Garmin 2002 Annual Report Download - page 27

impaired investments, the determination of their fair value and the assessment of whether any decline in value is other than
temporary are the key judgement elements. The discovery of new information and the passage of time can significantly change
these judgements. Revisions of impairment judgements are made when new information becomes known, and any resulting
impairment adjustments are made at that time. The current economic environment and recent volatility of securities markets
increase the difficulty of determining fair value and assessing investment impairment. The same influences tend to increase the
risk of potentially impaired assets.
Income Taxes
While no valuation allowance has been recorded, it is the Company’s policy to record a valuation allowance to reduce its
deferred tax assets to an amount that it believes is more likely than not to be realized. While the Company has considered future
taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in
the event the Company were to determine that it would not be able to realize all or part of its net deferred tax assets in the
future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made.
Likewise, should the Company determine that it would be able to realize its deferred tax assets in the future in excess of its net
recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made.
Impairments and Restructuring Charges
The Company has experienced no impairments of long-lived assets, securities held for investment, or goodwill. No restructuring
charges have been necessary.
Depreciation and Amortization
The Company depreciates or amortizes its assets using the straight-line method.
Retirement and Post Retirement Liabilities; Pension Income and Expense
The retirement benefits provided by the Company are classified as defined contribution plans. As this is the case, there is no
retirement liability to fund. Because the retirement benefits provided by the Company are not defined benefit plans, there are
no funds held in trust and therefore no pension income or expense disclosures are necessary.
Environmental Liabilities
The Company is not aware of any environmental liabilities at this time.
Repurchase Obligations
The Company has no repurchase obligations at this time.
Stock-based Compensation
The Company distributes a small number of stock options each year as part of the Company’s compensation package for
employees. Employees with certain levels of responsibility within the Company are eligible for stock options grants, but the
granting of options is at the discretion of the Compensation Committee of the Board of Directors and is not a contractual
obligation. Stock compensation plans are discussed in detail in the Notes to Consolidated Financial Statements.
Insurance Loss Reserves
Historically the Company has not experienced losses related to general or product liability claims, therefore no loss reserves have
been created.
Accounting Terms and Characteristics
Net Sales
Our net sales are primarily generated through sales to our global dealer and distributor network and to original equipment
manufacturers. We recognize sales when products are shipped. Our sales are largely of a consumer nature; therefore backlog
levels are not necessarily indicative of our future sales results. We aim to achieve a quick turnaround on orders we receive, and
we typically ship most orders within 72 hours.
Net sales are subject to some seasonal fluctuation. Typically, sales of our consumer products are highest in the second quarter,
due to increased demand during the spring and summer marine season, and in the fourth quarter, due to increased demand
during the holiday buying season. Our aviation products do not experience much seasonal variation, but are more influenced by
the timing of the release of new products when the initial demand is typically the strongest.
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