Garmin 2007 Annual Report Download - page 89

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63
Balance at December 30, 2006 $70.5
Additions based on tax positions related to prior years 10.0
Reductions based on tax positions related to prior years (8.0)
Additions based on tax positions related to current period 73.0
Reductions based on tax positions related to current period -
Reductions related to settelements with tax authorities (7.6)
Expiration of statute of limitations (11.3)
Balance at December 29, 2007 $126.6
The December 29, 2007 balance of $126.6 million of unrecognized tax benefits, if recognized, would
reduce the effective tax rate. None of the unrecognized tax benefits are due to uncertainty in the timing of
deductibility.
FIN 48 requires unrecognized tax benefits to be classified as non-current liabilities, except for the portion
that is expected to be paid within one year of the balance sheet date. The Company previously classified these
amounts as current liabilities, however after the adoption, the entire $126.6 million is required to be classified as
non-current at December 29, 2007.
Interest expense and penalties, if any, accrued on the unrecognized tax benefits are reflected in income tax
expense. $1.4 million of interest is included in income tax expense for the year ending December 29, 2007. The
Company had no amounts accrued for penalties as the nature of the unrecognized tax benefits, if recognized, would
not warrant the imposition of penalties.
The Company files income tax returns in the U.S. federal jurisdiction, and various state, local and foreign
jurisdictions. The Company is no longer subject to US federal, state, or local tax examinations by tax authorities for
years prior to 2004. The Company also considers 2003 and 2004 US federal returns to have been effectively settled
due to the completion of audit examination by the Internal Revenue Service. The Company is no longer subject to
Taiwan income tax examinations by tax authorities for years prior to 2002. The Company is no longer subject to
United Kingdom tax examinations by tax authorities for years prior to 2006.
At this time, we are unable to make a reasonably reliable estimate of the timing of payments in individual
years beyond 12 months due to uncertainties in the timing of potential tax audit outcomes.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. Actual results could differ from those
estimates.
Concentration of Credit Risk
The Company grants credit to certain customers who meet the Company’s pre-established credit
requirements. Generally, the Company does not require security when trade credit is granted to customers. Credit
losses are provided for in the Company’s consolidated financial statements and consistently have been within
management’s expectations. Certain customers are allowed extended terms consistent with normal industry
practice. Most of these extended terms can be classified as either relating to seasonal sales variations or to the
timing of new product releases by the Company.
Revenue Recognition
The Company recognizes revenue from product sales when the product is delivered to the customer and
title has transferred. The Company assumes no remaining significant obligations associated with the product sale
other than that related to its warranty programs discussed below.