Logitech 2015 Annual Report Download

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2015 Annual General Meeting
Invitation, Proxy Statement and Annual Report

Table of contents

  • Page 1
    2015 Annual General Meeting Invitation, Proxy Statement and Annual Report

  • Page 2

  • Page 3
    ...the Company's future - show great promise. Here's more detail: Growth Category Logitech's Growth category comprised Tablet and Other Accessories, Gaming, and Mobile Speakers at the start of Fiscal Year 2015. By Q4 we added a fourth business: Video Collaboration. Our growth businesses are key engines...

  • Page 4
    ... the savings into our Growth category and future projects. We will also invest in new capabilities, both in R&D and in our regional go-to-market organizations. Last, but not least, we are returning more value to you, our shareholders, through dividends and share buybacks. Thanks to this price and...

  • Page 5
    2015 Annual General Meeting Invitation, Proxy Statement 2015 Annual General Meeting Invitation, Proxy Statement and Annual Report This page is intentionally left blank.

  • Page 6
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  • Page 7
    ... 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. 2015 Annual General Meeting Invitation, Proxy Statement Thank you for your continued support of Logitech...

  • Page 8
    This page is intentionally left blank.

  • Page 9
    LOGITECH INTERNATIONAL S.A. Invitation to the Annual General Meeting Wednesday, September 9, 2015 2:00 p.m. (registration starts at 1:30 p.m.) SwissTech Convention Center, EPFL - Lausanne, Switzerland ***** AGENDA A. Reports Report on Operations for the fiscal year ended March 31, 2015 2015 Annual...

  • Page 10
    This page is intentionally left blank.

  • Page 11
    ... Convention Center, EPFL, in Lausanne, Switzerland. 2015 Annual General Meeting Invitation, Proxy Statement WHO IS ENTITLEd TO vOTE AT THE MEETING? Shareholders registered in the Share Register of Logitech International S.A. (including in the sub-register maintained by Logitech's U.S. transfer...

  • Page 12
    ... principal executive office in the United States is at 7700 Gateway Boulevard, Newark, California 94560. Logitech's main telephone number in Switzerland is +41-(0)21-863-5111 and our main telephone number in the United States is +1-510-795-8500. A copy of our 2015 Annual Report to Shareholders, this...

  • Page 13
    ... or www.proxyvote.com for shareholders on the U.S. share register, or on the Response Coupon or Proxy Card, as applicable. SWISS SHARE REGISTER - INTERNET vOTING - Go to the Internet voting site gvmanager.ch/logitech and log in with your one-time code on the Response Coupon. Please use the menu item...

  • Page 14
    ... are a registered shareholder as of September 3, 2015, you may attend the meeting by presenting proof of identification at the meeting. SWISS SHARE REGISTER - INTERNET vOTING - Go to the Internet voting site gvmanager.ch/logitech and log in with your one-time code on the Response Coupon. Please use...

  • Page 15
    ... may complete the new Response Coupon and return it to us by September 3, 2015, or you may attend the meeting and vote in person. u.S. SHARE REGISTER - INTERNET vOTING - Go to the Internet voting site www.proxyvote.com and log in with your 16-digit voting control number printed in the box marked by...

  • Page 16
    ... Answers about The Logitech 2015 Annual General Meeting If I vOTE By PROxy, WHAT HAPPENS If I dO NOT GIvE SPECIfIC vOTING INSTRuCTIONS? SWISS SHARE REGISTER - INTERNET vOTING - If you are a registered shareholder and vote using the Internet voting site, you have to give specific voting instructions...

  • Page 17
    ... a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it. 2015 Annual General Meeting Invitation, Proxy Statement HOW CAN I GET ELECTRONIC ACCESS TO THE PROxy MATERIALS? 7 | - Proxy Statement

  • Page 18
    ... organization on July 10, 2015 may direct the organization on how to vote. Logitech has made arrangements with a service company to U.S. and Canadian brokers, trustees and nominee organizations for that service company to provide a reconciliation of share positions of U.S. and Canadian "street...

  • Page 19
    ... Committee), Proposal 8 (Approval of Compensation for the Board of Directors for the 2015 to 2016 Board Year), Proposal 9 (Approval of Compensation for the Group Management Team for Fiscal Year 2017), Proposal 11 (Election of the Independent Representative). All other Proposals involve matters that...

  • Page 20
    ... or who share an address with other stockholders can authorize us to discontinue mailings of multiple proxy statements and annual reports by calling or writing to investor relations. 2015 Annual General Meeting Invitation, Proxy Statement Further Information for Shareholders with Shares Registered...

  • Page 21
    ... about The Logitech 2015 Annual General Meeting Other Meeting Information 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 you are a registered shareholder: SWISS SHARE REGISTER INTERNET...

  • Page 22
    ... may submit a proposal for consideration by the Board of Directors for inclusion in the 2016 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 United States no later than...

  • Page 23
    ... for the fiscal year Ended March 31, 2015 Senior management of Logitech International S.A. will provide the Annual General Meeting with a presentation and report on operations of the Company for fiscal year 2015. 2015 Annual General Meeting Invitation, Proxy Statement 13 | - Proxy Statement

  • Page 24
    ...information on the Company's business, organization and strategy, and information relating to corporate governance as required by the SIX Swiss Exchange directive on corporate governance. Copies of the Annual Report are available on the Internet at ir.logitech.com. Under Swiss law, the annual report...

  • Page 25
    ...Compensation Report, Logitech has designed its compensation programs to: • provide compensation sufficient to attract and retain the level of talent needed to create and manage an innovative, high growth global company in highly competitive and rapidly evolving markets; • support a performance...

  • Page 26
    ...included in this Invitation and Proxy Statement. Logitech's compensation philosophy, compensation program risks and design, and compensation paid during fiscal year 2015 are also set out in the Compensation Report. While compensation is a central part of attracting, retaining and motivating the best...

  • Page 27
    ...the Board's belief that it is in the best interests of Logitech and its shareholders to retain Logitech's earnings for future investment in the growth of Logitech's business, for share repurchases, and for the possible acquisition of other companies or lines of business. 2015 Annual General Meeting...

  • Page 28
    ...Swiss Francs presented at Logitech's 2015 Annual General Meeting will be based on USD 85,000,000 and the currency exchange rate effective on the date of Logitech's 2015 Annual General Meeting. Distribution-bearing shares are all shares issued except for treasury shares held by Logitech International...

  • Page 29
    .... This release from liability exempts members of the Board of Directors or Executive Officers from liability claims brought by the Company or its shareholders on behalf of the Company against any of them for activities carried out during fiscal year 2015 relating to facts that have been disclosed...

  • Page 30
    ... that the Company's President and Chief Executive Officer, Mr. Bracken Darrell, be re-elected to the Board for a one-year term ending at the closing of the 2016 Annual General Meeting. For biographical information and qualifications of Mr. Darrell, please refer to "Corporate Governance and Board of...

  • Page 31
    ...-based networking products and services. He joined Cisco as a Vice President and Chief Technology Officer of Cisco's Server Access and Virtualization Business Unit from May 2008 to June 2011. Prior to Nuova, Dr. Bugnion was a Founder of VMware, a leading provider of cloud and virtualization software...

  • Page 32
    ... at the closing of the 2016 Annual General Meeting. Lung Yeh is the Managing Director of Enspire Capital, a Singapore-based venture capital and private equity firm focusing on technology, media and telecommunications, internet and mobile investments in Silicon Valley, China, Taiwan, Hong Kong and...

  • Page 33
    ... investment and senior leadership experience, as a venture capitalist in Asia and the United States focused on multimedia, wireless and communications, and also as the founder and former Chief Executive Officer of several technology companies. He brings to the Board senior leadership, business...

