What changed in this filing

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Item 1. Financial Statements

2021-01-21 compared with 2020-10-22 · 199 added, 175 removed, 382 unchanged (49% of the section changed)

4 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

September 30,

December 31, Nine Months Ended

2020 2019 2020 2019

Net sales $ 1,667,302 $ 902,687 $ 3,716,354 $ 2,266,603

Cost of goods sold 914,851 564,283 2,082,088 1,410,605

Amortization of intangible assets and purchase accounting effect on inventory

Amortization of intangible assets 3,441 3,951 9,800 10,493

Gross profit 749,010 334,453 1,624,466 845,505

Operating expenses:

8 unchanged sentences

Interest income 311 2,063 1,444 7,006

Other income (expense), net

Other income, net 6,483 1,101 9,661 2,852

Income before income taxes 454,857 131,992 864,148 254,208

Provision for (benefit from) income taxes

Provision for income taxes 72,334 14,467 142,638 18,405

Net income $ 382,523 $ 117,525 $ 721,510 $ 235,803

Net income per share:

Basic $ 2.26 $ 0.70 $ 4.28 $ 1.41

Diluted $ 2.22 $ 0.69 $ 4.21 $ 1.39

Weighted average shares used to compute net income per share:

Basic 169,050 167,063 168,448 166,678

Diluted 172,587 169,685 171,378 169,173

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

September 30,

December 31, Nine Months Ended

2020 2019 2020 2019

Net income $ 382,523 $ 117,525 $ 721,510 $ 235,803

Other comprehensive income (loss):

Currency translation gain (loss), net of taxes 19,500 1,736 23,944 ( 2,639 )

Reclassification of currency translation gain included in other income (expense), net

Reclassification of currency translation loss included in other income, net — — ( 1,738 ) —

Defined benefit plans:

Net gain (loss) and prior service costs, net of taxes

Amortization included in other income (expense), net

Net loss and prior service costs, net of taxes ( 863 ) ( 231 ) ( 319 ) ( 274 )

Amortization included in other income, net 178 53 523 160

Hedging gain (loss):

7 unchanged sentences

(In thousands, except per share amounts)

September 30, 2020

March 31, 2020

December 31, 2020 March 31, 2020

Current assets:

1 unchanged sentence

Accounts receivable, net 894,937 394,743

Inventories 476,802 229,249

Other current assets 117,741 74,920

2 unchanged sentences

Property, plant and equipment, net 96,683 76,119

Goodwill 400,993 400,917

Other intangible assets, net 103,314 126,941

333,733 345,019

Total assets $ 3,812,946 $ 2,363,474

Liabilities and Shareholders’ Equity

6 unchanged sentences

Other non-current liabilities

134,021 119,274

Total liabilities 1,711,179 874,206

2 unchanged sentences

Registered shares, CHF 0.25 par value:

Issued shares — 173,106 at September 30 and March 31, 2020

Additional shares that may be issued out of conditional capitals — 50,000 at September 30 and March 31, 2020

Additional shares that may be issued out of authorized capital — 17,311 at September 30 and 34,621 at March 31, 2020

30,148 30,148

Issued shares — 173,106 at December 31 and March 31, 2020

Additional shares that may be issued out of conditional capitals — 50,000 at December 31 and March 31, 2020

Additional shares that may be issued out of authorized capital — 17,311 at December 31 and 34,621 at March 31, 2020

Additional paid-in capital 108,140 75,097

Shares in treasury, at cost — 4,357 at September 30, 2020 and 6,210 at March 31, 2020

Shares in treasury, at cost — 4,243 at December 31, 2020 and 6,210 at March 31, 2020

( 198,435 ) ( 185,896 )

Retained earnings 2,264,831 1,690,579

6 unchanged sentences

(In thousands)

Six Months Ended

September 30,

Nine Months Ended

Cash flows from operating activities:

Net income $ 721,510 $ 235,803

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 36,010 32,154

Amortization of intangible assets 23,627 21,958

3 unchanged sentences

Change in fair value of contingent consideration for business acquisition 5,716 —

Other ( 1,670 ) ( 1,012 )

Changes in assets and liabilities, net of acquisitions:

Accounts receivable, net ( 476,804 ) ( 147,292 )

Inventories ( 239,378 ) ( 15,170 )

Other assets ( 53,281 ) 2,866

Accounts payable 541,024 155,190

5 unchanged sentences

Acquisitions, net of cash acquired ( 360 ) ( 91,569 )

Proceeds from the sale of property, plant and equipment — 1,037

Proceeds from return of strategic investments 2,934 —

Purchases of trading investments ( 10,672 ) ( 3,071 )

8 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 10,408 ( 2,320 )

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents 673,177 51,530

Cash and cash equivalents, beginning of the period 715,566 604,516

1 unchanged sentence

Supplementary Cash Flow Disclosures:

Non-cash investing activities:

Non-cash investing and financing activities:

Property, plant and equipment purchased during the period and included in period end liability accounts $ 14,663 $ 4,871

Non-cash contingent consideration for acquisition $ 28,463 $ —

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months ended September 30, 2019

Additional Paid-in Capital

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Registered Shares

Treasury Shares

Retained Earnings

June 30, 2019

Three Months Ended December 31, 2019

Additional Paid-in Capital Accumulated Other Comprehensive Loss Total Shareholders’ Equity

Registered Shares Treasury Shares Retained Earnings

Shares Amount Shares Amount

September 30, 2019 173,106 $ 30,148 $ 50,913 6,203 $ ( 163,728 ) $ 1,359,134 $ ( 108,930 ) $ 1,167,537

Total comprehensive income — — — — — 117,525 ( 562 ) 116,963

2 unchanged sentences

Share-based compensation — — 13,841 — — — — 13,841

Cash dividends ($0.74 per share)

