What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-01-21 compared with 2020-10-22 · 127 added, 75 removed, 408 unchanged (33% of the section changed)

The risk factors summarized and disclosed below could adversely affect our business, results of operations and financial condition, and may cause volatility in the price of our shares.

These are not all the risks we face and other factors not presently known to us or that we currently believe are immaterial may also affect our business if they occur.

(See also the other information set forth in this Quarterly Report on Form 10-Q, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations and our Condensed Consolidated Financial Statements and the related notes.)

Summary of Risk Factors

Risks Related to our Business

• If we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories, our business and operating results could be adversely affected.

• Our future growth will depend on our diversified product growth opportunities, and if we do not successfully execute on our growth opportunities, or if our growth opportunities are more limited than we expect, our operating results could be adversely affected.

• If we are not able to maintain and enhance our brands, or if our brands or reputation are damaged, our reputation, business and operating results could be adversely affected.

• If we do not compete effectively, demand for our products could decline and our business and operating results could be adversely affected.

• The full effect of the COVID-19 pandemic is uncertain and cannot be predicted, and it could adversely affect the Company’s business, results of operations and financial condition.

• Our business depends in part on access to third-party platforms or technologies, and if the access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected.

• If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected.

• Our success largely depends on our ability to hire, retain, integrate and motivate sufficient numbers of qualified personnel, including senior management.

Our strategy and our ability to innovate, design and produce new products, sell products, maintain operating margins and control expenses depend on key personnel that may be difficult to replace.

• As we focus on growth opportunities, we are divesting or discontinuing non-strategic product categories and pursuing strategic acquisitions and investments, which could have an adverse impact on our business.

• We rely on third parties to sell and distribute our products, and we rely on their information to manage our business.

Disruption of our relationship with these channel partners, changes in or issues with their business practices, their failure to provide timely and accurate information, changes in distribution partners, practices or models, conflicts among our channels of distribution, or failure to build and scale our own sales force for certain product categories and enterprise channel partners could adversely affect our business, results of operations, operating cash flows and financial condition.

• Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well

as potential tariffs, adverse tax consequences and pressure to move or diversify our manufacturing locations.

• If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales.

• We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components.

• The moral and regulatory imperatives to avoid purchasing conflict minerals are causing us to incur additional expenses, could limit the supply and increase the cost of certain metals used in manufacturing our products and could adversely affect the distribution and sales of our products.

Risks Related to Global Nature of our Operations and Regulatory Environment

• We conduct operations in a number of countries and have invested significantly in growing our sales and marketing activities in China, and the effect of business, legal and political risks associated with international operations could adversely affect us.

• Changes in trade policy in the United States and other countries, including changes in trade agreements and the imposition of tariffs and the resulting consequences, may have adverse impacts on our business, results of operations and financial condition.

• Our financial performance is subject to risks associated with fluctuations in currency exchange rates.

• As a company operating in many markets and jurisdictions, expanding into new growth categories, and engaging in acquisitions, and as a Swiss, dual-listed company, we are subject to risks associated with new, existing and potential future laws and regulations.

• As a result of changes in tax laws, treaties, rulings, regulations or agreements, or their interpretation, of Switzerland or any other country in which we operate, the loss of a major tax dispute or a successful challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, or other factors, our effective income tax rates may increase, which could adversely affect our net income and cash flows.

Risks Related to Intellectual Property, Cyber Security and Privacy

• Claims by others that we infringe their proprietary technology could adversely affect our business.

• We may be unable to protect our proprietary rights.

Unauthorized use of our technology may result in the development of products that compete with our products.

• Product quality issues could adversely affect our reputation, business and operating results.

• Significant disruptions in, or breaches in security of, our websites or information technology systems could adversely affect our business.

• The collection, storage, transmission, use and distribution of user data could give rise to liabilities and additional costs of operation as a result of laws, governmental regulation and risks of security breaches.

Risks Related to our Financial Results

• Our operating results are difficult to predict and fluctuations in results may cause volatility in the price of our shares

Our revenues and profitability are difficult to predict due to the nature of the markets in which we compete, fluctuating user demand, the uncertainty of current and future global economic conditions, and for many other reasons, including the following:

Our operating results are highly dependent on the volume and timing of orders received during the quarter, which are difficult to forecast.

