Logistea
Annual Report 2019

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ý



o

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2019
or

For the Transition Period from                    to                  

Commission File Number: 0-29174

LOGITECH INTERNATIONAL S.A.

(Exact
name
of
registrant
as
specified
in
its
charter)

Canton of Vaud, Switzerland
(State
or
other
jurisdiction
of
incorporation
or
organization)

None
(I.R.S.
Employer
Identification
No.)

Logitech International S.A.
EPFL - Quartier de l'Innovation
Daniel Borel Innovation Center
1015 Lausanne, Switzerland
c/o Logitech Inc.
7700 Gateway Boulevard
Newark, California 94560

(Address
of
principal
executive
offices
and
zip
code)

(510) 795-8500

(Registrant's
telephone
number,
including
area
code)

Securities
registered
pursuant
to
Section
12(b)
of
the
Act:

Title of each class

Name of each exchange on which registered

Registered
Shares
par
value
CHF
0.25
per
share

The
Nasdaq
Global
Select
Market;
SIX
Swiss
Exchange

Securities
registered
or
to
be
registered
pursuant
to
Section
12(g)
of
the
Act:
None

Indicate
by
check
mark
if
the
registrant
is
a
well-known
seasoned
issuer,
as
defined
in
Rule
405
of
the
Securities
Act.
Yes

ý


No

o

Indicate
by
check
mark
if
the
registrant
is
not
required
to
file
reports
pursuant
to
Section
13
or
Section
15(d)
of
the
Act.
Yes

o




No

ý

Indicate 
by
check
mark
whether
the
registrant 
(1)
has
filed
all
reports
required
to
be
filed
by
Section
13
or
15(d)
of
the
Securities 
Exchange 
Act
of
1934
during
the
preceding 
12 
months 
(or 
for 
such 
shorter 
period 
that 
the 
registrant 
was 
required 
to 
file 
such 
reports), 
and 
(2) 
has 
been 
subject 
to 
such 
filing 
requirements 
for 
the 
past
90
days.
Yes

ý




No

o

Indicate
by
check
mark
whether
the
registrant
has
submitted
electronically
every
Interactive
Data
file
required
to
be
submitted
pursuant
to
Rule
405
of
Regulation
S-T

during
the
preceding
12
months
(or
for
such
shorter
period
that
the
registrant
was
required
to
submit
such
files).
Yes

ý


No

o

 
 
 




 
 
 


 
 
 
 


Table of Contents

Indicate 
by 
check 
mark 
if 
disclosure 
of 
delinquent 
filers 
pursuant 
to 
Item 
405 
of 
Regulation 
S-K 
(§229.405 
of 
this 
chapter) 
is 
not 
contained 
herein, 
and 
will 
not 
be
contained,
to
the
best
of
the
registrant's
knowledge,
in
definitive
proxy
or
information
statements
incorporated
by
reference
in
Part
III
of
this
Form
10-K
or
any
amendment
to
this
Form
10-K.

ý

Indicate 
by 
check 
mark 
whether 
the 
registrant 
is 
a 
large 
accelerated 
filer, 
an 
accelerated 
filer, 
a 
non-accelerated 
filer, 
a 
smaller 
reporting 
company 
or 
an 
emerging
growth 
company. 
See 
the 
definitions 
of 
"large 
accelerated 
filer," 
"accelerated 
filer," 
"smaller 
reporting 
company," 
and 
"emerging 
growth 
company" 
in 
Rule 
12b-2 
of 
the
Exchange
Act.

Large
accelerated
filer
ý

Accelerated
filer
o

Non-accelerated
filer
o




 Smaller
reporting
company
o 
Emerging
Growth
Company
o

If
an
emerging
growth
company,
indicate
by
check
mark
if
the
registrant
has
elected
not
to
use
the
extended
transition
period
for
complying
with
any
new
or
revised

financial
accounting
standard
s
provided
pursuant
to
Section
13(a)
of
the
Exchange
Act.
o

Indicate
by
check
mark
whether
the
registrant
is
a
shell
company
(as
defined
in
Rule
12b-2
of
the
Act).
Yes

o




No

ý

The
aggregate
market
value
of
the
voting
shares
held
by
non-affiliates
of
the
registrant,
based
upon
the
closing
sale
price
of
the
shares
on
September
28,
2018,
the
last
business
day
of
the
registrant's
second
fiscal
quarter
on
the
Nasdaq
Global
Select
Market,
was
 $7,359,961,924
.
For
purposes
of
this
disclosure,
voting
shares
held
by
persons
known
to
the
Registrant
to
beneficially
own
more
than
5%
of
the
Registrant's
shares
and
shares
held
by
officers
and
directors
of
the
Registrant
have
been
excluded
because
such
persons
may
be
deemed
to
be
affiliates.
In
the
case
of
5%
or
greater
shareholders,
we
have
not
deemed
such
shareholders
to
be
affiliates
unless
there
are
facts
and 
circumstances 
which 
would 
indicate 
that 
such 
shareholders 
exercise 
any 
control 
over 
the 
Registrant, 
or 
unless 
they 
hold 
10% 
or 
more 
of 
Registrant’s 
share 
capital
outstanding.
This
determination
is
not
necessarily
a
conclusive
determination
for
other
purposes.

As
of
May
3,
2019
,
there
were
166,598,546
shares
of
the
Registrant's
share
capital
outstanding.

Portions
of
the
registrant's
Proxy
Statement
for
the
2019
Annual
Meeting
of
Shareholders
are
incorporated
herein
by
reference
in
Part
III
of
this
Annual
Report
on
Form
10-K
to
the
extent
stated
herein.
Such
proxy
statement
will
be
filed
with
the
Securities
and
Exchange
Commission
within
120
days
of
the
registrant's
fiscal
year
ended
March
31,
2019.

DOCUMENTS INCORPORATED BY REFERENCE

Securities
registered
pursuant
to
Section
12(b)
of
the
Act:

Title
of
each
class

Trading
Symbol(s)

Name
of
each
exchange
on
which
registered

Registered
Shares

LOGN

LOGI

SIX
Swiss
Exchange

Nasdaq
Global
Select
Market

 
   
   
   
 




Table of Contents

TABLE OF CONTENTS

Part I

Item
1.

Item
1A.

Item
1B.

Item
2.

Item
3.

Item
4.

Part II

Item
5.

Item
6.

Item
7.

Item
7A.

Item
8.

Item
9.

Item
9A.

Item
9B.

Part III

Item
10.

Item
11.

Item
12.

Item
13.

Item
14.

Part IV

Item
15.

Signatures

Business

Risk
Factors

Unresolved
Staff
Comments

Properties

Legal
Proceedings

Mine
Safety
Disclosures

Market
for
Registrant's
Common
Equity,
Related
Stockholder
Matters
and
Issuer
Purchases
of
Equity
Securities

Selected
Financial
Data

Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations

Quantitative
and
Qualitative
Disclosures
About
Market
Risk

Financial
Statements
and
Supplementary
Data

Changes
in
and
Disagreements
With
Accountants
on
Accounting
and
Financial
Disclosure

Controls
and
Procedures

Other
Information

Directors,
Executive
Officers
and
Corporate
Governance

Executive
Compensation

Security
Ownership
of
Certain
Beneficial
Owners
and
Management
and
Related
Stockholder
Matters

Certain
Relationships
and
Related
Transactions,
and
Director
Independence

Principal
Accountant
Fees
and
Services

Exhibits
and
Financial
Statement
Schedules

Page

3

16

32

33

33

33

34

36

38

55

56

56

56

57

58

58

58

58

59

59

In
this
document,
unless
otherwise
indicated,
references
to
the
"Company",
"Logitech"
"we,"
"our,"
and
"us"
are
to
Logitech
International
S.A.

and
its
consolidated
subsidiaries.
Unless
otherwise
specified,
all
references
to
U.S.
Dollar,
Dollar
or
$
are
to
the
United
States
Dollar,
the
legal
currency
of
the
United
States
of
America.
All
references
to
CHF
are
to
the
Swiss
Franc,
the
legal
currency
of
Switzerland.

Logitech,
the
Logitech
logo,
and
the
Logitech
products
referred
to
herein
are
either
the
trademarks
or
the
registered
trademarks
of
Logitech.
All

other
trademarks
are
the
property
of
their
respective
owners.

The
Company's
fiscal
year
ends
on
March
31.
Interim
quarters
are
generally
thirteen-week
periods,
each
ending
on
a
Friday.
For
purposes
of

presentation,
the
Company
has
indicated
its
quarterly
periods
end
on
the
last
day
of
the
calendar
quarter.

The
term
“Sales”
means
net
sales,
except
as
otherwise
specified.

