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Logitech 2013 Invitation, Proxy Statement & Annual Report
2013 Annual General Meeting
Invitation, Proxy Statement and Annual Report

Table of contents

  • Page 1
    Logitech 2013 Invitation, Proxy Statement & Annual Report 2013 Annual General Meeting Invitation, Proxy Statement and Annual Report

  • Page 2

  • Page 3
    ..., instructions on how you can exercise your voting rights, information concerning Logitech's compensation of its Board members and executive officers and other relevant information. Whether or not you plan to attend the Annual General Meeting, your vote is important. Thank you for your continued...

  • Page 4
    This page is intentionally left blank.

  • Page 5
    ... 8 million shares to the number of shares available for purchase under the Employee Share Purchase Plans Amendment and restatement of the Logitech Management Performance Bonus Plan Authorization to exceed 10% holding of own share capital Release of the Board of Directors and Executive Officers from...

  • Page 6
    QUESTIONS AND ANSWERS ABOUT THE LOGITECH 2013 ANNUAL GENERAL MEETING GENERAL INFORMATION FOR ALL SHAREHOLDERS Why am I receiving this "Invitation and Proxy Statement"? This document is designed to comply with both Swiss corporate law and U.S. proxy statement rules. Outside of the U.S. and Canada ...

  • Page 7
    ... year 2013 filed with the U.S. Securities and Exchange Commission are available on our website at http://ir.logitech.com. Shareholders also may request free copies of these materials at our principal executive offices in Switzerland or the United States, at the addresses and phone numbers above...

  • Page 8
    ..., the institution or asset manager will be obliged under Swiss law to exercise the voting rights of your shares in the manner recommended by the Board of Directors. Who can I contact if I have questions? If you have any questions or need assistance in voting your shares, please call us at +1-510-713...

  • Page 9
    ... their registration instructions. In order to allow adequate time for registration, for proxy materials to be sent or made available to you, and for your voting instructions to be returned to us before the meeting, please begin the registration process as far before August 29, 2013 as possible. If...

  • Page 10
    ... also send an email to our investor relations group at [email protected]. Other shareholders who have multiple accounts in their names or who share an address with other stockholders can authorize us to discontinue mailings of multiple annual reports and proxy statements by calling or writing...

  • Page 11
    ... as professional asset managers, are obliged to inform Logitech of the number and par value of the registered shares they represent. Meeting Proposals There are no other matters that the Board intends to present, or has reason to believe others will present, at the Annual General Meeting. If other...

  • Page 12
    ... (the "Exchange Act"), you may submit a proposal for consideration by the Board of Directors for inclusion in the 2014 Annual General Meeting agenda by delivering a request and a description of the proposal to the Secretary of Logitech at our principal executive office in either Switzerland or the...

  • Page 13
    ...and strategy, and information relating to corporate governance as required by the SIX Swiss Exchange directive on corporate governance. The Compensation Report forms part of this Invitation and Proxy Statement. Copies of the Annual Report, Invitation and Proxy Statement are available on the Internet...

  • Page 14
    ...named executive officers disclosed in Logitech's Compensation Report for fiscal year 2013. Explanation At Logitech's 2009 and 2010 Annual General Meetings, the Logitech Board of Directors voluntarily asked shareholders to approve Logitech's compensation philosophy, policies and practices, as set out...

  • Page 15
    ... of Logitech shareholders at the 2013 Annual General Meeting are the earnings of Logitech International S.A., the Logitech parent holding company. The proposal of the Board of Directors to distribute a gross dividend of CHF 0.21 per share is an indication of the Board of Directors' confidence...

  • Page 16
    ...the Company's 1996 Employee Share Purchase Plan (U.S.) and 2006 Employee Share Purchase Plan (Non-U.S.), including an Increase of 8 Million Shares to the Number of Shares Available for Purchase under the Employee Share Purchase Plans Proposal The Board of Directors proposes that shareholders approve...

  • Page 17
    ... (taking into account the application of the $25,000 limit for each calendar year a purchase right is at any time outstanding) in the case of the 1996 Plan. The majority of companies with which we compete for talent in the United States offer share purchase programs to their employees. Outside of...

  • Page 18
    ... after such purchase own (directly or indirectly) shares, which when added to shares that the employees may purchase under outstanding options or other rights, amounts to 5% or more of the total combined voting power of shares of Logitech. Enrollment and Participation An eligible employee who wants...

  • Page 19
    ... the applicable date. The Board may change the percentage of market value applied to determine the purchase price with respect to any future offering period, but not below 85%. If the aggregate number of shares subscribed for in any offering period exceeds the number of shares that remain available...

  • Page 20
    ... last reported trade price for the shares on NASDAQ on June 30, 2013, was $7.05. Number of Shares Purchased (#) Market Value of Shares Purchased ($)(1) Person or Group Guerrino De Luca ...Bracken P. Darrell ...L. Joseph Sullivan ...Erik K. Bardman ...Junien Labrousse ...Current executive officers...

  • Page 21
    ... Annual General Meeting, not counting abstentions. Recommendation of the Board The Board of Directors recommends a vote "FOR" approval of the proposed amendments to and restatement of the ESPPs, including an increase of eight million (8,000,000) shares to the number of shares available for purchase...

  • Page 22
    ... employees of Logitech, although the Compensation Committee may not delegate its authority as Administrator with respect to Logitech executive officers. Subject to the terms of the Bonus Plan, the Administrator has sole discretion to Select the employees who will be eligible to receive awards. Set...

  • Page 23
    ... sales; (xl) share price performance; (xli) strategic alliances, including, but not limited to, mergers, acquisitions, strategic investments, restructurings or reorganizations (including post-integration milestones); (xlii) total shareholder return; (xliii) working capital; (xliv) market...

  • Page 24
    ... in whole or in part upon the termination of a participant's employment. In addition, subject to applicable law, the Administrator has the discretion to determine whether an award will be paid and the amount of the award that will be paid in the event of a change in control of Logitech prior to the...

  • Page 25
    ... fiscal year 2013 bonus program, but using fiscal year 2014 compensation levels. Name of Individual or Group Award Guerrino De Luca ...Chairman of the Board of Directors Bracken P. Darrell ...President and Chief Executive Officer L. Joseph Sullivan...Senior Vice President, Worldwide Operations All...

  • Page 26
    ... at the 2013 and/or 2014 Annual General Meetings of the Company. Since the November 11, 2011 approval by the Swiss Takeover Board and the SIX Swiss Exchange, the Company has been making repurchases under its stock repurchase program through a "second trading line" that permits the Company to comply...

  • Page 27
    ... during fiscal year 2013. Proposal 8 Elections to the Board of Directors Our Board of Directors is presently composed of nine members. Until last year, each director was elected for a term of three years. At the Company's 2012 Annual General Meeting, shareholders approved a change such that each...

  • Page 28
    ... a director. For further information on the Board of Directors, including the current members of the Board, the Committees of the Board, the means by which the Board exercises supervision of Logitech's executive officers, and other information, please see "Corporate Governance and Board of Directors...