  • Page 34
    ... term ending at the closing of the following Annual General Meeting. Proposal The Board of Directors proposes that Mr. Guerrino De Luca be re-elected as Chairman of the Board of Directors for a one-year term ending at the closing of the 2016 Annual General Meeting. The Board of Directors recommends...

  • Page 35
    ...be re-elected to the Compensation Committee for a one-year term ending at the closing of the 2016 Annual General Meeting. For biographical information and qualifications of Ms. Davis, please refer to "Corporate Governance and Board of Directors Matters - Members of the Board of Directors" on page 35...

  • Page 36
    ...or share equivalent awards corresponds to a fixed amount and the number shares granted will be calculated at market value at the time of their grant. • Other payments, including the Company's contributions to social security, of a maximum of approximately CHF 300,000. 2015 Annual General Meeting...

  • Page 37
    ... of the compensation of the members of the Board of Directors of CHF 4,600,000 for the term of office from the Annual General Meeting 2015 until the Annual General Meeting 2016, subject to adjustment as set forth in the proposal. • Performance-based cash compensation of a maximum of CHF 980,000...

  • Page 38
    ... philosophy, compensation program risks and design, and compensation paid during fiscal year 2015 are set forth in the Compensation Report. The proposed maximum amount of USD 19,200,000 has been determined based on the following non-binding assumptions for Logitech's Group Management Team as an...

  • Page 39
    .... The actual pay-out to the members of the Group Management Team for fiscal year 2017 will be disclosed in the Compensation Report in the Invitation and Proxy Statement for the 2017 Annual General Meeting. In the event of a negative vote on this proposal by shareholders, the Board of Directors will...

  • Page 40
    ... registered public accounting firm for fiscal year 2015, respectively, as well as further information regarding KPMG AG and KPMG LLP, is set out below under the heading "Independent Auditors" and "Report of the Audit Committee." Members of KPMG AG will be present at the Annual General Meeting, will...

  • Page 41
    ... the closing of the 2016 Annual General Meeting. Explanation Shareholders may either represent their shares themselves or have them represented by a third party, whether or not a shareholder, if the latter is given a written proxy. In accordance with Swiss law, each shareholder may be represented at...

  • Page 42
    ... to the executive officers under the organizational regulations (also known as by-laws). The Board makes resolutions through a majority vote of the members present at the meetings. In the event of a tie, the vote of the Chairman decides. Logitech's Articles of Incorporation set the minimum number of...

  • Page 43
    ... Matters Members of the Board of Directors The members of the Board of Directors, including their principal occupation, business experience, and qualifications, are set out below. Daniel Borel 65 Years Old Co-Founder and former Chief Executive Officer and Chairman, Logitech International S.A. Swiss...

  • Page 44
    ...voiceover-Internet services. He serves on the Board of Yongmao Holdings Limited (where he is lead independent director), a publicly traded company in Singapore, and IGG Inc., a Singapore-based online gaming company publicly traded on the Stock Exchange of Hong Kong Growth Enterprise Market. Mr. Chua...

  • Page 45
    ... Europe. Mr. De Luca holds a Laurea degree in Electronic Engineering from the University of Rome, Italy. As Logitech's Chairman and former Chief Executive Officer, Mr. De Luca brings significant senior leadership, industry, strategy, marketing and global experience to the Board and a deep knowledge...

  • Page 46
    ... Motor Company. He serves on the Board of Knowles Corporation, a New York Stock Exchange (NYSE)listed global supplier of advanced micro-acoustic solutions and specialty components serving the mobile communications, consumer electronics, medical technology, military, aerospace and industrial markets...

  • Page 47
    ...in various executive, managerial and other positions with P&G in sales, brand management and advertising in Europe (including Switzerland), Egypt and the Far East from 1977 to 1999. He serves on the Board of British American Tobacco p.l.c., a London Stock Exchange (LSE)-listed global tobacco company...

  • Page 48
    ... 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., 7700 Gateway Boulevard, Newark, CA 94560, USA. Under the Company's Articles...

  • Page 49
    ... 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 major computer manufacturers and consumer electronics distributors...

  • Page 50
    ... limit mentioned above. The year of appointment and remaining term of office as of March 31, 2015 for each director are as follows: year first Appointed 1988 2005 2000 2013 2007 1998 2012 2010 2014 2004 year Current Term Expires Annual General Meeting 2015 Annual General Meeting 2015 Annual General...

  • Page 51
    ... The Chief Executive Officer manages the day-to-day operations of Logitech, with the support of the other executive officers. The Chief Executive Officer has, in particular, the following powers and duties: • defining and implementing term strategies; short and medium 2015 Annual General Meeting...

  • Page 52
    ...each regular Board meeting the Chief Executive Officer reports to the Board of Directors on developments and important issues. The Chief Executive Officer also provides regular updates to the Board members regarding Logitech's business between the dates of regular Board meetings. • The offices of...

  • Page 53
    ... 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 54
    ... with the published listing requirements of the Nasdaq Stock Market and Swiss corporate governance best practices guidelines. At each quarterly Board meeting, each applicable Board Committee reports to the full Board on the substance of the Committee's meetings, if any, during the quarter. Each...

  • Page 55
    ... organizational structure and qualifications of the internal auditing staff; Audit Committee The Audit Committee is appointed by the Board to assist the Board in monitoring the Company's financial accounting, controls, planning and reporting. It is composed of only non-executive, independent Board...

  • Page 56
    ... compensation of executive officers and non-executive Board members 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...

  • Page 57
    ... full Board. Nominees are then selected by a majority of the independent members of the Board. The Nominating Committee met six times in fiscal year 2015. The meetings were held in person or by teleconference and lasted approximately half-an-hour to one hour. 2015 Annual General Meeting Invitation...

  • Page 58
    ... Secretary at the following address: Logitech International S.A. Attn: Corporate Secretary EPFL - Quartier de l'Innovation Daniel Borel Innovation Center 1015 Lausanne, Switzerland All such shareholder communications will be forwarded to the appropriate member or members of the Board of Directors or...

  • Page 59
    ... Compensation Report (the "named executive officers"); and • all directors and current executive officers as a group. 2015 Annual General Meeting Invitation, Proxy Statement Beneficial Owner(1) 5% shareholders: Credit Suisse AG(5) Daniel Borel(6) director, not including the Chairman or the CEO...

  • Page 60
    ...officers who report directly to the Chief Executive Officer or President are subject to share ownership guidelines. Directors are required to own Logitech shares with a market value equal to 3 times the annual Board retainer under guidelines adopted by the Board in June 2006 and revised in June 2013...

  • Page 61
    ...remaining officers who report directly to the Chief Executive Officer to hold a number of Logitech shares with a market value equal to their respective annual base salaries. Officers subject to the guidelines are required to achieve the guideline within five years of being appointed to the position...

  • Page 62
    ...which at all times must be performed in the best interests of Logitech. In addition, Logitech employees may not use their position with Logitech, or Logitech's information or assets, for their personal gain or for the improper benefit of others. These policies are included in our Business Ethics and...

  • Page 63
    ... Switzerland. KPMG AG assumed its first audit mandate for Logitech in fiscal year 2015. They were elected by the shareholders as Logitech's auditors at the Annual General Meeting in December 2014. For purposes of U.S. securities law reporting, KPMG LLP, Santa Clara, California, served as the Company...

  • Page 64
    ... the fiscal year ended March 31, 2014. Accordingly, the reports of PwC LLP on the Company's internal control over financial reporting as of March 31, 2013 and as of March 31, 2014 as well as management's reports as of the same date, 2015 Annual General Meeting Invitation, Proxy Statement - Proxy...