All
references
to
our
websites
are
intended
to
be
inactive
textual
references
only,
and
the
content
of
such
websites
do
not
constitute
a
part
of

and
are
not
intended
to
be
incorporated
by
reference
into
this
Annual
Report
on
Form
10-K.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
1

 
 






 


 


 
 
Table of Contents

FORWARD-LOOKING INFORMATION

This
Annual
Report
on
Form
10-K
contains
"forward-looking
statements"
within
the
meaning
of
the
Private
Securities
Litigation
Reform
Act
of

1995.
Forward-looking
statements
are
based
on
beliefs
of
our
management
as
of
the
filing
date
of
this
Annual
Form
10-K.
These
forward-looking
statements
include,
among
other
things,
statements
related
to:

• Our
strategy
for
growth,
future
revenues,
earnings,
cash
flow,
uses
of
cash
and
other
measures
of
financial
performance,
and
market

position;

• Our
business
strategy
and
investment
priorities
in
relation
to
competitive
offerings
and
evolving
consumer
demand
trends
affecting
our

products
and
markets,
worldwide
economic
and
capital
market
conditions,
fluctuations
in
currency
exchange
rates,
and
current
and
future
general
regional
economic
conditions
for
fiscal
year
2020
and
beyond;
•
The
scope,
nature
or
impact
of
acquisition,
strategic
alliance,
divestiture
activities
and
restructuring
of
our
organizational
structure;
• Our
expectations
regarding
the
success
of
our
strategic
acquisitions,
including
integration
of
acquired
operations,
products,
technology,

internal
controls,
personnel
and
management
teams;

• Our
business
and
product
plans
and
development
and
product
innovation
and
their
impact
on
future
operating
results
and
anticipated

operating
costs
for
fiscal
year
2020
and
beyond;

Potential
tariffs,
their
effects
and
our
ability
to
mitigate
their
effects;
Capital
investments
and
research
and
development;

• Opportunities
for
growth,
market
opportunities
and
our
ability
to
take
advantage
of
them;
•
•
• Our
expectations
regarding
our
share
buyback
and
dividend
programs;
•

The
sufficiency
of
our
cash
and
cash
equivalents,
cash
generated
from
operations,
and
available
borrowings
under
our
bank
lines
of
credit
to
fund
capital
expenditures
and
working
capital
needs;
and
The
effects
of
environmental
and
other
laws
and
regulations
in
the
United
States
and
other
countries
in
which
we
operate.

•

Forward-looking
statements
also
include,
among
others,
those
statements
including
the
words
"anticipate",
"believe",
"could",
"estimate",

"expect",
"forecast",
"intend",
"may",
"plan",
"project",
"predict",
"should",
"will"
and
similar
language.
These
statements
reflect
our
views
and
assumptions
as
of
the
date
of
this
Annual
Report
on
Form
10-K.
All
forward-looking
statements
involve
risks
and
uncertainties
that
could
cause
our
actual
performance
to
differ
materially
from
those
anticipated
in
the
forward-looking
statements
depending
on
a
variety
of
factors.
Important
information
as
to
these
factors
can
be
found
in
this
Annual
Report
on
Form
10-K
under
the
headings
of
“Management’s
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations”,
“Overview”,
“Critical
Accounting
Estimates”
and
“Liquidity
and
Capital
Resources”,
among
others.
Factors
that
might
cause
or
contribute
to
such
differences
include,
but
are
not
limited
to,
those
discussed
under
Item
1A,
Risk
Factors,
as
well
as
elsewhere
in
this
Annual
Report
on
Form
10-K
and
in
our
other
filings
with
the
U.S.
Securities
and
Exchange
Commission,
or
"SEC."
You
are
cautioned
not
to
place
undue
reliance
on
the
forward-looking
statements,
which
speak
only
as
of
the
date
of
this
Annual
Report
on
Form
10-K.
We
undertake
no
obligation
to
publicly
release
any
revisions
to
the
forward-looking
statements
or
reflect
events
or
circumstances
after
the
date
of
this
document.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
2

Table of Contents

ITEM 1.    BUSINESS

Company Overview

PART I

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

than
35
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
better
experiences
consuming,
sharing
and
creating
digital
content
for
computing,
gaming,
video
and
music,
whether
it
is
on
a
computer,
mobile
device
or
in
the
cloud.
Logitech's
brands
include
Logitech,
Jaybird,
Ultimate
Ears,
Logitech
G,
ASTRO
Gaming
and
Blue
Microphones.

Logitech
was
founded
in
Switzerland
in
1981,
and
Logitech
International
S.A.
has
been
the
parent
holding
company
of
Logitech
since
1988.

Logitech
International
S.A.
is
a
Swiss
holding
company
with
its
registered
office
in
Apples,
Switzerland,
which
conducts
its
business
through
subsidiaries
in
the
Americas
(including
North
and
South
America),
EMEA
(Europe,
Middle
East,
Africa)
and
Asia
Pacific
(including,
among
other
countries,
China,
Taiwan,
Japan,
India
and
Australia).
Shares
of
Logitech
International
S.A.
are
listed
on
both
the
SIX
Swiss
Exchange,
under
the
trading
symbol
LOGN,
and
the
Nasdaq
Global
Select
Market,
under
the
trading
symbol
LOGI.
References
in
this
Annual
Report
on
Form
10-K
to
the
"Company,"
"Logitech,"
"we,"
"our,"
and
"us"
refer
to
Logitech
International
S.A.
and
its
consolidated
subsidiaries.

We
operate
in
a
single
operating
segment:
Peripherals.
For
more
information
about
segments
and
geographic
areas,
please
refer
to
Note
15
of

our
consolidated
financial
statements
included
in
this
Annual
Report
on
Form
10-K.
Our
products
participate
in
five
large
markets:
Creativity
&
Productivity,
Gaming,
Video
Collaboration,
Music
and
Smart
Home.
We
sell
our
products
to
a
broad
network
of
domestic
and
international
customers,
including
direct
sales
to
retailers
and
e-tailers
and
indirect
sales
through
distributors.
Our
worldwide
channel
network
includes
consumer
electronics
distributors,
retailers,
mass
merchandisers,
specialty
stores,
computer
and
telecommunications
stores,
value-added
resellers
and
online
merchants.

Acquisitions

On
August
21,
2018,
we
acquired
all
equity
interests
in
Blue
Microphones
Holding
Corporation
(Blue
Microphones)
for
a
total
consideration
of

$134.8
million
in
cash
(the
Blue
Microphones
Acquisition),
which
included
a
working
capital
adjustment
and
repayment
of
debt
on
behalf
of
Blue
Microphones.
Blue
Microphones
is
a
leading
audio
manufacturer
that
designs
and
produces
microphones,
headphones,
recording
tools,
and
accessories
for
audio
professionals,
musicians
and
consumers.
The
Blue
Microphones
Acquisition
supplements
our
product
portfolio.


On
August
11,
2017,
we
acquired
certain
assets
and
liabilities
constituting
the
ASTRO
Gaming
business
(ASTRO)
from
AG
Acquisition
Corporation
for
a
purchase
price
of
$85.0
million
in
cash
(the
ASTRO
Acquisition).
ASTRO
is
a
leading
console
gaming
accessory
brand
with
a
history
of
producing
award-winning
headsets
for
professional
gamers
and
enthusiasts.
ASTRO
provides
a
strong
growth
platform
in
the
console
gaming
accessories
market.

Industry Overview

Historically,
Logitech's
business
has
been
driven
by
the
same
trends
that
drove
the
adoption
of
desktop
and
laptop
PCs
for
consumers,

businesses
and
institutional
applications,
including
the
growth
in
affordable
processing
power,
communications
bandwidth,
the
increased
accessibility
of
digital
content,
and
the
growing
and
pervasive
use
of
the
Internet
for
productivity,
communication
and
entertainment.
These
trends
have
created
opportunities
for
new
applications,
new
users
and
dramatically
richer
interaction
between
people
and
digital
content.

In
the
last
several
years,
new
PC
shipments
have
stagnated
and,
combined
with
increased
interest
in
smaller,
mobile
computing
devices
(such

as
smartphones
and
tablets),
the
market
for
PC
peripherals
has
rapidly
changed.
We
see
opportunities
within
the
large
installed
base
of
PCs,
created
by
consumers'
desire
to
refresh
their
current
PCs
with
new
peripherals,
as
well
as
new
trends
developing
within
the
connected
device
ecosystems.
In
addition,
the
refresh
of
operating
systems
and
new
use
cases
created
by
the
growth
of
specific
cloud-based
services
and
applications
drive
new
peripherals
opportunities.
Consumers
are
also
enhancing
their
tablet
experience
with
a
range
of
keyboards
and
cases
that
enable
them
to
create,
consume
and
do
more
with
their
tablets
conveniently
and
comfortably.

Logitech
International
S.A.
|
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Table of Contents

Growing
adoption
of
cloud-based
experiences
in
gaming,
video,
music
and
smart
home
has
expanded
our
addressable
market
opportunities.

