Logitech 2004 Annual Report Download - page 51

diversion of our technical and management resources, result in costly litigation, cause product shipment delays or
require us to enter into royalty or licensing agreements, any of which could adversely affect our business,
financial condition and operating results.
Our effective tax rates may increase in the future, which could adversely affect our operating results.
We operate in multiple jurisdictions and our profits are taxed pursuant to the tax laws of these jurisdictions.
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 carryovers, 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. There
is no assurance that our effective income tax rate will not change in future periods. If our effective tax rate
increases in future periods, our operating results could be adversely affected.
Changes in environmental rules and regulations could increase our costs and impact our future
operating results.
Certain of our products are subject to international laws restricting the presence of certain substances in
electronic products. Legislation enacted by the European Union (“EU”) mandates that certain electronic products
manufactured or supplied into the EU be lead-free by July 2006. Further, production of products in certain
countries requires us to provide consumers with the ability to return product at the end of its useful life, and
places responsibility for environmentally safe disposal or recycling with the producer. The EU has finalized the
Waste Electrical and Electronic Equipment Directive (“WEEE”), which makes producers of electrical goods,
financially responsible for specified collection, recycling, treatment and disposal of covered products. Producers
are to be financially responsible under the WEEE Legislation beginning in August 2005. Similar legislation may
be enacted in other geographies, including federal and state legislation in the United States, the cumulative
impact of which could be significant. It is our policy to apply strict standards for environmental protection to
sites inside and outside the United States, even if not subject to regulations imposed by local governments.
Although Logitech does not anticipate any material adverse effects in the future based on the nature of its
operations and the thrust of such laws, there is no assurance that such existing laws or future laws will not have a
material adverse affect on us.
We may encounter difficulties with our acquisition of Intrigue Technologies, which could adversely
affect our business and operating results.
We have acquired and may continue to acquire companies that have products, personnel and technologies
that complement our strategic direction and roadmap. Subsequent to year-end, we acquired Intrigue
Technologies, Inc., a privately held Canadian company focused on advanced remote control technology.
Our acquisition of Intrigue, involves risks and uncertainties, including:
• difficulties in integrating the acquired company and its operations;
• diversion of management’s attention from the normal operations of our business;
• potential loss of key employees and customers of the acquired company;
• insufficient future revenues and profitability of the acquired company that could negatively impact our
consolidated results;
• exposure to potential product quality issues; and
• exposure to unanticipated contingent liabilities of the acquired company.
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