Logitech 2015 Annual Report Download - page 227

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other Contingencies
The Company is subject to an ongoing formal investigation by the SEC’s Enforcement Division,
relating to certain issues including the accounting for Revue inventory valuation reserves that resulted
in the restatement described in the Fiscal Year 2014 Annual Report on Form 10-K, revision to the
Company’s consolidated financial statements concerning warranty accruals and amortization of intangible
assets presented in the Company’s Amended Annual Report on 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 has entered into an agreement with the SEC to extend the statute of limitations. The Company
is cooperating with the investigation and recently engaged in discussions to settle the matter with the
SEC, including making offers of monetary amounts for a civil penalty. In accordance with U.S. GAAP, the
Company has made an accrual in its financial statements. The Company cannot predict the timing, range
of possible loss or final outcome of this matter.
Guarantees
Logitech Europe S.A. guaranteed payments of two third-party contract manufacturers’ purchase
obligations. As of March 31, 2015, the maximum amount of this guarantee was $3.8 million, of which
$1.7 million of guaranteed purchase obligations was 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, 2015, 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 material adverse effect on its financial condition, cash flows or results of
operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that
the Company’s defenses will be successful or that any such lawsuit or claim would not have a material
adverse impact on the Company’s business, financial conditions, cash flows or results of operations in
a particular period. Any claims or proceedings against the Company, whether meritorious or not, can
have an adverse impact because of defense costs, diversion of management and operational resources,
negative publicity and other factors. Any failure to obtain necessary license or other rights, or litigation
arising out of intellectual property claims, could adversely affect the Company’s business.
Note 11—Commitments and Contingencies (Continued)
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Annual Report Fiscal Year 2015