LOGITECH INTERNATIONAL SA, 10-Q filed on 11/5/2013
Quarterly Report
Document and Entity Information
6 Months Ended
Sep. 30, 2013
Oct. 28, 2013
Document and Entity Information
 
 
Entity Registrant Name
LOGITECH INTERNATIONAL SA 
 
Entity Central Index Key
0001032975 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2013 
 
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
 
160,592,874 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q2 
 
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
Net sales
$ 531,972 
$ 547,693 
$ 1,009,896 
$ 1,016,297 
Cost of goods sold
348,559 
351,919 
658,128 
675,177 
Gross profit
183,413 
195,774 
351,768 
341,120 
Operating expenses:
 
 
 
 
Marketing and selling
93,710 
110,522 
194,345 
211,419 
Research and development
37,633 
38,114 
73,824 
77,137 
General and administrative
29,395 
25,980 
58,543 
58,460 
Restructuring charges (credits)
5,465 
(2,671)
7,799 
28,556 
Total operating expenses
166,203 
171,945 
334,511 
375,572 
Operating income (loss)
17,210 
23,829 
17,257 
(34,452)
Interest income, net
183 
153 
160 
537 
Other income (expense)
62 
(509)
279 
(668)
Income (loss) before income taxes
17,455 
23,473 
17,696 
(34,583)
Provision for (benefit from) income taxes
3,057 
(31,076)
2,255 
(37,986)
Net income
$ 14,398 
$ 54,549 
$ 15,441 
$ 3,403 
Net income per share:
 
 
 
 
Basic (in dollars per share)
$ 0.09 
$ 0.35 
$ 0.10 
$ 0.02 
Diluted (in dollars per share)
$ 0.09 
$ 0.35 
$ 0.10 
$ 0.02 
Shares used to compute net income per share:
 
 
 
 
Basic (in shares)
159,969 
156,736 
159,637 
158,723 
Diluted (in shares)
161,183 
157,932 
160,875 
159,853 
Cash dividends per share (in dollars per share)
$ 0.22 
$ 0.85 
$ 0.22 
$ 0.85 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
 
 
 
Net income
$ 14,398 
$ 54,549 
$ 15,441 
$ 3,403 
Other comprehensive income:
 
 
 
 
Foreign currency translation gain (loss)
2,728 
2,441 
2,829 
(4,420)
Change in net loss (gain), and prior service cost related to defined benefit pension plans:
 
 
 
 
Net loss (gain) and prior service cost
(804)
6,457 
(1,000)
7,920 
Less amortization included in operating expenses
309 
301 
615 
756 
Net change in hedging gain (loss):
 
 
 
 
Unrealized hedging loss
(1,373)
(5,466)
(2,286)
(4,261)
Less reclassification adjustment for gain (loss) included in cost of goods sold
(94)
1,683 
184 
1,577 
Net change in unrealized investment loss:
 
 
 
 
Reclassification adjustment for gain included in other income (expense)
 
 
 
(343)
Other comprehensive income
766 
5,416 
342 
1,229 
Total comprehensive income
$ 15,164 
$ 59,965 
$ 15,783 
$ 4,632 
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2013
Mar. 31, 2013
Current assets:
 
 
Cash and cash equivalents
$ 294,796 
$ 333,824 
Accounts receivable
258,858 
179,565 
Inventories
292,777 
261,083 
Other current assets
65,808 
58,103 
Assets held for sale
 
10,960 
Total current assets
912,239 
843,535 
Non-current assets:
 
 
Property, plant and equipment, net
87,133 
87,649 
Goodwill
344,759 
341,357 
Other intangible assets
17,747 
26,024 
Other assets
71,817 
75,098 
Total assets
1,433,695 
1,373,663 
Current liabilities:
 
 
Accounts payable
303,089 
265,995 
Accrued and other current liabilities
219,646 
192,774 
Liabilities held for sale
 
3,202 
Total current liabilities
522,735 
461,971 
Non-current liabilities
202,556 
195,882 
Total liabilities
725,291 
657,853 
Commitments and contingencies (Note 11)
   
   
Shareholders' equity:
 
 
Shares, par value CHF 0.25 - 173,106 issued and authorized and 50,000 conditionally authorized at September 30, 2013 and March 31, 2013
30,148 
30,148 
Less: shares in treasury, at cost, 12,556 at September 30, 2013 and 13,855 at March 31, 2013
(155,807)
(177,847)
Retained earnings
926,714 
956,502 
Accumulated other comprehensive loss
(92,651)
(92,993)
Total shareholders' equity
708,404 
715,810 
Total liabilities and shareholders' equity
$ 1,433,695 
$ 1,373,663 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (CHF)
In Thousands, except Per Share data, unless otherwise specified
Sep. 30, 2013
Mar. 31, 2013
CONSOLIDATED BALANCE SHEETS
 
 
Shares, par value (in CHF per share)
 0.25 
 0.25 
Shares, issued
173,106 
173,106 
Shares, authorized
173,106 
173,106 
Shares, conditionally authorized
50,000 
50,000 
Treasury, at cost, shares
12,556 
13,855 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Cash flows from operating activities:
 
 
Net income
$ 15,441 
$ 3,403 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation
19,283 
22,307 
Amortization of other intangible assets
10,518 
12,589 
Investment impairment and loss
530 
 
Share-based compensation expense
8,499 
13,437 
Loss on disposal of property, plant and equipment
2,456 
 
Gain on sales of available-for-sale securities
 
(831)
Excess tax benefits from share-based compensation
 
(22)
Deferred income taxes and other
(3,902)
(3,806)
Changes in assets and liabilities, net of acquisitions:
 
 
Accounts receivable
(77,042)
(58,533)
Inventories
(21,350)
(31,825)
Other assets
(5,893)
(7,570)
Accounts payable
39,555 
71,095 
Accrued and other liabilities
26,091 
(10,997)
Net cash provided by operating activities
14,186 
9,247 
Cash flows from investing activities:
 
 
Purchases of property, plant and equipment
(23,063)
(32,817)
Investment in a privately-held company
 
(3,970)
Acquisitions, net of cash acquired
(650)
 
Proceeds from sales of available-for-sale securities
 
917 
Purchases of trading investments for deferred compensation plan
(6,146)
(1,648)
Proceeds from sales of trading investments for deferred compensation plan
6,602 
1,638 
Net cash used in investing activities
(23,257)
(35,880)
Cash flows from financing activities:
 
 
Payment of cash dividends
(36,123)
(133,462)
Purchases of treasury shares
 
(87,812)
Proceeds from sales of shares upon exercise of options and purchase rights
6,135 
9,008 
Tax withholdings related to net share settlements of restricted stock units
(453)
(635)
Excess tax benefits from share-based compensation
 
22 
Net cash used in financing activities
(30,441)
(212,879)
Effect of exchange rate changes on cash and cash equivalents
484 
(1,825)
Net decrease in cash and cash equivalents
(39,028)
(241,337)
Cash and cash equivalents at beginning of period
333,824 
478,370 
Cash and cash equivalents at end of period
294,796 
237,033 
Non-cash investing activities:
 
 
Property, plant and equipment purchased during the period and included in period end accounts payable
$ 1,935 
$ 1,702 
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
Balance at Mar. 31, 2012
$ 1,122,232 
$ 33,370 
 
$ (343,829)
$ 1,528,620 
$ (95,929)
Balance (in shares) at Mar. 31, 2012
 
191,606 
 
27,173 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
Total comprehensive income
4,632 
 
 
 
3,403 
1,229 
Purchase of treasury shares
(87,812)
 
 
(87,812)
 
 
Purchase of treasury shares (in shares)
 
 
 
8,600 
 
 
Tax benefit from exercise of stock options
(3,011)
 
(3,011)
 
 
 
Sale of shares upon exercise of options and purchase rights
9,017 
 
(1,756)
41,058 
(30,285)
 
Sale of shares upon exercise of options and purchase rights (in shares)
 
 
 
(1,347)
 
 
Issuance of shares upon vesting of restricted stock units
(580)
 
(8,526)
7,946 
 
 
Issuance of shares upon vesting of restricted stock units (in shares)
 
 
 
(288)
 
 
Share-based compensation expense
13,293 
 
13,293 
 
 
 
Cash dividends
(133,462)
 
 
 
(133,462)
 
Balance at Sep. 30, 2012
924,309 
33,370 
 
(382,637)
1,368,276 
(94,700)
Balance (in shares) at Sep. 30, 2012
 
191,606 
 
34,138 
 
 
Balance at Mar. 31, 2013
715,810 
30,148 
 
(177,847)
956,502 
(92,993)
Balance (in shares) at Mar. 31, 2013
 
173,106 
 
13,855 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
Total comprehensive income
15,783 
 
 
 
15,441 
342 
Deferred tax asset adjustment related to share-based compensation expense
(1,304)
 
(1,304)
 
 
 
Sale of shares upon exercise of options and purchase rights
6,079 
 
(3,021)
18,206 
(9,106)
 
Sale of shares upon exercise of options and purchase rights (in shares)
 
 
 
(1,074)
 
 
Issuance of shares upon vesting of restricted stock units
(397)
 
(4,231)
3,834 
 
 
Issuance of shares upon vesting of restricted stock units (in shares)
 
 
 
(225)
 
 
Share-based compensation expense
8,556 
 
8,556 
 
 
 
Cash dividends
(36,123)
 
 
 
(36,123)
 
Balance at Sep. 30, 2013
$ 708,404 
$ 30,148 
 
$ (155,807)
$ 926,714 
$ (92,651)
Balance (in shares) at Sep. 30, 2013
 
173,106 
 
12,556 
 
 
The Company
The Company

Note 1 — The Company

 

Logitech International S.A, together with its consolidated subsidiaries, (“Logitech” or the “Company”) develops and markets innovative hardware and software products that enable or enhance digital navigation, music and video entertainment, gaming, social networking, and audio and video communication over the Internet.

 

Logitech has two operating segments, peripherals and video conferencing. Logitech’s peripherals segment encompasses the design, manufacturing and marketing of peripherals for PCs (personal computers), tablets and other digital platforms. Logitech’s 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.

 

Logitech sells its peripheral products to a network of distributors, retailers and OEMs (original equipment manufacturers).  Logitech sells its video conferencing products and services to distributors, value-added resellers, OEMs, and, occasionally, direct enterprise customers. The large majority of its sales have historically been derived from 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 symbol LOGN.

Revision of Previously-Issued Financial Statements
Revision of Previously-Issued Financial Statements

Note 2 — Revision of Previously-Issued Financial Statements

 

In the first quarter of fiscal year 2014, the Company identified errors related to the accounting for its product warranty liability and amortization expense of certain intangible assets. The errors impacted prior reporting periods, starting prior to fiscal year 2009. While these errors were not material to any previously issued annual or quarterly consolidated financial statements, management concluded that correcting the cumulative errors and related tax effects, which amounted to $19.1 million, in the first quarter of fiscal year 2014 would be material to the consolidated financial statements for the three months ended June 30, 2013 and to the expected results of operations for the fiscal year ending March 31, 2014.

 

The Company evaluated the cumulative impact of the errors on prior periods under the guidance in ASC 250-10 relating to SEC Staff Accounting Bulletin (“SAB”) No. 99, Materiality. The Company also evaluated the impact of correcting the errors through an adjustment to its financial statements and concluded, based on the guidance within ASC 250-10 relating to SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, to revise its previously issued financial statements to reflect the impact of the correction of these errors when it files subsequent reports on Form 10-Q and Form 10-K. Accordingly, the Company has revised its consolidated financial statements for the quarter ended June 30, 2012, to correct these errors. In addition, as a result of the decision to revise its previously issued consolidated financial statements to correct for the errors described above, the Company also corrected other immaterial errors that were previously uncorrected. On August 7, 2013, the Company filed a Form 10-K/A to revise its financial statements for the years ended March 31, 2011, 2012 and 2013 to correct for the same errors.  As a result, the Company has also revised its financial statements for the three and six months ended September 30, 2012 from what it previously reported.

 

The revised financial statements correct the following errors, which are included in the tables below, with associated footnotes:

 

(1) - Warranty accrual — The Company determined that its prior warranty model did not accurately estimate warranty costs and liabilities at each reporting period. The inherent flaws in the prior model involved use of generic assumptions, incomplete warranty cost data and inter-regional methodological differences. This error impacted prior reporting periods, starting prior to fiscal year 2009, and impacted deferred tax asset classification between current and non-current assets.

 

(2) - Amortization of intangibles — The Company determined that $4.2 million in intangible assets originating from a November 2009 acquisition were never amortized.  The impact of this adjustment was $2.0 million in amortization expense not properly recorded during the periods from the quarter ended December 31, 2009 through the end of fiscal year 2013.

 

(3) - Other adjustments — The Company also corrected a number of other immaterial errors, including the cumulative translation adjustment related to the purchase of treasury shares, and an adjustment affecting the amount of property, plant and equipment purchased during the first quarter of fiscal year 2013.

 

Consolidated Statements of Operations.

 

The following table presents the impact of the accounting errors on the Company’s previously-reported consolidated statement of operations for the three and six months ended September 30, 2012 (in thousands):

 

 

 

Three Months ended September 30, 2012

 

Six Months ended September 30, 2012

 

 

 

As Reported

 

Adjustments

 

As Revised

 

As Reported

 

Adjustments

 

As Revised

 

 

 

 

 

(Unaudited)

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

547,693

 

150

(1)

$

547,693

 

$

1,016,297

 

(1,015

)(1)

$

1,016,297

 

Cost of goods sold

 

351,698

 

71

(2)

351,919

 

676,050

 

142

(2)

675,177

 

Gross profit

 

195,995

 

(221

)

195,774

 

340,247

 

873

 

341,120

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing and selling

 

110,522

 

 

110,522

 

211,419

 

 

211,419

 

Research and development

 

38,019

 

95

(2)

38,114

 

76,947

 

190

(2)

77,137

 

General and administrative

 

25,980

 

 

25,980

 

58,460

 

 

58,460

 

Restructuring charges (credits)

 

(2,671

)

 

(2,671

)

28,556

 

 

28,556

 

Total operating expenses

 

171,850

 

95

 

171,945

 

375,382

 

190

 

375,572

 

Operating income (loss)

 

24,145

 

(316

)

23,829

 

(35,135

)

683

 

(34,452

)

Interest income, net

 

153

 

 

153

 

537

 

 

537

 

Other expense, net

 

(509

)

 

(509

)

(668

)

 

(668

)

Income (loss) before income taxes

 

23,789

 

(316

)

23,473

 

(35,266

)

683

 

(34,583

)

Benefit from income taxes

 

(31,076

)

 

(31,076

)

(37,986

)

 

(37,986

)

Net Income

 

$

54,865

 

$

(316

)

$

54,549

 

$

2,720

 

$

683

 

$

3,403

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

$

0.35

 

 

 

$

0.35

 

$

0.02

 

 

 

$

0.02

 

Basic

 

$

0.35

 

 

 

$

0.35

 

$

0.02

 

 

 

$

0.02

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

156,736

 

 

 

156,736

 

158,723

 

 

 

158,723

 

Diluted

 

157,932

 

 

 

157,932

 

159,853

 

 

 

159,853

 

 

Consolidated Statements of Comprehensive Income

 

The Company’s following table presents the impact of the accounting errors on the Company’s previously-reported consolidated statements of comprehensive income for the three and six months ended September 30, 2012 (in thousands):

 

 

 

Three Months ended September 30, 2012

 

Six Months ended September 30, 2012

 

 

 

As Reported

 

Adjustments

 

As Revised

 

As Reported

 

Adjustments

 

As Revised

 

 

 

 

 

(Unaudited)

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

54,865

 

$

(150

)(1)

$

54,549

 

$

2,720

 

$

1,015

(1)

$

3,403

 

 

 

 

 

$

(166

)(2)

 

 

 

 

$

(332

)(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

4,970

 

(2,529

)(3)

2,441

 

(1,295

)

(3,125

)(3)

(4,420

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in net loss, and prior service cost related to defined benefit pension plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss and prior service cost

 

6,457

 

 

6,457

 

7,920

 

 

 

7,920

 

Less amortization included in operating expenses

 

301

 

 

301

 

756

 

 

756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in hedging gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized hedging loss

 

(5,466

)

 

(5,466

)

(4,261

)

 

(4,261

)

Less reclassification adjustment for gain included in cost of goods sold

 

1,683

 

 

1,683

 

1,577

 

 

1,577

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized investment loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for gain included in other income (expense)

 

 

 

 

(343

)

 

(343

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

7,945

 

(2,529

)

5,416

 

4,354

 

(3,125

)

1,229

 

Total comprehensive income

 

$

62,810

 

$

(2,845

)

$

59,965

 

$

7,074

 

$

(2,442

)

$

4,632

 

 

Consolidated Statements of Cash Flows

 

The following table presents the impact of the accounting errors on the Company’s previously-reported consolidated statement of cash flows for the six months ended September 30, 2012 (in thousands):

 

 

 

Six Months ended

 

 

 

September 30, 2012

 

 

 

As Reported

 

Adjustments

 

As Revised

 

 

 

 

 

(Unaudited)

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

2,720

 

$

1,015

(1)

$

3,403

 

 

 

 

 

(332

)(2)

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation

 

22,307

 

 

22,307

 

Amortization of other intangible assets

 

12,257

 

332

(2)

12,589

 

Share-based compensation expense

 

13,437

 

 

13,437

 

Gain on sale of available-for-sale securities

 

(831

)

 

(831

)

Excess tax benefits from share-based compensation

 

(22

)

 

(22

)

Deferred income taxes and other

 

(3,806

)

 

(3,806

)

Changes in assets and liabilities, net of acquisition:

 

 

 

 

 

 

Accounts receivable

 

(58,272

)

(261

)(3)

(58,533

)

Inventories

 

(30,733

)

(1,092

)(3)

(31,825

)

Other assets

 

(7,339

)

(231

)(3)

(7,570

)

Accounts payable

 

68,875

 

2,220

(3)

71,095

 

Accrued and other liabilities

 

(9,498

)

(1,015

)(1)

(10,997

)

 

 

 

 

(484

)(3)

 

 

Net cash provided by operating activities

 

9,095

 

152

 

9,247

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(30,522

)

(2,295

)(3)

(32,817

)

Investment in privately-held company

 

(3,970

)

 

(3,970

)

Proceeds from sale of available-for-sale securities

 

917

 

 

917

 

Purchases of trading investments for deferred compensation plan

 

(1,648

)

 

(1,648

)

Proceeds from sales of trading investments for deferred compensation plan

 

1,638

 

 

1,638

 

Net cash used in investing activities

 

(33,585

)

(2,295

)

(35,880

)

Cash flows from financing activities:

 

 

 

 

 

 

Payment of cash dividends

 

(133,462

)

 

(133,462

)

Purchases of treasury shares

 

(89,955

)

2,143

(3)

(87,812

)

Proceeds from sale of shares upon exercise of options and purchase rights

 

9,008

 

 

9,008

 

Tax withholdings related to net share settlements of restricted stock units

 

(635

)

 

(635

)

Excess tax benefits from share-based compensation

 

22

 

 

22

 

Net cash used in financing activities

 

(215,022

)

2,143

 

(212,879

)

Effect of exchange rate changes on cash and cash equivalents

 

(1,825

)

 

(1,825

)

Net decrease in cash and cash equivalents

 

(241,337

)

 

(241,337

)

Cash and cash equivalents at beginning of period

 

478,370

 

 

478,370

 

Cash and cash equivalents at end of period

 

$

237,033

 

$

 

$

237,033

 

 

Other Revisions

 

During fiscal year 2013, the Company also determined that geographic net sales (Note 13), previously reported in its Form 10-Q for the three and six months ended September 30, 2012, were not property stated. These revisions had no impact on the previously reported consolidated statements of operations.

