Logitech 2004 Annual Report Download - page 104

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LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — The Company:
Logitech International S.A. designs, manufactures and markets personal interface products that serve as the
primary physical interface between people and their personal computers and other digital platforms. The
Company’s products include corded and cordless mice, trackballs, and keyboards; joysticks, gamepads and
racing systems; Internet video cameras; PC speakers, headsets and microphones; 3D controllers; and with its
recent acquisition of Intrigue Technologies, advanced remote controls. The Company sells its products to both
original equipment manufacturers (“OEMs”) and to a network of retail distributors and resellers.
Logitech was founded in Switzerland in 1981, and in 1988 listed its registered shares in an initial public
offering in Switzerland. In 1997, the Company sold shares in a U.S. initial public offering in the form of
American Depositary Shares (“ADSs”) and listed the ADSs on the Nasdaq National Market. The Company’s
corporate headquarters are in Fremont, California through its U.S. subsidiary, with regional headquarters in
Romanel, Switzerland, Hsinchu, Taiwan, and Hong Kong, China through local subsidiaries. The Company has its
principal manufacturing operations in China, and distribution facilities in the U.S., Europe and Asia.
Note 2 — Summary of Significant Accounting Policies:
Basis of Presentation
The consolidated financial statements include the accounts of Logitech and its subsidiaries. All
intercompany balances and transactions have been eliminated. The consolidated financial statements are
presented in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) and comply with Swiss law.
The Company’s fiscal year ends on March 31 of each year. Interim quarters end on the Friday closest to the
last day of each quarter, except for the fourth quarter, which ends on March 31.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses. Actual
results could differ from those estimates.
Foreign Currencies
The functional currency of the Company’s operations is primarily the U.S. dollar. To a lesser extent, certain
operations use the Euro, Swiss franc, Taiwanese dollar and Japanese yen as their functional currencies. The
financial statements of the Company’s subsidiaries whose functional currency is other than the U.S. dollar are
translated to U.S. dollars using period-end rates of exchange for assets and liabilities and using monthly average
rates for net sales and expenses. Cumulative translation gains and losses are included as a component of
shareholders’ equity in accumulated other comprehensive loss. Gains and losses arising from transactions
denominated in currencies other than a subsidiary’s functional currency are reported in other income (expense),
net in the statements of income.
Revenue Recognition
Revenues are recognized when all of the following criteria are met:
• evidence of an arrangement exists between the Company and the customer;
• delivery has occurred and title and risk of loss transfer to the customer;
F-7