Garmin 2008 Annual Report Download - page 42

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20
Many of our Products Rely on the Global Positioning System
The Global Positioning System is a satellite-based navigation and positioning system consisting of a
constellation of orbiting satellites. The satellites and their ground control and monitoring stations are maintained
and operated by the United States Department of Defense. The Department of Defense does not currently charge
users for access to the satellite signals. These satellites and their ground support systems are complex electronic
systems subject to electronic and mechanical failures and possible sabotage. The satellites were originally designed
to have lives of 7.5 years and are subject to damage by the hostile space environment in which they operate.
However, of the current deployment of satellites in place, some have been operating for more than 13 years.
If a significant number of satellites were to become inoperable, unavailable or are not replaced, it would
impair the current utility of our Global Positioning System products and would have a material negative effect on
our business. In addition, there can be no assurance that the U.S. government will remain committed to the
operation and maintenance of Global Positioning System satellites over a long period, or that the policies of the U.S.
government that provide for the use of the Global Positioning System without charge and without accuracy
degradation will remain unchanged. Because of the increasing commercial applications of the Global Positioning
System, other U.S. government agencies may become involved in the administration or the regulation of the use of
Global Positioning System signals. However, in a presidential policy statement issued in December 2004, the Bush
administration indicated that the U.S. is committed to supporting and improving the Global Positioning System and
will continue providing it free from direct user fees.
Some of our products also use signals from systems that augment GPS, such as the Wide Area
Augmentation System (WAAS). WAAS is operated by the FAA. Any curtailment of the operating capability of
WAAS could result in decreased user capability for many of our aviation products, thereby impacting our markets.
Any of the foregoing factors could affect the willingness of buyers of our products to select Global
Positioning System-based products instead of products based on competing technologies.
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