Logitech 2010 Annual Report Download - page 216

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Note 16 — 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 non-cancelable
operating leases at March 31, 2010 are as follows (in thousands):
Year ending March 31,
2011 .................................................................. $13,679
2012 .................................................................. 9,666
2013 .................................................................. 8,204
2014 .................................................................. 4,171
2015 .................................................................. 3,473
Thereafter.............................................................. 7,503
$46,696
Rent expense was $16.3 million, $15.5 million and $13.8 million for the years ended March 31, 2010, 2009 and
2008. The Company’s asset retirement obligations for its leased facilities as of March 31, 2010 were not material.
At March 31, 2010, fixed purchase commitments for capital expenditures amounted to $12.9 million, and
primarily related to commitments for manufacturing equipment, tooling, computer software and computer
hardware. Also, the Company has commitments for inventory purchases made in the normal course of business
to original design manufacturers, contract manufacturers and other suppliers. At March 31, 2010, fixed purchase
commitments for inventory amounted to $183.6 million, which are expected to be fulfilled by December 31, 2010.
The Company also had other commitments totaling $33.3 million for consulting services, marketing arrangements,
advertising and other services. 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.
The Company has guaranteed the purchase obligations of some of its contract manufacturers and original
design manufacturers to certain component suppliers. These guarantees generally have a term of one year and are
automatically extended for one or more 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 vary. At
March 31, 2010, there were no outstanding guaranteed purchase obligations. The maximum total potential future
payments under three of the five guarantee arrangements is limited to $30.8 million. The remaining two guarantees
are limited to purchases of specified components from the named suppliers. 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 International S.A., the parent holding company, has guaranteed certain contingent liabilities of
various subsidiaries related to specific transactions occurring in the normal course of business. The maximum
amount of the guarantees was $8.2 million as of March 31, 2010. As of March 31, 2010, $7.6 million was outstanding
under these guarantees. The parent holding company has also guaranteed the purchases of one of its subsidiaries
under two guarantee agreements. These guarantees do not specify a maximum amount. As of March 31, 2010,
$8.7 million was outstanding under these guarantees.
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, 2010. 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.