LOGITECH INTERNATIONAL SA, 10-Q filed on 8/6/2012
Quarterly Report
Document and Entity Information
3 Months Ended
Jun. 30, 2012
Aug. 1, 2012
Document and Entity Information
 
 
Entity Registrant Name
LOGITECH INTERNATIONAL SA 
 
Entity Central Index Key
0001032975 
 
Document Type
10-Q 
 
Document Period End Date
Jun. 30, 2012 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--03-31 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
155,995,827 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q1 
 
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Net sales
$ 468,604 
$ 480,441 
Cost of goods sold
324,352 
354,834 
Gross profit
144,252 
125,607 
Operating expenses:
 
 
Marketing and selling
100,897 
99,793 
Research and development
38,928 
39,981 
General and administrative
32,480 
30,865 
Restructuring charges
31,227 
 
Total operating expenses
203,532 
170,639 
Operating loss
(59,280)
(45,032)
Interest income, net
384 
690 
Other income (expense), net
(159)
5,191 
Loss before income taxes
(59,055)
(39,151)
Benefit from income taxes
(6,910)
(9,545)
Net loss
$ (52,145)
$ (29,606)
Net loss per share:
 
 
Basic (in dollars per share)
$ (0.32)
$ (0.17)
Diluted (in dollars per share)
$ (0.32)
$ (0.17)
Shares used to compute net loss per share:
 
 
Basic (in shares)
160,733 
179,331 
Diluted (in shares)
160,733 
179,331 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Net loss
$ (52,145)
$ (29,606)
Other comprehensive income (loss):
 
 
Foreign currency translation
(6,265)
1,330 
Defined benefit pension plan adjustments during the period:
 
 
Foreign currency exchange rate changes
1,463 
(1,241)
Amortization included in net loss:
 
 
Transition obligation for the period
Prior service cost for the period
38 
39 
Net loss for the period
416 
100 
Pension liability adjustments, net of tax
1,918 
(1,101)
Deferred hedging gain
1,205 
3,160 
Less reclassification adjustment for gain included in net loss
106 
2,478 
Net deferred hedging gain
1,099 
682 
Reversal of unrealized gains previously recognized in accumulated other comprehensive income
(343)
 
Net change in accumulated other comprehensive income (loss)
(3,591)
911 
Total comprehensive loss
$ (55,736)
$ (28,695)
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Mar. 31, 2012
Current assets:
 
 
Cash and cash equivalents
$ 360,737 
$ 478,370 
Accounts receivable
213,973 
223,104 
Inventories
280,533 
297,072 
Other current assets
69,367 
65,990 
Total current assets
924,610 
1,064,536 
Non-current assets:
 
 
Property, plant and equipment
94,491 
94,884 
Goodwill
558,211 
560,523 
Other intangible assets
47,037 
53,518 
Other assets
75,972 
83,033 
Total assets
1,700,321 
1,856,494 
Current liabilities:
 
 
Accounts payable
262,929 
301,111 
Accrued liabilities
213,552 
186,680 
Total current liabilities
476,481 
487,791 
Non-current liabilities
219,934 
218,462 
Total liabilities
696,415 
706,253 
Commitments and contingencies
   
   
Shareholders' equity:
 
 
Shares, par value CHF 0.25 - 191,606 issued and authorized and 50,000 conditionally authorized at June 30, 2012 and March 31, 2012
33,370 
33,370 
Additional paid-in capital
1,726 
 
Less shares in treasury, at cost, 35,647 at June 30, 2012 and 27,173 at March 31, 2012
(429,834)
(343,829)
Retained earnings
1,498,164 
1,556,629 
Accumulated other comprehensive loss
(99,520)
(95,929)
Total shareholders' equity
1,003,906 
1,150,241 
Total liabilities and shareholders' equity
$ 1,700,321 
$ 1,856,494 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Jun. 30, 2012
Mar. 31, 2012
CONSOLIDATED BALANCE SHEETS
 
 
Shares, par value (in CHF per share)
$ 0.25 
$ 0.25 
Shares, issued
191,606 
191,606 
Shares, authorized
191,606 
191,606 
Shares, conditionally authorized
50,000 
50,000 
Treasury, at cost, shares
35,647 
27,173 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Cash flows from operating activities:
 
 
Net loss
$ (52,145)
$ (29,606)
Non-cash items included in net loss:
 
 
Depreciation
11,152 
13,172 
Amortization of other intangible assets
6,232 
6,630 
Inventory valuation adjustment
 
34,074 
Share-based compensation expense
6,171 
9,715 
Gain on disposal of property and plant
 
(4,904)
Gain on sale of available-for-sale securities
(831)
 
Excess tax benefits from share-based compensation
(5)
(24)
Deferred income taxes and other
(1,055)
(13,701)
Changes in assets and liabilities:
 
 
Accounts receivable
6,577 
19,097 
Inventories
11,445 
(54,783)
Other assets
33 
(6,015)
Accounts payable
(37,408)
29,346 
Accrued liabilities
42,778 
743 
Net cash (used in) provided by operating activities
(7,056)
3,744 
Cash flows from investing activities:
 
 
Purchases of property, plant and equipment
(19,621)
(10,561)
Proceeds from sale of property and plant
 
4,904 
Proceeds from sale of available-for-sale securities
917 
 
Purchases of trading investments
(1,397)
(3,545)
Proceeds from sales of trading investments
1,385 
3,500 
Net cash used in investing activities
(18,716)
(5,702)
Cash flows from financing activities:
 
 
Purchases of treasury shares
(89,955)
 
Proceeds from sale of shares upon exercise of options and purchase rights
404 
607 
Tax withholdings related to net share settlements of restricted stock units
(170)
(176)
Excess tax benefits from share-based compensation
24 
Net cash (used in) provided by financing activities
(89,716)
455 
Effect of exchange rate changes on cash and cash equivalents
(2,145)
(61)
Net decrease in cash and cash equivalents
(117,633)
(1,564)
Cash and cash equivalents at beginning of period
478,370 
477,931 
Cash and cash equivalents at end of period
$ 360,737 
$ 476,367 
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $)
In Thousands, unless otherwise specified
Total
Registered shares
Additional paid-in capital
Treasury shares
Retained earnings
Accumulated other comprehensive loss
Comprehensive income (loss)
Balance at Mar. 31, 2011
$ 1,205,001 
$ 33,370 
 
$ (264,019)
$ 1,514,168 
$ (78,518)
 
Balance (in shares) at Mar. 31, 2011
 
191,606 
 
12,433 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
 
Total comprehensive loss
(28,695)
 
 
 
(29,606)
911 
(28,695)
Tax benefit from exercise of stock options
 
 
 
 
 
Sale of shares upon exercise of options and purchase rights
617 
 
(1,580)
2,197 
 
 
 
Sale of shares upon exercise of options and purchase rights (in shares)
 
 
 
(77)
 
 
 
Issuance of shares up on vesting of restricted stock units
(176)
 
(1,060)
884 
 
 
 
Issuance of shares up on vesting of restricted stock units (in shares)
 
 
 
(30)
 
 
 
Share-based compensation expense
9,588 
 
9,588 
 
 
 
 
Balance at Jun. 30, 2011
1,186,339 
33,370 
6,952 
(260,938)
1,484,562 
(77,607)
 
Balance (in shares) at Jun. 30, 2011
 
191,606 
 
12,326 
 
 
 
Balance at Mar. 31, 2012
1,150,241 
33,370 
 
(343,829)
1,556,629 
(95,929)
 
Balance (in shares) at Mar. 31, 2012
 
191,606 
 
27,173 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
 
Total comprehensive loss
(55,736)
 
 
 
(52,145)
(3,591)
(55,736)
Purchase of treasury shares
(89,955)
 
 
(89,955)
 
 
 
Purchase of treasury shares (in shares)
 
 
 
8,600 
 
 
 
Tax benefit from exercise of stock options
(500)
 
(500)
 
 
 
 
Deferred tax asset adjustment related to share-based compensation expense
(6,320)
 
 
 
(6,320)
 
 
Sale of shares upon exercise of options and purchase rights
408 
 
(2,289)
2,697 
 
 
 
Sale of shares upon exercise of options and purchase rights (in shares)
 
 
 
(86)
 
 
 
Issuance of shares up on vesting of restricted stock units
(170)
 
(1,423)
1,253 
 
 
 
Issuance of shares up on vesting of restricted stock units (in shares)
 
 
 
(40)
 
 
 
Share-based compensation expense
5,938 
 
5,938 
 
 
 
 
Balance at Jun. 30, 2012
$ 1,003,906 
$ 33,370 
$ 1,726 
$ (429,834)
$ 1,498,164 
$ (99,520)
 
Balance (in shares) at Jun. 30, 2012
 
191,606 
 
35,647 
 
 
 
The Company
The Company

Note 1 — The Company

 

Logitech is a world leader in products that connect people to the digital experiences they care about. Spanning multiple computing, communications and entertainment platforms, we develop and market innovative hardware and software products that enable or enhance digital navigation, music and video entertainment, gaming, social networking, audio and video communication over the Internet, video security and home-entertainment control. Our products for home and business PCs (personal computers) include mice, trackballs, keyboards, interactive gaming controllers, multimedia speakers, headsets and webcams. Our tablet accessories include keyboards, keyboard cases and covers, headsets, wireless speakers, earphones and stands. Our Internet communications products include webcams, headsets, video communication services, and digital video security systems. Our digital music products include speakers, earphones, custom in-ear monitors, and Squeezebox Wi-Fi music players. For home entertainment systems, we offer the Harmony line of advanced remote controls. Our gaming products include a range of gaming controllers and microphones, as well as other accessories. Our video conferencing segment offers scalable HD (high-definition) video communications endpoints, HD video conferencing systems with integrated monitors, video bridges and other infrastructure software and hardware to support large-scale video deployments, and services to support these products.

 

We sell our peripheral products to a network of distributors, retailers and OEMs (original equipment manufacturers). We sell our video conferencing products and services to distributors, value-added resellers, OEMs, and, occasionally, direct enterprise customers. The large majority of our revenues have historically been derived from sales of our peripheral products for use by consumers.

 

Logitech was founded in Switzerland in 1981, and Logitech International S.A. has been the parent holding company of Logitech since 1988. Logitech International S.A. is a Swiss holding company with its registered office in Apples, Switzerland, which conducts its business through subsidiaries in the Americas, EMEA (Europe, Middle East, Africa) and Asia Pacific. Shares of Logitech International S.A. are listed on both the Nasdaq Global Select Market, under the trading symbol LOGI, and the SIX Swiss Exchange, under the trading symbols LOGN and LOGNE.

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Note 2 — Summary of Significant Accounting Policies

 

Basis of Presentation

 

The consolidated financial statements include the accounts of Logitech and its subsidiaries. All intercompany balances and transactions have been eliminated. The consolidated financial statements are presented in accordance with U.S. GAAP (accounting principles generally accepted in the United States of America) for interim financial information and therefore do not include all the information required by U.S. GAAP for complete financial statements. They should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2012 included in its Annual Report on Form 10-K.

 

In the quarter ended June 30, 2012, we recorded a reduction in deferred tax assets and a decrease to retained earnings of $6.3 million, related to vested unexercised non-qualified stock options for former employees who terminated in fiscal year 2012 and prior.  We reviewed this accounting error utilizing SEC Staff Accounting Bulletin No. 99, Materiality, and SEC Staff Accounting Bulletin No. 108, Effects of Prior Year Misstatements on Current Year Financial Statements, and determined the impact of the error to be immaterial to any period presented.

 

Certain prior period financial statement amounts have been reclassified to conform to the current period presentation with no impact on previously reported net income.

 

In the opinion of management, these consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented. Operating results for the three months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending March 31, 2013, or any future periods.

 

Fiscal Year

 

The Company’s fiscal year ends on March 31. Interim quarters are thirteen-week periods, each ending on a Friday. For purposes of presentation, the Company has indicated its quarterly periods as ending on the month end.

 

Changes in Significant Accounting Policies

 

There have been no substantial changes in our significant accounting policies during the three months ended June 30, 2012 compared with the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect reported amounts of assets, liabilities, net sales and expenses, and the disclosure of contingent assets and liabilities. Although these estimates are based on management’s best knowledge of current events and actions that may impact the Company in the future, actual results could differ from those estimates.

Net Loss per Share
Net Loss per Share

Note 3 — Net Loss per Share

 

The computations of basic and diluted net loss per share for the Company were as follows (in thousands except per share amounts):

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Net loss

 

$

(52,145

)

$

(29,606

)

 

 

 

 

 

 

Weighted average shares - basic

 

160,733

 

179,331

 

Effect of potentially dilutive share equivalents

 

 

 

Weighted average shares - diluted

 

160,733

 

179,331

 

 

 

 

 

 

 

Net loss per share - basic

 

$

(0.32

)

$

(0.17

)

Net loss per share - diluted

 

$

(0.32

)

$

(0.17

)

 

Employee stock options, restricted stock units and similar share-based compensation awards granted by the Company are treated as potential shares in computing diluted net income per share. Diluted shares outstanding include the dilutive effect of in-the-money share-based awards which is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount that the employee must pay for exercising share-based awards, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax impact that would be recorded in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares.

 

Share equivalents attributable to outstanding stock options and RSUs (restricted stock units) of 18,955,767 and 15,939,015 for the three months ended June 30, 2012 and 2011 were excluded from the calculation of diluted net loss per share because their inclusion would have been anti-dilutive.

Employee Benefit Plans
Employee Benefit Plans

Note 4 — Employee Benefit Plans

 

Employee Share Purchase Plans and Stock Incentive Plans

 

As of June 30, 2012, the Company offers the 2006 ESPP (2006 Employee Share Purchase Plan (Non-U.S.)), the 1996 ESPP (1996 Employee Share Purchase Plan (U.S.)), the 2006 Plan (2006 Stock Incentive Plan) and the 2012 Plan (2012 Stock Inducement Equity Plan). The 2012 Plan was approved by the Board of Directors in April 2012. On April 13, 2012, the Company filed Registration Statements to register 5.0 million additional shares to be issued pursuant to the 2006 ESPP, and 1.8 million shares under the 2012 Plan. Shares issued to employees as a result of purchases or exercises under these plans are generally issued from shares held in treasury.