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Note 3 — Summary of Significant Accounting Policies

 

Basis of Presentation

 

The consolidated interim 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, 2013, included in its Annual Report on Form 10-K/A. 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 and six months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending March 31, 2014, or any future periods.

 

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

 

Fiscal Years

 

The Company’s fiscal years end 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 the Company’s significant accounting policies during the three and six months ended September 30, 2013, compared with the significant accounting policies described in its Annual Report on Form 10-K/A for the fiscal year ended March 31, 2013.

 

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. Examples of significant estimates and assumptions made by management involve the fair value of goodwill, accruals for customer programs, inventory valuation, valuation allowances for deferred tax assets and warranty accruals. 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.

 

Recent Accounting Pronouncements

 

In July 2013, the FASB issued ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”. The ASU provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU No. 2013-11 is effective for interim and annual periods beginning after December 15, 2013.  The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Net Income per Share
Net Income per Share

Note 4 — Net Income per Share

 

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

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

As Revised

 

 

 

As Revised

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

14,398

 

$

54,549

 

$

15,441

 

$

3,403

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares - basic

 

159,969

 

156,736

 

159,637

 

158,723

 

Effect of potentially dilutive share equivalents

 

1,214

 

1,196

 

1,238

 

1,130

 

Weighted average shares - diluted

 

161,183

 

157,932

 

160,875

 

159,853

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

$

0.09

 

$

0.35

 

$

0.10

 

$

0.02

 

Net income per share - diluted

 

$

0.09

 

$

0.35

 

$

0.10

 

$

0.02

 

 

Share equivalents attributable to outstanding stock options and RSUs (restricted stock units) of 15,408,542  and 14,929,137 for the three months ended September 30, 2013 and 2012, and 16,829,424 and 15,127,253  for the six months ended September 30, 2013 and 2012 were excluded from the calculation of diluted net income per share because the combined exercise price, average unamortized fair value and assumed tax benefits upon exercise of these options and RSUs were greater than the average market price of the Company’s shares, and therefore their inclusion would have been anti-dilutive.

Employee Benefit Plans
Employee Benefit Plans

Note 5 — Employee Benefit Plans

 

Employee Share Purchase Plans and Stock Incentive Plans

 

As of September 30, 2013, 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). On September 4, 2013, at the fiscal year 2013 Annual General Meeting of Shareholders, Logitech shareholders approved amendments to and restatement of the1996 ESPP and the 2006 ESPP, which included the increase of 8.0 million additional shares to be issued under these plans. 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 and six months ended September 30, 2013 and 2012 (in thousands):

 

 

 

Three Months ended

 

Six Months ended

 

 

 

September 30,

 

September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

$

594

 

$

608

 

$

1,171

 

$

1,397

 

Share-based compensation expense included in gross profit

 

594

 

608

 

1,171

 

1,397

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Marketing and selling

 

1,017

 

2,644

 

2,923

 

4,424

 

Research and development

 

840

 

1,763

 

1,934

 

3,588

 

General and administrative

 

1,658

 

2,251

 

2,471

 

4,028

 

Share-based compensation expense included in operating expenses

 

3,515

 

6,658

 

7,328

 

12,040

 

Total share-based compensation expense

 

4,109

 

7,266

 

8,499

 

13,437

 

Income tax benefit

 

(1,300

)

(1,671

)

(2,175

)

(3,047

)

Share-based compensation expense, net of income tax

 

$

2,809

 

$

5,595

 

$

6,324

 

$

10,390

 

 

As of September 30 and March 31, 2013, $0.4 million and $0.4 million of share-based compensation cost was capitalized to inventory.

 

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 September 30, 2013 and 2012 were $1.6 million and $1.8 million, and for the six months ended September 30, 2013 and 2012 were $3.3 million and $4.6 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.

 

During the quarter ended September 30, 2012, the Company’s Swiss defined benefit pension plan was subject to re-measurement due to the number of plan participants affected by the April 2012 restructuring described in Note 14. The re-measurement resulted in the realization of $2.2 million in previously unrecognized losses residing within accumulated other comprehensive loss that the Company recognized during the three months ended September 30, 2012.

 

The net periodic benefit cost for defined benefit pension plans and non-retirement post-employment benefit obligations for the three and six months ended September 30, 2013 and 2012 were as follows (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

1,972

 

$

1,726

 

$

3,929

 

$

3,601

 

Interest cost

 

430

 

418

 

857

 

912

 

Expected return on plan assets

 

(490

)

(525

)

(990

)

(618

)

Amortization of net transition obligation

 

1

 

1

 

2

 

2

 

Amortization of net prior service cost

 

52

 

38

 

104

 

76

 

Recognized net actuarial loss

 

256

 

262

 

508

 

678

 

Settlement cost

 

 

2,254

 

 

2,254

 

Net periodic benefit cost

 

$

2,221

 

$

4,174

 

$

4,410

 

$

6,905

 

Income Taxes
Income Taxes

Note 6 — 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.

 

The income tax provision for the three months ended September 30, 2013 was $3.1 million based on an effective income tax rate of 17.5% of pre-tax income. The income tax benefit for the three months ended September 30, 2012 was $31.1 million based on an effective income tax rate of (132.4%) of pre-tax income.   For the six months ended September 30, 2013, the income tax provision was $2.3 million based on an effective income tax rate of 12.7% of pre-tax income.  For the six months ended September 30, 2012, the income tax benefit was $38.0 million based on an effective income rate of 109.8% of pre-tax loss.  The change in the effective income tax rate for the three and six months ended September 30, 2013, compared with the same periods in fiscal year 2013, 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 in fiscal year 2013.  In addition, there was a discrete tax benefit of $32.1 million in the three months ended September 30, 2012 from the reversal of uncertain tax positions resulting from the closure of federal income tax examinations in the United States.

 

In fiscal year 2013, the Company incurred $43.7 million of restructuring charges and related expenses to simplify the organization and to align the organization to its strategic priorities, $28.6 million of such charges were incurred through the second quarter of fiscal year 2013 with the remaining balance primarily incurred in the fourth quarter of the fiscal year 2013. In the three and six months ended September 30, 2013, the Company incurred restructuring-related termination benefits and lease exit costs in the amount of $5.5 million and $7.8 million, respectively. In determining the estimated fiscal 2014 annual effective tax rate, the restructuring activities were not treated as a discrete event as the charges were not significantly unusual and infrequent in nature, unlike those that were incurred in fiscal year 2013.   The tax benefit associated with the restructuring in the six months ended September 30, 2013 was not material.

 

As of September 30 and March 31, 2013, the total amount of unrecognized tax benefits and related accrued interest and penalties due to uncertain tax positions was $103.5 million and $102.0 million, of which $90.8 million and $90.3 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 September 30 and March 31, 2013, the Company had approximately $6.9 million and $6.6 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 fiscal year 2001. The Company is under examination and has received assessment notices in foreign 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 results of operations.

 

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 not possible at this time to reasonably estimate changes in the unrecognized tax benefits within the next twelve months.

Balance Sheet Components
Balance Sheet Components

Note 7 — Balance Sheet Components

 

The following table presents the components of certain balance sheet asset amounts as of September 30 and March 31, 2013 (in thousands):

 

 

 

September 30, 2013

 

March 31, 2013

 

 

 

 

 

 

 

Accounts receivable:

 

 

 

 

 

Accounts receivable

 

$

413,696

 

$

325,870

 

Allowance for doubtful accounts

 

(1,071

)

(2,153

)

Allowance for returns

 

(19,230

)

(21,883

)

Allowances for cooperative marketing arrangements

 

(26,010

)

(24,160

)

Allowances for customer incentive programs

 

(44,788

)

(42,857

)

Allowances for pricing programs

 

(63,739

)

(55,252

)

 

 

$

258,858

 

$

179,565

 

Inventories:

 

 

 

 

 

Raw materials

 

$

34,020

 

$

37,504

 

Work-in-process

 

75

 

41

 

Finished goods

 

258,682

 

223,538

 

 

 

$

292,777

 

$

261,083

 

Other current assets:

 

 

 

 

 

Income tax and value-added tax refund receivables

 

$

25,113

 

$

17,403

 

Deferred taxes

 

29,109

 

25,400

 

Prepaid expenses and other

 

11,586

 

15,300

 

 

 

$

65,808

 

$

58,103

 

Property, plant and equipment:

 

 

 

 

 

Plant, buildings and improvements

 

$

68,642

 

$

70,009

 

Equipment

 

131,913

 

129,868

 

Computer equipment

 

32,551

 

42,437

 

Computer software

 

80,136

 

80,930

 

 

 

313,242

 

323,244

 

Less: accumulated depreciation

 

(236,845

)

(247,469

)

 

 

76,397

 

75,775

 

Construction-in-progress

 

7,890

 

9,047

 

Land

 

2,846

 

2,827

 

 

 

$

87,133

 

$

87,649

 

Other assets:

 

 

 

 

 

Deferred taxes

 

$

51,121

 

$

53,035

 

Trading investments

 

15,435

 

15,599

 

Other

 

5,261

 

6,464

 

 

 

$

71,817

 

$

75,098

 

 

The following table presents the components of certain balance sheet liability amounts as of September 30 and March 31, 2013 (in thousands):

 

 

 

September 30, 2013

 

March 31, 2013

 

 

 

 

 

 

 

Accrued and other current liabilities:

 

 

 

 

 

Accrued personnel expenses

 

$

56,906

 

$

40,502

 

Accrued marketing expenses

 

13,039

 

11,005

 

Indirect customer incentive programs

 

32,539

 

29,464

 

Accrued restructuring

 

5,566

 

13,458

 

Deferred revenue

 

21,562

 

22,698

 

Accrued freight and duty

 

8,596

 

5,882

 

Value-added tax payable

 

8,477

 

8,544

 

Accrued royalties

 

4,012

 

3,358

 

Warranty accrual

 

12,634

 

11,878

 

Employee benefit plan obligations

 

1,571

 

4,351

 

Income taxes payable

 

5,392

 

2,463

 

Other accrued liabilities

 

49,352

 

39,171

 

 

 

$

219,646

 

$

192,774

 

Non-current liabilities:

 

 

 

 

 

Income taxes payable

 

$

100,310

 

$

98,827

 

Warranty accrual

 

9,451

 

8,660

 

Obligation for deferred compensation

 

15,435

 

15,631

 

Employee benefit plan obligations

 

40,728

 

35,963

 

Deferred rent

 

23,690

 

24,136

 

Deferred taxes

 

1,872

 

1,989

 

Other liabilities

 

11,070

 

10,676

 

 

 

$

202,556

 

$

195,882

 

 

The following table presents the changes in the allowance for doubtful accounts during the three and six months ended September 30, 2013 and 2012 (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(2,189

)

$

(2,321

)

$

(2,153

)

$

(2,472

)

Bad debt expense reversal, net

 

428

 

103

 

359

 

189

 

Write-offs, net of recoveries

 

690

 

(21

)

723

 

44

 

Ending balance

 

$

(1,071

)

$

(2,239

)

$

(1,071

)

$

(2,239

)

Financial Instruments
Financial Instruments

Note 8 — 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 Company did not have level 3 assets and liabilities as of September 30 and March 31, 2013. The following table presents the Company’s financial assets and liabilities, that were accounted for at fair value, excluding assets related to the Company’s defined benefit pension plans, classified by the level within the fair value hierarchy (in thousands):

 

 

 

September 30, 2013

 

March 31, 2013

 

 

 

Level 1

 

Level 2

 

Level 1

 

Level 2

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents (1)

 

$

99,510

 

$

 

$

119,073

 

$

 

Trading investments for deferred compensation plan:

 

 

 

 

 

 

 

 

 

Money market funds

 

3,311

 

 

4,220

 

 

Mutual funds

 

12,124

 

 

11,379

 

 

Foreign exchange derivative assets

 

 

126

 

 

1,197

 

Total assets at fair value

 

$

114,945

 

$

126

 

$

134,672

 

$

1,197

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange derivative liabilities

 

$

 

$

1,546

 

$

 

$

707

 

Total liabilities at fair value

 

$

 

$

1,546

 

$

 

$

707

 

 

(1) Excludes cash balances of $195.3 million as of September 30, 2013 and $214.7 million as of March 31, 2013.

 

The following table presents the changes in the Company’s Level 3 available-for-sale securities during the six months ended September 30, 2013 and 2012 (in thousands):

 

 

 

September 30, 2013

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Beginning balance

 

$

 

$

429

 

Proceeds from sales of securities

 

 

(917

)

Reversal of unrealized gains previously recognized in accumulated other comprehensive loss

 

 

831

 

Reversal of unrealized losses previously recognized in accumulated other comprehensive loss

 

 

(343

)

Ending balance

 

$

 

$

 

 

Cash and Cash Equivalents

 

Cash equivalents consist of bank demand deposits and time deposits. The time deposits have original maturities of three months or less. Cash equivalents are carried at cost, which approximates fair value.

 

Investment Securities

 

The Company’s investment securities portfolio consists of marketable securities (money market and mutual funds) related to a deferred compensation plan at September 30, 2013 and March 31, 2013.

 

The marketable securities related to the deferred compensation plan are classified as non-current other assets. Since participants in the deferred compensation plan may select the mutual funds in which their compensation deferrals are invested within the confines of the Rabbi Trust which holds the marketable securities, the Company has designated these marketable securities as trading investments, although there is no intent to actively buy and sell securities within the objective of generating profits on short-term difference in market prices. 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 $15.4 million and $15.6 million as of September 30 and March 31, 2013, based on quoted market prices. Quoted market prices are observable inputs that are classified as Level 1 within the fair value hierarchy. Earnings, and realized and unrealized gains and losses on trading investments are included in other income (expense). Unrealized trading gains of $0.4 million and unrealized trading losses of $0.2 million are included in other income (expense) for the three and six months ended September 30, 2013, respectively and relate to the trading securities held at September 30, 2013. Unrealized trading gains of $0.5 million and $0.2 million are included in other income (expense) for the three and six months ended September 30, 2012 and relate to trading securities held at September 30, 2012.

 

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 September 30 and March 31, 2013 (in thousands):

 

 

 

Asset Derivatives

 

Liability Derivatives

 

 

 

 

 

Fair Value

 

 

 

Fair Value

 

 

 

 

 

September 30,

 

March 31,

 

 

 

September 30,

 

March 31,

 

 

 

Location

 

2013

 

2013

 

Location

 

2013

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

Other assets

 

$

8

 

$

1,165

 

Other liabilities

 

$

754

 

$

 

 

 

 

 

8

 

1,165

 

 

 

754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

Other assets

 

118

 

 

Other liabilities

 

240

 

270

 

Foreign exchange swap contracts

 

Other assets

 

 

32

 

Other liabilities

 

552

 

437

 

 

 

 

 

118

 

32

 

 

 

792

 

707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

126

 

$

1,197

 

 

 

$

1,546

 

$

707

 

 

The following table presents the amounts of gains and losses on the Company’s derivative instruments for the three and six months ended September 30, 2013 and 2012 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

 

 

 

2013

 

2012

 

Loss into Income

 

2013

 

2012

 

Immediately

 

2013

 

2012

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

$

(1,467

)

$

(3,783

)

Cost of goods sold

 

$

(94

)

$

(1,683

)

Other income/expense

 

$

16

 

$

120

 

 

 

(1,467

)

(3,783

)

 

 

(94

)

(1,683

)

 

 

16

 

120

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

 

 

 

 

 

 

 

Other income/expense

 

(482

)

(92

)

Foreign exchange swap contracts

 

 

 

 

 

 

 

 

Other income/expense

 

5

 

(390

)

 

 

 

 

 

 

 

 

 

 

 

(477

)

(482

)

 

 

$

(1,467

)

$

(3,783

)

 

 

$

(94

)

$

(1,683

)

 

 

$

(461

)

$

(362

)

 

 

 

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

 

 

 

2013

 

2012

 

Loss into Income

 

2013

 

2012

 

Immediately

 

2013

 

2012

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

$

(2,102

)

$

(2,684

)

Cost of goods sold

 

$

184

 

$

(1,577

)

Other income/expense

 

$

46

 

$

172

 

 

 

(2,102

)

(2,684

)

 

 

184

 

(1,577

)

 

 

46

 

172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

 

 

 

 

 

 

 

Other income/expense

 

165

 

(837

)

Foreign exchange swap contracts

 

 

 

 

 

 

 

 

Other income/expense

 

743

 

435

 

 

 

 

 

 

 

 

 

 

 

 

908

 

(402

)

 

 

$

(2,102

)

$

(2,684

)

 

 

$

184

 

$

(1,577

)

 

 

$

954

 

$

(230

)

 

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 Company has one entity with a euro functional currency that purchases inventory in U.S. dollars. 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 and six months ended September 30, 2013 and 2012. 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 $56.7 million (€41.9 million) and $38.5 million (€30.1 million) at September 30, 2013 and March 31, 2013, respectively. 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 other income (expense) based on the changes in fair value.

