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Discontinued Operations
 12 Months Ended
Mar. 31, 2017
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued operations
Discontinued Operations

During the third quarter of fiscal year 2016, the Company's Board of Directors approved a plan to divest the Lifesize video conferencing business. On December 28, 2015 during the fourth quarter of fiscal year 2016, the Company, and Lifesize, Inc., a wholly owned subsidiary of the Company (“Lifesize”) which held the assets of the Company’s video conferencing reportable segment, entered into a stock purchase agreement (the “Stock Purchase Agreement”) with entities affiliated with three venture capital investment firms (the "Venture Investors"). Pursuant to the terms of the Stock Purchase Agreement, the Company sold 2.5 million shares of Series B Preferred Stock of Lifesize to the Venture Investors for cash proceeds of $2.5 million and retained 12 million non-voting shares of Series A Preferred Stock of Lifesize. The shares of Series A Preferred Stock of Lifesize retained by the Company represent 37.5% of the shares outstanding immediately after the closing of the transactions contemplated by the Stock Purchase Agreement (the “Closing”). Lifesize also issued 17.5 million shares of Series B Preferred Stock to the Venture Investors for cash proceeds of $17.5 million. The shares of Series B Preferred Stock held by the Venture Investors represent 62.5% of the shares outstanding immediately after the Closing. In addition, Lifesize has reserved 8 million shares of common stock for issuance pursuant to a stock plan to be adopted by Lifesize following the Closing, none of which are issued or outstanding at the Closing. The Company substantially completed its transition services for Lifesize during the third quarter of fiscal year 2017.

The Company has classified the historical results of its Lifesize video conferencing business as discontinued operations in its consolidated statements of operations since the disposition of the Lifesize video conferencing business represents a strategic shift that has a major effect on the Company's operations and financial results. Evaluating whether the disposal of the business represents a strategic shift requires the Company's judgment. Also, evaluating whether the strategic shift will have a "major effect" on the Company's operations and financial results requires assessing not only quantitative factors but also the magnitude of qualitative factors.

The retained Series A Preferred Stock gives the Company no voting rights or any other significant influence over the disposed Lifesize video conferencing business, and therefore is accounted for as a cost method investment which was initially recognized at fair value of $5.6 million at the date of disposition of Lifesize Video Conferencing business. The fair value was determined by using the option pricing methodology with reference to the price of Lifesize’s Series B Preferred Stock paid by Venture Investors. The fair value of the Company’s investment in Series A Preferred Stock is classified as Level 3 as the application of the option pricing methodology requires the use of significant unobservable inputs including asset volatility of 50%, expected term to exit of three years, and lack of marketability discount of 27%.
 
Discontinued operations include results of the Lifesize video conferencing business. Discontinued operations also include other costs incurred by Logitech to effect the divestiture of the Lifesize video conferencing business. These costs include transaction charges, advisory and consulting fees and restructuring cost related to the Lifesize video conferencing business.

The following table presents financial results of the video conferencing classified as discontinued operations (in thousands):

 
 
Years Ended March 31,
 
 
2016
 
2015
Net sales
 
$
65,554

 
$
109,039

Cost of goods sold
 
24,951

 
40,299

Gross profit
 
40,603

 
68,740

Operating expenses:
 


 


Marketing and selling
 
32,260

 
56,856

Research and development
 
16,526

 
22,706

General and administrative
 
5,254

 
5,439

Impairment of goodwill (1)
 
—

 
122,734

Restructuring charges (credits), net
 
7,900

 
(111
)
Operating expenses
 
61,940

 
207,624

Operating loss from discontinued operations
 
(21,337
)
 
(138,884
)
Interest and other expense, net
 
205

 
426

Gain on disposal of discontinued operations
 
13,684

 
—

Loss from discontinued operations before income taxes
 
(7,858
)
 
(139,310
)
Provision for (benefit from) income taxes
 
1,187

 
(164
)
Net loss from discontinued operations
 
$
(9,045
)
 
$
(139,146
)

(1) The Company recognized $122.7 million impairment of goodwill in its discontinued operations as result of its impairment analysis as of March 31, 2015. Refer to the Company's Annual Report on Form 10-K for fiscal year 2015.

The Company recognized a gain on its divestiture of Lifesize video conferencing business as follows (in thousands):
 
 
Year Ended
 
 
March 31, 2016
Proceeds received from disposition of discontinued operations
 
$
2,500

Fair value of retained cost method investment as a result of divestiture of discontinued operations
 
5,591

Net liabilities of discontinued operations disposed
 
9,981

Currency translation loss released due to disposition of discontinued operations (1)
 
(3,913
)
Transaction related costs
 
(475
)
Gain on disposal of discontinued operations (2)
 
$
13,684

(1) Currency translation loss recognized as a result of substantial liquidation of a subsidiary using non-USD functional currency, which is part of discontinued operations

(2) Gain on disposal of discontinued operation was included in loss from discontinued operations, net of income taxes, in the Company's consolidated statement of operations