 

The following table summarizes the share-based compensation expense and related tax benefit recognized for the three months ended June 30, 2012 and 2011 (in thousands):

 

 

 

Three months ended

 

 

 

June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Cost of goods sold

 

$

789

 

$

1,160

 

Share-based compensation expense included in gross profit

 

789

 

1,160

 

Operating expenses:

 

 

 

 

 

Marketing and selling

 

1,780

 

3,517

 

Research and development

 

1,825

 

1,808

 

General and administrative

 

1,777

 

3,230

 

Share-based compensation expense included in operating expenses

 

5,382

 

8,555

 

Total share-based compensation expense

 

6,171

 

9,715

 

Income tax benefit

 

(1,376

)

(2,389

)

Share-based compensation expense, net of income tax

 

$

4,795

 

$

7,326

 

 

Share-based compensation expense for the quarter ended June 30, 2012 includes a reduction of $1.6 million in expense applicable to employees terminated as a result of the restructuring plan announced in April 2012. As of June 30, 2012 and 2011, $0.5 million and $0.9 million of share-based compensation cost was capitalized to inventory.

 

The following table summarizes total share-based compensation cost not yet recognized and the number of months over which such cost is expected to be recognized, on a weighted-average basis by type of grant (in thousands, except number of months):

 

 

 

June 30, 2012

 

 

 

Compensation
Cost Not Yet
Recognized

 

Months of
Future
Recognition

 

 

 

 

 

 

 

Non-vested stock options

 

$

7,202

 

17

 

Premium-priced stock options

 

2,769

 

45

 

Time-based RSUs

 

27,790

 

22

 

Performance-based RSUs

 

5,454

 

19

 

Total compensation cost not yet recognized

 

$

43,215

 

 

 

 

A summary of the Company’s stock option activity for the three months ended June 30, 2012 and 2011 is as follows (in thousands, except per share data; exercise prices are weighted averages):

 

 

 

Three Months ended June 30,

 

 

 

2012

 

2011

 

 

 

Number

 

Exercise
Price

 

Number

 

Exercise
Price

 

 

 

 

 

 

 

 

 

 

 

Options outstanding, beginning of period

 

13,034

 

$

19

 

16,312

 

$

19

 

Granted

 

1,700

 

14

 

 

 

Exercised

 

(84

)

5

 

(74

)

8

 

Cancelled or expired

 

(439

)

19

 

(599

)

22

 

Options outstanding, end of period

 

14,211

 

18

 

15,639

 

20

 

Options exercisable, end of period

 

10,984

 

$

19

 

11,446

 

$

20

 

 

The total pretax intrinsic value of options exercised during the three months ended June 30, 2012 and 2011 was $0.5 million and $0.3 million and the tax benefit realized for the tax deduction from options exercised during each of those periods was $0.1 million. The total fair value of options vested as of June 30, 2012 and 2011 was $70.6 million and $74.9 million.

 

The fair value of employee stock options granted and shares purchased under the Company’s employee purchase plans was estimated using the Black-Scholes-Merton option-pricing valuation model. During the three months ended June 30, 2012, the Company also granted premium-priced stock options which will vest in full if and only when Logitech’s average closing share price, over a consecutive ninety-day trading period, meets or exceeds the exercise price of the grants. The fair value of premium-priced stock options was estimated using the Monte-Carlo simulation method. There were no stock options granted during the three months ended June 30, 2011. The table below presents the assumptions used to determine the fair value of employee stock options, premium-priced stock options and shares purchased under the employee purchase plans:

 

 

 

Three Months Ended June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

2011

 

 

 

Purchase Plans

 

Stock Option Plans

 

Premium-Priced Stock Options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend yield

 

0

%

0

%

0

%

n/a

 

0

%

n/a

 

Expected life

 

6 months

 

6 months

 

4 years

 

n/a

 

7 years

 

n/a

 

Expected volatility

 

64

%

33

%

46

%

n/a

 

46

%

n/a

 

Risk-free interest rate

 

0.08

%

0.17

%

1.20

%

n/a

 

2.00

%

n/a

 

 

The dividend yield assumption is based on the Company’s history and future expectations of dividend payouts. The Company has not paid dividends since 1996. If approved by shareholders, the distribution of qualifying additional paid-in capital described in Note 11 is expected by management to be a one-time event. The expected option life represents the weighted-average period the stock options or purchase offerings are expected to remain outstanding. The expected life is based on historical settlement rates, which the Company believes are most representative of future exercise and post-vesting termination behaviors. Expected share price volatility is based on historical volatility using the Company’s daily closing prices over the term of past options or purchase offerings. The Company considers historical share price volatility of its shares as most representative of future volatility. The risk-free interest rate assumptions are based upon the implied yield of U.S. Treasury zero-coupon issues appropriate for the term of the Company’s stock options or purchase offerings.

 

The Company estimates option forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and records share-based compensation expense only for those awards that are expected to vest.

 

The following table presents the weighted average grant-date fair values of options granted and the expected forfeiture rates. There were no stock options granted during the three months ended June 30, 2011.

 

 

 

Three Months Ended June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

2011

 

 

 

Purchase Plans

 

Stock Option Plans

 

Premium-Priced Stock Options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average grant-date fair value of options granted

 

$

2.67

 

$

4.69

 

$

8.03

 

n/a

 

$

2.52

 

n/a

 

Expected forfeitures

 

0

%

0

%

11

%

n/a

 

0

%

n/a

 

 

The Company has granted time-based RSUs, which vest in annual installments on the grant-date anniversary, and performance-based RSUs, which vest at the end of the performance period upon meeting certain share price performance criteria measured against market conditions. A summary of the Company’s time- and performance-based RSU activity for the three months ended June 30, 2012 and 2011 is as follows (in thousands, except per share values; grant-date fair values are weighted averages):

 

 

 

Three Months ended June 30,

 

 

 

2012

 

2011

 

 

 

Number

 

Grant
Date Fair
Value

 

Number

 

Grant
Date Fair
Value

 

 

 

 

 

 

 

 

 

 

 

RSUs outstanding, beginning of period

 

4,125

 

$

13

 

2,370

 

$

21

 

Granted

 

170

 

$

9

 

714

 

$

13

 

Vested

 

(60

)

$

14

 

(50

)

$

13

 

Cancelled or expired

 

(240

)

$

16

 

(155

)

$

19

 

RSUs outstanding, end of period

 

3,995

 

$

13

 

2,879

 

$

20

 

 

The total pretax intrinsic value (fair value) of RSUs vested during the three months ended June 30, 2012 and 2011 was $0.8 million and $0.7 million and the tax benefit realized for the tax deduction from RSUs vested during each of those periods was $0.2 million.

 

The Company determines the fair value of time-based RSUs based on the market price of the Company’s shares on the date of grant. The fair value of performance-based RSUs is estimated using the Monte-Carlo simulation method applying the following assumptions:

 

 

 

Q1 FY 2013
Grants

 

FY 2012
Grants

 

 

 

 

 

 

 

Dividend yield

 

n/a

 

0

%

Expected life

 

n/a

 

3 years

 

Expected volatility

 

n/a

 

51

%

Risk-free interest rate

 

n/a

 

1.35

%

 

The dividend yield assumption is based on the Company’s history and future expectations of dividend payouts. If approved by shareholders, the distribution of qualifying additional paid-in capital described in Note 11 is expected by management to be a one-time event. The expected life of the performance-based RSUs is the service period at the end of which the RSUs will vest if the performance conditions are satisfied. The volatility assumption is based on the actual volatility of Logitech’s daily closing share price over a look-back period equal to the years of expected life. The risk free interest rate is derived from the yield on U.S. Treasury Bonds for a term of the same number of years as the expected life.

 

Defined Contribution Plans

 

Certain of the Company’s subsidiaries have defined contribution employee benefit plans covering all or a portion of their employees. Contributions to these plans are discretionary for certain plans and are based on specified or statutory requirements for others. The charges to expense for these plans for the three months ended June 30, 2012 and 2011 were $2.8 million and $3.1 million.

 

Defined Benefit Plans

 

Certain of the Company’s subsidiaries sponsor defined benefit pension plans or non-retirement post-employment benefits covering substantially all of their employees. Benefits are provided based on employees’ years of service and earnings, or in accordance with applicable employee benefit regulations. The Company’s practice is to fund amounts sufficient to meet the requirements set forth in the applicable employee benefit and tax regulations.

 

The net periodic benefit cost for defined benefit pension plans and non-retirement post-employment benefit obligations for the three months ended June 30, 2012 and 2011 was as follows (in thousands):

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Service cost

 

$

1,875

 

$

1,295

 

Interest cost

 

494

 

505

 

Expected return on plan assets

 

(93

)

(418

)

Amortization of net transition obligation

 

1

 

1

 

Amortization of net prior service cost

 

38

 

39

 

Recognized net actuarial loss

 

416

 

100

 

Net periodic benefit cost

 

$

2,731

 

$

1,522

 

Income Taxes
Income Taxes

Note 5 — Income Taxes

 

The Company is incorporated in Switzerland but operates in various countries with differing tax laws and rates. Further, a portion of the Company’s income before taxes and the provision for income taxes are generated outside of Switzerland.

 

On April 25, 2012, Logitech announced a restructuring plan to simplify the Company’s organization, to better align costs with its current business, and to free up resources to pursue growth opportunities. A majority of the restructuring was completed during the three months ended June 30, 2012. In determining the annual effective tax rate, the restructuring was treated as a discrete event in the quarter as it was significantly unusual and infrequent in nature. As such, restructuring-related charges and costs were excluded from ordinary income in determining the annual effective tax rate. The tax benefit associated with the restructuring is approximately $0.2 million.

 

Tax benefits for the three months ended June 30, 2012 and 2011 were $6.9 million and $9.5 million based on effective income tax rates of 11.7% and 24.4% of pre-tax loss. The change in the effective income tax rate for the three months ended June 30, 2012 compared with the three months ended June 30, 2011 is primarily due to the mix of income and losses in the various tax jurisdictions in which the Company operates, and the treatment of restructuring expenses as a discrete event in determining the annual effective tax rate.

 

As of June 30 and March 31, 2012, the total amount of unrecognized tax benefits and related accrued interest and penalties due to uncertain tax positions was $141.0 million and $143.3 million, of which $124.0 million and $125.4 million would affect the effective income tax rate if recognized. The Company classified the unrecognized tax benefits as non-current income taxes payable.

 

The Company continues to recognize interest and penalties related to unrecognized tax positions in income tax expense. As of June 30 and March 31, 2012, the Company had approximately $7.5 million of accrued interest and penalties related to uncertain tax positions.

 

The Company files Swiss and foreign tax returns. For all these tax returns, the Company is generally not subject to tax examinations for years prior to 1999. During fiscal year 2012, the IRS (U.S. Internal Revenue Service) completed its field examinations of tax returns for the Company’s U.S. subsidiary for fiscal years 2006 and 2007, and issued NOPAs (notices of proposed adjustment) related to international tax issues for those years. The Company disagreed with the NOPAs and contested through the administrative process for the IRS claims regarding 2006 and 2007. On July 2, 2012, the IRS issued an RAR (Revenue Agent’s Report) for fiscal years 2006 and 2007 proposing revised assessments resulting from the administrative process. On July 12, 2012, the Company accepted the proposed revised assessments. The IRS is completing their RAR review process which generally takes sixty days from the time of acceptance. The proposed revised assessments will not have a material adverse effect on the Company’s consolidated operating results.

 

In addition, the IRS is in the process of examining the Company’s U.S. subsidiary for fiscal years 2008 and 2009. The Company is also under examination and has received assessment notices in other tax jurisdictions. At this time, the Company is not able to estimate the potential impact that these examinations may have on income tax expense. If the examinations are resolved unfavorably, there is a possibility they may have a material negative impact on the Company’s consolidated operating results.

 

Although the Company has adequately provided for uncertain tax positions, the provisions on these positions may change as revised estimates are made or the underlying matters are settled or otherwise resolved. It is reasonably possible that resolution of fiscal years 2006 and 2007 with the IRS will lead to a decrease of unrecognized tax benefits within the next twelve months, which may have a material positive effect on the Company’s consolidated operating results.  At this time, the Company is not able to estimate the change as of June 30, 2012.

Balance Sheet Components
Balance Sheet Components

Note 6 — Balance Sheet Components

 

The following table presents the components of certain balance sheet asset amounts as of June 30 and March 31, 2012 (in thousands):

 

 

 

June 30, 2012

 

March 31, 2012

 

Accounts receivable:

 

 

 

 

 

Accounts receivable

 

$

361,339

 

$

376,917

 

Allowance for doubtful accounts

 

(2,321

)

(2,472

)

Allowance for returns

 

(24,995

)

(24,599

)

Allowances for cooperative marketing arrangements

 

(22,259

)

(24,109

)

Allowances for customer incentive programs

 

(36,237

)

(42,262

)

Allowances for pricing programs

 

(61,554

)

(60,371

)

 

 

$

213,973

 

$

223,104

 

Inventories:

 

 

 

 

 

Raw materials

 

$

32,129

 

$

38,613

 

Work-in-process

 

3

 

73

 

Finished goods

 

248,401

 

258,386

 

 

 

$

280,533

 

$

297,072

 

Other current assets:

 

 

 

 

 

Tax and value-added tax refund receivables

 

$

15,331

 

$

19,360

 

Deferred taxes

 

33,179

 

25,587

 

Prepaid expenses and other

 

20,857

 

21,043

 

 

 

$

69,367

 

$

65,990

 

Property, plant and equipment:

 

 

 

 

 

Plant, buildings and improvements

 

$

62,775

 

$

48,555

 

Equipment

 

151,159

 

148,059

 

Computer equipment

 

40,956

 

40,353

 

Computer software

 

77,094

 

75,758

 

 

 

331,984

 

312,725

 

Less: accumulated depreciation

 

(254,079

)

(249,657

)

 

 

77,905

 

63,068

 

Construction-in-progress

 

13,754

 

28,968

 

Land

 

2,832

 

2,848

 

 

 

$

94,491

 

$

94,884

 

Other assets:

 

 

 

 

 

Deferred taxes

 

$

55,234

 

$

61,358

 

Trading investments

 

14,172

 

14,301

 

Deposits and other

 

6,566

 

7,374

 

 

 

$

75,972

 

$

83,033

 

 

Inventories are stated at the lower of cost or market. Inventory as of June 30, 2012 and March 31, 2012 includes an adjustment of an immaterial amount and $8.5 million to reflect the lower of cost or market on the Company’s inventory of Logitech Revue and related peripherals on hand. In the three months ended June 30, 2011, a valuation adjustment of $34.1 million was charged to cost of goods sold, as the result of management’s decision in early July 2011 to reduce the retail price of Logitech Revue.