 

The notional amounts of foreign exchange forward contracts outstanding at September 30 and March 31, 2013 relating to foreign currency receivables or payables were $16.4 million and $14.2 million. Open forward contracts as of September 30, 2013 consisted of contracts in U.S. dollars to purchase Taiwanese dollars and contracts in euros to sell British pounds at future dates at pre-determined exchange rates. Open forward contracts as of March 31, 2013 consisted of contracts in U.S. dollars to purchase Taiwanese dollars and contracts in euros to sell British pounds at future dates at pre-determined exchange rates. The notional amounts of foreign exchange swap contracts outstanding at September 30 and March 31, 2013 were $31.7 million and $19.6 million. Swap contracts outstanding at September 30, 2013 consisted of contracts in Mexican Pesos, Japanese Yen and Australian Dollars. Swap contracts outstanding at March 31, 2013 consisted of contracts in Mexican Pesos, Japanese Yen and Australian Dollars.

 

The fair value of all 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 9 — Goodwill and Other Intangible Assets

 

Interim Goodwill Impairment Testing

 

During the second quarter of fiscal year 2014, the Company implemented a restructuring plan (“this plan”) associated with its video conferencing reporting unit to simplify its organization, to better align costs with its current business, and to free up resources to pursue growth opportunities. This plan resulted in restructuring charges of $5.4 million in termination benefits to affected employees and $0.6 million in lease exit costs.  This plan also involved a $5.2 million write-off of video conferencing discontinued products. In addition, actual performance was significantly less than projected results for the periods since the most recent goodwill impairment assessment performed during the third quarter of fiscal 2013, due to a combination of a changing industry landscape caused by a shift to less expensive, cloud-based video conferencing solutions, an evolving LifeSize product line and challenges in execution. These factors resulted in the Company concluding that it is more likely than not that the fair value of its video conferencing reporting unit was less than its carrying amount.   The Company, therefore, performed an interim Step 1 assessment of its video conferencing reporting unit during the second quarter of fiscal year 2014.

 

The Step 1 assessment involved measuring the recoverability of goodwill by comparing the video conferencing reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. The fair value was estimated using both an income approach employing a discounted cash flow (“DCF”) model and a market approach. The DCF model was based on projected cash flows from the Company’s most recent forecast, which was based on a number of key assumptions, including, but not limited to, discount rate, compounded annual growth rate (“CAGR”) during the forecast period, and terminal value. The terminal value was based on an exit price at the end of the assessment forecast using an earnings multiple applied to the final year of the assessment forecast. The discount rate was applied to the projected cash flows to reflect the risks inherent in the timing and amount of the projected cash flows, including the terminal value, and was derived from the weighted average cost of capital of market participants in similar businesses. The market approach model was based on applying certain revenue multiples of comparable companies to the respective revenue and earnings metrics of the reporting unit. The DCF and market approach models 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.

 

Key assumptions used in the Step 1 income approach analysis included the appropriate discount rates, CAGR during the forecast period, and long-term growth rates for purposes of determining a terminal value at the end of the discrete forecast period. Sensitivity assessment of key assumptions for the video conferencing reporting unit Step 1 test is presented below.

 

·                  CAGR assumption was 7.0% through fiscal year 2021, with a forecast decline in the remainder of fiscal year 2014, higher growth rates from fiscal years 2015 through 2019, reducing to a growth rate of 4% in fiscal year 2021. The forecasted growth contrasts with the recent performance of the video conferencing reporting unit, when the Company experienced a decline in revenue (see Note 13 for further details). A hypothetical decrease to 2.1% in the CAGR rate, holding all other assumptions constant, would decrease the fair value of the video conferencing reporting unit below its carrying value and hence would result in the reporting unit failing Step 1 of the goodwill impairment test.

 

·                  Discount rate assumptions was 15%.  A hypothetical increase to 18.7% in the discount rate, holding all other assumptions constant, would result in the reporting unit failing Step 1 of the goodwill impairment test.

 

·                  Terminal growth rate assumption was 4%.  A hypothetical decrease to 0% in the terminal growth rate assumption, holding all other assumptions constant, would result in the reporting unit passing Step 1 of the goodwill impairment test.

 

The assumptions used also included a reduction in future operating expenses as a percentage of revenue, driven by increases in forecast revenue as described above, combined with reduced operating expenses related to the fourth Q4’13 and Q2’14 restructuring activities.

 

The Step 1 assessment resulted in the Company determining that the video conferencing reporting unit passed the Step 1 test because the estimated fair value exceeded its carrying value by approximately 23%, thus not requiring a Step 2 assessment of this reporting unit. This result presents a future video conferencing reporting unit goodwill impairment risk to the Company since the margin it cleared the current Step 1 assessment was not significant.

 

The Company continues to evaluate and monitor all key factors impacting the carrying value of its recorded goodwill, as well as other long-lived assets. There are a number of uncertainties associated with the key assumptions described above based primarily on the difficulty of predicting the Company’s revenues and profitability. The Company’s revenues and profitability are difficult to predict due to the nature of the markets in which it competes, fluctuating end-user demand, the uncertainty of current and future global economic conditions, and for many other reasons, including, but not limited to:

 

·                  The video conferencing industry is characterized by continual performance enhancements and large, well-financed competitors. There is increased participation in the video conferencing market by companies such as Cisco Systems, Inc. and Polycom, Inc., and as a result, the Company expects competition in the industry to further intensify.

 

·                  The Company’s revenues are impacted by end-user consumer demand and future global conditions, which could fluctuate abruptly and significantly during periods of uncertain economic conditions or geographic distress, as well as from shifts in consumer buying patterns.

 

·                  The Company must incur a large portion of its costs in advance of sales orders, because it must plan research and production, order components, buy tooling equipment, and enter into development, sales and marketing, and other operating commitments prior to obtaining firm commitments from its customers. This makes it difficult for it to rapidly adjust its costs in response to a revenue shortfall.

 

·                  Fluctuations in currency exchange rates can impact the Company’s revenues, expenses and profitability because it reports its financial statements in U.S. dollars, whereas a significant portion of its revenues and expenses are in other currencies.

 

Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates and operating margins, discount rates and future market conditions, among others.  It is reasonably possible that changes in the judgments, assumptions and estimates that the Company used in assessing the fair value of the video conferencing reporting unit result in the goodwill to become impaired.  A goodwill impairment charge would have the effect of decreasing the Company’s earnings or increasing its losses in such period. If the Company is required to take a substantial impairment charge, its operating results would be materially and adversely affected in such period.

 

Goodwill and Other Intangible Assets

 

During the first quarter of fiscal year 2014, the Company decided not to sell its Remotes product category, previously classified as assets held for sale as of March 31, 2013. This decision required the Company to assess whether the fair value of the goodwill and other intangibles related to its Remotes category were less than the carrying value of these assets. For other intangibles, carrying value was adjusted by amortization expense not taken during the period in which this category was classified as assets held for sale.  The Company concluded that the carrying value of these assets was less than their fair value.  Accordingly, the Company reclassified these assets from assets held for sale back to goodwill and other intangible assets at their respective carrying values, which amounted to $2.5 million for goodwill and $1.6 million for intangibles as of June 30, 2013.

 

The following table summarizes the activity in the Company’s goodwill during the six months ended September 30, 2013 (in thousands):

 

 

 

September 30, 2013

 

 

 

Peripherals

 

Video
Conferencing

 

Total

 

Beginning balance

 

$

216,744

 

$

124,613

 

$

341,357

 

Additions

 

202

 

 

202

 

Foreign currency movements

 

 

731

 

731

 

Reclassified from assets held for sale

 

2,469

 

 

2,469

 

Ending balance

 

$

219,415

 

$

125,344

 

$

344,759

 

 

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

 

 

 

September 30, 2013

 

March 31, 2013

 

 

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

 

 

Amount

 

Amortization

 

Amount

 

Amount

 

Amortization

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademark/tradename

 

$

32,085

 

$

(30,127

)

$

1,958

 

$

29,842

 

$

(26,558

)

$

3,284

 

Technology (1)

 

92,007

 

(84,144

)

7,863

 

73,249

 

(61,560

)

11,689

 

Customer contracts

 

40,345

 

(32,419

)

7,926

 

39,068

 

(28,017

)

11,051

 

 

 

$

164,437

 

$

(146,690

)

$

17,747

 

$

142,159

 

$

(116,135

)

$

26,024

 

 

 

(1) During the six months ended September 30, 2013, the Company changed its classification of its Retail - Remote product category and digital video security product line from assets held for sale to assets held and used.  The increase in gross carrying amount and accumulated amortization between March 31, 2013 and September 30, 2013 was due to this change in classification.

 

Amortization expense for other intangible assets was $5.3 million and $6.2 million for the three months ended September 30, 2013 and 2012, and $10.5 million and $12.6 million for the six months ended September 30, 2013 and 2012. The Company expects that amortization expense for the remaining six months of fiscal year 2014 will be $7.3 million, and annual amortization expense for fiscal years 2015, 2016 and 2017 will be $8.4 million, $1.8 million and $0.1 million, respectively.

 

Financing Arrangements
Financing Arrangements

Note 10 — 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 September 30, 2013.

 

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 March 31, 2013, the Company was not in compliance with the interest coverage ratio of this credit facility. This situation resulted from the significant operating loss incurred during fiscal year 2013.  On June 13, 2013, the Company amended this credit facility to amend the definitions of (a) EBITDA to exclude the effect of impairment of goodwill and other intangible assets and (b) interest coverage ratio calculation to utilize EBITDA rather than EBIT. As of September 30, 2013, the Company was not in compliance with the adjusted equity ratio of this facility. This facility continues to be available for the Company’s use based on a temporary waiver of the adjusted equity ratio covenant through the end of the third quarter of fiscal year 2014.

 

This credit facility stipulates that, 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 $62 million at September 30, 2013. There are no financial covenants under these lines of credit with which the Company must comply. At September 30, 2013, the Company had no outstanding borrowings under these lines of credit. The Company also had credit lines related to corporate credit cards totaling $17.4 million at September 30, 2013. 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 11 — 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 September 30, 2013 amounted to $84.7 million.

 

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 and six months ended September 30, 2013 and 2012 (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,532

 

$

2,001

 

$

1,750

 

$

1,918

 

Liabilities incurred

 

 

 

 

 

Liabilities settled

 

(375

)

 

(596

)

 

Accretion expense

 

9

 

4

 

11

 

16

 

Foreign currency translation

 

12

 

(135

)

13

 

(64

)

Ending balance

 

$

1,178

 

$

1,870

 

$

1,178

 

$

1,870

 

 

Product Warranties

 

All 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 replacement 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 requirements. 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 and six months ended September 30, 2013 and 2012 were as follows (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

As Revised

 

 

 

As Revised

 

Beginning balance

 

$

22,655

 

$

23,966

 

$

20,538

 

$

25,494

 

Provision during the period

 

3,356

 

3,444

 

6,645

 

5,981

 

Settlements made during the year, net of adjustments

 

(3,926

)

(3,873

)

(7,425

)

(7,938

)

Amount classified as liabilities held for sale (1)

 

 

 

2,327

 

 

Ending balance

 

$

22,085

 

$

23,537

 

$

22,085

 

$

23,537

 

 

(1)         Represents warranty liability previously allocated to the Company’s Retail — Remotes product category which was classified as an asset held for sale as of March 31, 2013.

 

Deferred Services Revenue

 

The Company’s video conferencing reporting unit offers maintenance contracts for sale of the majority of its products which allow for customers to receive service and support in addition to the expiration of the product warranty contractual term.  The Company also provides installation services to its customer under contractual arrangements.  The Company recognizes these contracts over the life of the service period.  Change in the Company’s deferred services revenue during the three and six months ended September 30, 2013 and 2012 were as follows (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

29,080

 

$

26,340

 

$

29,328

 

$

24,568

 

Additions for extended warranties issued during the period

 

7,914

 

8,112

 

15,830

 

16,394

 

Amortization of deferred revenue for the period

 

(7,926

)

(7,333

)

(16,090

)

(13,843

)

Ending balance

 

$

29,068

 

$

27,119

 

$

29,068

 

$

27,119

 

 

The cost of providing these services for the three months ended September 30, 2013 and 2012 was $2.1 million and $2.3 million, respectively, and for the six months ended September 30, 2013 and 2012 was $4.2 million and $4.3 million, respectively.

 

Purchase Commitments

 

At September 30, 2013, the Company had the following outstanding purchase commitments:

 

 

 

September 30, 2013

 

 

 

 

 

Inventory purchases

 

$

132,782

 

Operating expenses

 

63,426

 

Capital expenditures

 

18,372

 

 

 

$

214,580

 

 

Commitments for inventory purchases are made in the normal course of business to original design manufacturers, the majority of the contract manufacturers and other suppliers and are expected to be fulfilled by December 2013. 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 $30.0 million. At September 30, 2013, there were no purchase obligations outstanding for which the parent holding company was required to guarantee payment.

 

Logitech Europe S.A., a subsidiary of the parent holding company, has guaranteed the purchase obligations of another Logitech subsidiary under two guarantee agreements. One of these guarantees does not specify a maximum amount. The remaining guarantee has a total limit of $7.0 million. As of September 30, 2013, there was an immaterial amount of guaranteed purchase obligations that were outstanding under these guarantees. Logitech Europe S.A. has also guaranteed payment of the purchase obligations of a third-party contract manufacturer under one guarantee agreement. The maximum amount of this guarantee was $3.5 million as of September 30, 2013. As of September 30, 2013, $2.8 million of guaranteed purchase obligations were outstanding under this agreement.

 

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 $35.0 million as of September 30, 2013 and $5.6 million of guaranteed obligations were outstanding under these agreements.

 

Indemnifications

 

Logitech indemnifies certain of its suppliers and customers for losses arising from matters such as intellectual property disputes and product safety defects, subject to certain restrictions. The scope of these indemnities varies, but in some instances, includes indemnification for damages and expenses, including reasonable attorneys’ fees. No amounts have been accrued for indemnification provisions at September 30, 2013. 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

 

From time to time the Company is involved in claims and legal proceedings which arise in the ordinary course of its business. The Company is currently subject to several such claims and a small number of legal proceedings. The Company believes that these matters lack merit and intends to vigorously defend against them. Based on currently available information, the Company does not believe that resolution of pending matters will have a material adverse effect on its financial condition, cash flows or results of operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that the Company’s defenses will be successful or that any such lawsuit or claim would not have a material adverse impact on the Company’s business, financial condition, cash flows and results of operations in a particular period. Any claims or proceedings against us, whether meritorious or not, can have an adverse impact because of defense costs, diversion of management and operational resources, negative publicity and other factors. Any failure to obtain necessary license or other rights, or litigation arising out of intellectual property claims, could adversely affect the Company’s business.

Shareholders' Equity
Shareholders' Equity

Note 12 — Shareholders’ Equity

 

Share Repurchases

 

In September 2008, the Company’s Board of Directors approved the September 2008 share buyback program for $250.0 million. In November 2011, an amendment to the September 2008 share buyback program (“September 2008 - amended”) was approved by the Company’s Board of Directors to enable future purchases of shares for cancellation. During the three months ended December 31, 2012, 18.5 million shares were cancelled. In August 2013, the September 2008 share buyback and September 2008 - amended share buyback programs expired.  The approved share buyback programs are shown in the following table (in thousands, excluding transaction costs).

 

Date of Announcement

 

Approved
Share
Buyback
Number

 

Approved
Buyback
Amount

 

Expiration Date

 

Shares
Repurchased

 

Amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

September 2008 - amended

 

28,465

 

$

177,030

 

August 2013

 

18,500

 

$

170,714

 

September 2008

 

8,344

 

$

250,000

 

August 2013

 

7,609

 

$

73,134

 

 

During the six months ended September 30, 2012, the Company repurchased 18.5 million shares under the September 2008-amended program. No shares were repurchased during the three months ended September 30, 2013 and 2012 and six months ended September 30, 2013.

 

Accumulated Other Comprehensive Loss

 

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

 

 

 

Accumulated Other Comprehensive Loss

 

 

 

Cumulative

 

Defined

 

Deferred

 

 

 

 

 

Translation

 

Benefit

 

Hedging

 

 

 

 

 

Adjustment

 

Plan (1)

 

Gains (Losses)

 

Total

 

March 31, 2013 (As Revised)

 

$

(73,187

)

$

(20,316

)

$

510

 

$

(92,993

)

Net change in other comprehensive loss

 

2,829

 

(385

)

(2,102

)

342

 

September 30, 2013

 

$

(70,358

)

$

(20,701

)

$

(1,592

)

$

(92,651

)

 

(1)  Net of tax of $315 as of September 30 and March 31, 2013.

Segment Information
Segment Information

Note 13 — Segment Information

 

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

 

 

 

Three Months ended

 

Six Months ended

 

 

 

September 30,

 

September 30,

 

 

 

2013

 

2012(1)

 

2013

 

2012(1)

 

Peripherals

 

 

 

 

 

 

 

 

 

Retail - Pointing Devices

 

$

130,656

 

$

122,524

 

$

245,307

 

$

238,353

 

Retail - PC Keyboards & Desktops

 

105,236

 

97,069

 

203,186

 

191,628

 

Retail - Tablet Accessories

 

34,711

 

33,737

 

73,270

 

49,623

 

Retail - Audio PC

 

67,199

 

77,267

 

119,164

 

138,792

 

Retail - Audio - Wearables & Wireless

 

25,648

 

19,108

 

44,723

 

33,707

 

Retail - Video

 

41,061

 

49,453

 

76,319

 

86,612

 

Retail - PC Gaming

 

41,493

 

46,673

 

81,110

 

73,456

 

Retail - Remotes

 

13,327

 

16,434

 

27,901

 

30,166

 

Retail - Other

 

5,522

 

14,214

 

7,109

 

29,243

 

OEM

 

37,526

 

36,718

 

72,039

 

73,393

 

Total peripherals

 

502,379

 

513,197

 

950,128

 

944,973

 

Video conferencing

 

29,593

 

34,496

 

59,768

 

71,324

 

Total net sales

 

$

531,972

 

$

547,693

 

$

1,009,896

 

$

1,016,297

 

 

(1) 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 peripheral sales.

