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Item 7. Management’s Discussion and Analysis

2023-05-17 compared with 2022-05-18 · 164 added, 226 removed, 249 unchanged (61% of the section changed)

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Overview of Our Company

Logitech is a world leader in designing, manufacturing and marketing products that help connect people to digital and cloud experiences.

Forty years ago, Logitech created products to improve experiences around the personal computer ("PC") platform, and today it is a multi-brand, multi-category company designing products that enable people to pursue their passions and connect to the world.

Logitech’s products align with several large secular trends including work and learn from anywhere, video everywhere, the increasing popularity of gaming as a spectator and participant sport, and the democratization of content creation.

Logitech's brands include Logitech, Logitech G, ASTRO Gaming, Streamlabs, Blue Microphones, and Ultimate Ears.

Our Company's website is www.logitech.com.

Our products participate primarily in four large market opportunities:

Logitech’s mission is to help all people pursue their passions in a way that is good for people and the planet.

We design, manufacture, and sell products that help businesses thrive and bring people together when working, creating, gaming and streaming.

We sell these products through a number of brands:

Logitech, Logitech G (including ASTRO Gaming, Streamlabs, and Blue Microphones) and Ultimate Ears.

Our products address primarily four large market opportunities:

Creativity & Productivity, Gaming, Video Collaboration and Music.

We sell our products to a broad network of domestic and international customers, including direct sales to retailers, e-tailers and enterprise customers, and indirect sales through distributors.

Our worldwide channel network includes consumer electronics distributors, retailers, e-tailers, mass merchandisers, specialty stores, computer and telecommunications stores, value-added resellers and online merchants.

We primarily sell our services directly to end customers.

We sell our products to a broad network of international customers, including direct sales to retailers, e-tailers, and end consumers through our e-commerce platform, and indirect sales to end customers through distributors.

From time to time, we may seek to partner with or acquire, when appropriate, companies that have products, personnel, and technologies that complement our strategic direction.

For example, in February 2021, we acquired Mevo Inc.

("Mevo") to complement our PC webcams portfolio and enable us to offer end-to-end solution for streaming and content creation, and in October 2019, we acquired General Workings, Inc.

("Streamlabs") to complement our Gaming portfolio (see Note 3 to the consolidated financial statements).

We continually review our product offerings and our strategic direction in light of our profitability targets, competitive conditions, changing consumer trends and the evolving nature of the interface between the consumer and the digital world.

Impacts of COVID-19 to Our Business

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the world.

The spread of COVID-19 has caused public health officials to recommend precautions to mitigate the spread of the virus and, in certain markets in which we operate, government authorities have from time to time issued orders that require the closure of or restrictions on non-essential businesses and people to be quarantined or to shelter-at-home.

The ongoing COVID-19 pandemic has curtailed global economic activity, caused volatility and disruption in global financial and commercial markets, and is likely to continue to cause uncertainty for an indeterminate amount of time.

While most of our offices have at least partially reopened or will be reopening in the near future, we are conducting our business with substantial modifications, such as employee remote work in many non-manufacturing facilities and travel limitations, among other changes.

We are continuing to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities in the countries in which we operate, or that we determine are in the best interest of our employees, customers, partners, suppliers or shareholders.

Since the outbreak of COVID-19 in early 2020 we experienced disruptions to our supply chain and logistics, inventory constraints, and increased logistics costs, as we attempted to address the effects of the COVID-19 pandemic.

At the same time, due to the shelter-at-home requirements or other restrictions in many countries, there was an acceleration of work-from-anywhere, learn-from-anywhere, gaming, video collaboration and streaming trends and high demand and consumption of certain of our products that led to increased sales and operating income.

While we continued to experience increased sales in fiscal year 2022 compared to fiscal year 2021, we also experienced supply and demand volatility, as the COVID-19 pandemic and related safety measures and restrictions have evolved differently across the world.

Further, the demand volatility has led to, and could continue to lead to in the future, higher promotions and marketing expenses, or excess inventories, or both, which could have an adverse impact on our results of operations.

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In addition, the COVID-19 pandemic has resulted in, and could continue to result in, industry-wide global supply chain challenges, including manufacturing, transportation and logistics.

We purchase certain products and key components from a limited number of sources, and depend on the supply chain, including freight, to receive components, transport finished goods and deliver our products across the world.

While we proactively manage our supply chain, we expect to continue to be impacted by higher logistics and component costs, prolonged delays, and challenges with component availability.

Most recently, Shanghai, China, began a lockdown in late March 2022 due to another outbreak of COVID-19, resulting in a lockdown of the city, closures of ports and airports, and disruption of commercial activities, further constraining our supply chain.

If the Shanghai lockdown is extended, including to our Suzhou manufacturing facility, and to other places where our suppliers and partners are located, such measures, depending on their duration, could cause additional negative impact on our business and results of operations.

It is still difficult to predict the progression, the duration and all of the effects of COVID-19, how business restrictions and shelter-at-home guidelines will continue evolving on a global basis, how consumer demand, supply chain challenges, including inventory and logistical effects and costs, may change over time, and the impact on our future sales and results of operations.

The full extent of the impact of the COVID-19 pandemic on our business and our operational and financial performance remains uncertain and will depend on many factors outside our control.

For additional information, see " Liquidity and Capital Resources " below and Item 1A " Risk Factors, " including under the caption " The full effect of the COVID-19 pandemic is still uncertain and cannot be predicted, and could adversely affect our business, results of operations and financial condition.

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

Impacts of Macroeconomic and Geopolitical Conditions on our Business

Adverse macroeconomic conditions, including but not limited to inflation, slower growth or recession, new or increased tariffs, changes to fiscal and monetary policy, higher interest rates and currency fluctuations could adversely affect demand for our products.

In addition, in February 2022, Russia invaded Ukraine resulting in, among other things, broad economic sanctions being imposed on Russia, which has further increased existing global supply chain, logistics, and inflationary challenges.

Such global or regional economic and political conditions may also have a significant impact on our suppliers, contract manufacturers, logistics providers, and distributors, causing increases in cost of materials.

Furthermore, these conditions may lead to price increases in certain of our product markets.

Price increases may not successfully offset cost increases or may cause us to lose market share and in turn adversely impact our operations.

In the fourth quarter of fiscal year 2022, we indefinitely ceased all sales and shipments to Russia.

Our sales in Ukraine have also been halted due to the ongoing military operations on the Ukrainian territory.

Our business in Russia and Ukraine were not material to our results and accounted for approximately 2% of total revenue for fiscal year 2022.

For additional information, see item 1A " Risk Factors ," including under the caption “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,” “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” and “If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected.”

