Garmin 2005 Annual Report Download - page 94

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64
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant
components of the Company’s deferred tax assets and liabilities are as follows:
December 31, December 25,
2005 2004
Deferred tax assets:
Product warranty accruals $5,017 $4,084
Allowance for doubtful accounts 1,361 1,187
Inventory carrying value 4,120 2,792
Sales program allowances 3,798 4,035
Vacation accrual 1,401 1,022
Unrealized intercompany profit in inventory 12,978 16,905
Unrealized investment loss 219 433
Unrealized foreign currency loss 550 3,579
Tax credit carryforwards, net 1,482 2,914
Other 566 1,576
31,492 38,527
Deferred tax liabilities:
Depreciation 9,019 5,267
Other 2,344 0
11,363 5,267
Net deferred tax assets $20,129 $33,260
7. Fair Value of Financial Instruments
In accordance with SFAS No. 107, Disclosures about Fair Value of Financial Instruments, the following
summarizes required information about the fair value of certain financial instruments for which it is currently
practicable to estimate such value. None of the financial instruments are held or issued for trading purposes. The
carrying amounts and fair values of the Company’s financial instruments are as follows:
December 31, 2005 December 25, 2004
Carrying Fair Carrying Fair
Amount Value Amount Value
Cash and cash equivalents $334,352 $334,352 $249,909 $249,909
Restricted cash 1,356 1,356 1,457 1,457
Marketable securities 376,723 376,723 322,215 322,215
8. Segment Information
The Company operates within its targeted markets through two reportable segments, those being related to
products sold into the consumer and aviation markets. Both of the Company’s reportable segments offer products
through the Company’s network of independent dealers and distributors as well as through OEM’s. However, the
nature of products and types of customers for the two segments vary significantly. As such, the segments are
managed separately. The Company’s consumer segment includes portable global positioning system (GPS) receivers
and accessories for marine, recreation, land, and automotive use sold primarily to retail outlets. These products are
produced primarily by the Company’s subsidiary in Taiwan. The Company’s aviation products are portable and
panel mount avionics for Visual Flight Rules and Instrument Flight Rules navigation and are sold primarily to
aviation dealers and certain aircraft manufacturers.
The Company’s Chief Executive Officer has been identified as the Chief Operating Decision Maker
(CODM). The CODM evaluates performance and allocates resources based on income before income taxes of each
segment. Income before income taxes represents net sales less operating expenses including certain allocated general