Garmin 2010 Annual Report Download - page 39

Download and view the complete annual report

Please find page 39 of the 2010 Garmin annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 138

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138

29
price of the alternative source is prohibitive, or if the costs of components rise, our ability to maintain timely and
cost-effective production of our products would be seriously harmed.
We depend on third party licensors for the digital map data contained in our automotive/mobile products, and
our business and/or gross margins could be harmed if we become unable to continue licensing such mapping
data or if the royalty costs for such data rise.
We license digital mapping data for use in our products from various sources. There are only a limited
number of suppliers of mapping data for each geographical region. The two largest digital map suppliers are
NAVTEQ Corporation and Tele Atlas N.V. NAVTEQ Corporation is owned by Nokia Oyj and Tele Atlas N.V. is owned
by TomTom N.V. Nokia and TomTom are both competitors of Garmin.
Although we do not foresee difficulty in continuing to license data at favorable pricing due to the long
term license extension signed between Garmin and NAVTEQ in November 2007 (extending our NAVTEQ license
agreement through 2017 with an option to extend through 2021), if we are unable to continue licensing such
mapping data and are unable to obtain an alternative source, or if the nature of our relationships with NAVTEQ
changes detrimentally, our ability to supply mapping data for use in our products would be seriously harmed.
We may pursue strategic acquisitions, investments, strategic partnerships or other ventures, and our business
could be materially harmed if we fail to successfully identify, complete and integrate such transactions.
We intend to evaluate acquisition opportunities and opportunities to make investments in complementary
businesses, technologies, services or products, or to enter into strategic partnerships with parties who can provide
access to those assets, additional product or services offerings, additional distribution or marketing synergies or
additional industry expertise. We may not be able to identify suitable acquisition, investment or strategic
partnership candidates, or if we do identify suitable candidates in the future, we may not be able to complete
those transactions on commercially favorable terms, or at all.
Any past or future acquisitions could also result in difficulties assimilating acquired employees (including
cultural differences with foreign acquisitions), operatios, ad poduts ad diesio of apital ad aageets
attention away from other business issues and opportunities. Integration of acquired companies may result in
problems related to integration of technology and inexperienced management teams. In addition, the key
personnel of the acquired company may decide not to work for us. We may not successfully integrate internal
controls, compliance under the Sarbanes-Oxley Act of 2002 and other corporate governance matters, operations,
personnel or products related to acquisitions we have made in previous years or may make in the future. If we fail
to successfully integrate such transactions, our business could be materially harmed.
We may have additional tax liabilities.
We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant
judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our
business, there are many transactions and calculations where the ultimate tax determination is uncertain. We are
regularly under audit by tax authorities. Although we believe our tax estimates are reasonable, the final
determination of tax audits and any related litigation could be materially different from our historical income tax
provisions and accruals. The results of an audit or litigation could have a material effect on our income tax
provision, net income or cash flows in the period or periods for which that determination is made.
Failure to obtain required certifications of our products on a timely basis could harm our business.
We have certain products, especially in our aviation segment, that are subject to governmental and similar
certifications before they can be sold. For example, FAA certification is required for all of our aviation products
that are intended for installation in type certificated aircraft. To the extent required, certification is an expensive
and time-consuming process that requires significant focus and resources. An inability to obtain, or excessive
delay in obtaining, such certifications could have an adverse effect on our ability to introduce new products and,