Garmin 2007 Annual Report Download - page 47

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A shut down of U.S. airspace or imposition of restrictions on general aviation would harm our business.
Following the September 11, 2001 terrorist attacks, the FAA ordered all aircraft operating in the U.S. to be
grounded for several days. In addition to this shut down of U.S. airspace, the general aviation industry was further
impacted by the additional restrictions implemented by the FAA on those flights that fly utilizing Visual Flight
Rules (VFR). The FAA restricted VFR flight inside 30 enhanced Class B (a 20-25 mile radius around the 30 largest
metropolitan areas in the USA) airspace areas. The Aircraft Owners and Pilots Association (AOPA) estimated that
these restrictions affected approximately 41,800 general aviation aircraft based at 282 airports inside the 30
enhanced Class B airspace areas. The AOPA estimates that approximately 90% of all general aviation flights are
conducted VFR, and that only 15% of general aviation pilots are current to fly utilizing Instrument Flight Rules
(IFR).
The shut down of U.S. airspace following September 11, 2001 caused reduced sales of our general aviation
products and delays in the shipment of our products manufactured in our Taiwan manufacturing facility to our
distribution facility in Olathe, Kansas, thereby adversely affecting our ability to supply new and existing products to
our dealers and distributors.
Any future shut down of U.S. airspace or imposition of restrictions on general aviation could have a
material adverse effect on our business and financial results.
Any reallocation of radio frequency spectrum could cause interference with the reception of Global
Positioning System signals. This interference could harm our business.
Our Global Positioning System technology is dependent on the use of the Standard Positioning Service
(SPS) provided by the U.S. Government’s Global Positioning System satellites. The Global Positioning System
operates in radio frequency bands that are globally allocated for radio navigation satellite services. The assignment
of spectrum is controlled by an international organization known as the International Telecommunications Union
(‘‘ITU’’). The Federal Communications Commission (‘‘FCC’’) is responsible for the assignment of spectrum for
non-government use in the United States in accordance with ITU regulations. Any ITU or FCC reallocation of radio
frequency spectrum, including frequency band segmentation or sharing of spectrum, could cause interference with
the reception of Global Positioning System signals and may materially and adversely affect the utility and reliability
of our products, which would, in turn, have a material adverse effect on our operating results. In addition, emissions
from mobile satellite service and other equipment operating in adjacent frequency bands or inband may materially
and adversely affect the utility and reliability of our products, which could result in a material adverse effect on our
operating results. The FCC continually receives proposals for new technologies and services, such as ultra-
wideband technologies, which may seek to operate in, or across, the radio frequency bands currently used by the
GPS SPS. Adverse decisions by the FCC that result in harmful interference to the delivery of the GPS SPS may
materially and adversely affect the utility and reliability of our products, which could result in a material
adverse effect on our business and financial condition.
If we are not successful in the continued development, introduction or timely manufacture of new products,
demand for our products could decrease.
We expect that a significant portion of our future revenue will continue to be derived from sales of newly
introduced products. The market for our products is characterized by rapidly changing technology, evolving
industry standards and changes in customer needs. If we fail to introduce new products, or to modify or improve our
existing products, in response to changes in technology, industry standards or customer needs, our products could
rapidly become less competitive or obsolete. We must continue to make significant investments in research and
development in order to continue to develop new products, enhance existing products and achieve market
acceptance for such products. However, there can be no assurance that development stage products will be
successfully completed or, if developed, will achieve significant customer acceptance.
If we are unable to successfully develop and introduce competitive new products, and enhance our existing
products, our future results of operations would be adversely affected. Our pursuit of necessary technology may
require substantial time and expense. We may need to license new technologies to respond to technological change.
These licenses may not be available to us on terms that we can accept or may materially change the gross profits that