  • Page 29
    .... Bracken P. Darrell joined Logitech as President in April 2012 and became Chief Executive Officer in January 2013. Prior to joining Logitech, Mr. Darrell served as President of Whirlpool EMEA and Executive Vice President of Whirlpool Corporation, a home appliance manufacturer and marketing company...

  • Page 30
    ... of a tie, the vote of the Chairman decides. Logitech's Articles of Incorporation set the minimum number of directors at three. We had nine members of the Board of Directors as of June 30, 2013. Mr. Erh-Hsun Chang, having served the Company in an officer and executive role for thirteen years and as...

  • Page 31
    ... BOARD OF DIRECTORS The members of the Board of Directors, including their principal occupation, business experience, and qualifications, are set out below. Daniel Borel ...63 Years Old Director since 1988 Co-Founder and former Chief Executive Officer and Chairman, Logitech International S.A. Swiss...

  • Page 32
    ...Hsun Chang ...64 Years Old Director since 2006 Former Senior Vice President, Worldwide Operations and General Manager, Far East, Logitech Taiwan national Erh-Hsun Chang has been a member of the Board of Directors since June 2006. Until April 2006, Mr. Chang was the Company's Senior Vice President...

  • Page 33
    ... International S.A. Italian and U.S. national Guerrino De Luca has served as Chairman of the Logitech Board of Directors since January 2008. Mr. De Luca served as Logitech's Chief Executive Officer from April 2012 to January 2013 and as acting President and Chief Executive Officer from July 2011...

  • Page 34
    ...Hirsch worked in finance positions with Valeo Inc., Gemplus S.C.A., SGSThomson Microelectronics, I.B.H. Holding S.A., Bendix Corporation and Ford Motor Company. He serves on the Board of International Rectifier, a New York Stock Exchange (NYSE)-listed supplier of advanced power management technology...

  • Page 35
    ...a meeting of shareholders should be sent to: Secretary to the Board of Directors, Logitech International S.A., EPFL - Quartier de l'Innovation, Daniel Borel Innovation Center 1015 Lausanne, Switzerland, or c/o Logitech Inc., 7600 Gateway Boulevard, Newark, CA 94560, USA. Under the Company's Articles...

  • Page 36
    ... because it assists our directors in understanding, advising, and overseeing Logitech's structure, financial reporting, and internal control of such activities. Industry and Technical Expertise. Because we develop and manufacture hardware and software products, ship them worldwide, and sell to both...

  • Page 37
    ... the Board of Directors at that meeting. Mr. Chang is retiring, effective as of the 2013 Annual General Meeting, and is not standing for re-election. BOARD RESPONSIBILITIES AND STRUCTURE The Board of Directors is responsible for supervising the management of the business and affairs of the Company...

  • Page 38
    ...budget, which must be approved by the Board of Directors; reviewing and certifying the Company's annual report; appointing, dismissing and promoting any employees of Logitech other than executive officers and the head of the internal audit function; taking immediate measures to protect the interests...

  • Page 39
    ... other functions as the Board may direct. The Lead Independent Director generally is elected annually by the Independent Directors. Means by Which the Board of Directors Supervises Executive Officers The Board of Directors is regularly informed on developments and issues in Logitech's business, and...

  • Page 40
    ... design and risk controls of compensation programs. The Audit Committee oversees issues related to internal control over financial reporting and Logitech's risk tolerance in cash-management investments. The Board's role in oversight does not have a direct impact on the Board's leadership structure...

  • Page 41
    ... agenda. The Board Committee members receive materials in advance of Committee meetings allowing them to prepare for the meeting. The Charters of each Board Committee are available on Logitech's Investor Relations website at http://ir.logitech.com. Each of the Audit, Compensation and Nominating...

  • Page 42
    ... approval, the compensation of executive officers and Logitech's compensation policies and programs, including share-based compensation programs and other incentive-based compensation. Within the guidelines established by the Board and the limits set forth in the Company's employee equity incentive...

  • Page 43
    ...resignation as of the Annual General Meeting on September 5, 2012. The Board of Directors has determined that each member of the Committee meets the independence requirements of the NASDAQ Stock Market listing standards. The Compensation Committee met five times in fiscal year 2013. At the Committee...

  • Page 44
    ... AND INSIDER PARTICIPATION None of the members of the Compensation Committee has been an officer or employee of Logitech. None of our executive officers serves on the board of directors or compensation committee of a company that has an executive officer that serves on our Board of Directors...

  • Page 45
    ... officers"); and all directors and current executive officers as a group. Number of Shares Owned(2) Shares that May be Acquired Within 60 Days(3) Total Beneficial Ownership Total as a Percentage of Shares Outstanding(4) Beneficial Owner(1) 5% Shareholders: Capital Research Global Investors...

  • Page 46
    ... Company in April 2012. (13) Mr. Junien Labrousse was the Senior Vice President, Products and President, Logitech Europe until April 22, 2012. In connection with a restructuring, he ceased to be an executive officer as of April 22, 2012. SHARE OWNERSHIP GUIDELINES Members of the Board of Directors...

  • Page 47
    ... Executive Officer direct reports who have not met at least 75% of their stock ownership targets within three years of being subject to the ownership requirements, to pay a portion, increasing over time, of any earned bonus under the annual incentive bonus program in Logitech shares. These shares...

  • Page 48
    ...; any corporation or organization of which any of our directors, executive officers or nominees is an executive officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities (except trade debt entered into in the ordinary course of business...

  • Page 49
    ...to be performed by PwC with a set dollar limit per type of service. The Vice President, Corporate Controller is responsible for ensuring that the work performed is within the scope and dollar limit as approved by the Audit Committee. Management must report to the Audit Committee the...

  • Page 50
    ...the effectiveness of Logitech's internal control over financial reporting. The Board of Directors has adopted a written charter for the Audit Committee. A copy of the Charter can be found on our website at http://ir.logitech.com. To view the charter, select "Audit Committee Charter" under "Corporate...

  • Page 51
    ... 9, 2013 to report a performance stock option granted on January 4, 2013. The filing was delayed by one day as a result of an investment fund with which Mr. De Luca was associated changing his filing codes in connection with a 13-G filing (for a company other than Logitech) without informing either...

  • Page 52
    ... REPORT 2013 INTRODUCTION This Compensation Report contains information on Logitech compensation philosophy and practices, the background for decisions, and the results of decisions with respect to Logitech's named executive officers and its Board members. This Compensation Report has been designed...

  • Page 53
    ...Officer since July 2011. In fiscal year 2013, Mr. Darrell removed a layer of executive management, which resulted in the elimination of Werner Heid's role as Senior Vice President of Worldwide Sales and Marketing and Junien Labrousse's role as Executive Vice President of the Products...

  • Page 54
    ... heading "Pay Mix", the majority of executive officers' compensation is designed to be performance-based, using a variety of performance measures, including measuring Logitech's performance against Board-established fiscal and other targets for annual incentive cash bonuses, and stock price growth...