More
and
more
consumers
today
interact
with
cloud-based
content
platforms,
such
as
Steam
and
Twitch
for
gaming,
Spotify,
Apple
Music
and
Pandora
for
streaming
music,
or
Zoom
or
Microsoft
Teams
for
video
collaboration.
Logitech
offers
peripherals
and
accessories
to
enhance
the
use
of
such
cloud-based
content
platforms.

In
the
gaming
market,
the
rapid
rise
of
electronic
sports
(esports),
and
the
development
of
new
technologies
in
social,
virtual
and
augmented
reality
present
growth
opportunities.
We
leverage
our
deep
research
and
development
(R&D)
capabilities
in
the
area
of
PC
peripherals
to
develop
industry-leading
gaming
gear
that
enhances
consumers'
overall
gaming
experience
and
performance.
As
consumers
increasingly
watch
various
esports
tournaments
or
other
gaming
broadcasts
on
cloud-based
platforms
such
as
Twitch,
the
gaming
industry
is
becoming
both
a
source
of
entertainment
and
participation
by
mainstream
consumers.
We
sponsor
and
work
closely
with
esports
athletes
to
improve
our
brand
and
the
quality
and
functionality
of
our
gaming
products.
We
also
offer
gaming
peripherals
that
enhance
the
experience
of
more
casual
gamers.

The
use
of
video
across
multiple
platforms
-
PCs,
laptops
and
mobile
devices
such
as
tablets
and
smartphones
-
is
a
continuing
trend.
The

video
communication
industry
continues
to
make
progress
toward
a
vision
in
which
people
can
conduct
a
video
call
from
any
of
these
platforms
to
any
other
platform.
And
this
trend
to
embrace
cloud
video
conferencing
by
businesses
and
institutions
is
driving
our
Video
Collaboration
category
and
offers
a
long-term
growth
opportunity
for
Logitech.
For
businesses
and
institutions,
video
conferencing
is
increasingly
substituted
for
travel,
because
of
high
travel
costs
as
well
as
the
productivity
gain
that
can
be
achieved
by
a
high-quality
face-to-face
meeting
that
does
not
require
travel
away
from
the
office.
Further,
with
the
increased
availability
of
high
Internet
bandwidth,
video
conferencing
is
becoming
a
key
component
of
Unified
Communications,
which
is
the
integration
of
communications
solutions
such
as
voicemail,
e-mail,
chat,
presentation
sharing
and
live
video
meetings.
The
market
opportunity
to
provide
innovative,
affordable,
and
easy-to-use
video
collaboration
products
to
the
millions
of
small-
to
medium-sized
meeting
rooms
lacking
video
is
substantial,
and
we
are
well-positioned
to
take
advantage
of
that
opportunity
and
to
expand
into
large-sized
meeting
rooms.

Cloud-based
music
services
have
enjoyed
tremendous
growth,
fueled
by
the
adoption
of
smartphones,
tablets,
and
other
connected
devices.
Consumers
are
optimizing
their
audio
experiences
on
their
tablets
and
smartphones
with
wireless
mobile
speakers
that
pair
easily
with
their
mobile
devices
and
with
in-ear
and
other
headphones.
Our
mobile
speakers
and
in-ear
headphone
products
target
a
large
and
growing
market
that
reflects
the
increasing
popularity
of
mobile
devices
or
various
voice
assistants
for
accessing
digital
music.
Additionally,
within
the
music
market,
consumers
are
increasingly
listening
with
wireless
earphones
while
they
undertake
other
activities
such
as
sports.
The
innovation
in
truly
wireless
headphones
has
led
to
double-digit
industry
growth
in
revenue
and
average
selling
price,
which
highlights
a
major
opportunity
for
Logitech.

The
home
is
also
an
important
place
for
technological
development,
particularly
as
an
increasing
number
of
objects
become
connected
smart

home
devices
such
as
home
security
cameras,
light
bulbs,
security
locks,
thermostats
and
others.
Logitech’s
line
of
universal
remotes
and
hubs
control
electronic
and
connected
devices
around
the
home
as
well
as
these
other
smart
devices.

Business Strategy

Logitech's
foundation
for
future
growth
is
built
on
five
core
capabilities
that
apply
to
all
of
our
product
categories:
•
 Design;

•


Engineering;

•
 Go-to-market;

•
 Marketing;
and

•
 Operations.

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Design

In
the
past
few
years,
Logitech
has
strengthened
its
design
capabilities
by
building
a
world-class
team
of
internal
designers.
Our
designs
have

an
everyday
place
in
people’s
lives,
connecting
them
to
the
digital
experiences
they
care
about.
These
products
have
been
earning
prestigious
design
awards
-
215
design
awards
during
the
past
five
fiscal
years
-
and
enthusiastic
reviews
in
the
media.
This
is
an
important
indication
that
Logitech’s
strategic
aim
to
become
a
design
company
is
working.
During
fiscal
year
2019,
we
won
50
design
awards
spanning
all
of
our
product
categories.
As
Logitech
establishes
itself
as
a
design
company,
design
thinking
and
culture
are
used
as
a
strategic
and
cultural
differentiator.
Design
also
helps
to
reduce
product
costs
through
increased
collaboration
between
our
design,
engineering
and
manufacturing
teams.
Our
key
design
centers
are
in
Switzerland,
Ireland,
the
United
States,
and
Taiwan.

Engineering

Our
decades-long
expertise
in
key
engineering
disciplines
such
as
sensors,
acoustics,
optics,
wireless,
and
power
management
is
a
core
competitive
advantage
of
Logitech.
Furthermore,
we
continue
to
extend
our
engineering
capabilities
into
more
advanced
technologies
such
as
software,
apps,
cloud,
data
analytics
and
machine
learning.
Our
engineering
team
has
expertise
in
developing
products
for
a
broad
array
of
platforms
such
as
PCs,
mobile
and
personal
voice
assistants
(such
as
Amazon
Alexa
and
Google
Assistant).
These
engineering
capabilities
combined
with
our
award-winning
design
team
form
the
basis
of
Logitech's
key
innovation
engine.

Go-To-Market

Over
the
past
30-plus
years,
Logitech
has
built
an
extensive
global
go-to-market
network
that
can
be
leveraged
as
we
introduce
new
products,
enter
new
market
categories
and
optimize
the
value
of
our
existing
products
and
product
categories.
We
have
multiple
opportunities
to
drive
growth
-
existing
products
in
existing
retailers,
new
products
in
existing
retailers,
existing
products
in
new
retailers,
and
new
products
in
new
retailers.
Beyond
traditional
retail
and
distribution
channels,
we
have
also
cultivated
various
non-traditional
retail
channels
and
are
building
our
direct
sales
force
to
sell
our
products.
As
we
continue
to
expand
into
new
channels,
there
are
numerous
cross-selling
opportunities
across
our
broad
product
portfolio.
We
have
established
Logitech
as
a
neutral
technology
supplier
that
can
work
with
leading
technology
vendors
and
platforms
as
well
as
provide
connections
among
their
products
and
ecosystems.

Marketing

As
Logitech
expands
into
multiple
categories
with
multiple
brands,
we
are
focusing
on
enhancing
our
marketing
capabilities
around
brand
strategy
and
execution,
digital
marketing,
and
marketing
technology.
Most
of
the
marketing
and
creative
efforts
that
were
once
outsourced
to
outside
marketing
agencies
are
now
executed
through
our
internal
teams
from
concept
to
execution,
which
improves
speed
and
cost
efficiency.
We
are
increasing
our
leverage
of
digital
media
channels
and
programs
to
drive
consumer
brand
engagement
and
purchase.
We
are
also
increasing
our
focus
on
marketing
analytics
platforms
to
improve
our
understanding
of
marketing
investments
and
to
maximize
return
on
investment
(ROI).
And
we
are
making
investments
to
upgrade
and
expand
all
aspects
of
our
marketing
technology
infrastructure,
including
the
re-platforming
of
our
websites
to
support
the
global
expansion
of
our
brands
across
countries,
languages
and
devices
and
provide
the
foundation
for
the
acceleration
of
our
digital
marketing
efforts
and
evolution
to
personalized
consumer
communication.

Operations

Logitech’s
operations
capability
consists
of
a
hybrid
model
of
in-house
manufacturing
and
third-party
contract
manufacturers,
which
allows
us

to
effectively
respond
to
rapidly
changing
demand
and
leverage
economies
of
scale.
Our
supply
chain’s
extensive
global
reach,
key
distribution,
adoption
of
factory
automation
and
strategic
business
relationships
combined
with
extensive
analytic
modeling
expertise,
optimization
tools
and
global
processes
provide
a
competitive
advantage
against
many
of
our
competitors.

Products

Logitech
designs,
manufactures
and
markets
products
that
allow
people
to
connect
through
music,
gaming,
video,
computing,
and
other
digital

platforms.
The
large
majority
of
our
revenue
has
historically
been
derived
from
sales
of
our
products
for
use
by
consumers.

