+Added: 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.
+Added: 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.
+Added: See also the other information set forth in this Annual Report on Form 10-K, including in Part I, Item 1 "Business," Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related Notes.
+Added: Summary of Risk Factors
+Added: Risks Related to our Business
+Added: • 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.
+Added: • 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.
+Added: • 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.
+Added: • If we do not compete effectively, demand for our products could decline and our business and operating results could be adversely affected.
+Added: • The full effect of the COVID-19 pandemic is still uncertain and cannot be predicted, and could adversely affect the Company’s business, results of operations and financial condition.
+Added: • Our business depends in part on access to third-party platforms or technologies, and if the access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results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.
+Added: • If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected.
+Added: • Our success largely depends on our ability to hire, retain, integrate and motivate sufficient numbers of qualified personnel, including senior management.
+Added: 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.
+Added: • 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.
+Added: • We rely on third parties to sell and distribute our products, and we rely on their information to manage our business.
+Added: 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.
+Added: • 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.
+Added: • If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales.
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 17
+Added: • 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.
+Added: Risks Related to Global Nature of our Operations and Regulatory Environment
+Added: • 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.
+Added: • 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.
+Added: • Our financial performance is subject to risks associated with fluctuations in currency exchange rates.
+Added: • We are subject to risks related to our environmental, social and governance (ESG) activities and disclosures.
+Added: • 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.
+Added: • 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.
+Added: Risks Related to Intellectual Property, Cyber Security and Privacy
+Added: • Claims by others that we infringe their proprietary technology could adversely affect our business.
+Added: • We may be unable to protect our proprietary rights.
+Added: Unauthorized use of our technology may result in the development of products that compete with our products.
+Added: • Product quality issues could adversely affect our reputation, business and operating results.
+Added: • Significant disruptions in, or breaches in security of, our websites or information technology systems could adversely affect our business.
+Added: • 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.
+Added: 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
−Removed: 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:
−Removed: Our operating results are highly dependent on the volume and timing of orders received during the quarter, which are difficult to forecast.
−Removed: Customers generally order on an as-needed basis and we typically do not obtain firm, long-term purchase commitments from our customers.
−Removed: As a result, our revenues in any quarter depend primarily on orders booked and shipped in that quarter.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Changes in supply, operations and demand and uncertainty due to the COVID-19 pandemic.
−Removed: We engage in acquisitions and divestitures, and such activity varies from period to period.
−Removed: Such variance may affect our growth, our previous outlook and expectations, and comparisons of our operating results and financial statements between periods.
−Removed: We have attempted to simplify our organization, to reduce operating costs through expense reduction and 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 for music, gaming, video collaboration, digital home, mobile devices and other product categories.
−Removed: 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.
−Removed: Fluctuations in currency exchange rates can impact our revenues, expenses and profitability because we report our financial statements in U.S.
−Removed: Dollars, whereas a significant portion of our revenues and expenses are in other currencies.
−Removed: We attempt to adjust product prices over time to offset the impact of currency movements.
−Removed: 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.
−Removed: 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.
+Added: • Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results.
+Added: • We cannot ensure that our current share repurchase program will be fully utilized or that it will enhance long-term shareholder value.
+Added: Share repurchases may also increase the volatility of the trading price of our shares.
+Added: We similarly cannot ensure that we will continue to increase our dividend payments or to pay dividends at all.
+Added: Share repurchases and dividends diminish our cash reserves.
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 18
+Added: 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.
1 unchanged sentence
As a result, we must continually innovate in our new and existing product categories, introduce new products and technologies, and enhance existing products in order to remain competitive.
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 17
The success of our product portfolio depends on several factors, including our ability to:
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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.
−Removed: Our failure to manage the transition to new products or the integration of new technology into new or existing products could adversely affect our business, results of operations, operating cash flows and financial condition.
+Added: 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.
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 19
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.
We have historically targeted peripherals for the PC platform.
−Removed: Consumer demand for PCs, especially in our traditional, mature markets such as North America, Western and Nordic Europe, Japan and Australia, has been declining or flat for several years, and such trends may continue in the future.
−Removed: This has put pressure on consumer demand for PC peripherals in many of our markets and may cause sales growth of our PC peripherals to slow and, in some cases, decline.
−Removed: We expect this trend may continue.
Our sales of PC peripherals might be less than we expect due to a decline in business or economic conditions in one or more of the countries or regions, a greater decline than we expect in demand for our products, our inability to successfully execute our sales and marketing plans, or for other reasons.
−Removed: Global economic concerns, such as the COVID-19 pandemic, the varying pace of global economic recovery, political uncertainties created by policy changes such as Brexit, tariffs and policies that inhibit trade, the impact of sovereign debt issues in Europe, the
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 18
−Removed: impact of oil prices on Russia and other countries, conflicts with either local or global financial implications and economic slowdown in China, create unpredictability and add risk to our future outlook.
−Removed: As a result, we are attempting to diversify our product category portfolio and focusing more of our attention, which may include personnel, financial resources and management attention, on product innovations and growth opportunities, including products for gaming, products for video collaboration, products for the consumption of digital music, products for the digital home, and on other potential growth opportunities in addition to our PC peripherals product categories.
−Removed: Our investments may not result in the growth we expect, or when we expect it, for a variety of reasons including those described below.
+Added: Global economic concerns, such as the ongoing COVID-19 pandemic, the varying pace of global economic recovery, political uncertainties created by policy changes such as Brexit, tariffs and policies that inhibit trade, the impact of sovereign debt issues in Europe, the impact of oil prices on Russia and other countries, conflicts with either local or global financial implications and economic slowdown in China, create unpredictability and add risk to our future outlook.
+Added: As a result, we are attempting to diversify our product category portfolio and focusing more of our attention, which may include personnel, financial resources and management attention, on product innovations and growth opportunities, including products and services for gaming, for video collaboration, for the consumption of digital music, for the digital home, and on other potential growth opportunities in addition to our PC peripherals product categories.
+Added: Our investments may not result in the growth we expect, or when we expect it, for a variety of reasons, including but not limited to, changes in growth trends, evolving and changing market and increasing competition, market opportunities, and product innovation.