  • Page 65
    ...provided PwC with a copy of the disclosure set forth in this section, which disclosure was set forth in the Current Report on Form 8-K filed by the Company on November 13, 2014. PwC furnished Logitech with a letter addressed to the Securities and Exchange Commission stating their agreement with such...

  • Page 66
    ... 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 status of each project or service provided by KPMG. 2015 Annual General Meeting Invitation...

  • Page 67
    ... independent accountant's independence. Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in Logitech's Annual Report on Form 10-K for the fiscal year ended March 31, 2015...

  • Page 68
    Section 16(a) Beneficial Ownership Reporting Compliance Section 16 of the Exchange Act requires Logitech's directors, executive officers and any persons who own more than 10% of Logitech's shares, to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are...

  • Page 69
    ... both our internal goals and the overall market, and limited rewards when Logitech's performance does not meet these objectives. Overall, our Compensation Committee has developed executive compensation programs that it believes will provide an incentive to drive the Company's performance and reward...

  • Page 70
    ... as well as performance-based and time-based incentives. In fiscal year 2015, the majority of the target total direct compensation of our CEO consisted of performancebased pay, including cash awarded under our annual bonus plan and long-term incentives in the form of equity awards for which value is...

  • Page 71
    ... serves our long-term value creation goals and retention objectives. 2015 Annual General Meeting Invitation, Proxy Statement  Limited Executive Perquisites - We do not provide perquisites or other personal benefits to our executive officers. The executive officers participate in our health...

  • Page 72
    ... payments or benefits.  No Unearned Dividends - We do not pay dividends or dividend equivalents on unvested or unearned restricted stock unit or performance-based restricted stock unit awards.  No Stock Option Repricing - We do not reprice options to purchase our registered shares without...

  • Page 73
    ...review executive compensation annually. • Provide compensation sufficient to attract and retain the level of talent needed to create and manage an innovative, high growth global company in highly competitive and rapidly evolving markets; • Support a performance-oriented culture; • Maintain...

  • Page 74
    ...officers for fiscal year 2015 included: • Each individual executive's performance; • Each individual executive's qualifications and marketability; skills, experience, 2015 Annual General Meeting Invitation, Proxy Statement • The Company's performance against financial goals and objectives...

  • Page 75
    ... Committee in determining the compensation of our other executive officers, excluding our Executive Chairman. Typically, our CEO works with the Compensation Committee to recommend the structure of the annual bonus plan, and to identify and develop corporate performance objectives for such plan, and...

  • Page 76
    ...market practices. The compensation consultant undertook a detailed review of the pool of U.S.-based publicly-traded companies, taking into consideration involvement in the PC-based consumer electronics industry, revenues approximately equal to Logitech's and a presence near Silicon Valley in the San...

  • Page 77
    ...at the time the fiscal year 2015 executive compensation review was performed: (in millions) 75th Percentile 50th Percentile 25th Percentile Logitech Percentile Rank Revenues $ 3,933.9 2,287.0 1,804.1 2,093.5 33% Market Capitalization $10,601.4 8,245.8 2,790.3 2,520.1 22% 2015 Annual General Meeting...

  • Page 78
    ..., the Compensation Committee selected the following peer group of 16 publicly-traded companies, which the Compensation Committee subsequently approved and considered when making compensation decisions toward the end of fiscal year 2015 and with respect to setting compensation for fiscal year 2016...

  • Page 79
    ...incentivize our management objectives and individual executive officers to achieve or exceed contributions. performance objectives. For fiscal year 2015, payouts for corporate performance objectives could range from 0% to 200%, depending on actual achievement. 2015 Annual General Meeting Invitation...

  • Page 80
    ... awards is directly related to the market price of our registered shares, and the awards are only earned over an extended period of time subject to vesting, they serve to focus management on the creation and maintenance of longterm shareholder value. • Performance-based equity links compensation...

  • Page 81
    ... fiscal year 2015 under the Logitech Management Performance Bonus Plan (the "Bonus Plan"). Under the Bonus Plan, the Compensation Committee had the authority to select the performance measures and related target levels applicable to the annual cash bonus opportunities for our executive officers. 71...

  • Page 82
    ...generating revenue, managing our expenses, increasing profitability, and growing our business, which it believes Corporate Performance Measure Revenue Non-GAAP Operating Income most directly influences long-term shareholder value. The Compensation Committee established target performance levels for...

  • Page 83
    ... 2015 Target Level $2.18B $153M 2015 Annual General Meeting Invitation, Proxy Statement In addition to the corporate performance objectives, 25% of the annual cash bonuses for our executive officers, other than our CEO and our Executive Chairman, could be adjusted based on each executive officer...

  • Page 84
    ... to new auditors upon PwC's independence issue to preserve the Company's ability to file its fiscal year 2014 and 2015 periodic reports. Mr. Stolk received an annual incentive at 121% of target based on achievement of the corporate performance measures described above and business group performance...

  • Page 85
    ... within our finance department, including our CFO, should receive more of their equity in time-based RSUs than awards based on financial results. The equity awards granted to our executive officers in fiscal year 2015 were as follows: Performance Share units Number of Grant date Shares fair value 19...

  • Page 86
    Compensation Report for Fiscal Year 2015 Performance Share Units The PSU awards granted to our executive officers in fiscal year 2015 were subject to Logitech's relative total shareholder return ("TSR") versus the TSR of companies included in the Nasdaq-100 Index. The PSUs are "at-risk" compensation...

  • Page 87
    ... other paid holidays to all employees, including our executive officers. We also offer our employees the opportunity to participate in the Logitech Employee Share Purchase Plans. We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant...

  • Page 88
    ... base salary, a target annual cash bonus opportunity, and, in some instances, a recommendation for an equity award. For a summary of the material terms and conditions of the employment arrangements with each of our executive officers, see "Employment Arrangements" below. 2015 Annual General Meeting...

  • Page 89
    ... 5x Base Salary 3x Base Salary 2x Base Salary officer does not meet the applicable guideline by the end of the five-year period, the executive officer will have 50% of the after-tax value of any earned bonuses under the Leadership Team Bonus Program paid in fully vested Logitech shares. Our CEO and...

  • Page 90
    ... disclosure of any Logitech trade secret or confidential information; or • induces any with Logitech. customer to breach a contract 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...

  • Page 91
    ... to the securities that they hold. Finally, no employee, including an executive officer or member of our Board of Directors may acquire, sell, or trade in any interest or position relating to the future price of our equity securities. 2015 Annual General Meeting Invitation, Proxy Statement Tax and...

  • Page 92
    ...based on the March 2015 review, the Compensation Committee has concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. 2015 Annual General Meeting Invitation, Proxy Statement • Management Performance...

  • Page 93
    ... of this Compensation Report with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Logitech's 2015 Invitation and Proxy Statement and Annual Report. Compensation Committee...

  • Page 94
    ... of stock awards and stock options are presented in Note 4 to the Consolidated Financial Statements included in Logitech's Annual Report to Shareholders. For FY15: The amount shown includes an aggregate grant date fair value of the shares issuable for PSUs granted in fiscal year 2015 at target...

  • Page 95
    ... 250,000 shares in fiscal year 2014 in recognition for his service as Logitech's acting Chief Executive Officer from July 2011 through January 2013. 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. Mr...

  • Page 96
    ...fiscal year 2013, including airfare, home purchase and sales assistance, tax advice assistance, moving costs, temporary living benefits and other costs. Represents the matching contributions to the Logitech Employee Pension Fund in Switzerland for Mr. Stolk, which are available to all of the Company...

