Garmin 2003 Annual Report Download - page 52

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reviewed for impairment in accordance with SFAS No. 144. The adoption of this statement did not have a material impact on the
Company.
At December 27, 2003 and December 28, 2002, the Company had patents, license agreements, customer related intangibles
and other identifiable finite lived intangible assets recorded at a cost of $48,703 and $35,403, respectively. The Company’s excess
purchase cost over fair value of net assets acquired (goodwill) was $11,418 and zero at December 27, 2003 and December 28, 2002,
respectively.
Identifiable, finite lived intangible assets are amortized over their estimated useful lives on a straight-line basis over three to
ten years. Accumulated amortization was $17,810 and $10,924 at December 27, 2003 and December 28, 2002, respectively.
Amortization expense was $6,886, $5,277 and $2,800 for the years ended December 27, 2003, December 28, 2002, and December 29,
2001, respectively. In the next five years, the amortization expense is estimated to be $12,945, $7,145, $2,363, $1,889, and $1,535,
respectively.
Marketable Securities
Management determines the appropriate classification of marketable securities at the time of purchase and reevaluates such
designation as of each balance sheet date.
All of the Company’s marketable securities are considered available-for-sale at December 27, 2003. See Note 3. Available-
for-sale securities are stated at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive loss. During
2003, unrealized gains of $1,234 were reported in other comprehensive loss, net of related taxes.
The amortized cost of debt securities classified as available-for-sale is adjusted for amortization of premiums and accretion of
discounts to maturity, or in the case of mortgage-backed securities, over the estimated life of the security. Such amortization is
included in interest income from investments. Realized gains and losses, and declines in value judged to be other-than-temporary are
included in net securities gains (losses). The cost of securities sold is based on the specific identification method. Realized gains and
losses on available-for-sale securities were not material.
Income Taxes
The Company accounts for income taxes using the liability method in accordance with SFAS No. 109, Accounting for
Income Taxes. The liability method provides that deferred tax assets and liabilities are recorded based on the difference between the
tax bases of assets and liabilities and their carrying amount for financial reporting purposes as measured by the enacted tax rates and
laws that will be in effect when the differences are expected to reverse. Income taxes have not been accrued by Garmin Corporation
for the unremitted earnings of GII totaling approximately $112,567 and $122,315 at December 27, 2003 and December 28, 2002,
respectively, because such earnings are intended to be reinvested in this subsidiary indefinitely. Income taxes have also not been
accrued by the Company for the unremitted earnings of Garmin Corporation or GEL because such earnings are also intended to be
reinvested in these subsidiaries indefinitely.
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.
Revenue Recognition
The Company recognizes revenue from product sales when the product is shipped 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.