Summary of Financial Results

Our total sales for fiscal year 2022 increased 4% compared to fiscal year 2021, primarily driven by growth in sales in Gaming, Keyboards & Combos, and Pointing Devices, partially offset by a decline in sales of Tablet & Other Accessories, Audio & Wearables, and Video Collaboration.

Sales for fiscal year 2022 increased 5% and 10% in the Americas and Asia Pacific, respectively, and declined 1% in EMEA, compared to fiscal year 2021.

Gross margin for fiscal year 2022 decreased by 320 basis points to 41.3%, compared to fiscal year 2021, due to increased promotional spending, higher reserves for excess inventories, and higher material and logistic costs, partially offset by favorable impacts from product mix and changes in currency exchange rates.

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Operating expenses for fiscal year 2022 were $1,489.0 million, or 27.2% of sales, compared to $1,187.6 million, or 22.6% of sales, for fiscal year 2021.

The increase in operating expenses was primarily driven by $195.6 million higher third-party costs to support our long-term growth opportunities and branding development as well as $124.6 million higher personnel-related costs due to additional headcount across departments to support business growth.

These increases were partially offset by a $30 million contribution into a charitable donor advised fund in fiscal year 2021 to support our social giving strategies.

Included in the income tax provision of $131.3 million and $200.9 million in fiscal year 2022 and 2021 was $88.7 million and $152.6 million, respectively, of tax expense from Switzerland that reflects the post enactment of the Tax Reform and AHV Financing (“TRAF") by the canton of Vaud.

TRAF was enacted in the fourth quarter of fiscal year 2020 and took effect as of January 1, 2020.

Net income for fiscal year 2022 wa s $644.5 million , compared to $947.3 million for fiscal year 2021.

Trends in Our Business

Our products participate primarily in four large multi-category market opportunities, including Creativity & Productivity, Gaming, Video Collaboration and Music.

The following discussion represents key trends specific to our market opportunities.

Trends Specific to Our Market Opportunities

Creativity & Productivity:

In the past few years, new PC shipments were strong due to work-from-home and learn-from-home trends.

We believe that innovative PC peripherals, such as our mice and keyboards, can renew the PC usage experience and help improve the productivity and engagement of remote work and learning, thus providing growth opportunities.

Hybrid work culture will also greatly expand the number of new workspaces to which we can attach our PC peripherals.

Increasing adoption of various cloud-based applications has led to multiple unique consumer use cases, which we are addressing with our innovative product portfolio and a deep understanding of our customer base.

The popularity of streaming coupled with work-from-home trends, provide growth opportunities for our webcam products as well as other products in our portfolio.

Smaller mobile computing devices, such as tablets, have created new markets and usage models for peripherals and accessories.

We offer a number of products to enhance the use of mobile devices, including a combo backlit keyboard case with trackpad for the iPad.

The PC gaming and console gaming platforms continue to show strong structural growth opportunities as onl ine gaming, multi-platform experiences, and esports gain greater popularity and gaming becomes more social.

W e expect gaming will increasingly become one of the largest participant and spectator sports in the world.

We believe Logitech is well positioned to benefit from the overall gaming market growth.

In addition, our acquisition of Streamlabs provides a solid platform to deliver recurring services and subscriptions to gamers and streamers.

Video Collaboration :

The near and long-term structural growth opportunities in the video collaboration market continue to be strong as commercial and consumer adoption of video has seen substantial growth since the start of the COVID-19 pandemic.

Video meetings continue to be an opportunity as companies want lower-cost, cloud-based solutions that can provide their employees with the ability to work from anywhere.

We are continuing our efforts to create and sell innovative products to accommodate the increasing demand from home offices and small-size meeting rooms, such as huddle rooms, to medium and large-sized meeting rooms.

We will continue to invest in the development of select business-specific products (both hardware and software), targeted product marketing and sales channel development.

The digitization of learning and hybrid learning environments have also created demand and growth opportunities in the education market.

Consumers are optimizing their audio experiences on their tablets and smartphones with a variety of music peripherals including wireless mobile speakers and in-ear and other headphones.

However, the mobile speaker market has matured and the integration of personal voice assistants has increased competition in the speaker category.

In addition, the retail footprint has decreased significantly due to the COVID-19 pandemic.

These factors have led to a decline in our Mobile Speakers category sales in the past three years.

In the wireless headphone industry, the largest growth in recent years has been in true wireless headphones while traditional wireless headphones have declined significantly.

We will continue developing wireless audio products as growth in the wireless headphone market is expected for the next several years.

In fiscal year 2023, our business was impacted by adverse macroeconomic and geopolitical conditions.

These conditions included inflation, foreign currency fluctuations, and slowdown of economic activity around the world, in part due to rising interest rates, and lower consumer and enterprise spending.

In addition, the war in Ukraine resulted in global supply chain, logistics, and inflationary challenges.

We had no revenue in Russia and Ukraine in fiscal year 2023 as we have indefinitely ceased all sales and shipments to Russia and sales in Ukraine have also been halted due to the ongoing military operations on the Ukrainian territory.

The global and regional economic and political conditions adversely affect demand for our products.

These conditions also had an impact on our suppliers, contract manufacturers, logistics providers, and distributors, causing volatility in cost of materials and shipping and transportation rates, and as a result, impacting the pricing of our products.

For additional information, see "Liquidity and Capital Resources" below and Item 1A " Risk Factors ," including under the caption " Adverse global and regional economic and geopolitical conditions can materially adversely affect our business, results of operations and financial condition , " “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,” “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 trade regulations, adverse tax consequences and pressure to move or diversify our manufacturing locations,” “If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected,” and "If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales and our business and operating results could be adversely affected.”

Trends and Uncertainties

Several long-term secular-trends offer long-term structural growth opportunities across Logitech’s product portfolio, including work and learn from anywhere (hybrid work), video everywhere, the rise of social gaming for participants and spectators, and the democratization of digital content creation.

We design, create and sell products that benefit from these secular trends.

The culture of hybrid work and learn provides an opportunity to equip meeting rooms, classrooms and personal workspaces, at home or in the office.

It also provides an opportunity for increased commercial and consumer adoption of video conferencing.

Our video collaboration products are compatible with a variety of video conference platforms, including Zoom, Microsoft Teams, Google Meet, etc.

Moving from work to play, Logitech gaming and streaming products benefit from social gaming which continues to

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gain popularity through online gaming, multi-platform experiences and esports.

In addition, the democratization of digital content creation presents an opportunity for anyone to be a content creator because of the accessibility of the tools necessary to code, design, create, make music, game or broadcast to professional standards.

While we believe we will further benefit from these secular trends, we have experienced and will continue to experience challenges that impact our business and financial results.