  • Page 97
    ... of plan-based awards to each of our executive officers during fiscal year 2015. For more information, please refer to "Compensation Disclosure and Analysis." All Other Stock Estimated future Payouts Awards: under Equity Incentive Plan Number Awards of Shares of Stock Threshold Target Maximum or...

  • Page 98
    ...12 month average (April 2014 to March 2015) exchange rate of 1 Swiss Franc to 1.0784 U.S. Dollars. (5) 2015 Annual General Meeting Invitation, Proxy Statement (6) (7) Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table Employment Agreements and Offer Letters...

  • Page 99
    ... by the number of outstanding options. The market value for stock awards (RSUs and PSUs) is determined by multiplying the number of shares subject to such awards by the closing price of Logitech shares on the Nasdaq Global Select Market on the last trading day of the fiscal year. Stock Awards Equity...

  • Page 100
    Compensation Report for Fiscal Year 2015 Option Awards Stock Awards Equity Equity Incentive Incentive Plan Plan Awards: Awards: Market or Number Payout of value of Number Market unearned unearned of value of Shares, Shares, Shares or Shares or units or units or units of units of Other Other Market ...

  • Page 101
    ... price and the fair market value of Logitech shares on the date of exercise, multiplied by the number of shares for which the option was exercised. Based on the closing trading price of Logitech shares on the Nasdaq Global Select Market on the date of vesting of underlying awards. Pension Benefits...

  • Page 102
    Compensation Report for Fiscal Year 2015 Non-qualified Deferred Compensation for Fiscal Year 2015 The following table sets forth information regarding the participation by our named executive officers in the Logitech Inc. U.S. Deferred Compensation Plan during fiscal year 2015 and at fiscal year-end...

  • Page 103
    .... In fiscal year 2014, Mr. De Luca was awarded an RSU grant of 250,000 shares in recognition of his service as Logitech's acting Chief Executive Officer from July 2011 through January 2013. Given that the award was based on past service, if Mr. De Luca's service with the Company terminates by reason...

  • Page 104
    ... of his employment, (ii) current compensation is based on base salary and annual target bonus, and (iii) executivelevel outplacement services of a value of up to $15,000. PSu and RSu Award Agreements The PSU and RSU award agreements prior to fiscal year 2015 for named executive officers provide for...

  • Page 105
    ...or (ii) if, by January 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...

  • Page 106
    ...perquisites (including office space and location) available to him immediately prior to such reduction, without his expressed written consent and without good business reasons, (ii) a material reduction of his base salary, (iii) a material reduction in the kind or level of employee benefits to which...

  • Page 107
    ... or otherwise. The price used for determining the value of accelerated equity in the tables below was the closing price of Logitech's shares on the Nasdaq Global Select Market on March 31, 2015, the last business day of the fiscal year, of $13.15. 2015 Annual General Meeting Invitation, Proxy...

  • Page 108
    ... "280G cut-back" so that, in effect, the maximum value of the cash payments plus accelerated equity awards to which an executive is entitled under the agreement is just under 3 times the average annual taxable compensation paid by Logitech to the executive in the prior five taxable years, calculated...

  • Page 109
    ... Annual General Meeting. For fiscal year 2015, the annual RSU grant value was adjusted from CHF 135,000 ($145,584) to CHF 150,000 ($161,760) to reflect increases in the market for board compensation. Directors who are Logitech employees do not receive any compensation for their service on the Board...

  • Page 110
    ... closing price of Logitech shares on the Nasdaq Global Select Market on the last trading day of the fiscal year. (3) The following table presents additional information with respect to the equity awards held as of March 31, 2015 by members of the Board of Directors who were not executive officers...

  • Page 111
    ... below for such options is based on an exchange rate of 1 Swiss Franc to 1.0283 U.S. Dollars as of March 31, 2015. OuTSTANdING EquITy AWARdS fOR NON-EMPLOyEE dIRECTORS AT fISCAL 2015 yEAR-ENd Option Awards Stock Awards Market value of Number of Shares or Number of Number of Shares or Securities...

  • Page 112
    ...shares that may be issued upon the exercise of outstanding options under the 1996 Stock Plan (this plan terminated in 2006). (c) Number of Securities Remaining Available for future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) (#) 2015 Annual General Meeting...

  • Page 113
    ... Plan. No further awards will be granted under the 1996 Stock Plan. Each option issued under the 1996 Stock Plan entitles the holder to purchase one share of Logitech International S.A. at the exercise price. Employee Share Purchase Plans Logitech maintains two employee share purchase plans, one for...

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  • Page 115
    Annual Report fiscal year 2015 Annual Report fiscal year 2015

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    MANAGEMENT'S dISCuSSION ANd ANALySIS Of fINANCIAL CONdITION ANd RESuLTS Of OPERATIONS Annual Report fiscal year 2015 1

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  • Page 119
    ... are: Mobile Speakers, Gaming, Video Collaboration and Tablet & Other Accessories. Our profit maximization categories are: Pointing Devices, Keyboards & Combos, Audio-PC & Wearables, PC Webcams, and Home Control. Our brand, portfolio management, product development and engineering teams in our...

  • Page 120
    ...cloud opportunity faster. We sell our video conferencing products and services to distributors, value-added resellers, OEMs and, occasionally, direct enterprise customers. Net sales of video conferencing products and services were 5%, 6% and 7% of our net sales in the fiscal year 2015, 2014 and 2013...

  • Page 121
    ... our global sales presence and the reporting of our financial results in U.S. Dollars, our financial results for fiscal year 2015 were affected by significant shifts in currency exchange rates during fiscal year 2015. See "Results of Operations" beginning on page 13 for information on the effect of...

  • Page 122
    ...our investments in the UE brand, our introduction of new products and our ability to gain market share during fiscal year 2015, has driven our growth in Mobile Speakers. PC Peripherals (Pointing Devices, Keyboards & Combos, PC Webcams, Gaming and Audio PC & Wearables): Although the installed base of...

  • Page 123
    ...into customer marketing programs with many of our distribution and retail customers, and with certain indirect partners, allowing customers to receive a credit equal to a set percentage of their purchases of our products, or a fixed dollar credit for various marketing Annual Report fiscal year 2015...

  • Page 124
    ... customers. Special pricing discounts 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...

  • Page 125
    ... our stock price volatility, employee exercise patterns, future forfeitures, dividend yield, related tax effects and the selection of an appropriate fair value model. We estimate expected share price volatility based on historical volatility using daily prices over the term of past options, RSUs...

  • Page 126
    ... such as changes in management, key personnel, strategy, or customers, contemplation of bankruptcy, or litigation. The fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill. Annual Report fiscal year 2015 In reviewing goodwill...

  • Page 127
    ... represented the purchase price. If the carrying value of goodwill exceeds its implied fair value, an impairment loss equal to such excess would be recognized. We use a third party valuation expert in the development of our market and income approach models. The annual Step 1 assessment performed...

  • Page 128
    ... conferencing reporting unit's updated business outlook for fiscal year 2016 based on the factors discussed above and the risk of execution of its refocused strategy, we updated the future cash flow assumptions for the video conferencing reporting unit and calculated updated estimates of fair value...

  • Page 129
    ...Asia Pacific and decreased in EMEA during fiscal year 2014, compared to fiscal year 2013. The increase in retail sales is primarily due to triple-digit growth in Mobile Speakers, double-digit growth in Tablets & Other Accessories and Gaming, offset in part by a decline in Audio-PC & Wearables, Video...