  • Page 55
    ... risk) relative to Logitech's other employees. The charts below indicate the percentage of total compensation costs in fiscal year 2013 represented by base salary, performance-based cash compensation, and long-term equity incentive awards for our Chief Executive Officer, Bracken Darrell, and for all...

  • Page 56
    ... pay out, base salaries comprised approximately 40% of total compensation in fiscal year 2013 for our named executive officers, excluding our Chief Executive Officer, whose new hire stock grants comprised almost 90% of his total compensation delivered in fiscal year 2013. Had the Logitech Management...

  • Page 57
    ... 2012 Annual Base Salary (CHF) 0% n/a 0% 10% 0% Change 2012 to 2013 Named Executive Officer Junien Labrousse ...(1) 625,000(5) 710,000(4) -12% Mr. Darrell joined the Company as President on April 9, 2012. Mr. Darrell assumed the role of Chief Executive Officer of the Company in January 2013...

  • Page 58
    ... 30-day trailing average stock price growth for the period of May 1, 2012 - April 30, 2013 compared to the NASDAQ 100 Index. For all named executive officers, the 2013 Bonus Plan goals were set equal to Logitech's annual business plan for fiscal year 2013 as approved by the Board of Directors in...

  • Page 59
    ... of the executives, to provide competitive total compensation packages, and to provide a direct incentive for future performance. In fiscal year 2013, the Compensation Committee granted Logitech's new President, Mr. Darrell, a mix of stock options, RSUs, and premium-priced stock options (PPOs...

  • Page 60
    ... awards on our shareholders and, in the Committee's view, provides a more cost effective balance of incentive and risk than standard stock options. PPOs. In April 2012, the Compensation Committee made a grant of premium-priced options, or PPOs, to our new President, Mr. Darrell as part of his new...

  • Page 61
    ...year 2013 During fiscal year 2013 the target value of long-term equity incentive awards granted to Logitech's named executive officers was determined by the Compensation Committee based on data from our compensation peer group data and from the Radford Global Technology Executive Compensation survey...

  • Page 62
    The table also illustrates the total shares of the equity awards that each named executive officer received in fiscal year 2013 and 2012. The number of shares granted increased significantly due to: • the decrease in Logitech's stock price of approximately 55% between the grant dates of the ...

  • Page 63
    ... in Logitech's share price between the grant and vesting dates. (2) Mr. Darrell joined the Company as President on April 9, 2012 and was appointed as Chief Executive Officer of the Company effective January 1, 2013. Determination of long-term equity incentive awards The Compensation Committee...

  • Page 64
    ... year 2013 executive officer compensation proposals for base salary, bonus targets and equity grant values were developed by Radford and presented to both the Compensation Committee and Logitech's management. Based on the analysis performed by Radford, Logitech's Vice President of Worldwide Human...

  • Page 65
    ... 2011, and are reviewed annually, in partnership with Radford Consulting, based on (i) involvement in the PC-based consumer electronics industry, or (ii) revenues approximately equal to Logitech's and a presence near Silicon Valley in the San Francisco Bay Area. Although Logitech is a Swiss company...

  • Page 66
    ... prior position and join Logitech. Timing of compensation decisions Executive compensation (base salary, target bonus, and equity grants) is typically reviewed and actions are taken at the start of the fiscal year in order to align all compensation actions, and the related performance periods, with...

  • Page 67
    ... our employees in Switzerland. Severance and related benefits All named executive officers are eligible to receive benefits under certain conditions in accordance with Logitech's Change of Control Severance Agreement (Change of Control Agreement), as described in the section "Potential Payments Upon...

  • Page 68
    ... market practices. Perquisites Logitech's executive officer benefit programs are substantially the same as for all other eligible employees except as set out below. In fiscal year 2013, Logitech paid a total of approximately $202,780 in costs associated with Mr. Darrell's relocation from Switzerland...

  • Page 69
    ... customer to breach a contract with Logitech. PROXY STATEmEnT Any decision to suspend or cause a forfeiture of any award held by an executive officer under the 2006 Stock Incentive Plan or the Management Performance Bonus Plan is subject to the approval of the Board of Directors. The Compensation...

  • Page 70
    ... the 2006 Stock Incentive Plan. Management Performance Bonus Plan. Profit Sharing Plan. Sales commissions plans. Change of Control Severance Agreements in place with executive officers. As in past years, based on the March 2013 review, we have concluded that our compensation policies and practices...

  • Page 71
    ... members of the Logitech Board of Directors, assists the Board in fulfilling its responsibilities with regard to compensation matters. The Compensation Committee has reviewed and discussed the "Compensation Discussion and Analysis" section of this Compensation Report with management. Based...

  • Page 72
    ... earned during fiscal years 2013, 2012, and 2011 by our named executive officers. For more information, please refer to "Compensation Disclosure and Analysis," as well as "Narrative Disclosure to Summary Compensation Table and Grants of PlanBased Awards Table." Changes in Non-equity Nonqualified...

  • Page 73
    ... President, Products and President, Logitech Europe until April 22, 2012. In connection with a restructuring, he ceased to be an executive officer as of April 22, 2012. On behalf of the Company, Mr. Labrousse moved to Switzerland as of January 1, 2011 and his base salary was set at 710,000 Swiss...

  • Page 74
    ... use of a company car and driver to and from work. Represents the cost to Logitech of $25,058, $21,784 and $21,290 in fiscal years 2013, 2012 and 2011, respectively, for tax preparation services for Mr. Junien Labrousse related to his transfer from the U.S. to Switzerland. Represents 401(k) savings...

  • Page 75
    ... table sets forth certain information regarding grants of plan-based awards to each of our named executive officers during fiscal year 2013. For more information, please refer to "Compensation Disclosure and Analysis." All Other Stock Awards: Estimated Future Payouts Estimated Future Payouts Number...

  • Page 76
    ...97 on March 31, 2013) and the option exercise price, and multiplying it by the number of outstanding options. Market value for stock awards (RSUs and PSUs) is determined by multiplying the number of shares by the closing price of Logitech shares on NASDAQ on the last trading day of the fiscal year...

  • Page 77
    Option Awards Stock Awards Equity Incentive Market Plan Awards: Value of Number of Shares or Unearned Units of Shares, Units Stock or Other That Have Rights That Not Have Not Vested ($) Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That ...

  • Page 78
    Option Awards Stock Awards Equity Incentive Market Plan Awards: Value of Number of Shares or Unearned Units of Shares, Units Stock or Other That Have Rights That Not Have Not Vested ($) Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That ...

  • Page 79
    ... shares on the NASDAQ Global Select Market. PENSION BENEFITS FOR FISCAL YEAR 2013 Junien Labrousse, Senior Vice President, Consumer Computing Platforms Group, is a participant in Logitech's Swiss Pension plan, which is a benefit offered to all eligible Swiss employees. No other executive officers...