September 30, 2019

Six Months ended September 30, 2019

Additional Paid-in Capital

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Registered Shares

Treasury Shares

Retained Earnings

December 31, 2019 173,106 $ 30,148 $ 59,668 5,901 $ ( 159,190 ) $ 1,476,659 $ ( 109,492 ) $ 1,297,793

Nine Months Ended December 31, 2019

Additional Paid-in Capital Accumulated Other Comprehensive Loss Total Shareholders’ Equity

Registered Shares Treasury Shares Retained Earnings

Shares Amount Shares Amount

March 31, 2019 173,106 $ 30,148 $ 56,655 7,244 $ ( 169,802 ) $ 1,365,036 $ ( 105,698 ) $ 1,176,339

5 unchanged sentences

Cash dividends ($ 0.74 per share)

— — — — — ( 124,180 ) — ( 124,180 )

December 31, 2019 173,106 $ 30,148 $ 59,668 5,901 $ ( 159,190 ) $ 1,476,659 $ ( 109,492 ) $ 1,297,793

Three Months Ended December 31, 2020

Additional Paid-in Capital Accumulated Other Comprehensive Loss Total Shareholders’ Equity

Registered Shares Treasury Shares Retained Earnings

Shares Amount Shares Amount

September 30, 2020 173,106 $ 30,148 $ 78,617 4,357 $ ( 166,258 ) $ 1,882,308 $ ( 118,852 ) $ 1,705,963

Three Months ended September 30, 2020

Additional Paid-in Capital

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Registered Shares

Treasury Shares

Retained Earnings

June 30, 2020

Total comprehensive income — — — — — 382,523 15,935 398,458

2 unchanged sentences

Issuance of shares upon vesting of restricted stock units — — ( 5,833 ) ( 77 ) 2,102 — — ( 3,731 )

Issuance of shares for contingent consideration — — 18,847 ( 390 ) 9,616 — — 28,463

Share-based compensation — — 19,242 — — — — 19,242

Cash dividends ($0.87 per share)

September 30, 2020

Six Months ended September 30, 2020

Additional Paid-in Capital

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Registered Shares

Treasury Shares

Retained Earnings

December 31, 2020 173,106 $ 30,148 $ 108,140 4,243 $ ( 198,435 ) $ 2,264,831 $ ( 102,917 ) $ 2,101,767

Nine Months Ended December 31, 2020

Additional Paid-in Capital Accumulated Other Comprehensive Loss Total Shareholders’ Equity

Registered Shares Treasury Shares Retained Earnings

Shares Amount Shares Amount

March 31, 2020 173,106 $ 30,148 $ 75,097 6,210 $ ( 185,896 ) $ 1,690,579 $ ( 120,660 ) $ 1,489,268

4 unchanged sentences

Issuance of shares upon vesting of restricted stock units — — ( 48,968 ) ( 1,031 ) 19,493 — — ( 29,475 )

Issuance of shares for contingent consideration — — 18,847 ( 390 ) 9,616 — — 28,463

Share-based compensation — — 64,532 — — — — 64,532

Cash dividends ($ 0.87 per share)

September 30, 2020

— — — — — ( 146,705 ) — ( 146,705 )

December 31, 2020 173,106 $ 30,148 $ 108,140 4,243 $ ( 198,435 ) $ 2,264,831 $ ( 102,917 ) $ 2,101,767

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

Logitech International S.A, together with its consolidated subsidiaries, (Logitech or the Company) designs, manufactures and markets products that have an everyday place in people's lives, connecting them to the digital experiences they care about.

More than 35 years ago, Logitech created products to improve experiences around the personal PC platform, and today it is a multi-brand, multi-category company designing products that enable better experiences consuming, sharing and creating any digital content such as computing, gaming, video and music, whether it is on a computer, mobile device or in the cloud.

Almost 40 years ago, Logitech created products to improve experiences around the personal PC platform, and today it is a multi-brand, multi-category company designing products that enable better experiences consuming, sharing and creating any digital content such as computing, gaming, video and music, whether it is on a computer, mobile device or in the cloud.

The Company sells its products to a broad network of domestic and international customers, including direct sales to retailers and e-tailers and indirect sales through distributors.

11 unchanged sentences

In the opinion of management, these condensed consolidated financial statements include all adjustments, consisting of only normal and recurring adjustments, necessary and in all material aspects, for a fair statement of the results of operations, comprehensive income, financial position, cash flows and changes in shareholders' equity for the periods presented.

Operating results for the three and six months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2021, or any future periods.

Operating results for the three and nine months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2021, or any future periods.

Changes in Significant Accounting Policies

Other than the recent accounting pronouncements adopted and discussed below under Recent Accounting Pronouncements Adopted and Summary of Significant Accounting Policies , there have been no material changes in the Company’s significant accounting policies during the six months ended September 30, 2020 compared with the significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended March 31, 2020 .

Other than the recent accounting pronouncements adopted and discussed below under Recent Accounting Pronouncements Adopted , there have been no material changes in the Company’s significant accounting policies during the nine months ended December 31, 2020 compared with the significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

Use of Estimates

6 unchanged sentences

We are subject to risks and uncertainties as a result of the novel coronavirus (COVID-19).

The measures taken by many countries in response have contributed to a general slowdown in the global economy and adversely affected, and could in the future continue to adversely affect, the Company's business and operations.

Capital markets and economies worldwide have also been negatively impacted by COVID-19 and it is still unclear how lasting and deep the economic impacts will be.

During the three and six months ended September 30, 2020, as well as in the fourth quarter of fiscal year 2020, the COVID-19 pandemic had mixed effects on the Company’s results of operations, and it may continue to have mixed or adverse effects.

While there was high demand and consumption of certain of our products that led to increased sales and operating income during the fourth quarter of fiscal year 2020 and the three and six months ended September 30, 2020, at the same time the Company experienced disruptions to supply chain and logistics services, inventory constraints and increased logistics costs.

