Logitech 2005 Annual Report Download - page 126

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LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
outstanding at March 31, 2005 and 2004 were $5.0 million and $3.5 million. The notional amount of foreign
exchange swap contracts outstanding at March 31, 2005 was $2.7 million. There were no foreign exchange swap
contracts outstanding at March 31, 2004. Deferred gains on the contracts recorded in accumulated other
comprehensive loss were immaterial at March 31, 2005.
Note 12 — 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 noncancelable
operating leases at March 31, 2005 are as follows (in thousands):
Year ending March 31,
2006 .......................................................... $ 7,433
2007 .......................................................... 5,840
2008 .......................................................... 5,571
2009 .......................................................... 5,158
2010 .......................................................... 4,358
Thereafter ...................................................... 12,134
$40,494
Rent expense was $7.0 million, $6.9 million and $6.3 million during the years ended March 31, 2005, 2004
and 2003.
At March 31, 2005, the Company had approximately $91.6 million in noncancelable purchase commitments
with suppliers for inventory. Fixed commitments for capital and other expenditures approximated $14.6 million
and primarily related to commitments for manufacturing equipment, software, and also for commitments related
to the construction of the Company’s new factory in Suzhou, China. The Company also had commitments of $.2
million related to its participation in an investment partnership.
The Company has guaranteed the purchase obligations of some of its contract manufacturers and original
design 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, 2005, the amount of these outstanding guaranteed purchase obligations was
approximately $3.8 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.
Logitech indemnifies some of its suppliers and customers for losses arising from matters such as intellectual
property rights 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, 2005. 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 its indemnification arrangements.
Certain of the Company’s products are subject to the European Union’s (“EU”) Waste Electrical and
Electronic Equipment Directive (“WEEE”), which require producers of electrical goods be financially
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