Logitech 2013 Annual Report Download - page 122

The credit facility matures on October 31, 2016. We may prepay the loans under the credit facility in whole or in
part at any time without premium or penalty. The facility agreement contains representations, covenants, including
threshold financial covenants, and events of default customary in Swiss credit markets. There were no outstanding
borrowings under the credit facility at March 31, 2013. As of March 31, 2013, we were not in compliance with
the interest cover ratio of this facility. This situation resulted from the significant operating loss incurred during
fiscal year 2013. We believe that this is only a short-term situation. Until we are in compliance with all covenants,
including the interest cover 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 an amendment to the September 2008 share buyback program to enable future
repurchases of shares for cancellation. In fiscal year 2012, we repurchased 17.5 million shares for $156.0 million
under the September 2008 program. Under the amended September 2008 program, we repurchased 8.6 million
shares for $90.0 million during fiscal year 2013. As of March 31, 2013, the approved amount remaining under
the amended September 2008 program was $4.4 million. On September 5, 2012, our shareholders approved the
cancellation of 18.5 million shares repurchased under the September 2008 amended share buyback program. These
shares were legally cancelled during the third quarter of fiscal year 2013.
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.
During the first quarter of fiscal year 2013, we implemented a restructuring plan to reduce operating costs
and improve financial results. We substantially completed this restructuring plan during the fourth quarter of
fiscal year 2013. During the fourth quarter of fiscal year 2013, we implemented an additional restructuring plan to
realign our organization to increase our focus on mobility products, improve profitability in PC-related products
and enhance our global operational efficiencies.
Our other contractual obligations and commitments which require cash are described in the following sections.
For over ten years, we have generated positive cash flows from our operating activities, including cash from
operations of $117.0 million in fiscal year 2013. During the fiscal year 2013, our normal level of cash and cash
equivalents was significantly reduced by the cash dividend payment of CHF 125.7 million (U.S. dollar amount of
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