These challenges include (i) the current macroeconomic environment, including interest rate fluctuations, inflation, foreign exchange movements and low economic growth in certain regions, (ii) low consumer confidence and recent declines in enterprise spending leading to reduced demand for some of our products, (iii) the uncertainty in strategy and timing of enterprises’ “return-to-office” impacting demand for our Video Collaboration and Creativity & Productivity products, and (iv) the timing of further development of our business-to-business go-to-market capabilities.

We expect these challenges to continue in the near-term.

We have taken steps to mitigate the impact of these challenges, including but not limited to:

(i) reduction in our operating expenses as revenues have declined in order to maintain margins and size the business for the current market, (ii) reduction in inventories to more appropriately align with demand, (iii) continued investment in our business-to-business direct sales channel in order to improve performance, and (iv) release of new products to increase the value proposition of our portfolio.

Business Seasonality and Product Introductions

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Furthermore, cash flow is correspondingly lower in the first half of our fiscal year as we typically build inventories in advance for the third quarter and we pay an annual dividend following our Annual General Meeting, which is typically in September.

Swiss Federal Tax Reform

As we described above, the canton of Vaud in Switzerland enacted TRAF on March 10, 2020 that took effect as of January 1, 2020.

Our cash tax payments have increased in Switzerland beginning in fiscal year 2020 as a result of our transition out of our longstanding tax ruling from the canton of Vaud.

Capitalization and amortization of research and development expenses in the U.S.

Pursuant to the Tax Cuts and Jobs Act of 2017, research and development expenses are required to be capitalized and amortized over five years for U.S.

tax purposes if the research and development activities are performed in the U.S, effective for tax year beginning after December 31, 2021.

Absent a change in legislation, the provision is effective for us beginning in fiscal year 2023 which will delay the deductibility of research and development expenses.

Cash tax payments in the U.S.

are expected to increase beginning in fiscal year 2023.

Summary of Financial Results

Our total sales for fiscal year 2023 decreased 17%, compared to fiscal year 2022, primarily driven by a decline in sales of all of our product categories as a result of lower demand and unfavorable changes in currency exchange rates.

Sales for fiscal year 2023 decreased 25%, 17% and 9% in the EMEA, Americas and Asia Pacific regions, respectively, compared to fiscal year 2022.

Gross margin for fiscal year 2023 decreased by 340 basis points to 37.9%, compared to fiscal year 2022, primarily due to inflationary pressure on costs and unfavorable impacts from changes in currency exchange rates, partially offset by a reduction in our use of expedited shipping.

Operating expenses for fiscal year 2023 were $1,261.0 million, or 27.8% of sales, compared to $1,489.0 million, or 27.2% of sales, for fiscal year 2022.

The decrease in operating expenses was primarily driven by a reduction in marketing and advertising spend.

Included in the income tax provision of $98.9 million and $131.3 million in fiscal year 2023 and 2022 was $48.3 million and $88.7 million, respectively, of tax expense from Switzerland.

Net income for fiscal year 2023 wa s $364.6 million , compared to $644.5 million for fiscal year 2022, reflecting lower sales and gross margin, partially offset by a reduction in operating expenses.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with U.S.

GAAP requires us to make judgments, estimates, and assumptions that affect reported amounts of assets, liabilities, sales and expenses, and the disclosure of contingent assets and liabilities.

GAAP requires us to make assumptions, judgments, and estimates that affect reported amounts of assets, liabilities, sales and expenses, and the disclosure of contingent assets and liabilities.

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We consider an accounting estimate critical if it:

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and (ii) is important to an understanding of our financial condition and operating results.

We base our estimates on historical experience and various other factors that we believe to be reasonable under the circumstances.

Although these estimates are based on management's best knowledge of current events and actions that may impact us in the future, actual results could differ from those estimates.

We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances.

Although these assumptions, judgments, and estimates are based on management's best knowledge of current events and actions that may impact us in the future, actual results could differ.

Management has discussed the development, selection and disclosure of these critical accounting estimates with the Audit Committee of the Board of Directors.

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Customer incentive programs include performance-based incentives and consumer rebates.

We offer performance-based incentives to our customers and indirect partners based on pre-

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determined performance criteria.

We offer performance-based incentives to our customers and indirect partners based on pre-determined performance criteria.

Consumer rebates are offered from time to time at our discretion for the primary benefit of end-users.

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Further, our industry is characterized by rapid technological change, short-term customer commitments and rapid changes in demand.

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We record inventories at the lower of cost and net realizable value and record write-downs of inventories that are obsolete or in excess of anticipated demand or net realizable value.

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These differences result in deferred tax assets and liabilities, which are included in the consolidated balance sheet.

We assess the likelihood that our deferred tax assets will be recovered from future taxable income, considering all available evidence such as historical levels of income, expectations and risks associated with estimates of future

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taxable income and ongoing prudent and feasible tax strategies.

When we determine that it is not more likely than not that we will realize all or part of our deferred tax assets, an adjustment is charged to earnings in the period when such determination is made.

Likewise, if we later determine that it is more likely than not that all or a part of our deferred tax assets would be realized, the previously provided valuation allowance would be reversed.

We make certain estimates and judgments about the application of tax laws, the expected resolution of uncertain tax positions and other matters surrounding the recognition and measurement of uncertain tax benefits.

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Such adjustments may have a material impact on our income tax provision and our results of operations.

Business Acquisitions

Accounting for business acquisitions requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed and pre-acquisition contingencies.

We use our best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date.

Examples of critical estimates in valuing certain intangible assets and goodwill we have acquired and liabilities we have assumed include but are not limited to:

• assumptions regarding royalty rate range and forecasted revenue growth rate;

• assumptions regarding the estimated useful life of the acquired intangibles;

• discount rates;

• projected risk-based net revenues forecast;

• asset volatility.

Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.

The economic useful life of the developed technology from the business acquisitions was determined based on the technology cycle related to developed technology of existing products, as well as the cash flows over the forecasted periods.

The economic useful life of the customer relationships from the business acquisitions was determined based on historical customer turnover rates and the industry benchmarks.

The economic useful life of the trademarks and trade names from the business acquisitions was determined based on the expected life of the trade names and the cash flows anticipated over the forecasted periods.

For additional information about our Critical Accounting Estimates, see Note 2—Summary of Significant Accounting Policies in our Notes to our consolidated financial statements below.

Adoption of New Accounting Pronouncements

Refer to Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K for recent accounting pronouncements adopted and to be adopted.

Refer to Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K for recent accounting pronouncements adopted.

Inflation Reduction Act in the U.S.

On August 16, 2022, the “Inflation Reduction Act” (H.R.

5376) ("IRA") was signed into law in the U.S.