Customers generally order on an as-needed basis and we typically do not obtain firm, long-term purchase commitments from our customers.

As a result, our revenues in any quarter depend primarily on orders booked and shipped in that quarter.

A significant portion of our quarterly retail sales typically occurs in the last weeks of each quarter, further increasing the difficulty in predicting quarterly revenues and profitability.

Our sales are impacted by consumer demand and current and future global economic and political conditions, including trade restrictions and tariffs, and can, therefore, fluctuate abruptly and significantly during periods of uncertain economic conditions or geographic distress, as well as from shifts in distributor inventory practices and consumer buying patterns.

We must incur a large portion of our costs in advance of sales orders because we must plan research and production, order components, buy tooling equipment, and enter into development, sales and marketing, and other operating commitments prior to obtaining firm commitments from our customers.

This makes it difficult for us to rapidly adjust our costs during the quarter in response to a revenue shortfall, which could adversely affect our operating results.

The COVID-19 pandemic has led to evolving changes in our supply, operations, logistics and related expenses and use patterns and demand for certain of our products that may not recur or be sustainable in future periods, as well as uncertainty in global macroeconomic conditions.

We engage in acquisitions and divestitures, and such activity varies from period to period.

Such variance may affect our growth, our previous outlook and expectations, and comparisons of our operating results and financial statements between periods.

We are continuously attempting to simplify our organization, to reduce operating costs through expense reduction and at times through global workforce reductions, to reduce the complexity of our product portfolio, and to better align costs with our current business as we expand from PC accessories to growth opportunities in accessories and other products and services for creativity and productivity, gaming, video collaboration, mobile devices, music, digital home and other product categories.

We may not achieve the cost savings or other anticipated benefits from these efforts, and the success or failure of such efforts may cause our operating results to fluctuate and to be difficult to predict.

Fluctuations in currency exchange rates can impact our revenues, expenses and profitability because we report our financial statements in U.S.

Dollars, whereas a significant portion of our revenues and expenses are in other currencies.

We attempt to adjust product prices over time to offset the impact of currency movements.

However, over short periods of time, during periods of weakness in consumer spending or given high levels of competition in many product categories, our ability to change local currency prices to offset the impact of currency fluctuations is limited.

Because our operating results are difficult to predict, our results may be below the expectations of financial analysts and investors, which could cause the price of our shares to decline.

• Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results.

• As we continue our efforts to lower our costs and improve our operating leverage, we may or may not fully realize our goals.

• We cannot ensure that our current share repurchase program will be fully utilized or that it will enhance long-term shareholder value.

Share repurchases may also increase the volatility of the trading price of our shares.

We similarly cannot ensure that we will continue to increase our dividend payments or to pay dividends at all.

Share repurchases and dividends diminish our cash reserves.

If we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories, our business and operating results could be adversely affected.

16 unchanged sentences

Premature announcements or leaks of new products, features or technologies may exacerbate some of these risks by reducing the effectiveness of our product launches, reducing sales volumes of current products due to anticipated future products, making it more difficult to compete, shortening the period of differentiation based on our product innovation, straining relationships with our partners or increasing market expectations for the results of our new products before we have had an opportunity to demonstrate the market viability of the products.

Our failure to manage the transition to new products and services or the integration of new technology into new or existing products and services could adversely affect our business, results of operations, operating cash flows and financial condition.

Our failure to manage the transition to new products and services

or the integration of new technology into new or existing products and services could adversely affect our business, results of operations, operating cash flows and financial condition.

Our future growth will depend on our diversified product growth opportunities, and if we do not successfully execute on our growth opportunities, or if our growth opportunities are more limited than we expect, our operating results could be adversely affected.

46 unchanged sentences

We remain alert to opportunities in new categories and markets.

As we do so, we are confronting new competitors, many of which have more experience in the categories or markets and have greater marketing resources and brand name recognition than we have.

As we do so, we are confronting new competitors, many of which have more experience in the categories or markets and have greater marketing resources and brand name

recognition than we have.