  • Page 130
    ...year 2013: Annual Report fiscal year 2015 2015 vs. 2014 2014 vs. 2013 Americas ...EMEA ...Asia Pacific ...Americas 8% (7) 2 9% (4) 2 During fiscal year 2015, retail sales in Americas increased 8%, compared to fiscal year 2014. If currency exchange rates had been constant in 2015 and 2014, our...

  • Page 131
    ... designed for the iPad, iPad mini and iPad Air. The increase in Mobile Speakers was primarily from the UE BOOM. The increase in Gaming was due to the recent launch of our new gaming products. The increase in Keyboards & Combos was driven by low-end, mid-range and high-end products. Retail sales...

  • Page 132
    ...31, 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 Peripherals: Mobile Speakers ...Gaming ...Video Collaboration...Tablet & Other Accessories...Growth...Pointing Devices ...Keyboards & Combos ...Audio-PC & Wearables ...PC Webcams ...Home Control ...Profit Maximization ...Retail Strategic Sales(1)...Non...

  • Page 133
    ...% of total Gaming revenue for fiscal year 2015. Our top revenue-generating Gaming products included the Logitech G502 Proteus Core, the Logitech G27 Racing Wheel, the Logitech G930 Wireless Gaming Headset, and the G430 Cordless Mice. During fiscal year 2014, retail sales of Gaming increased 29% and...

  • Page 134
    ... of the tablet accessory market, including tablet cases. Retail Strategic - Profit Maximization Categories: Pointing Devices Our retail Pointing Devices category comprises PC and Mac-related mice, touchpads and presenters. During fiscal year 2015, retail sales of Pointing Devices decreased 4% and...

  • Page 135
    ...to our business. Products currently included in this category include TV camera, Digital Video Security, TV and home speakers, Google TV products, Keyboard/Desktop accessories, and music docks. During fiscal year 2015, retail sales of this category decreased 93%, compared to fiscal year 2014. During...

  • Page 136
    ...-based video conferencing solutions, an evolving Lifesize product line and challenges in execution experienced in all geographic regions. Gross Profit Gross profit for fiscal years 2015, 2014 and 2013 was as follows (in thousands): Change 2015 vs. 2014 vs. 2014 2013 Annual Report fiscal year 2015...

  • Page 137
    ... in fiscal 2013. Marketing and Selling Marketing and selling expense consists of personnel and related overhead costs, corporate and product marketing, promotions, advertising, trade shows, customer and technical support and facilities costs. During fiscal year 2015, marketing and selling expense...

  • Page 138
    ... fiscal year 2014, general and administrative expense increased 4%, compared to fiscal year 2013. The increase was primarily due to an $8 million increase in personnel-related expenses due to higher variable compensation costs related to our improved performance and share-based compensation expense...

  • Page 139
    ... 31, 2014. During the fourth quarter of fiscal year 2013, we implemented a restructuring plan to align our organization to our strategic priorities of increasing focus on mobility products, improving profitability in PC-related products and enhancing global operational efficiencies. As part of this...

  • Page 140
    ..., 2014 and 2013 represents earnings, gains, and losses on trading investments related to a deferred compensation plan offered by one of our subsidiaries. Annual Report fiscal year 2015 The $2.3 million, $0.6 million and $3.6 million investment impairment charges in fiscal years 2015, 2014 and 2013...

  • Page 141
    ... 31, 2014. The increase in working capital over the prior year was primarily due to higher cash and inventory balances, partially offset by higher accounts payable balances at March 31, 2015. During fiscal year 2015, we generated $178.6 million cash from operating activities. Our main sources of...

  • Page 142
    ...,546) Annual Report fiscal year 2015 The following table presents selected financial information and statistics for fiscal years 2015, 2014 and 2013 (dollars in thousands): March 31, 2014 2015 2013 Accounts receivable, net ...Inventories ...Working capital ...Days sales in accounts receivable...

  • Page 143
    ... addition, we sold our two remaining available-for-sale securities for $0.9 million. The purchases and sales of trading investments during fiscal years 2015, 2014 and 2013 represent mutual fund activity directed by participants in a deferred compensation plan offered by one of our subsidiaries. The...

  • Page 144
    ... extent, capital markets and borrowings. Our future working capital requirements and capital expenditures may increase to support investment in product innovations and growth opportunities, or to acquire or invest in complementary businesses, products, services, and technologies. In March 2015, we...

  • Page 145
    ... based on business needs prior to delivery of goods or performance of services. Income Taxes Payable As of March 31, 2015, we had $72.1 million in non-current income taxes payable, including interest and penalties, related to our income tax liability for uncertain tax positions. At this time...

  • Page 146
    ... of our research and development activities, patents and licenses, please refer to Item 1, Business, in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission and posted to the Company's Investor Relations website. Annual Report fiscal year 2015 30

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    AddITIONAL fINANCIAL dISCLOSuRES Annual Report fiscal year 2015 31

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  • Page 149
    ... 2015, 2014 or 2013. Sales and Distribution We primarily sell our peripherals products to a network of distributors and retailers. We support these channels with third-party distribution centers located in North America, Europe and Asia Pacific. Some of these distribution centers perform product...

  • Page 150
    ...Office Depot and Target. In Europe, chains include Metro Group (Media-Saturn Group), Carrefour Group, Kesa Electricals, Fnac, and Dixons Stores Group PLC. In Asia Pacific, retail chains include Australia's Dick Smith Electronics Limited. Logitech products can also be purchased online either directly...

  • Page 151
    ...05 12.25 14.70 11.00 11.15 10.75 11.60 5.92 6.14 7.93 12.00 Annual Report fiscal year 2015 The following table sets forth certain historical share price information for the Company's shares traded on the Nasdaq Global Select Market. Nasdaq Global Select Market High Low Fiscal Year Ended March 31...

  • Page 152
    ... the time such dividend becomes due. Share Repurchases The following table presents certain information related to purchases made by Logitech of its equity securities under its publicly announced share buyback program (in thousands, except per share amounts): Weighted Average Price Per Share CHf uSd...

  • Page 153
    ... indicative of future stock price performance. Annual Report fiscal year 2015 Comparison of 5 year cumulative total return $300 $250 $200 $150 $100 $50 $2010 Logitech Logitech 2011 2012 2013 2014 2015 Nasdaq Composite Index Nasdaq Composite Index S&P 500 S&P 500 Index Information and Technology...

  • Page 154
    ... to be expected in the future. year ended March 31, 2014 2013 2012 (in thousands, except for per share amounts) 2015 2011 Consolidated statement of operations and cash flow data Net sales ...Cost of goods sold...Gross profit ...Operating expenses: Marketing and selling ...Research and development...

  • Page 155
    ... years 2014 and 2013 were related to restructuring plans we implemented in fiscal years 2014 and 2013. quANTITATIvE ANd quALITATIvE dISCLOSuRES ABOuT MARkET RISk Market Risk Market risk represents the potential for loss due to adverse changes in the fair value of financial instruments. As a global...

  • Page 156
    ... activities in the Consolidated Statements of Cash Flows. As of March 31, 2015 and 2014, the notional amounts of foreign exchange forward contracts outstanding related to forecasted inventory purchases were $43.5 million and $51.8 million, respectively. Deferred realized gains of $1.9 million...

  • Page 157
    ... in fair value. Cash flows from these contracts are classified as operating activities in the consolidated statements of cash flows. The notional amounts of foreign exchange forward and swap contracts outstanding as of March 31, 2015 and 2014 relating to foreign currency receivables or payables were...

  • Page 158
    ... priorities of increasing focus on a tighter range of products, expanding Cloud-based video conferencing services and improving profitability. The Company incurred $5.4 million of restructuring charges related to lease exit costs which pertains to the consolidation our Silicon Valley campus from...