The ongoing and full extent of the impact of the COVID-19 pandemic on the Company's business and operational and financial performance and condition, including the sustainability of its effect on trends positive to the Company, is uncertain and will depend on many factors outside the Company's control, including but not limited to the timing, extent, duration and effects of the virus and any of its mutations, the development and availability of effective treatments and vaccines, the imposition of effective public safety and other protective measures, the impact of COVID-19 on the global economy and demand for the Company's products and services.

Capital markets and economies worldwide have been negatively impacted by COVID-19 and it is still unclear how lasting and deep the economic impacts will be.

During the three and nine months ended December 31, 2020, the COVID-19 pandemic had mixed effects on the Company’s results of operations, and it may continue to have mixed or adverse effects.

While there was high demand for and consumption of certain of our products that led to increased sales and operating income during the three and nine months ended December 31, 2020, at the same time the Company experienced disruptions and higher costs in our manufacturing, supply chain and logistics operations and outsourced services.

The ongoing and full extent of the impact of the COVID-19 pandemic on the Company's business and operational and financial performance and condition, including the sustainability of its effect on trends positive to the Company, is uncertain and will depend on many factors outside the Company's control, including but not limited to the timing, extent, duration and effects of the virus and any of its mutations, the availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective public safety and other protective measures and the public's response to such measures, the impact of COVID-19 on the global economy and demand for the Company's products and services.

Should the COVID-19 pandemic or global economic slowdown not improve or worsen, or if the Company's attempt to mitigate its impact on its operations and costs is not successful, the Company's business, results of operations, financial condition and prospects may be adversely affected.

24 unchanged sentences

Note 2 — Net Income Per Share

The following table summarizes the computations of basic and diluted net income per share for the three and six months ended September 30, 2020 and September 30, 2019 (in thousands, except per share amounts):

The following table summarizes the computations of basic and diluted net income per share for the three and nine months ended December 31, 2020 and December 31, 2019 (in thousands, except per share amounts):

Three Months Ended

September 30,

Six Months Ended

September 30,

December 31, Nine Months Ended

2020 2019 2020 2019

Net income $ 382,523 $ 117,525 $ 721,510 $ 235,803

Shares used in net income per share computation:

3 unchanged sentences

Net income per share:

Share equivalents attributable to outstanding stock options, restricted stock units ("RSUs") and employee share purchase plan ("ESPP") rights totaling 0.4 million and 1.9 million for the three months ended September 30, 2020 and 2019 , respectively, and 0.4 million and 2.0 million for the six months ended September 30, 2020 and 2019 , respectively, were excluded from the calculation of diluted net income per share because the combined exercise price and average unamortized grant date fair value upon exercise of these options and ESPP rights or vesting of RSUs were greater than the average market price of the Company's shares during the periods presented herein, and therefore their inclusion would have been anti-dilutive.

The majority of performance-based awards were not included because all necessary conditions have not been satisfied by the end of the respective period, and those shares were not issuable if the end of the reporting period were the end of the performance contingency period.

Basic $ 2.26 $ 0.70 $ 4.28 $ 1.41

Diluted $ 2.22 $ 0.69 $ 4.21 $ 1.39

Share equivalents attributable to outstanding stock options, restricted stock units ("RSUs") and employee share purchase plan ("ESPP") rights totaling 0.3 million and 1.8 million for the three months ended December 31, 2020 and 2019, respectively, and 0.4 million and 1.8 million for the nine months ended December 31, 2020 and 2019, respectively, were excluded from the calculation of diluted net income per share because the combined exercise price and average unamortized grant date fair value upon exercise of these options and ESPP rights or vesting of RSUs were greater than the average market price of the Company's shares during the periods presented herein, and therefore their inclusion would have been anti-dilutive.

A small number of performance-based awards were not included in the calculation because all necessary conditions had not been satisfied by the end of the respective period, and those shares were not issuable if the end of the reporting period were the end of the performance contingency period.

Note 3 — Employee Benefit Plans

Employee Share Purchase Plans and Stock Incentive Plans

As of September 30, 2020 , the Company offers the 2006 Employee Share Purchase Plan, as amended and restated (Non-U.S.) (2006 ESPP), the 1996 Employee Share Purchase Plan (U.S.), as amended and restated (1996 ESPP), the 2006 Stock Incentive Plan, as amended and restated (2006 Plan), and the 2012 Stock Inducement Equity Plan (2012 Plan).

The following table summarizes the share-based compensation expense and total income tax benefit recognized for share-based awards for the three and six months ended September 30, 2020 and 2019 (in thousands):

As of December 31, 2020, the Company offers the 2006 Employee Share Purchase Plan, as amended and restated (Non-U.S.) (2006 ESPP), the 1996 Employee Share Purchase Plan (U.S.), as amended and restated (1996 ESPP), the 2006 Stock Incentive Plan, as amended and restated (2006 Plan), and the 2012 Stock Inducement Equity Plan (2012 Plan).

The following table summarizes the share-based compensation expense and total income tax benefit recognized for share-based awards for the three and nine months ended December 31, 2020 and 2019 (in thousands):

Three Months Ended

September 30,

Six Months Ended

September 30,

December 31, Nine Months Ended

2020 2019 2020 2019

Cost of goods sold $ 1,747 $ 1,210 $ 4,919 $ 3,552

6 unchanged sentences

The income tax benefit in the respective period primarily consists of tax benefit related to the share-based compensation expense for the period and direct tax benefit realized, including net excess tax benefits recognized from share-based awards vested or exercised during the period.

As of September 30, 2020 and 2019 , the balance of capitalized share-based compensation included in inventory was $ 1.3 million and $ 0.9 million , respectively.

As of December 31, 2020 and 2019, the balance of capitalized share-based compensation included in inventory was $ 1.0 million and $ 0.9 million, respectively.

Defined Benefit Plans

2 unchanged sentences

The Company’s practice is to fund amounts sufficient to meet the requirements set forth in the applicable employee benefit and tax regulations.