  • Page 80
    ... fiscal year 2011 were reported as compensation to Mr. Junien Labrousse in the Summary Compensation table. NARRATIVE DISCLOSURE TO NON-QUALIFIED DEFERRED COMPENSATION TABLE The Logitech Inc. U.S. Deferred Compensation Plan effective January 1, 2009 allows the participating executive officers and...

  • Page 81
    ... The acquisition by any person of securities of Logitech representing 50% or more of the total voting power of Logitech's outstanding shares. The change of control agreement with Mr. De Luca is the same as for the other executive officers, except that only those stock options granted by the Company...

  • Page 82
    ... date of the change of control. Bracken Darrell Offer Letter We entered into an offer letter with Bracken Darrell dated March 13, 2012. Under his offer letter, in the event he is terminated without "cause" or resigns (within 30 days after Logitech fails to remedy the condition reported to be good...

  • Page 83
    ... 31, 2013, he is not reporting directly to the Logitech International Board of Directors as Chief Executive Officer. Mr. Darrell became Chief Executive Officer, reporting directly to the Board, on January 1, 2013. If any amounts become payable to Mr. Darrell under his change of control agreement...

  • Page 84
    ... a Swiss Franc to U.S. Dollar exchange rate on March 31, 2013 of 1 to 1.05. Potential Payments Upon Involuntary Termination After Change in Control Other Benefits(3) Value of Accelerated Equity Awards(4) Name Base Salary(1) Bonus(2) 280G cut-back(5) Total Guerrino De Luca ...Bracken P. Darrell...

  • Page 85
    ... value of 25% vesting of Mr. Darrell's 100,000 RSU new hire grant and 25% vesting of his 500,000 new hires stock option grant of fiscal year 2013 target bonus using Logitech's stock price in effect on March 28, 2013. Note: Mr. Heid terminated his employment with the Company on May 15, 2012...

  • Page 86
    ... the number of shares by the closing price of Logitech shares on NASDAQ on the last trading day of the fiscal year. Information regarding the option and stock awards held as of March 31, 2013 by Guerrino De Luca, the only member of the Board of Directors that is an executive officer of Logitech as...

  • Page 87
    Outstanding Equity Awards for Non-Employee Directors at Fiscal 2013 Year-End Option Awards Stock Awards Number of Number of Number of Shares or Securities Securities Market Units of Option Market Value of Underlying Underlying Exercise Value of Stock That Shares or Units of Unexercised Unexercised ...

  • Page 88
    ... 31, 2013, no shares were unreserved and available for issuance under this plan. 2006 Stock Incentive Plan The Logitech International S.A. 2006 Stock Incentive Plan provides for the grant to eligible employees and non-employee members of the Board of Directors of stock options, stock appreciation...

  • Page 89
    ... outstanding for periods not to exceed ten years. Options were granted at exercise prices of at least 100% of the fair market value of the shares on the date of grant. Logitech made no grants of restricted shares, stock appreciation rights or stock units under the 1996 Stock Plan. No further awards...

  • Page 90
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  • Page 91
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 89 AnnUAL REPORT

  • Page 92
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  • Page 93
    ...: Pointing Devices, PC Keyboards & Desktops, Tablet Accessories, Audio PC, Audio-Wearables & Wireless, Video, PC Gaming, and Remotes. Our global marketing organization is responsible for developing and building the Logitech brand, consumer insight, public relations and social media, customer care...

  • Page 94
    ... business, particularly our Consumer Computing Platform group. We sell our LifeSize products and services to distributors, value-added resellers, OEMs, and occasionally, direct enterprise customers. Sales of LifeSize products were 6% of our net sales in the fiscal years ended March 31, 2013 and 2012...

  • Page 95
    ... mobile devices, and for digital music, including wireless speakers and wearables such as earphones, to limit and offset the decline in our PC peripherals and to pursue growth opportunities in emerging markets, mobility-related products, products for digital music and sales to enterprise markets...

  • Page 96
    ... of employees increasingly drive companies' choices in the information technologies they deploy to their employee base. Growing our enterprise peripherals business will continue to require investment in selected business-specific products, targeted product marketing, and sales channel development...

  • Page 97
    ... for product returns, cooperative marketing arrangements, customer incentive programs and pricing programs. An allowance against accounts receivable is recorded for accruals and program activity related to our direct customers and those indirect customers who receive payments for program activity...

  • Page 98
    ... are usually offered only for limited time periods or for sales of selected products to specific indirect partners. Our decision to make price reductions is influenced by product life cycle stage, market acceptance of products, the competitive environment, new product introductions and other factors...

  • Page 99
    ...-line basis over the service period of the award. Our estimates of share-based compensation expense require a number of complex and subjective assumptions including our stock price volatility, employee exercise patterns, future forfeitures, dividend yield, related tax effects and the selection...

  • Page 100
    ... assessed the implied premium of the aggregate fair value over the market capitalization considered attributable to an acquisition control premium, which is the price in excess of a stock market's price that investors would typically pay to gain control of an entity. The discounted cash flow model...

  • Page 101
    ... of our costs in advance of sales orders, because we 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 our customers. This makes it difficult for us...

  • Page 102
    ...regions during fiscal year 2013. Our overall retail average selling price declined 1% in fiscal year 2013 compared with the prior fiscal year. Our retail sales in fiscal year 2012 were essentially flat compared with fiscal year 2011, as the retail sales increase in the Asia Pacific region was offset...

  • Page 103
    ... the competitive environment in fiscal year 2013 and lower demand related to new product launches. Video conferencing net sales increased 10% in fiscal year 2012 over 2011, primarily driven by growth in the EMEA and Asia Pacific regions, with strong growth in Russia, China and Australia. Sales of...

  • Page 104
    ... of products that are no longer strategic to our business, and from decreases in our Video, Remotes, PC Gaming and Pointing Device categories. These decreases were offset in part by an increase of 108% in Tablet Accessories due to continued strong demand from the Logitech Ultrathin Keyboard Cover...

  • Page 105
    ...): Change % Year Ended March 31, 2013 2012 2011 2013 vs 2012 2012 vs 2011 NM-Not Meaningful. 103 AnnUAL REPORT Net retail sales by product categories: Retail-Pointing Devices ...Retail-PC Keyboards & Desktops ...Retail-Tablet Accessories ...Retail-Audio PC ...Retail-Audio-Wearables & Wireless...

  • Page 106
    ...products, such as speaker docks and most console gaming peripherals, by the end of fiscal year 2014. Retail Pointing Devices Our Retail Pointing Device category is comprised of PC-related mice, trackpads, touchpads and presenters. Retail sales of Pointing Devices decreased 7% while retail units sold...

  • Page 107
    ... Keyboard K360 and the Logitech Wireless Solar Keyboard K750. Overall increase in sales and units sold of keyboard and desktop was due to strong performance in our Asia Pacific region which increased by 21% in sales and 24% in units sold during fiscal year 2012 compared to fiscal year 2011. China...

