v2.4.1.9
Marketable Securities
3 Months Ended
Mar. 28, 2015
Marketable Securities
8. Marketable Securities
  
The FASB ASC topic entitled Fair Value Measurements and Disclosures defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The accounting guidance classifies the inputs used to measure fair value into the following hierarchy:
 
Level 1
Unadjusted quoted prices in active markets for the identical asset or liability
 
Level 2
Observable inputs for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
 
Level 3
Unobservable inputs for the asset or liability
 
The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Valuation is based on prices obtained from an independent pricing vendor using both market and income approaches. The primary inputs to the valuation include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, and credit spreads.
 
The method described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
 
Available-for-sale securities measured at estimated fair value on a recurring basis are summarized below:
 
 
 
Fair Value Measurements as
 
 
 
of March 28, 2015
 
 
 
Total
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
$
27,369
 
$
-
 
$
27,369
 
$
-
 
Agency securities
 
 
327,160
 
 
-
 
 
327,160
 
 
-
 
Mortgage-backed securities
 
 
380,535
 
 
-
 
 
380,535
 
 
-
 
Corporate securities
 
 
572,211
 
 
-
 
 
572,211
 
 
-
 
Municipal securities
 
 
153,617
 
 
-
 
 
153,617
 
 
-
 
Other
 
 
68,422
 
 
-
 
 
68,422
 
 
-
 
Total
 
$
1,529,314
 
$
-
 
$
1,529,314
 
$
-
 
  
 
 
 
Fair Value Measurements as
 
 
 
of December 27, 2014 (1)
 
 
 
Total
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
 
$
30,144
 
$
-
 
$
30,144
 
$
-
 
Agency securities
 
 
428,320
 
 
-
 
 
428,320
 
 
-
 
Mortgage-backed securities
 
 
324,307
 
 
-
 
 
324,307
 
 
-
 
Corporate securities
 
 
594,402
 
 
-
 
 
594,402
 
 
-
 
Municipal securities
 
 
125,410
 
 
-
 
 
125,410
 
 
-
 
Other
 
 
72,750
 
 
-
 
 
72,750
 
 
-
 
Total
 
$
1,575,333
 
$
-
 
$
1,575,333
 
$
-
 
  
(1) Certain available-for-sale securities held as of December 27, 2014 have been reclassified among major security types to conform to the current year presentation. These reclassifications had no effect on fair value measurement.
 
Marketable securities classified as available-for-sale securities are summarized below:
 
 
 
Available-For-Sale Securities as
 
 
 
of March 28, 2015
 
 
 
Amortized Cost
 
Gross Unrealized
Gains
 
Gross
Unrealized
Losses-OTTI (2)
 
Gross Unrealized
Losses-Other (3)
 
Estimated Fair
Value (Net
Carrying 
Amount)
 
U.S. Treasury securities
 
$
27,185
 
$
186
 
$
-
 
$
(2)
 
$
27,369
 
Agency securities
 
 
330,109
 
 
531
 
 
(3,242)
 
 
(238)
 
 
327,160
 
Mortgage-backed securities
 
 
382,676
 
 
953
 
 
(1,076)
 
 
(2,018)
 
 
380,535
 
Corporate securities
 
 
574,513
 
 
744
 
 
(1,690)
 
 
(1,356)
 
 
572,211
 
Municipal securities
 
 
153,513
 
 
515
 
 
(5)
 
 
(406)
 
 
153,617
 
Other
 
 
68,461
 
 
13
 
 
(14)
 
 
(38)
 
 
68,422
 
Total
 
$
1,536,457
 
$
2,942
 
$
(6,027)
 
$
(4,058)
 
$
1,529,314
 
 
 
 
Available-For-Sale Securities as
 
 
 
of December 27, 2014 (1)
 
 
 
Amortized Cost
 
Gross Unrealized
Gains
 
Gross
Unrealized
Losses-OTTI (2)
 
Gross Unrealized
Losses-Other (3)
 
Estimated Fair 
Value (Net 
Carrying 
Amount)
 
U.S. Treasury securities
 
$
30,185
 
$
26
 
$
(25)
 
$
(42)
 
$
30,144
 
Agency securities
 
 
436,817
 
 
169
 
 
(8,259)
 
 
(407)
 