The costs recorded of $ 2.7 million and $ 2.4 million for the three months ended September 30, 2020 and 2019 , respectively, and $ 5.4 million and $ 4.8 million for the six months ended September 30, 2020 and 2019 , respectively, were primarily related to service costs.

The costs recorded of $ 2.9 million and $ 2.3 million for the three months ended December 31, 2020 and 2019, respectively, and $ 8.3 million and $ 7.1 million for the nine months ended December 31, 2020 and 2019, respectively, were primarily related to service costs.

Note 4 — Income Taxes

1 unchanged sentence

Further, a portion of the Company’s income before taxes and the provision for (benefit from) income taxes are generated outside of Switzerland.

The canton of Vaud enacted the Federal Act on Tax Reform and AHV Financing ("TRAF"), a major reform to better align the Swiss tax system with international tax standards, on March 10, 2020 to take effect as of January 1, 2020.

The longstanding tax ruling from the canton of Vaud was applicable through December 31, 2019.

The income tax provision for the three months ended September 30, 2020 was $ 56.3 million based on an effective income tax rate of 17.4 % of pre-tax income, compared to an income tax benefit of $ 2.6 million based on an effective income tax rate of ( 3.7 )% of pre-tax income for the three months ended September 30, 2019 .

The income tax provision for the six months ended September 30, 2020 was $ 70.3 million based on an effective income tax rate of 17.2 % of pre-tax income, compared to an income tax provision of $ 3.9 million based on an effective income tax rate of 3.2 % of pre-tax income for the six months ended September 30, 2019.

The change in the effective income tax rate for the three months ended September 30, 2020 , compared to the same period ended September 30, 2019 was primarily due to the mix of income and losses in the various tax jurisdictions in which the Company operates.

The Swiss income tax provision in the three months ended September 30, 2020 represents the income tax provision at the full statutory income tax rate of 13.63 % .

In the same period ended September 30, 2019 when TRAF was yet to be enacted at the federal and cantonal levels, the transition income tax provision reflects the application of the longstanding tax ruling through December 31, 2019 including a retroactive adjustment made to the preceding three-month period ended June 30, 2019 when the transition income tax provision was quantified at the full statutory income tax rate of 13.63 % because at the time the canton of Vaud permitted the application of the longstanding tax ruling only through March 31, 2019.

The retroactive adjustment resulted in a tax benefit of $ 5.9 million in the three months ended September 30, 2019.

In addition, there was a discrete tax benefit of $ 4.0 million from adjusting deferred tax assets and liabilities in Switzerland in the three months ended September 30, 2019.

The change in the effective income tax rate for the six months ended September 30, 2020 , compared to the same period ended September 30, 2019 was primarily due to the mix of income and losses in the various tax jurisdictions in which the Company operates.

The Swiss income tax provision in the six months ended September 30, 2020 represents the income tax provision at the full statutory income tax rate of 13.63 % .

The income tax provision in the six months ended September 30, 2019 reflects the application of the longstanding tax ruling through December 31, 2019 as stated above.

In the six months ended September 30, 2019, there was a discrete tax benefit of $ 1.7 million from adjusting deferred tax assets and liabilities in Switzerland.

Furthermore, there were discrete tax benefits of $ 5.8 million and $ 1.5 million from the recognition of excess tax benefits in the United States and reversal of uncertain tax positions from the expiration of statutes of limitations, respectively, in the six-month period ended September 30, 2020 , compared with $ 6.7 million and $ 1.8 million , respectively, in the six-month period ended September 30, 2019 .

As of September 30, 2020 and March 31, 2020 , the total amount of unrecognized tax benefits due to uncertain tax positions was $ 152.5 million and $ 140.8 million , respectively, all of which would affect the effective income tax rate if recognized.

As of September 30, 2020 and March 31, 2020 , the Company had $ 54.5 million and $ 40.8 million , respectively, in non-current income taxes payable including interest and penalties, related to the Company's income tax liability for uncertain tax positions.

The income tax provision for the three months ended December 31, 2020 was $ 72.3 million based on an effective income tax rate of 15.9 % of pre-tax income, compared to an income tax provision of $ 14.5 million based on an effective income tax rate of 11.0 % of pre-tax income for the three months ended December 31, 2019.

The income tax provision for the nine months ended December 31, 2020 was $ 142.6 million based on an effective income tax rate of 16.5 % of pre-tax income, compared to an income tax provision of $ 18.4 million based on an effective income tax rate of 7.2 % of pre-tax income for the nine months ended December 31, 2019.

The change in the effective income tax rate for the three and nine months ended December 31, 2020, compared to the same periods ended December 31, 2019 was primarily due to the mix of income and losses in the various tax jurisdictions in which the Company operates.

The Swiss income tax provision in the three and nine months ended December 31, 2020 represents the income tax provision at the full statutory income tax rate of 13.63 %.

In the same periods ended December 31, 2019 when TRAF was yet to be enacted at the federal and cantonal levels, the transition income tax provision reflects the application of the longstanding tax ruling through December 31, 2019.

Furthermore, there was a discrete tax benefit of $ 1.7 million from adjusting deferred tax assets and liabilities in Switzerland in the nine months ended December 31, 2019.

There were discrete tax benefits of $ 7.2 million and $ 2.9 million from the recognition of excess tax benefits in the United States and reversal of uncertain tax positions from the expiration of statutes of limitations, respectively, in the nine-month period ended December 31, 2020, compared with $ 6.0 million and $ 2.7 million, respectively, in the nine-month period ended December 31, 2019.

As of December 31, 2020 and March 31, 2020, the total amount of unrecognized tax benefits due to uncertain tax positions was $ 158.8 million and $ 140.8 million, respectively, all of which would affect the effective income tax rate if recognized.

As of December 31, 2020 and March 31, 2020, the Company had $ 60.8 million and $ 40.8 million, respectively, in non-current income taxes payable including interest and penalties, related to the Company's income tax liability for uncertain tax positions.

The Company recognizes interest and penalties related to unrecognized tax positions in the income tax provision.

