Garmin 2008 Annual Report Download - page 74

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52
expense accounts at average rates during the year. In order to minimize the effect of the currency exchange
fluctuations on our net assets, we have elected to retain most of our Taiwan subsidiary’s cash and investments in
marketable securities denominated in U.S. dollars. In 2008, the Taiwan Dollar weakened 1.6% relative to the U.S.
Dollar which resulted in a cumulative translation adjustment of negative $15.3 million at the end of fiscal 2008 and
a net foreign currency gain of $20.8 million at Garmin Corporation during 2008.
All European subsidiaries excluding Garmin (Europe) Ltd., Garmin Danmark and Garmin Sweden use the
Euro as the functional currency. The functional currency of our largest European subsidiary, Garmin (Europe) Ltd.
remains the U.S. dollar, and as some transactions occurred in British Pounds Sterling or Euros, foreign currency
gains or losses have been realized historically related to the movements of those currencies relative to the U.S.
dollar. The Company believes that gains and losses will become more material in the future as our European
presence grows. In 2008, the Euro weakened 4.1% relative to the U.S. dollar and the British Pound Sterling
weakened 26.1% relative to the U.S. dollar. These currency moves resulted in a foreign currency loss of $77.3
million in Garmin Ltd. and our European subsidiaries. Offsetting this net loss was a realized gain of $21.5 million
due to the strengthening of the Euro between the date of purchase of the Tele Atlas N.V. shares in October 2007 to
the dates of sale and tender in February, March, and June 2008. The net result of these currency moves combined
with other losses of $0.3 million, and the timing of transactions during the year for a net loss of $35.3 million for the
Company.
Interest Rate Risk
We have no outstanding long-term debt as of December 27, 2008. We, therefore, have no meaningful
debt-related interest rate risk.
We are exposed to interest rate risk in connection with our investments in marketable securities. As
interest rates change, the unrealized gains and losses associated with those securities will fluctuate accordingly. A
hypothetical change of 10% in interest rates would not have a material effect on such unrealized gains or losses. At
December 27, 2008, cumulative unrealized losses on those securities were $22.2 million.