In addition, because of the continuing convergence of the markets for computing devices and consumer electronics, we expect greater competition in the future from well-established consumer electronics companies in our developing categories as well as in future categories we might enter.

30 unchanged sentences

For PC headset, we face numerous competitors, including Plantronics and GN Netcom/Jabra, among others.

In-ear headphones competitors include Beats, Bose, Apple, Sony, JBL and Sennheiser, among others.

In-ear headphones competitors include Beats, Bose, Apple, Sony, JBL and

Sennheiser, among others.

Our competitors for Blue Microphones products include Rode, Audio-Technica, Samson, Shure, Razer and Apogee, among others.

5 unchanged sentences

COVID-19 has spread rapidly throughout the world, causing significant volatility and disruption in financial markets, curtailing global economic activity, raising the prospect of an extended global recession, and prompting governments and businesses to take unprecedented measures in response.

Such measures have included restrictions on travel and business operations, indefinite business closures, and quarantines and shelter-at-home orders.

The full effects of the COVID-19 pandemic cannot be predicted as a result of uncertainties, including the extent and rate of the spread, the possibility and timing of any vaccine, treatment or cure or stop to the spread, and the potential for additional peaks in infection rates.

The COVID-19 pandemic and 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 adversely affect, our business and operations, our customers and our partners.

Such measures have included restrictions on travel and business operations, quarantines and shelter-at-home orders and often resulted in indefinite business closures.

The full effects of the COVID-19 pandemic cannot be predicted as a result of uncertainties, including the extent and rate of the spread that continue to fluctuate, the potential for additional peaks in infection rates, and the timing and availability of vaccines, treatments or cures to slow and eventually stop the spread.

The COVID-19 pandemic and the measures taken by many countries in response have contributed to a general slowdown in the global economy and had a mixed effect and could in the future have a mixed or adverse effect on our business and operations, our customers and our partners.

Starting with the initial outbreak of the virus in China and as it has spread globally, we have experienced disruptions and higher costs in our manufacturing, supply chain and logistics operations and outsourced services, and in some cases increased sell-through, resulting in shortages of our products in our distribution channels and loss of market share and opportunities.

10 unchanged sentences

We continue to monitor the situation and attempt to take appropriate actions in accordance with the recommendations and requirements of relevant authorities.

The full extent of the impact of the COVID-19 pandemic on our business and on our operational and financial performance and condition is currently uncertain and will depend on many factors outside our 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 an vaccines, the imposition of effective public safety and other protective measures, the impact of COVID-19 on the global economy and demand for our products and services, and the impact of the virus on the business, operations and financial condition of our partners.

Should the COVID-19 situation or global economic slowdown not improve or worsen, or if our attempts to mitigate its impact on our operations and costs are not successful, our business, results of operations, financial condition and prospects may be adversely affected.

The full extent of the impact of the COVID-19 pandemic on our business and on our operational and financial performance and condition is currently uncertain and will depend on many factors outside our 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 our products and services, and the impact of the virus on the business, operations and financial condition of our partners.

Should the COVID-19 situation or global economic slowdown not improve or worsen, or if our attempts to mitigate its

impact on our operations and costs are not successful, our business, results of operations, financial condition and prospects may be adversely affected.

Our business depends in part on access to third-party platforms or technologies, and if the access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected.

44 unchanged sentences

Reductions in our workforce could make it difficult to attract, motivate and retain employees, which could adversely affect our business.

Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results.

Our gross margins can vary due to consumer demand, competition, product pricing, product lifecycle, product mix, new product introductions, unit volumes, acquisitions and divestitures, commodity, supply chain and logistics costs, capacity utilization, geographic sales mix, currency exchange rates, trade policy and tariffs, and the complexity and functionality of new product innovations and other factors.

In particular, if we are not able to introduce new products in a timely manner at the product cost we expect, or if consumer demand for our products is less than we anticipate, or if there are product pricing, marketing and other initiatives by our competitors to which we need to react or that are initiated by us to drive sales that lower our margins, then our overall gross margin will be less than we project.

In addition, our gross margins may vary significantly by product line, sales geography and customer type, as well as within product lines.