As of September 30, 2020 and March 31, 2020 , the Company had $ 4.8 million and $ 4.5 million , respectively, of accrued interest and penalties related to uncertain tax positions in non-current income taxes payable.

As of December 31, 2020 and March 31, 2020, the Company had $ 4.7 million and $ 4.5 million, respectively, of accrued interest and penalties related to uncertain tax positions in non-current income taxes payable.

Although the Company has adequately provided for uncertain tax positions, the provisions related to these positions may change as revised estimates are made or the underlying matters are settled or otherwise resolved.

4 unchanged sentences

Note 5 — Balance Sheet Components

The following table presents the components of certain balance sheet asset amounts as of September 30 and March 31 , 2020 (in thousands):

September 30, 2020

March 31, 2020

The following table presents the components of certain balance sheet asset amounts as of December 31 and March 31, 2020 (in thousands):

December 31, 2020 March 31, 2020

Accounts receivable, net:

5 unchanged sentences

Allowance for pricing programs ( 139,870 ) ( 100,168 )

$ 894,937 $ 394,743

Raw materials $ 94,748 $ 56,052

Finished goods 382,054 173,197

$ 476,802 $ 229,249

Other current assets:

1 unchanged sentence

Prepaid expenses and other assets 56,995 41,304

$ 117,741 $ 74,920

Property, plant and equipment, net:

1 unchanged sentence

Accumulated depreciation and amortization ( 295,795 ) ( 270,387 )

$ 96,683 $ 76,119

Other assets:

3 unchanged sentences

Investments in privately held companies 44,634 45,949

The following table presents the components of certain balance sheet liability amounts as of September 30 and March 31, 2020 (in thousands):

September 30, 2020

March 31, 2020

Other assets 14,366 12,900

$ 333,733 $ 345,019

The following table presents the components of certain balance sheet liability amounts as of December 31 and March 31, 2020 (in thousands):

December 31, 2020 March 31, 2020

Accrued and other current liabilities:

8 unchanged sentences

Other current liabilities 198,654 107,873

$ 704,573 $ 455,024

Other non-current liabilities:

5 unchanged sentences

Other non-current liabilities 3,613 2,285

$ 134,021 $ 119,274

Note 6 — Fair Value Measurements

10 unchanged sentences

The following table presents the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis, excluding assets related to the Company’s defined benefit pension plans, classified by the level within the fair value hierarchy (in thousands):

September 30, 2020

March 31, 2020

December 31, 2020 March 31, 2020

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Cash equivalents $ 465,838 $ — $ — $ 564,952 $ — $ —

Trading investments for deferred compensation plan included in other assets:

Cash $ 75 $ — $ — $ 846 $ — $ —

Common stock 1,544 — — — — —

Money market funds 7,147 — — 7,147 — —

Mutual funds 15,290 — — 12,092 — —

Total of trading investments for deferred compensation plan $ 24,056 $ — $ — $ 20,085 $ — $ —

4 unchanged sentences

included in accrued and other current liabilities $ — $ 4,523 $ — $ — $ 719 $ —

The following table summarizes the change in the fair value of the Company's contingent consideration balance during the six months ended September 30, 2020 (in thousands):

Six Months Ended

September 30, 2020

The following table summarizes the change in the fair value of the Company's contingent consideration balance during the nine months ended December 31, 2020 (in thousands):

Nine Months Ended

December 31, 2020

Beginning of the period $ 23,284

Change in fair value of contingent consideration 5,716

Settlement of contingent consideration ( 28,463 )

End of the period (1) $ 537

(1) As of June 30, 2020, the earn-out period was completed.

The earn-out payment of $ 29.0 million is based on the actual net sales of Streamlabs services and no longer subject to fair value measurement and was accordingly transferred out of Level 3.

The expected earn-out payment is included in the accrued and other current liabilities of the unaudited condensed consolidated balance sheet.

(1) As of June 30, 2020, the earn-out period was completed in connection with our acquisition of Streamlabs (defined below).

The earn-out payment of $ 29.0 million is based on the actual net sales of Streamlabs services during the earn-out period and is no longer subject to fair value measurement and was accordingly transferred out of Level 3.

During the third quarter of 2021, the fair value of $ 28.5 million of the contingent consideration was transferred from other current liabilities to equity upon settlement of the contingent consideration through the issuance of shares out of treasury stock.

The remaining amount of $ 0.5 million is held back in escrow for claims made against the escrow and for the payment of taxes.

Investment Securities

The marketable securities for the Company's deferred compensation plan were recorded at a fair value of $ 24.6 million and $ 20.1 million , as of September 30, 2020 and March 31, 2020 , respectively, based on quoted market prices.

The marketable securities for the Company's deferred compensation plan were recorded at a fair value of $ 24.1 million and $ 20.1 million, as of December 31, 2020 and March 31, 2020, respectively, based on quoted market prices.

Quoted market prices are observable inputs that are classified as Level 1 within the fair value hierarchy.

Unrealized gains (losses) related to trading securities for the three and six months ended September 30, 2020 and 2019 were not material and are included in other income, net in the Company's condensed consolidated statements of operations.

Unrealized gains (losses) related to trading securities for the three and nine months ended December 31, 2020 and 2019 were not material and are included in other income, net in the Company's condensed consolidated statements of operations.

Contingent Consideration for Business Acquisition

1 unchanged sentence

("Streamlabs").

The contingent consideration for business acquisition arising from the Streamlabs Acquisition represents the future potential earn-out payments of $ 29.0 million payable in stock only upon the achievement of certain net sales for the period beginning on January 1, 2020 and ending on June 30, 2020.

The fair value of the earn-out as of the Streamlabs Acquisition Date was $ 0.04 million , and increased to $ 23.3

million as of March 31, 2020, which was determined by using a Black-Scholes-Merton valuation model to calculate the probability of the earn-out threshold being met and times the value of the earn-out payment, and discounted at the risk-free rate.