Creativity & Productivity .
−Removed: Despite slowing or declines in sales of PCs, our pointing devices, keyboards, webcams and other PC peripherals have continued to see some growth as a result of consumers refreshing their existing PCs, product innovation and new consumer trends, such as social content creation.
+Added: Our pointing devices, keyboards, webcams and other PC peripherals have continued to see growth as a result of work-from-home and remote learning trends, consumers refreshing their existing PCs, product innovation and new consumer trends, such as social content creation.
If these trends and other growth drivers do not continue, or result in erratic periods of growth, our results of operations could be more susceptible to the trends in PCs and our business and our results could be adversely affected.
−Removed: We are building a diverse business that features a variety of gaming peripherals.
+Added: We are building a diverse business that features a variety of gaming peripherals and services.
The rapidly evolving and changing market and increasing competition increase the risk that we do not allocate our resources in line with the market and our business and our results of operations could be adversely affected.
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This process is inherently risky and will result in investments in time and resources for which we do not achieve any return or value.
−Removed: Each of these growth categories and many of the growth opportunities that we may pursue are subject to constant and rapidly changing and evolving technologies and evolving industry standards and may be replaced by new technology concepts or platforms.
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 20
+Added: Our growth opportunities and those we may pursue are subject to constant and rapidly changing and evolving technologies and evolving industry standards and may be replaced by new technology concepts or platforms.
Some of these growth categories and opportunities are also characterized by short product cycles, frequent new product introductions and enhancements and rapidly changing and evolving consumer preferences with respect to design and features that require calculated risk-taking and fast responsiveness and result in short opportunities to establish a market presence.
1 unchanged sentence
The growth opportunities and strength and number of competitors that we face in all of our product categories mean that we are at risk of new competitors coming to market with more innovative products that are more attractive to customers than ours or priced more competitively.
−Removed: If we do not develop innovative and reliable peripherals and enhancements in a cost-effective and timely manner that are attractive to consumers in these markets, if we are otherwise unsuccessful entering and competing in these growth categories or responding to our many competitors and to the rapidly changing conditions in these growth categories, if the growth categories in which we invest our
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 19
−Removed: limited resources do not emerge as the opportunities or do not produce the growth or profitability we expect, or when we expect it, or if we do not correctly anticipate changes and evolutions in technology and platforms, our business and results of operations could be adversely affected.
+Added: If we do not develop innovative and reliable product offerings and enhancements in a cost-effective and timely manner that are attractive to consumers in these markets, if we are otherwise unsuccessful entering and competing in these growth categories or responding to our many competitors and to the rapidly changing conditions in these growth categories, if the growth categories in which we invest our limited resources do not emerge as the opportunities or do not produce the growth or profitability we expect, or when we expect it, or if we do not correctly anticipate changes and evolutions in technology and platforms, our business and results of operations 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.
7 unchanged sentences
The peripherals industry is intensely competitive.
−Removed: Most of our product categories are characterized by large, well-financed competitors with strong brand names and highly effective research and development, marketing and sales capabilities, short product life cycles, continual performance enhancements, and rapid adoption of technological and product advancements by competitors in our retail markets.
+Added: Most of our product categories are characterized by large, well-financed competitors with strong brand names and highly effective research and development, marketing and sales capabilities, short product life cycles, continual performance enhancements, and rapid adoption of technological and product advancements by competitors in our product markets.
Many of our competitors have broad product portfolios across several of our product categories and are able to use the strength of their brands to move into adjacent categories.
1 unchanged sentence
We experience aggressive price competition and other promotional activities from our primary competitors and from less-established brands, including brands owned by retail customers known as house brands.
−Removed: In addition, our competitors may offer customers terms and conditions that may be more favorable than our terms and conditions and may require us to take actions to increase our customer incentive programs, which could impact our revenues and operating margins.
+Added: As we shift the focus of our marketing efforts in certain categories from promotional activities to a pull strategy, the pressures from this competition and from our distribution channels, combined with the implementation risks of such a strategy shift, could adversely affect our competitive position, market share and business.
+Added: In addition, our competitors may offer customers terms and conditions that may be more favorable than our terms and conditions and may require us to take actions to maintain or increase our customer incentive programs, which could impact our revenues and operating margins.
In recent years, we have expanded the categories of products we sell and entered new markets.
2 unchanged sentences
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.
−Removed: Many of these companies, such as Microsoft, Apple, Google, Cisco, Sony Corporation, Samsung and others, have greater financial, technical, sales, marketing and other resources than we have.
+Added: Many of these companies, such as Microsoft, Apple, Google, Cisco, Sony, Samsung, Amazon and others, have greater financial, technical, sales, marketing and other resources than we have.
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 21
Microsoft, Apple, Google and Amazon are leading producers of operating systems, hardware, platforms and applications with which our mice, keyboards, wireless speakers and other products are designed to operate.
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In addition, Microsoft, Apple, Google, Amazon or other competitors may be able to control distribution channels or offer pricing advantages on bundled hardware and software products that we may not be able to offer, and maybe financially positioned to exert significant downward pressure on product prices and upward pressure on promotional incentives in order to gain market share.
−Removed: Creativity & Productivity
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 20
−Removed: Pointing Devices.
−Removed: Apple, Microsoft and HP are our main competitors worldwide.
−Removed: We also experience competition and pricing pressure from less-established brands, including house brands and local competitors in Asian markets such as Elecom, Buffalo, Shenzhen Rapoo and Xiaomi.
−Removed: Keyboards & Combo .
−Removed: Microsoft and Apple are our main competitors in our PC keyboard and combo product lines.
−Removed: We also experience competition and pricing pressure for keyboard and combos from less-established brands, including house brands and local competitors in Asian markets such as Shenzhen Rapoo and Xiaomi.
−Removed: Tablet & Other Accessories .
−Removed: Competitors in the tablet keyboard market are Apple, Zagg, Kensington, Belkin, Targus and other less-established brands.
−Removed: Although we are one of the leaders in the tablet keyboard market and continue to bring innovative offerings to the market, we expect the competition may increase.
