Garmin 2007 Annual Report Download - page 44

18
Garmin purchases components for its products from a number of suppliers around the world. For certain
components, Garmin relies on sole source suppliers. The failure of our suppliers to deliver components in sufficient
quantities and in a timely manner could adversely affect our business.
Seasonality
Our sales are subject to significant seasonal fluctuation. Sales of our consumer products are generally
significantly higher in the fourth quarter, due to increased demand for automotive/mobile products during the
holiday buying season, and, to a lesser extent, the second quarter, due to increased demand during the spring and
summer marine season and the Father’s Day/graduation buying season. Sales of consumer products are also
influenced by the timing of the release of new products. Our aviation products do not experience much seasonal
variation, but are more influenced by the timing of the release of new products when the initial demand is typically
the strongest.
Backlog
Our sales are generally of a consumer nature and there is a relatively short cycle between order and
shipment. Therefore, we believe that backlog information is not material to the understanding of our business. We
typically ship most orders within 72 hours of receipt.
Intellectual Property
Our success and ability to compete is dependent in part on our proprietary technology. We rely on a
combination of patent, copyright, trademark and trade secret laws, as well as confidentiality agreements, to establish
and protect our proprietary rights. As of January 11, 2008, we held 331 U.S. patents and 42 foreign patents. As of
January 11, 2008, we had 190 U.S. patent applications and 32 foreign patent applications pending. In addition,
Garmin often relies on licenses of intellectual property for use in its business. For example, Garmin obtains licenses
for digital cartography technology for use in our products from various sources. As of January 11, 2008, we held 81
U.S. trademark registrations and 162 foreign trademark registrations. As of January 11, 2008, we had 28 U.S.
trademark applications and 73 foreign trademark applications pending.
We believe that our continued success depends on the intellectual skills of our employees and their ability to
continue to innovate. Garmin will continue to file and prosecute patent applications when appropriate to attempt to
protect Garmin’s rights in its proprietary technologies. Garmin was selected as a constituent of the Ocean Tomo®
300 Patent Index and The Ocean Tomo® 300 Patent Growth Index, which are indices that recognize companies with
high intellectual property value.
There is no assurance that our current patents, or patents which we may later acquire, may successfully
withstand any challenge, in whole or in part. It is also possible that any patent issued to us may not provide us with
any competitive advantages, or that the patents of others will preclude us from manufacturing and marketing certain
products. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of
our products or to obtain and use information that we regard as proprietary. Litigation may be necessary in the
future to enforce our intellectual property rights, to protect its trade secrets, to determine the validity and scope of
the proprietary rights of others or to defend against claims of infringement or invalidity.
Regulations
The telecommunications industry is highly regulated, and the regulatory environment in which Garmin
operates is subject to change. In accordance with Federal Communication Commission (“FCC”) rules and
regulations, wireless transceiver and cellular handset products are required to be certified by the FCC and
comparable authorities in foreign countries where they are sold. Garmin’s products sold in Europe are required to
comply with relevant directives of the European Commission. A delay in receiving required certifications for new
products, or enhancements to Garmin’s products, or losing certification for Garmin’s existing products could