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    REPORT ON CORPORATE GOvERNANCE 2015 Annual Report fiscal year 2015 43

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  • Page 161
    ... (Europe, Middle East, Africa) and Asia Pacific (including, among other countries, China, Taiwan, Japan 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...

  • Page 162
    ...executive officers and greater than 5% shareholders as of June 30, 2015, 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 Invitation, Proxy Statement and Annual Report for the 2015...

  • Page 163
    ... 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 Capital As of March 31, 2015, Logitech International S.A.'s nominal share capital was CHF...

  • Page 164
    ... As of March 31, 2015, 2014 and 2013, balances in shareholders' equity of Logitech International S.A., based on the parent company's Swiss Statutory Financial Statements, were as follows (in thousands): As of March 31, 2014 Annual Report fiscal year 2015 2015 2013 Share capital ...Legal reserves...

  • Page 165
    ...approved the 2014 share buyback program, which authorizes the Company to use up to $250.0 million to purchase its own shares. The Company's share buyback program is expected to remain in effect for a period of three years. Shares may be repurchased from time to time on the open market, through block...

  • Page 166
    ...the transfer. Refer to section 6.1 for the conditions for exercise of shareholders' voting rights. 2.7 Conversion and Option Rights Logitech does not have any outstanding bonds or other publicly traded securities with conversion rights and has not issued warrants on its shares. Annual Report fiscal...

  • Page 167
    ...units, including performance-based restricted stock units, to its employees and directors. Please refer to our Invitation and Proxy Statement for the 2015 Annual General Meeting, under the heading "Equity Compensation Plan Information" at pages 102 to 103, for details on option rights and restricted...

  • Page 168
    ... Logitech, Mr. Pilette served as Chief Financial Officer of Electronics for Imaging, Inc., a digital printing innovation and solutions company, from January 2011 through August 2013. From January 2009 through December 2010, he served as Vice President of Finance for the Enterprise Server, Storage...

  • Page 169
    ... to October 2005, and held a number of positions within the sales and marketing functions at Logitech from 1991 to 2001. Prior to rejoining Logitech in 2011, he was the Chief Executive Officer of SourceTag BV, a software company for unique tagging of cloud based data, from September 2010 to March...

  • Page 170
    ... Company or its subsidiaries. 5. Compensation, Shareholdings and Loans Please refer to Logitech's Compensation Report on pages 59 to 101 of our Invitation and Proxy Statement for the 2015 Annual General Meeting for information on Logitech's compensation of its Board members and executive officers...

  • Page 171
    ... the rights of shareholders outside Switzerland to hold or vote Logitech shares. The Company's Articles of Incorporation contain no rules on giving instructions to the independent proxy and no provisions on electronic participation in the general meeting. Annual Report fiscal year 2015 55

  • Page 172
    ... its 2015 Annual General Meeting, and combined it with its Annual Report required under Swiss law and U.S. law to create one convenient document for shareholders. Also, to encourage attendance, Logitech holds its Annual General Meeting close to its operations in Switzerland. 6.4 Shareholders' Right...

  • Page 173
    ... event of termination of service of an executive officer or a change-in-control of Logitech. 8. Auditors Annual Report fiscal year 2015 Under the Company's Articles of Incorporation, the shareholders elect the Company's independent auditors each year at the Annual General Meeting. Re-election is...

  • Page 174
    ... on Corporate Governance and other key financial and business information. The Invitation and Proxy Statement section of the document includes a description of the matters to be acted upon at the Annual General Meeting of shareholders, a Compensation Report on executive officer and Board member...

  • Page 175
    ... % Share Capital EuROPE Labtec Europe S.A...Logitech U.K. Limited ...Logitech (Jersey) Limited ...Logitech Espana BCN SL ...Logitech Europe S.A...SAS Logitech France ...Logitech GmbH ...Logitech Ireland Services Limited ...Logitech Italia SRL ...Logitech Mirial Srl ...Logitech Nordic AB ...Logitech...

  • Page 176
    ... % Share Capital 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 Asia Pacific Pte. Ltd...Logitech Singapore Pte. Ltd...Logitech Technology...

  • Page 177
    Annual Report fiscal year 2015 REMuNERATION REPORT 2015 61

  • Page 178
    ... the accompanying remuneration report dated June 5, 2015 of Logitech International S.A. for the year ended March 31, 2015. The audit was limited to the information according to articles 1416 of the Ordinance Against Excessive Compensation in Stock Exchange Listed Companies contained in sections...

  • Page 179
    ... General Meeting of Shareholders Other Matter The corresponding figures stated in the remuneration report of Logitech International S.A. for the year ended March 31, 2015 were formerly included in the consolidated financial statements of Logitech International S.A. for the year ended March 31, 2014...

  • Page 180
    ... and payment for travel days in connection with Board meetings. Non-employee directors also receive an annual restricted stock unit ("RSU") grant based on a fixed market value. These grants vest based on approximately one year of Board service. The following tables set forth compensation Logitech...

  • Page 181
    ..., Logitech's President and Chief Executive Officer, who is also a member of the Board. Mr. Darrell's compensation is included as part of Total Group Management Team. 10) Fiscal year 2014 U.S. Dollar amounts converted to Swiss Francs using the 12 month average (April 2013 to March 2014) exchange rate...

  • Page 182
    ... members of the Group Management Team for services performed in the fiscal years ended March 31, 2015 and 2014: 3.2. Compensation of Group Management Team in Fiscal Years 2015 and 2014 fiscal year 2015 (in CHf)(1) Base Salary Bonus(2) Stock Awards(3) Other Compensation(4) Total Annual Report fiscal...

  • Page 183
    ... closely related to members of the Board of Directors or Group Management Team. No additional fees or compensation have been paid during fiscal years 2015 and 2014 to any current or former members of the Board of Directors or Group Management Team other than as noted above. Annual Report fiscal...

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    LOGITECH INTERNATIONAL S.A. CONSOLIdATEd fINANCIAL STATEMENTS Annual Report fiscal year 2015 INdEx TO CONSOLIdATEd fINANCIAL STATEMENTS Page Report of Independent Auditors ...70 Consolidated Statements of Operations-Years Ended March 31, 2015, 2014 and 2013 ...Consolidated Statements of ...

  • Page 186
    KPMG AG Audit Badenerstrasse 172 CH-8004 Zurich P.O. Box 1872 CH-8026 Zurich Telephone +41 58 249 31 31 Fax +41 58 249 44 06 Internet www.kpmg.ch Report of the Statutory Auditor to the General Meeting of Shareholders of Logitech International S.A., Apples Report of the Statutory Auditor on the ...

  • Page 187
    Logitech International S.A., Apples Report of the Statutory Auditor on the Consolidated Financial Statements to the General Meeting of Shareholders Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of ...

  • Page 188
    LOGITECH INTERNATIONAL S.A. CONSOLIdATEd STATEMENTS Of OPERATIONS (In thousands, except per share amounts) years Ended March 31, 2015 2014 2013 Net sales ...Cost of goods sold ...Gross profit ...Operating expenses: Marketing and selling ...Research and development ...General and administrative ......

  • Page 189
    LOGITECH INTERNATIONAL S.A. CONSOLIdATEd STATEMENTS Of COMPREHENSIvE INCOME (LOSS) (In thousands) years Ended March 31, 2015 2014 2013...3,633 Annual Report fiscal year 2015 (1,190) 1,756 - (27,435) $(18,152) - 9,327 $83,631 (343) 1,348 $(226,170) The accompanying notes are an integral part of ...

