Garmin 2009 Annual Report Download - page 92

74
TheCompanyadoptedtheapplicableguidanceincludedintheFASBASCtopicIncomeTaxesrelatedto
accountingforuncertaintyinincometaxesonDecember31,2006,thebeginningoffiscalyear2007. Thetotal
amountofunrecognizedtaxbenefitsasofDecember26,2009was$255.7millionincludinginterestof$20.1
million. Areconciliationofthebeginningandendingamountofunrecognizedtaxbenefitsforyearsending
December26,2009andDecember27,2008isasfollows(in$millions):

December26, December27,
2009 2008
Balanceatbeginningofyear $214.4 $126.6
Additionsbasedontaxpositionsrelatedtoprioryears 14.2 14.2
Reductionsbasedontaxpositionsrelatedtoprioryears (16.2) (4.6)
Additionsbasedontaxpositionsrelatedtocurrentperiod 63.1 83.8
Reductionsbasedontaxpositionsrelatedtocurrentperiod ‐ ‐
Reductionsrelatedtosettelementswithtaxauthorities ‐ ‐
Expirationofstatuteoflimitations (19.8) (5.6)
Balanceatendofyear $255.7 $214.4


TheDecember26,2009balanceof$255.7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.

Accountingguidance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entire$255.7million
and$214.4millionarerequiredtobeclassifiedasnon‐currentatDecember26,2009andDecember27,2008,
respectively.

Interestexpenseandpenalties,ifany,accruedontheunrecognizedtaxbenefitsarereflectedinincome
taxexpense.AtDecember26,2009andDecember27,2008,theCompanyhadaccruedapproximately$20.1and
$11.1millionrespectivelyforinterest.  Interestexpenseincludedinincometaxexpensefortheyearsending
December26,2009andDecember27,2008are$9.0millionand$6.4million,respectively.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U.S.federal,state,orlocaltaxexaminationsbytaxauthorities
foryearspriorto2006.TheCompanyisnolongersubjecttoTaiwanincometaxexaminationsbytaxauthorities
foryearspriorto2004.TheCompanyisnolongersubjecttoUnitedKingdomtaxexaminationsbytaxauthorities
foryearspriorto2008.

TheCompanybelievesthatitisreasonablypossiblethatapproximately$30millionofitsreservesfor
certainunrecognizedtaxbenefitswilldecreasewithinthenext12monthsastheresultoftheexpirationofstatute
oflimitations.ThispotentialdecreaseinunrecognizedtaxbenefitswouldimpacttheCompany’seffectivetaxrate
withinthenext12months.

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.
