Logitech 2013 Annual Report Download - page 114

Impairment of Goodwill and Other Assets
While performing our annual goodwill impairment analysis of each of our reporting units as of December 31,
2012, we determined that our video conferencing reporting unit’s estimated fair value was less than its carrying
value, thus requiring a Step 2 assessment of this reporting unit. This impairment primarily resulted from a decrease
in our expected CAGR during the assessment forecast period based on greater evidence of the overall enterprise
video conferencing industry experiencing a slowdown in recent quarters, combined with lower demand related to
new product launches, increased competition in fiscal year 2013 and other market data. The Step 2 test required us
to fair value all assets and liabilities of our video conferencing reporting unit to determine the implied fair value
of this reporting unit’s goodwill. We were unable to complete the Step 2 analysis prior to filing of our Form 10-Q
for the quarterly period ended December 31, 2012 due to the complexities of determining the implied fair value
of goodwill of our video conferencing reporting unit. Based on our work performed during the third quarter of
fiscal year 2013, we initially recorded an estimated goodwill impairment charge of $211.0 million. During the
fourth quarter of fiscal year 2013, we completed this goodwill impairment assessment and recorded an additional
$3.5 million in goodwill impairment charge related to our video conferencing reporting unit. During the fourth
quarter of fiscal year 2013, we also recorded impairment charges of $2.1 million related to our digital video security
product line, included within our Retail Video product category, which we plan to divest by the end of fiscal
year 2014.
Restructuring Charges
Our restructuring activities were mainly attributable to the peripheral operating segment. The following table
summarizes restructuring-related activities during the year ended March 31, 2013 (in thousands):
Tota l
Termination
Benefits
Lease Exit
Costs Other
Accrual balance at March 31, 2012 . . . . . . . . . . . . . . . . . . . $ — $ — $ — $ —
Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,705 41,088 1,308 1,309
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,324) (27,768) (1,233) (1,323)
Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 63 — 14
Accrual balance at March 31, 2013 . . . . . . . . . . . . . . . . . . . $ 13,458 $ 13,383 $ 75 $ —
During the first quarter of fiscal year 2013, we implemented a restructuring plan to simplify our organization,
to better align costs with our 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, we reduced our worldwide non-direct-labor workforce by approximately 340 employees. Charges and other
costs related to the workforce reduction are presented as restructuring charges in the consolidated statements of
operations. During the year ended March 31, 2013, restructuring charges under this plan included $25.9 million
in termination benefits to affected employees, $1.3 million in legal, consulting, and other costs as a result of the
terminations, and $1.3 million in lease exit costs associated with the closure of existing facilities. We substantially
completed this restructuring plan during the fourth quarter of fiscal year 2013.
During the fourth quarter of fiscal year 2013, we implemented an additional restructuring plan to align
our organization to our 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, we reduced
our worldwide non-direct-labor workforce by approximately 220 employees. Restructuring charges under this plan
primarily consist 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
year ended March 31, 2013, restructuring charges under this plan included $15.2 million in termination benefits to
affected employees. We estimate completing this restructuring plan during fiscal year 2014.
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