 

The following table presents the components of certain balance sheet liability amounts as of June 30 and March 31, 2012 (in thousands):

 

 

 

June 30, 2012

 

March 31, 2012

 

Accrued liabilities:

 

 

 

 

 

Accrued personnel expenses

 

$

50,229

 

$

42,809

 

Accrued marketing expenses

 

7,664

 

7,097

 

Customer incentive program accruals

 

25,007

 

26,112

 

Accrued restructuring

 

26,095

 

 

Deferred revenue

 

20,339

 

19,358

 

Accrued freight and duty

 

10,168

 

11,376

 

Value-added tax payable

 

4,698

 

7,140

 

Accrued royalties

 

6,114

 

6,243

 

Warranty accrual

 

4,821

 

5,184

 

Non-retirement post-employment benefit obligations

 

4,325

 

4,129

 

Income taxes payable - current

 

4,501

 

6,047

 

Other accrued liabilities

 

49,591

 

51,185

 

 

 

$

213,552

 

$

186,680

 

Non-current liabilities:

 

 

 

 

 

Income taxes payable - non-current

 

$

134,988

 

$

137,319

 

Obligation for deferred compensation

 

14,235

 

14,393

 

Defined benefit pension plan liability

 

37,730

 

39,337

 

Deferred rent

 

20,638

 

16,042

 

Other long-term liabilities

 

12,343

 

11,371

 

 

 

$

219,934

 

$

218,462

 

 

The following table presents the changes in the allowance for doubtful accounts during the three months ended June 30, 2012 and 2011 (in thousands):

 

 

 

June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Allowance for doubtful accounts, beginning of period

 

$

(2,472

)

$

(4,086

)

Bad debt expense

 

86

 

401

 

Write-offs, net of recoveries

 

65

 

(351

)

Allowance for doubtful accounts, end of period

 

$

(2,321

)

$

(4,036

)

Financial Instruments
Financial Instruments

Note 7 — Financial Instruments

 

Fair Value Measurements

 

The Company considers fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company utilizes the following three-level fair value hierarchy to establish the priorities of the inputs used to measure fair value:

 

·                    Level 1 — Quoted prices in active markets for identical assets or liabilities.

 

·                    Level 2 — Observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

·                    Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

 

The following table presents the Company’s financial assets and liabilities that were accounted for at fair value, except for assets related to the Company’s defined benefit pension plans, classified by the level within the fair value hierarchy (in thousands):

 

 

 

June 30, 2012

 

March 31, 2012

 

 

 

Level 1

 

Level 2

 

Level 3

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

360,737

 

$

 

$

 

$

478,370

 

$

 

$

 

Trading investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

3,542

 

 

 

3,383

 

 

 

Mutual funds

 

10,630

 

 

 

10,918

 

 

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized debt obligations

 

 

 

 

 

 

429

 

Foreign exchange derivative assets

 

 

45

 

 

 

658

 

 

Total assets at fair value

 

$

374,909

 

$

45

 

$

 

$

492,671

 

$

658

 

$

429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange derivative liabilities

 

$

 

$

966

 

$

 

$

 

$

245

 

$

 

Total liabilities at fair value

 

$

 

$

966

 

$

 

$

 

$

245

 

$

 

 

The following table presents the changes in the Company’s Level 3 financial assets during the three months ended June 30, 2012 and 2011 (in thousands):

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Available-for-sale securities, beginning balance

 

$

429

 

$

1,695

 

Proceeds from sales of securities

 

(917

)

 

Realized gain on sales of securities

 

831

 

 

Reversal of unrealized gains previously recognized in accumulated other comprehensive income

 

(343

)

 

Available-for-sale securities, ending balance

 

$

 

$

1,695

 

 

Cash and Cash Equivalents

 

Cash and cash equivalents consist of bank demand deposits and time deposits. The time deposits have original maturities of less than 32 days. Cash and cash equivalents are carried at cost, which approximates fair value.

 

Investment Securities

 

The Company’s investment securities portfolio consists of marketable securities related to a deferred compensation plan and auction rate securities collateralized by residential and commercial mortgages.

 

The marketable securities related to the deferred compensation plan are classified as non-current trading investments and do not have maturity dates. Since participants in the deferred compensation plan may select the mutual funds in which their compensation deferrals are invested, and may actively trade funds within the confines of the Rabbi Trust which holds the marketable securities, the Company has designated these marketable securities as trading investments. Management has classified the investments as non-current assets because final sale of the investments or realization of proceeds by plan participants is not expected within the Company’s normal operating cycle of one year. The marketable securities are recorded at a fair value of $14.2 million and $14.3 million as of June 30 and March 31, 2012, based on quoted market prices. Quoted market prices are observable inputs that are classified as Level 1 within the fair value hierarchy. Earnings, gains and losses on trading investments are included in other income (expense), net. Unrealized trading loss of $0.3 million are included in other income (expense), net for the three months ended June 30, 2012 and relate to trading securities held at June 30, 2012.

 

The auction rate securities are classified as non-current available-for-sale securities. These securities are collateralized by residential and commercial mortgages, and are second-priority senior secured floating rate notes with maturity dates in excess of 10 years. Interest rates on these notes were intended to reset through an auction every 28 days, however auctions for these securities have failed since August 2007. During the three months ended June 30, 2012, the Company sold its remaining two auction rate securities with a total carrying value of $0.4 million and a total par value of $15.2 million for $0.9 million. This sale resulted in $0.8 million of gain recognized in other income (expense), net, $0.3 million of which resulted from the recognition of a temporary increase in fair value previously recorded in accumulated other comprehensive income. The par value and original cost of the auction rate securities held as of March 31, 2012 was $15.2 million. These securities were recorded at an estimated fair value of $0.4 million at March 31, 2012. The estimated fair value was determined by estimating future cash flows through time according to each security’s terms, including periodic consideration of overcollateralization and interest coverage tests, and incorporating estimates of default rate, loss severity, prepayment, and delinquency assumptions when available, for the underlying assets in the securities based on representative indices and various research reports. The estimated coupon and principal payments were discounted at the rate of return required by investors, based on the characteristics of each security as calculated from the indices. Such valuation methods fall within Level 3 of the fair value hierarchy.

 

Derivative Financial Instruments

 

The following table presents the fair values of the Company’s derivative instruments and their locations on its Consolidated Balance Sheets as of June 30 and March 31, 2012 (in thousands):

 

 

 

Asset Derivatives

 

Liability Derivatives

 

 

 

 

 

Fair Value

 

 

 

Fair Value

 

 

 

 

 

June 30,

 

March 31,

 

 

 

June 30,

 

March 31,

 

 

 

Location

 

2012

 

2012

 

Location

 

2012

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

Other assets

 

$

25

 

$

250

 

Other liabilities

 

$

547

 

$

 

 

 

 

 

25

 

250

 

 

 

547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

Other assets

 

13

 

341

 

Other liabilities

 

122

 

148

 

Foreign exchange swap contracts

 

Other assets

 

7

 

67

 

Other liabilities

 

297

 

97

 

 

 

 

 

20

 

408

 

 

 

419

 

245

 

 

 

 

 

$

45

 

$

658

 

 

 

$

966

 

$

245

 

 

The following table presents the amounts of gains and losses on the Company’s derivative instruments for the three months ended June 30, 2012 and 2011 and their locations on its Consolidated Statements of Operations (in thousands):

 

 

 

Net amount of gain/(loss)
deferred as a component of
accumulated other
comprehensive loss

 

Location of
gain/(loss)
reclassified from
accumulated other
comprehensive

 

Amount of gain/(loss)
reclassified from
accumulated other
comprehensive loss into
income

 

Location of
gain/(loss)
recognized in income

 

Amount of gain/(loss)
recognized in income
immediately

 

 

 

2012

 

2011

 

loss into income

 

2012

 

2011

 

immediately

 

2012

 

2011

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

$

1,099

 

$

682

 

Cost of goods sold

 

$

106

 

$

2,478

 

Other income/expense

 

$

52

 

$

(97

)

 

 

1,099

 

682

 

 

 

106

 

2,478

 

 

 

52

 

(97

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

 

 

 

 

 

 

Other income/expense

 

(745

)

(52

)

Foreign exchange swap contracts

 

 

 

 

 

 

 

Other income/expense

 

825

 

(217

)

 

 

 

 

 

 

 

 

 

 

80

 

(269

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,099

 

$

682

 

 

 

$

106

 

$

2,478

 

 

 

$

132

 

$

(366

)

 

Cash Flow Hedges

 

The Company enters into foreign exchange forward contracts to hedge against exposure to changes in foreign currency exchange rates related to its subsidiaries’ forecasted inventory purchases. The primary risk managed by using derivative instruments is the foreign currency exchange rate risk. The Company has designated these derivatives as cash flow hedges. Logitech does not use derivative financial instruments for trading or speculative purposes. These hedging contracts mature within four months, and are denominated in the same currency as the underlying transactions. Gains and losses in the fair value of the effective portion of the hedges are deferred as a component of accumulated other comprehensive loss until the hedged inventory purchases are sold, at which time the gains or losses are reclassified to cost of goods sold. The Company assesses the effectiveness of the hedges by comparing changes in the spot rate of the currency underlying the forward contract with changes in the spot rate of the currency in which the forecasted transaction will be consummated. If the underlying transaction being hedged fails to occur or if a portion of the hedge does not generate offsetting changes in the foreign currency exposure of forecasted inventory purchases, the Company immediately recognizes the gain or loss on the associated financial instrument in other income (expense). Such gains and losses were immaterial during the three months ended June 30, 2012 and 2011. Cash flows from such hedges are classified as operating activities in the consolidated statements of cash flows. The notional amounts of foreign exchange forward contracts outstanding related to forecasted inventory purchases were $98.2 million (€78.0 million) and $66.3 million (€45.8 million) at June 30, 2012 and 2011. The notional amount represents the future cash flows under contracts to purchase foreign currencies.

 

Other Derivatives

 

The Company also enters into foreign exchange forward contracts to reduce the short-term effects of foreign currency fluctuations on certain foreign currency receivables or payables. These forward contracts generally mature within three months. The Company may also enter into foreign exchange swap contracts to economically extend the terms of its foreign exchange forward contracts. The primary risk managed by using forward and swap contracts is the foreign currency exchange rate risk. The gains or losses on foreign exchange forward contracts are recognized in earnings based on the changes in fair value.

 

The notional amounts of foreign exchange forward contracts outstanding at June 30, 2012 and 2011 relating to foreign currency receivables or payables were $6.4 million and $8.9 million. Open forward contracts as of June 30, 2012 consisted of contracts in euros to sell British pounds and contracts in Australian dollars to purchase U.S. dollars at future dates at pre-determined exchange rates. Open forward contracts as of June 30, 2011 consisted of contracts in British pounds to purchase euros at a future date at a predetermined exchange rate. The notional amounts of foreign exchange swap contracts outstanding at June 30, 2012 and 2011 were $24.7 million and $14.6 million. Swap contracts outstanding at June 30, 2012 consisted of contracts in Taiwanese dollars, Mexican pesos and Japanese yen. Swap contracts outstanding at June 30, 2011 consisted of contracts in Mexican pesos and Japanese yen.

 

The fair value of all our foreign exchange forward contracts and foreign exchange swap contracts is determined based on observable market transactions of spot currency rates and forward rates. Cash flows from these contracts are classified as operating activities in the consolidated statements of cash flows.

Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets

Note 8 — Goodwill and Other Intangible Assets

 

There were no changes in the Company’s goodwill accounts during the three months ended June 30, 2012 or 2011 attributable to activity other than fluctuations in foreign currency rates.

 

The Company evaluates the goodwill of each reporting unit for impairment at least annually as of December 31, or more frequently if events or circumstances warrant. The Company’s reporting units consist of peripherals and video conferencing. On April 25, 2012, the Company announced a restructuring plan as described in Note 13, and as a result, management performed a test to evaluate the recoverability of goodwill after implementation of the restructuring. The Company measures the recoverability of goodwill at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the estimated fair value of the reporting unit. The fair value is estimated using a discounted cash flow model, which considers estimates of projected future operating results and cash flows, discounted at an estimated after-tax weighted-average cost of capital. In addition, market-based valuation techniques are used to test the reasonableness of the value indicated by the discounted cash flow model. In the market-based valuation technique, the implied premium of the aggregate fair value over the market capitalization is considered attributable to an acquisition control premium, which is the price in excess of a stock’s market price that investors would typically pay to gain control of an entity. The discounted cash flow model and the market-based valuation techniques require the exercise of significant judgment, including assumptions about appropriate discount rates, long-term growth rates for purposes of determining a terminal value at the end of the discrete forecast period, economic expectations, timing of expected future cash flows, and expectations of returns on equity that will be achieved. Such assumptions are subject to change as a result of changing economic and competitive conditions. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired, and a second test is performed to measure the amount of impairment loss by allocating the reporting unit’s fair value to its assets and liabilities other than goodwill, comparing the resulting implied fair value of goodwill with its carrying amount, and recording an impairment charge for the difference.

 

As of June 30, 2012, the carrying value of goodwill attributable to its peripherals and video conferencing reporting units was $219.3 million and $338.9 million. The goodwill impairment evaluation performed by management as of June 30, 2012 indicated that the fair value of its peripherals reporting unit exceeded the carrying value of the reporting unit by more than 70% of the carrying value, and the fair value of its video conferencing reporting unit exceeded the carrying value of the reporting unit by more than 100% of the carrying value.

 

In connection with the restructuring, management also reviewed long-lived assets, such as property and equipment, and intangible assets, for recoverability by comparing the projected undiscounted net cash flows associated with those assets to their carrying values. No impairment of long-lived assets was required as a result of the review.

 

Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill and long-lived assets. Further adverse changes in the Company’s expected operating results, market capitalization, business climate, or other negative events could result in a material non-cash impairment charge in the future.