When the mix of products sold shifts from higher margin product lines to lower margin product lines, to lower margin sales geographies, or to lower margin products within product lines, our overall gross margins and our profitability may be adversely affected.

As we expand within and into new product categories, our products in those categories may have lower gross margins than in our traditional product categories.

Consumer demand in these product categories, based on style, color and other factors, tends to be less predictable and tends to vary more across geographic markets.

we may face higher up-front investments, inventory costs associated with attempting to anticipate consumer preferences, and increased inventory write-offs.

If we are unable to offset these potentially lower margins by enhancing the margins in our more traditional product categories, our profitability may be adversely affected.

Changes in trade policy, including tariffs and the tariffs focused on China in particular, and currency exchange rates also have adverse impacts on our gross margins.

The COVID-19 pandemic is putting pressure on our gross margins as well as causing us to face uncertain product demand and incur increased air freight and other costs to fulfill sell through demand, replenish channel inventory, and maintain shelf presence and market share.

The impact of these factors on gross margins can create unanticipated fluctuations in our operating results, which may cause volatility in the price of our shares.

As we continue our efforts to lower our costs and improve our operating leverage, we may or may not fully realize our goals.

Our strategy over the past several years has been based in part on simplifying the organization, reducing operating costs through global workforce reductions and a reduction in the complexity of our product portfolio, with the goal of better aligning costs with our current business.

We restructured our business in fiscal years 2014 through 2016, and we may continue to divest or discontinue non-strategic product categories.

During the third quarter of fiscal year 2016, we divested our Lifesize video conferencing business and completed our exit from the OEM business.

During the first quarter of fiscal year 2019, we implemented a restructuring plan to streamline and realign our overall organization structure and reallocate resources to support long-term growth opportunities.

We substantially completed this restructuring during the three months ended June 30, 2019.

Our ability to achieve the desired and anticipated cost savings and other benefits from these simplification, cost-cutting and restructuring activities, and within our desired and expected timeframes, are subject to many estimates and assumptions, and the actual savings and timing for those savings may vary materially based on factors such as local labor regulations, negotiations with third parties, and operational requirements.

These estimates and assumptions are also subject to significant economic, competitive and other uncertainties, some of which are beyond our control.

There can be no assurance that we will fully realize the desired and anticipated benefits from these activities.

To the extent that we are unable to improve our financial performance, further restructuring measures may be required in the future.

Furthermore, we are expecting to be able to use the anticipated cost savings from these activities to fund and support our current growth opportunities and incremental investments for future growth.

If the cost-savings do not materialize as anticipated, or within our expected timeframes, our ability to invest in growth may be limited and our business and operating results may be adversely affected.

As we grow, explore new opportunities and markets, hire new management and other personnel, and fund research and development, marketing, brand development, sales, operations, investments in intellectual property and acquisitions to support this growth and our new opportunities, some or all of which may not succeed, we expect to experience continued pressure on our cost structure and expenses.

As part of the restructuring plans, we reduced the size of our product portfolio and the assortment of similar products at similar price points within each product category over the past several fiscal years.

While we are constantly replacing products and are dependent on the success of our new products, this product portfolio simplification has made us even more dependent on the success of the new products that we are introducing.

As we focus on growth opportunities, we are divesting or discontinuing non-strategic product categories and pursuing strategic acquisitions and investments, which could have an adverse impact on our business.

7 unchanged sentences

We will evaluate acquisition opportunities that could provide us with additional product or service offerings or with additional industry expertise, assets and capabilities.

For example, we acquired ASTRO Gaming to expand into the console gaming market, we acquired Jaybird to expand into the wireless audio wearables market, we acquired Saitek to expand into the gaming simulation and controller markets, we acquired Blue Microphones to expand into the microphones market, and we acquired Streamlabs to expand our software and service capabilities and tools for the streaming market.

For example, we acquired ASTRO Gaming to expand into the console gaming market, we acquired Jaybird to expand

into the wireless audio wearables market, we acquired Saitek to expand into the gaming simulation and controller markets, we acquired Blue Microphones to expand into the microphones market, and we acquired Streamlabs to expand our software and service capabilities and tools for the streaming market.