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Table of Contents

Creativity & Productivity

Pointing Devices: Logitech
offers
a
variety
of
pointing
devices.
Some
of
our
key
products
in
this
category
include:

•

•

•

•
•

The
Logitech
MX
Master
2S
and
MX
Anywhere
2S
wireless
mice,
our
flagship
wireless
mouse
products.
Enabled
with
Logitech
Flow
cross-
computer
control
software,
these
products
represent
the
new
paradigm
for
precise,
fast,
comfortable
cross-computer
digital
navigation.
The
Logitech
MX
Ergo,
a
wireless
trackball
that
offers
personalized
comfort
with
a
unique
adjustable
hinge,
precision
tracking
and
multi-
device
connectivity.
The
Logitech
MX
Vertical,
a
wireless
mouse
which
is
angled
57
degree
and
offers
personalized
ergonomic
comfort
precision
tracking
and
multi-device
connectivity.
The
Logitech
Wireless
Mouse
M325,
which
offers
micro-precise
scrolling,
18-month
battery
life
and
comfortable
design.
The
Logitech
Wireless
Mouse
M185,
a
wireless
mouse
with
nano
receiver
technology
that
is
compatible
with
any
computer.

Keyboards & Combos: Logitech
offers
a
variety
of
corded
and
cordless
keyboards,
living
room
keyboards,
and
combos
(keyboard-and-mouse

combinations).
Some
of
our
products
in
this
category
include:

•

•

•

The
Logitech
Craft
Advanced
Wireless
keyboard,
a
premium
backlit
keyboard
with
customizable
input
dial
to
access
directly
menus
and
shortcuts
within
leading
creativity
and
productivity
apps.
The
Logitech
Wireless
Touch
Keyboard
K400
Plus,
a
compact
keyboard
with
an
integrated
touchpad
and
10-meter
wireless
range,
designed
for
use
in
the
living
room.
The
Logitech
Wireless
Combo
MK270,
a
full-size
keyboard
and
mouse
combination
with
a
tiny
USB
receiver.

PC Webcams: Our
PC
Webcams
category
comprises
PC-based
webcams
targeted
primarily
at
consumers.
The
Logitech
HD
Pro
Webcams
C920
&
C922,
which
offer
razor-sharp
HD
1080p
video
recordings
and
stereo
sound,
were
top
revenue-generating
webcams
during
fiscal
year
2019.

Tablet & Other Accessories: Our
Tablet
&
Other
Accessories
category
includes
keyboards
for
tablets
and
smartphones
as
well
as
other
accessories
for
mobile
devices.
These
products
are
mostly
for
iPads
but
are
also
for
select
Samsung
and
other
Android
tablets.
Some
of
our
products
in
this
category
include
:

•

•

•

The
Logitech
Slim
Combo
Backlit
Keyboard
Case
with
Smart
Connector
for
the
iPad
Pro
12.9
and
iPad
Pro
10.5
that
provides
thin
and
light
front
and
back
protection,
a
detachable
backlit
keyboard
and
a
multi-angle
stand
for
optimal
viewing
and
face-time.
The
Logitech
Slim
Folio
Keyboard
Case
with
Bluetooth
for
the
iPad
6th
Generation
that
provides
thin
and
light
front
and
back
protection,
a
keyboard
with
shortcut
keys
and
an
optimized
angle
for
viewing.
The
Logitech
Keys-To-Go,
an
ultra-portable,
stand-alone
keyboard.

Gaming

Logitech
G
provides
gamers
of
all
levels
with
industry-leading
keyboards,
mice,
headsets
and
simulation
products
such
as
steering
wheels
and

flight
sticks,
incorporating
innovative
design
and
advanced
technologies
.
Some
of
our
products
in
this
category
include:

•

•

•

The
Logitech
G513
RGB
Mechanical
Gaming
Keyboard,
which
features
high-performance
mechanical
switches,
LIGHTSYNC
intelligent
RGB
illumination,
a
leather
palm
rest,
a
metal
top
case,
and
a
USB
pass-through.
The
Logitech
G
PRO
Wireless
Gaming
Mouse
that
was
designed
in
collaboration
with
the
world's
top
professionals,
and
features
our
LIGHTSPEED
TM
professional
grade
wireless
technology,
our
exclusive
high-performance
HERO
gaming
sensor,
a
flexible
ambidextrous
design,
and
support
for
our
POWERPLAY
TM
wireless
charging
solution,
for
maximum
performance
and
comfort
over
long
gameplay
sessions.
The
Logitech
G29
Driving
Force
Steering
Wheel
for
Sony
PlayStation
4,
which
features
a
powerful
dual-motor
force
feedback
transmission,
hand-stitched
leather-wrapped
rim,
and
stainless
steel
throttle,
brake
and
clutch
pedals
for
an
ultra-realistic
driving
experience.

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ASTRO
Gaming
is
a
performance
gaming
and
lifestyle
brand
focused
on
the
console
gaming
peripherals
market
with
a
cross-platform
lineup

consisting
of
four
primary
headset
models
and
a
high-performance
controller
for
Playstation
4
and
PC:

•

•

•

•

•

The
A50
Wireless
Headset
and
Base
Station
that
targets
the
discerning
“prosumer”
consumer,
featuring
integrated
MixAmp
technology,
Dolby
®
Digital
surround
sound
and
the
ASTRO
Command
Center
Software
system.
The
A40TR
and
MixAmp
Pro,
a
wired
solution
that
targets
the
esport
professional
and
live
streamer,
featuring
Dolby
®
Digital
surround
sound,
daisy-chain
chat,
live
stream
port
and
the
ASTRO
Command
Center
Software
system.
The
A20
Wireless
Headset,
a
stereo
headset
delivering
the
signature
ASTRO
comfort
and
audio
customization
via
the
ASTRO
Command
Center
Software.
The
A10
wired
headset,
an
ultra-durable
robust
headset
delivering
ASTRO
signature
comfort
and
sound
quality
at
a
more
accessible
price
point.
The
C40
TR
(Tournament
Ready)
wireless
controller
for
PlayStation
4
and
PC,
which
has
modular,
swappable
and
replaceable
joysticks
and
d-pad,
and
also
uses
a
proprietary
low-latency
wireless
connection
that
supports
advanced
wireless
audio
directly
to
the
controller.

Video Collaboration

The
Video
Collaboration
category
includes
Logitech’s
ConferenceCams,
which
combine
enterprise-quality
audio
and
high
definition
(HD)

1080p
video
with
affordability
to
bring
video
conferencing
to
businesses
of
any
size.
Our
key
products
in
this
category
include:

•

•

•

Logitech
Rally,
which
offers
best-in-class
video
conferencing
with
Ultra
HD
4k
video
and
professional
audio
that
easily
turns
medium-
to
large-sized
conference
rooms
into
video-enabled
collaboration
rooms.
Logitech
MeetUp
is
Logitech’s
premier
ConferenceCam
designed
for
huddle
rooms,
with
a
room-capturing
120°
field
of
view
(
FOV),
4K
optics
and
exceptional
audio
performance.

Logitech
BRIO,
which
has
4K
video,
RightLight
3
and
high
dynamic
range
(HDR)
to
improve
challenging
lighting,
and
Windows
Hello
facial
recognition
support
for
secure
login
using
just
a
user's
face.

Music

Mobile Speakers: Our
Mobile
Speakers
category
comprises
portable
wireless
Bluetooth
and
Wi-Fi
speakers.
One
of
our
top
revenue-

generating
products
in
the
Mobile
Speakers
category
during
fiscal
year
2019
was
the
Ultimate
Ears
WONDERBOOM,
our
smaller
sized
addition
to
our
line-up
of
360°
portable
Bluetooth
wireless
speakers
that
provide
bold,
immersive
sound
in
every
direction.
The
Ultimate
Ears
WONDERBOOM
was
a
key
driver
for
success
in
fiscal
year
2018
in
this
product
category
along
with
the
Ultimate
Ears
BOOM2,
our
flagship
Bluetooth
speaker,
and
MEGABOOM,
which
has
more
bass
and
is
a
larger
and
more
powerful
complement
to
the
Ultimate
Ears
BOOM
2.
In
fiscal
year
2019,
we
released
our
Ultimate
Ears
BOOM
3
and
Ultimate
Ears
MEGABOOM
3,
which
compared
with
the
prior
model,
have
been
updated
with
better
sound,
more
durable
fabric
and
a
Magic
Button
feature
that
enables
direct
access
to
a
consumer’s
personal
playlists.

Audio & Wearables: Our
Audio
&
Wearables
category
comprises
PC
speakers,
PC
headsets,
in-ear
headphones
and
premium
wireless
audio

wearables
designed
to
enhance
the
audio
experience
and
studio-quality
microphones
for
professionals
and
consumers.
We
offer
both
the
Jaybird
wireless
audio
wearables
for
sports
and
active
lifestyles
and
our
custom
in-ear
headphones,
made
by
Ultimate
Ears.
Jaybird
is
a
digitally
native
brand
that
pioneered
the
wireless
in-ear
headphone
space
and
continues
to
be
a
leading
brand
in
headphones
made
for
athletes.
Designed
for
sport
&
IPX
7
rated,
Jaybird’s
Tarah
Pro,
Tarah,
X4
and
Run
XT
offer
great
sound
with
the
durability
that
athletes
demand.
All
Jaybird
products
are
accompanied
by
software
supported
on
both
Android
and
iOS
that
offers
a
rich
personalized
listening
experience.