 

The Company’s acquired other intangible assets subject to amortization were as follows (in thousands):

 

 

 

June 30, 2012

 

March 31, 2012

 

 

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

 

 

Amount

 

Amortization

 

Amount

 

Amount

 

Amortization

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademark/tradename

 

$

32,053

 

$

(26,754

)

$

5,299

 

$

32,104

 

$

(26,095

)

$

6,009

 

Technology

 

91,732

 

(66,283

)

25,449

 

91,954

 

(62,548

)

29,406

 

Customer contracts

 

39,846

 

(23,557

)

16,289

 

39,926

 

(21,823

)

18,103

 

 

 

$

163,631

 

$

(116,594

)

$

47,037

 

$

163,984

 

$

(110,466

)

$

53,518

 

 

For the three months ended June 30, 2012 and 2011, amortization expense for other intangible assets was $6.2 million and $6.6 million. The Company expects that amortization expense for the remaining nine months of fiscal year 2013 will be $18.2 million, and annual amortization expense for fiscal years 2014, 2015 and 2016 will be $18.2 million, $9.1 million, and $1.2 million, and $0.3 million thereafter.

Financing Arrangements
Financing Arrangements

Note 9 — Financing Arrangements

 

In December 2011, the Company entered into a Senior Revolving Credit Facility Agreement with a group of primarily Swiss banks that provides for a revolving multicurrency unsecured credit facility in an amount of up to $250.0 million. The Company may, upon notice to the lenders and subject to certain requirements, arrange with existing or new lenders to provide up to an aggregate of $150.0 million in additional commitments, for a total of $400.0 million of unsecured revolving credit. The credit facility may be used for working capital, general corporate purposes, and acquisitions. There were no outstanding borrowings under the credit facility at June 30, 2012.

 

The credit facility matures on October 31, 2016. The Company may prepay the loans under the credit facility in whole or in part at any time without premium or penalty. Borrowings under the credit facility will accrue interest at a per annum rate based on LIBOR (London Interbank Offered Rate), or EURIBOR (Euro Interbank Offered Rate) in the case of loans denominated in euros, plus a variable margin determined quarterly based on the ratio of senior debt-to-earnings before interest, taxes, depreciation and amortization for the preceding four-quarter period, plus, if applicable, an additional rate per annum intended to compensate the lenders for the cost of compliance with regulatory reserve requirements and other banking regulations. The Company also pays a quarterly commitment fee of 40% of the applicable margin on the available commitment. In connection with entering into the credit facility, the Company incurred non-recurring fees totaling $1.5 million, which are amortized on a straight-line basis over the term of the credit facility.

 

The facility agreement contains representations, covenants, including threshold financial covenants, and events of default customary in Swiss credit markets. Affirmative covenants include covenants regarding reporting requirements, maintenance of insurance, maintenance of properties and compliance with applicable laws and regulations, and financial covenants that require the maintenance of net senior debt, interest cover and adjusted equity ratios determined in accordance with the terms of the facility. Negative covenants limit the ability of the Company and its subsidiaries, among other things, to grant liens, make investments, incur debt, make restricted payments, enter into a merger or acquisition, or sell, transfer or dispose of assets, in each case subject to certain exceptions. As of June 30, 2012, the Company was in compliance with all covenants and conditions.

 

Upon an uncured event of default under the facility, the lenders may declare all or a portion of the outstanding obligations payable by the Company to be immediately due and payable, terminate their commitments and exercise other rights and remedies provided for under the facility. The events of default under the facility include, among other things, payment defaults, covenant defaults, inaccuracy of representations and warranties, cross defaults with certain other indebtedness, bankruptcy and insolvency events and events that have a material adverse effect (as defined in the facility). Upon a change of control of the Company, lenders whose commitments aggregate more than two-thirds of the total commitments under the facility may terminate the commitments and declare all outstanding obligations to be due and payable.

 

The Company had several uncommitted, unsecured bank lines of credit aggregating $43.9 million at June 30, 2012. There are no financial covenants under these lines of credit with which the Company must comply. At June 30, 2012, the Company had no outstanding borrowings under these lines of credit. The Company also had credit lines related to corporate credit cards totaling $29.9 million as of June 30, 2012. The outstanding borrowings under these credit lines are recorded in other current liabilities. There are no financial covenants under these credit lines.

Commitments and Contingencies
Commitments and Contingencies

Note 10 — Commitments and Contingencies

 

Operating Leases

 

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 June 30, 2012 amounted to $106.0 million. In the three months ended June 30, 2012, the Company recognized additional rent expense of $3.4 million, representing the fair value of future rent obligations on its former Americas headquarters, which are no longer used by the Company.

 

In connection with its leased facilities, the Company has recognized a liability for asset retirement obligations representing the present value of estimated remediation costs to be incurred at lease expiration. The following table describes changes to the Company’s asset retirement obligation liability for the three months ended June 30, 2012 and 2011 (in thousands):

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Asset retirement obligations, beginning of period

 

$

1,918

 

$

1,636

 

Liabilities incurred

 

 

 

Liabilities settled

 

 

(17

)

Accretion expense

 

12

 

19

 

Foreign currency translation

 

71

 

32

 

Asset retirement obligations, end of period

 

$

2,001

 

$

1,670

 

 

Product Warranties

 

Certain of the Company’s products are covered by warranty to be free from defects in material and workmanship for periods ranging from one year to five years. At the time of sale, the Company accrues a warranty liability for estimated costs to provide products, parts or services to repair or replace products in satisfaction of the warranty obligation. The Company’s estimate of costs to fulfill its warranty obligations is based on historical experience and expectations of future conditions. When the Company experiences changes in warranty claim activity or costs associated with fulfilling those claims, the warranty liability is adjusted accordingly. Changes in the Company’s warranty liability for the three months ended June 30, 2012 and 2011 were as follows (in thousands):

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Warranty liability, beginning of period

 

$

5,184

 

$

4,970

 

Provision for warranties issued during the period

 

1,632

 

4,421

 

Settlements made during the period

 

(1,995

)

(4,758

)

Warranty liability, end of period

 

$

4,821

 

$

4,633

 

 

Purchase Commitments

 

At June 30, 2012, the Company had the following outstanding purchase commitments:

 

 

 

June 30, 2012

 

 

 

 

 

Inventory purchases

 

$

152,617

 

Operating expenses

 

57,655

 

Capital expenditures

 

21,896

 

Total purchase commitments

 

$

232,168

 

 

Commitments for inventory purchases are made in the normal course of business to original design manufacturers, contract manufacturers and other suppliers and are expected to be fulfilled by December 2012. Operating expense commitments are for consulting services, marketing arrangements, advertising, outsourced customer services, information technology maintenance and support services, and other services. Fixed purchase commitments for capital expenditures primarily related to commitments for computer hardware and leasehold 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.

 

Guarantees

 

Logitech International S.A., the parent holding company, has guaranteed payment of the purchase obligations of various subsidiaries from certain component suppliers. These guarantees generally have an unlimited term. The maximum potential future payment under the guarantee arrangements is limited to $36.0 million. At June 30, 2012, 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 and third-party contract manufacturers under threee guarantee agreements. Two of these guarantees do not specify a maximum amount. The remaining guarantee has a total limit of $7.0 million. As of June 30, 2012, $3.6 million of guaranteed purchase obligations were outstanding under these guarantees. Logitech Europe S.A. has also guaranteed payment of the purchase obligations of a third-party contract manufacturer under three guarantee agreements. The maximum amount of these guarantees was $3.7 million as of June 30, 2012. As of June 30, 2012, $1.7 million of guaranteed purchase obligations were outstanding under these agreements.

 

Logitech International S.A. and Logitech Europe S.A. have guaranteed certain contingent liabilities of various subsidiaries related to transactions occurring in the normal course of business. The maximum amount of the guarantees was $67.9 million as of June 30, 2012. As of June 30, 2012, $15.7 million of guaranteed liabilities were subject to these guarantees.

 

Indemnifications

 

Logitech indemnifies some 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. No amounts have been accrued for indemnification provisions at June 30, 2012. 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.

 

Logitech 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. Logitech is unable to reasonably estimate the maximum amount that could be payable under these arrangements because these exposures are not capped, the obligations are conditional in nature, and the facts and circumstances involved in any situation that might arise are variable.

 

Legal Proceedings

 

On May 23, 2011, a class action complaint was filed against Logitech International S.A. and certain of its officers in the United States District Court for the Southern District of New York on behalf of individuals who purchased Logitech shares between October 28, 2010 and April 1, 2011. The complaint relates to Logitech’s disclosure on March 31, 2011 that its results for fiscal year 2011 would fall below expectations and seeks unspecified monetary damages and other relief against the defendants. The action was transferred to the United States District Court for the Northern District of California on July 28, 2011. The California Court appointed a lead plaintiff on October 27, 2011. The plaintiff filed an amended complaint on January 9, 2012 which expanded the alleged class period to between October 28, 2010 and September 22, 2011. On July 13, 2012, the California Court granted defendants’ motion to dismiss the amended complaint, with leave to amend.

 

On July 15, 2011, a complaint was filed against Logitech International S.A. and two of its subsidiaries in the United States District Court for the Central District of California by Universal Electronics, Inc. (UEI). On November 3, 2011, the Company filed a counter suit against UEI. On July 18, 2012, Logitech and UEI signed a nonbinding settlement and license agreement term sheet, and the District Court thereafter dismissed the suits without prejudice to the right, upon good cause shown within 60 days, to reopen the action if a settlement is not consummated.

 

In addition, 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 these lawsuits and claims lack merit and intends to vigorously defend against them. However, there can be no assurances that its defenses will be successful, or that any judgment or settlement in any of these lawsuits would not have a material adverse impact on the Company’s business, financial condition, cash flows and results of operations. The Company is presently unable to estimate the effects of these claims and legal proceedings on its results of operations, cash flows or financial position.

Shareholders' Equity
Shareholders' Equity

Note 11 — Shareholders’ Equity

 

Capital Distribution

 

The Board of Directors has proposed that the Company distribute CHF 125.7 million of qualifying additional paid-in capital to shareholders out of its capital contribution reserves. If approved by shareholders, the cash is expected to be distributed in September 2012.

 

Share Repurchases

 

During the three months ended June 30, 2012 and 2011, the Company had in place the approved share buyback programs shown in the following table (in thousands, excluding transaction costs). The amended September 2008 share buyback program enables the Company to repurchase shares for cancellation.

 

Date of Announcement

 

Approved
Share
Buyback
Number

 

Approved
Buyback
Amount

 

Expiration Date

 

Completion Date

 

Number of
Shares
Remaining (1)

 

Amount
Remaining

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 2008 - amended

 

28,465

 

$

177,030

 

August 2013

 

 

414

 

$

4,435

 

September 2008

 

8,344

 

$

250,000

 

August 2013

 

 

 

 

 

(1)  Represents an estimate of the number of shares remaining to be repurchased, calculated based on the $4.4 million amount remaining to repurchase as of June 30, 2012 divided by the CHF 10.22 per share adjusted closing price on the SIX Swiss Exchange as of the same date, translated at the exchange rate on June 30, 2012.

 

During the three months ended June 30, 2012 and 2011, the Company repurchased shares under these programs as follows (in thousands):

 

 

 

Amounts Repurchased During Three Months ended June 30, (1)

 

Date of 

 

Program to date

 

2012

 

2011

 

Announcement

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 2008 - amended

 

18,500

 

$

172,857

 

8,600

 

$

89,955

 

 

$

 

September 2008

 

7,609

 

73,134

 

 

 

 

 

 

 

26,109

 

$

245,991

 

8,600

 

$

89,955

 

 

$

 

 

(1)  Represents the amount in U.S. dollars, including transaction costs, calculated based on exchange rates on the repurchase dates.

 

The Company’s Board of Directors has proposed that shareholders approve, at the Company’s next Annual General Meeting of Shareholders, the cancellation of the 18.5 million shares repurchased under the September 2008 amended share buyback program.

 

Accumulated Other Comprehensive Loss

 

The components of accumulated other comprehensive loss were as follows (in thousands):

 

 

 

June 30,
2012

 

March 31,
2012

 

 

 

 

 

 

 

Cumulative translation adjustment

 

$

(73,119

)

$

(66,854

)

Pension liability adjustments, net of tax of $752 and $752

 

(27,444

)

(29,362

)

Unrealized gain on investments

 

 

343

 

Net deferred hedging gains (losses)

 

1,043

 

(56

)

 

 

$

(99,520

)

$

(95,929

)

Segment Information
Segment Information

Note 12 — Segment Information

 

Net sales by product family, excluding intercompany transactions, were as follows (in thousands):

 

 

 

Three months ended

 

 

 

June 30,

 

 

 

2012

 

2011 (*)

 

 

 

 

 

 

 

Retail - Pointing Devices

 

$

115,727

 

$

121,750

 

Retail - Keyboards & Desktops

 

110,445

 

94,596

 

Retail - Audio

 

90,047

 

77,673

 

Retail - Video

 

36,880

 

49,586

 

Retail - Gaming

 

27,274

 

37,166

 

Retail - Digital Home

 

14,728

 

14,005

 

OEM

 

36,675

 

49,178

 

Peripherals

 

431,776

 

443,954

 

Video Conferencing

 

36,828

 

36,487

 

Total net sales

 

$

468,604

 

$

480,441

 

 

(*) Certain products within the retail product families as presented in the prior year have been reclassified to conform to the current year presentation, with no impact on previously reported total net retail sales.

 

The Company has two operating segments, peripherals and video conferencing, based on product markets and internal organizational structure. The peripherals segment encompasses the design, manufacturing and marketing of peripherals for PCs (personal computers), tablets and other digital platforms. The video conferencing segment consists of the LifeSize division, and encompasses the design, manufacturing and marketing of LifeSize video conferencing products, infrastructure and services for the enterprise, public sector and other business markets. The Company’s operating segments do not record revenue on sales between segments, as such sales are not material.

 

Operating performance measures for the peripherals segment and the video conferencing segment are reported separately to Logitech’s Chief Executive Officer, who is considered to be the Company’s chief operating decision maker. These operating performance measures do not include share-based compensation expense, amortization of intangible assets, and assets by operating segment. Share-based compensation expense and amortization of intangible assets are presented in the following financial information by operating segment as “all other.” Long-lived assets are presented by geographic region. Net sales, operating loss and depreciation and amortization for the Company’s operating segments were as follows (in thousands):

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Net sales by operating segment

 

 

 

 

 

Peripherals

 

$

431,776

 

$

443,954

 

Video Conferencing

 

36,828

 

36,487

 

Total net sales

 

$

468,604

 

$

480,441

 

 

 

 

 

 

 

Operating loss by segment

 

 

 

 

 

Peripherals

 

$

(45,826

)

$

(26,879

)

Video Conferencing

 

(1,065

)

(1,808

)

All other

 

(12,389

)

(16,345

)

Total operating loss

 

$

(59,280

)

$

(45,032

)

 

 

 

 

 

 

Depreciation and amortization by segment

 

 

 

 

 

Peripherals

 

$

12,133

 

$

15,017

 

Video Conferencing

 

5,251

 

4,785

 

Total depreciation and amortization

 

$

17,384

 

$

19,802

 

 

Geographic net sales information in the table below is based on the location of the selling entity. Long-lived assets, primarily fixed assets, are reported below based on the location of the asset.