Acquisitions could result in difficulties integrating acquired operations, products, technology, internal controls, personnel and management teams and result in the diversion of capital and management’s attention away from other business issues and opportunities.

22 unchanged sentences

Our sales channel partners also sell products offered by our competitors and, in the case of retailer house brands, may also be our competitors.

our sales channel partners show preference for their own house brands, our sales channel partners may de-emphasize or decline to carry our products.

In addition, certain of our sales channel partners could decide to de-emphasize the product categories that we offer in exchange for other product categories that they believe provide them with higher returns.

If product competitors offer our sales channel partners more favorable terms, have more products available to meet their needs, or utilize the leverage of broader product lines sold through the channel, or if our sales channel partners show preference for their own house brands, our sales channel partners may de-emphasize or decline to carry our products.

In addition, certain of our sales channel partners could decide to de-emphasize the product categories that we offer in exchange for other product categories that they believe

provide them with higher returns.

If we are unable to maintain successful relationships with these sales channel partners or to maintain our distribution channels, our business will suffer.

45 unchanged sentences

As our supply chain is complex and we use contract manufacturers for some of our products, we may not be able to sufficiently verify the origins of the relevant minerals used in our products through the due diligence procedures that we implement, which may adversely affect our reputation.

We may also encounter

challenges to satisfy those customers who require that all of the components of our products be certified as conflict-free, which could, if we are unable to satisfy their requirements or pass through any increased costs associated with meeting their requirements place us at a competitive disadvantage, adversely affect our business and operating results, or both.

We may also encounter challenges to satisfy those customers who require that all of the components of our products be certified as conflict-free, which could, if we are unable to satisfy their requirements

or pass through any increased costs associated with meeting their requirements place us at a competitive disadvantage, adversely affect our business and operating results, or both.

We filed our report for the calendar year 2019 with the SEC on May 29, 2020.

Risks Related to our Global Operations and Regulatory Environment

We conduct operations in a number of countries and have invested significantly in growing our sales and marketing activities in China, and the effect of business, legal and political risks associated with international operations could adversely affect us.

42 unchanged sentences

Dollar-denominated sales and operating expenses worldwide.

For the three months ended September 30, 2020 , approximately 50% of our revenue was in non-U.S.

For the three months ended December 31, 2020, approximately 54% of our revenue was in non-U.S.

denominated currencies.

16 unchanged sentences

We use derivative instruments to hedge certain exposures to fluctuations in currency exchange rates.

The use of such hedging activities may not offset any, or more than a portion, of the adverse financial effects of unfavorable

movements in currency exchange rates over the limited time the hedges are in place and do not protect us from long term shifts in currency exchange rates.

The use of such hedging activities may not offset any, or more than a portion, of the adverse financial effects of unfavorable movements in currency exchange rates over the limited time the hedges are in place and do not protect us from long term shifts in currency exchange rates.

As a result, fluctuations in currency exchange rates could adversely affect our business, operating results and financial condition.

20 unchanged sentences

TRAF mandates reforms in the cantonal tax law that were enacted by the canton of Vaud on March 10, 2020 and took effect as of January 1, 2020.

As a result of the reform, Logitech will incur cash income taxes that will increase over time as the deferred income tax benefit established in connection with the reform diminishes.

As a result of the reform, Logitech will incur cash income taxes that

will increase over time as the deferred income tax benefit established in connection with the reform diminishes.

See "Note 7 - Income Taxes" in our fiscal year 2020 Form 10-K for more information.

The canton’s tax authority is primarily delegated by the

Swiss federal government and its implementation of TRAF in general or with respect to Logitech is subject to Swiss federal review and challenge.

The canton’s tax authority is primarily delegated by the Swiss federal government and its implementation of TRAF in general or with respect to Logitech is subject to Swiss federal review and challenge.

Implementation of any material change in tax laws or policies or the adoption of new interpretations of existing tax laws and rulings, or termination or replacement of our tax arrangements with the canton of Vaud, by Switzerland or the canton of Vaud could result in a higher effective income tax rate, or a decreased tax asset, a charge to earnings and an accelerated pace of increase in our effective income tax rate, or a combination of such impacts, on our worldwide earnings and any such change will adversely affect our net income.

