Logitech 2012 Annual Report Download - page 263

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Commitments for inventory purchases are made in the normal course of business to original design
manufacturers, contract manufacturers and other suppliers and are expected to be fulfilled by March 31, 2012.
Operating expense commitments are for consulting services, marketing arrangements, advertising, outsourced
customer services, information technology maintenance and support services, and other services. Fixed purchase
commitments for capital expenditures primarily related to commitments for tooling, computer hardware and
leasehold improvements. 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.
Guarantees
Logitech International S.A., the parent holding company, has guaranteed payment of the purchase obligations
of various subsidiaries from certain component suppliers. These guarantees generally have an unlimited term.
The maximum potential future payment under the guarantee arrangements is limited to $36.0 million. At
March 31, 2012, there were no purchase obligations outstanding for which the parent holding company was required
to guarantee payment.
Logitech Europe S.A., a subsidiary of the parent holding company, has guaranteed the purchase obligations of
another Logitech subsidiary and third-party contract manufacturers under six guarantee agreements. Two of these
guarantees do not specify a maximum amount. The remaining guarantee has a total limit of $7.0 million. As of
March 31, 2012, $3.9 million of guaranteed purchase obligations were outstanding under these guarantees. Logitech
Europe S.A. has also guaranteed payment of the purchase obligations of a third-party contract manufacturer under
three guarantee agreements. The maximum amount of these guarantees was $3.7 million as of March 31, 2012. As
of March 31, 2012, $0.7 million of guaranteed purchase obligations were outstanding under these agreements.
Logitech International S.A. and Logitech Europe S.A. have guaranteed certain contingent liabilities of
various subsidiaries related to transactions occurring in the normal course of business. The maximum amount of
the guarantees was $69.1 million as of March 31, 2012. As of March 31, 2012, $16.0 million of guaranteed liabilities
were subject to these guarantees.
Indemnifications
Logitech indemnifies some of its suppliers and customers for losses arising from matters such as intellectual
property disputes and product safety defects, subject to certain restrictions. The scope of these indemnities varies,
but in some instances, includes indemnification for damages and expenses, including reasonable attorneys’ fees.
No amounts have been accrued for indemnification provisions at March 31, 2012. The Company does not believe,
based on historical experience and information currently available, that it is probable that any material amounts will
be required to be paid under its indemnification arrangements.
Logitech also indemnifies its current and former directors and certain of its current and former officers.
Certain costs incurred for providing such indemnification may be recoverable under various insurance policies.
Logitech is unable to reasonably estimate the maximum amount that could be payable under these arrangements
because these exposures are not capped, the obligations are conditional in nature, and the facts and circumstances
involved in any situation that might arise.
Note 11 — Commitments and Contingencies (Continued)
ANNUAL REPORT
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