Logitech 2010 Annual Report Download - page 213

ANNUAl REPORT
201
As of March 31, 2010, the Company had foreign net operating loss and tax credit carryforwards for income tax
purposes of $332.4 million and $22.3 million. Approximately $168.1 million of the net operating loss carryforwards
and $20.2 million of the tax credit carryforwards, if realized, will be credited to equity since they have not met the
applicable realization criteria. Unused net operating loss carryforwards will expire at various dates in fiscal years
2014 to 2031, and the tax credit carryforwards will begin to expire in fiscal year 2012.
Swiss income taxes and non-Swiss withholding taxes associated with the repatriation of earnings or for other
temporary differences related to investments in non-Swiss subsidiaries have not been provided for, as the Company
intends to reinvest the earnings of such subsidiaries indefinitely or the Company has concluded that no additional tax
liability would arise on the distribution of such earnings. If these earnings were distributed to Switzerland in the form
of dividends or otherwise, or if the shares of the relevant non-Swiss subsidiaries were sold or otherwise transferred,
the Company may be subject to additional Swiss income taxes and non-Swiss withholding taxes. Determination of the
amount of unrecognized deferred income tax liability related to these earnings is not practicable.
The Company follows a two-step approach to recognizing and measuring uncertain tax positions. The first
step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates
that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or
litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than
50% likely of being realized upon ultimate settlement.
As of March 31, 2010, the total amount of unrecognized tax benefits was $125.2, of which $101.4 million
would affect the effective income tax rate if realized. The Company classified $2.4 million of unrecognized tax
benefits as current income taxes payable as the Company anticipates payment within the next 12 months. The
remainder of the unrecognized tax benefits is classified as non-current income taxes payable.
The aggregate changes in gross unrecognized tax benefits were as follow (in thousands):
Beginning balance as of April 1, 2007 (date of adoption) .......................... $82,435
Lapse of statute of limitations ............................................... (1,202)
Decreases in balances related to tax positions taken during prior periods . . . . . . . . . . . . . (6,471)
Increases in balances related to tax positions taken during the current period .......... 17,885
Balance as of March 31, 2008 ................................................ $92,647
Lapse of statute of limitations ............................................... (1,978)
Decreases in balances related to tax positions taken during prior periods . . . . . . . . . . . . . —
Increases in balances related to tax positions taken during the current period .......... 6,958
Balance as of March 31, 2009 ................................................ $97,627
Lapse of statute of limitations ............................................... (3,667)
Decreases in balances related to tax positions taken during prior periods . . . . . . . . . . . . . (229)
Increases in balances related to tax positions taken during the prior period ............ 2,690
Increases in balances related to tax positions taken during the current period .......... 17,207
Balance as of March 31, 2010 ................................................ $113,628
The Company continues to recognize interest and penalties related to unrecognized tax positions in income
tax expense. The Company recognized $1.9 million, $1.8 million and $1.6 million in interest and penalties in income
tax expense during fiscal years 2010, 2009 and 2008. As of March 31, 2010, 2009 and 2008, the Company had
approximately $12.5 million, $10.7 million and $8.8 million of accrued interest and penalties related to uncertain
tax positions.