  • Page 190
    ... payable ...Other non-current liabilities ...Total liabilities ...Commitments and contingencies (Note 11) Shareholders' equity: Registered shares, CHF 0.25 par value: ...Issued and authorized shares-173,106 at March 31, 2015 and 2014 Conditionally authorized shares-50,000 at March 31, 2015 and 2014...

  • Page 191
    ...of ESPP awards ...Proceeds from sales of shares upon exercise of options and purchase rights ...Tax withholdings related to net share settlements of restricted stock units ...Excess tax benefits from share-based compensation ...Net cash used in financing activities ...Effect of exchange rate changes...

  • Page 192
    ...March 31, 2013 ...Total comprehensive income ...Tax effects from share-based awards...Sale of shares upon exercise of options and purchase rights ...Issuance of shares upon vesting of restricted stock units...Share-based compensation expense ...Cash dividends ...March 31, 2014 ...Total comprehensive...

  • Page 193
    ... 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 SIX Swiss Exchange under the trading symbol LOGN and the Nasdaq Global Select Market...

  • Page 194
    ... with software essential to the functionality of the hardware device delivered at time of sale • Maintenance for hardware with essential software, including future when-and-if-available unspecified upgrades • Other services, including training and installation Annual Report fiscal year 2015...

  • Page 195
    ... programs in any accounting period. The Company grants limited rights to return products. Return rights vary by customer, and range from just the right to return defective product to stock rotation rights limited to a percentage of sales approved by management. Estimates of expected future product...

  • Page 196
    ... expected future product returns. The Company enters into cooperative marketing arrangements with many of its distribution 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...

  • Page 197
    ...the Company to direct or indirect customers must have an identifiable benefit and an estimable fair value in order to be classified as an operating expense. If these criteria are not met, the cost is classified as a reduction of revenue. Advertising costs during fiscal years 2015, 2014 and 2013 were...

  • Page 198
    ... Company has designated these marketable securities as trading investments, although there is no intent to actively buy and sell securities within the objective of generating profits on short-term differences in market prices. These securities are recorded at fair value based on quoted market prices...

  • Page 199
    ..., other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation. Determining the number of reporting units and the fair value of a reporting unit requires the Company to make judgments and involves the use of...

  • Page 200
    ... fair value is estimated using an income approach employing a discounted cash flow ("DCF") and a market-based model. The DCF model is based on projected cash flows from the Company's most recent forecast ("assessment forecast") developed in connection with each of its reporting units to perform the...

  • Page 201
    ...The grant date fair value of time-based and performance-based RSUs is calculated based on the market price on the date of grant, adjusted by estimated dividends yield prior to vesting. Excess tax benefits resulting from share-based awards are classified as cash flows from financing activities in the...

  • Page 202
    .... Treasury Shares The Company periodically repurchases shares in the market at fair value. Treasury shares repurchased are recorded at cost as a reduction of total shareholders' equity. Treasury shares held may be reissued to satisfy the exercise of employee stock options and purchase rights, the...

  • Page 203
    ... fair value and assumed tax benefits upon exercise of these options and ESPP or vesting of RSUs were greater than the average market price of the Company's shares, and therefore their inclusion would have been anti-dilutive. Note 4-Employee Benefit Plans Employee Share Purchase Plans and Stock...

  • Page 204
    ... 2015 Stock options and ESPP ...Premium-priced stock options ...Time-based RSUs ...Market-based and performance-based RSUs ... $ 1,509 224 23,545 6,383 $31,661 7 12 21 23 Under the 1996 ESPP and 2006 ESPP plans, eligible employees may purchase shares at the lower of 85% of the fair market value...

  • Page 205
    ...market stock performance criteria, based on individual written employment offer letter. The 2012 Plan has an expiration date of March 28, 2022. Premium-priced stock options granted under the 2012 Plan vest in full if and only when Logitech's average closing share price, over a consecutive ninety-day...

  • Page 206
    ...those awards that are expected to vest. A summary of the Company's stock option activities under all stock plans for fiscal years 2015, 2014 and 2013 is as follows: WeightedAverage Exercise Price WeightedAverage Remaining Contractual Term (years) Annual Report fiscal year 2015 Number of Shares (In...

  • Page 207
    ... A summary of the Company's time-based, market-based, and performance-based RSU activities for fiscal years 2015, 2014 and 2013 is as follows (in thousands, except per share values; grant-date fair values are weighted averages): WeightedAverage Grant date fair value WeightedAverage Remaining vesting...

  • Page 208
    ...of the defined benefit pension plans and the non-retirement post-employment benefit obligations for fiscal years 2015, 2014 and 2013 was as follows (in thousands): years Ended March 31, 2014 2013 Annual Report fiscal year 2015 2015 Service costs ...Interest costs ...Expected return on plan assets...

  • Page 209
    ... also governed by applicable governmental regulatory agencies. The Company's investment strategy with respect to its largest defined benefit plan, which is available only to Swiss employees, is to invest in the following allocation ranges starting from January 2014: 20-55% for equities, 25-60% for...

  • Page 210
    ... for cash and cash equivalents. The Company's other defined benefit plans, which comprise 7.2% of total defined benefit plan assets as of March 31, 2015, have similar investment and allocation strategies. The following tables present the fair value of the defined benefit pension plan assets by major...

  • Page 211
    ...were as follows: years Ended March 31, 2015 2014 Annual Report fiscal year 2015 Benefit Obligations: Discount rate ...Estimated rate of compensation increase ...Periodic Costs: Discount rate ...Estimated rate of compensation increase ...Expected average rate of return on plan assets ... 0.75%-7.75...

  • Page 212
    ... as trading investments and were recorded at a fair value of $17.2 million and $16.6 million as of March 31, 2015 and 2014, respectively, based on quoted market prices. The Company also had $17.2 million and $16.6 million deferred compensation liability as of March 31, 2015 and 2014, respectively...

  • Page 213
    ... March 31, 2014 2013 Annual Report fiscal year 2015 2015 Expected tax provision (benefit) at statutory income tax rates ...Income taxes at different rates...Research and development tax credits ...Foreign tax credits ...Executive compensation ...Stock-based compensation ...Valuation allowance...

  • Page 214
    ...436) (8,436) $77,592 Annual Report fiscal year 2015 Management regularly assesses the ability to realize deferred tax assets recorded in the Company's entities based upon the weight of available evidence, including such factors as recent earnings history and expected future taxable income. In the...

  • Page 215
    ... effective in the first quarter of fiscal year 2015, the Company reclassified $10.3 million of unrecognized tax benefits previously presented as non-current income taxes payable to a reduction in non-current deferred tax assets primarily for tax credit carryforwards. Annual Report fiscal year 2015...

  • Page 216
    ... of March 31, 2015, 2014 and 2013, the Company had $4.9 million, $5.6 million and $6.6 million of accrued interest and penalties related to uncertain tax positions, respectively. The Company files Swiss and foreign tax returns. The Company received final tax assessments in Switzerland through fiscal...

  • Page 217
    ...for doubtful accounts ...Allowance for sales returns ...Allowance for cooperative marketing arrangements...Allowance for customer incentive programs ...Allowance for pricing programs...Inventories: Raw materials ...Work-in-process ...Finished goods ...Other current assets: Income tax and value-added...

  • Page 218
    ... 31, 2015 2014 Accrued and other current liabilities: Accrued personnel expenses ...Indirect customer incentive programs ...Accrued restructuring ...Deferred revenue ...Accrued freight and duty ...Value-added taxes payable...Accrued royalties...Warranty accrual ...Employee benefit plan obligation...