The IRA establishes a new corporate alternative minimum tax based on financial statement income adjusted for certain items.

The new minimum tax is effective for tax years beginning after December 31, 2022.

We do not expect the IRA will have a material impact to our financial statements when it becomes effective.

Constant Currency

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Dollars, our financial results could be affected by significant shifts in currency exchange rates.

See “Results of Operations” for information on the effect of currency exchange results on our sales.

See “Results of Operations” for information on the effect of currency exchange rate fluctuations on our sales.

Dollar appreciates or depreciates in comparison to other currencies in future periods, this will affect our results of operations in future periods as well.

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For a discussion of the year ended March 31, 2022 compared to the year ended March 31, 2021, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the SEC on May 18, 2022.

Our sales in fiscal year 2022 increased 4%, compared to fiscal year 2021 .

The increase in sales was primarily driven by growth in sales in Gaming, Keyboards & Combos, and Pointing Devices, partially offset by a decline in sales of Tablet & Other Accessories, Audio & Wearables, and Video Collaboration.

Our sales growth in fiscal year 2022 was driven by continued demand from hybrid work trends and popularity of esports and social gaming, partially offset by the negative impacts from higher promotions and industry-wide supply chain challenges, including supply availability and logistics delays.

I f currency exchange rates had been constant in 2022 and 2021, our constant currency sales growth rate would have remained at 4%.

Our sales in fiscal year 2023 decreased 17%, compared to fiscal year 2022, driven b y a decline in sales of all of our product categories.

O ur sales were negatively impacted from lower demand and unfavorable changes in currency exchange rates.

If currency exchange rates had been constant in fiscal years 2023 and 2022, our sales decline in constant currency would have been 13%.

Sales Denominated in Other Currencies

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Americas (17) % (17) %

EMEA (25) (17)

Asia Pacific (9) (3)

The increase in sales in the Americas region for fiscal year 2022, compared to fiscal year 2021, was primarily driven by growth in sales of Video Collaboration, Keyboards & Combos, Gaming, and Tablet & Other Accessories, partially offset by declines in sales of Audio & Wearables and Mobile Speakers.

The decrease in sales in the EMEA region for fiscal year 2022, compared to fiscal year 2021, was primarily driven by decline in sales of Video Collaboration, Audio & Wearables, and PC Webcams, partially offset by growth in sales of Gaming, Keyboards & Combos, Pointing Devices, and Tablets & Other Accessories.

The decrease in sales in the Americas region for fiscal year 2023, compared to fiscal year 2022, was primarily driven by decreases in sales for Gaming, Video Collaboration, PC Webcams and Audio & Wearables.

The decrease in sales in the EMEA region for fiscal year 2023, compared to fiscal year 2022, was primarily driven by decreases in sales in Gaming, Keyboards & Combos, PC Webcams and Pointing Devices.

Asia Pacific:

The increase in sales in the Asia Pacific region for fiscal year 2022, compared to fiscal year 2021, was primarily driven by growth in sales of a majority of our product categories, partially offset by decline in sales of Tablet & Other Accessories.

The decrease in sales in the Asia Pacific region for fiscal year 2023, compared to fiscal year 2022, was primarily driven by decreases in sales of Keyboards & Combos, PC Webcams, Audio & Wearables, and Video Collaboration, partially offset by an increase in sales of Gaming.

Logitech International S.A.

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Audio & Wearables 274,231 401,424 (32)

Smart Home 18,463 34,394 (46)

7,081 18,665 (62)

Total Sales $ 4,538,818 $ 5,481,101 (17) %

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

(2) Other includes products that we phased out because they are no longer strategic to our business.

Sales by Product Categories:

(2) Other includes Smart Home.

Creativity & Productivity market:

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Our Pointing Devices category comprises PC- and Mac-related mice including trackballs, touchpads and presentation tools.

During fiscal year 2022, Pointing Devices sales increased 15%, compared to fiscal year 2021, primarily driven by the increase in sales for cordless and corded mice.

During fiscal year 2023, Pointing Devices sales decreased 7%, compared to fiscal year 2022, primarily driven by the decrease in sales of cordless and corded mice, particularly in our low end products.

Keyboards & Combos

Our Keyboards & Combos category comprises PC keyboards, keyboard/mice combo products, and living room keyboards.

During fiscal year 2022, Keyboards & Combos sales increased 23%, compared to fiscal year 2021, driven by increases in sales of cordless and corded keyboards and keyboard/mice combos.

Our Keyboards & Combos category comprises PC keyboards and keyboard/mice combo products.

During fiscal year 2023, Keyboards & Combos sales decreased 14%, compared to fiscal year 2022, primarily driven by the decrease in sales of our cordless combos and corded PC keyboards, particularly in our low end products.

Our PC Webcams category comprises PC-based webcams targeted primarily at consumers, including streaming cameras.

During fiscal year 2022, PC Webcams sales decreased 8%, compared to fiscal year 2021, primarily driven by decline in sales of 1080P PRO Webcam, HD Pro Webcam 920, Streamcam, partially offset by an increase in sales of Mevo Video Cameras.

During fiscal year 2023, PC Webcams sales decreased 44%, compared to fiscal year 2022, primarily driven by the decrease in sales of our HD Pro Webcam C920, 1080p Pro Stream Webcam, and Webcam C260.

Tablet & Other Accessories

Our Tablet & Other Accessories category primarily comprises keyboards for tablets.

During fiscal year 2022, Tablet & Other Accessories sales decreased 19%, compared to fiscal year 2021, primarily driven by decline in sales of Rugged Folio and Slim Folio Products, partially offset by sales of Combo Touch for iPad Pro 12.9-inch, introduced in the second quarter of fiscal year 2022, Combo Touch for iPad Pro 11-inch and Combo Touch for iPad Air, introduced in the first quarter of fiscal year 2022.

Our Tablet & Other Accessories category primarily comprises tablet keyboards and styluses.

During fiscal year 2023, Tablet & Other Accessories sales decreased 18%, compared to fiscal year 2022, primarily driven by the decrease in sales of most of our products, partially offset by increases in sales of our Rugged Combo 3 Touch.

Gaming market:

Our Gaming category comprises gaming mice, keyboards, headsets, gamepads, steering wheels, simulation controllers, console gaming headsets, and Streamlabs services.

During fiscal year 2023, Gaming sales decreased 17%, compared to fiscal year 2022, primarily driven by the decrease in sales of gaming mice, keyboards, and headsets.

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Gaming market:

Our Gaming category comprises gaming mice, keyboards, headsets, gamepads, steering wheels, simulation controllers, console gaming headsets, console gaming controllers, and Streamlabs services.