The valuation included significant assumptions and unobservable inputs such as the projected sales of Streamlabs over the earn-out period, the risk-free rate, and the net sales volatility.

In connection with the acquisition of Streamlabs, the Company agreed to pay a total earn out payment of $ 29.0 million, payable in stock, only upon the achievement of certain net revenues for the period beginning on January 1, 2020 and ending on June 30, 2020.

The fair value of the earn-out as of the Streamlabs Acquisition Date was $ 0.04 million, and increased to $ 23.3 million as of March 31, 2020, which was determined by using a Black-Scholes-Merton valuation model to calculate the probability of the earn-out threshold being met and times the value of the earn-out payment, and discounted at the risk-free rate.

The fair value was increased by $ 5.7 million to $ 29.0 million as of June 30, 2020, based on actual sales.

The fair value of the contingent consideration no longer needs to be remeasured at each reporting period, as the earn-out period has been completed.

The fair value of the contingent consideration no longer needs to be remeasured after June 30, 2020, as the earn-out period has been completed.

During the third quarter of fiscal 2021, Logitech issued 390,397 shares out of treasury shares to former security holders of Streamlabs, in satisfaction of payment of the contingent consideration that was earned during the earn-out period of January 1, 2020 through June 30, 2020.

The issuances of such shares were deemed to be exempt from registration under the Securities Act of 1933 (the "Securities Act"), in reliance on Regulation D of the Securities Act as transactions by an issuer not involving a public offering.

Equity Method Investments

The Company has certain non-marketable investments included in other assets that are accounted for under the equity method of accounting, with a carrying value of $ 42.3 million and $ 42.1 million as of September 30, 2020 and March 31, 2020 , respectively.

There was no impairment of these assets during the three and six months ended September 30, 2020 or 2019 .

The Company has certain non-marketable investments included in other assets that are accounted for under the equity method of accounting, with a carrying value of $ 39.9 million and $ 42.1 million as of December 31, 2020 and March 31, 2020, respectively.

Unrealized gains (losses) related to equity investments for the three and nine months ended December 31, 2020 and 2019 were not material and are included in other income, net in the Company's condensed consolidated statements of operations.

There was no impairment of these assets during the three and nine months ended December 31, 2020 or 2019.

Other Assets Measured at Fair Value on a Nonrecurring Basis

3 unchanged sentences

The carrying value is also adjusted for observable price changes with a same or similar security from the same issuer.

The amount of these investments included in other assets was immaterial as of September 30, 2020 and March 31, 2020 .

There was no impairment of these assets during the three and six months ended September 30, 2020 or 2019 .

The amount of these investments included in other assets was immaterial as of December 31, 2020 and March 31, 2020.

There was no impairment of these assets during the three and nine months ended December 31, 2020 or 2019.

Non-Financial Assets.

1 unchanged sentence

However, if certain triggering events occur (or tested at least annually for goodwill) such that a non-financial instrument is required to be evaluated for impairment and an impairment is recorded to reduce the non-financial instrument's carrying value to the fair value as a result of such triggering events, the non-financial assets and liabilities are measured at fair value for the period such triggering events occur.

There was no impairment of these assets during the three and six months ended September 30, 2020 or 2019 .

There was no impairment of these assets during the three and nine months ended December 31, 2020 or 2019.

Note 7 — Derivative Financial Instruments

Under certain agreements with the respective counterparties to the Company’s derivative contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same type with a single net amount payable by one party to the other.

However, the Company presents its derivative assets and derivative liabilities on a gross basis on the condensed consolidated balance sheets as of September 30, 2020 and March 31, 2020 .

The fair value of the Company’s derivative instruments was not material as of September 30, 2020 or March 31, 2020 .

However, the Company presents its derivative assets and derivative liabilities on a gross basis on the condensed consolidated balance sheets as of December 31, 2020 and March 31, 2020.

The fair value of the Company’s derivative instruments was not material as of December 31, 2020 or March 31, 2020.

The amount of gain (loss) recognized on derivatives not designated as hedging instruments was not material in all periods presented herein.

The following table presents the amounts of gains (losses) on the Company’s derivative instruments designated as hedging instruments and their locations on its condensed consolidated statements of operations and condensed consolidated statements of comprehensive income for the three and six months ended September 30, 2020 and 2019 (in thousands):

The following table presents the amounts of gains (losses) on the Company’s derivative instruments designated as hedging instruments and their locations on its condensed consolidated statements of operations and condensed consolidated statements of comprehensive income for the three and nine months ended December 31, 2020 and 2019 (in thousands):

Three Months Ended

September 30,

Amount of Gain (Loss)

Deferred as a Component of Accumulated

Other Comprehensive Loss

Amount of Loss (Gain)

Other Comprehensive Loss Amount of Loss (Gain)

Reclassified from Accumulated Other Comprehensive Loss to

Costs of Goods Sold

2020 2019 2020 2019

Cash flow hedges $ ( 6,326 ) $ ( 1,381 ) $ 3,446 $ ( 739 )

Six Months Ended

September 30,

Nine Months Ended

Amount of Gain (Loss)

Deferred as a Component of Accumulated

Other Comprehensive Loss

Amount of Loss (Gain)

Other Comprehensive Loss Amount of Loss (Gain)

Reclassified from Accumulated Other Comprehensive Loss to

Costs of Goods Sold

2020 2019 2020 2019

Cash flow hedges $ ( 9,752 ) $ 56 $ 5,085 $ ( 1,097 )

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In all periods presented herein, there have been no forecasted inventory purchases that were probable to not occur by the end of the originally specified time period or within an additional two-month period of time thereafter.

The notional amounts of foreign currency exchange forward contracts outstanding related to forecasted inventory purchases were $ 155.5 million as of September 30, 2020 and $ 48.0 million as of March 31, 2020 .

The Company had $ 2.0 million of net losses related to its cash flow hedges included in accumulated other comprehensive loss as of September 30, 2020 , which will be reclassified into earnings within the next 12 months.