 

The Company has two reporting 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, tablets and other digital platforms. The video conferencing segment 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 reporting 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. The Chief Executive Officer periodically reviews information such as net sales and operating income (loss) for each operating segment to make business decisions. These operating performance measures do not include share-based compensation expense, and amortization of intangible assets. Share-based compensation expense and amortization of intangible assets are presented in the following financial information by operating segment as “other charges.” Assets by operating segment are not presented since the Company does not present such data to the chief operating decision maker. Net sales and operating income (loss) for the Company’s reporting segments were as follows (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Net sales by reporting segment:

 

 

 

 

 

 

 

 

 

Peripherals

 

$

502,379

 

$

513,197

 

$

950,128

 

$

944,973

 

Video conferencing

 

29,593

 

34,496

 

59,768

 

71,324

 

Total net sales

 

$

531,972

 

$

547,693

 

$

1,009,896

 

$

1,016,297

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) by segment:

 

 

 

 

 

 

 

 

 

Peripherals (1)

 

$

39,281

 

$

39,097

 

$

52,151

 

$

(5,505

)

Video conferencing (1)

 

(12,708

)

(1,811

)

(15,877

)

(2,921

)

Operating income (loss) before other charges

 

26,573

 

37,286

 

36,274

 

(8,426

)

Other charges:

 

 

 

 

 

 

 

 

 

Share-based compensation

 

(4,109

)

(7,266

)

(8,499

)

(13,437

)

Amortization

 

(5,254

)

(6,191

)

(10,518

)

(12,589

)

Total operating income (loss)

 

$

17,210

 

$

23,829

 

$

17,257

 

$

(34,452

)

 

(1)         The previously-reported operating income (loss) for the three and six months ended September 30, 2012 was impacted by the errors described in Note 2 as follows: (a) For the three and six months ended September 30, 2012, Peripherals operating income (loss) decreased by an immaterial amount and increased by $1.2 million, respectively, and (b) For the three and six months ended September 30, 2012, Video Conferencing operating loss decreased by less than $0.1 million and $0.2 million, respectively. These changes resulted from the warranty accrual and amortization of intangibles error correction.

 

Geographic net sales information in the table below is based on the customer location. 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 September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

As Reported

 

Adjustments (1)

 

As Revised

 

 

 

As Reported

 

Adjustments (1)

 

As Revised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

202,381

 

$

216,596

 

$

(17,079

)

$

199,517

 

$

402,834

 

$

420,522

 

$

(36,438

)

$

384,084

 

EMEA

 

203,353

 

212,050

 

10,939

 

222,989

 

358,576

 

362,056

 

24,306

 

386,362

 

Asia Pacific

 

126,238

 

119,047

 

6,140

 

125,187

 

248,486

 

233,719

 

12,132

 

245,851

 

Total net sales

 

$

531,972

 

$

547,693

 

$

 

$

547,693

 

$

1,009,896

 

$

1,016,297

 

$

 

$

1,016,297

 

 

(1)                            During fiscal year 2013, the Company determined that net sales to unaffiliated customers by geographic regions previously reported, including the three and six months ended September 30, 2012, were not properly stated since amounts related to its Video Conferencing segment and other businesses were improperly allocated solely to the Americas region.

 

Sales are attributed to countries on the basis of the customers’ locations. The United States represented 34% and 32% of the Company’s total consolidated net sales for the quarter ended September 30, 2013 and 2012. No other single country represented more than 10% of the Company’s total consolidated net sales during those periods. Revenues from sales to customers in Switzerland, the Company’s home domicile, represented 2% of the Company’s total consolidated net sales for the three and six months ended September 30, 2013 and 2012.  One customer group of the Company’s peripheral operating segment represented 14% and 13% of sales for the quarters ended September 30, 2013 and 2012. The United States represented 35% and 33% of the Company’s total consolidated net sales for the six months ended September 30, 2013 and 2012. Revenues from sales to customers in Switzerland represented 1% and 2% of the Company’s total consolidated net sales for the six months ended September 30, 2013 and 2012. No other single country represented more than 10% of the Company’s total consolidated net sales during those periods. One customer group of the Company’s peripheral reporting segment represented 14% and 12% of net sales in each of the six month periods ended September 30, 2013 and 2012.

 

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

 

 

 

September 30, 2013

 

March 31, 2013

 

 

 

 

 

 

 

Americas

 

$

43,386

 

$

43,357

 

EMEA

 

5,875

 

8,315

 

Asia Pacific

 

42,396

 

40,952

 

Total long-lived assets

 

$

91,657

 

$

92,624

 

 

Long-lived assets in the United States and China were $43.2 million and $35.0 million at September 30, 2013 and $43.2 million and $33.1 million at March 31, 2013. No other countries represented more than 10% of the Company’s total consolidated long-lived assets at September 30 and March 31, 2013.  Long-lived assets in Switzerland were $1.9 million and $4.2 million at September 30 and March 31, 2013.

Restructuring
Restructuring

Note 14 — Restructuring

 

During the first quarter of fiscal year 2013, Logitech implemented 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. Charges and other costs related to the workforce reduction are presented as restructuring charges in the consolidated statements of operations. During the three months ended September 30, 2012, the Company incurred a $3.8 million credit in termination benefits to affected employees due to the further refinement of estimates previously accrued during the three months ended June 30, 2012.  For the six months ended September 30, 2012, the Company incurred $24.8 million in termination benefits to affected employees under this plan. In addition, the Company incurred legal, consulting, and other costs of $1.1 million and $2.2 million as a result of the terminations during the three and six months ended September 30, 2012.  The Company also incurred $1.5 million in lease exit costs primarily related to costs associated with the closure of existing facilities during the six months ended September 30, 2012. During the six months ended September 30, 2012, 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.  During the quarter ended September 30, 2012, the Company also incurred $2.2 million from the re-measurement of its Swiss defined benefit pension plan caused by the number of plan participants affected by this restructuring that was not included in restructuring charge since it related to prior services.

 

During the fourth quarter of fiscal year 2013, Logitech implemented an additional restructuring plan to align the organization to its strategic priorities of increasing focus on mobility products, improving profitability in PC-related products and enhancing global operational efficiencies. As part of this restructuring plan, the Company reduced its worldwide non-direct labor workforce. Restructuring charges under this plan primarily consisted of severance and other one-time termination benefits. Charges and other costs related to the workforce reduction are presented as restructuring charges in the consolidated statements of operations.  During the three months ended September 30, 2013, the Company incurred a $0.8 million credit in termination benefits to affected employees due to the further refinement of estimates which were previously accrued and a $0.3 million charge in lease exit costs. During the six months ended September 30, 2013, restructuring changes under this plan included $1.2 million in termination benefits to affected employees and $0.6 million in lease exit costs.  The Company estimates to complete this restructuring plan by March 31, 2014.

 

During the second quarter of fiscal year 2014, Logitech implemented a restructuring plan associated with its video conferencing operating segment to simplify its 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 September 30, 2013. As part of this restructuring plan, the Company reduced its non-direct labor workforce, which is presented as restructuring charges in the consolidated statements of operations. During the three months ended September 30, 2013, restructuring charges under this plan included $5.4 million in termination benefits to affected employees and $0.6 million in lease exit costs.  During the three months ended September 30, 2013, the Company also incurred a $5.2 million write-off of discontinued products, resulting from the restructuring of our video conferencing reporting segment included in cost of goods sold in the consolidated statements of operations. The Company estimates to complete this restructuring plan by March 31, 2014.

 

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.

 

The following table summarizes restructuring related activities (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

 

 

 

 

 

 

 

 

 

 

 

Charges (credits)

 

(2,671

)

(3,816

)

48

 

1,097

 

Cash payments

 

(17,652

)

(16,642

)

(52

)

(958

)

Foreign exchange

 

14

 

 

 

14

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2012

 

$

5,786

 

$

3,494

 

$

1,468

 

$

824

 

 

 

 

 

 

 

 

 

 

 

Charges (credits)

 

(358

)

(188

)

(182

)

12

 

Cash payments

 

(4,511

)

(2,633

)

(1,104

)

(774

)

Foreign exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 30, 2012

 

917

 

673

 

182

 

62

 

 

 

 

 

 

 

 

 

 

 

Charges (credits)

 

15,507

 

16,437

 

(30

)

(900

)

Cash payments

 

(2,966

)

(3,727

)

(77

)

838

 

Foreign exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2013

 

13,458

 

13,383

 

75

 

 

 

 

 

 

 

 

 

 

 

 

Charges

 

2,334

 

2,004

 

330

 

 

Cash payments

 

(8,422

)

(8,422

)

 

 

Foreign exchange

 

(170

)

(170

)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2013

 

7,200

 

6,795

 

405

 

 

 

 

 

 

 

 

 

 

 

 

Charges

 

5,465

 

4,562

(1)

903

(1)

 

Cash payments

 

(7,099

)

(6,535

)

(564

)

 

Foreign exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2013

 

$

5,566

 

$

4,822

 

$

744

 

$

 

 

(1) During the three months ended September 30, 2013, the Company incurred $4.6 million in termination benefits, $5.4 million charge related to the restructuring plan initiated during the second quarter of fiscal year 2014 offset by a $0.8 million credit related to the restructuring plan initiated during the fourth quarter of fiscal year 2013.  During the same period, the Company also incurred $0.9 million in lease exit costs, $0.6 million related to the restructuring plan initiated during the second quarter of fiscal year 2014 and $0.3 million related to the restructuring plan initiated during the fourth quarter of fiscal year 2013.

Summary of Significant Accounting Policies (Policies)

Basis of Presentation

 

The consolidated interim 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, 2013, included in its Annual Report on Form 10-K/A. 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 and six months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending March 31, 2014, or any future periods.

 

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

Fiscal Years

 

The Company’s fiscal years end 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. Examples of significant estimates and assumptions made by management involve the fair value of goodwill, accruals for customer programs, inventory valuation, valuation allowances for deferred tax assets and warranty accruals. 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.

Recent Accounting Pronouncements

 

In July 2013, the FASB issued ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”. The ASU provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU No. 2013-11 is effective for interim and annual periods beginning after December 15, 2013.  The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Revision of Previously-Issued Financial Statements (Tables)

The following table presents the impact of the accounting errors on the Company’s previously-reported consolidated statement of operations for the three and six months ended September 30, 2012 (in thousands):

 

 

 

Three Months ended September 30, 2012

 

Six Months ended September 30, 2012

 

 

 

As Reported

 

Adjustments

 

As Revised

 

As Reported

 

Adjustments

 

As Revised

 

 

 

 

 

(Unaudited)

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

547,693

 

150

(1)

$

547,693

 

$

1,016,297

 

(1,015

)(1)

$

1,016,297

 

Cost of goods sold

 

351,698

 

71

(2)

351,919

 

676,050

 

142

(2)

675,177

 

Gross profit

 

195,995

 

(221

)

195,774

 

340,247

 

873

 

341,120

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing and selling

 

110,522

 

 

110,522

 

211,419

 

 

211,419

 

Research and development

 

38,019

 

95

(2)

38,114

 

76,947

 

190

(2)

77,137

 

General and administrative

 

25,980

 

 

25,980

 

58,460

 

 

58,460

 

Restructuring charges (credits)

 

(2,671

)

 

(2,671

)

28,556

 

 

28,556

 

Total operating expenses

 

171,850

 

95

 

171,945

 

375,382

 

190

 

375,572

 

Operating income (loss)

 

24,145

 

(316

)

23,829

 

(35,135

)

683

 

(34,452

)

Interest income, net

 

153

 

 

153

 

537

 

 

537

 

Other expense, net

 

(509

)

 

(509

)

(668

)

 

(668

)

Income (loss) before income taxes

 

23,789

 

(316

)

23,473

 

(35,266

)

683

 

(34,583

)

Benefit from income taxes

 

(31,076

)

 

(31,076

)

(37,986

)

 

(37,986

)

Net Income

 

$

54,865

 

$

(316

)

$

54,549

 

$

2,720

 

$

683

 

$

3,403

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

$

0.35

 

 

 

$

0.35

 

$

0.02

 

 

 

$

0.02

 

Basic

 

$

0.35

 

 

 

$

0.35

 

$

0.02

 

 

 

$

0.02

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

156,736

 

 

 

156,736

 

158,723

 

 

 

158,723

 

Diluted

 

157,932

 

 

 

157,932

 

159,853

 

 

 

159,853

 

The Company’s following table presents the impact of the accounting errors on the Company’s previously-reported consolidated statements of comprehensive income for the three and six months ended September 30, 2012 (in thousands):

 

 

 

Three Months ended September 30, 2012

 

Six Months ended September 30, 2012

 

 

 

As Reported

 

Adjustments

 

As Revised

 

As Reported

 

Adjustments

 

As Revised

 

 

 

 

 

(Unaudited)

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

54,865

 

$

(150

)(1)

$

54,549

 

$

2,720

 

$

1,015

(1)

$

3,403

 

 

 

 

 

$

(166

)(2)

 

 

 

 

$

(332

)(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

4,970

 

(2,529

)(3)

2,441

 

(1,295

)

(3,125

)(3)

(4,420

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in net loss, and prior service cost related to defined benefit pension plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss and prior service cost

 

6,457

 

 

6,457

 

7,920

 

 

 

7,920

 

Less amortization included in operating expenses

 

301

 

 

301

 

756

 

 

756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in hedging gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized hedging loss

 

(5,466

)

 

(5,466

)

(4,261

)

 

(4,261

)

Less reclassification adjustment for gain included in cost of goods sold

 

1,683

 

 

1,683

 

1,577

 

 

1,577

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized investment loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for gain included in other income (expense)

 

 

 

 

(343

)

 

(343

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

7,945

 

(2,529

)

5,416

 

4,354

 

(3,125

)

1,229

 

Total comprehensive income

 

$

62,810

 

$

(2,845

)

$

59,965

 

$

7,074

 

$

(2,442

)

$

4,632

 

The following table presents the impact of the accounting errors on the Company’s previously-reported consolidated statement of cash flows for the six months ended September 30, 2012 (in thousands):

 

 

 

Six Months ended

 

 

 

September 30, 2012

 

 

 

As Reported

 

Adjustments

 

As Revised

 

 

 

 

 

(Unaudited)

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

2,720

 

$

1,015

(1)

$

3,403

 

 

 

 

 

(332

)(2)

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation

 

22,307

 

 

22,307

 

Amortization of other intangible assets

 

12,257

 

332

(2)

12,589

 

Share-based compensation expense

 

13,437

 

 

13,437

 

Gain on sale of available-for-sale securities

 

(831

)

 

(831

)

Excess tax benefits from share-based compensation

 

(22

)

 

(22

)

Deferred income taxes and other

 

(3,806

)

 

(3,806

)

Changes in assets and liabilities, net of acquisition:

 

 

 

 

 

 

Accounts receivable

 

(58,272

)

(261

)(3)

(58,533

)

Inventories

 

(30,733

)

(1,092

)(3)

(31,825

)

Other assets

 

(7,339

)

(231

)(3)

(7,570

)

Accounts payable

 

68,875

 

2,220

(3)

71,095

 

Accrued and other liabilities

 

(9,498

)

(1,015

)(1)

(10,997

)

 

 

 

 

(484

)(3)

 

 

Net cash provided by operating activities

 

9,095

 

152

 

9,247

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(30,522

)

(2,295

)(3)

(32,817

)

Investment in privately-held company

 

(3,970

)

 

(3,970

)

Proceeds from sale of available-for-sale securities

 

917

 

 

917

 

Purchases of trading investments for deferred compensation plan

 

(1,648

)

 

(1,648

)

Proceeds from sales of trading investments for deferred compensation plan

 

1,638

 

 

1,638

 

Net cash used in investing activities

 

(33,585

)

(2,295

)

(35,880

)

Cash flows from financing activities:

 

 

 

 

 

 

Payment of cash dividends

 

(133,462

)

 

(133,462

)

Purchases of treasury shares

 

(89,955

)

2,143

(3)

(87,812

)

Proceeds from sale of shares upon exercise of options and purchase rights

 

9,008

 

 

9,008

 

Tax withholdings related to net share settlements of restricted stock units

 

(635

)

 

(635

)

Excess tax benefits from share-based compensation

 

22

 

 

22

 

Net cash used in financing activities

 

(215,022

)

2,143

 

(212,879

)

Effect of exchange rate changes on cash and cash equivalents

 

(1,825

)

 

(1,825

)

Net decrease in cash and cash equivalents

 

(241,337

)

 

(241,337

)

Cash and cash equivalents at beginning of period

 

478,370

 

 

478,370

 

Cash and cash equivalents at end of period

 

$

237,033

 

$

 

$

237,033

 

Net Income per Share (Tables)
Schedule of computations of basic and diluted net income per share

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

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

As Revised

 

 

 

As Revised

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

14,398

 

$

54,549

 

$

15,441

 

$

3,403

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares - basic

 

159,969

 

156,736

 

159,637

 

158,723

 

Effect of potentially dilutive share equivalents

 

1,214

 

1,196

 

1,238

 

1,130

 

Weighted average shares - diluted

 

161,183

 

157,932

 

160,875

 

159,853

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

$

0.09

 

$

0.35

 

$

0.10

 

$

0.02

 

Net income per share - diluted

 

$

0.09

 

$

0.35

 

$

0.10

 

$

0.02

 

Employee Benefit Plans (Tables)

The following table summarizes the share-based compensation expense and related tax benefit recognized for the three and six months ended September 30, 2013 and 2012 (in thousands):

 

 

 

Three Months ended

 

Six Months ended

 

 

 

September 30,

 

September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

$

594

 

$

608

 

$

1,171

 

$

1,397

 

Share-based compensation expense included in gross profit

 

594

 

608

 

1,171

 

1,397

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Marketing and selling

 

1,017

 

2,644

 

2,923

 

4,424

 

Research and development

 

840

 

1,763

 

1,934

 

3,588

 

General and administrative

 

1,658

 

2,251

 

2,471

 

4,028

 

Share-based compensation expense included in operating expenses

 

3,515

 

6,658

 

7,328

 

12,040

 

Total share-based compensation expense

 

4,109

 

7,266

 

8,499

 

13,437

 

Income tax benefit

 

(1,300

)

(1,671

)

(2,175

)

(3,047

)

Share-based compensation expense, net of income tax

 

$

2,809

 

$

5,595

 

$

6,324

 

$

10,390

The net periodic benefit cost for defined benefit pension plans and non-retirement post-employment benefit obligations for the three and six months ended September 30, 2013 and 2012 were as follows (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

1,972

 

$

1,726

 

$

3,929

 

$

3,601

 

Interest cost

 

430

 

418

 

857

 

912

 

Expected return on plan assets

 

(490

)

(525

)

(990

)

(618

)

Amortization of net transition obligation

 

1

 

1

 

2

 

2

 

Amortization of net prior service cost

 

52

 

38

 

104

 

76

 

Recognized net actuarial loss

 

256

 

262

 

508

 

678

 

Settlement cost

 

 

2,254

 

 

2,254

 

Net periodic benefit cost

 

$

2,221

 

$

4,174

 

$

4,410

 

$

6,905

Balance Sheet Components (Tables)

The following table presents the components of certain balance sheet asset amounts as of September 30 and March 31, 2013 (in thousands):