During fiscal year 2022, Gaming sales increased 17%, compared to fiscal year 2021, primarily driven by strong performance in nearly all of our Gaming sub-categories, including our gaming mice, gaming steering wheels, and gaming headsets, partially offset by a decline in the sales of our console gaming headsets and console gaming controllers.

Video Collaboration market:

Video Collaboration

Our Video Collaboration category includes Logitech’s ConferenceCams, which combine affordable enterprise-quality audio and high definition 4K video to bring video conferencing to businesses of any size, as well as webcams and headsets that turn any desktop into an instant collaboration space.

During fiscal year 2022, Video Collaboration sales decreased 5% , compared to fiscal year 2021, primarily driven by the decline in sales of webcams and headsets, partially offset by the increase in sales of conference peripherals.

Our Video Collaboration category includes Logitech’s conference room cameras, which combine affordable enterprise-quality audio and high definition 4K video to bring video conferencing to businesses of any size, as well as webcams and headsets that turn any desktop into an instant collaboration space.

During fiscal year 2023, Video Collaboration sales decreased 11%, compared to fiscal year 2022, primarily due to the decrease in sales of webcams, partially offset by an increase in sales of conference room cameras and docks.

Sales for Video Collaboration for fiscal year 2023 were negatively impacted by a slowdown in enterprise spending.

Music market:

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Our Mobile Speakers category is made up entirely of Bluetooth wireless speakers.

During fiscal year 2022, Mobile Speakers sale s decreased 14% , compared to fiscal year 2021, primarily due to a decline in sales of most of our Mobile Speaker sub-categories, partially offset by an increase in sales of our Boom 3 speakers.

During fiscal year 2023, Mobile Speakers sale s decreased 25%, compared to fiscal year 2022, primarily due to a decrease in sales of most of our Mobile Speaker sub-categories, partially offset by the sales of our Ultimate Ears Wonderboom 3 mini speakers, introduced in the second quarter of fiscal year 2023.

Audio & Wearables

Our Audio & Wearables category comprises PC speakers, PC headsets, in-ear headphones, premium wireless audio wearables and studio-quality Blue Microphones for professionals and consumers.

During fiscal year 2022, Audio & Wearables sales decreased 14%, compared to fiscal year 2021, primarily due to the decrease in sales of Blue Microphone products, cordless headsets and Jaybird products, partially offset by an increase in sales of our Ultimate Ears custom and wireless headsets.

In the third quarter of fiscal year 2022, we made a decision to cease future product launches under the Jaybird brand, but plan to continue developing wireless audio products such as Ultimate Ears.

Smart Home market:

Our Smart Home category is mainly comprised of our Harmony line of advanced home entertainment controllers and home security cameras.

During fiscal year 2022, Smart Home sales decreased 46%, compared to fiscal year 2021.

In the fourth quarter of fiscal year 2021, we made the decision to discontinue manufacturing and selling our Harmony line of advanced home entertainment controllers as the way people consume content has shifted to streaming services across multiple screens.

Fiscal year 2022 included sales of remaining Harmony products in inventory.

We continue to sell our Circle home security cameras within the Smart Home product category.

Logitech International S.A.

| Fiscal 2022 Form 10-K | 47

Our Audio & Wearables category comprises PC speakers, PC headsets, in-ear headphones, premium wireless earbuds and studio-quality Blue Microphones for professionals and consumers.

During fiscal year 2023, Audio & Wearables sales decreased 32%, compared to fiscal year 2022, primarily due to the decrease in sales of almost all sub-categories.

Gross profit for fiscal years 2023 and 2022 was as follows (Dollars in thousands):

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Gross margin decreased by 340 basis points to 37.9% during fiscal year 2023, compared to fiscal year 2022.

The decrease in gross margin was primarily due to increased promotional spending, higher reserves for excess inventories, higher material costs and logistic costs, partially offset by favorable impacts from a shift in product mix and currency exchange rates.

The higher material costs were due to industry-wide supply chain challenges and supply availability.

The decrease in gross margin was primarily due to inflationary pressure on costs and unfavorable impacts from changes in currency exchange rates, partially offset by a reduction in our use of expedited shipping.

Logitech International S.A.

| Fiscal 2023 Form 10-K | 42

Operating Expenses

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Impairment of intangible assets — 7,000

% of sales 0.1 % — %

% of sales N/A 0.1 %

Change in fair value of contingent consideration for business acquisition — (3,509)

% of sales (0.1) % 0.1 %

Restructuring charges (credits), net 2,165 (54)

% of sales N/A (0.1) %

Restructuring charges, net 34,573 2,165

% of sales 0.8 % — %

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% of sales 27.8 % 27.2 %

The increase in total operating expenses during fiscal year 2022, compared to fiscal year 2021, was mainly due to increases in marketing and selling expenses, research and development expenses, impairment of intangible assets and restructuring charges related to the Jaybird exit, partially offset by decrease in general and administrative expenses and change in fair value of contingent consideration for business acquisition.

The decrease in total operating expenses during fiscal year 2023, compared to fiscal year 2022, was mainly due to decreases in marketing and selling expenses, partially offset by an increase in restructuring charges.

Marketing and Selling

Marketing and selling expenses consist of personnel and related overhead costs, corporate and product marketing, promotions, advertising, trade shows, technical support for customer experiences and facilities costs.

During fiscal year 2022, marketing and selling expenses increased $255.6 million, compared to fiscal year 2021.

The higher expenses were primarily related to increases of $172.8 million in third-party costs and

Logitech International S.A.

| Fiscal 2022 Form 10-K | 48

$73.5 million in personnel-related costs.

The increase in third-party costs was primarily due to increased marketing and advertising spend to support our investment in brand awareness and consideration.

The higher personnel spend was driven by increased headcount to support business growth and go-to-market expansion.

During fiscal year 2023, marketing and selling expenses decreased $216.7 million, compared to fiscal year 2022, primarily driven by our reduction in third-party marketing and advertising spend.

Research and Development

Research and development expenses consist of personnel and related overhead costs for contractors and outside consultants, supplies and materials, equipment depreciation and facilities costs, all associated with the design and development of new products and enhancements of existing products.

During fiscal year 2022, research and development expenses increased $65.8 million, compared to fiscal year 2021.

The increases were primarily driven by $39.9 million of additional personnel-related costs due to increased headcount to support our investment in innovation.

Higher third-party costs of $18.2 million also contributed to the growth in research and development expense and were mainly comprised of costs for contractors to support the increased research and development initiatives.

During fiscal year 2023, research and development expense s decreased $11.0 million, compared to fiscal year 2022, primarily driven by lower personnel-related costs, partially offset by higher outsourcing expenses.

Research and development expenses as a percentage of sales increased from 5.3% in fiscal year 2022 to 6.2% in fiscal year 2023 reflecting our continued investment in innovation.

