Logitech 2010 Annual Report Download - page 148

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In December 2009, we acquired LifeSize Communications, Inc., a privately held company specializing in high
definition video communication products and services. In connection with the merger, Logitech agreed to establish
a cash and stock option retention and incentive plan for certain LifeSize employees, linked to the achievement of
LifeSize performance targets. The duration of the plan’s performance period is two years, from January 1, 2010 to
December 31, 2011. The total available cash incentive is $9.0 million over the two year performance period. In December
2009, options to purchase 850,000 Logitech shares were issued in connection with the retention and incentive plan.
In November 2007, we acquired WiLife, Inc., a privately held company providing PC-based video cameras
for self-monitoring a home or small business. The purchase agreement provides for a possible performance-based
payment, payable in the first calendar quarter of 2011. The performance-based payment is based on net revenues
attributed to WiLife during calendar year 2010. No payment is due if the applicable net revenues total $40.0 million or
less. The maximum performance-based payment is $64.0 million. The total performance-based payment amount, if
any, will be recorded in goodwill and will not be known until the end of calendar year 2010. As of March 31, 2010, no
amounts were payable towards performance-based payments under our WiLife acquisition agreement.
The U.S. state of California has enacted legislation affecting the methodology which must be used by corporate
taxpayers to apportion income to California. These changes will become effective for our fiscal year ending March
31, 2012. Although the Company has significant operations in California, we believe these changes will not have a
material impact on our results of operations or financial condition.
The U.S. Internal Revenue Service has initiated an examination of the Company’s U.S. subsidiary for fiscal
years 2006 and 2007. The Company is also under examination in other foreign jurisdictions. As of March 31, 2010,
we are not able to estimate the potential future liability, if any, which may result from these examinations.
Other contractual obligations and commitments of the Company which require cash are described in the
following sections.
Over the past several years, we have been able to generate positive cash flow from our operating activities,
including cash from operations of $365.3 million in fiscal year 2010. Despite the uncertain economic environment,
we believe that our cash and cash equivalents, cash flow generated from operations, and available borrowings under
our bank lines of credit will be sufficient to fund our operations for the foreseeable future.
Contractual Obligations and Commitments
As of March 31, 2010, the Company’s outstanding contractual obligations and commitments included:
(i) equipment financed under capital leases, (ii) facilities leased under operating lease commitments, (iii) purchase
commitments and obligations, (iv) long-term liabilities for income taxes payable, and (v) defined benefit pension
plan obligations. The following summarizes our contractual obligations and commitments at March 31, 2010
(in thousands):
Payments Due by Period(1)
Total Less than 1 year 1-3 years 4-5 years
More
than 5
years
Operating leases .............................. $46,696 $13,679 $17,870 $7,644 $7,503
Purchase commitments — inventory .............. 183,560 183,560 ———
Purchase obligations — capital expenditures . . . . . . . 12,925 12,925 ———
Purchase obligations — operating expenses . . . . . . . . 33,324 33,324 ———
Other liabilities(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164,825 — — — —
Total contractual obligations and commitments . . . . . $ 441,330 $243,488 $17,870 $7,644 $7,503
(1) The table above does not include the performance based payments that we may have to make as part of our
acquisition agreements described above.