Garmin 2008 Annual Report Download - page 43

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21
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
we are able to obtain on our products. We may not succeed in adapting our products to new technologies as they
emerge. Development and manufacturing schedules for technology products are difficult to predict, and there can
be no assurance that we will achieve timely initial customer shipments of new products. The timely availability of
these products in volume and their acceptance by customers are important to our future success. From time to time
we have experienced delays in shipping certain of our new products and any future delays, whether due to product
development delays, manufacturing delays, lack of market acceptance, delays in regulatory approval, or otherwise,
could have a material adverse effect on our results of operations.
If we do not correctly anticipate demand for our products, we may not be able to secure sufficient quantities
or cost-effective production of our products or we could have costly excess production or inventories.
We have generally been able to increase production to meet this increasing demand. However, the demand
for our products depends on many factors and will be difficult to forecast. We expect that it will become more
difficult to forecast demand as we introduce and support multiple products, as competition in the market for our
products intensifies and as the markets for some of our products mature to the mass market category. Significant
unanticipated fluctuations in demand could cause the following problems in our operations:
y If demand increases beyond what we forecast, we would have to rapidly increase production. We would
depend on suppliers to provide additional volumes of components and those suppliers might not be able
to increase production rapidly enough to meet unexpected demand.
y Rapid increases in production levels to meet unanticipated demand could result in higher costs for
manufacturing and supply of components and other expenses. These higher costs could lower our profit
margins. Further, if production is increased rapidly, manufacturing quality could decline, which may also
lower our margins and reduce customer satisfaction.