The notional amounts of foreign currency exchange forward contracts outstanding related to forecasted inventory purchases were $ 166.1 million as of December 31, 2020 and $ 48.0 million as of March 31, 2020.

The Company had $ 4.9 million of net losses related to its cash flow hedges included in accumulated other comprehensive loss as of December 31, 2020, which will be reclassified into earnings within the next 12 months.

Other Derivatives

3 unchanged sentences

The gains or losses on these contracts are recognized in other income, net in the condensed consolidated statements of operations based on the changes in fair value.

The notional amounts of these contracts outstanding as of September 30, 2020 and March 31, 2020 were $ 86.5 million and $ 64.7 million , respectively.

Open forward and swap contracts outstanding as of September 30, 2020 and March 31, 2020 consisted of contracts in Mexican Pesos, Japanese Yen, Canadian Dollars, Taiwan New Dollars and Australian Dollars to be settled at future dates at pre-determined exchange rates.

The notional amounts of these contracts outstanding as of December 31, 2020 and March 31, 2020 were $ 157.2 million and $ 64.7 million, respectively.

Open forward and swap contracts outstanding as of December 31, 2020 and March 31, 2020 consisted of contracts in Mexican Pesos, Japanese Yen, Canadian Dollars, Taiwan New Dollars and Australian Dollars to be settled at future dates at pre-determined exchange rates.

The fair value of all foreign currency exchange forward and swap contracts is determined based on observable market transactions of spot currency rates and forward rates.

2 unchanged sentences

The Company conducts its impairment analysis of goodwill annually at December 31 and as necessary, if changes in facts and circumstances indicate that it is more likely than not that the fair value of the Company’s reporting unit may be less than its carrying amount.

There have been no events or circumstances during the six months ended September 30, 2020 that have required the Company to perform an interim assessment of goodwill.

The following table summarizes the activities in the Company’s goodwill balance during the six months ended September 30, 2020 (in thousands):

The Company conducted its annual impairment analysis of goodwill as of December 31, 2020 by performing a qualitative assessment and concluded that it was more likely than not that the fair value of its reporting unit exceeds its carrying amount.

In assessing the qualitative factors, the Company considered the impact of change in industry and competitive environment, growth in the Company's market capitalization and budgeted-to-actual revenue performance for the last twelve months.

The following table summarizes the activities in the Company’s goodwill balance during the nine months ended December 31, 2020 (in thousands):

As of March 31, 2020 $ 400,917

Currency translation 76

As of September 30, 2020

As of December 31, 2020 $ 400,993

The Company's acquired intangible assets subject to amortization were as follows (in thousands):

September 30, 2020

March 31, 2020

Gross Carrying Amount

Net Carrying Amount

Gross Carrying Amount

Net Carrying Amount

December 31, 2020 March 31, 2020

Gross Carrying Amount Accumulated

Amortization Net Carrying Amount Gross Carrying Amount Accumulated

Amortization Net Carrying Amount

Trademark and trade names $ 45,570 $ ( 23,615 ) $ 21,955 $ 45,570 $ ( 19,061 ) $ 26,509

1 unchanged sentence

Customer contracts/relationships 90,610 ( 41,136 ) 49,474 90,610 ( 31,859 ) 58,751

Total $ 254,987 $ ( 151,673 ) $ 103,314 $ 254,987 $ ( 128,046 ) $ 126,941

Note 9 — Financing Arrangements

The Company had several uncommitted, unsecured bank lines of credit aggregating $ 84.2 million as of September 30, 2020 .

The Company had several uncommitted, unsecured bank lines of credit aggregating $ 82.6 million as of December 31, 2020.

There are no financial covenants under these lines of credit with which the Company must comply.

As of September 30, 2020 , the Company had outstanding bank guarantees of $ 22.9 million under these lines of credit.

There was no borrowing outstanding under these lines of credit as of September 30, 2020 or March 31, 2020 .

As of December 31, 2020, the Company had outstanding bank guarantees of $ 37.8 million under these lines of credit.

There was no borrowing outstanding under these lines of credit as of December 31, 2020 or March 31, 2020.

Note 10 — Commitments and Contingencies

Product Warranties

Changes in the Company’s warranty liability for the three and six months ended September 30, 2020 and 2019 were as follows (in thousands):

Changes in the Company’s warranty liability for the three and nine months ended December 31, 2020 and 2019 were as follows (in thousands):

Three Months Ended

September 30,

Six Months Ended

September 30,

December 31, Nine Months Ended

2020 2019 2020 2019

Beginning of the period $ 41,782 $ 37,222 $ 40,039 $ 34,229

Provision 13,692 9,608 28,575 26,652

Settlements ( 8,371 ) ( 6,840 ) ( 22,073 ) ( 20,544 )

Currency translation 489 187 1,051 ( 160 )

2 unchanged sentences

The Company indemnifies certain of its suppliers and customers for losses arising from matters such as intellectual property disputes and product safety defects, subject to certain restrictions.

The scope of these indemnities varies, but in some instances, includes indemnification for damages and expenses, including reasonable attorneys’ fees.

As of September 30, 2020 , no amounts have been accrued for these indemnification provisions.

The scope of these

indemnities varies, but in some instances, includes indemnification for damages and expenses, including reasonable attorneys’ fees.

As of December 31, 2020, no amounts have been accrued for these indemnification provisions.

The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under its indemnification arrangements.

19 unchanged sentences

Purchases may be started or stopped at any time without prior notice depending on market conditions and other factors.

As of September 30, 2020 , $ 227.6 million is still available for repurchase under the 2020 buyback program.

During the three and six months ended September 30, 2020 , the Company declared and paid cash dividends of CHF 0.79 (USD equivalent of $ 0.87 ) per share, totaling $ 146.7 million on the Company's outstanding shares.

During the three and six months ended September 30, 2019 , the Company declared and paid cash dividends of CHF 0.73 (USD equivalent of $ 0.74 ) per share, totaling $ 124.2 million on the Company's outstanding shares.

