Logitech 2012 Annual Report Download - page 259

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other Derivatives
The Company also enters into foreign exchange forward contracts to reduce the short-term effects of foreign
currency fluctuations on certain foreign currency receivables or payables. These forward contracts generally
mature within three months. The Company may also enter into foreign exchange swap contracts to economically
extend the terms of its foreign exchange forward contracts. The primary risk managed by using forward and swap
contracts is the foreign currency exchange rate risk. The gains or losses on foreign exchange forward contracts are
recognized in earnings based on the changes in fair value.
The notional amounts of foreign exchange forward contracts outstanding at March 31, 2012 and 2011 relating
to foreign currency receivables or payables were $18.7 million and $12.9 million. Open forward contracts as of
March 31, 2012 consisted of contracts in euros to sell British pounds and contracts in Australian dollars to purchase
U.S. dollars at future dates at pre-determined exchange rates. Open forward contracts as of March 31, 2011 consisted
of contracts in British pounds to purchase euros at a future date at a predetermined exchange rate. The notional
amounts of foreign exchange swap contracts outstanding at March 31, 2012 and 2011 were $22.4 million and
$17.1 million. Swap contracts outstanding at March 31, 2012 consisted of contracts in Taiwanese dollars, Mexican
pesos and Japanese Yen. Swap contracts outstanding at March 31, 2011 consisted of contracts in Canadian dollars,
Japanese yen, and Mexican pesos.
The fair value of all our foreign exchange forward contracts and foreign exchange swap contracts is determined
based on observable market transactions of spot currency rates and forward rates. Cash flows from these contracts
are classified as operating activities in the consolidated statements of cash flows. Beginning the quarter ended
December 31, 2011, the Company reclassified its foreign exchange derivative assets and liabilities from Level 1 of
the fair value hierarchy to Level 2, to reflect the inputs used to measure fair value as observable inputs other than
quoted market prices.
Note 9 — Goodwill and Other Intangible Assets
The following table summarizes the activity in the Company’s goodwill account during fiscal years ended
March 31, 2012 and 2011 (in thousands):
March 31,
2012 2011
Goodwill, beginning balance ................................ $547,184 $553,462
Additions ............................................. 14,415 332
Sale of business ........................................ — (6,610)
Fluctuation in foreign currency rates ....................... (1,076) —
Goodwill, ending balance ................................... $560,523 $547,184
Our acquisition of Mirial S.r.l. on July 18, 2011 added $14.4 million to goodwill. Mirial’s business has been
fully integrated into the Company’s video conferencing reporting unit, and discrete financial information for
Mirial is not maintained. Accordingly, the acquired goodwill related to Mirial is evaluated for impairment at the
video conferencing reporting unit level. Additions to goodwill during fiscal year 2011 related to our acquisition
of Paradial. The sale of business relates to goodwill associated with the 3Dconnexion entities which were sold on
March 31, 2011.
Note 8 — Financial Instruments (Continued)
ANNUAL REPORT
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