 

 

 

September 30, 2013

 

March 31, 2013

 

 

 

 

 

 

 

Accounts receivable:

 

 

 

 

 

Accounts receivable

 

$

413,696

 

$

325,870

 

Allowance for doubtful accounts

 

(1,071

)

(2,153

)

Allowance for returns

 

(19,230

)

(21,883

)

Allowances for cooperative marketing arrangements

 

(26,010

)

(24,160

)

Allowances for customer incentive programs

 

(44,788

)

(42,857

)

Allowances for pricing programs

 

(63,739

)

(55,252

)

 

 

$

258,858

 

$

179,565

 

Inventories:

 

 

 

 

 

Raw materials

 

$

34,020

 

$

37,504

 

Work-in-process

 

75

 

41

 

Finished goods

 

258,682

 

223,538

 

 

 

$

292,777

 

$

261,083

 

Other current assets:

 

 

 

 

 

Income tax and value-added tax refund receivables

 

$

25,113

 

$

17,403

 

Deferred taxes

 

29,109

 

25,400

 

Prepaid expenses and other

 

11,586

 

15,300

 

 

 

$

65,808

 

$

58,103

 

Property, plant and equipment:

 

 

 

 

 

Plant, buildings and improvements

 

$

68,642

 

$

70,009

 

Equipment

 

131,913

 

129,868

 

Computer equipment

 

32,551

 

42,437

 

Computer software

 

80,136

 

80,930

 

 

 

313,242

 

323,244

 

Less: accumulated depreciation

 

(236,845

)

(247,469

)

 

 

76,397

 

75,775

 

Construction-in-progress

 

7,890

 

9,047

 

Land

 

2,846

 

2,827

 

 

 

$

87,133

 

$

87,649

 

Other assets:

 

 

 

 

 

Deferred taxes

 

$

51,121

 

$

53,035

 

Trading investments

 

15,435

 

15,599

 

Other

 

5,261

 

6,464

 

 

 

$

71,817

 

$

75,098

 

The following table presents the components of certain balance sheet liability amounts as of September 30 and March 31, 2013 (in thousands):

 

 

 

September 30, 2013

 

March 31, 2013

 

 

 

 

 

 

 

Accrued and other current liabilities:

 

 

 

 

 

Accrued personnel expenses

 

$

56,906

 

$

40,502

 

Accrued marketing expenses

 

13,039

 

11,005

 

Indirect customer incentive programs

 

32,539

 

29,464

 

Accrued restructuring

 

5,566

 

13,458

 

Deferred revenue

 

21,562

 

22,698

 

Accrued freight and duty

 

8,596

 

5,882

 

Value-added tax payable

 

8,477

 

8,544

 

Accrued royalties

 

4,012

 

3,358

 

Warranty accrual

 

12,634

 

11,878

 

Employee benefit plan obligations

 

1,571

 

4,351

 

Income taxes payable

 

5,392

 

2,463

 

Other accrued liabilities

 

49,352

 

39,171

 

 

 

$

219,646

 

$

192,774

 

Non-current liabilities:

 

 

 

 

 

Income taxes payable

 

$

100,310

 

$

98,827

 

Warranty accrual

 

9,451

 

8,660

 

Obligation for deferred compensation

 

15,435

 

15,631

 

Employee benefit plan obligations

 

40,728

 

35,963

 

Deferred rent

 

23,690

 

24,136

 

Deferred taxes

 

1,872

 

1,989

 

Other liabilities

 

11,070

 

10,676

 

 

 

$

202,556

 

$

195,882

 

The following table presents the changes in the allowance for doubtful accounts during the three and six months ended September 30, 2013 and 2012 (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(2,189

)

$

(2,321

)

$

(2,153

)

$

(2,472

)

Bad debt expense reversal, net

 

428

 

103

 

359

 

189

 

Write-offs, net of recoveries

 

690

 

(21

)

723

 

44

 

Ending balance

 

$

(1,071

)

$

(2,239

)

$

(1,071

)

$

(2,239

)

Financial Instruments (Tables)

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

 

 

 

September 30, 2013

 

March 31, 2013

 

 

 

Level 1

 

Level 2

 

Level 1

 

Level 2

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents (1)

 

$

99,510

 

$

 

$

119,073

 

$

 

Trading investments for deferred compensation plan:

 

 

 

 

 

 

 

 

 

Money market funds

 

3,311

 

 

4,220

 

 

Mutual funds

 

12,124

 

 

11,379

 

 

Foreign exchange derivative assets

 

 

126

 

 

1,197

 

Total assets at fair value

 

$

114,945

 

$

126

 

$

134,672

 

$

1,197

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange derivative liabilities

 

$

 

$

1,546

 

$

 

$

707

 

Total liabilities at fair value

 

$

 

$

1,546

 

$

 

$

707

 

 

(1) Excludes cash balances of $195.3 million as of September 30, 2013 and $214.7 million as of March 31, 2013.

The following table presents the changes in the Company’s Level 3 available-for-sale securities during the six months ended September 30, 2013 and 2012 (in thousands):

 

 

 

September 30, 2013

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Beginning balance

 

$

 

$

429

 

Proceeds from sales of securities

 

 

(917

)

Reversal of unrealized gains previously recognized in accumulated other comprehensive loss

 

 

831

 

Reversal of unrealized losses previously recognized in accumulated other comprehensive loss

 

 

(343

)

Ending balance

 

$

 

$

 

The following table presents the fair values of the Company’s derivative instruments and their locations on its Consolidated Balance Sheets as of September 30 and March 31, 2013 (in thousands):

 

 

 

Asset Derivatives

 

Liability Derivatives

 

 

 

 

 

Fair Value

 

 

 

Fair Value

 

 

 

 

 

September 30,

 

March 31,

 

 

 

September 30,

 

March 31,

 

 

 

Location

 

2013

 

2013

 

Location

 

2013

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

Other assets

 

$

8

 

$

1,165

 

Other liabilities

 

$

754

 

$

 

 

 

 

 

8

 

1,165

 

 

 

754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

Other assets

 

118

 

 

Other liabilities

 

240

 

270

 

Foreign exchange swap contracts

 

Other assets

 

 

32

 

Other liabilities

 

552

 

437

 

 

 

 

 

118

 

32

 

 

 

792

 

707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

126

 

$

1,197

 

 

 

$

1,546

 

$

707

 

The following table presents the amounts of gains and losses on the Company’s derivative instruments for the three and six months ended September 30, 2013 and 2012 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

 

 

 

2013

 

2012

 

Loss into Income

 

2013

 

2012

 

Immediately

 

2013

 

2012

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

$

(1,467

)

$

(3,783

)

Cost of goods sold

 

$

(94

)

$

(1,683

)

Other income/expense

 

$

16

 

$

120

 

 

 

(1,467

)

(3,783

)

 

 

(94

)

(1,683

)

 

 

16

 

120

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

 

 

 

 

 

 

 

Other income/expense

 

(482

)

(92

)

Foreign exchange swap contracts

 

 

 

 

 

 

 

 

Other income/expense

 

5

 

(390

)

 

 

 

 

 

 

 

 

 

 

 

(477

)

(482

)

 

 

$

(1,467

)

$

(3,783

)

 

 

$

(94

)

$

(1,683

)

 

 

$

(461

)

$

(362

)

 

 

 

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

 

 

 

2013

 

2012

 

Loss into Income

 

2013

 

2012

 

Immediately

 

2013

 

2012

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedges

 

$

(2,102

)

$

(2,684

)

Cost of goods sold

 

$

184

 

$

(1,577

)

Other income/expense

 

$

46

 

$

172

 

 

 

(2,102

)

(2,684

)

 

 

184

 

(1,577

)

 

 

46

 

172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

 

 

 

 

 

 

 

Other income/expense

 

165

 

(837

)

Foreign exchange swap contracts

 

 

 

 

 

 

 

 

Other income/expense

 

743

 

435

 

 

 

 

 

 

 

 

 

 

 

 

908

 

(402

)

 

 

$

(2,102

)

$

(2,684

)

 

 

$

184

 

$

(1,577

)

 

 

$

954

 

$

(230

)

Goodwill and Other Intangible Assets (Tables)

The following table summarizes the activity in the Company’s goodwill during the six months ended September 30, 2013 (in thousands):

 

 

 

September 30, 2013

 

 

 

Peripherals

 

Video
Conferencing

 

Total

 

Beginning balance

 

$

216,744

 

$

124,613

 

$

341,357

 

Additions

 

202

 

 

202

 

Foreign currency movements

 

 

731

 

731

 

Reclassified from assets held for sale

 

2,469

 

 

2,469

 

Ending balance

 

$

219,415

 

$

125,344

 

$

344,759

 

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

 

 

 

September 30, 2013

 

March 31, 2013

 

 

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

Gross Carrying

 

Accumulated

 

Net Carrying

 

 

 

Amount

 

Amortization

 

Amount

 

Amount

 

Amortization

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademark/tradename

 

$

32,085

 

$

(30,127

)

$

1,958

 

$

29,842

 

$

(26,558

)

$

3,284

 

Technology (1)

 

92,007

 

(84,144

)

7,863

 

73,249

 

(61,560

)

11,689

 

Customer contracts

 

40,345

 

(32,419

)

7,926

 

39,068

 

(28,017

)

11,051

 

 

 

$

164,437

 

$

(146,690

)

$

17,747

 

$

142,159

 

$

(116,135

)

$

26,024

 

 

(1) During the six months ended September 30, 2013, the Company changed its classification of its Retail - Remote product category and digital video security product line from assets held for sale to assets held and used.  The increase in gross carrying amount and accumulated amortization between March 31, 2013 and September 30, 2013 was due to this change in classification.

Commitments and Contingencies (Tables)

The following table describes changes to the Company’s asset retirement obligation liability for the three and six months ended September 30, 2013 and 2012 (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,532

 

$

2,001

 

$

1,750

 

$

1,918

 

Liabilities incurred

 

 

 

 

 

Liabilities settled

 

(375

)

 

(596

)

 

Accretion expense

 

9

 

4

 

11

 

16

 

Foreign currency translation

 

12

 

(135

)

13

 

(64

)

Ending balance

 

$

1,178

 

$

1,870

 

$

1,178

 

$

1,870

 

Changes in the Company’s warranty liability for the three and six months ended September 30, 2013 and 2012 were as follows (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

As Revised

 

 

 

As Revised

 

Beginning balance

 

$

22,655

 

$

23,966

 

$

20,538

 

$

25,494

 

Provision during the period

 

3,356

 

3,444

 

6,645

 

5,981

 

Settlements made during the year, net of adjustments

 

(3,926

)

(3,873

)

(7,425

)

(7,938

)

Amount classified as liabilities held for sale (1)

 

 

 

2,327

 

 

Ending balance

 

$

22,085

 

$

23,537

 

$

22,085

 

$

23,537

 

 

(1)         Represents warranty liability previously allocated to the Company’s Retail — Remotes product category which was classified as an asset held for sale as of March 31, 2013.

Change in the Company’s deferred services revenue during the three and six months ended September 30, 2013 and 2012 were as follows (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

29,080

 

$

26,340

 

$

29,328

 

$

24,568

 

Additions for extended warranties issued during the period

 

7,914

 

8,112

 

15,830

 

16,394

 

Amortization of deferred revenue for the period

 

(7,926

)

(7,333

)

(16,090

)

(13,843

)

Ending balance

 

$

29,068

 

$

27,119

 

$

29,068

 

$

27,119

 

 

 

 

 

September 30, 2013

 

 

 

 

 

Inventory purchases

 

$

132,782

 

Operating expenses

 

63,426

 

Capital expenditures

 

18,372

 

 

 

$

214,580

 

Shareholders' Equity (Tables)

The approved share buyback programs are shown in the following table (in thousands, excluding transaction costs).

 

Date of Announcement

 

Approved
Share
Buyback
Number

 

Approved
Buyback
Amount

 

Expiration Date

 

Shares
Repurchased

 

Amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

September 2008 - amended

 

28,465

 

$

177,030

 

August 2013

 

18,500

 

$

170,714

 

September 2008

 

8,344

 

$

250,000

 

August 2013

 

7,609

 

$

73,134

 

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

 

 

 

Accumulated Other Comprehensive Loss

 

 

 

Cumulative

 

Defined

 

Deferred

 

 

 

 

 

Translation

 

Benefit

 

Hedging

 

 

 

 

 

Adjustment

 

Plan (1)

 

Gains (Losses)

 

Total

 

March 31, 2013 (As Revised)

 

$

(73,187

)

$

(20,316

)

$

510

 

$

(92,993

)

Net change in other comprehensive loss

 

2,829

 

(385

)

(2,102

)

342

 

September 30, 2013

 

$

(70,358

)

$

(20,701

)

$

(1,592

)

$

(92,651

)

 

(1)  Net of tax of $315 as of September 30 and March 31, 2013.

Segment Information (Tables)

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

 

 

 

Three Months ended

 

Six Months ended

 

 

 

September 30,

 

September 30,

 

 

 

2013

 

2012(1)

 

2013

 

2012(1)

 

Peripherals

 

 

 

 

 

 

 

 

 

Retail - Pointing Devices

 

$

130,656

 

$

122,524

 

$

245,307

 

$

238,353

 

Retail - PC Keyboards & Desktops

 

105,236

 

97,069

 

203,186

 

191,628

 

Retail - Tablet Accessories

 

34,711

 

33,737

 

73,270

 

49,623

 

Retail - Audio PC

 

67,199

 

77,267

 

119,164

 

138,792

 

Retail - Audio - Wearables & Wireless

 

25,648

 

19,108

 

44,723

 

33,707

 

Retail - Video

 

41,061

 

49,453

 

76,319

 

86,612

 

Retail - PC Gaming

 

41,493

 

46,673

 

81,110

 

73,456

 

Retail - Remotes

 

13,327

 

16,434

 

27,901

 

30,166

 

Retail - Other

 

5,522

 

14,214

 

7,109

 

29,243

 

OEM

 

37,526

 

36,718

 

72,039

 

73,393

 

Total peripherals

 

502,379

 

513,197

 

950,128

 

944,973

 

Video conferencing

 

29,593

 

34,496

 

59,768

 

71,324

 

Total net sales

 

$

531,972

 

$

547,693

 

$

1,009,896

 

$

1,016,297

 

 

(1) 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 peripheral sales.

Net sales and operating income (loss) for the Company’s reporting segments were as follows (in thousands):

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Net sales by reporting segment:

 

 

 

 

 

 

 

 

 

Peripherals

 

$

502,379

 

$

513,197

 

$

950,128

 

$

944,973

 

Video conferencing

 

29,593

 

34,496

 

59,768

 

71,324

 

Total net sales

 

$

531,972

 

$

547,693

 

$

1,009,896

 

$

1,016,297

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) by segment:

 

 

 

 

 

 

 

 

 

Peripherals (1)

 

$

39,281

 

$

39,097

 

$

52,151

 

$

(5,505

)

Video conferencing (1)

 

(12,708

)

(1,811

)

(15,877

)

(2,921

)

Operating income (loss) before other charges

 

26,573

 

37,286

 

36,274

 

(8,426

)

Other charges:

 

 

 

 

 

 

 

 

 

Share-based compensation

 

(4,109

)

(7,266

)

(8,499

)

(13,437

)

Amortization

 

(5,254

)

(6,191

)

(10,518

)

(12,589

)

Total operating income (loss)

 

$

17,210

 

$

23,829

 

$

17,257

 

$

(34,452

)

 

(1)         The previously-reported operating income (loss) for the three and six months ended September 30, 2012 was impacted by the errors described in Note 2 as follows: (a) For the three and six months ended September 30, 2012, Peripherals operating income (loss) decreased by an immaterial amount and increased by $1.2 million, respectively, and (b) For the three and six months ended September 30, 2012, Video Conferencing operating loss decreased by less than $0.1 million and $0.2 million, respectively. These changes resulted from the warranty accrual and amortization of intangibles error correction.

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

 

 

 

Three Months ended September 30,

 

Six Months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

As Reported

 

Adjustments (1)

 

As Revised

 

 

 

As Reported

 

Adjustments (1)

 

As Revised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

202,381

 

$

216,596

 

$

(17,079

)

$

199,517

 

$

402,834

 

$

420,522

 

$

(36,438

)

$

384,084

 

EMEA

 

203,353

 

212,050

 

10,939

 

222,989

 

358,576

 

362,056

 

24,306

 

386,362

 

Asia Pacific

 

126,238

 

119,047

 

6,140

 

125,187

 

248,486

 

233,719

 

12,132

 

245,851

 

Total net sales

 

$

531,972

 

$

547,693

 

$

 

$

547,693

 

$

1,009,896

 

$

1,016,297

 

$

 

$

1,016,297

 

 

(1)                            During fiscal year 2013, the Company determined that net sales to unaffiliated customers by geographic regions previously reported, including the three and six months ended September 30, 2012, were not properly stated since amounts related to its Video Conferencing segment and other businesses were improperly allocated solely to the Americas region.

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

 

 

 

September 30, 2013

 

March 31, 2013

 

 

 

 

 

 

 

Americas

 

$

43,386

 

$

43,357

 

EMEA

 

5,875

 

8,315

 

Asia Pacific

 

42,396

 

40,952

 

Total long-lived assets

 

$

91,657

 

$

92,624

 

Restructuring (Tables)
Summary of restructuring related activities

The following table summarizes restructuring related activities (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

 

 

 

 

 

 

 

 

 

 

 

Charges (credits)

 

(2,671

)

(3,816

)

48

 

1,097

 

Cash payments

 

(17,652

)

(16,642

)

(52

)

(958

)

Foreign exchange

 

14

 

 

 

14

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2012

 

$

5,786

 

$

3,494

 

$

1,468

 

$

824

 

 

 

 

 

 

 

 

 

 

 

Charges (credits)

 

(358

)

(188

)

(182

)

12

 

Cash payments

 

(4,511

)

(2,633

)

(1,104

)

(774

)

Foreign exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 30, 2012

 

917

 

673

 

182

 

62

 

 

 

 

 

 

 

 

 

 

 

Charges (credits)

 

15,507

 

16,437

 

(30

)

(900

)

Cash payments

 

(2,966

)

(3,727

)

(77

)

838

 

Foreign exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2013

 

13,458

 

13,383

 

75

 

 

 

 

 

 

 

 

 

 

 

 

Charges

 

2,334

 

2,004

 

330

 

 

Cash payments

 

(8,422

)

(8,422

)

 

 

Foreign exchange

 

(170

)

(170

)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2013

 

7,200

 

6,795

 

405

 

 

 

 

 

 

 

 

 

 

 

 

Charges

 

5,465

 

4,562

(1)

903

(1)

 

Cash payments

 

(7,099

)

(6,535

)

(564

)

 

Foreign exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2013

 

$

5,566

 

$

4,822

 

$

744

 

$

 

 

(1) During the three months ended September 30, 2013, the Company incurred $4.6 million in termination benefits, $5.4 million charge related to the restructuring plan initiated during the second quarter of fiscal year 2014 offset by a $0.8 million credit related to the restructuring plan initiated during the fourth quarter of fiscal year 2013.  During the same period, the Company also incurred $0.9 million in lease exit costs, $0.6 million related to the restructuring plan initiated during the second quarter of fiscal year 2014 and $0.3 million related to the restructuring plan initiated during the fourth quarter of fiscal year 2013.

