Logitech 2003 Annual Report Download - page 116

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Pending lawsuits could adversely impact us.
Through our U.S. subsidiary we are currently involved in pending lawsuits with respect to patent infringement
claims by third parties and commercial matters that arise in the normal course of business. We believe that these
lawsuits are without merit and intend to defend them vigorously. However, our defense of these actions may not be
successful. Any judgment in or settlement of these lawsuits may have a material adverse impact on our business,
financial condition and results of operations.
Pending and future litigation and disputes arising over patent infringement claims, commercial matters, or other
litigation involving us, whether as plaintiff or defendant, regardless of outcome, may result in significant diversion of
effort by our technical and management personnel, result in costly litigation, cause product shipment delays or require
us to enter into royalty or licensing agreements, any of which could harm our business and operating results.
Our effective tax rates may increase in the future, which could harm our operating results.
We operate in multiple jurisdictions and our profits are taxed pursuant to the tax laws of these jurisdictions. If
our effective tax rate increases in a future period, our operating results will be adversely impacted, and specifically
our net income and earnings per ADS and per registered share will decrease. Our effective tax rate may be affected
by changes in or interpretations of tax laws in any given jurisdiction, utilization of net operating losses and tax credit
carry forwards, changes in geographical allocation of income and expense, and changes in management’s assessment
of matters such as the realizability of deferred tax assets. In the past, we have experienced fluctuation in our effective
income tax rate. Our effective income tax rate in a given fiscal year reflects a variety of factors that may not be
present in the succeeding fiscal year or years. As a result, our effective income tax rate may increase in future
periods, which could harm our operating results.
ITEM 4. INFORMATION ON THE COMPANY
A. History and development of the Company
Logitech was incorporated under the laws of Switzerland in 1981, and in 1988, listed its shares in an initial
public offering in Switzerland. In March 1997, the Company sold 4,000,000 registered shares from treasury in a U.S.
initial public offering in the form of 4,000,000 American Depositary Shares and listed the ADSs on the Nasdaq
National Market. Logitech maintains its corporate headquarters through its U.S. subsidiary located at 6505 Kaiser
Drive, Fremont, California. Logitech’s telephone number there is [phone]. The Company also maintains
regional headquarters through local subsidiaries in Romanel, Switzerland, Hsinchu, Taiwan, and Hong Kong, China.
In addition, Logitech has manufacturing operations in China, with distribution facilities in the United States, Europe
and Asia, and sales offices in major cities in the United States, Europe and Asia Pacific.
Important Events and Recent Acquisitions
In April 2002, we acquired the 49% interest we did not previously own in 3Dconnexion, the provider of
Logitech’s 3D controllers, for $7.4 million, payable in July 2003 using Logitech shares.
In May 2002, we acquired the 64.8% interest we did not previously own in Spotlife, Inc., whose business was to
enhance video communications using the internet infrastructure, for approximately $2.5 million in cash.
Principal capital expenditures and divestitures
Our capital expenditures for property, plant and equipment for the fiscal years ended March 31, 2003, 2002 and
2001 were $28.7 million, $21.9 million and $16.8 million. Principal areas of investment during all three years relate
to normal expenditures for tooling costs, machinery and equipment and computer equipment and software.
Principal equity investments
As of March 31, 2003, we have equity investments in privately-held companies totaling $1.5 million. During the
years ended March 31, 2003, 2002 and 2001, we made investments of $.4 million, $1.6 million and $5.6 million and
sold or wrote-off investments of $2.3 million, $4.3 million and $.5 million.
B. Business Overview
Logitech is a leader in the design, manufacture and marketing of personal interface products for personal
computers and other digital platforms. Today, the computing environment that Logitech serves is centered on the
desktop. But as the interface to the digital world moves beyond the desktop and beyond the PC - to the living room,