Garmin 2007 Annual Report Download - page 51

25
Since our products are highly consumer-oriented, a significant slowdown in discretionary spending or
consumer confidence due to an economic recession or slowdown in the United States or worldwide economies could
negatively impact our revenues.
Adverse economic conditions may harm our investments.
Inflation or other changes in general economic conditions could adversely affect our investment portfolio.
Our quarterly financial statements will reflect fluctuations in foreign currency translation.
Our Taiwan subsidiary holds, and is expected to continue to hold, significant cash, cash equivalents, and
marketable securities and receivables denominated in U.S. Dollars. Because the U.S. Dollar is the primary currency
for our business and in order to substantially reduce the economic consequence of any variation in the exchange rate
for the U.S. Dollar and the New Taiwan Dollar on these assets, management expects that the Taiwan subsidiary will
continue to hold the majority of these assets in U.S. Dollar or U.S. Dollar denominated instruments. Nonetheless,
U.S. GAAP requires the Company at the end of each accounting period to translate into New Taiwan dollars all such
U.S. Dollar denominated assets held by our Taiwan subsidiary. This translation is required because the New Taiwan
Dollar is the functional currency of the subsidiary. This U.S. GAAP-mandated translation will cause us to recognize
gain or loss on our financial statements as the New Taiwan Dollar/U.S. Dollar exchange rate varies. Such gain or
loss will create variations in our earnings per share. Because there is minimal cash impact caused by such exchange
rate variations, management will continue to focus on the Company’s operating performance before the impact of
the foreign currency translation.
If we are unable to compete effectively with existing or new competitors, our resulting loss of competitive
position could result in price reductions, fewer customer orders, reduced margins and loss of market share.
The markets for our products are highly competitive, and we expect competition to increase in the future.
Some of our competitors have significantly greater financial, technical and marketing resources than we do. These
competitors may be able to respond more rapidly to new or emerging technologies or changes in customer
requirements. They may also be able to devote greater resources to the development, promotion and sale of their
products. Increased competition could result in price reductions, fewer customer orders, reduced margins and loss
of market share. Our failure to compete successfully against current or future competitors could seriously harm our
business, financial condition and results of operations.
Our intellectual property rights are important to our operations, and we could suffer loss if they infringe
upon other’s rights or are infringed upon by others.
We rely on a combination of patents, copyrights, trademarks and trade secrets, confidentiality provisions
and licensing arrangements to establish and protect our proprietary rights. To this end, we hold rights to a number
of patents and registered trademarks and regularly file applications to attempt to protect our rights in new technology
and trademarks. However, there is no guarantee that our patent applications will become issued patents, or that our
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, trademarks or other intellectual property rights. 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.