As of December 31, 2020, $ 177.6 million is still available for repurchase under the 2020 buyback program.

During the three and nine months ended December 31, 2020, the Company declared and paid cash dividends of CHF 0.79 (USD equivalent of $ 0.87 ) per share, totaling $ 146.7 million on the Company's outstanding shares.

During the three and nine months ended December 31, 2019, the Company declared and paid cash dividends of CHF 0.73 (USD equivalent of $ 0.74 ) per share, totaling $ 124.2 million on the Company's outstanding shares.

Any future dividends will be subject to approval of the Company's shareholders.

6 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

Deferred Hedging Losses

Adjustment Defined

Plan Deferred Hedging Losses Total

March 31, 2020 $ ( 100,418 ) $ ( 20,016 ) $ ( 226 ) $ ( 120,660 )

Other comprehensive income (loss) 22,206 204 ( 4,667 ) 17,743

September 30, 2020

December 31, 2020 $ ( 78,212 ) $ ( 19,812 ) $ ( 4,893 ) $ ( 102,917 )

Note 12 — Segment Information

3 unchanged sentences

These operating performance measures do not include restructuring charges (credits), net, share-based compensation expense, amortization of intangible assets, charges from the purchase accounting effect on inventory, acquisition-related costs or change in fair value of contingent consideration from business acquisition.

Sales by product categories and sales channels, excluding intercompany transactions, for the three and six months ended September 30, 2020 and 2019 were as follows (in thousands):

Sales by product categories and sales channels, excluding intercompany transactions, for the three and nine months ended December 31, 2020 and 2019 were as follows (in thousands):

Three Months Ended

September 30,

Six Months Ended

September 30,

December 31, Nine Months Ended

2020 2019 2020 2019

Pointing Devices $ 213,638 $ 154,540 $ 503,228 $ 409,293

Keyboards & Combos 218,269 156,333 565,246 424,061

PC Webcams 131,700 32,165 295,020 89,041

Tablet & Other Accessories 138,052 31,256 267,186 103,442

436,426 245,736 916,040 541,265

Video Collaboration 292,500 91,964 659,278 254,941

1 unchanged sentence

Audio & Wearables 152,952 81,934 338,592 208,576

(1) Other category includes products that the Company currently intends to phase out, or has already phased out, because they are no longer strategic to the Company's business.

Sales by geographic region (based on the customers’ locations) for the three and six months ended September 30, 2020 and 2019 were as follows (in thousands):

Smart Home 10,593 15,790 25,976 35,088

606 — 632 279

Total sales $ 1,667,302 $ 902,687 $ 3,716,354 $ 2,266,603

(1) Gaming includes streaming services revenue generated by Streamlabs.

(2) Other includes products that the Company currently intends to phase out, or has already phased out, because they are no longer strategic to the Company's business.

Sales by geographic region (based on the customers’ locations) for the three and nine months ended December 31, 2020 and 2019 were as follows (in thousands):

Three Months Ended

September 30,

Six Months Ended

September 30,

December 31, Nine Months Ended

2020 2019 2020 2019

Americas $ 704,718 $ 380,493 $ 1,603,221 $ 970,775

EMEA 547,044 308,907 1,147,393 719,994

Asia Pacific 415,540 213,287 965,740 575,834

Total sales $ 1,667,302 $ 902,687 $ 3,716,354 $ 2,266,603

Sales are attributed to countries on the basis of the customers’ locations.

1 unchanged sentence

No other countries represented 10% or more of the Company’s total consolidated sales for the periods presented herein.

Switzerland, the Company’s home domicile, represented 3 % and 2 % of the Company's total consolidated sales for the three and six months ended September 30, 2020 , respectively, and represented 4 % and 3 % of the Company's total consolidated sales for the three and six months ended September 30, 2019 , respectively.

Switzerland, the Company’s home domicile, represented 3 % of the Company's total consolidated sales for the three and nine months ended December 31, 2020, respectively, and represented 4 % of the Company's total consolidated sales for the three and nine months ended December 31, 2019, respectively.

Two customers of the Company each represented 10% or more of the total consolidated sales for each of the periods presented herein.

Property, plant and equipment, net by geographic region were as follows (in thousands):

September 30, 2020

March 31, 2020

December 31, 2020 March 31, 2020

Americas $ 21,859 $ 26,636

EMEA 6,998 5,052

Asia Pacific 67,826 44,431

Total property, plant and equipment, net $ 96,683 $ 76,119

Property, plant and equipment, net in the United States and China were $ 22.9 million and $ 48.9 million , respectively, as of September 30, 2020 , and $ 26.5 million and $ 36.6 million , respectively, as of March 31, 2020 .

No other countries represented 10% or more of the Company’s total consolidated property, plant and equipment, net as of September 30, 2020 or March 31, 2020 .

Property, plant and equipment, net in Switzerland, the Company’s home domicile, were $ 3.7 million and $ 2.3 million as of September 30, 2020 and March 31, 2020 , respectively.

Note 13 — Subsequent Event

During October 2020, Logitech issued or reserved 397,763 shares out of treasury shares to former security holders of Streamlabs related to the achievement of certain net sales milestones during the earn-out period of contingent consideration in connection with the business acquisition.

The issuances of such shares were deemed to be exempt from registration under the Securities Act, in reliance on Regulation D of the Securities Act as transactions by an issuer not involving a public offering.

Property, plant and equipment, net in the United States and China were $ 21.6 million and $ 59.6 million, respectively, as of December 31, 2020, and $ 26.5 million and $ 36.6 million, respectively, as of March 31, 2020.

No other countries represented 10% or more of the Company’s total consolidated property, plant and equipment, net as of December 31, 2020 or March 31, 2020.

Property, plant and equipment, net in Switzerland, the Company’s home domicile, were $ 4.6 million and $ 2.3 million as of December 31, 2020 and March 31, 2020, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements