Logitech 2007 Annual Report Download - page 146

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
goods sold when the related inventory is sold. Realized net losses reclassified to cost of goods sold during fiscal
years 2007, 2006 and 2005 were $0.3 million, $2.6 million and $1.0 million.
The Company also enters into foreign exchange forward contracts to reduce the short-term effects of foreign
currency fluctuations on certain foreign currency receivables or payables. The gains or losses on the foreign
exchange forward contracts offset the transaction losses or gains on the foreign currency receivables or payables
recognized in earnings. The foreign exchange forward contracts are entered into on a monthly basis and generally
mature within one to three months. Further, the Company may enter into foreign exchange swap contracts to
extend the terms of its foreign exchange forward contracts. The notional amounts of foreign exchange forward
contracts outstanding at March 31, 2007 and 2006 were $9.0 million and $8.6 million. The notional amounts of
foreign exchange swap contracts outstanding at March 31, 2007 and 2006 were $11.5 million and $5.9 million.
Unrealized net losses on the contracts were immaterial at March 31, 2007.
Note 16 — Commitments and Contingencies
The Company leases facilities under operating leases, certain of which require it to pay property taxes,
insurance and maintenance costs. Operating leases for facilities are generally renewable at the Company’s option
and usually include escalation clauses linked to inflation. Future minimum annual rentals under non-cancelable
operating leases at March 31, 2007 are as follows (in thousands):
Year ending March 31,
2008 ......................................................... $12,060
2009 ......................................................... 11,117
2010 ......................................................... 9,305
2011 ......................................................... 7,865
2012 ......................................................... 7,294
Thereafter ..................................................... 15,237
$62,878
Rent expense was $9.9 million, $8.7 million and $7.0 million during the years ended March 31, 2007, 2006
and 2005.
At March 31, 2007, fixed purchase commitments for capital expenditures amounted to $21.4 million, and
primarily related to commitments for manufacturing equipment, tooling and leasehold improvements. Also, the
Company has commitments for inventory purchases made in the normal course of business to original design
manufacturers, contract manufacturers and other suppliers. At March 31, 2007, fixed purchase commitments for
inventory amounted to $124.1 million, which are expected to be fulfilled within the fiscal quarter ending June 30,
2007. The Company also had other commitments totaling $28.3 million for consulting services, information
technology services, marketing arrangements and advertising. Although open purchase orders are considered
enforceable and legally binding, the terms generally allow the Company the option to reschedule and adjust its
requirements based on the business needs prior to delivery of goods or performance of services.
The Company has guaranteed the purchase obligations of some of its contract manufacturers to certain
component suppliers. These guarantees have a term of one year and are automatically extended for one or more
additional years as long as a liability exists. The amount of the purchase obligations of these manufacturers varies
over time, and therefore the amounts subject to Logitech’s guarantees similarly varies. At March 31, 2007, the
amount of these outstanding guaranteed purchase obligations was approximately $3.1 million. The Company
does not believe, based on historical experience and information currently available, that it is probable that any
amounts will be required to be paid under these guarantee arrangements.
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