Logitech 2014 Annual Report Download - page 286

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 12 — Commitments and Contingencies (Continued)
improvements. 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.
Other Contingencies
As previously announced, some of the issues reviewed by the Audit Committee are also the subject of an
ongoing formal investigation by the SEC, including the accounting for Revue inventory valuation reserves that
resulted in the restatement, revision to the Company’s financial statements concerning warranty accruals and
amortization of intangible assets presented in our Form 10-K/A, filed on August 7,2013, and the Company’s
transactions with a distributor for Fiscal Year 2007 through Fiscal Year 2009. The Company is cooperating with
the SEC in its ongoing investigation. The Company has entered into an agreement with the SEC to extend the
statute of limitations. The Company cannot predict the outcome of the investigation at this time and potential fines
or penalties, if any, that may arise from the investigation are currently not estimable.
Guarantees
Logitech International S.A., the parent holding company, has issued several parent guarantees on behalf of its
subsidiaries. The maximum potential future payment under the guarantee arrangements is limited to $80.0 million.
As of March 31, 2014, there were no purchase obligations outstanding for which the parent holding company was
required to guarantee payment.
Logitech Europe S.A., a subsidiary of the parent holding company, has guaranteed the purchase obligations of
another Logitech subsidiary under a guarantee agreement. This guarantee does not specify a maximum amount. As
of March 31, 2014, the amount of purchase obligations outstanding under this guarantee was immaterial. In addition,
Logitech Europe S.A. also guaranteed payments of a third-party contract manufacturer’s purchase obligations. As
of March 31, 2014, the maximum amount of this guarantee was $3.5 million, of which $2.3 million of guaranteed
purchase obligations were outstanding.
Indemnifications
The Company indemnifies certain of its suppliers and customers for losses arising from matters such
as intellectual property disputes 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. As of March 31, 2014, no amounts have been accrued for these indemnification provisions. The
Company does not believe, based on historical experience and information currently available, that it is probable
that any material amounts will be required to be paid under its indemnification arrangements.
The Company also indemnifies its current and former directors and certain of its current and former officers.
Certain costs incurred for providing such indemnification may be recoverable under various insurance policies. The
Company is unable to reasonably estimate the maximum amount that could be payable under these arrangements
because these exposures are not limited, the obligations are conditional in nature and the facts and circumstances
involved in any situation that might arise are variable.
Legal Proceedings
From time to time the Company is involved in claims and legal proceedings which arise in the ordinary course
of its business. The Company is currently subject to several such claims and a small number of legal proceedings.
The Company believes that these matters lack merit and intends to vigorously defend against them. Based on
currently available information, the Company does not believe that resolution of pending matters will have a
270