−Removed: Competitors in the tablet case market include Apple, Otter, Speck and a large number of small brands.
−Removed: Our primary competitors for PC webcams are Microsoft and other manufacturers taking smaller market share such as Razer.
−Removed: Competitors for our Gaming products include Razer, Corsair Components, SteelSeries, Turtle Beach and Kingston, among others.
−Removed: Video Collaboration
−Removed: Our competitors for Video Collaboration products are numerous across various categories with many new entrants.
−Removed: Competitors include Cisco Systems, Poly, GN Netcom/Jabra (which recently acquired Altia systems), and AVer Information, among others.
−Removed: Mobile Speakers.
−Removed: Our competitors for Bluetooth wireless speakers include Bose, Harman (owned by Samsung) and Beats (owned by Apple) among others.
−Removed: Harman is our largest competitor.
−Removed: Apple's ownership of Beats may impact our access to shelf space in Apple retail stores and adversely impact our ability to succeed in this important growth market.
−Removed: Personal voice assistants and other devices that offer music, such as Sonos, Amazon's Echo, Google Home and Apple HomePod also compete with our products.
−Removed: Amazon is also a significant customer of our products.
−Removed: Audio & Wearables .
−Removed: For PC speakers, our competitors include Bose, Cyber Acoustics, Phillips, Creative Labs, Apple and Samsung, among others.
−Removed: For PC headset, we face numerous competitors, including Plantronics and GN Netcom, among others.
−Removed: In-ear headphones competitors include Beats, Bose, Apple, Sony, JBL and Sennheiser, among others.
−Removed: Our competitors for Blue Microphones products include Rode, Audio-Technica, Samson, Shure, Razer and Apogee, among others.
−Removed: Direct competitors in the remote control market include pro-installer-focused Universal Remote Control and new “DIY” entrants.
−Removed: Indirect competition exists in the form of low-end “replacement remotes” such as Sony, RCA, GE, pure app-based solutions such as Peel, as well as device and/or subscriber-specific solutions from TV makers such as Samsung and Vizio and multisystem operators, or MSOs, such as Comcast and DirecTV.
−Removed: Competition in the home control market also exists in form of home automation platforms such as Smart Things (owned by Samsung), Amazon with their Echo product, Google Home and Nest (owned by Alphabet), Wink and many other startups.
−Removed: Many of these companies also integrate their products with Logitech's smart home and Harmony remote products.
−Removed: The full effect of the COVID-19 pandemic is uncertain and cannot be predicted, and the Company’s business, results of operations and financial condition could be adversely affected by the COVID-19 pandemic.
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 21
−Removed: 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.
−Removed: Such measures have included restrictions on travel and business operations, indefinite business closures, and quarantines and shelter-at-home orders.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: In order to renew manufacturing at our own facility, we have quarantined employees and re-engineered our manufacturing operations with diminished capacity.
−Removed: Sales of our products have also been impeded by closures of retail stores and disruptions in other channel partner points of sale.
−Removed: At the same time, as a result of government orders and concern for the well-being of our employees and their families, we have required substantially all of our employees in non-manufacturing facilities to work remotely.
−Removed: This has led to inefficiencies and operational, cybersecurity and other risks and costs which could have an adverse impact to our results of operations.
−Removed: We cannot reasonably predict when our employees will be able to return to our offices or the further precautionary measures and costs we may need to incur to ensure the health of our employees and to mitigate the spread and impact of the virus.
−Removed: Additionally, our management team and employees had to focus on planning for and mitigating operational changes and risks of the COVID-19 pandemic, shifting some of their attention from focusing on and adversely affecting our normal business, strategic plans and other initiatives.
+Added: For additional information, see "Competition” in Item 1 above.
+Added: The full effect of the COVID-19 pandemic is still uncertain and cannot be predicted, and could adversely affect the Company’s business, results of operations and financial condition.
+Added: COVID-19 has spread rapidly throughout the world, causing 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.
+Added: Such measures have included restrictions on travel and business operations, quarantines and shelter-at-home orders, and often resulted in indefinite business closures.
+Added: The full effects of the COVID-19 pandemic cannot be predicted as a result of uncertainties, including if and how the extent and rate of the spread continue to fluctuate in different parts of the world, the availability and effectiveness of vaccines and vaccination progress, and the treatments or cures to slow and eventually stop the spread.
+Added: 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.
+Added: Starting with the initial outbreak of the virus in China, where we have a manufacturing facility, 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.
We have also incurred additional costs related to business continuity.
−Removed: During the three months ended March 31, 2020, the COVID-19 pandemic had mixed effects on our results of operations, and it may continue to have mixed or adverse effects.
−Removed: It also may have the effect of heightening many of the other risks described in under this heading “Risk Factors”.
−Removed: We continue to monitor the situation and attempt to take appropriate actions in accordance with the recommendations and requirements of relevant authorities.
−Removed: 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.
−Removed: Should the COVID-19 situation 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.
+Added: While we believe that the pandemic has accelerated certain trends that are favorable to us, its effects on the use patterns and demand for certain of our products may not be sustainable or may lead to increased competition in certain of our product markets.
+Added: The COVID-19 pandemic also may have the effect of heightening many of the other risks described under this heading “Risk Factors.” We continue to monitor the situation and attempt to take appropriate actions in accordance with the recommendations and requirements of relevant authorities.
+Added: The full extent of the impact of the COVID-19 pandemic on our business and on our operational and financial performance and condition is still 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 further development and availability of effective treatments and vaccines and the vaccination progress, 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 and customers.
+Added: 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.
1 unchanged sentence
With the growth of mobile, tablet, gaming and other computer devices, digital music and personal voice assistants, the number of platforms has grown, and with it the complexity and increased need for us to have business and contractual relationships with the platform owners in order to produce products compatible with these platforms.
−Removed: Our product portfolio includes current and future products designed for use with third-party platforms or software, such as the Apple iPad, iPod, iPhone and Siri, Android phones and tablets, Google Assistant and Amazon Alexa .