 

Net sales to unaffiliated customers by geographic region were as follows (in thousands):

 

 

 

Three months ended

 

 

 

June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Americas

 

$

203,926

 

$

226,020

 

EMEA

 

150,006

 

130,852

 

Asia Pacific

 

114,672

 

123,569

 

Total net sales

 

$

468,604

 

$

480,441

 

 

Sales are attributed to countries on the basis of the customers’ locations. The United States and China each represented more than 10% of the Company’s total consolidated net sales for each of the quarters ended June 30, 2012 and 2011. No other single country represented more than 10% of the Company’s total consolidated net sales for the three months ended June 30, 2012 and 2011. One customer group represented 10% of net sales in each of the quarters ended June 30, 2012 and 2011.

 

Long-lived assets by geographic region were as follows (in thousands):

 

 

 

June 30, 2012

 

March 31, 2012

 

 

 

 

 

 

 

Americas

 

$

50,256

 

$

49,365

 

EMEA

 

8,529

 

9,304

 

Asia Pacific

 

40,969

 

41,576

 

Total long-lived assets

 

$

99,754

 

$

100,245

 

 

Long-lived assets in China and the United States each represented more than 10% of the Company’s total consolidated long-lived assets at June 30 and March 31, 2012.

Restructuring
Restructuring

Note 13 — Restructuring

 

On April 25, 2012, Logitech announced a restructuring plan to simplify the Company’s organization, to better align costs with its current business, and to free up resources to pursue growth opportunities. A majority of the restructuring activity was completed during the three months ended June 30, 2012. As part of this restructuring plan, the Company reduced its worldwide non-direct-labor workforce by approximately 340 employees. Charges and other costs related to the workforce reduction are presented as restructuring charges in the consolidated statements of operations. Charges of approximately $3.0 million related to discontinuance of certain product development efforts are included in cost of goods sold in the consolidated statements of operations. The Company estimates completing the restructuring plan during the current fiscal year, and incurring additional pre-tax restructuring charges related to employee termination costs, lease exit costs, and other associated costs of less than $5 million during the remaining nine months of fiscal year 2013.

 

The following table summarizes restructuring related activities during the three months ended June 30, 2012 (in thousands):

 

 

 

Total

 

Termination
Benefits

 

Lease Exit
Costs

 

Other

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2012

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

Charges

 

31,227

 

28,655

 

1,472

 

1,100

 

Cash payments

 

(5,195

)

(4,766

)

 

(429

)

Foreign exchange

 

63

 

63

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2012

 

$

26,095

 

$

23,952

 

$

1,472

 

$

671

 

 

Termination benefits were calculated based on regional benefit practices and local statutory requirements. Lease exit costs primarily relate to costs associated with the closure of existing facilities. Other charges primarily consist of legal, consulting and other costs related to employee terminations.

Subsequent Event
Subsequent Event

Note 14 — Subsequent Event

 

Subsequent to June 30, 2012, the Company discontinued sales of a product which it determined carried an inaccurate regulatory label, and plans to withdraw the product from its customers and either re-label or replace the product.  The Company evaluated whether this matter resulted in a probable and estimable loss, and concluded that there was no significant loss that should have been recorded in the quarter ended June 30, 2012. In addition, the Company does not currently expect a material impact from this issue on future results of operations or cash flows.

Summary of Significant Accounting Policies (Policies)

Basis of Presentation

 

The consolidated financial statements include the accounts of Logitech and its subsidiaries. All intercompany balances and transactions have been eliminated. The consolidated financial statements are presented in accordance with U.S. GAAP (accounting principles generally accepted in the United States of America) for interim financial information and therefore do not include all the information required by U.S. GAAP for complete financial statements. They should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2012 included in its Annual Report on Form 10-K.

 

In the quarter ended June 30, 2012, we recorded a reduction in deferred tax assets and a decrease to retained earnings of $6.3 million, related to vested unexercised non-qualified stock options for former employees who terminated in fiscal year 2012 and prior.  We reviewed this accounting error utilizing SEC Staff Accounting Bulletin No. 99, Materiality, and SEC Staff Accounting Bulletin No. 108, Effects of Prior Year Misstatements on Current Year Financial Statements, and determined the impact of the error to be immaterial to any period presented.

 

Certain prior period financial statement amounts have been reclassified to conform to the current period presentation with no impact on previously reported net income.

 

In the opinion of management, these consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented. Operating results for the three months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending March 31, 2013, or any future periods.

Fiscal Year

 

The Company’s fiscal year ends on March 31. Interim quarters are thirteen-week periods, each ending on a Friday. For purposes of presentation, the Company has indicated its quarterly periods as ending on the month end.

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect reported amounts of assets, liabilities, net sales and expenses, and the disclosure of contingent assets and liabilities. Although these estimates are based on management’s best knowledge of current events and actions that may impact the Company in the future, actual results could differ from those estimates.

Net Loss per Share (Tables)
Schedule of computations of basic and diluted net loss per share

 

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Net loss

 

$

(52,145

)

$

(29,606

)

 

 

 

 

 

 

Weighted average shares - basic

 

160,733

 

179,331

 

Effect of potentially dilutive share equivalents

 

 

 

Weighted average shares - diluted

 

160,733

 

179,331

 

 

 

 

 

 

 

Net loss per share - basic

 

$

(0.32

)

$

(0.17

)

Net loss per share - diluted

 

$

(0.32

)

$

(0.17

)

Employee Benefit Plans (Tables)

 

 

 

 

Three months ended

 

 

 

June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Cost of goods sold

 

$

789

 

$

1,160

 

Share-based compensation expense included in gross profit

 

789

 

1,160

 

Operating expenses:

 

 

 

 

 

Marketing and selling

 

1,780

 

3,517

 

Research and development

 

1,825

 

1,808

 

General and administrative

 

1,777

 

3,230

 

Share-based compensation expense included in operating expenses

 

5,382

 

8,555

 

Total share-based compensation expense

 

6,171

 

9,715

 

Income tax benefit

 

(1,376

)

(2,389

)

Share-based compensation expense, net of income tax

 

$

4,795

 

$

7,326

 

 

 

 

 

June 30, 2012

 

 

 

Compensation
Cost Not Yet
Recognized

 

Months of
Future
Recognition

 

 

 

 

 

 

 

Non-vested stock options

 

$

7,202

 

17

 

Premium-priced stock options

 

2,769

 

45

 

Time-based RSUs

 

27,790

 

22

 

Performance-based RSUs

 

5,454

 

19

 

Total compensation cost not yet recognized

 

$

43,215

 

 

 

 

 

 

 

Three Months ended June 30,

 

 

 

2012

 

2011

 

 

 

Number

 

Exercise
Price

 

Number

 

Exercise
Price

 

 

 

 

 

 

 

 

 

 

 

Options outstanding, beginning of period

 

13,034

 

$

19

 

16,312

 

$

19

 

Granted

 

1,700

 

14

 

 

 

Exercised

 

(84

)

5

 

(74

)

8

 

Cancelled or expired

 

(439

)

19

 

(599

)

22

 

Options outstanding, end of period

 

14,211

 

18

 

15,639

 

20

 

Options exercisable, end of period

 

10,984

 

$

19

 

11,446

 

$

20

 

 

 

 

 

Three Months Ended June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

2011

 

 

 

Purchase Plans

 

Stock Option Plans

 

Premium-Priced Stock Options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend yield

 

0

%

0

%

0

%

n/a

 

0

%

n/a

 

Expected life

 

6 months

 

6 months

 

4 years

 

n/a

 

7 years

 

n/a

 

Expected volatility

 

64

%

33

%

46

%

n/a

 

46

%

n/a

 

Risk-free interest rate

 

0.08

%

0.17

%

1.20

%

n/a

 

2.00

%

n/a

 

 

 

 

 

Three Months Ended June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

2011

 

 

 

Purchase Plans

 

Stock Option Plans

 

Premium-Priced Stock Options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average grant-date fair value of options granted

 

$

2.67

 

$

4.69

 

$

8.03

 

n/a

 

$

2.52

 

n/a

 

Expected forfeitures

 

0

%

0

%

11

%

n/a

 

0

%

n/a

 

 

 

 

 

Three Months ended June 30,

 

 

 

2012

 

2011

 

 

 

Number

 

Grant
Date Fair
Value

 

Number

 

Grant
Date Fair
Value

 

 

 

 

 

 

 

 

 

 

 

RSUs outstanding, beginning of period

 

4,125

 

$

13

 

2,370

 

$

21

 

Granted

 

170

 

$

9

 

714

 

$

13

 

Vested

 

(60

)

$

14

 

(50

)

$

13

 

Cancelled or expired

 

(240

)

$

16

 

(155

)

$

19

 

RSUs outstanding, end of period

 

3,995

 

$

13

 

2,879

 

$

20

 

 

 

 

 

Q1 FY 2013
Grants

 

FY 2012
Grants

 

 

 

 

 

 

 

Dividend yield

 

n/a

 

0

%

Expected life

 

n/a

 

3 years

 

Expected volatility

 

n/a

 

51

%

Risk-free interest rate

 

n/a

 

1.35

%

 

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Service cost

 

$

1,875

 

$

1,295

 

Interest cost

 

494

 

505

 

Expected return on plan assets

 

(93

)

(418

)

Amortization of net transition obligation

 

1

 

1

 

Amortization of net prior service cost

 

38

 

39

 

Recognized net actuarial loss

 

416

 

100

 

Net periodic benefit cost

 

$

2,731

 

$

1,522

 

Balance Sheet Components (Tables)

 

 

 

 

June 30, 2012

 

March 31, 2012

 

Accounts receivable:

 

 

 

 

 

Accounts receivable

 

$

361,339

 

$

376,917

 

Allowance for doubtful accounts

 

(2,321

)

(2,472

)

Allowance for returns

 

(24,995

)

(24,599

)

Allowances for cooperative marketing arrangements

 

(22,259

)

(24,109

)

Allowances for customer incentive programs

 

(36,237

)

(42,262

)

Allowances for pricing programs

 

(61,554

)

(60,371

)

 

 

$

213,973

 

$

223,104

 

Inventories:

 

 

 

 

 

Raw materials

 

$

32,129

 

$

38,613

 

Work-in-process

 

3

 

73

 

Finished goods

 

248,401

 

258,386

 

 

 

$

280,533

 

$

297,072

 

Other current assets:

 

 

 

 

 

Tax and value-added tax refund receivables

 

$

15,331

 

$

19,360

 

Deferred taxes

 

33,179

 

25,587

 

Prepaid expenses and other

 

20,857

 

21,043

 

 

 

$

69,367

 

$

65,990

 

Property, plant and equipment:

 

 

 

 

 

Plant, buildings and improvements

 

$

62,775

 

$

48,555

 

Equipment

 

151,159

 

148,059

 

Computer equipment

 

40,956

 

40,353

 

Computer software

 

77,094

 

75,758

 

 

 

331,984

 

312,725

 

Less: accumulated depreciation

 

(254,079

)

(249,657

)

 

 

77,905

 

63,068

 

Construction-in-progress

 

13,754

 

28,968

 

Land

 

2,832

 

2,848

 

 

 

$

94,491

 

$

94,884

 

Other assets:

 

 

 

 

 

Deferred taxes

 

$

55,234

 

$

61,358

 

Trading investments

 

14,172

 

14,301

 

Deposits and other

 

6,566

 

7,374

 

 

 

$

75,972

 

$

83,033

 

 

 

 

 

June 30, 2012

 

March 31, 2012

 

Accrued liabilities:

 

 

 

 

 

Accrued personnel expenses

 

$

50,229

 

$

42,809

 

Accrued marketing expenses

 

7,664

 

7,097

 

Customer incentive program accruals

 

25,007

 

26,112

 

Accrued restructuring

 

26,095

 

 

Deferred revenue

 

20,339

 

19,358

 

Accrued freight and duty

 

10,168

 

11,376

 

Value-added tax payable

 

4,698

 

7,140

 

Accrued royalties

 

6,114

 

6,243

 

Warranty accrual

 

4,821

 

5,184

 

Non-retirement post-employment benefit obligations

 

4,325

 

4,129

 

Income taxes payable - current

 

4,501

 

6,047

 

Other accrued liabilities

 

49,591

 

51,185

 

 

 

$

213,552

 

$

186,680

 

Non-current liabilities:

 

 

 

 

 

Income taxes payable - non-current

 

$

134,988

 

$

137,319

 

Obligation for deferred compensation

 

14,235

 

14,393

 

Defined benefit pension plan liability

 

37,730

 

39,337

 

Deferred rent

 

20,638

 

16,042

 

Other long-term liabilities

 

12,343

 

11,371

 

 

 

$

219,934

 

$

218,462

 

 

 

 

 

June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Allowance for doubtful accounts, beginning of period

 

$

(2,472

)

$

(4,086

)

Bad debt expense

 

86

 

401

 

Write-offs, net of recoveries

 

65

 

(351

)

Allowance for doubtful accounts, end of period

 

$

(2,321

)

$

(4,036

)

Financial Instruments (Tables)

 

 

 

 

June 30, 2012

 

March 31, 2012

 

 

 

Level 1

 

Level 2

 

Level 3

 

Level 1

 

Level 2

 

Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

360,737

 

$

 

$

 

$

478,370

 

$

 

$

 

Trading investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

3,542

 

 

 

3,383

 

 

 

Mutual funds

 

10,630

 

 

 

10,918

 

 

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized debt obligations

 

 

 

 

 

 

429

 

Foreign exchange derivative assets

 

 

45

 

 

 

658

 

 

Total assets at fair value

 

$

374,909

 

$

45

 

$

 

$

492,671

 

$

658

 

$

429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange derivative liabilities

 

$

 

$

966

 

$

 

$

 

$

245

 

$

 

Total liabilities at fair value

 

$

 

$

966

 

$

 

$

 

$

245

 

$

 

 

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Available-for-sale securities, beginning balance

 

$

429

 

$

1,695

 

Proceeds from sales of securities

 

(917

)

 

Realized gain on sales of securities

 

831

 

 

Reversal of unrealized gains previously recognized in accumulated other comprehensive income