  • Page 108
    ...year 2012, compared to fiscal year 2011. China sales and units sold increased by 18% during this period. Retail Audio-Wearables & Wireless Our Retail Audio-Wearables & Wireless category is comprised of non-PC audio products, including ear and headphones, and wireless speakers. Retail Audio-Wearables...

  • Page 109
    ... new gaming products, including mice, keyboards and headsets. PC Gaming sales in the Americas, EMEA and Asia Pacific regions decreased by 10%, 15% and 26% in fiscal year 2013, compared to fiscal year 2012. China sales and units sold decreased by 14% and 13% during this period. Retail sales of our PC...

  • Page 110
    ... 2011. OEM OEM net sales decreased 24% and 17% and units sold decreased 12% in fiscal years 2013 and 2012, compared with the preceding fiscal years. These declines were primarily due to lower sales in the keyboard/ desktop category due to product mix changes with a large customer, and lower sales...

  • Page 111
    ... the competitive environment in fiscal year 2013 and lower demand related to new product launches. Video conferencing net sales increased 10% in fiscal year 2012 over 2011, primarily driven by growth in the EMEA and Asia Pacific regions, with strong growth in Russia, China and Australia. Sales of...

  • Page 112
    ...fiscal year 2012 compared with 2011, primarily from higher personnel-related expenses resulting from increased headcount for LifeSize, the enterprise market team, and the Asia Pacific region, higher infrastructure costs to support the additional headcount, and the settlement of a customer bankruptcy...

  • Page 113
    ... in research and development expense in fiscal year 2012 compared with fiscal year 2011 was primarily due to higher personnel-related expenses, mainly from our LifeSize division, and from increased investments in product development for pointing devices, audio and digital home. These increases...

  • Page 114
    ... 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...

  • Page 115
    ...a privately-held company. The gain on sale of property and plant in fiscal year 2012 relates to the sale of unused manufacturing properties in China. The gain on sale of building in the fiscal year 2011 relates to the sale of our building in Romanel, Switzerland. During fiscal year 2013, we sold the...

  • Page 116
    ...by one of our subsidiaries. Investment income for fiscal year 2011 represents earnings, gains, and losses on the trading investments and changes in the cash surrender value of Company-owned life insurance contracts, related to the same deferred compensation plan. In December 2010, we surrendered the...

  • Page 117
    ... the $133.5 million cash dividend payment and from the $90.0 million used to repurchase 8.6 million shares under our share buyback program, offset in part by $16.0 million in proceeds received from sale of shares upon exercise of options and purchase rights. At March 31, 2013, we had cash and cash...

  • Page 118
    ...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. We have credit lines...

  • Page 119
    ...in fiscal year 2012 over 2011 was primarily due to lower accounts receivable balances resulting from increased cash collections. Typical payment terms require customers to pay for product sales generally within 30 to 60 days. However, terms may vary by customer type, by country and by selling season...

  • Page 120
    ..., 2013 2012 2011 Purchases of property, plant and equipment ...$(46,945) Acquisitions, net of cash acquired ...- Investment in privately-held company ...(4,420) Proceeds from sales of available-for-sale securities...917 Proceeds from sales of property and plant ...- Purchases of trading investments...

  • Page 121
    ... from financing activities, including information on our share repurchases during fiscal years 2013, 2012 and 2011 (in thousands except per share amounts): Year Ended March 31, 2013 2012 2011 Cash dividend payment ...Purchases of treasury shares(1) ...Proceeds from sales of shares upon exercise...

  • Page 122
    ... ratio, this facility is not available for our use. In September 2008, our Board of Directors approved a share buyback program, which authorizes the Company to invest up to $250.0 million to purchase its own shares. In November 2011, we received approval from the Swiss regulatory authorities for...

  • Page 123
    ... of $158.9 million for inventory purchases made in the normal course of business to original design manufacturers, contract manufacturers and other suppliers, which are expected to be fulfilled by June 30, 2013. We also had commitments of $55.1 million for consulting services, 121 AnnUAL REPORT

  • Page 124
    ... guarantee has a total limit of $7.0 million. As of March 31, 2013, $0.1 million of guaranteed purchase obligations were outstanding under these guarantees. Logitech Europe S.A. has also guaranteed payment of the purchase obligations of a third-party contract manufacturer under two guarantee...

  • Page 125
    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 $22.4 million as of March 31, 2013. As of March 31, 2013, $3.0 ...

  • Page 126
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  • Page 127
    ADDITIONAL FINANCIAL DISCLOSURES 125 AnnUAL REPORT

  • Page 128
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  • Page 129
    ... product, which vary by distributor. Marketing Logitech builds awareness of our products and recognition of the Logitech brand through targeted advertising, public relations efforts, social media, distinct packaging of our retail products, in-store promotions and merchandising, a Worldwide Web site...

  • Page 130
    ... PC manufacturers among our customers. Our Life Size division maintains a separate marketing and sales organization that sells LifeSize products and services to distributors, value-added resellers, OEMs and direct enterprise customers. The large majority of LifeSize revenues are derived from sales...

  • Page 131
    ... table sets forth certain historical share price information for the Company's shares traded on the SIX Swiss Exchange, as reported by the SIX Swiss Exchange. The U.S. dollar equivalent is based on the noon buying rate on the trading day of the month in which the high or low closing sales price...

  • Page 132
    Dividends Under Swiss law, a corporation may only pay dividends upon a vote of its shareholders. This vote typically follows the recommendation of the corporation's board of directors. On September 5, 2012, Logitech's shareholders approved a cash dividend payment of CHF 125.7 million out of retained...

  • Page 133
    ... table presents certain information related to purchases made by Logitech of its equity securities (in thousands, except per share amounts): Period Total Number of Shares Purchased as Part of Publicly Announced Program Average Price Paid Per Share in USD in CHF Approximate Dollar Value of Shares...

  • Page 134
    ... the annual return through March 31, 2013. The stock price performance on the following graph is not necessarily indicative of future stock price performance. Comparison of 5 year cumulative total return $160 $140 $120 $100 $80 $60 $40 $20 $0 2008 Logitech Logitech 2009 2010 2011 2012 2013 Nasdaq...

  • Page 135
    ... future. Year ended March 31, 2013 2012 2011 2010 2009 (In thousands, except per share amounts) Consolidated statements of operations and cash flow data: Net sales ...Gross profit ...Operating expenses: Marketing and selling...Research and development ...General and administrative ...Impairment of...

  • Page 136
    ... currency. Our principal manufacturing operations are located in China, with much of our component and raw material costs transacted in CNY. However, the functional currency of our Chinese operating subsidiary is the U.S. dollar as its sales and trade receivables are transacted in U.S. dollars...

  • Page 137
    ...against exposure to changes in foreign currency exchange rates related to our subsidiaries' forecasted inventory purchases. The primary risk managed by using derivative instruments is the foreign currency exchange rate risk. We have designated these derivatives as cash flow hedges. Logitech does not...

  • Page 138
    ...digital video security product line. During the first and fourth quarters of fiscal 2013, the Company announced restructuring plans intended align the organization to its strategic priorities of increasing focus on mobility products, improving profitability in PC-related product and enhancing global...