Our
Blue
Microphones
product
line
has
a
20-year
legacy
of
innovative,
design
and
performance
across
both
professional
and
consumer
markets.
Blue
Microphones
offers
a
range
of
audio
tools
for
recording
or
broadcasting
application,
from
YouTube
and
podcast
production
to
music
and
gaming.
Examples
of
products
in
Blue
Microphones
products
lineup
include:

•

Yeti:
A
premium
USB
microphone
for
game
streaming,
podcasting,
YouTube,
Skype/VoIP
and
music.
With
its
proprietary
3-capsule
array,
it
delivers
astounding
details
and
presence
and
includes
four
recording
patterns
(cardioid,
omni,
bi-directional
and
stereo)
for
versatility.

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International
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|
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2019
Form
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|
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Table of Contents

•

•

Yeti
Pro:
A
versatile
high-resolution
USB
and
XLR
microphone.
The
Yeti
Pro
is
a
higher
resolution
version
of
Yeti
and
includes
24-bit/192
kHz
audio
resolution
for
high-resolution
music
recording,
sound
design
and
podcasting,
an
XLR
breakout
cable
for
connecting
to
existing
home
studio
audio
interfaces
or
mixers
and
a
3-capsule
array
with
cardioid,
omni,
bi-directional
and
stereo
pickup
patterns.
Yeti
Nano:
A
premium
USB
microphone
with
broadcast
sound
quality
in
a
more
compact
format.
Dual
capsule
design
enables
cardioid
and
omni
patterns.

Smart Home

Our
Smart
Home
category
includes
our
Harmony
line
of
advanced
home
entertainment
controllers,
new
products
dedicated
to
controlling
emerging
categories
of
connected
smart
home
devices
such
as
lighting,
thermostats
and
door
locks,
and
home
security
cameras.
Examples
of
products
in
this
category
include:

•

•

•

The
Logitech
Harmony
Elite
and
the
Logitech
Harmony
Companion,
both
of
which
feature
Logitech's
Harmony
Hub
and
integration
with
the
most
popular
voice
platforms
-
Google
and
Amazon
-
for
complete
control
of
the
home
entertainment
system,
including
Bluetooth
and
IP
devices
such
as
PS4
and
Roku.
The
Logitech
Harmony
350,
650
and
950
remotes,
which
offer
infrared
(IR)-only
control
of
home
entertainment
devices
and
enable
consumers
to
replace
many
remotes
with
one.
Circle
2,
an
indoor
and
outdoor,
weatherproof,
wired
or
100%
wire-free
1080p
HD
home
security
camera
with
night
vision
and
up
to
180°
field-of-view,
which
connects
with
smart
home
platforms
including
Amazon
Alexa,
Google
Assistant
and
Apple
HomeKit.

Research and Development

We
recognize
that
continued
investment
in
product
research
and
development
(including
design)
is
critical
to
facilitate
innovation
of
new
and

improved
products,
technologies
and
experiences.
Our
research
and
development
expenses
for
fiscal
years
2019
,
2018
and
2017
were
$161.2
million
,
$143.8
million
and
$130.5
million,
respectively.
We
expect
to
continue
to
devote
significant
resources
to
research,
development
and
design,
including
devices
for
digital
platforms,
video
communications,
wireless
technologies,
power
management,
user
interfaces
and
device
database
management
to
sustain
our
competitive
position.

Sales and Distribution

Principal Markets

Sales
by
geographic
region
for
fiscal
years
2019
,
2018
and
2017
(based
on
the
customers'
location)
are
as
follows
(in
thousands):

Americas

EMEA

Asia
Pacific

Total
Sales

Year Ended March 31,

  $

2019
1,190,216   $

2018
1,118,324   $

861,731  

736,375  

820,347  

628,192  

2017

963,674

746,898

510,855

  $

2,788,322   $

2,566,863   $

2,221,427

Revenues
from
sales
to
customers
in
Switzerland,
our
home
domicile,
represented
3%,
2%
and
2%
of
our
sales
in
fiscal
years
2019
,
2018
and

2017
,
respectively.
In
fiscal
years
2019
,
2018
and
2017
,
revenues
from
sales
to
customers
in
the
United
States
represented
36%
,
37%
and
37%
of
our
sales,
respectively.
In
fiscal
year
2019
,
2018
and
2017
,
revenues
from
sales
to
customers
in
Germany
represented
18%
,
16%
and
17%
of
our
sales,
respectively.
Revenues
from
sales
to
customers
in
China
represented
10%
of
our
sales
for
fiscal
year
2019
.
No
other
country
represented
more
than
10%
of
our
sales
for
fiscal
years
2019
,
2018
or
2017
.

Sales and Distribution

Our
sales
and
marketing
activities
are
organized
into
three
geographic
regions:
the
Americas
(North
and
South
America),
EMEA
(Europe,

Middle
East,
Africa)
and
Asia
Pacific
(China,
Japan,
Australia,
Taiwan,
India
and
other
countries).

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International
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|
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Table of Contents

We
sell
our
products
primarily
to
a
network
of
distributors,
retailers
and
e-tailers.
We
support
these
channels
with
our
direct
sales
force
and

third-party
distribution
centers
located
in
North
America,
South
America,
Europe
and
Asia
Pacific.

Major
distributors
in
North
America
include
Ingram
Micro
Inc.,
Tech
Data
Corporation,
D&H
Distributing
Company,
and
Synnex
Corporation.
In
Europe,
major
Pan-European
distributors
include
Ingram
Micro,
Tech
Data,
and
Gem
Distribution.
We
also
sell
to
many
regional
distributors
such
as
Actebis
GmbH
in
Germany,
Littlebit
Technology
Partners
AG
in
the
Netherlands,
Copaco
Dc
B.V.
in
the
Netherlands
and
others.
In
Asia,
major
distributors
include
Wincheers
International
Trading
Co.,
Ltd
in
China,
Beijing
Digital
China
Limited
in
China,
Daiwabo
in
Japan,
Synnex
in
Australia
and
the
Pan-Asian
distributor,
Ingram
Micro.
Our
distributor
customers
typically
resell
products
to
retailers,
value-added
resellers,
systems
integrators
and
other
distributors
with
whom
Logitech
does
not
have
a
direct
relationship.

Logitech's
products
can
be
purchased
in
most
major
retail
chains,
where
we
typically
have
access
to
significant
shelf
space.
In
the
U.S.,
these

chains
include
Best
Buy,
Walmart,
Staples,
Office
Depot
and
Target.
In
Europe,
chains
include
Metro
Group
(Media-Saturn
Group),
Elkjop,
FNAC,
and
Dixons
Stores
Group
PLC.
Logitech
also
sells
products
to
non-traditional
retail
channels
such
as
telcos.
In
addition,
Logitech
products
can
be
purchased
online
either
directly
from
Logitech.com
or
through
e-tailers,
such
as
Amazon.com,
the
websites
of
our
major
retail
chains
noted
previously,
and
others.
Logitech
products
are
also
carried
by
business-to-business
direct
market
resellers
such
as
CDW,
Insight,
Zones,
PC
Connection,
and
SHI.

In
fiscal
years
2019
,
2018
and
2017
,
Ingram
Micro
and
its
affiliated
entities
together
accounted
for
13%
,
15%
and
15%
of
our
gross
sales,
respectively.
In
fiscal
years
2019
,
2018
and
2017
,
Amazon
Inc.
and
its
affiliated
entities
together
accounted
for
14%
,
13%
and
12%
of
our
gross
sales,
respectively.
No
other
customer
individually
accounted
for
more
than
10%
of
our
gross
sales
during
fiscal
years
2019
,
2018
or
2017
.

The
material
terms
of
our
distribution
agreements
with
Ingram
Micro
and
its
affiliated
entities
are
summarized
as
follows:

•
•

The
agreements
are
non-exclusive
in
the
particular
territory
and
contain
no
minimum
purchase
requirements.
Each
agreement
may
be
terminated
for
convenience
at
any
time
by
either
party.
Most
agreements
provide
for
termination
on
30
days
written
notice
from
either
party,
with
two
Ingram
Micro
agreements
providing
for
termination
on
90
days
notice.

• We
generally
offer
an
allowance
for
marketing
activities
equal
to
a
negotiated
percentage
of
sales
and
volume
rebates
related
to
purchase

•

volumes
or
sales
of
specific
products
to
specified
retailers.
These
terms
vary
by
agreement.
Agreements
allow
price
protection
credits
to
be
issued
for
on-hand
or
in-transit
new
inventory
if
we,
in
our
sole
discretion,
lower
the
price
of
the
product.