 

(343

)

 

Available-for-sale securities, ending balance

 

$

 

$

1,695

 

 

 

 

 

Asset Derivatives

 

Liability Derivatives

 

 

 

 

 

Fair Value

 

 

 

Fair Value

 

 

 

 

 

June 30,

 

March 31,

 

 

 

June 30,

 

March 31,

 

 

 

Location

 

2012

 

2012

 

Location

 

2012

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

Other assets

 

$

25

 

$

250

 

Other liabilities

 

$

547

 

$

 

 

 

 

 

25

 

250

 

 

 

547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

Other assets

 

13

 

341

 

Other liabilities

 

122

 

148

 

Foreign exchange swap contracts

 

Other assets

 

7

 

67

 

Other liabilities

 

297

 

97

 

 

 

 

 

20

 

408

 

 

 

419

 

245

 

 

 

 

 

$

45

 

$

658

 

 

 

$

966

 

$

245

 

 

 

 

 

Net amount of gain/(loss)
deferred as a component of
accumulated other
comprehensive loss

 

Location of
gain/(loss)
reclassified from
accumulated other
comprehensive

 

Amount of gain/(loss)
reclassified from
accumulated other
comprehensive loss into
income

 

Location of
gain/(loss)
recognized in income

 

Amount of gain/(loss)
recognized in income
immediately

 

 

 

2012

 

2011

 

loss into income

 

2012

 

2011

 

immediately

 

2012

 

2011

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

$

1,099

 

$

682

 

Cost of goods sold

 

$

106

 

$

2,478

 

Other income/expense

 

$

52

 

$

(97

)

 

 

1,099

 

682

 

 

 

106

 

2,478

 

 

 

52

 

(97

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

 

 

 

 

 

 

Other income/expense

 

(745

)

(52

)

Foreign exchange swap contracts

 

 

 

 

 

 

 

Other income/expense

 

825

 

(217

)

 

 

 

 

 

 

 

 

 

 

80

 

(269

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,099

 

$

682

 

 

 

$

106

 

$

2,478

 

 

 

$

132

 

$

(366

)

Goodwill and Other Intangible Assets (Tables)
Schedule of other intangible assets

 

 

 

 

June 30, 2012

 

March 31, 2012

 

 

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

 

 

Amount

 

Amortization

 

Amount

 

Amount

 

Amortization

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademark/tradename

 

$

32,053

 

$

(26,754

)

$

5,299

 

$

32,104

 

$

(26,095

)

$

6,009

 

Technology

 

91,732

 

(66,283

)

25,449

 

91,954

 

(62,548

)

29,406

 

Customer contracts

 

39,846

 

(23,557

)

16,289

 

39,926

 

(21,823

)

18,103

 

 

 

$

163,631

 

$

(116,594

)

$

47,037

 

$

163,984

 

$

(110,466

)

$

53,518

 

Commitments and Contingencies (Tables)

 

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Asset retirement obligations, beginning of period

 

$

1,918

 

$

1,636

 

Liabilities incurred

 

 

 

Liabilities settled

 

 

(17

)

Accretion expense

 

12

 

19

 

Foreign currency translation

 

71

 

32

 

Asset retirement obligations, end of period

 

$

2,001

 

$

1,670

 

 

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Warranty liability, beginning of period

 

$

5,184

 

$

4,970

 

Provision for warranties issued during the period

 

1,632

 

4,421

 

Settlements made during the period

 

(1,995

)

(4,758

)

Warranty liability, end of period

 

$

4,821

 

$

4,633

 

 

 

 

 

June 30, 2012

 

 

 

 

 

Inventory purchases

 

$

152,617

 

Operating expenses

 

57,655

 

Capital expenditures

 

21,896

 

Total purchase commitments

 

$

232,168

 

Shareholders' Equity (Tables)

 

 

Date of Announcement

 

Approved
Share
Buyback
Number

 

Approved
Buyback
Amount

 

Expiration Date

 

Completion Date

 

Number of
Shares
Remaining (1)

 

Amount
Remaining

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 2008 - amended

 

28,465

 

$

177,030

 

August 2013

 

 

414

 

$

4,435

 

September 2008

 

8,344

 

$

250,000

 

August 2013

 

 

 

 

 

(1)  Represents an estimate of the number of shares remaining to be repurchased, calculated based on the $4.4 million amount remaining to repurchase as of June 30, 2012 divided by the CHF 10.22 per share adjusted closing price on the SIX Swiss Exchange as of the same date, translated at the exchange rate on June 30, 2012.

 

 

 

 

Amounts Repurchased During Three Months ended June 30, (1)

 

Date of 

 

Program to date

 

2012

 

2011

 

Announcement

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 2008 - amended

 

18,500

 

$

172,857

 

8,600

 

$

89,955

 

 

$

 

September 2008

 

7,609

 

73,134

 

 

 

 

 

 

 

26,109

 

$

245,991

 

8,600

 

$

89,955

 

 

$

 

 

(1)  Represents the amount in U.S. dollars, including transaction costs, calculated based on exchange rates on the repurchase dates.

 

 

 

 

June 30,
2012

 

March 31,
2012

 

 

 

 

 

 

 

Cumulative translation adjustment

 

$

(73,119

)

$

(66,854

)

Pension liability adjustments, net of tax of $752 and $752

 

(27,444

)

(29,362

)

Unrealized gain on investments

 

 

343

 

Net deferred hedging gains (losses)

 

1,043

 

(56

)

 

 

$

(99,520

)

$

(95,929

)

Segment Information (Tables)

 

 

 

 

Three months ended

 

 

 

June 30,

 

 

 

2012

 

2011 (*)

 

 

 

 

 

 

 

Retail - Pointing Devices

 

$

115,727

 

$

121,750

 

Retail - Keyboards & Desktops

 

110,445

 

94,596

 

Retail - Audio

 

90,047

 

77,673

 

Retail - Video

 

36,880

 

49,586

 

Retail - Gaming

 

27,274

 

37,166

 

Retail - Digital Home

 

14,728

 

14,005

 

OEM

 

36,675

 

49,178

 

Peripherals

 

431,776

 

443,954

 

Video Conferencing

 

36,828

 

36,487

 

Total net sales

 

$

468,604

 

$

480,441

 

 

(*) Certain products within the retail product families as presented in the prior year have been reclassified to conform to the current year presentation, with no impact on previously reported total net retail sales.

 

 

 

 

Three months ended June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Net sales by operating segment

 

 

 

 

 

Peripherals

 

$

431,776

 

$

443,954

 

Video Conferencing

 

36,828

 

36,487

 

Total net sales

 

$

468,604

 

$

480,441

 

 

 

 

 

 

 

Operating loss by segment

 

 

 

 

 

Peripherals

 

$

(45,826

)

$

(26,879

)

Video Conferencing

 

(1,065

)

(1,808

)

All other

 

(12,389

)

(16,345

)

Total operating loss

 

$

(59,280

)

$

(45,032

)

 

 

 

 

 

 

Depreciation and amortization by segment

 

 

 

 

 

Peripherals

 

$

12,133

 

$

15,017

 

Video Conferencing

 

5,251

 

4,785

 

Total depreciation and amortization

 

$

17,384

 

$

19,802

 

 

 

 

 

Three months ended

 

 

 

June 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Americas

 

$

203,926

 

$

226,020

 

EMEA

 

150,006

 

130,852

 

Asia Pacific

 

114,672

 

123,569

 

Total net sales

 

$

468,604

 

$

480,441

 

 

 

 

 

June 30, 2012

 

March 31, 2012

 

 

 

 

 

 

 

Americas

 

$

50,256

 

$

49,365

 

EMEA

 

8,529

 

9,304

 

Asia Pacific

 

40,969

 

41,576

 

Total long-lived assets

 

$

99,754

 

$

100,245

 

Restructuring (Tables)
Summary of restructuring related activities

 

 

 

 

Total

 

Termination
Benefits

 

Lease Exit
Costs

 

Other

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2012

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

Charges

 

31,227

 

28,655

 

1,472

 

1,100

 

Cash payments

 

(5,195

)

(4,766

)

 

(429

)

Foreign exchange

 

63

 

63

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2012

 

$

26,095

 

$

23,952

 

$

1,472

 

$

671

 

Summary of Significant Accounting Policies (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Jun. 30, 2012
Mar. 31, 2012
week
Fiscal Year
 
 
Number of weeks in each interim quarter
 
13 
Reduction in deferred tax assets and decrease to retained earnings related to vested unexercised non-qualified stock options
$ 6.3 
 
Net Loss per Share (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Net Loss per Share
 
 
Net loss
$ (52,145)
$ (29,606)
Weighted average shares - basic
160,733,000 
179,331,000 
Weighted average shares - diluted
160,733,000 
179,331,000 
Net loss per share - basic (in dollars per share)
$ (0.32)
$ (0.17)
Net loss per share - diluted (in dollars per share)
$ (0.32)
$ (0.17)
Anti-dilutive share equivalents excluded from the computation of diluted net income per share
18,955,767 
15,939,015 
Employee Benefit Plans (Details)
In Millions, unless otherwise specified
1 Months Ended
Apr. 30, 2012
2006 Employee Share Purchase Plan (Non-U.S.)
 
Employee Share Purchase Plans and Stock Incentive Plans
 
Number of additional shares to be issued
5.0 
2012 Stock Inducement Equity Plan
 
Employee Share Purchase Plans and Stock Incentive Plans
 
Number of shares authorized
1.8 
Employee Benefit Plans (Details 2) (USD $)
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Share-based compensation expense and related tax benefit
 
 
Share-based compensation expense
$ 6,171,000 
$ 9,715,000 
Income Tax benefit
(1,376,000)
(2,389,000)
Share-based compensation expense, net of income tax
4,795,000 
7,326,000 
Share-based compensation expenese reduction due to employee termination
1,600,000 
 
Share-based compensation cost capitalized to inventory
500,000 
900,000 
Cost of goods sold
 
 
Share-based compensation expense and related tax benefit
 
 
Share-based compensation expense
789,000 
1,160,000 
Share-based compensation expense included in gross profit
 
 
Share-based compensation expense and related tax benefit
 
 
Share-based compensation expense
789,000 
1,160,000 
Marketing and selling
 
 
Share-based compensation expense and related tax benefit
 
 
Share-based compensation expense
1,780,000 
3,517,000 
Research and development
 
 
Share-based compensation expense and related tax benefit
 
 
Share-based compensation expense
1,825,000 
1,808,000 
General and administrative
 
 
Share-based compensation expense and related tax benefit
 
 
Share-based compensation expense
1,777,000 
3,230,000 
Share-based compensation expense included in operating expenses
 
 
Share-based compensation expense and related tax benefit
 
 
Share-based compensation expense
$ 5,382,000 
$ 8,555,000 
Employee Benefit Plans (Details 3) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Employee Share Purchase Plans and Stock Incentive Plans
 
Compensation Cost Not Yet Recognized
$ 43,215 
Stock Option Plans
 
Employee Share Purchase Plans and Stock Incentive Plans
 
Compensation Cost Not Yet Recognized
7,202 
Compensation Cost Not Yet Recognized, Future Recognition
17 months 
Time-based RSUs
 
Employee Share Purchase Plans and Stock Incentive Plans
 
Compensation Cost Not Yet Recognized
27,790 
Compensation Cost Not Yet Recognized, Future Recognition
22 months 
Performance-based RSUs
 
Employee Share Purchase Plans and Stock Incentive Plans
 
Compensation Cost Not Yet Recognized
5,454 
Compensation Cost Not Yet Recognized, Future Recognition
19 months 
Premium-priced stock options
 
Employee Share Purchase Plans and Stock Incentive Plans
 
Compensation Cost Not Yet Recognized
$ 2,769 
Compensation Cost Not Yet Recognized, Future Recognition
45 months 
Employee Benefit Plans (Details 4) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Summary of stock option activity, Number
 
 
Options outstanding, beginning of period, Number (in shares)
13,034 
16,312 
Granted, Number (in shares)
1,700 
 
Exercised, Number (in shares)
(84)
(74)
Cancelled or expired, Number (in shares)
(439)
(599)
Options outstanding, end of period, Number (in shares)
14,211 
15,639 
Options exercisable, end of period, Number (in shares)
10,984 
11,446 
Summary of stock option activity, Exercise Price
 
 
Options outstanding, beginning of period, Exercise Price (in dollars per share)
$ 19 
$ 19 
Granted, Exercise Price (in dollars per share)
$ 14 
 
Exercised, Exercise Price (in dollars per share)
$ 5 
$ 8 
Cancelled or expired, Exercise Price (in dollars per share)
$ 19 
$ 22 
Options outstanding, end of period, Exercise Price (in dollars per share)
$ 18 
$ 20 
Options exercisable, end of period, Exercise Price (in dollars per share)
$ 19 
$ 20 
Pretax intrinsic value of options exercised
$ 0.5 
$ 0.3 
Tax benefit realized for the tax deduction from options exercised
0.1 
0.1 
Total fair value of options vested
$ 70.6 
$ 74.9 
Employee Benefit Plans (Details 5)
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Employee Stock Purchase Plans
 
 
Valuation Assumptions and Values
 
 
Dividend yield (as a percent)
0.00% 
0.00% 
Expected life
6 months 
6 months 
Expected volatility (as a percent)
64.00% 
33.00% 
Risk-free interest rate (as a percent)
0.08% 
0.17% 
Weighted average grant-date fair value of options granted (in dollars per share)
$ 2.67 
$ 4.69 
Expected forfeitures (as a percent)
0.00% 
0.00% 
Stock Option Plans
 
 
Valuation Assumptions and Values
 
 
Dividend yield (as a percent)
0.00% 
 
Expected life
4 years 
 
Expected volatility (as a percent)
46.00% 
 
Risk-free interest rate (as a percent)
1.20% 
 
Weighted average grant-date fair value of options granted (in dollars per share)
$ 8.03 
 
Expected forfeitures (as a percent)
11.00% 
 
Premium-priced stock options
 
 
Valuation Assumptions and Values
 
 
Terms under which the premium-priced stock options grant will vest
90 days 
 
Dividend yield (as a percent)
0.00% 
 
Expected life
7 years 
 
Expected volatility (as a percent)
46.00% 
 
Risk-free interest rate (as a percent)
2.00% 
 
Weighted average grant-date fair value of options granted (in dollars per share)
$ 2.52 
 