General and Administrative

General and administrative expenses consist primarily of personnel and related overhead, information technology, and facilities costs for the infrastructure functions such as finance, information systems, executives, human resources and legal.

During fiscal year 2022, general and administrative expenses decreased $17.9 million, compared to fiscal year 2021.

The decrease was primarily driven by a $30.0 million contribution into a charitable donor advised fund in fiscal year 2021, partially offset an increase of $10.2 million in personnel-related costs due to increased headcount to support business growth.

During fiscal year 2023, general and administrative expenses decreased $24.0 million, compared to fiscal year 2022, primarily driven by lower personnel-related costs.

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| Fiscal 2023 Form 10-K | 43

Amortization of Intangible Assets and Acquisition-Related Costs

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Acquisition-related costs include legal expense, due diligence costs, and other professional costs incurred for business acquisitions.

The decrease in amortization of intangible assets and acquisition-related costs from fiscal year 2021 to 2022 was primarily driven by write-off Jaybird intangible assets in fiscal year 2022, partially offset by full year of amortization in fiscal year 2022 for intangible assets acquired through acquisitions completed in the fourth quarter of fiscal year 2021.

The decrease in amortization of intangible assets and acquisition-related costs from fiscal year 2022 to 2023 was primarily due to certain acquired intangible assets becoming fully amortized and the write-off of Jaybird intangible assets in fiscal year 2022.

Impairment of Intangible Assets

During fiscal year 2022, we recognized a pre-tax impairment charge of $7.0 million, related to the intangibles acquired as part of the Jaybird acquisition due to our decision to discontinue Jaybird-branded products.

Change in Fair Value of Contingent Consideration for Business Acquisition

T he change in fair value of contingent consideration was a decrease of $3.5 million for fiscal year 2022, primarily due to the release of the contingent consideration from the acquisition of Mevo as a result of not achieving the net sales milestone upon completion of the earn-out period.

The change in fair value of contingent consideration was an increase of $5.7 million for fiscal year 2021, primarily due to growth in Streamlabs' net sales and the achievement of the net sales targets during the six-month earn-out period ended June 30, 2020.

Logitech International S.A.

| Fiscal 2022 Form 10-K | 49

Restructuring Charges (Credits), Net

During fiscal year 2022, we recorded restructuring charges of $2.1 million related to our decision to exit Jaybird-branded products.

The total charges consisted of $1.3 million, primarily related to costs of production cancellation, and $0.8 million related to cash severance and termination benefits.

We expect to complete the restructuring within the next nine months.

During the second quarter of fiscal year 2023, we initiated a restructuring plan to realign our business group and engineering structure with our go-to-market strategy to more effectively compete within the enterprise market and to better serve end-users.

During the fourth quarter of fiscal year 2023, we undertook further actions to remove organization layers as well as streamline our marketing organization to increase efficiency.

As a result, we recorded pre-tax restructuring charges totaling $34.6 million primarily related to employee severance and other termination benefits.

We expect to substantially complete these restructuring activities within the next twelve months.

The restructuring charges of $2.2 million for fiscal year 2022, were recorded as a result of our decision to exit Jaybird-branded products during the third quarter of fiscal year 2022.

This restructuring plan has been substantially completed.

See Note 16 to our consolidated financial statements for additional information.

Interest Income

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We invest in highly liquid instruments with an original maturity of three months or less at the date of purchase, which are classified as cash equivalents.

The decrease in interest income for fiscal year 2022, compared to fiscal year 2021, was primarily driven by the decline in interest rates.

The increase in interest income for fiscal year 2023, compared to fiscal year 2022, was primarily driven by th e increase in interest rates.

Logitech International S.A.

| Fiscal 2023 Form 10-K | 44

Other Income (Expense), Net

Other income and expense for fiscal years 2022 and 2021 was as follows (in thousands):

Other income (expense), net for fiscal years 2023 and 2022 was as follows (in thousands):

Years Ended March 31,

Investment income related to the deferred compensation plan $ 1,231 $ 5,916

Investment gain (loss) related to the deferred compensation plan $ (1,961) $ 1,231

Currency exchange loss, net (7,337) (4,604)

Loss on investments, net (14,073) (1,683)

Other 5,616 893

Non-service cost net pension income (expense) and other 10,093 5,616

Total $ (13,278) $ 560

Investment income related to the deferred compensation plan for fiscal years 2022 and 2021 represents earnings, gains, and losses on marketable securities related to a deferred compensation plan offered by one of our subsidiaries.

Investment gain (loss) related to the deferred compensation plan for fiscal years 2023 and 2022 represents earnings, gains, and losses on marketable securities related to a deferred compensation plan offered by one of our subsidiaries.

The decrease in investment income for fiscal year 2023 compared to fiscal year 2022 primarily relates to the change in market performance of the underlying securities.

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We do not speculate in currency positions, but we are alert to opportunities to maximize currency exchange gains and minimize currency exchange losses.

The loss for fiscal year 2023 was primarily related to the weakening of the Brazilian Real and Australian Dollar against U.S.

The loss for fiscal year 2022 was primarily related to the strengthening of the Chinese Renminbi against the U.S.

Loss on investments, net, represents the realized gain (loss) on sales of investment, unrealized gain (loss) from the fair value change of investment and gain (loss) on equity-method investments during the periods presented.

Other, includes the components of net periodic benefit cost other than the service costs component.

The increase in the net gains for fiscal year 2022, compared to fiscal year 2021, was related to the actuarial gains primarily resulting from change in termination rate assumption used for one of our defined benefit plans.

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Loss on investments, net, includes unrealized gain (loss) from the fair value change of investment, gain (loss) on equity-method investments and impairment of investments during the periods presented, as applicable.

The loss on investments, net for fiscal year 2023 was primarily due to the impairment charge related to one of our equity method investments, partially offset by the unrealized gain related to one of our equity investments without readily determinable fair value resulting from observable price changes.

See Note 9 to our consolidated financial statements for additional information.

Non-service cost net pension income (expense) and other increased in fiscal year 2023, compared to fiscal year 2022, primarily due to the curtailment gain recognized in fiscal year 2023 for one of our defined benefit plans as a result of the restructuring actions undertaken by the Company (see Notes 5 and 16 to our consolidated financial statements).

Provision for Income Taxes

The provision for income taxes and the effective income tax rate for fiscal years 2022 and 2021 were as follows (Dollars in thousands):

The provision for income taxes and effective income tax rates for fiscal years 2023 and 2022 were as follows (Dollars in thousands):

Years Ended March 31,

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As of March 31, 2023 and 2022, the total amount of unrecognized tax benefits due to uncertain tax positions was $186.8 million and $176.0 million, respectively, all of which would affect the effective income tax rate if recognized.