• We
grant
limited
stock
rotation
return
rights
in
certain
territories.

The
material
terms
of
our
reseller
agreements
with
Amazon
and
its
affiliated
entities
are
summarized
as
follows:

Each
agreement
has
a
one
year
term
followed
by
one-year
automatic
renewals.

•
• We
generally
offer
an
allowance
for
marketing
activities
equal
to
a
negotiated
percentage
of
sales
through
transactions
and
additional

•

rebates
related
to
sales
of
specific
products
to
end
users.
These
terms
vary
by
agreement.
Agreements
allow
price
protection
credits
to
be
issued
for
on-hand
or
in-transit
new
inventory
if
we,
in
our
sole
discretion,
lower
the
price
of
the
product.

Through
our
operating
subsidiaries,
we
maintain
marketing
and
channel
support
offices
in
approximately
40
countries.

Backlog

In
our
experience,
the
amount
of
backlog
at
any
particular
fiscal
period-end
is
not
a
meaningful
indication
of
our
future
business
prospects,
as

the
cycle
between
order
and
shipment
of
our
sales
is
generally
relatively
short,
and
also
the
backlog
is
impacted
by
the
commercial
cycle
of
our
products.

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International
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|
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2019
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Table of Contents

Customer Service and Technical Support

Our
customer
service
organization
provides
user
technical
support,
support
related
to
product
inquiry,
and
order
support.
We
support
these

customer
service
functions
with
an
outsourced
operation
that
has
support
centers
located
in
China,
South
Korea,
India,
the
Philippines,
Mexico,
Bulgaria
and
Northern
Ireland.
Our
customer
service
and
technical
personnel
in
each
of
our
regions
provide
support
services
to
retail
purchasers
of
products
through
telephone,
e-mail,
forums,
chat,
and
the
Logitech
Support
website.
For
some
of
our
brands,
dedicated
support
websites
and
channels
are
available.
Logitech
provides
warranties
on
our
branded
products
that
range
from
one
to
five
years.
For
our
Video
Collaboration
business,
we
also
work
with
channel
partners
to
offer
bundled
support
services
with
Logitech
Video
Collaboration
solutions.

In
Korea,
India,
and
China,
there
are
multiple
locations
where
consumers
may
obtain
service
for
their
Logitech
products.
These
locations
are

managed
by
third-party
logistics
providers.
Consumers
who
have
purchased
Logitech
products
can
visit
these
locations
for
product
inspection,
testing
and
return
or
exchange
of
products.
Within
China,
there
is
also
a
mail-in
center
to
provide
these
services
for
more
remote
locations
in
China.

Manufacturing

Logitech's
manufacturing
operations
consist
principally
of
final
assembly
and
testing.
Since
1994,
we
have
had
our
own
manufacturing
operations
in
Suzhou,
China,
which
currently
handles
approximately
half
of
our
total
production
of
products.
We
continue
to
focus
on
ensuring
the
efficiency
of
the
Suzhou
facilities,
through
the
implementation
of
quality
management,
automation,
process
improvements,
and
employee
involvement
programs.
We
outsource
the
remaining
production
to
contract
manufacturers
and
original
design
manufacturers
located
in
Asia.
Both
our
in-house
and
outsourced
manufacturing
operations
are
managed
by
our
worldwide
operations
group.
The
worldwide
operations
group
also
supports
the
business
units
and
marketing
and
sales
organizations
through
the
management
of
distribution
centers
and
the
supply
chain
and
the
provision
of
technical
support
and
other
services.

New
product
launches,
process
engineering,
commodities
management,
logistics,
quality
assurance,
operations
management
and
management
of
Logitech's
contract
manufacturers
occur
in
China,
Taiwan,
Hong
Kong
and
Malaysia.
Certain
components
are
manufactured
to
Logitech's
specifications
by
vendors
in
Asia,
the
United
States,
and
Europe.
We
also
use
contract
manufacturers
to
supplement
internal
capacity
and
to
reduce
volatility
in
production
volumes.
In
addition,
some
products,
including
most
keyboards,
certain
gaming
devices
and
certain
audio
products
are
manufactured
by
contract
manufacturers
to
Logitech's
specifications.

Our
hybrid
model
of
in-house
manufacturing
and
contract
manufacturers
allows
us
to
effectively
respond
to
rapidly
changing
demand
and

leverage
economies
of
scale.
Through
our
high-volume
manufacturing
operations
located
in
Suzhou,
China,
we
believe
we
have
been
able
to
maintain
strong
quality
process
controls
and
have
realized
significant
cost
efficiencies.
Our
Suzhou
operation
provides
for
increased
production
capacity,
manufacturing
know-how,
IP
protection
and
greater
flexibility
in
responding
to
product
demand.
Further,
by
outsourcing
the
manufacturing
of
certain
products,
we
seek
to
reduce
volatility
in
production
volumes
as
well
as
improve
time
to
market.

Competition

Our
product
categories
are
characterized
by
large,
well-financed
competitors,
short
product
life
cycles,
continual
performance
enhancements,

and
rapid
adoption
of
technological
and
product
advancements
by
competitors
in
our
retail
markets.
We
have
experienced
aggressive
price
competition
and
other
promotional
activities
from
our
primary
competitors
and
less-established
brands,
including
brands
owned
by
some
retail
customers
known
as
house
brands.
We
may
also
encounter
more
competition
if
any
of
our
competitors
in
one
or
more
categories
decide
to
enter
other
categories
in
which
we
currently
operate.

As
we
target
opportunities
in
new
categories
and
markets
and
as
some
of
our
product
categories
demonstrate
growth,
we
are
confronting
new

competitors,
many
of
which
may
have
more
experience
in
the
categories
or
markets
and
have
greater
marketing
resources
and
brand
name
recognition
than
we
have.
In
addition,
because
of
the
continuing
convergence
of
the
markets
for
computing
devices
and
consumer
electronics,
we
expect
greater
competition
in
the
future
from
well-established
consumer
electronics
companies
in
our
developing
categories,
as
well
as
future
ones
we
might
enter.
Many
of
these
companies
have
greater
financial,
technical,
sales,
marketing,
and
other
resources
than
we
have.

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International
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|
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2019
Form
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|
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Table of Contents

We
expect
continued
competitive
pressure
in
our
business,
including
in
the
terms
and
conditions
that
our
competitors
offer
customers,
which

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
sales
and
operating
margins.

Creativity and Productivity

Pointing Devices: Apple,
Microsoft
Corporation
and
HP
Inc.
are
our
main
competitors
worldwide.
We
also
experience
competition
and
pricing

pressure
from
less-established
brands,
including
house
brands
and
local
competitors
in
Asian
markets,
such
as
Elecom
Co.,
Ltd.,
Buffalo
Inc.,
Shenzhen
Rapoo
Technology
Co.,
Ltd.,
and
Xiaomi
Inc.

Keyboards & Combos: Microsoft
and
Apple
are
the
main
competitors
in
our
PC
keyboard
and
combo
product
lines.
We
also
experience
competition
and
pricing
pressure
for
corded
and
cordless
keyboard
and
combos
from
less-established
brands,
including
house
brands
and
local
competitors
in
Asian
markets.

Tablet & Other Accessories: Competitors
in
the
tablet
keyboard
market
are
Apple,
Zagg
Inc.,
Kensington
Computer
Products
Group,
Belkin
International,
Inc.,
Targus
Corporation
and
other
less-established
brands.
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.
Competitors
in
the
tablet
case
market
include
Apple,
Otter
Products
LLC,
Speck
Products
and
a
large
number
of
small
brands.

PC Webcams: Our
primary
competitors
for
PC
webcams
are
Microsoft
and
other
manufacturers
taking
smaller
market
share
such
as
Razer
Inc.

Gaming   



Competitors
for
our
Gaming
products
include
Razer
Inc.,
Corsair,
SteelSeries,
Turtle
Beach
Corporation
and
Kingston
Technology
Corporation,

among
others.

Video Collaboration    

Our
competitors
for
Video
Collaboration
products
include
Cisco
Systems,
Inc.,
Polycom,
Inc.
(acquired
by
Plantronics,
Inc.),
GN
Netcom/Jabra

(which
recently
acquired
Altia
Systems),
and
AVer
Information
Inc.,
among
others.

Music  




Mobile Speakers: Our
competitors
for
Bluetooth
wireless
speakers
include
Bose
Corporation,
Harman
International
Industries,
Inc
(owned
by

Samsung
Electronics
Co.,
Ltd.),
and
Beats
Electronics
LLC
(owned
by
Apple
Inc.),
among
others.
Harman
is
our
largest
competitor.
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.
Amazon
is
also
a
significant
customer
of
our
products.

Audio & Wearables: For
PC
speakers,
our
competitors
include
Bose,
Cyber
Acoustics,
Phillips,
Creative
Labs,
Inc,
Apple
and
Samsung,
among

others.