  • Page 139
    REPORT ON CORPORATE GOVERNANCE 2013 137 AnnUAL REPORT

  • Page 140
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  • Page 141
    ..., India and Australia). Shares of Logitech International S.A. are listed on both the Nasdaq Global Select Market (Ticker: LOGI, CUSIP H50430232), and the SIX Swiss Exchange (Ticker: LOGN; security number: 257513), and Logitech has a "second trading line" with the SIX Swiss Exchange (Ticker: LOGNE...

  • Page 142
    ...of the Company by directors, executive officers and greater than 5% shareholders as of June 30, 2013, based on the number of the Company's shares outstanding (which is equal to the shares issued less the shares held in the Company's treasury) is set out in the Company's Annual Report, Invitation and...

  • Page 143
    ...privately or publicly traded, by any significant shareholder of the Company that is not a member of the Board of Directors or an executive officer. 1.3 Cross-shareholdings Logitech has no shareholdings in companies that to its knowledge have shareholdings in Logitech. 2. Capital Structure 2.1 Share...

  • Page 144
    ... than the market price of the shares preceding the determination of the final conditions for the bonds. 2.3 Changes in Shareholders' Equity As of March 31, 2013, 2012 and 2011, balances in shareholders' equity of Logitech International S.A., based on the parent company's Swiss Statutory Financial...

  • Page 145
    ... dates. For further information on Logitech's share repurchases please refer to "Additional Financial Disclosures - Market for Logitech's Shares, Related Shareholder Matters, and Share Repurchases" in our Annual Report. 2.4 Share Categories Registered Shares. Logitech International S.A. has only...

  • Page 146
    ... for the 2013 Annual General Meeting, under the heading "Corporate Governance and Board of Directors Matters" at pages 28 to 42. 4. Senior Management 4.1 Members of Senior Management The members of our senior management, referred to by Logitech as our "executive officers," are set out below...

  • Page 147
    ... Bracken P. Darrell joined Logitech as President in April 2012 and became Chief Executive Officer in January 2013. Prior to joining Logitech, Mr. Darrell served as President of Whirlpool EMEA and Executive Vice President of Whirlpool Corporation, a home appliance manufacturer and marketing company...

  • Page 148
    ... Loans Please refer to Logitech's Compensation Report on pages 50 to 87 of our Annual Report, Invitation and Proxy Statement for our 2013 Annual General Meeting, of which this Report is a part, for information on Logitech's compensation of its Board members and executive officers, and regarding how...

  • Page 149
    ... shareholders should be sent to: Secretary to the Board of Directors, Logitech International S.A., EPFL - Quartier de l'Innovation, Daniel Borel Innovation Center 1015 Lausanne, Switzerland, or c/o Logitech Inc., 7600 Gateway Boulevard, Newark, CA 94560, USA. 6.5 Registration in the Company's Share...

  • Page 150
    ...to ask questions of the Chief Executive Officer and Chief Financial Officer. Logitech also holds periodic analyst days where senior management present reviews of Logitech's business. These events are webcast and remain available on Logitech's Investor Relations website for a period of time after the...

  • Page 151
    ... a Swiss company traded on the SIX Swiss Exchange, and as a company subject to the provisions of Section 16 of the Securities Exchange Act of 1934, as amended, we file reports on transactions in Logitech securities by members of Logitech's Board of Directors and executive officers. The reports that...

  • Page 152
    ...Holding % Share Capital EUROPE Labtec Europe S.A...Logi Trading and Services Limited Liability Company ...Logitech U.K. Limited...Logitech (Jersey) Limited ...Logitech Czech Republic, s.r.o...Logitech Espana BCN SL ...Logitech Europe S.A...SAS Logitech France ...Logitech GmbH ...Logitech 3D Holding...

  • Page 153
    ...LifeSize Communications, Inc...UE Acquisition Inc...Logitech Latin America, Inc...Labtech Inc...ASIA PACIFIC LogiCool Co., Ltd...Logitech Electronic (India) Private Limited...Logitech Far East, Ltd...Logitech Hong Kong Limited ...Logitech Korea Ltd...Logitech New Zealand Co., Ltd...Logitech Service...

  • Page 154
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  • Page 155
    ... of Cash Flows-Years Ended March 31, 2013, 2012 and 2011 ...Consolidated Statements of Changes in Shareholders' Equity-Years Ended March 31, 2013, 2012 and 2011 ...Notes to Consolidated Financial Statements ...Unaudited Quarterly Financial Data ... Page 154 156 AnnUAL REPORT 157 158 159 160 161 211...

  • Page 156
    ... of Logitech International SA, which comprise the balance sheet, income statement, statement of cash flows, statement of changes in shareholders' equity, comprehensive income and notes for the year ended March 31, 2013. Board of Directors' Responsibility The Board of Directors is responsible...

  • Page 157
    ... management did not design, in all material respects, an effective internal control system for the preparation of consolidated financial statements according to the instructions of the Board of Directors because a material weakness in internal control over financial reporting related to the review...

  • Page 158
    ... except per share amounts) Year ended March 31, 2013 2012 2011 Net sales ...Cost of goods sold ...Gross profit ...Operating expenses: Marketing and selling ...Research and development ...General and administrative...Impairment of goodwill and other assets ...Restructuring charges ...Total operating...

  • Page 159
    LOGITECH INTERNATIONAL S.A. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Year ended March 31, 2013 2012 2011 Net income (loss) ...Other comprehensive income (loss): Foreign currency translation gain (loss) ...Change in net loss (gain), and prior service cost related to ...

  • Page 160
    ...receivable ...Inventories ...Other current assets ...Assets held for sale...Total current assets...Non-current assets: Property, plant and equipment, net ...Goodwill...Other intangible assets...Other assets ...Total assets ...LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable...

  • Page 161
    ..., plant and equipment ...Gain on sales of available-for-sale securities...Excess tax benefits from share-based compensation ...Gain on cash surrender value of life insurance policies ...Deferred income taxes and other ...Changes in assets and liabilities, net of acquisitions: Accounts receivable...

  • Page 162
    ..., 2011 ...Total comprehensive income ...Purchase of treasury shares ...Tax benefit from exercise of stock options ...Sale of shares upon exercise of options and purchase rights ...Issuance of shares upon vesting of restricted stock units ...Share-based compensation expense ...March 31, 2012 ...Total...

  • Page 163
    ... 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...

  • Page 164
    ...determine the appropriate deliverables and associated relative selling prices. The Company has identified Logitech Revue, discontinued in fiscal year 2013, and the LifeSize video conferencing products as products sold with software components that qualify as multiple-deliverable revenue arrangements...

  • Page 165
    ... estimated product returns and expected payments for cooperative marketing arrangements, customer incentive programs and pricing programs. The estimated cost of these programs is recorded as a reduction of revenue or as an operating expense, if the Company receives a separately identifiable benefit...