  • Page 219
    ... within the fair value hierarchy (in thousands): March 31, 2015 Level 1 Level 2 March 31, 2014 Level 1 Level 2 Annual Report fiscal year 2015 Cash equivalents: Cash equivalents...Trading investments for deferred compensation plan: Money market funds ...Mutual funds ...Foreign exchange derivative...

  • Page 220
    ...presents the fair values of the Company's derivative instruments as of March 31, 2015 and 2014 (in thousands): derivatives Asset Liability March 31, March 31, 2015 2014 2015 2014 Designated as hedging instruments: Cash flow hedges ...Not designated as hedging instruments: Foreign exchange contracts...

  • Page 221
    ... fair value. The notional amounts of foreign exchange forward and swap contracts outstanding as of March 31, 2015 and 2014 relating to foreign currency receivables or payables were $61.7 million and $53.7 million, respectively. Open forward and swap contracts as of March 31, 2015 and 2014 consisted...

  • Page 222
    ... versus on-premise infrastructure solutions and resource realignment, which was not anticipated during annual impairment assessment as of December 31, 2014. This quick shift towards Cloud-based offering resulted in the change in business strategy to de-emphasize Lifesize's legacy offerings more...

  • Page 223
    ...'s updated business outlook for fiscal year 2016 and onwards based on the factors discussed above, and the risk of execution of its refocused strategy, the Company updated the future cash flow assumptions for the video conferencing reporting unit and calculated updated estimates of fair value using...

  • Page 224
    ... with lower demand related to new product launches, increased competition during fiscal year 2013, and other market data. These factors had an adverse effect on the Company's video conferencing operating results and future outlook. During fiscal year 2013, the Company recorded goodwill impairment...

  • Page 225
    .... At the time of sale, the Company accrues a warranty liability for estimated costs to provide products, parts or services to repair or replace products in satisfaction of the warranty obligation. The Company's estimate of costs to fulfill its warranty obligations is based on historical experience...

  • Page 226
    ... for sale. Annual Report fiscal year 2015 Deferred Services Revenue The Company's video conferencing reporting unit offers maintenance contracts with the sale of a majority of its products which allow customers to receive service and support extended beyond the expiration of the product warranty...

  • Page 227
    ...Enforcement Division, relating to certain issues including the accounting for Revue inventory valuation reserves that resulted in the restatement described in the Fiscal Year 2014 Annual Report on Form 10-K, revision to the Company's consolidated financial statements concerning warranty accruals and...

  • Page 228
    ... its shares issued and outstanding from 191.6 million to 173.1 million. Dividends Pursuant 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 444.9 million...

  • Page 229
    ...approved the 2014 share buyback program, which authorizes the Company to use up to $250.0 million to purchase its own shares. The Company's share buyback program is expected to remain in effect for a period of three years. Shares may be repurchased from time to time on the open market, through block...

  • Page 230
    ... and services to support these products. The Company's reporting segments do not record revenue on sales between segments. Operating performance measures for the peripherals segment and the video conferencing segment are reported separately to Logitech's Chief Executive Officer ("CEO"), who...

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    ... March 31, 2014 2015 2013 Peripherals: Mobile Speakers ...Gaming ...Video Collaboration...Tablet & Other Accessories...Growth...Pointing Devices ...Keyboards & Combos ...Audio-PC & Wearables ...PC Webcams ...Home Control ...Profit Maximization ...Retail Strategic Sales(1)...Non-Strategic ...OEM...

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    ...long-lived assets information, primarily fixed assets, are reported below based on the location of the asset (in thousands): March 31, 2015 2014 Americas ...EMEA ...Asia Pacific ... $48,527 3,584 39,482 $91,593 $45,166 5,154 38,071 $88,391 Long-lived assets in the United States and China were $48...

  • Page 233
    ... million in fiscal years 2015, 2014, and 2013. Security Ownership of Board Members and Executive Officers In accordance with the Swiss Code of Obligations, the security ownership of members of the Board of Directors of Logitech International S.A. and Logitech executive officers are presented in the...

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    LOGITECH INTERNATIONAL S.A., APPLES SWISS STATuTORy fINANCIAL STATEMENTS Annual Report fiscal year 2015 TABLE Of CONTENTS Page Report of the Statutory Auditor ...Swiss Statutory Balance Sheets (unconsolidated) ...Swiss Statutory Statements of Income (unconsolidated) ...Notes to Swiss Statutory ...

  • Page 236
    ... Audit Badenerstrasse 172 CH-8004 Zurich P.O. Box 1872 CH-8026 Zurich Telephone +41 58 249 31 31 Fax +41 58 249 44 06 Internet www.kpmg.ch Report of the Statutory Auditor to the General Meeting of Shareholders of Logitech International S.A., Apples Report of the Statutory Auditor on the financial...

  • Page 237
    Logitech International S.A., Apples Report of the Statutory Auditor on the Financial Statements to the General Meeting of Shareholders Report on Other Legal Requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article...

  • Page 238
    ... CHF1,208,712 507,968 222,152 104,807 (16,927) 818,000 CHF1,057,245 Annual Report fiscal year 2015 LIABILITIES ANd SHAREHOLdERS' EquITy Current liabilities: Payables to group companies ...CHF 7,225 Accruals and other liabilities ...7,961 Total current liabilities ...15,186 Long-term liabilities...

  • Page 239
    ... to group companies ...Income, capital and non-recoverable withholding taxes ...Loss/(Gain) on treasury shares ...Loss on long-term investments ...Loss/(Gain) on foreign currency exchange ...(Gain)/Loss on liquidation of investments ...Other expenses ...Total expenses ...Net income ... CHF 42,181...

  • Page 240
    ... 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 SIX Swiss Exchange under the trading symbol LOGN and the Nasdaq Global Select Market...

  • Page 241
    ... (31,043) CHF 75,299 Annual Report fiscal year 2015 In March 2014, the Company's Board of Directors approved the 2014 share buyback program, which authorizes the Company to use up to $250.0 million to purchase its own shares. The Company's share buyback program is expected to remain in effect for...

  • Page 242
    ...Fund Management (Switzerland) AG is based on a notification filed with the SIX Exchange Regulation on October 7, 2014. The number of shares held by Credit Suisse Funds AG is based on a notification filed with the SIX Exchange Regulation on April 2, 2015. The Swiss Federal Act on Stock Exchanges and...

  • Page 243
    ... 2023 $7.83 - $30.09 2016 - 2023 Each option provides the right to purchase one share at the exercise price. For executive officers (including members of the Group Management Team and Mr. Guerrino De Luca), the options became exercisable over four years in equal annual installments from the date of...

  • Page 244
    ...date or upon meeting certain minimum share price performance criteria. Premium-priced stock options granted under the Company's 2012 Stock Inducement Equity Plan vested or vest if and only when Logitech's average closing share price, over a consecutive ninety-day trading period, meets or exceeds the...

  • Page 245
    ... $7.83 2013 $7.83 - $30.09 2016 - 2023 Each option provides the right to purchase one share at the exercise price. For executive officers (including members of the Group Management Team and Mr. Guerrino De Luca), the options became exercisable over four years in equal annual installments from the...

  • Page 246
    ...President and Chief Executive Officer, is also a member of the Board of Directors. Mr. Erik Bardman resigned as an executive officer of the Company in April 2013. (3) (4) (5) Annual Report fiscal year 2015 (6) (7) (8) (9) Note 10 - Risk Assessment: At a company-wide level, Logitech's internal...

  • Page 247
    ... based on 164,481,799 shares outstanding, net of treasury shares, as of March 31, 2015. Subject to the maximum gross aggregate dividend, the proposed dividends in Swiss Francs presented at Logitech's 2015 Annual General Meeting will be based on USD 85,000,000 and the currency exchange rate effective...

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