The Company (Details)
6 Months Ended
Sep. 30, 2013
segment
The Company
 
Number of Operating Segments
Revision of Previously-Issued Financial Statements (Details) (USD $)
3 Months Ended 6 Months Ended 39 Months Ended 3 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Mar. 31, 2013
Mar. 31, 2013
Amortization of intangibles
Jun. 30, 2013
Adjustment for product warranty liability and amortization expense
Product warranty liability and amortization expense of intangible assets
 
 
 
 
 
 
$ 19,100,000 
Intangible assets
17,747,000 
 
17,747,000 
 
26,024,000 
4,200,000 
 
Amortization of intangible assets
$ 5,254,000 
$ 6,191,000 
$ 10,518,000 
$ 12,589,000 
 
$ 2,000,000 
 
Revision of Previously-Issued Financial Statements (Details 2) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended 12 Months Ended
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Mar. 31, 2013
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
Net sales
$ 531,972 
 
 
 
$ 547,693 
 
$ 1,009,896 
$ 1,016,297 
 
Cost of goods sold
348,559 
 
 
 
351,919 
 
658,128 
675,177 
 
Gross profit
183,413 
 
 
 
195,774 
 
351,768 
341,120 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
Marketing and selling
93,710 
 
 
 
110,522 
 
194,345 
211,419 
 
Research and development
37,633 
 
 
 
38,114 
 
73,824 
77,137 
 
General and administrative
29,395 
 
 
 
25,980 
 
58,543 
58,460 
 
Restructuring charges (credits)
5,465 
2,334 
15,507 
(358)
(2,671)
31,227 
7,799 
28,556 
43,700 
Total operating expenses
166,203 
 
 
 
171,945 
 
334,511 
375,572 
 
Operating income (loss)
17,210 
 
 
 
23,829 
 
17,257 
(34,452)
 
Interest income, net
183 
 
 
 
153 
 
160 
537 
 
Other expense, net
62 
 
 
 
(509)
 
279 
(668)
 
Income (loss) before income taxes
17,455 
 
 
 
23,473 
 
17,696 
(34,583)
 
Benefit from income taxes
3,057 
 
 
 
(31,076)
 
2,255 
(37,986)
 
Net income
14,398 
 
 
 
54,549 
 
15,441 
3,403 
 
Net income per share:
 
 
 
 
 
 
 
 
 
Basic (in dollars per share)
$ 0.09 
 
 
 
$ 0.35 
 
$ 0.10 
$ 0.02 
 
Diluted (in dollars per share)
$ 0.09 
 
 
 
$ 0.35 
 
$ 0.10 
$ 0.02 
 
Shares used to compute net income per share:
 
 
 
 
 
 
 
 
 
Basic (in shares)
159,969 
 
 
 
156,736 
 
159,637 
158,723 
 
Diluted (in shares)
161,183 
 
 
 
157,932 
 
160,875 
159,853 
 
As Reported
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
547,693 
 
 
1,016,297 
 
Cost of goods sold
 
 
 
 
351,698 
 
 
676,050 
 
Gross profit
 
 
 
 
195,995 
 
 
340,247 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
Marketing and selling
 
 
 
 
110,522 
 
 
211,419 
 
Research and development
 
 
 
 
38,019 
 
 
76,947 
 
General and administrative
 
 
 
 
25,980 
 
 
58,460 
 
Restructuring charges (credits)
 
 
 
 
(2,671)
 
 
28,556 
 
Total operating expenses
 
 
 
 
171,850 
 
 
375,382 
 
Operating income (loss)
 
 
 
 
24,145 
 
 
(35,135)
 
Interest income, net
 
 
 
 
153 
 
 
537 
 
Other expense, net
 
 
 
 
(509)
 
 
(668)
 
Income (loss) before income taxes
 
 
 
 
23,789 
 
 
(35,266)
 
Benefit from income taxes
 
 
 
 
(31,076)
 
 
(37,986)
 
Net income
 
 
 
 
54,865 
 
 
2,720 
 
Net income per share:
 
 
 
 
 
 
 
 
 
Basic (in dollars per share)
 
 
 
 
$ 0.35 
 
 
$ 0.02 
 
Diluted (in dollars per share)
 
 
 
 
$ 0.35 
 
 
$ 0.02 
 
Shares used to compute net income per share:
 
 
 
 
 
 
 
 
 
Basic (in shares)
 
 
 
 
156,736 
 
 
158,723 
 
Diluted (in shares)
 
 
 
 
157,932 
 
 
159,853 
 
Adjustments |
Amounts not properly stated
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
Gross profit
 
 
 
 
(221)
 
 
873 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
Total operating expenses
 
 
 
 
95 
 
 
190 
 
Operating income (loss)
 
 
 
 
(316)
 
 
683 
 
Income (loss) before income taxes
 
 
 
 
(316)
 
 
683 
 
Net income
 
 
 
 
(316)
 
 
683 
 
Adjustments |
Amounts not properly stated for warranty accrual
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
Cost of goods sold
 
 
 
 
150 
 
 
(1,015)
 
Operating expenses:
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
(150)
 
 
1,015 
 
Adjustments |
Amortization of intangibles
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
Cost of goods sold
 
 
 
 
71 
 
 
142 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
Research and development
 
 
 
 
95 
 
 
190 
 
Net income
 
 
 
 
$ (166)
 
 
$ (332)
 
Revision of Previously-Issued Financial Statements (Details 3) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Consolidated Statements of Comprehensive Income
 
 
 
 
Net Income
$ 14,398 
$ 54,549 
$ 15,441 
$ 3,403 
Other comprehensive income:
 
 
 
 
Foreign currency translation gain (loss)
2,728 
2,441 
2,829 
(4,420)
Change in net loss, and prior service cost related to defined benefit pension plans:
 
 
 
 
Net loss and prior service cost
(804)
6,457 
(1,000)
7,920 
Less amortization included in operating expenses
309 
301 
615 
756 
Net change in hedging gain (loss):
 
 
 
 
Unrealized hedging loss
(1,373)
(5,466)
(2,286)
(4,261)
Less reclassification adjustment for gain included in cost of goods sold
(94)
1,683 
184 
1,577 
Net change in unrealized investment loss:
 
 
 
 
Reclassification adjustment for gain included in other income (expense)
 
 
 
(343)
Other comprehensive income
766 
5,416 
342 
1,229 
Total comprehensive income
15,164 
59,965 
15,783 
4,632 
As Reported
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
Net Income
 
54,865 
 
2,720 
Other comprehensive income:
 
 
 
 
Foreign currency translation gain (loss)
 
4,970 
 
(1,295)
Change in net loss, and prior service cost related to defined benefit pension plans:
 
 
 
 
Net loss and prior service cost
 
6,457 
 
7,920 
Less amortization included in operating expenses
 
301 
 
756 
Net change in hedging gain (loss):
 
 
 
 
Unrealized hedging loss
 
(5,466)
 
(4,261)
Less reclassification adjustment for gain included in cost of goods sold
 
1,683 
 
1,577 
Net change in unrealized investment loss:
 
 
 
 
Reclassification adjustment for gain included in other income (expense)
 
 
 
(343)
Other comprehensive income
 
7,945 
 
4,354 
Total comprehensive income
 
62,810 
 
7,074 
Adjustments |
Amounts not properly stated
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
Net Income
 
(316)
 
683 
Net change in unrealized investment loss:
 
 
 
 
Other comprehensive income
 
(2,529)
 
(3,125)
Total comprehensive income
 
(2,845)
 
(2,442)
Adjustments |
Amounts not properly stated for warranty accrual
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
Net Income
 
(150)
 
1,015 
Adjustments |
Amortization of intangibles
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
Net Income
 
(166)
 
(332)
Adjustments |
Amounts not properly stated for other adjustments
 
 
 
 
Other comprehensive income:
 
 
 
 
Foreign currency translation gain (loss)
 
$ (2,529)
 
$ (3,125)
Revision of Previously-Issued Financial Statements (Details 4) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended 39 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Mar. 31, 2013
Amortization of intangibles
Sep. 30, 2012
As Reported
Sep. 30, 2012
As Reported
Sep. 30, 2012
Adjustments
Sep. 30, 2012
Adjustments
Amounts not properly stated
Sep. 30, 2012
Adjustments
Amounts not properly stated
Sep. 30, 2012
Adjustments
Amounts not properly stated for warranty accrual
Sep. 30, 2012
Adjustments
Amounts not properly stated for warranty accrual
Sep. 30, 2012
Adjustments
Amortization of intangibles
Sep. 30, 2012
Adjustments
Amortization of intangibles
Sep. 30, 2012
Adjustments
Amounts not properly stated for other adjustments
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$ 14,398 
$ 54,549 
$ 15,441 
$ 3,403 
 
$ 54,865 
$ 2,720 
 
$ (316)
$ 683 
$ (150)
$ 1,015 
$ (166)
$ (332)
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation
 
 
19,283 
22,307 
 
 
22,307 
 
 
 
 
 
 
 
 
Amortization of other intangible assets
5,254 
6,191 
10,518 
12,589 
2,000 
 
12,257 
332 
 
 
 
 
 
332 
 
Share-based compensation expense
 
 
8,499 
13,437 
 
 
13,437 
 
 
 
 
 
 
 
 
Gain on sale of available-for-sale securities
 
 
 
(831)
 
 
(831)
 
 
 
 
 
 
 
 
Excess tax benefits from share-based compensation
 
 
 
(22)
 
 
(22)
 
 
 
 
 
 
 
 
Deferred income taxes and other
 
 
(3,902)
(3,806)
 
 
(3,806)
 
 
 
 
 
 
 
 
Changes in assets and liabilities, net of acquisitions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 
 
(77,042)
(58,533)
 
 
(58,272)
 
 
 
 
 
 
 
(261)
Inventories
 
 
(21,350)
(31,825)
 
 
(30,733)
 
 
 
 
 
 
 
(1,092)
Other assets
 
 
(5,893)
(7,570)
 
 
(7,339)
 
 
 
 
 
 
 
(231)
Accounts payable
 
 
39,555 
71,095 
 
 
68,875 
 
 
 
 
 
 
 
2,220 
Accrued and other liabilities
 
 
26,091 
(10,997)
 
 
(9,498)
 
 
 
 
(1,015)
 
 
(484)
Net cash provided by operating activities
 
 
14,186 
9,247 
 
 
9,095 
152 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchases of property, plant and equipment
 
 
(23,063)
(32,817)
 
 
(30,522)
 
 
 
 
 
 
 
(2,295)
Investment in privately-held company
 
 
 
(3,970)
 
 
(3,970)
 
 
 
 
 
 
 
 
Proceeds from sales of available-for-sale securities
 
 
 
917 
 
 
917 
 
 
 
 
 
 
 
 
Purchases of trading investments for deferred compensation plan
 
 
(6,146)
(1,648)
 
 
(1,648)
 
 
 
 
 
 
 
 
Proceeds from sales of trading investments for deferred compensation plan
 
 
6,602 
1,638 
 
 
1,638 
 
 
 
 
 
 
 
 
Net cash used in investing activities
 
 
(23,257)
(35,880)
 
 
(33,585)
(2,295)
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payment of cash dividends
 
 
(36,123)
(133,462)
 
 
(133,462)
 
 
 
 
 
 
 
 
Purchases of treasury shares
 
 
 
(87,812)
 
 
(89,955)
 
 
 
 
 
 
 
2,143 
Proceeds from sales of shares upon exercise of options and purchase rights
 
 
6,135 
9,008 
 
 
9,008 
 
 
 
 
 
 
 
 
Tax withholdings related to net share settlements of restricted stock units
 
 
(453)
(635)
 
 
(635)
 
 
 
 
 
 
 
 
Excess tax benefits from share-based compensation
 
 
 
22 
 
 
22 
 
 
 
 
 
 
 
 
Net cash used in financing activities
 
 
(30,441)
(212,879)
 
 
(215,022)
2,143 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
 
 
484 
(1,825)
 
 
(1,825)
 
 
 
 
 
 
 
 
Net decrease in cash and cash equivalents
 
 
(39,028)
(241,337)
 
 
(241,337)
 
 
 
 
 
 
 
 
Cash and cash equivalents at beginning of period
 
 
333,824 
478,370 
 
 
478,370 
 
 
 
 
 
 
 
 
Cash and cash equivalents at end of period
$ 294,796 
$ 237,033 
$ 294,796 
$ 237,033 
 
$ 237,033 
$ 237,033 
 
 
 
 
 
 
 
 
Summary of Significant Accounting Policies (Details)
6 Months Ended
Sep. 30, 2013
Fiscal Years
 
Number of weeks in each interim quarter
91 days 
Net Income per Share (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Net Income per Share
 
 
 
 
Net income
$ 14,398 
$ 54,549 
$ 15,441 
$ 3,403 
Weighted average shares - basic
159,969,000 
156,736,000 
159,637,000 
158,723,000 
Effect of potentially dilutive share equivalents
1,214,000 
1,196,000 
1,238,000 
1,130,000 
Weighted average shares - diluted
161,183,000 
157,932,000 
160,875,000 
159,853,000 
Net income per share - basic (in dollars per share)
$ 0.09 
$ 0.35 
$ 0.10 
$ 0.02 
Net income per share - diluted (in dollars per share)
$ 0.09 
$ 0.35 
$ 0.10 
$ 0.02 
Anti-dilutive share equivalents excluded from the computation of diluted net income per share
15,408,542 
14,929,137 
16,829,424 
15,127,253 
Employee Benefit Plans (Details) (USD $)
Share data in Millions, unless otherwise specified
0 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Sep. 4, 2013
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Mar. 31, 2013
Share-based compensation expense and related tax benefit
 
 
 
 
 
 
Number of additional shares to be issued
8.0 
 
 
 
 
 
Share-based compensation expense
 
$ 4,109,000 
$ 7,266,000 
$ 8,499,000 
$ 13,437,000 
 
Tax benefit
 
(1,300,000)
(1,671,000)
(2,175,000)
(3,047,000)
 
Share-based compensation expense, net of income tax
 
2,809,000 
5,595,000 
6,324,000 
10,390,000 
 
Share-based compensation cost capitalized in inventory
 
 
 
400,000 
 
400,000 
Cost of goods sold
 
 
 
 
 
 
Share-based compensation expense and related tax benefit
 
 
 
 
 
 
Share-based compensation expense
 
594,000 
608,000 
1,171,000 
1,397,000 
 
Share-based compensation expense included in gross profit
 
 
 
 
 
 
Share-based compensation expense and related tax benefit
 
 
 
 
 
 
Share-based compensation expense
 
594,000 
608,000 
1,171,000 
1,397,000 
 
Marketing and selling
 
 
 
 
 
 
Share-based compensation expense and related tax benefit
 
 
 
 
 
 
Share-based compensation expense
 
1,017,000 
2,644,000 
2,923,000 
4,424,000 
 
Research and development
 
 
 
 
 
 
Share-based compensation expense and related tax benefit
 
 
 
 
 
 
Share-based compensation expense
 
840,000 
1,763,000 
1,934,000 
3,588,000 
 
General and administrative
 
 
 
 
 
 
Share-based compensation expense and related tax benefit
 
 
 
 
 
 
Share-based compensation expense
 
1,658,000 
2,251,000 
2,471,000 
4,028,000 
 
Share-based compensation expense included in operating expenses
 
 
 
 
 
 
Share-based compensation expense and related tax benefit
 
 
 
 
 
 
Share-based compensation expense
 
$ 3,515,000 
$ 6,658,000 
$ 7,328,000 
$ 12,040,000 
 
Employee Benefit Plans (Details 2) (USD $)
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Defined Contribution Plans
 
 
 
 
Expense for defined contribution plans
$ 1,600,000 
$ 1,800,000 
$ 3,300,000 
$ 4,600,000 
Unrecognized losses realized upon re-measurement of Swiss defined benefit pension plan
309,000 
301,000 
615,000 
756,000 
Net periodic benefit cost
 
 
 
 
Service cost
1,972,000 
1,726,000 
3,929,000 
3,601,000 
Interest cost
430,000 
418,000 
857,000 
912,000 
Expected return on plan assets
(490,000)
(525,000)
(990,000)
(618,000)
Amortization of net transition obligation
1,000 
1,000 
2,000 
2,000 
Amortization of net prior service cost
52,000 
38,000 
104,000 
76,000 
Recognized net actuarial loss
256,000 
262,000 
508,000 
678,000 
Settlement cost
 
2,254,000 
 
2,254,000 
Net periodic benefit cost
2,221,000 
4,174,000 
4,410,000 
6,905,000 
Swiss defined benefit pension plan
 
 
 
 
Defined Contribution Plans
 
 
 
 
Unrecognized losses realized upon re-measurement of Swiss defined benefit pension plan
 
2,200,000 
 
 
Net periodic benefit cost
 
 
 
 
Recognized net actuarial loss
 
$ (2,200,000)
 
 
Income Taxes (Details) (USD $)
3 Months Ended 6 Months Ended 12 Months Ended
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Mar. 31, 2013
Income Taxes
 
 
 
 
 
 
 
 
 
Provision for (benefit from) income taxes
$ 3,057,000 
 
 
 
$ (31,076,000)
 
$ 2,255,000 
$ (37,986,000)
 
Effective income tax rates (as a percent)
17.50% 
 
 
 
(132.40%)
 
12.70% 
109.80% 
 
Discrete tax benefits
 
 
 
 
32,100,000 
 
 
 
 
Income Taxes
 
 
 
 
 
 
 
 
 
Restructuring charges
5,465,000 
2,334,000 
15,507,000 
(358,000)
(2,671,000)
31,227,000 
7,799,000 
28,556,000 
43,700,000 
Unrecognized tax benefits and related accrued interest and penalties
103,500,000 
 