  • Page 166
    ... and retail customers, and with certain indirect partners, allowing customers to receive a credit equal to a set percentage of their purchases of the Company's products, or a fixed dollar credit for various marketing programs. The objective of these arrangements is to encourage advertising and...

  • Page 167
    ... 10% of the Company's total accounts receivable at either March 31, 2013 or 2012. Typical payment terms require customers to pay for product sales generally within 30 to 60 days; however terms may vary by customer type, by country and by selling season. Extended payment terms are sometimes offered...

  • Page 168
    ... and product life cycle stage, product development plans, component cost trends, demand forecasts, historical sales, and assumptions about future demand and market conditions. Investments The Company's investment securities portfolio consists of bank time deposits, marketable securities related to...

  • Page 169
    ...and the market approach, the Company also assesses the implied premium of the aggregate fair value over the market capitalization considered attributable to an acquisition control premium, which is the price in excess of a stock market's price that investors would typically pay to gain control of an...

  • Page 170
    ..., accounts receivable, accounts payable and accrued liabilities approximates fair value due to their short maturities. The Company's trading investments related to the deferred compensation plan are reported at fair value based on quoted market prices. Available-for-sale securities are reported at...

  • Page 171
    ... cash taxes payable. In addition, the Company has elected to account for the indirect benefits of share-based compensation on the research tax credit through continuing operations. Comprehensive Income (Loss) Comprehensive income (loss) is defined as the total change in shareholders' equity during...

  • Page 172
    ..., 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). The 2012 Plan was approved by the Board of Directors in...

  • Page 173
    ... are issued at exercise prices not less than the fair market value on the date of grant. Time-based RSUs granted to employees under the 2006 Plan generally vest in four equal annual installments on the grant date anniversary. Time-based RSUs granted to non-executive board members under the 2006 Plan...

  • Page 174
    ...The total fair value of options vested as of March 31, 2013, 2012 and 2011 was $60.5 million, $76.0 million and $74.3 million. The fair value of employee stock options granted and shares purchased under the Company's employee purchase plans was estimated using the Black-Scholes-Merton option-pricing...

  • Page 175
    ... awards that are expected to vest. The following table presents the weighted average grant-date fair values of options granted and the expected forfeiture rates: Year ended March 31, 2012 2011 2013 2013 2012 Purchase Plans 2011 2013 2012 2011 Stock Option Plans Premium-Priced Options 2013...

  • Page 176
    LOGITECH INTERNATIONAL S.A. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 4 - Employee Benefit Plans (Continued) A summary of the Company's time- and performance-based RSU activity for fiscal years 2013, 2012 and 2011 is as follows (in thousands, except per share values; grant-date ...

  • Page 177
    ...Board of Directors approved the 2012 Stock Inducement Equity Plan. Under this plan, Logitech's newly-hired President, Bracken P. Darrell, who became President and Chief Executive Officer in January 2013, was granted the following equity incentive awards (in thousands, except per share exercise price...

  • Page 178
    ... benefit pension plans and the non-retirement post-employment benefit obligations for fiscal years 2013, 2012 and 2011 was as follows (in thousands): Year ended March 31, 2012 2011 2013 Service cost ...Interest cost ...Expected return on plan assets ...Amortization of net transition obligation...

  • Page 179
    ... Employee Benefit Plans (Continued) The following table presents the changes in the fair value of defined benefit pension plan assets for fiscal years 2013 and 2012 (in thousands): Year Ended March 31, 2013 2012 Fair value of plan assets, beginning of year ...Actual return on plan assets...Employer...

  • Page 180
    LOGITECH INTERNATIONAL S.A. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 4 - Employee Benefit Plans (Continued) Level 1 March 31, 2012 Level 2 Level 3 Total Cash ...Equity securities ...Debt securities ...Swiss real estate fund ...Hedge fund ...Commodity fund...Other ...Total plan ...

  • Page 181
    LOGITECH INTERNATIONAL S.A. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 4 - Employee Benefit Plans (Continued) Changes in accumulated other comprehensive loss related to the defined benefit pension plans were as follows (in thousands): Year Ended March 31, 2012 2011 2013 ...

  • Page 182
    ... March 31, 2012 2011 2013 Interest income ...Interest expense ...Interest income, net ...Investment Impairments(1) ...Gain (loss) on sale of buildings ...Gain on sale of available-for-sale securities ...Foreign currency exchange gains, net ...Investment income related to deferred compensation plan...

  • Page 183
    ... March 31, 2012 2011 2013 181 AnnUAL REPORT Expected tax provision (benefit) at statutory income tax rates ...Income taxes at different rates ...Research and development tax credits ...Foreign tax credits ...Unrealized investment income ...Stock compensation ...Valuation allowance ...Impairment...

  • Page 184
    ... per share (diluted) in the same year was $0.02. On January 2, 2013, the enactment in the U.S. of the American Taxpayer Relief Act of 2012 extended retroactively through the end of calendar year 2013 the U.S. federal research and development tax credit which had expired on December 31, 2011. The...

  • Page 185
    ... of employee stock grants have been reduced to reflect settlement activity in fiscal years 2013 and 2012. Settlement activity of grants in fiscal year 2013 and 2012 resulted in a ''shortfall'' in which tax deductions were less than previously recorded share-based compensation expense. The Company...

  • Page 186
    ... aggregate changes in gross unrecognized tax benefits in fiscal years 2013, 2012 and 2011 were as follows (in thousands): Balance as of March 31, 2010 ...Lapse of statute of limitations ...Settlements with tax authorities...Foreign exchange impact on tax positions...Increases in balances related to...

  • Page 187
    ... 31, 2013 2012 Accounts receivable: Accounts receivable ...Allowance for doubtful accounts...Allowance for returns ...Allowances for cooperative marketing arrangements...Allowances for customer incentive programs ...Allowances for pricing programs ...Inventories: Raw materials...Work-in-process...

  • Page 188
    ... of management's decision in early July 2011 to reduce the retail price of Logitech Revue from $249 to $99, which due to its significance, has been presented as a non-cash charge in the consolidated statement of cash flows. The decrease in construction-in-progress primarily related to new facilities...

  • Page 189
    ... the allocated goodwill related to the Company's Retail-Remotes product category which was classified as an asset held for sale as of March 31, 2013. Note 8 - Financial Instruments Fair Value Measurements The Company considers fair value as the exchange price that would be received for an asset...

  • Page 190
    ... as of March 31, 2013 and $317.8 million as of March 31, 2012. The following table presents the changes in the Company's Level 3 financial assets during the fiscal years ended March 31, 2013, 2012 and 2011 (in thousands): March 31, 2012 2013 2011 Available-for-sale securities, beginning balance...

  • Page 191
    ... in a privately-held company was determined using a liquidation value approach, which is considered to be a Level 3 input. The fair value of the goodwill, other intangibles and property, plant and equipment related to the digital video security product line were determined using a market approach...

