Logitech 2015 Annual Report Download - page 202

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the total change in shareholders’ equity during the
period other than from transactions with shareholders. Comprehensive income (loss) consists of net
income (loss) and other comprehensive income (loss). Other comprehensive income (loss) is comprised
of currency translation adjustments from those entities not using the U.S. Dollar as their functional
currency, unrealized gains and losses on marketable equity securities, net deferred gains and losses and
prior service costs and credits for defined benefit pension plans, and net deferred gains and losses on
hedging activity.
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 vesting of
restricted stock units, and acquisitions, or may be cancelled with shareholder approval. Treasury shares
that are reissued are accounted for using the first-in, first-out basis.
Derivative Financial Instruments
The Company enters into foreign exchange forward contracts to reduce the short-term effects of
currency fluctuations on certain foreign currency receivables or payables and to hedge against exposure
to changes in currency exchange rates related to its subsidiaries’ forecasted inventory purchases. These
forward contracts generally mature within four months.
Gains and losses for changes in the fair value of the effective portion of the Company’s forward
contracts related to forecasted inventory purchases are deferred as a component of accumulated other
comprehensive income (loss) until the hedged inventory purchases are sold, at which time the gains or
losses are reclassified to cost of goods sold. Gains or losses for changes in the fair value on forward
contracts that offset translation losses or gains on foreign currency receivables or payables are recognized
are included in other income (expense), net.
Restructuring Charges
The Company’s restructuring charges consist of employee severance, one-time termination benefits
and ongoing benefits related to the reduction of its workforce, lease exit costs, and other costs. Liabilities
for costs associated with a restructuring activity are measured at fair value and are recognized when
the liability is incurred, as opposed to when management commits to a restructuring plan. One-time
termination benefits are expensed at the date the entity notifies the employee, unless the employee
must provide future service, in which case the benefits are expensed ratably over the future service
period. Ongoing benefits are expensed when restructuring activities are probable and the benefit
amounts are estimable. Costs to terminate a lease before the end of its term are recognized when the
property is vacated. Other costs primarily consist of legal, consulting, and other costs related to employee
terminations are expensed when incurred. Termination benefits are calculated based on regional benefit
practices and local statutory requirements.
Note 2—Summary of Significant Accounting Policies (Continued)
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Annual Report Fiscal Year 2015