For
PC
headsets,
our
main
competitors
include
Plantronics
Inc.
and
GN
Netcom,
among
others.
In-ear
headphones
competitors
include
Beats,

Bose,
Apple,
Sony,
JBL
and
Sennheiser,
among
others.
The
platform
providers
(e.g.,
Apple
and
Samsung)
are
able
to
craft
tighter
experiences
for
their
consumers
due
to
their
ability
to
control
both
ends
of
the
ecosystem
(the
headphone
and
the
mobile
device).

Our
competitors
for
Blue
Microphones
products
include
Rode
Microphones
LLC,
Audio
Technica
Corporation,
Samson
Technologies,
Shure

Inc,
Razer
Inc
and
Apogee
Electronics,
among
others.

Smart Home   



Direct
competitors
in
the
remote
control
market
include
pro-installer-focused
Universal
Remote
Control
Inc.,
and
new
“DIY”
entrants.
Indirect

competition
exists
in
the
form
of
low-end
“replacement
remotes”
such
as
Sony
Corporation,
RCA
Corporation,
General
Electric
Company
(GE),
pure
app-based
solutions
such
as
Peel
Technologies,
as
well
as
device
and/or
subscriber-specific
solutions
from
TV
makers
such
as
Samsung
and
Vizio
and
multiple-system
operators
(MSOs)
such
as
Comcast
Corporation
and
DirecTV.
Competition
in
the
home
control
market
also
exists
in
the
form
of
home
automation
platforms
such
as
Smart
Things
(owned
by
Samsung),
Amazon
with
its
Echo
product,
Google
Home
and
Nest
(owned
by
Alphabet
Inc.),
Wink
and
many
other
startups
in
the

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space.
Many
of
these
products
and
brands
are
partners
with
Logitech
as
well
via
integrations
with
Harmony
remotes.

Intellectual Property and Proprietary Rights

Intellectual
property
rights
that
apply
to
Logitech's
products
and
services
include
patents,
trademarks,
copyrights,
and
trade
secrets.

We
hold
various
United
States
patents
and
pending
applications,
together
with
corresponding
patents
and
pending
applications
from
other
countries.
While
we
believe
that
patent
protection
is
important,
we
also
believe
that
patents
are
of
less
competitive
significance
than
factors
such
as
technological
innovation,
ease
of
use,
and
quality
design.
No
single
patent
is
in
itself
essential
to
Logitech
as
a
whole.
From
time
to
time
we
receive
claims
that
we
may
be
infringing
on
patents
or
other
intellectual
property
rights
of
others.
As
appropriate,
claims
are
referred
to
counsel,
and
current
claims
are
in
various
stages
of
evaluation
and
negotiation.
If
necessary
or
desirable,
we
may
seek
licenses
for
certain
intellectual
property
rights.
Refer
also
to
the
discussion
in
Item
1A,
Risk
Factors—"We
may
be
unable
to
protect
our
proprietary
rights.
Unauthorized
use
of
our
technology
may
result
in
the
development
of
products
that
compete
with
our
products."
and
"Claims
by
others
that
we
infringe
their
proprietary
technology
could
adversely
affect
our
business."

To
distinguish
genuine
Logitech
products
from
competing
products
and
counterfeit
products,
Logitech
has
used,
registered,
or
applied
to

register
certain
trademarks
and
trade
names
in
the
United
States
and
other
countries
and
jurisdictions.
Logitech
enforces
its
trademark
and
trade
name
rights
in
the
United
States
and
other
countries.
In
addition,
the
software
for
Logitech's
products
and
services
is
entitled
to
copyright
protection,
and
we
generally
require
our
customers
to
obtain
a
software
license
before
providing
them
with
that
software.
We
also
protect
details
about
our
products
and
services
as
trade
secrets
through
employee
training,
license
and
non-disclosure
agreements,
technical
measures
and
other
reasonable
efforts
to
preserve
confidentiality.

Environmental Regulation

We
are
subject
to
laws
and
regulations
in
many
jurisdictions
regulating
the
materials
used
in
our
products
and,
increasingly,
product-related

energy
consumption,
and
the
recycling
of
our
products,
batteries,
and
packaging.

Europe. 



In
Europe,
we
are
subject
to
the
European
Union's
(EU's),
Restriction
of
Use
of
Certain
Hazardous
Substances
in
Electrical
and

Electronics
Equipment
Directive
2011/65/EU
(RoHS
Directive).
This
directive
restricts
the
placement
into
the
EU
market
of
electrical
and
electronic
equipment
containing
certain
hazardous
materials
including
lead,
mercury,
cadmium,
chromium,
phthalates
and
halogenated
flame-retardants.
All
Logitech
products
are
covered
by
the
directive
and
have
been
modified,
if
necessary,
to
be
compliant
with
the
RoHS
Directive,
we
issue
a
declaration
of
conformity
and
mark
the
product
with
the
'CE'
mark.

We
are
also
subject
to
the
EU's
Energy-related
Products
Directive
(ErP
Directive),
which
aims
to
encourage
manufacturers
and
importers
to

produce
products
designed
to
minimize
overall
environmental
impact.
Under
the
ErP
Directive,
manufacturers
must
ensure
that
their
energy-related
products
comply
with
applicable
requirements,
issue
a
declaration
of
conformity
and
mark
the
product
with
the
'CE'
mark.

We
have
assessed
the
applicability
and
implementation
of
the
applicable
measures
on
our
relevant
product
lines
and
have
taken
steps
to
ensure
that
our
products
meet
the
requirements.
Adoption
of
the
ErP
Directive
will
be
aligned
in
all
EU
member
states.
Similar
requirements
exist
in
the
four
member
states
of
the
European
Free
Trade
Association
(Iceland,
Norway,
Liechtenstein
and
Switzerland).
Such
requirements
are
substantially
met
by
compliance
with
the
ErP
Directive.

We
are
also
subject
to
a
number
of
End
of
Life
Stewardship
directives
including
the
EU's
Waste
Electrical
and
Electronic
Equipment
Directive,

the
EU
Packaging
Directive
and
the
EU
Battery
Directive,
which
require
producers
of
electrical
goods,
packaging,
and
batteries
to
be
financially
responsible
for
costs
of
specified
collection,
recycling,
treatment
and
disposal
of
covered
products.
Where
applicable,
we
have
provided
for
the
estimated
costs,
which
are
not
material,
of
managing
and
recycling
historical
and
future
waste
equipment,
packaging
and
batteries.
We
are
also
subject
to
the
European
REACH
Directive
(Regulation
(EC)
No.
1907/2006
for
Registration,
Evaluation,
Authorization,
and
Restrictions
of
Chemicals)
(REACH
Directive)
and
we
have
taken
steps
to
ensure
that
our
relevant
product
lines
are
compliant
with
the
applicable
provision
of
the
REACH
Directive.

China. 



In
China,
we
are
subject
to
China's
laws
on
Management
Methods
on
the
Control
of
Pollution
Caused
by
Electronic
Information

Products
(the
China
RoHS
laws).
The
China
RoHS
laws
are
substantially
similar
to
the
EU

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RoHS
Directive,
and
as
such,
our
products
are
already
compliant.
The
China
RoHS
laws
require
additional
labeling
of
products
that
will
be
shipped
to
China
and
we
have
taken
steps
to
ensure
we
comply
with
these
requirements.

United States and Canada. 



In
the
U.S.,
we
are
subject
to,
among
other
laws,
the
Appliance
Efficiency
Regulations
adopted
via
the
U.S.

Energy
Independence
and
Security
Act
of
2007.
The
regulations
set
out
standards
for
the
energy
consumption
performance
of
products
and
such
standards
apply
to
appliances
sold
or
offered
for
sale
throughout
the
U.S.
We
have
redesigned
or
changed
certain
of
our
products
to
ensure
compliance
with
these
regulations.
We
are
also
subject
to
California's
Proposition
65,
which
requires
that
clear
and
reasonable
warnings
be
given
to
consumers
who
are
exposed
to
certain
chemicals
deemed
by
the
state
of
California
to
be
dangerous.

Logitech
is
also
subject
to
the
requirement
as
set
out
by
the
Dodd-Frank
Wall
Street
Reform
and
Consumer
Protection
Act
of
2010,
specifically
Section
1502,
which
addresses
the
use
of
"Conflict
Minerals"
in
the
supply
chain.
We
have
established
systems
which
facilitate
our
compliance
with
the
sourcing,
traceability
and
reporting
obligations
and
the
reporting
requirements
of
this
Act
aligned
with
guidelines
published
by
the
Securities
and
Exchange
Commission.
As
a
member
of
the
Responsible
Business
Alliance
or
RBA
(formerly
the
EICC),
we
participate
in
the
industry-wide
Conflict-
Free
Sourcing
Initiative
and
its
Conflict-Free
Smelter
Program
by
which
these
requirements
are
met.