  • Page 192
    ... fair values of the Company's derivative instruments and their locations on its consolidated balance sheets as of March 31, 2013 and 2012 (in thousands): Asset Derivatives Fair Value March 31, Location 2013 2012 Liability Derivatives Fair Value March 31, Location 2013 2012 Derivatives designated as...

  • Page 193
    ...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...

  • Page 194
    ... are recognized in other income (expense), net based on the changes in fair value. The notional amounts of foreign exchange forward contracts outstanding at March 31, 2013 and 2012 relating to foreign currency receivables or payables were $14.2 million and $18.7 million. Open forward contracts as...

  • Page 195
    ... and the market approach, the Company also assesses the implied premium of the aggregate fair value over the market capitalization considered attributable to an acquisition control premium, which is the price in excess of a market stock price that investors would typically pay to gain control of an...

  • Page 196
    ...Security product line and Retail-Remotes product category which was classified as assets held for sale as of March 31, 2013. The allocated goodwill related to the Digital Video Security product line was fully impaired as of March 31, 2013. The Company's acquisition of Mirial S.r.l. on July 18, 2011...

  • Page 197
    ... 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. AnnUAL REPORT The Company...

  • Page 198
    ...2012 2011 As Reported Adjustment As Revised As Reported Adjustment As Revised 2013 Rent expense ...$25,268 $23,500 $1,609 $25,109 $19,800 $2,115 $21,915 In connection with its leased facilities, the Company has recognized a liability for asset retirement obligations representing the present...

  • Page 199
    .... One of these guarantees does not specify a maximum amount. The remaining guarantee has a total limit of $7.0 million. As of March 31, 2013, $0.1 million of guaranteed purchase obligations were outstanding under these guarantees. Logitech Europe S.A. has also guaranteed payment 197 AnnUAL REPORT

  • Page 200
    ...March 31, 2013, $2.0 million of guaranteed purchase obligations were outstanding under these agreements. 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...

  • Page 201
    ... to Swiss corporate law, Logitech International S.A. may only pay dividends in Swiss francs. The payment of dividends is limited to certain amounts of unappropriated retained earnings (CHF 354.6 million or $372.3 million based on exchange rates at March 31, 2013) and is subject to shareholder...

  • Page 202
    ... 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 operating segments do not record revenue on sales between segments, as such sales are not...

  • Page 203
    ... 31 2012 2013 2011 Net sales by operating segment: Peripherals ...Video Conferencing ...Total net sales ...Operating income (loss) by segment: Peripherals ...Video Conferencing(1)...Operating income (loss) before other charges ...Other charges: Share-based compensation...Amortization ...Total...

  • Page 204
    ... 31, 2012(1) 2013 2011(1) Peripherals Retail-Pointing Devices ...Retail-PC Keyboards & Desktops ...Retail-Tablet Accessories ...Retail-Audio PC ...Retail-Audio-Wearables & Wireless ...Retail-Video...Retail-PC Gaming ...Retail-Remotes ...Retail-Other...OEM ...Total Peripherals...Video Conferencing...

  • Page 205
    ... strategic to its business. Products currently included in this category include speaker docks, streaming media systems, console gaming peripherals and Logitech Revue for Google TV products. Geographic net sales information in the table below is based on the customers location. Long-lived assets...

  • Page 206
    ... purchase method of accounting. Accordingly, the total consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Fair values were determined by Company management based on information available...

  • Page 207
    ... 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 by approximately 220 employees. Restructuring charges under this...

  • Page 208
    ..., 2012, and 2011. Compensation and Security Ownership of Board Members and Executive Officers In accordance with the Swiss Code of Obligations, the compensation and security ownership of members of the Board of Directors of Logitech International S.A. and of Logitech executive officers is presented...

  • Page 209
    ...members of the Board of Directors, the highest compensation paid to an executive officer, and the total amount of compensation paid or accrued for payment to executive officers for services performed in the fiscal years ended March 31, 2013, 2012 and 2011: Non-equity Fiscal Base Incentive Plan Stock...

  • Page 210
    ... made or outstanding at any time during fiscal years 2013, 2012 and 2011 to any current or former members of the Board of Directors or executive officers. In addition, no compensation was paid or loans made during fiscal years 2013, 2012 and 2011 to parties closely related to members of the Board of...

  • Page 211
    ...Erh-Hsun Chang...Kee-Lock Chua(8) ...Sally Davis(9)...Neil Hunt ...Richard Laube(3)(10) ...Monika Ribar(11) ...Didier Hirsch(4) ...Total Non-Executive Members of the Board of Directors: ...Executive Officers: Guerrino De Luca ...Bracken P. Darrell ...Erik Bardman(5) ...Junien Labrousse(6) ...Werner...

  • Page 212
    ... by the Board of Directors. Financial risk assessment and management is integrated into the functions of the Company's Treasury, Finance and Business divisions operations, with oversight from the executive and treasury committees. Financial reporting risk is addressed through the Company's Corporate...

  • Page 213
    ... Statutory Balance Sheets (unconsolidated) ...Swiss Statutory Statements of Income (unconsolidated) ...Notes to Swiss Statutory Financial Statements ...Proposal of the Board of Directors for Appropriation of Retained Earnings ...Report of the Statutory Auditor ... 213 AnnUAL REPORT 214 215 218 219...

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  • Page 215
    ... integral part of these financial statements. 213 AnnUAL REPORT LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Payables to group companies...CHF 43,302 Accruals and other liabilities ...4,693 Total current liabilities ...47,995 Long-term liabilities: Deferred unrealized exchange gains...

  • Page 216
    LOGITECH INTERNATIONAL S.A., APPLES SWISS STATUTORY STATEMENTS OF INCOME (unconsolidated) (In thousands of Swiss francs) Year ended March 31, 2013 2012 Dividend income ...Royalty fees ...Interest income from third parties ...Interest income from subsidiaries ... CHF40,408 21,319 282 10,570 72,579 ...

  • Page 217
    ...working capital, general corporate purposes, and acquisitions. There were no outstanding borrowings under the credit facility at March 31, 2013 or 2012. The credit facility matures on October 31, 2016. The Holding Company may prepay the loans under the credit facility in whole or in part at any time...

  • Page 218
    ... (85,515) 172,391 In September 2008, the Board of Directors approved a share buyback program which authorizes the Holding Company to invest up to USD 250,000,000 to purchase its own shares. In November 2011, the Company received approval from the Swiss regulatory authorities for an amendment to the...

  • Page 219
    ...,620 voting rights as of March 31, 2013. The number of shares held by Capital Research Global Investors, a division of CRMC (Capital Research and Management Company), is based on a notification filed by Capital Research Global Investors with the U.S. Securities and Exchange Commission on February 13...

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    ... and Security Ownership of Board Members and Executive Officers: In accordance with the Swiss Code of Obligations, the compensation and security ownership of members of the Board of Directors of Logitech International S.A. and of Logitech executive officers is presented in the consolidated financial...

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    ...maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates...

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    ... confirm that an internal control system exists which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company's articles of...

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    For more information about Logitech and its products, please visit our web site: www.logitech.com.