Logitech International S.A.

| Fiscal 2023 Form 10-K | 45

As of March 31, 2023 and 2022, we had $106.4 million and $83.4 million, respectively, in non-current income taxes payable, including interest and penalties, related to our income tax liability for uncertain tax positions.

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If the examinations are resolved unfavorably, there is a possibility that they may have a material negative impact on our results of operations.

Pursuant to the Tax Cuts and Jobs Act of 2017, research and development expenses are required to be capitalized and amortized over five years for U.S.

tax purposes if the research and development activities are performed in the U.S.

effective for tax year beginning after December 31, 2021.

The provision was effective for us beginning in fiscal year 2023.

However, the provision which delays the deductibility of research and development expenses is not applicable to our existing research and development activities in the U.S.

We evaluate our business activities regularly should the provision become applicable.

Liquidity and Capital Resources

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As of March 31, 2023, we had cash and cash equivalents of $1,149.0 million, compared with $1,328.7 million as of March 31, 2022.

Our cash and cash equivalents consist of bank demand deposits and short-term time deposits, of which 70% is held in Switzerland, 12% is held in China (including Hong Kong), and 10% is held in Germany.

We do not expect to incur any material adverse tax impact except for what has already been recognized, or to be significantly inhibited by any country in which we do business from the repatriation of funds to Switzerland, our home domicile.

As of March 31, 2022, our working capital was $1,651.8 million, compared with working capital of $1,477.5 million as of March 31, 2021.

The increase was primarily driven by higher inventories, higher accounts receivable, net, lower accounts payable and lower accrued and other current liabilities, partially offset by lower cash and cash equivalents.

We had several uncommitted, unsecured bank lines of credit aggregating to $195.0 million as of March 31, 2022.

Our cash and cash equivalents consist of bank demand deposits and short-term time deposits, of w hich 78% is held in Switzerland and 12% is held in China (including Hong Kong).

As of Ma rch 31, 2023, our working capital was $1,555.1 million, compared to $1,651.8 million as of March 31, 2022.

The decrease was primarily driven by lower inventories, lower cash balances resulting from share repurchases and payments of cash dividends, and lower accounts receivable, net, partially offset by decreases in accounts payable and accrued liabilities.

We had several uncommitted, unsecured bank lines of credit aggregating $181.3 million as of March 31, 2023.

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

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(3) ITO is determined using ending inventories and annualized cost of goods sold (based on the most recent quarterly cost of goods sold).

DSO as of March 31, 2022 increased by 13 days to 49 days, as compared to 36 days as of March 31, 2021, primarily due to the timing of sales and customer payments within the quarter.

DPO as of March 31, 2022 decreased 12 days, compared to March 31, 2021, primarily due to lower inventory purchases than prior year as well as timing of purchases and related payments.

ITO as of March 31, 2022 was lower compared to March 31, 2021, primarily due to lower demand than prior year and industry wide logistic delays.

If we are not successful in launching and phasing in our new products, or market competition increases, or we are not able to sell the new products at the prices planned, it could have a material impact on our sales, gross profit margin, operating results including operating cash flow, and inventory turnover in the future.

During fiscal year 2022, we generated $298.3 million in cash from operating activities, resulting from net income of 644.5 million, a favorable impact from adding back non-cash expenses totaling $245.7 million, and an unfavorable net change in operating assets and liabilities of $591.9 million.

Non-cash expenses were primarily related to share-based compensation expenses, depreciation, amortization, and deferred income taxes.

The increase in accounts receivable, net was primarily driven by timing of sales.

The increase in inventories was primarily driven by higher inventory levels compared to the previously constrained supply from COVID-19 impacts and industry wide logistic delays.

The decrease in accounts payable was primarily driven by lower inventory purchases than prior years as well as the timing of purchases and related payments.

The decrease in accrued and other liabilities was primarily driven by a higher annual bonus accrual and a higher annual income tax payment, both due to strong business performance in fiscal year 2021.

For fiscal year 2022, net cash used in investing activities was $107.9 million, primarily due to purchases of property, plant, and equipment of $89.2 million and payments for an acquisition, net of cash acquired, of $16.2 million.

Our expenditures for property, plant and equipment during fiscal year 2022 were primarily for tooling and equipment as well as computer hardware and software.

For fiscal year 2022, net cash used in financing activities was $606.8 million, resulting from repurchases of our registered shares of $412.0 million, payments of cash dividends of $159.4 million, and tax withholdings related to net share settlements of restricted stock units of $64.2 million, partially offset by proceeds from exercise of stock options and purchase rights of $29.6 million.

DSO as of March 31, 2023 increased by 10 days to 59 days, as compared to 49 days as of March 31, 2022, primarily due to lower revenues resulting from softened demand, partially offset by timing of sales within the quarter.

DPO as of March 31, 2023 decreased 19 days, compared to March 31, 2022, primarily due to a reduction in inventory purchases and lower marketing spend, partially offset by softened demand.

ITO as of March 31, 2023 increased 0.4, compared to March 31, 2022, primarily due to a lower inventory balance as of March 31, 2023, partially offset by softened demand.

If we are not successful in launching and phasing in our new products, or market competition increases, or we are not able to sell the new products at the prices planned, it could have a material impact on our sales, gross margin, operating results including operating cash flow, and inventory turnover in the future.

The following table summarizes our consolidated statement of cash flows for the year ended March 31, 2023 (Dollars in thousands):

Year ended March 31, 2023

Net cash provided by operating activities $ 534,010

Net cash used in investing activities (105,730)

Net cash used in financing activities (583,353)

Effect of exchange rate changes on cash and cash equivalents (24,620)

Net decrease in cash and cash equivalents $ (179,693)

For fiscal year 2023, net cash provided by operating activities was $534.0 million resulting from net income of 364.6 million, a favorable impact from adding back non-cash expenses totaling $213.1 million, and an unfavorable net change in operating assets and liabilities of $43.6 million.

Non-cash expenses were primarily related to depreciation and amortization, share-based compensation expense , and deferred income taxes.

The decrease in accounts receivable, net was primarily driven by lower sales, partially offset by the timing of sales within the quarter.

The decrease in inventories was primarily driven by a reduction in inventory purchases to align with lower demand.

The decrease in accounts payable was primarily driven by the reduction in inventory purchases.

The decrease in accrued and other liabilities was primarily driven by a lower annual bonus accrual and lower marketing spend.

For fiscal year 2023, net cash used in investing activities was $105.7 million, primarily due to $92.4 million purchases of property, plant, and equipment .

Our expenditures for property, plant and equipment during fiscal year 2023 were primarily for tooling and equipment, building improvements, and computer hardware and software.