 
428,320
 
Mortgage-backed securities
 
 
329,048
 
 
580
 
 
(1,813)
 
 
(3,508)
 
 
324,307
 
Corporate securities
 
 
600,674
 
 
689
 
 
(2,874)
 
 
(4,087)
 
 
594,402
 
Municipal securities
 
 
125,183
 
 
497
 
 
(48)
 
 
(222)
 
 
125,410
 
Other
 
 
72,857
 
 
59
 
 
(12)
 
 
(154)
 
 
72,750
 
Total
 
$
1,594,764
 
$
2,020
 
$
(13,031)
 
$
(8,420)
 
$
1,575,333
 
(1) Certain available-for-sale securities held as of December 27, 2014 have been reclassified among major security types to conform to the current year presentation. These reclassifications had no effect on fair value measurement.
(2) Represents impairment not related to credit for those investment securities that have been determined to be other-than-temporarily impaired.
(3) Represents unrealized losses on investment securities that have not been determined to be other-than-temporarily impaired.
 
The Company’s investment policy requires investments to be rated A or better with the objective of minimizing the potential risk of principal loss. The fair value of our securities varies from period to period due to changes in interest rates, in the performance of the underlying collateral and in the credit performance of the underlying issuer, among other factors. The Company does not intend to sell the securities that have an unrealized loss shown in the table above and it is not more likely than not that the Company will be required to sell the investment before recovery of their amortized costs bases, which may be maturity.
 
The Company recognizes the credit component of other-than-temporary impairments of debt securities in "Other Income" and the noncredit component in "Other comprehensive income (loss)" for those securities that we do not intend to sell and for which it is not more likely than not that we will be required to sell before recovery. In 2013, Garmin experienced unrealized, noncredit losses on its investment portfolio resulting in gross other-than-temporary impairment and other unrealized losses on marketable securities. The decrease in estimated fair value was primarily due to market valuations declining on mortgage- and asset-backed securities and government and agency securities.  During 2014 and the first quarter of 2015, the Company did not record any material impairment charges on its outstanding securities.
 
The amortized cost and estimated fair value of the securities at an unrealized loss position at March 28, 2015 were $962,449 and $952,364, respectively. Approximately 43% of securities in our portfolio were at an unrealized loss position at March 28, 2015. We have the ability to hold these securities until maturity or their value is recovered. We do not consider these unrealized losses to be other than temporary credit losses because there has been no deterioration in credit quality and no change in the cash flows of the underlying securities. We do not intend to sell the securities and it is not more likely than not that we will be required to sell the securities; therefore, no impairment has been recorded in the accompanying condensed consolidated statement of income.
 
The cost of securities sold is based on the specific identification method.
 
The following table displays additional information regarding gross unrealized losses and fair value by major security type for available-for-sale securities in an unrealized loss position as of March 28, 2015.
 
 
 
As of March 28, 2015
 
 
 
Less than 12 Consecutive Months
 
12 Consecutive Months or Longer
 
 
 
Gross Unrealized
Losses
 
Fair Value
 
Gross Unrealized
Losses
 
Fair Value
 
U.S. Treasury securities
 
$
(2)
 
$
4,777
 
$
-
 
$
-
 
Agency securities
 
$
(221)
 
$
36,997
 
$
(3,259)
 
$
204,858
 
Mortgage-backed securities
 
$
(1,476)
 
$
175,026
 
$
(1,618)
 
$
85,274
 
Corporate securities
 
$
(1,253)
 
$
264,951
 
$
(1,793)
 
$
91,093
 
Municipal securities
 
$
(382)
 
$
51,639
 
$
(29)
 
$
9,356
 
Other
 
$
(10)
 
$
14,866
 
$
(42)
 
$
13,527
 
Total
 
$
(3,344)
 
$
548,256
 
$
(6,741)
 
$
404,108
 
  
The amortized cost and estimated fair value of marketable securities at March 28, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.
 
 
 
 
 
 
Estimated
 
 
 
Cost
 
Fair Value
 
 
 
 
 
 
 
 
 
Due in one year or less
 
$
269,931
 
$
270,212
 
Due after one year through five years
 
 
960,640
 
 
958,255
 
Due after five years through ten years
 
 
213,954
 
 
210,294
 
Due after ten years
 
 
91,932
 
 
90,553
 
 
 
$
1,536,457
 
$
1,529,314