11 unchanged sentences

If our effective income tax rate increases in future periods, our net income and cash flows could be adversely affected.

Risks Related to Intellectual Property, Cyber Security and Privacy

Claims by others that we infringe their proprietary technology could adversely affect our business.

15 unchanged sentences

It is possible that any patent owned by us will be invalidated, deemed unenforceable, circumvented or challenged, that the patent rights granted will not provide competitive advantages to us, or that any of our pending or future patent applications will not be granted, maintained or enforced.

In addition, other intellectual property laws or our confidentiality procedures and contractual provisions may not adequately protect our intellectual

In addition, other intellectual property laws or our confidentiality procedures and contractual provisions may not adequately protect our intellectual property.

Also, others may independently develop similar technology, duplicate our products, or design around our patents or other intellectual property rights.

14 unchanged sentences

We allocate significant resources to maintain our information technology systems and deploy network security, data encryption, training and other measures to protect against unauthorized access or misuse.

Nevertheless, our websites and information technology systems have been subject to or threatened with, and are susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, structural or operational failures, computer viruses, attacks by computer hackers, other data security issues, telecommunication failures, user error, malfeasance, catastrophes, system or software upgrades, integration or migration, or other foreseeable and unforeseen events.

Nevertheless, our websites and information technology systems have been and could continue to be subject to or threatened with, and are susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, structural or operational failures, computer viruses, attacks by computer hackers, other data security issues, telecommunication failures, user error, malfeasance, catastrophes, system or software upgrades, integration or migration, or other foreseeable and unforeseen events.

From time to time, we and our suppliers have identified vulnerabilities or other issues that we believe have been addressed, and we expect such issues to continue to arise.

None of such disruptions or issues has individually or in the aggregate resulted in security incident with a material impact on us.

Moreover, due to the COVID-19 pandemic, there is an increased risk that we may experience security breach related incidents as a result of our employees, service providers, and third parties working remotely on less secure systems.

3 unchanged sentences

This information is increasingly subject to legislation and regulations in numerous jurisdictions around the world, and especially in Europe.

For example, the European Union adopted the General Data Protection Regulation (GDPR), which is applicable to us and to all companies processing data of European Union residents, became effective in May 2018 and imposes significant fines and sanctions for violation of the Regulation.

For example, the European Union adopted the General Data Protection Regulation (GDPR), which is applicable to us and to all companies processing data of European Union residents, became effective in

May 2018 and imposes significant fines and sanctions for violation of the Regulation.

Compliance with the GDPR has been made more difficult by the recent invalidity of the U.S.-European Union Privacy Shield.

2 unchanged sentences

The collection of user data heightens the risk of security breaches and other data security issues related to our IT systems and the systems of third-party data storage and other service and IT providers.

Such laws and regulations, and the variation between jurisdictions,

as well as additional security measures and risk, could subject us to costs, allocation of additional resources, liabilities or negative publicity that could adversely affect our business.

In previous periods, we identified material weaknesses in our internal control over financial reporting and, if we are unable to satisfy regulatory requirements relating to internal controls or if our internal control over financial reporting is not effective, our business and stock price could be adversely affected.

In connection with Section 404 of the Sarbanes-Oxley Act and as recently as our audited financial statements for the fiscal year ended March 31, 2017, we have identified in the past and may, from time-to-time in the future, identify issues with our internal controls and deficiencies in our internal control over financial reporting.

Certain of those material weaknesses resulted in late filings of and an amendment to our periodic reports and in restatements of our financial results.

A material weakness indicates a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

If additional material weaknesses or significant deficiencies in our internal controls are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results, we could be subject to litigation, whether meritorious or not, remediation efforts could be time consuming, costly and/or divert significant operational resources, we could lose investor confidence in the accuracy and completeness of our financial reports, and our reputation, business, results of operations and stock price could be adversely affected.

Such laws and regulations, and the variation between jurisdictions, as well as additional security measures and risk, could subject us to costs, allocation of additional resources, financial penalties or other liabilities or negative publicity that could adversely affect our business.

Risks Related to our Financial Results

Our operating results are difficult to predict and fluctuations in results may cause volatility in the price of our shares.

