Garmin 2002 Annual Report Download - page 48

Note 2. Summary of Significant Accounting Policies (continued)
Finite-lived intangible assets principally consist of costs incurred with certain licensing agreements with a net book value of
approximately $19,370 and $11,408 at December 28, 2002 and December 29, 2001, respectively. Licenses are being amortized
over the lives of the related license agreements, which are generally three years. Accumulated amortization is approximately
$10,377 and $5,100 at December 28, 2002 and December 29, 2001, respectively.
Other intangible assets consist of patents as well as goodwill and other intangible assets acquired in the Company’s purchase of
Sequoia Instruments, Inc. in November 2001. The total purchase price of $3,625 was allocated to goodwill, developed technology,
and other intangibles. The purchase included additional consideration of $1,000 contingent on the completion of certain
activities expected to occur in 2003 and thereafter.
Patents and other finite lived intangible assets with a net book value of $3,153 and $2,725 are being amortized over the
estimated useful lives of the related assets, which is generally five to ten years. Accumulated amortization is $547 and $391 at
December 28, 2002 and December 29, 2001, respectively. No amortization expense was recorded related to goodwill during 2002
as a result of adopting SFA No. 142.
Marketable Securities
Management determines the appropriate classification of marketable securities at the time of purchase and reevaluates such
designation as of each balance sheet date.
Debt securities not classified as held-to-maturity and marketable equity securities not classified as trading are classified as
available-for-sale. All of the Company’s marketable securities are considered available-for-sale at December 28, 2002. See Note 3.
Available-for-sale securities are stated at fair value, with the unrealized gains and losses, net of tax, reported in other
comprehensive income. During 2002, significant unrealized gains of $1,167 were reported in other comprehensive income, net of
related taxes.
The amortized cost of debt securities classified as available-for-sale is adjusted for amortization of premiums and accretion of
discounts to maturity, or in the case of mortgage-backed securities, over the estimated life of the security. Such amortization is
included in interest income from investments. Realized gains and losses, and declines in value judged to be other-than-temporary
are included in net securities gains (losses). The cost of securities sold is based on the specific identification method. Realized
gains and losses on available-for-sale securities were not material.
Income Taxes
The Company accounts for income taxes using the liability method in accordance with SFAS No. 109, Accounting for Income
Taxes. The liability method provides that deferred tax assets and liabilities are recorded based on the difference between the tax
bases of assets and liabilities and their carrying amount for financial reporting purposes as measured by the enacted tax rates
and laws that will be in effect when the differences are expected to reverse. Income taxes have not been accrued at the GARMIN
level for the unremitted earnings of GII totaling approximately $122,315 and $96,948 at December 28, 2002 and December 29,
2001, respectively, because such earnings are intended to be reinvested in this subsidiary indefinitely. Income taxes have also not
been accrued by the Company for the unremitted earnings of GARMIN or GEL because such earnings are also intended to be
reinvested in these subsidiaries indefinitely.
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