+Added: Our product portfolio includes current and future products designed for use with third-party platforms or software, such as the Apple iPad, iPod, iPhone and Siri,
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 22
+Added: Android phones and tablets, Google Assistant and Amazon Alexa .
Our business in these categories relies on our access to the platforms of third parties, some of whom are our competitors.
1 unchanged sentence
As we expand the number of platforms and software applications with which our products are compatible, we may not be successful in launching products for those platforms or software applications, we may not be successful in establishing strong relationships with the new platform or software owners, or we may negatively impact our ability to develop and produce high-quality products on a timely basis for those platforms and software applications or we may otherwise adversely affect our relationships with existing platform or software owners.
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 22
Our access to third-party platforms may require paying a royalty, which lowers our product margins or may otherwise be on terms that are not acceptable to us.
−Removed: In addition, the third-party platforms or technologies used to interact with our product portfolio can be delayed in production or can change without prior notice to us, which can result in our having excess inventory or lower margins.
−Removed: If we are unable to access third-party platforms or technologies, or if our access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies are delayed or change without notice to us, our business and operating results could be adversely affected.
+Added: In addition, the third-party platforms or technologies used to interact with our product portfolio can be delayed in production or can change without prior notice to us, which can result in our having excess inventory, lower margins, lost investment in time and expense, or lost opportunity cost.
+Added: If we are unable to access third-party platforms or technologies, or if our access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies are delayed or changed 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.
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In addition, our products have short product life cycles, so a failure to accurately predict high demand for a product can result in lost sales that we may not recover in subsequent periods, or higher product costs if we meet demand by paying higher costs for materials, production and delivery.
−Removed: We could also frustrate our customers and lose shelf space.
+Added: We could also frustrate our customers and lose shelf space and market share.
Our failure to predict low demand for a product can result in excess inventory, lower cash flows and lower margins if we are required to reduce product prices in order to reduce inventories.
−Removed: If our sales channel partners have excess inventory of our products or decide to decrease their inventories for any reason, they may decrease the amount of products they acquire in subsequent periods, causing disruption in our business and adversely affecting our forecasts and sales.
+Added: If our sales channel partners have excess inventory of our products or decide to decrease their inventories for any reason, they may decrease the number of products they acquire in subsequent periods, which could cause disruption in our business and adversely affect our forecasts and sales.
Over the past few years, we have expanded the types of products we sell and the geographic markets in which we sell them.
The changes in our product portfolio and the expansion of our sales markets have increased the difficulty of accurately forecasting product demand.
−Removed: In addition, starting in fiscal year 2016, we increased the number of our products that we manufacture in our own facilities.
−Removed: This increases the inventory that we purchase and maintain to support such manufacturing.
We are also utilizing sea shipments more extensively than air delivery, which will cause us to build and ship products to our distribution centers earlier and will also result in increases in inventory.
These operational shifts increase the risk that we have excess or obsolete inventory if we do not accurately forecast product demand.
−Removed: Other events or circumstances, including those not in our control, such as the current COVID-19 pandemic, may result in rapid and significant increases or decreases of demand for our products that may result in excess inventory or product unavailability, increases in operational logistics and other costs, and damaged relationships with suppliers or customers.
+Added: Other events or circumstances, including those not in our control, such as the COVID-19 pandemic, may result in rapid and significant increases or decreases of demand for our products that may result in excess inventory or product unavailability, increases in operational logistics and other costs, damaged relationships with suppliers or customers, opportunities for our competitors, and lost market share and revenue.
We have experienced large differences between our forecasts and actual demand for our products.
1 unchanged sentence
If we do not accurately predict product demand, our business and operating results could be adversely affected.
−Removed: Our success largely depends on our ability to hire, retain, integrate and motivate sufficient numbers of qualified personnel, including senior management.
+Added: Our success largely depends on our ability to hire, retain, integrate and motivate sufficient numbers of qualified personnel, including senior leadership.
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.
−Removed: Our success depends on our ability to attract and retain highly skilled personnel, including senior management and international personnel.
−Removed: From time to time, we experience turnover in some of our senior management positions.
+Added: Our success depends on our ability to attract and retain highly skilled personnel, including senior leadership and international personnel.
+Added: From time to time, we experience turnover in some of our senior leadership positions.
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 23
We compensate our employees through a combination of salary, bonuses, benefits and equity compensation.
1 unchanged sentence
If we fail to provide competitive compensation to our employees, it will be difficult to retain, hire and integrate qualified employees and contractors, and we may not be able to maintain and expand our business.
−Removed: If we do not retain or maintain the continuity of our senior managers or other key employees for any reason, including voluntary or
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 23
−Removed: involuntary departure, death or permanent or temporary disability (the risk of which has been underscored during the COVID-19 pandemic), we risk losing institutional knowledge, experience, expertise and other benefits of continuity as well as the ability to attract and retain other key employees.
+Added: If we do not retain or maintain the continuity of our senior leaders or other key employees for any reason, including voluntary or involuntary departure, death or permanent or temporary disability (the risk of which has been underscored during the COVID-19 pandemic), we risk losing institutional knowledge, experience, expertise and other benefits of continuity as well as the ability to attract and retain other key employees.
In addition, we must carefully balance the size of our employee base with our current infrastructure, management resources and anticipated operating cash flows.
1 unchanged sentence
If our revenue growth or employee levels vary significantly, our operating cash flows and financial condition could be adversely affected.
−Removed: Volatility or lack of positive performance in our stock price, including declines in our stock prices in the past year, may also affect our ability to retain key employees, many of whom have been granted equity incentives.
+Added: Volatility or lack of positive performance in our stock price may also affect our ability to retain key employees, many of whom have been granted equity incentives.
Logitech’s practice has been to provide equity incentives to its employees, but the number of shares available for equity grants is limited.
We may find it difficult to provide competitive equity incentives, and our ability to hire, retain and motivate key personnel may suffer.
−Removed: Recently and in past years, we have initiated reductions in our workforce to align our employee base with our business strategy, our anticipated revenue base or with our areas of focus.
−Removed: We have also experienced turnover in our workforce.
−Removed: These reductions and turnover have resulted in reallocations of duties, which could result in employee uncertainty and discontent.
