Logitech 2013 Annual Report Download - page 117

We file Swiss and foreign tax returns. For all these tax returns, we are generally not subject to tax
examinations for years prior to fiscal year 2001. In the fiscal quarter ended September 30, 2012, we effectively
settled the examinations of fiscal years 2006 and 2007 with the IRS (U.S. Internal Revenue Service). We reversed
$33.8 million of unrecognized tax benefits associated with uncertain tax positions and recorded a $1.7 million tax
provision from the assessments as a result of the closure, resulting in a net tax benefit of $32.1 million. There was
no cash tax liability from the settlement due to utilization of net operating loss carryforwards.
We also effectively settled the examinations of fiscal years 2008 and 2009 with the IRS in the subsequent
fiscal quarter ended December 31, 2012. We reversed $9.0 million of unrecognized tax benefits associated with
uncertain tax positions and recorded a $5.5 million tax provision from the assessments, resulting in a net tax
benefit of $3.5 million. There was no cash tax liability from the settlement due to utilization of net operating loss
carryforwards. The effective settlement of the IRS examinations of fiscal years 2006 through 2009 resulted in an
overall net tax benefit of $35.6 million in fiscal year 2013.
We are also under examination and have received assessment notices in other tax jurisdictions. At this time,
we are not able to estimate the potential impact that these examinations may have on income tax expense. If the
examinations are resolved unfavorably, there is a possibility they may have a material negative impact on our
results of operations.
Although we have adequately provided for uncertain tax positions, the provisions on these positions may
change as revised estimates are made or the underlying matters are settled or otherwise resolved. It is not possible
at this time to reasonably estimate the decrease of the unrecognized tax benefits within the next twelve months.
Liquidity and Capital Resources
Cash Balances, Available Borrowings, and Capital Resources
At March 31, 2013, our working capital was $391.3 million, compared with $576.7 million at March 31, 2012.
This decrease in working capital was due to lower cash balances, primarily resulting from the $133.5 million cash
dividend payment paid on September 18, 2012 and from the repurchase of 8.6 million shares for $90.0 million.
During the fiscal year 2013, we generated $117.0 million of cash flow from operating activities. Our main
sources of operating cash flows were net loss after adding non-cash expenses of depreciation, amortization,
impairment of goodwill and other assets, investment impairment, share-based compensation expense and
inventory valuation adjustment, and from decreases in accounts receivables and inventories. These sources of
operating cash flows were offset in part by decreases in accounts payables and accrued liabilities and an increase
in other assets. Net cash used in investing activities was $50.2 million, primarily from $46.9 million of investments
in leasehold improvements, computer hardware and software, tooling and equipment and from investments in
privately-held companies of $4.4 million. Net cash used in financing activities was $210.0 million, primarily from
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 equivalents of $333.8 million. Our cash and cash equivalents are
comprised of bank demand deposits and short-term time deposits carried at cost, which is equivalent to fair value.
Approximately 45% of our cash and cash equivalents are held by our Swiss-based entities, and approximately 37%
is held by our subsidiaries in Hong Kong and China. We do not believe we would be subject to any material adverse
tax impact or significantly inhibited by any country in which we do business from the repatriation of funds to
Switzerland, our home domicile.
In December 2011, we entered into a Senior Revolving Credit Facility Agreement with a group of primarily
Swiss banks that provides for a revolving multicurrency unsecured credit facility in an amount of up to $250.0 million.
We may, upon notice to the lenders and subject to certain requirements, arrange with existing or new lenders to
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