Logitech 2014 Annual Report Download - page 280

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
changes in the spot rate of the currency underlying the forward contract with changes in the spot rate of the currency
in which the forecasted transaction will be consummated. If the underlying transaction being hedged fails to occur
or if a portion of the hedge does not generate offsetting changes in the foreign currency exposure of forecasted
inventory purchases, the Company immediately recognizes the gain or loss on the associated financial instrument
in other income (expense), net. Such gains and losses were not material during fiscal years 2014, 2013 and 2012.
Cash flows from such hedges are classified as operating activities in the Consolidated Statements of Cash Flows.
As of March 31, 2014 and 2013, the notional amounts of foreign exchange forward contracts outstanding related to
forecasted inventory purchases were $51.8 million (€37.6 million), and $38.5 million (€30.1 million), respectively.
Foreign Exchange Forward and Swap Contracts
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 other income (expense), net based on the changes in fair value.
The notional amounts of foreign exchange forward contracts outstanding as of March 31, 2014 and 2013
relating to foreign currency receivables or payables were $23.2 million and $14.2 million, respectively. Open
forward contracts as of March 31, 2014 and 2013 consisted of contracts in U.S. Dollars to purchase Taiwanese
Dollars and contracts in Euros to sell British Pounds at future dates at pre-determined exchange rates. The notional
amounts of foreign exchange swap contracts outstanding as of March 31, 2014 and 2013 were $30.5 million and
$19.6 million, respectively. Swap contracts outstanding as of March 31, 2014 and 2013 consisted of contracts in
Mexican Pesos, Japanese Yen and Australian Dollars.
The fair value of all 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.
Note 10 — Goodwill and Other Intangible Assets
Annual Goodwill Impairment Testing
In accordance with ASC Topic 350-10 (“ASC 350-10”) as it relates to Goodwill and Other Intangible Assets,
the Company conducts a goodwill impairment analysis annually at December 31 and as necessary if changes in
facts and circumstances indicate that it is more likely than not that the fair value of the Company’s reporting units
may be less than its carrying amount.
FASB ASC 350-20 permits an entity to make a qualitative assessment of whether it is more likely than not that
a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test.
If an entity concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying
amount, it would not be required to perform the two-step impairment test for that reporting unit.
Note 9 — Financial Instruments (Continued)
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