−Removed: Reductions in our workforce could make it difficult to attract, motivate and retain employees, which could adversely affect our business.
−Removed: Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results.
−Removed: 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.
−Removed: 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.
−Removed: In addition, our gross margins may vary significantly by product line, sales geography and customer type, as well as within product lines.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: As a result, we may face higher up-front investments, inventory costs associated with attempting to anticipate consumer preferences, and increased inventory write-offs.
−Removed: 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.
−Removed: 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.
−Removed: The COVID-19 pandemic is putting pressure on our gross margins as well as we 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.
−Removed: 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.
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 24
−Removed: As we continue our efforts to lower our costs and improve our operating leverage, we may or may not fully realize our goals.
−Removed: 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.
−Removed: We restructured our business in fiscal years 2014 through 2016, and we may continue to divest or discontinue non-strategic product categories.
−Removed: During the third quarter of fiscal year 2016, we divested our Lifesize video conferencing business and completed our exit from the OEM business.
−Removed: 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.
−Removed: We substantially completed this restructuring during the three months ended June 30, 2019.
−Removed: 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.
−Removed: These estimates and assumptions are also subject to significant economic, competitive and other uncertainties, some of which are beyond our control.
−Removed: There can be no assurance that we will fully realize the desired and anticipated benefits from these activities.
−Removed: To the extent that we are unable to improve our financial performance, further restructuring measures may be required in the future.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
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If we are unable to effect sales on favorable terms or if realignment is more costly or distracting than we expect or has a negative effect on our organization, employees and retention, then our business and operating results may be adversely affected.
−Removed: Discontinuing products with service components may also cause us to continue to incur expenses to maintain services within the product life cycle or to adversely affect our customer and consumer relationships and brand.
+Added: Discontinuing products with service components may also cause us to continue to incur expenses to maintain services within the product life cycle or may adversely affect our customer and consumer relationships and brand.
Divestitures may also involve warranties, indemnification or covenants that could restrict our business or result in litigation, additional expenses or liabilities.
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If we fail to successfully integrate acquisitions, our business could be harmed.
−Removed: Acquisitions could also result in the assumption of known and unknown liabilities, product, regulatory and other compliance issues, dilutive issuances of our equity securities, the incurrence of debt, disputes over earn-outs or other litigation, and adverse
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 25
−Removed: effects on relationships with our and our target’s employees, customers and suppliers.
+Added: Acquisitions could also result in the assumption of known and unknown liabilities, product, regulatory and other compliance issues, dilutive issuances of our equity securities, the incurrence of debt, disputes over earn-outs or other litigation, and adverse effects on relationships with our and our target’s employees, customers and suppliers.
Moreover, our acquisitions may not be successful in achieving our desired strategy, product, financial or other objectives or expectations, which would also cause our business to suffer.
Acquisitions can also lead to large non-cash charges that can have an adverse effect on our results of operations as a result of write-offs for items such as future impairments of intangible assets and goodwill or the recording of share-based compensation.
−Removed: Several of our past acquisitions have not been successful and have led to impairment charges, including a $122.7 million non-cash goodwill impairment charge in fiscal year 2015 related to our Lifesize video conferencing business which is reported in discontinued operations.
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 24
+Added: If we divest or discontinue product categories or products that we previously acquired, or if the value of those parts of our business become impaired, we may need to evaluate the carrying value of our goodwill.
+Added: Additional impairment charges could adversely affect our results of operations.
+Added: Several of our past acquisitions have not been successful and have led to impairment charges, including a $122.7 million non-cash goodwill impairment charge in fiscal year 2015 related to our Lifesize video conferencing business.
Acquisitions and divestitures may also cause our operating results to fluctuate and make it difficult for investors to compare operating results and financial statements between periods.
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and Ingram Micro - and their affiliated entities.
+Added: We don't have long-term commitments with those customers.
If online sales grow as a percentage of overall sales, we expect that we will become even more reliant on Amazon.
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If we are unable to maintain successful relationships with these sales channel partners or to maintain our distribution channels, our business will suffer.
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 25
As we expand into new product categories and markets in pursuit of growth, we will have to build relationships with new channel partners and adapt to new distribution and marketing models.
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Entrenched and more experienced competitors will make these transitions difficult.
−Removed: Certain product categories, such
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 26
−Removed: as Video Collaboration, may also require that we further build and scale our own enterprise sales force.
−Removed: Several of our competitors already have large enterprise sale forces and experience and success with that sales model.
+Added: Certain product categories, such as Video Collaboration, may also require that we further build and scale our own enterprise sales force.
+Added: Several of our competitors already have large enterprise sales forces and experience and success with that sales model.
If we are unable to build successful distribution channels, build and scale our own enterprise sales force, or successfully market our products in these new product categories, we may not be able to take advantage of the growth opportunities, and our business and our ability to grow our business could be adversely affected.
4 unchanged sentences
Sell-through data is subject to limitations due to collection methods and the third-party nature of the data and thus may not be an accurate indicator of actual consumer demand for our products.
−Removed: In addition, the customers supplying sell-through data vary by geographic region and from period to period, but typically represent a majority of our retail sales.
+Added: The customers supplying sell-through data vary by geographic region and from period to period, but typically represent a majority of our retail sales.
In addition, we rely on channel inventory data from our sales channel partners.
−Removed: If we do not receive this information on a timely and accurate basis, or if we do not properly interpret this information, our results of operations and financial condition may be adversely affected.
+Added: If we do not receive this information on a timely and accurate basis, if this information is not accurate, or if we do not properly interpret this information, our results of operations and financial condition may be adversely affected.
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.
1 unchanged sentence
The majority of our other production is performed by third-party contract manufacturers, including original design manufacturers, in China, Taiwan, Hong Kong, Malaysia, Vietnam, and Thailand.
−Removed: Our manufacturing operations in China could be adversely affected by changes in the interpretation and enforcement of legal standards, strains on China’s available labor pool, changes in labor costs and other employment dynamics, high turnover among Chinese employees, infrastructure issues, import-export issues, currency transfer restrictions, natural disasters, regional or global pandemics, conflicts or disagreements between China and Taiwan or China and the United States, labor unrest, and other trade customs and practices that are dissimilar to those in the United States and Europe.
