Garmin 2005 Annual Report Download - page 54

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trademark applications will become registered trademarks. Moreover, even if approved, our patents or trademarks
may thereafter be successfully challenged by others or otherwise become invalidated for a variety of reasons. Thus,
any patents or trademarks we currently have or may later acquire may not provide us a significant competitive
advantage.
Third parties may claim that we are infringing their intellectual property rights. Such claims could have a
material adverse effect on our business and financial condition. From time to time we receive letters alleging
infringement of patents. Litigation concerning patents or other intellectual property is costly and time consuming.
We may seek licenses from such parties, but they could refuse to grant us a license or demand commercially
unreasonable terms. We might not have sufficient resources to pay for the licenses. Such infringement claims could
also cause us to incur substantial liabilities and to suspend or permanently cease the use of critical technologies or
processes or the production or sale of major products.
Failure to obtain required certifications of our products on a timely basis could harm our business.
We have certain products, especially in our aviation segment, that are subject to governmental and similar
certifications before they can be sold. For example, Federal Aviation Administration (‘‘FAA’’) certification is
required for all of our aviation products that are intended for installation in type certificated aircraft. To the extent
required, certification is an expensive and time-consuming process that requires significant focus and resources. An
inability to obtain, or excessive delay in obtaining, such certifications could have an adverse effect on our ability to
introduce new products and, therefore, our operating results. In addition, we cannot assure you that our certified
products will not be decertified. Any such decertification could have an adverse effect on our operating results.
Our business is subject to economic, political and other risks associated with international sales and
operations.
Our business is subject to risks associated with doing business internationally. We estimate that
approximately 38% of our net sales in the fiscal year ended December 31, 2005 represented products shipped to
international destinations. Accordingly, our business, financial condition and results of operations could be harmed
by a variety of international factors, including:
y changes in foreign currency exchange rates;
y changes in a specific country’s or region’s political or economic conditions, particularly in emerging
markets;
y trade protection measures and import or export licensing requirements;
y potentially negative consequences from changes in tax laws;
y difficulty in managing widespread sales and manufacturing operations; and
y less effective protection of intellectual property.
We may experience unique economic and political risks associated with companies that operate in Taiwan.
Relations between Taiwan and the People’s Republic of China, also referred to as the PRC, and other
factors affecting the political or economic conditions of Taiwan in the future could materially adversely affect our
business, financial condition and results of operations and the market price and the liquidity of our shares. Our
principal manufacturing facilities where we manufacture all of our products, except our panel-mounted aviation
products, are located in Taiwan.
Taiwan has a unique international political status. The PRC asserts sovereignty over all of China, including
Taiwan, certain other islands and all of mainland China. The PRC government does not recognize the legitimacy of