Logitech 2014 Annual Report Download - page 247

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2 — Restatement and Revision of Previously Issued Consolidated Financial Statements (Continued)
(2) Property Plant and Equipment Capitalization Threshold Convention—Historically, the Company’s
practice was to apply an accounting convention to immediately expense the entire purchase price of
all property and equipment that cost less than certain dollar thresholds instead of capitalizing and
depreciating such property and equipment over its useful life. The Company determined that the
thresholds utilized were incorrect and resulted in a cumulative understatement of net income and
retained earnings through March 31, 2011 of $8.3 million, which the company corrected through an
increase to opening retained earnings as of that date. The impact of the correction also resulted in a
decrease in cost of goods sold and operating expense and increase in operating income of $0.1 million
in fiscal year 2012 and an increase in cost of goods sold and operating expense and increase in operating
loss of $1.3 million in fiscal year 2013.
(3) Settlement Accrual—The Company determined that it incorrectly recorded a release of a legal settlement
accrual of $1.3 million in fiscal year 2012 instead of correctly in fiscal year 2011 as the contingency
was resolved before the Annual Report Form 10-K of fiscal year 2011 was issued. The impact of this
adjustment was an increase in operating income by $1.3 million in fiscal year 2011 and a corresponding
decrease of operating income for the same amount in fiscal year 2012.
(4) Other Adjustments—The Company is also correcting a number of other immaterial errors which were
previously recorded in prior periods as out-of-period adjustments and are now being revised to report
them in the correct period as well as to correct other immaterial errors that were previously uncorrected.
Among the corrections, the Company is correcting its accrual for worker compensation, liability for
certain of its defined benefit pension plans, balance sheet reclassifications, cash flow reclassifications
and tax impact of the above adjustments.
ANNUAl REPORT
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