For fiscal year 2023, net cash used in financing activities was $583.4 million, resulting from repurchases of our registered shares of $418.3 million, payments of cash dividends of $158.7 million, and tax withholdings related to

Logitech International S.A.

| Fiscal 2023 Form 10-K | 47

During fiscal year 2022, there was a $5.2 million loss from currency exchange rate effect on cash and cash equivalents, primarily due to the weakening of the Euro and Australian dollar versus the U.S.

Dollar by 3%, and 5%, respectively.

net share settlements of restricted stock units of $29.2 million, partially offset by proceeds from exercise of stock options and purchase rights of $28.8 million.

During fiscal year 2023 , there was a $24.6 million loss from currency exchange rate effect on cash and cash equivalents, primarily due to exchange rate fluctuations of Euro, Swiss Franc, Chinese Renminbi, and Australian Dollar versus the U.S.

Dollar and timing of our cash transactions over the period.

Our principal sources of liquidity are our cash and cash equivalents, cash flow generated from operations and, to a much lesser extent, capital markets and borrowings.

Our future working capital requirements and capital expenditures may increase to support investments in product innovations and growth opportunities or to acquire or invest in complementary businesses, products, services, and technologies.

The future impact of COVID-19 cannot be predicted with certainty and may increase our costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity.

In May 2022, the Board of Directors recommended that we pay cash dividends for fiscal year 2022 of CHF 0.96 per share (approximately $1.04 per share b ased on the exchange rate on March 31, 2022).

Based on our shares outstanding, net of treasury shares, as of March 31, 2022 (165,252,020 shares), this would result in an aggregate gross dividend of approximately CHF 159.0 million (or approximately $172.1 million based on the exchange rate on March 31, 2022).

In fiscal year 2022, we paid a cash dividend of CHF 0.87 per share, or CHF 147.0 million (U.S.

Dollar amount of $159.4 million) on an aggregate gross basis, out of fiscal year 2021 retained earnings.

Market volatility driven by the current macroeconomic and geopolitical environment may increase our costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity.

In May 2023, the B oard of Directors recommended that we pay cash dividends for fiscal year 2023 of CHF 1.06 per share (approximately $1.16 per share based on the exchange rate on March 31, 2023).

Based on our shares outstanding, net of treasury shares, as of March 31, 2023 (159,343,273 shares), this would result in an aggregate gross dividend of approximately CHF 168.9 million (approximately $184.2 million based on the exchange rate on March 31, 2023).

In fiscal year 2023, we paid a cash dividend of CHF 0.96 per share, or CHF 156.1 million (U.S.

Dollar amount of $146.7 million) on an aggregate gross basis, out of fiscal year 2020 retained earnings.

Dollar amount of $158.7 million based on the exchange rate on the date of payment) out of fiscal year 2022 retained earnings.

In fiscal year 2022, we paid a cash dividen d of CHF 0.87 per share, or CHF 147.0 million (U.S.

Dollar amount of $159.4 million) out of fiscal year 2021 retained earnings.

In fiscal year 2021, we paid a cash dividend of CHF 0.79 per share, or CHF 134.0 million (U.S.

Dollar amount of $124.2 million) on an aggregate gross basis, out of fiscal year 2019 retained earnings.

In May 2020, our Board of Directors approved a new share repurchase program, which authorizes us to invest up to $250.0 million to purchase our own shares, following the expiration date of the 2017 share repurchase program.

In April 2021, our Board of Directors approved an increase of $750.0 million of the 2020 share repurchase program, to an aggregate amount of $1.0 billion.

Dollar amount of $146.7 million) out of fiscal year 2020 retained earnings.

In May 2020, our Board of Directors approved the 2020 share repurchase program, which authorized us to invest up to $250.0 million to purchase our own shares.

In April 2021, our Board of Directors approved an increase of $750.0 million to the 2020 share repurchase program, to an aggregate amount of $1.0 billion.

The Swiss Takeover Board approved this increase and it became effective on May 21, 2021.

In July 2022, our Board of Directors approved an increase of $500 million to the 2020 share repurchase program, to an aggregate amount of up to $1.5 billion to purchase up to 17.3 million of Logitech shares.

The Swiss Takeover Board approved this increase and it became effective on August 19, 2022.

As of March 31, 2023 , $505.8 million was available for repurchase under the 2020 repurchase program.

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Purchase Commitments

As of March 31, 2022, we had non-cancelable purchase commitments of $736.9 million for inventory purchases made in the normal course of business from original design manufacturers, contract manufacturers and other suppliers, the majority of which are expected to be fulfilled during the first two quarters of fiscal year 2023.

As of March 31, 2023, we had non-cancelable purchase commitments of $368.1 million for inventory purchases made in the normal course of business from original design manufacturers, contract manufacturers and other suppliers, the majority of which are expected to be fulfilled within the next 12 months.

We recorded a liability for firm, non-cancelable, and unhedged inventory purchase commitments in excess of anticipated demand or net realizable value consistent with our valuation of excess and obsolete inventory.

As of March 31, 2022, the liability for these purchase commitments was $46.4 million and is recorded in accrued and other current liabilities in the consolidated balance sheet.

We have firm purchase commitments of $29.5 million for capital expenditures, primarily related to commitments for tooling and equipment for new and existing products.

We expect to continue making capital expenditures in the future to support product development activities and ongoing and expanded operations.

As of March 31, 2023, the liability for

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| Fiscal 2023 Form 10-K | 48

these purchase commitments was $46.6 million and is recorded in accrued and other current liabilities in the consolidated balance sheet.

We have firm purchase commitments of $26.3 million for capital expenditures, primarily related to commitments for tooling and equipment for new and existing products and commitments to vendors to fit out and furnish office facilities.

We expect to continue making capital expenditures in the future to support product development activities and ongoing and expanded operations.

Although open purchase commitments are considered enforceable and legally binding, the terms generally allow us to reschedule or adjust our requirements based on business needs prior to delivery of goods or performance of services.

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Operating leases for facilities are generally renewable at our option and usually include escalation clauses linked to inflation .

The remaining terms of our non-cancelable operating leases expire in various years through 2031.

S ee Note 17 - Leases in our Notes to the consolidated financial statements included in this report for more information on leases.

The remaining terms of our non-cancelable operating leases expire in various years thro ugh 2033.

See Note 17 - Leases in our Notes to the consolidated financial statements included in this report for more information on leases.

Income Taxes Payable

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

As of March 31, 2022, no amounts have been accrued for indemnification provisions.

As of March 31, 2023, no material a mounts have been accrued for indemnification provisions.

We do not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under our indemnification arrangements.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis