Garmin 2009 Annual Report Download - page 95

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SoftwareDevelopmentCosts
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TheFASBASCtopicentitledSoftwarerequirescompaniestoexpensesoftwaredevelopmentcostsasthey
incurthemuntiltechnologicalfeasibilityhasbeenestablished,atwhichtimethosecostsarecapitalizeduntilthe
productisavailableforgeneralreleasetocustomers.Ourcapitalizedsoftwaredevelopmentcostsarenot
significantasthetimeelapsedfromworkingmodeltoreleaseistypicallyshort.AsrequiredbytheResearchand
DevelopmenttopicoftheFASBASC,costsweincurtoenhanceourexistingproductsorafterthegeneralreleaseof
theserviceusingtheproductareexpensedintheperiodtheyareincurredandincludedinresearchand
developmentcostsonourstatementofoperations.
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AccountingforStock‐BasedCompensation
TheCompanycurrentlysponsorsthreestockbasedemployeecompensationplans.TheFASBASCtopic
entitledCompensation–StockCompensationrequiresthemeasurementandrecognitionofcompensation
expensesforallshare‐basedpaymentawardsmadetoemployeesanddirectorsincludingemployeestockoptions
andrestrictedstockbasedonestimatedfairvalues.SeeNote9.
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Accountingguidancerequirescompaniestoestimatethefairvalueofshare‐basedpaymentawards
onthedateofgrantusinganoption‐pricingmodel.Thevalueoftheportionoftheawardthatisultimately
expectedtovestisrecognizedasstock‐basedcompensationexpensesovertherequisiteserviceperiodinthe
Company’sconsolidatedfinancialstatements.
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Asstock‐basedcompensationexpensesrecognizedintheaccompanyingconsolidatedstatementofincome
arebasedonawardsultimatelyexpectedtovest,theyhavebeenreducedforestimatedforfeitures.Accounting
guidancerequiresforfeiturestobeestimatedatthetimeofgrantandrevised,ifnecessary,insubsequentperiods
ifactualforfeituresdifferfromthoseestimates.Forfeitureswereestimatedbasedonhistoricalexperienceand
management’sestimates.
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RecentlyIssuedAccountingPronouncements
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InMay2008,theFASBissuedEITF07‐1,AccountingforCollaborativeArrangementswhichwas
subsequentlycodified.EITFIssue07‐1requiresentitiesenteringintocollaborativearrangementsinwhichtwoor
morepartiesactivelyparticipateinajointoperatingactivityandareexposedtosignificantrisksandrewardsthat
dependonthecommercialsuccessofthejointoperatingactivitytomakespecificdisclosuresregardingthat
arrangement.GarminannouncedastrategicalliancewithASUSTeKComputerInc.onFebruary4,2009toleverage
thecompanies’navigationandmobiletelephonyexpertisetodesign,manufactureanddistributeco‐branded
location‐centricmobilephones.ThemobilephoneproductlineisknownastheGarmin‐Asusnüvifoneseries.The
CompanyhasadoptedEITFIssue07‐1andthestrategicalliancedidnothaveamaterialimpactontheCompany’s
financialconditionoroperatingresultsin2009.
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InJanuary2009,theFASBreleasedProposedStaffPositionSFAS107‐bandAccountingPrinciplesBoard
(APB)OpinionNo.28‐a,“InterimDisclosuresaboutFairValueofFinancialInstruments”(SFAS107‐bandAPB28‐a),
bothofwhichweresubsequentlycodified.ThisproposalamendsFASBStatementNo.107,“DisclosuresaboutFair
ValuesofFinancialInstruments,”torequiredisclosuresaboutfairvalueoffinancialinstrumentsininterimfinancial
statementsaswellasinannualfinancialstatements.TheproposalalsoamendsAPBOpinionNo.28,“Interim
FinancialReporting,”torequirethosedisclosuresinallinterimfinancialstatements.Thisproposaliseffectivefor
interimperiodsendingafterJune15,2009,butearlyadoptionispermittedforinterimperiodsendingafterMarch
15,2009.TheCompanyhasadoptedSFAS107‐bandAPB28‐aandtheguidancedidnothaveamaterialimpacton
theCompany’sfinancialconditionoroperatingresultsin2009.
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InApril2009,theFASBissuedFSPNo.FAS157‐4(“FSPFAS157‐4”),“DeterminingFairValueWhenthe
VolumeandLevelofActivityfortheAssetorLiabilityhasSignificantlyDecreasedandIdentifyingTransactionsThat