• Our operating results are highly dependent on the volume and timing of orders received during the quarter, which are difficult to forecast.

Customers generally order on an as-needed basis and we typically do not obtain firm, long-term purchase commitments from our customers.

As a result, our revenues in any quarter depend primarily on orders booked and shipped in that quarter.

• A significant portion of our quarterly retail sales typically occurs in the last weeks of each quarter, further increasing the difficulty in predicting quarterly revenues and profitability.

• Our sales are impacted by consumer demand and current and future global economic and political conditions, including trade restrictions and tariffs, and can, therefore, fluctuate abruptly and significantly during periods of uncertain economic conditions or geographic distress, as well as from shifts in distributor inventory practices and consumer buying patterns.

• We must incur a large portion of our costs in advance of sales orders because we must plan research and production, order components, buy tooling equipment, and enter into development, sales and marketing, and other operating commitments prior to obtaining firm commitments from our customers.

This makes it difficult for us to rapidly adjust our costs during the quarter in response to a revenue shortfall, which could adversely affect our operating results.

• The COVID-19 pandemic has led to evolving changes in our supply, operations, logistics and related expenses and use patterns and demand for certain of our products that may not recur or be sustainable in future periods, as well as uncertainty in global macroeconomic conditions.

• We engage in acquisitions and divestitures, and such activity varies from period to period.

Such variance may affect our growth, our previous outlook and expectations, and comparisons of our operating results and financial statements between periods.

• We are continuously attempting to simplify our organization, to reduce operating costs through expense reduction and at times through global workforce reductions, to reduce the complexity of our product portfolio, and to better align costs with our current business as we expand from PC accessories to growth opportunities in accessories and other products and services for creativity and productivity, gaming, video collaboration, mobile devices, music, digital home and other product categories.

• Fluctuations in currency exchange rates can impact our revenues, expenses and profitability because we report our financial statements in U.S.

Dollars, whereas a significant portion of our revenues and expenses are in other currencies.

We attempt to adjust product prices over time to offset the impact of currency movements.

Because our operating results are difficult to predict, our results may be below the expectations of financial analysts and investors, which could cause the price of our shares to decline.

Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results.

In addition, our gross margins may vary significantly by product line, sales geography and customer type, as well as within product lines.

As we expand within and into new product categories, our products in those categories may have lower gross margins than in our traditional product categories.

Consumer demand in these product categories, based on style, color and other factors, tends to be less predictable and tends to vary more across geographic markets.

As a result, we may face higher up-front investments, inventory costs associated with attempting to anticipate consumer preferences, and increased inventory write-offs.

If we are unable to offset these potentially lower margins by enhancing the margins in our more traditional product categories, our profitability may be adversely affected.

Changes in trade policy, including tariffs and the tariffs focused on China in particular, and currency exchange rates also have adverse impacts on our gross margins.

The impact of these factors on gross margins can create unanticipated fluctuations in our operating results, which may cause volatility in the price of our shares.

As we continue our efforts to lower our costs and improve our operating leverage, we may or may not fully realize our goals .

We restructured our business in fiscal years 2014 through 2016, and we may continue to divest or discontinue non-strategic product categories.

During the third quarter of fiscal year 2016, we divested our Lifesize video conferencing business and completed our exit from the OEM business.

We substantially completed this restructuring during the three months ended June 30, 2019.

These estimates and assumptions are also subject to significant economic, competitive and other uncertainties, some of which are

beyond our control.

There can be no assurance that we will fully realize the desired and anticipated benefits from these activities.

To the extent that we are unable to improve our financial performance, further restructuring measures may be required in the future.

Furthermore, we are expecting to be able to use the anticipated cost savings from these activities to fund and support our current growth opportunities and incremental investments for future growth.

We cannot ensure that our current share repurchase program will be fully utilized or that it will enhance long-term shareholder value.

14 unchanged sentences

Without dividends, the trading price of our shares must appreciate for investors to realize a gain on their investment.

Certain of those material weaknesses resulted in late filings of and an amendment to our periodic reports and in restatements of our financial results.

A material weakness indicates a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Goodwill impairment charges could have an adverse effect on the results of our operations.

5 unchanged sentences

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 1A. Risk Factors