102,000,000 
 
 
 
103,500,000 
 
102,000,000 
Unrecognized tax benefits that would impact effective tax rate
90,800,000 
 
90,300,000 
 
 
 
90,800,000 
 
90,300,000 
Accrued interest and penalties related to uncertain tax positions
$ 6,900,000 
 
$ 6,600,000 
 
 
 
$ 6,900,000 
 
$ 6,600,000 
Balance Sheet Components (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Accounts receivable:
 
 
 
 
 
 
Accounts receivable
$ 413,696 
 
$ 325,870 
 
 
 
Allowance for doubtful accounts
(1,071)
(2,189)
(2,153)
(2,239)
(2,321)
(2,472)
Allowance for returns
(19,230)
 
(21,883)
 
 
 
Allowance for cooperative marketing arrangements
(26,010)
 
(24,160)
 
 
 
Allowance for customer incentive programs
(44,788)
 
(42,857)
 
 
 
Allowance for pricing programs
(63,739)
 
(55,252)
 
 
 
Accounts receivable, net
258,858 
 
179,565 
 
 
 
Inventories:
 
 
 
 
 
 
Raw materials
34,020 
 
37,504 
 
 
 
Work-in-process
75 
 
41 
 
 
 
Finished goods
258,682 
 
223,538 
 
 
 
Inventory, net
292,777 
 
261,083 
 
 
 
Other current assets:
 
 
 
 
 
 
Income tax and value-added tax refund receivables
25,113 
 
17,403 
 
 
 
Deferred taxes
29,109 
 
25,400 
 
 
 
Prepaid expenses and other
11,586 
 
15,300 
 
 
 
Other current assets, total
65,808 
 
58,103 
 
 
 
Property, plant and equipment:
 
 
 
 
 
 
Property, plant and equipment, gross
313,242 
 
323,244 
 
 
 
Less: accumulated depreciation
(236,845)
 
(247,469)
 
 
 
Property, plant and equipment before non-depreciable items
76,397 
 
75,775 
 
 
 
Property, plant and equipment, net
87,133 
 
87,649 
 
 
 
Other assets:
 
 
 
 
 
 
Deferred taxes
51,121 
 
53,035 
 
 
 
Trading investments
15,435 
 
15,599 
 
 
 
Other
5,261 
 
6,464 
 
 
 
Other assets, total
71,817 
 
75,098 
 
 
 
Plant, buildings and improvements
 
 
 
 
 
 
Balance sheet components
 
 
 
 
 
 
Property, plant and equipment, gross
68,642 
 
70,009 
 
 
 
Equipment
 
 
 
 
 
 
Balance sheet components
 
 
 
 
 
 
Property, plant and equipment, gross
131,913 
 
129,868 
 
 
 
Computer equipment
 
 
 
 
 
 
Balance sheet components
 
 
 
 
 
 
Property, plant and equipment, gross
32,551 
 
42,437 
 
 
 
Computer software
 
 
 
 
 
 
Balance sheet components
 
 
 
 
 
 
Property, plant and equipment, gross
80,136 
 
80,930 
 
 
 
Construction-in-progress
 
 
 
 
 
 
Balance sheet components
 
 
 
 
 
 
Property, plant and equipment, gross
7,890 
 
9,047 
 
 
 
Land
 
 
 
 
 
 
Balance sheet components
 
 
 
 
 
 
Property, plant and equipment, gross
$ 2,846 
 
$ 2,827 
 
 
 
Balance Sheet Components (Details 2) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2013
Mar. 31, 2013
Accrued and other current liabilities:
 
 
Accrued personnel expenses
$ 56,906 
$ 40,502 
Accrued marketing expenses
13,039 
11,005 
Indirect customer incentive programs
32,539 
29,464 
Accrued restructuring
5,566 
13,458 
Deferred revenue
21,562 
22,698 
Accrued freight and duty
8,596 
5,882 
Value-added tax payable
8,477 
8,544 
Accrued royalties
4,012 
3,358 
Warranty accrual
12,634 
11,878 
Employment benefit plan obligations
1,571 
4,351 
Income taxes payable
5,392 
2,463 
Other accrued liabilities
49,352 
39,171 
Accrued liabilities
219,646 
192,774 
Non-current liabilities:
 
 
Income taxes payable
100,310 
98,827 
Warranty accrual
9,451 
8,660 
Obligation for deferred compensation
15,435 
15,631 
Employment benefit plan obligations
40,728 
35,963 
Deferred rent
23,690 
24,136 
Deferred taxes
1,872 
1,989 
Other liabilities
11,070 
10,676 
Long-term liabilities, total
$ 202,556 
$ 195,882 
Balance Sheet Components (Details 3) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Allowance for Doubtful Accounts
 
 
 
 
Beginning balance
$ (2,189)
$ (2,321)
$ (2,153)
$ (2,472)
Bad debt expense reversal, net
428 
103 
359 
189 
Write-offs, net of recoveries
690 
(21)
723 
44 
Ending balance
$ (1,071)
$ (2,239)
$ (1,071)
$ (2,239)
Financial Instruments (Details) (USD $)
Sep. 30, 2013
Mar. 31, 2013
Statement
 
 
Trading investments for deferred compensation plan:
$ 15,435,000 
$ 15,599,000 
Cash
195,300,000 
214,700,000 
Level 1
 
 
Statement
 
 
Cash equivalents
99,510,000 
119,073,000 
Total assets at fair value
114,945,000 
134,672,000 
Level 1 |
Money market funds
 
 
Statement
 
 
Trading investments for deferred compensation plan:
3,311,000 
4,220,000 
Level 1 |
Mutual funds
 
 
Statement
 
 
Trading investments for deferred compensation plan:
12,124,000 
11,379,000 
Level 2
 
 
Statement
 
 
Foreign exchange derivative assets
126,000 
1,197,000 
Total assets at fair value
126,000 
1,197,000 
Foreign exchange derivative liabilities
1,546,000 
707,000 
Total liabilities at fair value
$ 1,546,000 
$ 707,000 
Financial Instruments (Details 2) (Available-for-sale securities, USD $)
In Thousands, unless otherwise specified
6 Months Ended
Sep. 30, 2012
Available-for-sale securities
 
Changes in the Level 3 available-for-sale securities
 
Beginning balance
$ 429 
Proceeds from sales of securities
(917)
Reversal of unrealized gains previously recognized in accumulated other comprehensive loss
831 
Reversal of unrealized losses previously recognized
$ (343)
Financial Instruments (Details 3) (USD $)
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Mar. 31, 2013
Financial Instruments
 
 
 
 
 
Trading Securities, Fair Value Disclosure
$ 15,435,000 
 
$ 15,435,000 
 
$ 15,599,000 
Trading Securities, Change in Unrealized Holding Gain (Loss)
400,000 
500,000 
(200,000)
200,000 
 
Derivative Financial Instruments
 
 
 
 
 
Asset Derivatives, Fair Value
126,000 
 
126,000 
 
1,197,000 
Liability Derivatives, Fair Value
1,546,000 
 
1,546,000 
 
707,000 
Derivatives designated as hedging instruments
 
 
 
 
 
Derivative Financial Instruments
 
 
 
 
 
Asset Derivatives, Fair Value
8,000 
 
8,000 
 
1,165,000 
Liability Derivatives, Fair Value
754,000 
 
754,000 
 
 
Derivatives designated as hedging instruments |
Cash Flow Hedges
 
 
 
 
 
Derivative Financial Instruments
 
 
 
 
 
Asset Derivatives, Fair Value
8,000 
 
8,000 
 
1,165,000 
Liability Derivatives, Fair Value
754,000 
 
754,000 
 
 
Derivatives not designated as hedging instruments
 
 
 
 
 
Derivative Financial Instruments
 
 
 
 
 
Asset Derivatives, Fair Value
118,000 
 
118,000 
 
32,000 
Liability Derivatives, Fair Value
792,000 
 
792,000 
 
707,000 
Derivatives not designated as hedging instruments |
Foreign Exchange Forward Contracts
 
 
 
 
 
Derivative Financial Instruments
 
 
 
 
 
Asset Derivatives, Fair Value
118,000 
 
118,000 
 
 
Liability Derivatives, Fair Value
240,000 
 
240,000 
 
270,000 
Derivatives not designated as hedging instruments |
Foreign Exchange Swap Contracts
 
 
 
 
 
Derivative Financial Instruments
 
 
 
 
 
Asset Derivatives, Fair Value
 
 
 
 
32,000 
Liability Derivatives, Fair Value
$ 552,000 
 
$ 552,000 
 
$ 437,000 
Financial Instruments (Details 4)
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Sep. 30, 2013
USD ($)
Sep. 30, 2012
USD ($)
Sep. 30, 2013
USD ($)
Sep. 30, 2012
USD ($)
Sep. 30, 2013
Derivatives designated as hedging instruments
USD ($)
Sep. 30, 2012
Derivatives designated as hedging instruments
USD ($)
Sep. 30, 2013
Derivatives designated as hedging instruments
USD ($)
Sep. 30, 2012
Derivatives designated as hedging instruments
USD ($)
Sep. 30, 2013
Derivatives designated as hedging instruments
Cash Flow Hedges
USD ($)
Sep. 30, 2012
Derivatives designated as hedging instruments
Cash Flow Hedges
USD ($)
Sep. 30, 2013
Derivatives designated as hedging instruments
Cash Flow Hedges
USD ($)
Sep. 30, 2012
Derivatives designated as hedging instruments
Cash Flow Hedges
USD ($)
Sep. 30, 2013
Derivatives designated as hedging instruments
Cash Flow Hedges
Foreign Exchange Forward Contracts
USD ($)
item
Sep. 30, 2013
Derivatives designated as hedging instruments
Cash Flow Hedges
Foreign Exchange Forward Contracts
EUR (€)
item
Mar. 31, 2013
Derivatives designated as hedging instruments
Cash Flow Hedges
Foreign Exchange Forward Contracts
USD ($)
Mar. 31, 2013
Derivatives designated as hedging instruments
Cash Flow Hedges
Foreign Exchange Forward Contracts
EUR (€)
Sep. 30, 2013
Derivatives designated as hedging instruments
Cash Flow Hedges
Cost of goods sold
USD ($)
Sep. 30, 2012
Derivatives designated as hedging instruments
Cash Flow Hedges
Cost of goods sold
USD ($)
Sep. 30, 2013
Derivatives designated as hedging instruments
Cash Flow Hedges
Cost of goods sold
USD ($)
Sep. 30, 2012
Derivatives designated as hedging instruments
Cash Flow Hedges
Cost of goods sold
USD ($)
Sep. 30, 2013
Derivatives designated as hedging instruments
Cash Flow Hedges
Other income/ expense
USD ($)
Sep. 30, 2012
Derivatives designated as hedging instruments
Cash Flow Hedges
Other income/ expense
USD ($)
Sep. 30, 2013
Derivatives designated as hedging instruments
Cash Flow Hedges
Other income/ expense
USD ($)
Sep. 30, 2012
Derivatives designated as hedging instruments
Cash Flow Hedges
Other income/ expense
USD ($)
Sep. 30, 2013
Derivatives not designated as hedging instruments
USD ($)
Sep. 30, 2012
Derivatives not designated as hedging instruments
USD ($)
Sep. 30, 2013
Derivatives not designated as hedging instruments
USD ($)
Sep. 30, 2012
Derivatives not designated as hedging instruments
USD ($)
Sep. 30, 2013
Derivatives not designated as hedging instruments
Foreign Exchange Forward Contracts
USD ($)
Mar. 31, 2013
Derivatives not designated as hedging instruments
Foreign Exchange Forward Contracts
USD ($)
Sep. 30, 2013
Derivatives not designated as hedging instruments
Foreign Exchange Swap Contracts
USD ($)
Mar. 31, 2013
Derivatives not designated as hedging instruments
Foreign Exchange Swap Contracts
USD ($)
Sep. 30, 2013
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Forward Contracts
USD ($)
Sep. 30, 2012
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Forward Contracts
USD ($)
Sep. 30, 2013
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Forward Contracts
USD ($)
Sep. 30, 2012
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Forward Contracts
USD ($)
Sep. 30, 2013
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Swap Contracts
USD ($)
Sep. 30, 2012
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Swap Contracts
USD ($)
Sep. 30, 2013
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Swap Contracts
USD ($)
Sep. 30, 2012
Derivatives not designated as hedging instruments
Other income/ expense
Foreign Exchange Swap Contracts
USD ($)
Amounts of gains and losses on the derivative instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Amount of Gain/(Loss) Deferred as a Component of Accumulated Other Comprehensive Loss
$ (1,467,000)
$ (3,783,000)
$ (2,102,000)
$ (2,684,000)
$ (1,467,000)
$ (3,783,000)
$ (2,102,000)
$ (2,684,000)
$ (1,467,000)
$ (3,783,000)
$ (2,102,000)
$ (2,684,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
(94,000)
(1,683,000)
184,000 
(1,577,000)
(94,000)
(1,683,000)
184,000 
(1,577,000)
 
 
 
 
 
 
 
 
(94,000)
(1,683,000)
184,000 
(1,577,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of Gain/(Loss) Recognized in Income Immediately
(461,000)
(362,000)
954,000 
(230,000)
16,000 
120,000 
46,000 
172,000 
 
 
 
 
 
 
 
 
 
 
 
 
16,000 
120,000 
46,000 
172,000 
(477,000)
(482,000)
908,000 
(402,000)
 
 
 
 
(482,000)
(92,000)
165,000 
(837,000)
5,000 
(390,000)
743,000 
435,000 
Number of entity with euro functional currency that purchases in U.S. dollars
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average maturity
 
 
 
 
 
 
 
 
 
 
 
 
4 months 
4 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 months 
 
 
 
 
 
 
 
 
 
 
 
Notional amounts of foreign exchange forward contracts outstanding
 
 
 
 
 
 
 
 
 
 
 
 
56,700,000 
41,900,000 
38,500,000 
30,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amounts of foreign exchange swap contracts, other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 16,400,000 
$ 14,200,000 
$ 31,700,000 
$ 19,600,000 
 
 
 
 
 
 
 
 
Goodwill and Other Intangible Assets (Details) (USD $)
3 Months Ended 6 Months Ended 12 Months Ended
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Mar. 31, 2013
Goodwill and Other Intangibles
 
 
 
 
 
 
 
 
 
Restructuring charges
$ 5,465,000 
$ 2,334,000 
$ 15,507,000 
$ (358,000)
$ (2,671,000)
$ 31,227,000 
$ 7,799,000 
$ 28,556,000 
$ 43,700,000 
Intangibles
17,747,000 
 
26,024,000 
 
 
 
17,747,000 
 
26,024,000 
Goodwill
 
 
 
 
 
 
 
 
 
Balance at the beginning of the period
 
341,357,000 
 
 
 
 
341,357,000 
 
 
Additions
 
 
 
 
 
 
202,000 
 
 
Foreign currency movements
 
 
 
 
 
 
731,000 
 
 
Reclassified from assets held for sale
 
 
 
 
 
 
2,469,000 
 
 
Balance at the end of the period
344,759,000 
 
341,357,000 
 
 
 
344,759,000 
 
341,357,000 
Termination Benefits
 
 
 
 
 
 
 
 
 
Goodwill and Other Intangibles
 
 
 
 
 
 
 
 
 
Restructuring charges
4,562,000 
2,004,000 
16,437,000 
(188,000)
(3,816,000)
28,655,000 
 
 
 
Lease Exit Costs
 
 
 
 
 
 
 
 
 
Goodwill and Other Intangibles
 
 
 
 
 
 
 
 
 
Restructuring charges
903,000 
330,000 
(30,000)
(182,000)
48,000 
1,472,000 
 
 
 
Q2'2014 Restructuring |
Termination Benefits
 
 
 
 
 
 
 
 
 
Goodwill and Other Intangibles
 
 
 
 
 
 
 
 
 
Restructuring charges
5,400,000 
 
 
 
 
 
 
 
 
Q2'2014 Restructuring |
Lease Exit Costs
 
 
 
 
 
 
 
 
 
Goodwill and Other Intangibles
 
 
 
 
 
 
 
 
 
Restructuring charges
600,000 
 
 
 
 
 
 
 
 
Retail - Remotes
 
 
 
 
 
 
 
 
 
Goodwill and Other Intangibles
 
 
 
 
 
 
 
 
 
Intangibles
 
1,600,000 
 
 
 
 
 
 
 
Goodwill
 
 
 
 
 
 
 
 
 
Balance at the end of the period
 
2,500,000 
 
 
 
 
 
 
 
Peripherals
 
 
 
 
 
 
 
 
 
Goodwill
 
 
 
 
 
 
 
 
 
Balance at the beginning of the period
 
216,744,000 
 
 
 
 
216,744,000 
 
 
Additions
 
 
 
 
 
 
202,000 
 
 
Reclassified from assets held for sale
 
 
 
 
 
 
2,469,000 
 
 
Balance at the end of the period
219,415,000 
 
 
 
 
 
219,415,000 
 
 
Video conferencing
 
 
 
 
 
 
 
 
 
Goodwill and Other Intangibles
 
 
 
 
 
 
 
 
 
Percentage of carrying value by which the fair value of each reporting unit exceeded the carrying value
23.00% 
 
 
 
 
 
23.00% 
 
 
Goodwill
 
 
 
 
 
 
 
 
 
Balance at the beginning of the period
 
124,613,000 
 
 
 
 
124,613,000 
 
 
Foreign currency movements
 
 
 
 
 
 
731,000 
 
 
Balance at the end of the period
125,344,000 
 
 
 
 
 
125,344,000 
 
 
Video conferencing |
Q2'2014 Restructuring |
Cost of goods sold
 
 
 
 
 
 
 
 
 
Goodwill and Other Intangibles
 
 
 
 
 
 
 
 
 
Write-off of discontinued products
5,200,000 
 
 
 
 
 
 
 
 
Video conferencing |
Q2'2014 Restructuring |
Termination Benefits
 
 
 
 
 
 
 
 
 
Goodwill and Other Intangibles
 
 
 
 
 
 
 
 
 
Restructuring charges
5,400,000 
 
 
 
 
 
 
 
 
Video conferencing |
Q2'2014 Restructuring |
Lease Exit Costs
 
 
 
 
 
 
 
 
 
Goodwill and Other Intangibles
 
 
 
 
 
 
 
 
 
Restructuring charges
$ 600,000 
 
 
 
 
 
 
 
 
Video conferencing |
Income approach analysis
 
 
 
 
 
 
 
 
 
