Logitech 2014 Annual Report Download - page 245

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — The Company
Logitech International S.A, together with its consolidated subsidiaries, (“Logitech” or the “Company”)
develops and markets innovative hardware and software products that enable or enhance digital navigation, music
and video entertainment, gaming, social networking, and audio and video communication over the Internet.
The Company has two operating segments, peripherals and video conferencing. Logitech’s peripherals
segment encompasses the design, manufacturing and marketing of peripherals for personal computers (“PCs”),
tablets and other digital platforms. The Company’s video conferencing segment offers scalable high-definition
(“HD”) video communications endpoints, HD video conferencing systems with integrated monitors, video bridges
and other infrastructure software and hardware to support large-scale video deployments, and services to support
these products.
The Company sells its peripherals products to a network of distributors, retailers and original equipment
manufacturers (“OEMs”). The Company sells its video conferencing products and services to distributors,
value-added resellers, OEMs and, occasionally, direct enterprise customers. The large majority of the Company’s
net sales have historically been derived from peripherals products for use by consumers.
Logitech was founded in Switzerland in 1981 and Logitech International S.A. has been the parent holding
company of Logitech since 1988. Logitech International S.A. is a Swiss holding company with its registered office
in Apples, Switzerland, which conducts its business through subsidiaries in Americas, Europe, Middle East, Africa
(“EMEA”) and Asia Pacific. Shares of Logitech International S.A. are listed on both the Nasdaq Global Select
Market under the trading symbol LOGI and the SIX Swiss Exchange under the trading symbol LOGN.
Note 2 — Restatement and Revision of Previously Issued Consolidated Financial Statements
As the Company announced on May 21, 2014, the Audit Committee, with the assistance of independent
advisors, began an independent investigation of certain accounting matters related to the Company’s previously
issued financial statements.
On September 3, 2014, the Company announced that, in connection with this investigation, the Audit
Committee, on the recommendation of management, concluded that the Company’s previously issued financial
statements for fiscal years 2011 and 2012 and the first quarter of fiscal year 2012 could no longer be relied on due
to an accounting misstatement for inventory valuation reserves for Logitech’s now-discontinued Revue product.
As a result, the Company recorded an adjustment to increase cost of goods sold and to increase inventory valuation
reserves and the accrual for supplier liability for components related to the Company’s now discontinued Revue
product by $30.7 million during fiscal year ended March 31, 2011, with a corresponding decrease to cost of goods
sold in fiscal year ended March 31, 2012. As a result, net income and net income per share for fiscal year ended
March 31, 2011 was reduced by $30.7 million and $0.17 per share, respectively, with a corresponding increase in
fiscal year ended March 31, 2012. In conjunction with recording of the adjustments related to this restatement, the
Company recorded other immaterial corrections to the consolidated financial statements included in this Form
10-K for the fiscal years ended March 31, 2013 and 2012.
The Audit Committee has completed its independent investigation and found that, in connection with its
quarterly close processes, up until June 2013, the Company’s finance organization would compile lists of financial
items, which included significant accounting entries recorded during the quarter, late accounting entries, disclosure
items and certain other items with potential accounting implications. The lists used to track these financial items
appear to have been primarily shared within certain parts of the Company’s finance organization and were not shared
with the Company’s independent registered public accounting firm. Typically, there were between approximately
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