3. 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 identical assets 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. The valuation methods used by the Company for each significant class of investments are summarized below.

Mortgage-backed securities, corporate bonds and obligations of states and political subdivisions – Valued 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.

Common stocks – Valued at the closing price reported on the active market on which the individual securities are traded.

The methods 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 December 28, 2013
	Total		Level 1		Level 2		Level 3
Mortgage-backed securities	$	437,330	$	-	$	437,330	$	-
Obligations of states and political subdivisions		647,354		-		647,354		-
Corporate bonds		457,148		-		457,148		-
Common stocks		29,854		29,854		-		-
Other		80,282		-		80,282		-
Total	$	1,651,968	$	29,854	$	1,622,114	$	-

	Fair Value Measurements as
	of December 29, 2012
	Total		Level 1		Level 2		Level 3
Mortgage-backed securities	$	650,895	$	-	$	650,895	$	-
Obligations of states and political subdivisions		499,857		-		499,857		-
Corporate bonds		399,941		-		399,941		-
Common stocks		22,982		22,982		-		-
Other		67,720		-		67,720		-
Total	$	1,641,395	$	22,982	$	1,618,413	$	-

Marketable securities classified as available-for-sale securities are summarized below:

	Available-For-Sale Securities as
	of December 28, 2013
					Gross				Estimated Fair
			Gross		Unrealized		Gross Unrealized		Value (Net Carrying
	Amortized Cost		Unrealized Gains		Losses-OTTI ⁽¹⁾		Losses-Other ⁽²⁾		Amount)
Mortgage-backed securities	$	461,054	$	2,692	$	(22,614)	$	(3,802)	$	437,330
Obligations of states and political subdivisions		673,529		1,601		(27,509)		(267)		647,354
U.S. corporate bonds		463,437		1,050		(7,031)		(308)		457,148
Common stocks		24,540		5,413		(99)		-		29,854
Other		78,059		2,326		(103)		-		80,282
Total	$	1,700,619	$	13,082	$	(57,356)	$	(4,377)	$	1,651,968

	Available-For-Sale Securities as
	of December 29, 2012
									Estimated Fair
			Gross		Gross Unrealized		Gross Unrealized		Value (Net Carrying
	Amortized Cost		Unrealized Gains		Losses-OTTI ⁽¹⁾		Losses-Other ⁽²⁾		Amount)
Mortgage-backed securities	$	644,388	$	8,894	$	-	$	(2,387)	$	650,895
Obligations of states and political subdivisions		499,241		2,345		-		(1,729)		499,857
U.S. corporate bonds		399,036		3,138		-		(2,233)		399,941
Common stocks		21,113		2,392		-		(523)		22,982
Other		67,181		551		-		(12)		67,720
Total	$	1,630,959	$	17,320	$	-	$	(6,884)	$	1,641,395

⁽¹⁾	Represents impairment not related to credit for those investment securities that have been determined to be other-than-temporarily impaired.
⁽²⁾	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 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. During 2013 and 2012, the Company did not record any material impairment charges on its outstanding securities.

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. In 2013, Garmin experienced unrealized, non-cash losses on its investment portfolio resulting in a balance of $57,356 of gross other-than-temporary impairment and $4,377 of other unrealized losses on marketable securities at December 28, 2013. The amortized cost and estimated fair value of the securities at an unrealized loss position at December 28, 2013 were $1,215,498 and $1,153,765, respectively. This decrease in estimated fair value is primarily due to market valuations on mortgage-backed securities and obligations of states and political subdivisions declining. The decline was due to increases in the 10 Year Treasury Bond Yield during 2013, which caused market valuations of securities in our investment portfolios to decline. Approximately 50% of securities in our portfolio were at an unrealized loss position at December 28, 2013. An immaterial amount of those securities have been in a continuous unrealized loss position for 12 months or longer. 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 amortized cost and estimated fair value of marketable securities at December 28, 2013, 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 (2014)	$	151,594	$	149,862
Due after one year through five years (2015-2019)		708,379		704,164
Due after five years through ten years (2020-2024)		237,556		226,777
Due after ten years (2025 and thereafter)		540,912		501,388
Other (No contractual maturity dates)		62,178		69,777
	$	1,700,619	$	1,651,968