+Added: Our manufacturing operations in China could be adversely affected by changes in the interpretation and enforcement of legal standards, strains on China’s available labor pool, changes in labor costs and other employment dynamics, high turnover among Chinese employees, infrastructure issues, import-export issues, cross-border intellectual property and technology restrictions, currency transfer restrictions, natural disasters, regional or global pandemics, conflicts or disagreements between China and Taiwan or China and the United States, labor unrest, and other trade customs and practices that are dissimilar to those in the United States and Europe.
Interpretation and enforcement of China’s laws and regulations continue to evolve, and we expect differences in interpretation and enforcement to continue in the foreseeable future.
4 unchanged sentences
These conditions could adversely affect our financial results.
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 26
If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales.
1 unchanged sentence
We rely on third parties to manufacture many of our products, manage centralized distribution centers, and transport our products.
−Removed: If we do not successfully coordinate the timely manufacturing and distribution of our products, if our manufacturers, distribution logistics providers or transport providers are not able to successfully and timely process our business or if we do not receive timely and accurate information from such providers, and especially if we expand into new product categories or our business grows in volume, we may have an insufficient
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 27
−Removed: supply of products to meet customer demand, we could lose sales, we may experience a build-up in inventory, we may incur additional costs, and our financial performance and reporting may be adversely affected.
+Added: If we do not successfully coordinate the timely manufacturing and distribution of our products, if our manufacturers, distribution logistics providers or transport providers are not able to successfully and timely process our business or if we do not receive timely and accurate information from such providers, and especially if we expand into new product categories or our business grows in volume, we may have an insufficient supply of products to meet customer demand, we could lose sales, we may experience a build-up in inventory, we may incur additional costs, and our financial performance and reporting may be adversely affected.
By locating our manufacturing in China and Southeast Asia, we are reliant on third parties to get our products to distributors around the world.
4 unchanged sentences
We purchase certain products and key components from a limited number of sources.
−Removed: If the supply of these products or key components, such as micro-controllers and optical sensors, were to be delayed or constrained, or if one or more of our single-source suppliers experience disruptions or go out of business as a result of adverse global economic conditions, natural disasters or regional or global pandemics, we might be unable to find a new supplier on acceptable terms, or at all, and our product shipments to our customers could be delayed, which could adversely affect our business, financial condition and operating results.
+Added: If the supply of these products or key components, such as micro-controllers and optical sensors, were to be delayed or constrained, or more recently, impacted by global shortages of semiconductor chips, or if one or more of our single-source suppliers experience disruptions or go out of business as a result of adverse global economic conditions, natural disasters or regional or global pandemics, including COVID-19, we might be unable to find a new supplier on acceptable terms, or at all, and our product shipments to our customers could be delayed, which could adversely affect our business, financial condition and operating results.
Lead times for materials, components and products ordered by us or by our contract manufacturers can vary significantly and depend on factors such as contract terms, demand for a component, and supplier capacity.
1 unchanged sentence
Shortages or interruptions in the supply of components or subcontracted products, or our inability to procure these components or products from alternate sources at acceptable prices in a timely manner, could delay shipment of our products or increase our production costs, which could adversely affect our business and operating results.
−Removed: 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.
−Removed: As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted disclosure requirements regarding the use of certain minerals, known as conflict minerals, which are mined from the Democratic Republic of Congo and adjoining countries, as well as procedures regarding a manufacturer’s efforts to identify and prevent the sourcing of such minerals and metals produced from those minerals.
−Removed: Additional reporting obligations are being considered by the European Union.
−Removed: The implementation of the existing U.S.
−Removed: requirements and any additional requirements in Europe could affect sourcing at competitive prices and availability in sufficient quantities of certain minerals used in the manufacture of our products.
−Removed: The number of suppliers who provide conflict-free minerals may be limited, and the implementation of these requirements may decrease the number of suppliers capable of supplying our needs for certain metals.
−Removed: In addition, there may be material costs associated with complying with the disclosure requirements, such as costs related to the due diligence process of determining the source of certain minerals used in our products, as well as costs of possible changes to products, processes, or sources of supply as a consequence of such verification activities.
−Removed: 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.
−Removed: 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.
−Removed: We filed our report for the calendar year 2018 with the SEC on May 31, 2019.
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 28
+Added: 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.
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• Compliance with laws and regulations, including environmental, tax, import/export and anti-corruption laws, which vary from country to country and over time, increasing the costs of compliance and potential risks of non-compliance;
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 27
• Varying laws, regulations and other legal protections, uncertain and varying enforcement of those laws and regulations, dependence on local authorities, and the importance of local networks and relationships;
10 unchanged sentences
• Higher credit risks;
−Removed: • Changes in VAT (value-added tax) or VAT reimbursement;
+Added: • Variations in VAT (value-added tax) or VAT reimbursement;
• Imposition of currency exchange controls;
2 unchanged sentences
Any of these risks could adversely affect our business, financial condition and operating results.
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 29
Sales growth in key markets, including China, is an important part of our expectations for our business.
1 unchanged sentence
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.
−Removed: government has indicated and demonstrated its intent to alter its approach to international trade policy through the renegotiation, and potential termination, of certain existing bilateral or multilateral trade agreements and treaties with, and the imposition of tariffs on a wide range of products and other goods from, China, countries in EMEA and other countries.
+Added: In recent years, the U.S.
+Added: government has instituted or proposed changes to international trade policy through the renegotiation, and potential termination, of certain existing bilateral or multilateral trade agreements and treaties with, and the imposition of tariffs on a wide range of products and other goods from, China, countries in EMEA and other countries.
As noted previously, we have invested significantly in manufacturing facilities in China and Southeast Asia.
−Removed: Given our manufacturing in those countries, and our lack of manufacturing elsewhere, policy changes in the United States or other countries, such as the tariffs already proposed, implemented and threatened in 2018 and 2019, present particular risks for us.
−Removed: Tariffs already announced and implemented are having an adverse effect on certain of our products, tariffs announced but not yet implemented may have an adverse effect on many of our products, and threatened tariffs could adversely affect more or all of our products.
+Added: Given our manufacturing in those countries, and our lack of manufacturing elsewhere, policy changes in the United States or other countries, present particular risks for us.
+Added: New or increased tariffs could adversely affect more or all of our products.
There are also risks associated with retaliatory tariffs and resulting trade wars.
−Removed: We cannot predict future trade policy, the terms of any renegotiated trade agreements or treaties, or tariffs and their impact on our business.
+Added: We cannot predict future trade policy, the terms of any renegotiated trade agreements or treaties, or tariffs
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 28
+Added: and their impact on our business.
A trade war could have a significant adverse effect on world trade and the world economy.
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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.
−Removed: Logitech International S.A.
−Removed: | Fiscal 2020 Form 10-K | 30
As a result, fluctuations in currency exchange rates could adversely affect our business, operating results and financial condition.
Moreover, these exposures may change over time.
+Added: We are subject to risks related to our environmental, social and governance (ESG) activities and disclosures.
+Added: Current and prospective shareholders are increasingly utilizing ESG data to inform their decisions, including investment and voting, using a multitude of evolving score and rating frameworks.
+Added: If we do not adapt our strategy or execution to meet the evolving expectations of our stakeholders, or if our ESG data input, processing and reporting are incomplete or inaccurate, our business, brand and reputation could be adversely affected.
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 29
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.
−Removed: Based on our current business model and as we expand into new markets and product categories and acquire companies, businesses and assets, we must comply with a wide variety of laws, standards and other requirements governing, among other things, health and safety, hazardous materials usage, product-related energy consumption, packaging, recycling and environmental matters.
+Added: Based on our current business model and as we expand into new markets and product categories and acquire companies, businesses and assets, we must comply with a wide variety of laws, standards and other requirements governing, among other things, health and safety, hazardous materials usage, product-related energy consumption, conflict minerals, packaging, recycling and environmental matters.
Our products may be required to obtain regulatory approvals and satisfy other regulatory concerns in the various jurisdictions where they are manufactured, sold or both.
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Failure to comply with such requirements can subject us to liability, additional costs, and reputational harm and, in severe cases, force us to recall products or prevent us from selling our products in certain jurisdictions.
+Added: We also are subject to the SEC disclosure requirements regarding the use of certain minerals, known as conflict minerals, which are mined from the Democratic Republic of Congo and adjoining countries, as well as procedures regarding a manufacturer’s efforts to identify and prevent the sourcing of such minerals and metals produced from those minerals.
+Added: 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.
As a Swiss company with shares listed on both the SIX Swiss Exchange and the Nasdaq Global Select Market, we are also subject to both Swiss and United States corporate governance and securities laws and regulations.
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We are incorporated in the canton of Vaud in Switzerland, and our effective income tax rate benefited from a longstanding ruling from the canton of Vaud through December 31, 2019.
−Removed: On May 19, 2019, the voters in Switzerland approved the Federal Act on Tax Reform and AHV Financing ("TRAF"), a major reform in response to certain guidance and demands from both the European Union and the Organization for Economic Co-operation and Development.
−Removed: 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.
+Added: As a result of the Federal Act on Tax Reform and AHV Financing ("TRAF"), the canton of Vaud enacted tax reforms on March 10, 2020 that 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.
−Removed: See "Note 7 - Income Taxes" 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.
−Removed: 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
+Added: 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
Logitech International S.A.
| Fiscal 2021 Form 10-K | 30
−Removed: 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.
+Added: 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.
Changes in our effective income tax rate may also make it more difficult to compare our net income and earnings per share between periods.
10 unchanged sentences
If our effective income tax rate increases in future periods, our net income and cash flows could be adversely affected.
+Added: Risks Related to Intellectual Property, Cyber Security and Privacy
Claims by others that we infringe their proprietary technology could adversely affect our business.
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We rely on a combination of patent, trade secret, copyright, trademark and other intellectual property laws, and confidentiality procedures and contractual provisions such as nondisclosure terms and licenses, to protect our intellectual property.
−Removed: We hold various United States patents and pending applications, together with corresponding patents and pending applications from other countries.
−Removed: 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.
−Removed: In addition, other intellectual property laws or our confidentiality procedures and contractual provisions may not adequately protect our intellectual property.
−Removed: Also, others may independently develop similar technology, duplicate our products, or design
Logitech International S.A.
| Fiscal 2021 Form 10-K | 31
−Removed: around our patents or other intellectual property rights.
+Added: We hold various United States patents and pending applications, together with corresponding patents and pending applications from other countries.
+Added: 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.
+Added: In addition, other intellectual property laws or our confidentiality procedures and contractual provisions may not adequately protect our intellectual property.
+Added: Also, others may independently develop similar technology, duplicate our products, or design around our patents or other intellectual property rights.
Unauthorized parties have copied and may in the future attempt to copy aspects of our products or to obtain and use information that we regard as proprietary.
Any of these events could adversely affect our business, financial condition and operating results.
−Removed: Product quality issues could adversely affect our reputation, business and our operating results.
+Added: Product quality issues could adversely affect our reputation, business and operating results.
The market for our products is characterized by rapidly changing technology and evolving industry standards.
6 unchanged sentences
Furthermore, our contracts with distributors and retailers may contain warranty, indemnification and other provisions related to product quality issues, and claims under those provisions may adversely affect our business and operating results.
−Removed: Significant disruptions in, or breaches in security of, our websites or information technology systems could adversely affect our business.
+Added: Significant disruptions in, or breaches in security of, our websites, or information technology systems, or our products could adversely affect our business.
As a consumer electronics company, our websites are an important presentation of our company, identity and brands and an important means of interaction with and source of information for consumers of our products.
1 unchanged sentence
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.
−Removed: Nevertheless, our websites and information technology systems 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.
+Added: 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.
+Added: None of such disruptions or issues has individually or in the aggregate resulted in security incidents 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.
+Added: In addition, increased frequency and sophistication of cyber security and product security attacks may increase the likelihood of breaches.
Breaches or disruptions of our websites or information technology systems, breaches of confidential information, data corruption or other data security issues could adversely affect our brands, reputation, relationships with customers or business partners, or consumer or investor perception of our company, business or products or result in disruptions of our operations, loss of intellectual property or our customers’ or our business partners’ data, reduced value of our investments in our brands, design, research and development or engineering, or costs to address regulatory inquiries or actions or private litigation, to respond to customers or partners or to rebuild or restore our websites or information technology systems.
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.
−Removed: In connection with certain of our products, we collect data related to our consumers.
−Removed: This information is increasingly subject to legislation and regulations in numerous jurisdictions around the world, and especially in Europe.
−Removed: 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.
−Removed: Government actions are typically intended to protect the privacy and security of personal information and its collection, storage, transmission, use and distribution in or from the governing jurisdiction.
+Added: In connection with our operations, we collect personal data, including that of our consumers.
+Added: This information is increasingly subject to legislation, regulations and enforcement in numerous jurisdictions around the world.
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 32
+Added: For example, the General Data Protection Regulation (GDPR), which is applicable to us and to all companies processing data of European Union residents, imposes significant fines and sanctions for violation of the Regulation.
+Added: Compliance with the GDPR has been made more difficult by the invalidity of the U.S.-European Union Privacy Shield.
+Added: In the United States, California and Virginia have already adopted privacy laws and other legislations may follow, at states and federal levels.
+Added: Such laws and regulations are typically intended to protect the privacy and security of personal information and its collection, storage, transmission, use and distribution in or from the governing jurisdiction.
In addition, because various jurisdictions have different laws and regulations concerning the use, storage and transmission of such information, we may face requirements that pose compliance challenges in existing markets as well as new international markets that we seek to enter.
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.
−Removed: 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.
+Added: Such laws and regulations, and the variation between jurisdictions, as well as additional security measures and risk, could subject us to increased costs, allocation of additional resources, financial penalties or other liabilities or negative publicity that could adversely affect our business.
+Added: Risks Related to our Financial Results
+Added: Our operating results are difficult to predict and fluctuations in results may cause volatility in the price of our shares.
+Added: 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:
+Added: • Our operating results are highly dependent on the volume and timing of orders received during the quarter, which are difficult to forecast.
+Added: Customers generally order on an as-needed basis and we typically do not obtain firm, long-term purchase commitments from our customers.
+Added: As a result, our revenues in any quarter depend primarily on orders booked and shipped in that quarter.
+Added: • 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.
+Added: • 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.
+Added: • 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.
+Added: 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.
+Added: • 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.
+Added: • We engage in acquisitions and divestitures, and such activity varies from period to period.
+Added: Such variance may affect our growth, our previous outlook and expectations, and comparisons of our operating results and financial statements between periods.
+Added: • We are continuously attempting to simplify our organization, to control operating costs through expense and global workforce management, to reduce the complexity of our product portfolio, and to better align costs with our current business as we expand from PC accessories and provide leverage for 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.
+Added: 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.
Logitech International S.A.
| Fiscal 2021 Form 10-K | 33
−Removed: 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.
−Removed: 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.
−Removed: Certain of those material weaknesses resulted in late filings of and an amendment to our periodic reports and in restatements of our financial results.
−Removed: 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.
−Removed: 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 which, 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.
+Added: • Fluctuations in currency exchange rates can impact our revenues, expenses and profitability because we report our financial statements in U.S.
+Added: Dollars, whereas a significant portion of our revenues and expenses are in other currencies.
+Added: We attempt to adjust product prices over time to offset the impact of currency movements.
+Added: 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.
+Added: 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.
+Added: Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results.
+Added: 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.
+Added: 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.
+Added: In addition, our gross margins may vary significantly by product line, sales geography and customer type, as well as within product lines.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: As a result, we may face higher up-front investments, inventory costs associated with attempting to anticipate consumer preferences, and increased inventory write-offs.
+Added: 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.
+Added: 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.
+Added: 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.
We cannot ensure that our current share repurchase program will be fully utilized or that it will enhance long-term shareholder value.
2 unchanged sentences
Share repurchases and dividends diminish our cash reserves.
−Removed: In May 2020, our Board of Directors authorized a three-year $250.0 million repurchase program of our registered shares.
+Added: In April 2021, our Board of Directors increased our current repurchase program of our registered shares to $1.0 billion.
We have also paid cash dividends and increased the size of our dividend, each year since fiscal year 2013.
5 unchanged sentences
There can be no assurance that our Board of Directors will continue to recommend, or that our shareholders will approve, dividend increases or any dividend at all.
−Removed: If we do not pay a regular dividend, we may lose the interest of investors that focus their investments on dividend-paying companies, which could create downward pressure on our share price.
+Added: If we do not pay a regular dividend, we may lose the interest of investors that focus their investments on dividend-paying companies, which could create downward pressure on our share
+Added: Logitech International S.A.
+Added: | Fiscal 2021 Form 10-K | 34
Any announcement of termination or suspension of our share repurchase program or dividend may result in a decrease in our share price.
1 unchanged sentence
Without dividends, the trading price of our shares must appreciate for investors to realize a gain on their investment.
−Removed: Goodwill impairment charges could have an adverse effect on the results of our operations.
−Removed: Goodwill associated with a number of previous acquisitions could result in impairment charges.
−Removed: The slowdown in the overall video conferencing industry together with the competitive environment in fiscal year 2013 resulted in a $214.5 million non-cash goodwill impairment charge in fiscal year 2013, which substantially impacted results of discontinued operations.
−Removed: We recorded an additional impairment charge of goodwill of $122.7 million related to our Lifesize video conferencing discontinued operations in fiscal year 2015, reducing its goodwill to zero, which substantially impacted results of discontinued operations again.
−Removed: If we divest or discontinue product categories or products that we previously acquired, or if the value of those parts of our business become impaired, we may need to evaluate the carrying value of our goodwill.
−Removed: Additional impairment charges could adversely affect our results of operations.
Logitech International S.A.
4 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.