Logitech 2004 Annual Report Download - page 119

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
periods would not be charged to the Company. The Company believes the ultimate resolution of this matter will
not have a material adverse effect on the Company’s financial position, results of operations or cash flows.
In the normal course of business, the Company pays value-added taxes, or VAT, in China on components
purchased in China, which are refunded after export of goods manufactured in China. The Company files for
refunds, receives approvals from Chinese tax officials and then receives a refund. Beginning in early fiscal year
2002, approval and refund delays started to occur and the Company had accumulated a significant VAT refund
receivable. In March 2003, a portion of the VAT receivable was sold to a bank on a non-recourse basis for a
negotiated discount. The government has since refunded all amounts related to the Company’s calendar 2002
claims, a portion of which was sold to the bank. The Company has received assurances from the Chinese officials
that all approved claims will be paid in full and expects to receive refunds for its calendar 2003 claims by the end
of the second quarter of fiscal year 2005.
The total VAT receivable may increase or decrease in the future depending on the amount of component
purchases in China, the amount of collections from the Chinese government and the amount of VAT that the
Company may be able to sell on a non-recourse basis to a bank in the future. Based on expectations as to the
timing of such payments, the Company has classified a portion of the VAT receivable as a non-current asset. The
Company does not expect the outcome of this matter to have a significant impact on the Company’s financial
position, results of operations or cash flows.
The Company is involved in a number of lawsuits relating to patent infringement and intellectual property
rights. The Company believes the lawsuits are without merit and intends to defend against them vigorously.
However, there can be no assurances that the defense of any of these actions will be successful, or that any
judgment in any of these lawsuits would not have a material adverse impact on the Company’s business,
financial condition and result of operations.
Note 13 — Interest and Other Income:
Interest and other income (expense), net comprised of the following (in thousands):
Year ended March 31,
2004 2003 2002
Interest income .............................................. $2,278 $2,411 $1,688
Interest expense ............................................. (4,136) (3,607) (3,644)
Interest expense, net .......................................... $(1,858) $(1,196) $(1,956)
Foreign currency exchange gains, net ............................ $2,966 $2,801 $ 2
Gain (loss) on sale of investments ............................... — (514) 1,115
Write-off of investments ...................................... (515) (1,161) (1,220)
Equity in net losses of affiliated companies ........................ — — (2,476)
Other,net .................................................. (478) (260) 1,012
Other income (expense), net ................................... $1,973 $ 866 $(1,567)
Note 14 — Geographic Information:
The Company operates in one operating segment, which is the design, manufacturing and marketing of
personal interface products for personal computers and other digital platforms. Geographic net sales information
in the table below is based on the location of the selling entity. Long-lived assets, primarily fixed assets,
unamortized intangibles, and investments are reported below based on the location of the asset.
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