Goodwill and Other Intangibles
 
 
 
 
 
 
 
 
 
CAGR assumption (as a percent)
 
 
 
 
 
 
7.00% 
 
 
Growth rate in fiscal year 2021
 
 
 
 
 
 
4.00% 
 
 
Hypothetical decrease in CAGR rate (as a percent)
 
 
 
 
 
 
2.10% 
 
 
Discount rate assumption (as a percent)
 
 
 
 
 
 
15.00% 
 
 
Hypothetical increase in discount rate (as a percent)
 
 
 
 
 
 
18.70% 
 
 
Terminal growth rate assumption (as a percent)
 
 
 
 
 
 
4.00% 
 
 
Hypothetical decrease in terminal value (as a percent)
 
 
 
 
 
 
0.00% 
 
 
Goodwill and Other Intangible Assets (Details 2) (USD $)
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Mar. 31, 2013
Other intangible assets
 
 
 
 
 
Gross Carrying Amount
$ 164,437,000 
 
$ 164,437,000 
 
$ 142,159,000 
Accumulated Amortization
(146,690,000)
 
(146,690,000)
 
(116,135,000)
Net Carrying Amount
17,747,000 
 
17,747,000 
 
26,024,000 
Amortization of intangible assets
5,254,000 
6,191,000 
10,518,000 
12,589,000 
 
Expected amortization expense
 
 
 
 
 
Future amortization expense for remaining six months of fiscal year, 2014
7,300,000 
 
7,300,000 
 
 
Future amortization expense for fiscal year, 2015
8,400,000 
 
8,400,000 
 
 
Future amortization expense for fiscal year, 2016
1,800,000 
 
1,800,000 
 
 
Future amortization expense for fiscal year, 2017
100,000 
 
100,000 
 
 
Trademark/ trade name
 
 
 
 
 
Other intangible assets
 
 
 
 
 
Gross Carrying Amount
32,085,000 
 
32,085,000 
 
29,842,000 
Accumulated Amortization
(30,127,000)
 
(30,127,000)
 
(26,558,000)
Net Carrying Amount
1,958,000 
 
1,958,000 
 
3,284,000 
Technology
 
 
 
 
 
Other intangible assets
 
 
 
 
 
Gross Carrying Amount
92,007,000 
 
92,007,000 
 
73,249,000 
Accumulated Amortization
(84,144,000)
 
(84,144,000)
 
(61,560,000)
Net Carrying Amount
7,863,000 
 
7,863,000 
 
11,689,000 
Customer contracts
 
 
 
 
 
Other intangible assets
 
 
 
 
 
Gross Carrying Amount
40,345,000 
 
40,345,000 
 
39,068,000 
Accumulated Amortization
(32,419,000)
 
(32,419,000)
 
(28,017,000)
Net Carrying Amount
$ 7,926,000 
 
$ 7,926,000 
 
$ 11,051,000 
Financing Arrangements (Details) (USD $)
In Millions, unless otherwise specified
1 Months Ended
Dec. 31, 2011
Sep. 30, 2013
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 
 
Outstanding borrowings
 
Period of measurement
4 years 
 
Commitment fee as percentage of the variable margin
40.00% 
 
Non-recurring commitment and legal fees
1.5 
 
Senior Revolving Credit Facility Agreement |
Minimum
 
 
Financing Arrangements
 
 
Aggregate portion of lender commitments of total commitment which may be terminated upon a change of control of the entity (as a percent)
67.00% 
 
Unsecured bank lines of credit
 
 
Financing Arrangements
 
 
Maximum borrowing capacity
 
62.0 
Outstanding borrowings
 
Credit lines related to corporate credit cards
 
 
Financing Arrangements
 
 
Maximum borrowing capacity
 
$ 17.4 
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2013
Future minimum annual rentals under non-cancelable operating leases
 
Future minimum annual rentals under non-cancelable operating leases
$ 84.7 
Commitments and Contingencies (Details 2) (USD $)
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Changes to the asset retirement obligation liability
 
 
 
 
Beginning balance
$ 1,532,000 
$ 2,001,000 
$ 1,750,000 
$ 1,918,000 
Liabilities settled
(375,000)
 
(596,000)
 
Accretion expense
9,000 
4,000 
11,000 
16,000 
Foreign currency translation
12,000 
(135,000)
13,000 
(64,000)
Ending balance
1,178,000 
1,870,000 
1,178,000 
1,870,000 
Changes in the warranty liability:
 
 
 
 
Beginning balance
22,655,000 
23,966,000 
20,538,000 
25,494,000 
Provision during the period
3,356,000 
3,444,000 
6,645,000 
5,981,000 
Settlements made during the year, net of adjustments
(3,926,000)
(3,873,000)
(7,425,000)
(7,938,000)
Amount classified as liabilities held for sale
 
 
2,327,000 
 
Ending balance
22,085,000 
23,537,000 
22,085,000 
23,537,000 
Change in deferred services revenue
 
 
 
 
Beginning balance
29,080,000 
26,340,000 
29,328,000 
24,568,000 
Additions for extended warranties issued during the period
7,914,000 
8,112,000 
15,830,000 
16,394,000 
Amortization of deferred revenue for the period
(7,926,000)
(7,333,000)
(16,090,000)
(13,843,000)
Ending balance
29,068,000 
27,119,000 
29,068,000 
27,119,000 
Cost of providing services
$ 2,100,000 
$ 2,300,000 
$ 4,200,000 
$ 4,300,000 
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
Sep. 30, 2013
Purchase Commitments
 
Purchase commitments
$ 214,580 
Inventory purchases
 
Purchase Commitments
 
Purchase commitments
132,782 
Operating expenses
 
Purchase Commitments
 
Purchase commitments
63,426 
Capital expenditures
 
Purchase Commitments
 
Purchase commitments
$ 18,372 
Commitments and Contingencies (Details 4) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Sep. 30, 2013
Parent Guarantee Of Purchase Obligations Of Various Subsidiaries
 
Guarantees
 
Maximum amount of the guarantees
$ 30.0 
Liabilities subject to guarantees
Parent Guarantee Of A Subsidiary Purchases Under Two Gaurantees
 
Guarantees
 
Maximum amount of the guarantees
7.0 
Number of guarantees
Number of guarantees without a specified maximum exposure
Parent Guarantee for purchases obligation of third-party contract manufacturer
 
Guarantees
 
Maximum amount of the guarantees
35.0 
Number of guarantees
Guarantees outstanding
2.8 
Parent Guarantee Of Contingent Liabilities of Subsidiaries
 
Guarantees
 
Maximum amount of the guarantees
35.0 
Guarantees outstanding
5.6 
Indemnification provisions accrued
 
Guarantees
 
Amount accrued for indemnification provisions
$ 0 
Shareholders' Equity (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 3 Months Ended 6 Months Ended 61 Months Ended 3 Months Ended 6 Months Ended 61 Months Ended
Dec. 31, 2012
Sep. 30, 2008
Sep. 30, 2013
September 2008 - amended
Sep. 30, 2012
September 2008 - amended
Sep. 30, 2013
September 2008 - amended
Sep. 30, 2012
September 2008 - amended
Sep. 30, 2013
September 2008 - amended
Sep. 30, 2013
September 2008
Sep. 30, 2012
September 2008
Sep. 30, 2013
September 2008
Sep. 30, 2012
September 2008
Sep. 30, 2013
September 2008
Share Repurchases
 
 
 
 
 
 
 
 
 
 
 
 
Approved Share Buyback Number
 
250,000,000 
28,465,000 
28,465,000 
28,465,000 
28,465,000 
28,465,000 
8,344,000 
8,344,000 
8,344,000 
8,344,000 
8,344,000 
Shares cancelled
18,500,000 
 
 
 
 
 
 
 
 
 
 
 
Approved Buyback Amount
 
 
$ 177,030 
$ 177,030 
$ 177,030 
$ 177,030 
 
$ 250,000 
$ 250,000 
$ 250,000 
$ 250,000 
 
Share Repurchases, Shares
 
 
18,500,000 
18,500,000 
 
 
 
 
7,609,000 
Share Repurchases, Amount
 
 
 
 
 
 
$ 170,714 
 
 
 
 
$ 73,134 
Shareholders' Equity (Details 2) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Mar. 31, 2013
Accumulated Other Comprehensive Loss
 
 
 
 
 
Balance at the beginning of the period
 
 
$ (92,993)
 
 
Net change in other comprehensive loss
766 
5,416 
342 
1,229 
 
Balance at the end of the period
(92,651)
 
(92,651)
 
 
Defined Benefit Plan, tax amount
315 
 
315 
 
315 
Cumulative Translation Adjustment
 
 
 
 
 
Accumulated Other Comprehensive Loss
 
 
 
 
 
Balance at the beginning of the period
 
 
(73,187)
 
 
Net change in other comprehensive loss
 
 
2,829 
 
 
Balance at the end of the period
(70,358)
 
(70,358)
 
 
Defined Benefit Plan
 
 
 
 
 
Accumulated Other Comprehensive Loss
 
 
 
 
 
Balance at the beginning of the period
 
 
(20,316)
 
 
Net change in other comprehensive loss
 
 
(385)
 
 
Balance at the end of the period
(20,701)
 
(20,701)
 
 
Deferred Hedging Gains (Losses)
 
 
 
 
 
Accumulated Other Comprehensive Loss
 
 
 
 
 
Balance at the beginning of the period
 
 
510 
 
 
Net change in other comprehensive loss
 
 
(2,102)
 
 
Balance at the end of the period
$ (1,592)
 
$ (1,592)
 
 
Segment Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
segment
Sep. 30, 2012
Segment Information
 
 
 
 
Number of reporting segments
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
$ 531,972 
$ 547,693 
$ 1,009,896 
$ 1,016,297 
Operating income (loss) before other charges
26,573 
37,286 
36,274 
(8,426)
Other charges:
 
 
 
 
Share-based compensation
(4,109)
(7,266)
(8,499)
(13,437)
Amortization
(5,254)
(6,191)
(10,518)
(12,589)
Total operating Income (loss)
17,210 
23,829 
17,257 
(34,452)
Adjustments
 
 
 
 
Other charges:
 
 
 
 
Amortization
 
 
 
(332)
Peripherals
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
502,379 
513,197 
950,128 
944,973 
Operating income (loss) before other charges
39,281 
39,097 
52,151 
(5,505)
Peripherals |
Adjustments
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Operating income (loss) before other charges
 
 
 
1,200 
Video conferencing
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
29,593 
34,496 
59,768 
71,324 
Operating income (loss) before other charges
(12,708)
(1,811)
(15,877)
(2,921)
Video conferencing |
Adjustments |
Maximum
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Operating income (loss) before other charges
 
(100)
 
(200)
Retail - Pointing Devices
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
130,656 
122,524 
245,307 
238,353 
Retail - PC Keyboards & Desktops
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
105,236 
97,069 
203,186 
191,628 
Retail - Tablet Accessories
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
34,711 
33,737 
73,270 
49,623 
Retail - Audio PC
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
67,199 
77,267 
119,164 
138,792 
Retail - Audio - Wearables & Wireless
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
25,648 
19,108 
44,723 
33,707 
Retail - Video
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
41,061 
49,453 
76,319 
86,612 
Retail - PC Gaming
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
41,493 
46,673 
81,110 
73,456 
Retail - Remotes
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
13,327 
16,434 
27,901 
30,166 
Retail - Other
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
5,522 
14,214 
7,109 
29,243 
OEM
 
 
 
 
Net sales by product family, excluding intercompany transactions
 
 
 
 
Total net sales
$ 37,526 
$ 36,718 
$ 72,039 
$ 73,393 
Segment Information (Details 2) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Mar. 31, 2013
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
$ 531,972 
$ 547,693 
$ 1,009,896 
$ 1,016,297 
 
Total long-lived assets
91,657 
 
91,657 
 
92,624 
Peripherals
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
502,379 
513,197 
950,128 
944,973 
 
As Reported
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
 
547,693 
 
1,016,297 
 
Consolidated net sales |
Customer Concentration |
Single customer group |
Peripherals
 
 
 
 
 
Concentration risk
 
 
 
 
 
Number of major customer
 
Percentage of benchmark derived from specified source
14.00% 
13.00% 
14.00% 
12.00% 
 
Americas
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
202,381 
199,517 
402,834 
384,084 
 
Total long-lived assets
43,386 
 
43,386 
 
43,357 
Americas |
As Reported
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
 
216,596 
 
420,522 
 
Americas |
Adjustments
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
 
(17,079)
 
(36,438)
 
EMEA
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
203,353 
222,989 
358,576 
386,362 
 
Total long-lived assets
5,875 
 
5,875 
 
8,315 
EMEA |
As Reported
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
 
212,050 
 
362,056 
 
EMEA |
Adjustments
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
 
10,939 
 
24,306 
 
Asia Pacific
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
126,238 
125,187 
248,486 
245,851 
 
Total long-lived assets
42,396 
 
42,396 
 
40,952 
Asia Pacific |
As Reported
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
 
119,047 
 
233,719 
 
Asia Pacific |
Adjustments
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total net sales
 
6,140 
 
12,132 
 
United States
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total long-lived assets
43,386 
 
43,386 
 
43,357 
United States |
Consolidated net sales |
Geographic Concentration
 
 
 
 
 
Concentration risk
 
 
 
 
 
Percentage of benchmark derived from specified source
34.00% 
32.00% 
35.00% 
33.00% 
 
United States |
Consolidated net sales |
Geographic Concentration |
Minimum [Member]
 
 
 
 
 
Concentration risk
 
 
 
 
 
Percentage of benchmark derived from specified source
 
 
10.00% 
10.00% 
 
Switzerland
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total long-lived assets
1,900 
 
1,900 
 
4,200 
Switzerland |
Consolidated net sales |
Geographic Concentration
 
 
 
 
 
Concentration risk
 
 
 
 
 
Percentage of benchmark derived from specified source
2.00% 
2.00% 
1.00% 
2.00% 
 
China
 
 
 
 
 
Net sales to unaffiliated customers and long-lived assets by geographic region
 
 
 
 
 
Total long-lived assets
$ 35,000 
 
$ 35,000 
 
$ 33,100 
Restructuring (Details) (USD $)
3 Months Ended 6 Months Ended 12 Months Ended
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Mar. 31, 2013
Restructuring reserve
 
 
 
 
 
 
 
 
 
Balance at the beginning of the period
$ 7,200,000 
$ 13,458,000 
$ 917,000 
$ 5,786,000 
$ 26,095,000 
 
$ 13,458,000 
 
 
Charges
5,465,000 
2,334,000 
15,507,000 
(358,000)
(2,671,000)
31,227,000 
7,799,000 
28,556,000 
43,700,000 
Benefit pension plan re-measurement cost due to restructuring
(256,000)
 
 
 
(262,000)
 
(508,000)
(678,000)
 
Cash payments
(7,099,000)
(8,422,000)
(2,966,000)
(4,511,000)
(17,652,000)
(5,195,000)
 
 
 
Foreign exchange
 
(170,000)
 
 
14,000 
63,000 
 
 
 
Balance at the end of the period
5,566,000 
7,200,000 
13,458,000 
917,000 
5,786,000 
26,095,000 
5,566,000 
5,786,000 
13,458,000 
Swiss Plan
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Benefit pension plan re-measurement cost due to restructuring
 
 
 
 
2,200,000 
 
 
 
 
Termination Benefits
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Balance at the beginning of the period
6,795,000 
13,383,000 
673,000 
3,494,000 
23,952,000 
 
13,383,000 
 
 
Charges
4,562,000 
2,004,000 
16,437,000 
(188,000)
(3,816,000)
28,655,000 
 
 
 
Cash payments
(6,535,000)
(8,422,000)
(3,727,000)
(2,633,000)
(16,642,000)
(4,766,000)
 
 
 
Foreign exchange
 
(170,000)
 
 
 
63,000 
 
 
 
Balance at the end of the period
4,822,000 
6,795,000 
13,383,000 
673,000 
3,494,000 
23,952,000 
4,822,000 
3,494,000 
13,383,000 
Lease Exit Costs
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Balance at the beginning of the period
405,000 
75,000 
182,000 
1,468,000 
1,472,000 
 
75,000 
 
 
Charges
903,000 
330,000 
(30,000)
(182,000)
48,000 
1,472,000 
 
 
 
Cash payments
(564,000)
 
(77,000)
(1,104,000)
(52,000)
 
 
 
 
Balance at the end of the period
744,000 
405,000 
75,000 
182,000 
1,468,000 
1,472,000 
744,000 
1,468,000 
75,000 
Other
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Balance at the beginning of the period
 
 
62,000 
824,000 
671,000 
 
 
 
 
Charges
 
 
(900,000)
12,000 
1,097,000 
1,100,000 
 
 
 
Cash payments
 
 
838,000 
(774,000)
(958,000)
(429,000)
 
 
 
Foreign exchange
 
 
 
 
14,000 
 
 
 
 
Balance at the end of the period
 
 
 
62,000 
824,000 
671,000 
 
824,000 
 
Q1'2013 Restructuring |
Cost of Goods Sold
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Charges related to discontinuance of certain product development
 
 
 
 
 
 
 
3,000,000 
 
Q1'2013 Restructuring |
Termination Benefits
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Charges
 
 
 
 
(3,800,000)
 
 
24,800,000 
 
Legal, consulting and other costs
 
 
 
 
1,100,000 
 
 
2,200,000 
 
Q1'2013 Restructuring |
Lease Exit Costs
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Charges
 
 
 
 
 
 
 
1,500,000 
 
Q4'2013 Restructuring |
Termination Benefits
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Charges
(800,000)
 
 
 
 
 
1,200,000 
 
 
Q4'2013 Restructuring |
Lease Exit Costs
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Charges
300,000 
 
 
 
 
 
600,000 
 
 
Q2'2014 Restructuring |
Termination Benefits
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Charges
5,400,000 
 
 
 
 
 
 
 
 
Q2'2014 Restructuring |
Lease Exit Costs
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Charges
600,000 
 
 
 
 
 
 
 
 
Q2'2014 Restructuring |
Video conferencing |
Cost of Goods Sold
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Charges related to discontinuance of certain product development
5,200,000 
 
 
 
 
 
 
 
 
Q2'2014 Restructuring |
Video conferencing |
Termination Benefits
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Charges
5,400,000 
 
 
 
 
 
 
 
 
Q2'2014 Restructuring |
Video conferencing |
Lease Exit Costs
 
 
 
 
 
 
 
 
 
Restructuring reserve
 
 
 
 
 
 
 
 
 
Charges
$ 600,000