Expected forfeitures (as a percent)
0.00% 
 
Employee Benefit Plans (Details 6) (USD $)
Share data in Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Restricted Stock Units (RSUs)
Jun. 30, 2011
Restricted Stock Units (RSUs)
Mar. 31, 2012
Performance-based RSUs
Summary of time- and performance-based RSU activity, Number
 
 
 
 
 
RSUs Outstanding, beginning of period, Number (in shares)
 
 
4,125 
2,370 
 
Granted, Number (in shares)
 
 
170 
714 
 
Vested, Number (in shares)
 
 
(60)
(50)
 
Cancelled or expired, Number (in shares)
 
 
(240)
(155)
 
RSUs Outstanding, end of period, Number (in shares)
 
 
3,995 
2,879 
 
Summary of time- and performance-based RSU activity, Grant-Date Fair Value
 
 
 
 
 
RSUs Outstanding, beginning of period, Grant-Date Fair Value (in dollars per share)
 
 
$ 13 
$ 21 
 
Granted, Grant-Date Fair Value (in dollars per share)
 
 
$ 9 
$ 13 
 
Vested, Grant-Date Fair Value (in dollars per share)
 
 
$ 14 
$ 13 
 
Cancelled or expired, Grant-Date Fair Value (in dollars per share)
 
 
$ 16 
$ 19 
 
RSUs Outstanding, end of period, Grant-Date Fair Value (in dollars per share)
 
 
$ 13 
$ 20 
 
Total pretax intrinsic value of RSUs vested
 
 
$ 800,000 
$ 700,000 
 
Tax benefit for RSUs vested during the period
$ (1,376,000)
$ (2,389,000)
$ (200,000)
$ (200,000)
 
Assumptions applied for the fair value of performance-based RSUs using the Monte-Carlo simulation method
 
 
 
 
 
Expected life
 
 
 
 
3 years 
Expected volatility (as a percent)
 
 
 
 
51.00% 
Risk-free interest rate (as a percent)
 
 
 
 
1.35% 
Employee Benefit Plans (Details 7) (USD $)
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Defined Contribution Plans
 
 
Expense for defined contribution plans
$ 2,800,000 
$ 3,100,000 
Net periodic benefit cost
 
 
Service cost
1,875,000 
1,295,000 
Interest cost
494,000 
505,000 
Expected return on plan assets
(93,000)
(418,000)
Amortization of net transition obligation
1,000 
1,000 
Amortization of net prior service cost
38,000 
39,000 
Recognized net actuarial loss
416,000 
100,000 
Net periodic benefit cost
$ 2,731,000 
$ 1,522,000 
Income Taxes (Details) (USD $)
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Mar. 31, 2012
Income Taxes
 
 
 
Restructuring charges
$ 31,227,000 
 
 
Tax benefit associated with the restructuring
200,000 
 
 
Income tax provision (benefit)
(6,910,000)
(9,545,000)
 
Effective income tax rates (as a percent)
11.70% 
24.40% 
 
Unrecognized tax benefits and related accrued interest and penalties
141,000,000 
 
143,300,000 
Unrecognized tax benefits that would impact effective tax rate
124,000,000 
 
125,400,000 
Accrued interest and penalties related to uncertain tax positions
$ 7,500,000 
 
$ 7,500,000 
Balance Sheet Components (Details) (USD $)
3 Months Ended
Jun. 30, 2011
Jun. 30, 2012
Mar. 31, 2012
Mar. 31, 2011
Accounts receivable:
 
 
 
 
Accounts receivable
 
$ 361,339,000 
$ 376,917,000 
 
Allowance for doubtful accounts
(4,036,000)
(2,321,000)
(2,472,000)
(4,086,000)
Allowance for returns
 
(24,995,000)
(24,599,000)
 
Allowance for cooperative marketing arrangements
 
(22,259,000)
(24,109,000)
 
Allowance for customer incentive programs
 
(36,237,000)
(42,262,000)
 
Allowance for pricing programs
 
(61,554,000)
(60,371,000)
 
Accounts receivable, net
 
213,973,000 
223,104,000 
 
Inventories:
 
 
 
 
Raw materials
 
32,129,000 
38,613,000 
 
Work-in-process
 
3,000 
73,000 
 
Finished goods
 
248,401,000 
258,386,000 
 
Inventory, net
 
280,533,000 
297,072,000 
 
Other current assets:
 
 
 
 
Tax and value-added tax refund receivables
 
15,331,000 
19,360,000 
 
Deferred taxes
 
33,179,000 
25,587,000 
 
Prepaid expenses and other
 
20,857,000 
21,043,000 
 
Other current assets, total
 
69,367,000 
65,990,000 
 
Property, plant and equipment:
 
 
 
 
Property, plant and equipment, gross
 
331,984,000 
312,725,000 
 
Less: accumulated depreciation
 
(254,079,000)
(249,657,000)
 
Property, plant and equipment before non-depreciable items
 
77,905,000 
63,068,000 
 
Property, plant and equipment, net
 
94,491,000 
94,884,000 
 
Other assets:
 
 
 
 
Deferred taxes
 
55,234,000 
61,358,000 
 
Trading investments
 
14,172,000 
14,301,000 
 
Deposits and other
 
6,566,000 
7,374,000 
 
Other assets, total
 
75,972,000 
83,033,000 
 
Other disclosures
 
 
 
 
Adjustments made to inventories
 
 
8,500,000 
 
Valuation adjustment charged to cost of goods sold
34,074,000 
 
 
 
Plant, buildings and improvements
 
 
 
 
Property, plant and equipment:
 
 
 
 
Property, plant and equipment, gross
 
62,775,000 
48,555,000 
 
Equipment
 
 
 
 
Property, plant and equipment:
 
 
 
 
Property, plant and equipment, gross
 
151,159,000 
148,059,000 
 
Computer equipment
 
 
 
 
Property, plant and equipment:
 
 
 
 
Property, plant and equipment, gross
 
40,956,000 
40,353,000 
 
Computer software
 
 
 
 
Property, plant and equipment:
 
 
 
 
Property, plant and equipment, gross
 
77,094,000 
75,758,000 
 
Construction-in-progress
 
 
 
 
Property, plant and equipment:
 
 
 
 
Property, plant and equipment, gross
 
13,754,000 
28,968,000 
 
Land
 
 
 
 
Property, plant and equipment:
 
 
 
 
Property, plant and equipment, gross
 
$ 2,832,000 
$ 2,848,000 
 
Balance Sheet Components (Details 2) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Mar. 31, 2012
Accrued liabilities:
 
 
Accrued personnel expenses
$ 50,229 
$ 42,809 
Accrued marketing expenses
7,664 
7,097 
Customer incentive program accruals
25,007 
26,112 
Accrued restructuring
26,095 
 
Deferred revenue
20,339 
19,358 
Accrued freight and duty
10,168 
11,376 
Valule-added tax payable
4,698 
7,140 
Accrued royalties
6,114 
6,243 
Warranty accrual
4,821 
5,184 
Non-retirement post-employment benefit obligations
4,325 
4,129 
Income taxes payable - current
4,501 
6,047 
Other accrued liabilities
49,591 
51,185 
Accrued liabilities
213,552 
186,680 
Other liabilities:
 
 
Income taxes payable - non-current
134,988 
137,319 
Obligation for deferred compensation
14,235 
14,393 
Defined benefit pension plan liability
37,730 
39,337 
Deferred rent
20,638 
16,042 
Other long-term liabilities
12,343 
11,371 
Long-term liabilities, total
$ 219,934 
$ 218,462 
Balance Sheet Components (Details 3) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Balance Sheet Components
 
 
Balance at the beginning of the period
$ (2,472)
$ (4,086)
Bad debt expense
86 
401 
Write-offs net of recoveries
65 
(351)
Balance at the end of the period
$ (2,321)
$ (4,036)
Financial Instruments (Details) (USD $)
3 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2012
Time deposits
Maximum
day
Jun. 30, 2012
Auction rate securities
security
Mar. 31, 2012
Auction rate securities
Jun. 30, 2012
Auction rate securities
Minimum
year
Jun. 30, 2012
Level 1
Mar. 31, 2012
Level 1
Jun. 30, 2012
Level 1
Money market funds
Mar. 31, 2012
Level 1
Money market funds
Jun. 30, 2012
Level 1
Mutual funds
Mar. 31, 2012
Level 1
Mutual funds
Jun. 30, 2012
Level 2
Mar. 31, 2012
Level 2
Mar. 31, 2012
Level 3
Mar. 31, 2011
Level 3
Collateralized debt obligations
Statement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
 
$ 360,737,000 
$ 478,370,000 
 
 
 
 
 
 
 
 
Trading investments
14,172,000 
14,301,000 
 
 
 
 
14,172,000 
14,301,000 
3,542,000 
3,383,000 
10,630,000 
10,918,000 
 
 
 
 
Available-for-sale securities
 
 
 
 
400,000 
 
 
 
 
 
 
 
 
 
 
429,000 
Foreign exchange derivative assets
 
 
 
 
 
 
 
 
 
 
 
 
45,000 
658,000 
 
 
Total assets at fair value
 
 
 
 
 
 
374,909,000 
492,671,000 
 
 
 
 
45,000 
658,000 
429,000 
 
Foreign exchange derivative liabilities
 
 
 
 
 
 
 
 
 
 
 
 
966,000 
245,000 
 
 
Total liabilities at fair value
 
 
 
 
 
 
 
 
 
 
 
 
966,000 
245,000 
 
 
Entity's normal operating cycle period
1 year 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized trading loss included in other income (expense), net
300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maturity term (in years/days)
 
 
32 
 
 
10 
 
 
 
 
 
 
 
 
 
 
Number of days for reset of interest rates on auction rate securities
 
 
 
28 days 
 
 
 
 
 
 
 
 
 
 
 
 
Number of auction rate securities that have been sold
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carrying value of securities sold
 
 
 
400,000 
 
 
 
 
 
 
 
 
 
 
 
 
Par value of securities sold
 
 
 
15,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds on sale of securities
 
 
 
900,000 
 
 
 
 
 
 
 
 
 
 
 
 
Loss recorded in accumulated other comprehensive income
 
 
 
300,000 
 
 
 
 
 
 
 
 
 
 
 
 
Par value of auction rate securities portfolio
 
 
 
 
$ 15,200,000 
 
 
 
 
 
 
 
 
 
 
 
Financial Instruments (Details 2) (Available-for-sale securities, USD $)
In Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Mar. 31, 2011
Available-for-sale securities
 
 
 
Changes in the Level 3 financial assets
 
 
 
Balance at the beginning of the year
$ 429 
$ 1,695 
$ 1,695 
Proceeds from sales of securities
(917)
 
 
Realized gain on sales of securities
831 
 
 
Reversal of unrealized gains previously recognized in accumulated other comprehensive income
(343)
 
 
Balance at the end of the year
 
$ 1,695 
$ 1,695 
Financial Instruments (Details 3) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Mar. 31, 2012
Derivative Financial Instruments
 
 
Asset Derivatives, Fair Value
$ 45 
$ 658 
Liability Derivatives, Fair Value
966 
245 
Derivatives designated as hedging instruments
 
 
Derivative Financial Instruments
 
 
Asset Derivatives, Fair Value
25 
250 
Liability Derivatives, Fair Value
547 
 
Derivatives designated as hedging instruments |
Cash Flow Hedges
 
 
Derivative Financial Instruments
 
 
Asset Derivatives, Fair Value
25 
250 
Liability Derivatives, Fair Value
547 
 
Derivatives not designated as hedging instruments
 
 
Derivative Financial Instruments
 
 
Asset Derivatives, Fair Value
20 
408 
Liability Derivatives, Fair Value
419 
245 
Derivatives not designated as hedging instruments |
Foreign Exchange Forward Contracts
 
 
Derivative Financial Instruments
 
 
Asset Derivatives, Fair Value
13 
341 
Liability Derivatives, Fair Value
122 
148 
Derivatives not designated as hedging instruments |
Foreign Exchange Swap Contracts
 
 
Derivative Financial Instruments
 
 
Asset Derivatives, Fair Value
67 
Liability Derivatives, Fair Value
$ 297 
$ 97 
Financial Instruments (Details 4)
3 Months Ended 3 Months Ended 3 Months Ended
Jun. 30, 2012
USD ($)
Jun. 30, 2011
USD ($)
Jun. 30, 2012
Derivatives designated as hedging instruments
USD ($)
Jun. 30, 2011
Derivatives designated as hedging instruments
USD ($)
Jun. 30, 2012
Derivatives designated as hedging instruments
Cash Flow Hedges
USD ($)
Jun. 30, 2011
Derivatives designated as hedging instruments
Cash Flow Hedges
USD ($)
Jun. 30, 2012
Derivatives designated as hedging instruments
Cash Flow Hedges
Foreign Exchange Forward Contracts
USD ($)
Jun. 30, 2012
Derivatives designated as hedging instruments
Cash Flow Hedges
Foreign Exchange Forward Contracts
EUR (€)
Jun. 30, 2011
Derivatives designated as hedging instruments
Cash Flow Hedges
Foreign Exchange Forward Contracts
USD ($)
Jun. 30, 2011
Derivatives designated as hedging instruments
Cash Flow Hedges
Foreign Exchange Forward Contracts
EUR (€)
Jun. 30, 2012
Derivatives designated as hedging instruments
Cash Flow Hedges
Cost of goods sold
USD ($)
Jun. 30, 2011
Derivatives designated as hedging instruments
Cash Flow Hedges
Cost of goods sold
USD ($)
Jun. 30, 2012
Derivatives designated as hedging instruments
Cash Flow Hedges
Other income/ expense
USD ($)
Jun. 30, 2011
Derivatives designated as hedging instruments
Cash Flow Hedges
Other income/ expense
USD ($)
Jun. 30, 2012
Derivatives not designated as hedging instruments
USD ($)
Jun. 30, 2011
Derivatives not designated as hedging instruments
USD ($)
Jun. 30, 2012
Derivatives not designated as hedging instruments
Foreign Exchange Forward Contracts
USD ($)
Jun. 30, 2011
Derivatives not designated as hedging instruments
Foreign Exchange Forward Contracts
USD ($)
Jun. 30, 2012
Derivatives not designated as hedging instruments
Foreign Exchange Swap Contracts
USD ($)
Jun. 30, 2011
Derivatives not designated as hedging instruments
Foreign Exchange Swap Contracts
USD ($)
Jun. 30, 2012
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Forward Contracts
USD ($)
Jun. 30, 2011
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Forward Contracts
USD ($)
Jun. 30, 2012
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Swap Contracts
USD ($)
Jun. 30, 2011
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Swap Contracts
USD ($)
Amounts of gains and losses on the derivative instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net amount of gain (loss) deferred as a component of accumulated other comprehensive loss
$ 1,099,000 
$ 682,000 
$ 1,099,000 
$ 682,000 
$ 1,099,000 
$ 682,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of gain (loss) reclassified from accumulated other comprehensive loss into income
(106,000)
2,478,000 
(106,000)
2,478,000 
 
