LOGITECH INTERNATIONAL SA - Shareholder.com

Table of Contents
Foreign Currencies
LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The functional currency of the Company’s operations is primarily the U.S. dollar. To a lesser extent, certain operations use the Euro,
Swiss franc and Japanese yen as their functional currencies. The financial statements of the Company’s subsidiaries whose functional currency
is other than the U.S. dollar are translated to U.S. dollars using period-end rates of exchange for assets and liabilities and monthly average rates
for revenues and expenses. Cumulative translation gains and losses are included as a component of shareholders’ equity in accumulated other
comprehensive loss. Gains and losses arising from transactions denominated in currencies other than a subsidiary’s functional currency are
reported in other income, net in the statement of income.
Revenue Recognition
Revenues are recognized when all of the following criteria are met:
• evidence of an arrangement exists between the Company and the customer;
• delivery has occurred and title and risk of loss transfer to the customer;
• the price of the product is fixed or determinable; and
• collectibility of the receivable is reasonably assured.
Revenues from sales to distributors and authorized resellers are recognized net of estimated product returns and expected payments for
cooperative marketing arrangements, customer incentive programs and price protection. Significant management judgments and estimates must
be used to determine the cost of these programs in any accounting period.
The Company grants limited rights to return product, and return rights vary by customer. Estimates of expected future product returns are
recognized as a reduction of revenue at the time of sale, based on analyses of historical trends by customer and by product, distributor and
retailer inventory levels, and other factors.
Cooperative marketing arrangements include contractual customer marketing and sales incentive programs. Under the customer
marketing programs, the Company generally offers customers an allowance for marketing activities equal to a negotiated percentage of sales.
Other sales incentive programs include various fixed discount and rebate programs. The costs of cooperative marketing arrangements are
recognized as a reduction of the sale price at the time of sale and are estimated based on the negotiated fixed percentage of the customer’s
purchases in the period the Company recognizes revenue. Accruals for sales incentive programs are recorded at the time of sale based on
negotiated terms, historical experience and inventory levels in the channel.
Customer incentive programs include volume and consumer rebates. Volume rebates are related to purchase volumes or sales of specific
products by distributors to specified retailers. Consumer rebates are offered from time to time at the Company’s discretion directly to endusers.
Contractual volume rebates to distribution or retail customers are recognized as a reduction of the sale price at the time of shipment, and
are estimated based on the negotiated terms and the Company’s historical experience. The costs of consumer rebates are recorded at the time
the incentive is offered and are estimated based on historical experience and the specific terms and conditions of the incentive.
The Company has contractual agreements with certain of its customers that contain terms allowing price protection credits to be issued
for customers’ on-hand or in transit new inventory if the Company, in its sole discretion, lowers the price of the product. The estimated costs of
price protection programs are recorded as a reduction of revenue at the time of sale based on planned price reductions, units held by qualifying
customers and historical trends by customer and by product.
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