LOGITECH INTERNATIONAL SA - Shareholder.com
LOGITECH INTERNATIONAL SA - Shareholder.com
LOGITECH INTERNATIONAL SA - Shareholder.com
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Table of Contents<br />
Impairment of Long-Lived Assets<br />
<strong>LOGITECH</strong> <strong>INTERNATIONAL</strong> S.A.<br />
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)<br />
The Company reviews long-lived assets, such as investments, property and equipment, and intangible assets, for impairment whenever<br />
events indicate that the carrying amounts might not be recoverable. Recoverability of investments, property and equipment, and other<br />
intangible assets is measured by <strong>com</strong>paring the projected undiscounted net cash flows associated with those assets to their carrying values. If an<br />
asset is considered impaired, it is written down to fair value, which is determined based on the asset’s projected discounted cash flows or<br />
appraised value, depending on the nature of the asset. Goodwill is evaluated for impairment at least annually.<br />
In<strong>com</strong>e Taxes<br />
The Company provides for in<strong>com</strong>e taxes using the liability method, which requires that deferred tax assets and liabilities be recognized<br />
for the expected future tax consequences of temporary differences resulting from differing treatment of items for tax and accounting purposes.<br />
In estimating future tax consequences, expected future events are taken into consideration, with the exception of potential tax law or tax rate<br />
changes.<br />
Fair Value of Financial Instruments<br />
The carrying value of certain of the Company’s financial instruments, including cash, cash equivalents, short-term investments, accounts<br />
receivable, accounts payable, short-term debt and current maturities of long-term debt approximates fair value due to their short maturities. The<br />
estimated fair value of publicly traded financial equity instruments are determined by quoted market prices.<br />
Net In<strong>com</strong>e per Share<br />
Basic net in<strong>com</strong>e per share is <strong>com</strong>puted by dividing net in<strong>com</strong>e by the weighted average outstanding shares. Diluted net in<strong>com</strong>e per share<br />
is <strong>com</strong>puted using the weighted average outstanding shares and dilutive share equivalents. Dilutive share equivalents consist of employee stock<br />
options and convertible debt.<br />
The dilutive effect of in-the-money stock options is calculated based on the average share price for each fiscal period using the treasury<br />
stock method, which assumes that the amount used to repurchase shares includes the amount the employee must pay for exercising stock<br />
options, the amount of <strong>com</strong>pensation cost not yet recognized for future service, and the amount of tax benefits that would be recorded in<br />
additional paid-in capital when the award be<strong>com</strong>es deductible. The dilutive effect of convertible debt is based upon conversion, <strong>com</strong>puted<br />
using the if-converted method.<br />
Share-Based Compensation Expense<br />
The Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123 (revised 2004),<br />
“Share-Based Payments” (“SFAS 123R”), effective April 1, 2006, using the modified prospective transition method. Therefore, results for<br />
periods prior to April 1, 2006 have not been restated to include share-based <strong>com</strong>pensation expense calculated in accordance with SFAS 123R.<br />
The Company recognized share-based <strong>com</strong>pensation expense in those periods in accordance with Accounting Principles Board Opinion No. 25,<br />
“Accounting for Stock Issued to Employees” (“APB 25”). In March 2005, the Securities and Exchange Commission (“SEC”) issued Staff<br />
Accounting Bulletin No. 107 (“<strong>SA</strong>B 107”) regarding the SEC’s interpretation of SFAS 123R and the valuation of share-based payments for<br />
public <strong>com</strong>panies. Logitech has applied the provisions of <strong>SA</strong>B 107 in its adoption of SFAS 123R.<br />
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