 
 
 
 
 
(106,000)
2,478,000 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of gain (loss) recognized in income immediately
 
 
 
 
 
 
 
 
 
 
 
 
 
 
80,000 
(269,000)
 
 
 
 
(745,000)
(52,000)
825,000 
(217,000)
Amount of gain (loss) recognized in income immediately
132,000 
(366,000)
(52,000)
(97,000)
 
 
 
 
 
 
 
 
(52,000)
(97,000)
 
 
 
 
 
 
 
 
 
 
Average maturity
 
 
 
 
 
 
4 months 
4 months 
 
 
 
 
 
 
 
 
3 months 
 
 
 
 
 
 
 
Notional amounts of foreign exchange forward contracts outstanding
 
 
 
 
 
 
98,200,000 
78,000,000 
66,300,000 
45,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amounts of foreign exchange swap contracts, other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 6,400,000 
$ 8,900,000 
$ 24,700,000 
$ 14,600,000 
 
 
 
 
Goodwill and Other Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Mar. 31, 2012
Goodwill
 
 
Goodwill
$ 558,211 
$ 560,523 
Peripherals
 
 
Goodwill
 
 
Goodwill
219,300 
 
Minimum percentage of carrying value by which the fair value of each reporting unit exceeded the carrying value
70.00% 
 
Video conferencing
 
 
Goodwill
 
 
Goodwill
$ 338,900 
 
Minimum percentage of carrying value by which the fair value of each reporting unit exceeded the carrying value
100.00% 
 
Goodwill and Other Intangible Assets (Details 2) (USD $)
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Mar. 31, 2012
Other intangible assets
 
 
 
Gross Carrying Amount
$ 163,631,000 
 
$ 163,984,000 
Accumulated Amortization
(116,594,000)
 
(110,466,000)
Net Carrying Amount
47,037,000 
 
53,518,000 
Amortization expense for other intangible assets
6,232,000 
6,630,000 
 
Expected amortization expense
 
 
 
Future amortization expense for remaining nine months of fiscal year, 2013
18,200,000 
 
 
Future amortization expense for fiscal year, 2014
18,200,000 
 
 
Future amortization expense for fiscal year, 2015
9,100,000 
 
 
Future amortization expense for fiscal year, 2016
1,200,000 
 
 
Future amortization expense, thereafter
300,000 
 
 
Trademark/ trade name
 
 
 
Other intangible assets
 
 
 
Gross Carrying Amount
32,053,000 
 
32,104,000 
Accumulated Amortization
(26,754,000)
 
(26,095,000)
Net Carrying Amount
5,299,000 
 
6,009,000 
Technology
 
 
 
Other intangible assets
 
 
 
Gross Carrying Amount
91,732,000 
 
91,954,000 
Accumulated Amortization
(66,283,000)
 
(62,548,000)
Net Carrying Amount
25,449,000 
 
29,406,000 
Customer contracts
 
 
 
Other intangible assets
 
 
 
Gross Carrying Amount
39,846,000 
 
39,926,000 
Accumulated Amortization
(23,557,000)
 
(21,823,000)
Net Carrying Amount
$ 16,289,000 
 
$ 18,103,000 
Financing Arrangements (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Senior Revolving Credit Facility Agreement
 
Financing Arrangements
 
Maximum borrowing capacity
$ 250.0 
Optional expansion, maximum borrowing capacity
150.0 
Increased maximum borrowing capacity
400.0 
Commitment fee as percentage of the variable margin
40.00% 
Non-recurring commitment and legal fees
1.5 
Unsecured bank lines of credit
 
Financing Arrangements
 
Maximum borrowing capacity
43.9 
Credit lines related to corporate credit cards
 
Financing Arrangements
 
Maximum borrowing capacity
$ 29.9 
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Future minimum annual rentals under non-cancelable operating leases
 
Future minimum annual rentals under non-cancelable operating leases
$ 106.0 
Rent expense
$ 3.4 
Commitments and Contingencies (Details 2) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Changes to the asset retirement obligation liability
 
 
Asset retirement obligations, beginning of period
$ 1,918 
$ 1,636 
Liabilities settled
 
(17)
Accretion expense
12 
19 
Foreign currency translation
71 
32 
Asset retirement obligations, end of period
2,001 
1,670 
Changes in the warranty liability:
 
 
Warranty liability, beginning of period
5,184 
4,970 
Provision for warranties issued during the period
1,632 
4,421 
Settlements made during the period
(1,995)
(4,758)
Warranty liability, end of period
$ 4,821 
$ 4,633 
Minimum
 
 
Product Warranties
 
 
Warranty period
1 year 
 
Maximum
 
 
Product Warranties
 
 
Warranty period
5 years 
 
Commitments and Contingencies (Details 3) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Purchase Commitments
 
Purchase commitments
$ 232,168 
Inventory Purchase Obligations
 
Purchase Commitments
 
Purchase commitments
152,617 
Operating Expenses
 
Purchase Commitments
 
Purchase commitments
57,655 
Capital Expenditure
 
Purchase Commitments
 
Purchase commitments
$ 21,896 
Commitments and Contingencies (Details 4) (USD $)
In Millions, unless otherwise specified
1 Months Ended 3 Months Ended 3 Months Ended
Jul. 31, 2012
day
Jun. 30, 2012
Parent Guarantee Of Subsidiary Obligations
Jun. 30, 2012
Parent Guarantee Of Subsidiary Purchases
guarantee
Jun. 30, 2012
Parent guarantee of subsidiary purchases, with specified maximum
Jun. 30, 2012
Guarantee of contract manufacturers purchase obligations, with specified maximum
Jun. 30, 2012
Parent Guarantee for purchases obligation of third-party contract manufacturer
guarantee
Guarantees
 
 
 
 
 
 
Maximum amount of the guarantees
 
$ 67.9 
 
$ 7.0 
$ 36.0 
$ 3.7 
Number of guarantees
 
 
 
 
Number of guarantees without a specified maximum exposure
 
 
 
 
 
Guarantees outstanding
 
$ 15.7 
$ 3.6 
 
 
$ 1.7 
Legal Proceedings
 
 
 
 
 
 
Maximum period to reopen the action in court if settlement fails between Logitech and UEI
60 
 
 
 
 
 
Shareholders' Equity (Details)
3 Months Ended 46 Months Ended 3 Months Ended 46 Months Ended 3 Months Ended 46 Months Ended
Jun. 30, 2012
USD ($)
Jun. 30, 2012
USD ($)
Jun. 30, 2012
September 2008
USD ($)
Jun. 30, 2011
September 2008
USD ($)
Jun. 30, 2012
September 2008
USD ($)
Jun. 30, 2012
September 2008 - amended
USD ($)
Jun. 30, 2011
September 2008 - amended
USD ($)
Jun. 30, 2012
September 2008 - amended
USD ($)
Jun. 30, 2012
September 2008 - amended
CHF
Dividends
 
 
 
 
 
 
 
 
 
Proposed distribution of additional paid-in-capital
$ 125,700,000 
 
 
 
 
 
 
 
 
Share Repurchases
 
 
 
 
 
 
 
 
 
Approved Share Buyback Number
 
 
8,344,000 
8,344,000 
8,344,000 
 
28,465,000 
 
28,465,000 
Approved Buyback Amount
 
 
250,000,000 
250,000,000 
 
177,030,000 
177,030,000 
 
 
Number of Shares Remaining
 
 
 
 
 
 
 
 
414,000 
Amount Remaining
 
 
 
 
 
4,435,000 
 
 
 
Adjusted closing price (in dollars per share)
 
 
 
 
 
 
 
 
 10.22 
Share Repurchases, Shares
8,600,000 
26,109,000 
 
 
7,609,000 
8,600,000 
 
18,500,000 
 
Share Repurchases, Amount
$ 89,955,000 
$ 245,991,000 
 
 
$ 73,134,000 
$ 89,955,000 
 
$ 172,857,000 
 
Shares repurchased subject to cancellation
 
 
 
 
 
18,500,000 
 
 
 
Shareholders' Equity (Details 2) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Mar. 31, 2012
Components of accumulated other comprehensive loss
 
 
Cumulative translation adjustment
$ (73,119)
$ (66,854)
Pension liability adjustments, net of tax of $752 and $752
(27,444)
(29,362)
Unrealized gain on investments
 
343 
Net deferred hedging gains (losses)
1,043 
(56)
Total
(99,520)
(95,929)
Pension liability adjustments, tax amount
$ 752 
$ 752 
Segment Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2012
segment
Jun. 30, 2011
Net sales by product family, excluding intercompany transactions
 
 
Total net sales
$ 468,604 
$ 480,441 
Number of operating segments
 
Peripherals
 
 
Net sales by product family, excluding intercompany transactions
 
 
Total net sales
431,776 
443,954 
Retail - Pointing Devices
 
 
Net sales by product family, excluding intercompany transactions
 
 
Total net sales
115,727 
121,750 
Retail - Keyboards & Desktops
 
 
Net sales by product family, excluding intercompany transactions
 
 
Total net sales
110,445 
94,596 
Retail - Audio
 
 
Net sales by product family, excluding intercompany transactions
 
 
Total net sales
90,047 
77,673 
Retail - Video
 
 
Net sales by product family, excluding intercompany transactions
 
 
Total net sales
36,880 
49,586 
Retail - Gaming
 
 
Net sales by product family, excluding intercompany transactions
 
 
Total net sales
27,274 
37,166 
Retail - Digital Home
 
 
Net sales by product family, excluding intercompany transactions
 
 
Total net sales
14,728 
14,005 
OEM
 
 
Net sales by product family, excluding intercompany transactions
 
 
Total net sales
36,675 
49,178 
Video Conferencing
 
 
Net sales by product family, excluding intercompany transactions
 
 
Total net sales
$ 36,828 
$ 36,487 
Segment Information (Details 2) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Net sales, operating loss and depreciation and amortization for the operating segments
 
 
Total net sales
$ 468,604 
$ 480,441 
Total operating loss
(59,280)
(45,032)
Total depreciation and amortization
17,384 
19,802 
Peripherals
 
 
Net sales, operating loss and depreciation and amortization for the operating segments
 
 
Total net sales
431,776 
443,954 
Total operating loss
(45,826)
(26,879)
Total depreciation and amortization
12,133 
15,017 
Video conferencing
 
 
Net sales, operating loss and depreciation and amortization for the operating segments
 
 
Total net sales
36,828 
36,487 
Total operating loss
(1,065)
(1,808)
Total depreciation and amortization
5,251 
4,785 
All other
 
 
Net sales, operating loss and depreciation and amortization for the operating segments
 
 
Total operating loss
$ (12,389)
$ (16,345)
Segment Information (Details 3) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Mar. 31, 2012
Jun. 30, 2012
Consolidated net sales
Geographic Concentration
No other single country
Jun. 30, 2011
Consolidated net sales
Geographic Concentration
No other single country
Jun. 30, 2012
Consolidated net sales
Customer Concentration
Single customer group
customer
Jun. 30, 2011
Consolidated net sales
Customer Concentration
Single customer group
Jun. 30, 2012
Americas
Jun. 30, 2011
Americas
Mar. 31, 2012
Americas
Jun. 30, 2012
EMEA
Jun. 30, 2011
EMEA
Mar. 31, 2012
EMEA
Jun. 30, 2012
Asia Pacific
Jun. 30, 2011
Asia Pacific
Mar. 31, 2012
Asia Pacific
Jun. 30, 2012
United States
Consolidated net sales
Geographic Concentration
Minimum
Jun. 30, 2011
United States
Consolidated net sales
Geographic Concentration
Minimum
Jun. 30, 2012
United States
Consolidated long-lived assets
Geographic Concentration
Minimum
Mar. 31, 2012
United States
Consolidated long-lived assets
Geographic Concentration
Minimum
Jun. 30, 2012
China
Consolidated net sales
Geographic Concentration
Minimum
Jun. 30, 2011
China
Consolidated net sales
Geographic Concentration
Minimum
Jun. 30, 2012
China
Consolidated long-lived assets
Geographic Concentration
Minimum
Mar. 31, 2012
China
Consolidated long-lived assets
Geographic Concentration
Minimum
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total net sales
$ 468,604 
$ 480,441 
 
 
 
 
 
$ 203,926 
$ 226,020 
 
$ 150,006 
$ 130,852 
 
$ 114,672 
$ 123,569 
 
 
 
 
 
 
 
 
 
Total long-lived assets
$ 99,754 
 
$ 100,245 
 
 
 
 
$ 50,256 
 
$ 49,365 
$ 8,529 
 
$ 9,304 
$ 40,969 
 
$ 41,576 
 
 
 
 
 
 
 
 
Concentration risk
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Threshold not reached for reporting individual countries (as a percent)
 
 
 
10.00% 
10.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of major customer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of benchmark derived from specified source
 
 
 
 
 
10.00% 
10.00% 
 
 
 
 
 
 
 
 
 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
Restructuring (Details) (USD $)
3 Months Ended
Jun. 30, 2012
Restructuring reserve
 
Charges
$ 31,227,000 
Restructuring Plan 2012
 
Restructuring related charges:
 
Number of non-direct-labor workforce reduced
340 
Charges related to discontinuance of certain product development
3,000,000 
Expected additional pre-tax restructuring charges
5,000,000 
Restructuring reserve
 
Charges
31,227,000 
Cash payments
(5,195,000)
Foreign exchange
63,000 
Balance at ending of period
26,095,000 
Restructuring Plan 2012 |
Termination Benefits
 
Restructuring reserve
 
Charges
28,655,000 
Cash payments
(4,766,000)
Foreign exchange
63,000 
Balance at ending of period
23,952,000 
Restructuring Plan 2012 |
Other
 
Restructuring reserve
 
Charges
1,100,000 
Cash payments
(429,000)
Balance at ending of period
671,000 
Restructuring Plan 2012 |
Lease Exit Costs
 
Restructuring reserve
 
Charges
1,472,000 
Balance at ending of period
$ 1,472,000