In
addition,
the
Transparency
in
Supply
Chain
Act
of
2010
(S.B.
657)
is
effective
from
Logitech's
fiscal
year
2012.
The
law
requires
all
retailers
and
manufacturers
of
tangible
products
who
do
business
in
California
and
have
annual
worldwide
gross
receipts
exceeding
$100
million
to
disclose
on
their
company
websites
their
efforts
to
combat
forced
labor
and
human
trafficking
in
their
own
supply
chains.
Similarly,
Logitech
complies
with
the
requirements
of
the
United
Kingdom
Modern
Slavery
Act
of
2015
requiring
certain
commercial
organizations
to
transparently
report
their
efforts
to
identify
and
eradicate
slavery
and
human
trafficking
in
their
supply
chain.
Further
information
is
provided
in
our
annual
Sustainability
Report
and
Logitech's
disclosure
posted
on
our
website,
www.logitech.com.

We
are
subject
to
laws
in
various
Canadian
provinces
and
U.S.
states
that
impose
fees
to
cover
the
cost
of
end
of
life
responsible
disposal
and

recycling
of
packaging,
product,
and
batteries.
These
laws
require
producers
of
electrical
goods,
packaging,
and
batteries
to
be
financially
responsible
for
costs
of
specified
collection,
recycling,
treatment
and
disposal
of
covered
products.
Where
applicable,
we
have
provided
for
the
estimated
costs,
which
are
not
material,
of
managing
and
recycling
historical
and
future
waste
equipment,
packaging,
and
batteries.

Australia and New Zealand. 



In
Australia
and
New
Zealand,
we
are
subject
to
the
Minimum
Energy
Performance
Standards
regulations

(MEPS).
These
regulations
set
out
standards
for
the
energy
consumption
performance
of
products
within
the
scope
of
the
regulations,
which
includes
some
of
our
products.
We
have
taken
steps
to
modify
products
to
ensure
they
are
in
compliance
with
MEPS.

We
expect
further
laws
governing
product
and
packaging
recycling
to
be
introduced
in
other
jurisdictions,
many
or
most
of
which
could
impose
fees
to
cover
recycling
costs,
the
cumulative
impact
of
which
could
be
significant.
If
such
legislation
is
enacted
in
other
countries,
Logitech
intends
to
develop
compliance
programs
as
necessary.
However,
until
that
time,
we
are
not
able
to
estimate
any
possible
impact.

The
effects
on
Logitech's
business
of
complying
with
other
government
regulations
are
limited
to
the
cost
of
agency
fees
and
testing,
as
well
as

the
time
required
to
obtain
agency
approvals.
There
are
also
stewardship
costs
associated
with
the
end
of
life
collection,
recycling
and
recovery
of
Logitech
products,
packaging
and
batteries
where
Logitech
is
recognized
as
the
steward
and
participates
in
relevant
programs.
The
costs
and
schedule
requirements
are
industry
requirements
and
therefore
do
not
represent
an
undue
burden
relative
to
Logitech's
competitive
position.
As
regulations
change,
we
will
modify
our
products
or
processes
to
address
those
changes.

In
addition
to
monitoring
and
managing
compliance
with
environmental
regulations,
we
also
monitor
and
align
with
international
good
practice
standards
for
environmental,
social
and
sustainability
performance.
We
joined
the
RBA
(formerly
EICC)
in
2007
to
collaborate
with
industry
peers
to
drive
international
good
practice
across
the
electronics
sector.
Since
2007,
we
have
fully
adopted
the
RBA
Code
of
Conduct
and
we
publish
an
annual
Sustainability
Report,
in
alignment
with
the
good
practice
standards
of
the
Global
Reporting
Initiative.
For
more
information
on
our
approach
to
sustainability
management,
RBA
Code
of
Conduct
compliance
and
international
good
practice,
refer
to
our
annual
Sustainability
Report,
which
is
available
from
the
sustainability
page
on
www.logitech.com.

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Seasonality

Our
product
sales
are
typically
seasonal.
Sales
are
generally
highest
during
our
third
fiscal
quarter
(October
to
December)
primarily
due
to
the

increased
consumer
demand
for
our
products
during
the
year-end
holiday
buying
season
and
year-end
spending
by
enterprises.
Due
to
the
timing
of
our
new
product
introductions,
we
believe
that
year-over-year
comparisons
are
more
indicative
of
variability
in
our
results
of
operations
than
the
current
quarter
to
prior
quarter
comparisons.

Materials

We
purchase
certain
products
and
key
components
used
in
our
products
from
a
limited
number
of
sources.
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
go
out
of
business,
we
might
be
unable
to
find
a
new
supplier
on
acceptable
terms,
or
at
all,
and
our
shipments
to
our
customers
could
be
delayed.
In
addition,
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,
our
ability
to
forecast
product
demand,
and
supplier
capacity.
From
time
to
time,
we
have
experienced
component
shortages
and
extended
lead
times
on
semiconductors,
such
as
micro-controllers
and
optical
sensors,
and
base
metals
used
in
our
products.
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.

Employees

As
of
March
31,
2019
,
we
employed
approximately
6,600
regular
employees,
of
which
approximately
3,400
employees
are
in
our
Suzhou

manufacturing
facilities,
and
from
the
remaining
3,200
regular
employees,
approximately
740
are
dedicated
to
research
and
development.
None
of
Logitech's
U.S.
employees
are
represented
by
a
labor
union
or
are
subject
to
a
collective
bargaining
agreement.
Certain
other
countries,
such
as
China,
provide
by
law
for
employee
rights,
which
include
requirements
similar
to
collective
bargaining
agreements.
We
believe
that
our
employee
relations
are
good.

Executive Officers of the Registrant

The
following
sets
forth
certain
information
regarding
our
executive
officers
as
of
March
31,
2019
*:

Name
Guerrino
De
Luca

Bracken
Darrell

Vincent
Pilette
*

Nate
Olmstead
*

Age
66

56

47

47

Nationality
  Italian
and
U.S.

  U.S.

  Belgian

  U.S.

  Executive
Chairman
of
the
Board

  President
and
Chief
Executive
Officer

  Chief
Financial
Officer

  Interim
Chief
Financial
Officer

Position

* On
April
29,
2019,
Mr.Pilette
announced
his
resignation,
effective
following
the
filing
of
this
Annual
Report
on
Form
10-K,
and
Logitech

appointed
Mr.
Olmstead
as
interim
Chief
Financial
Officer,
to
be
effective
as
of
June
1,
2019.
In
addition,
Marcel
Stolk,
Executive
Chairman,
Logitech
Europe
S.A.
and
Logitech's
Senior
Vice
President,
Business
Model
Innovation,
resigned
as
an
executive
officer,
effective
as
of
March
31,
2019.

Guerrino
De
Luca
has
served
as
Chairman
of
the
Logitech
Board
of
Directors
since
2008.
Mr.
De
Luca
served
as
Chief
Executive
Officer
from

April
2012
to
January
2013
and
acting
President
and
Logitech's
Chief
Executive
Officer
from
July
2011
to
April
2012.
Previously,
Mr.
De
Luca
served
as
Logitech's
President
and
Chief
Executive
Officer
from
February
1998,
when
he
joined
the
Company,
to
January
2008.
He
has
been
an
executive
member
of
the
Board
of
Directors
since
June
1998.
Prior
to
joining
Logitech,
Mr.
De
Luca
served
as
Executive
Vice
President
of
Worldwide
Marketing
for
Apple
Computer,
Inc.,
a
consumer
electronics
and
computer
company,
from
February
1997
to
September
1997,
and
as
President
of
Claris
Corporation,
a
U.S.
personal
computing
software
vendor,
from
May
1994
to
February
1997.
Prior
to
joining
Claris,
Mr.
De
Luca
held
various
positions
with
Apple
in
the
United
States
and
in
Europe.
Mr.
De
Luca
serves
on
the
board
of
directors
of
Nielsen
Holdings
plc.
Mr.
De
Luca
holds
a
Laurea
degree
in
Electronic
Engineering
from
the
University
of
Rome,
Italy.

Bracken
Darrell
joined
Logitech
as
President
in
April
2012
and
became
Chief
Executive
Officer
in
January
2013.
Prior
to
joining
Logitech,
Mr.
Darrell
served
as
President
of
Whirlpool
EMEA
and
Executive
Vice
President
of
Whirlpool
Corporation,
a
home
appliance
manufacturer
and
marketing
company,
from
January
2009
to
March
2012.

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Table of Contents

Previously,
Mr.
Darrell
had
been
Senior
Vice
President,
Operations
of
Whirlpool
EMEA
from
May
2008
to
January
2009.
From
2002
to
May
2008,
Mr.
Darrell
was
with
the
Procter
&
Gamble
Company
(P&G),
a
consumer
brand
company,
most
recently
as
the
President
of
its
Braun
GmbH
subsidiary.
Prior
to
rejoining
P&G
in
2002,
Mr.
Darrell
served
in
various
executive
and
managerial
positions
with
General
Electric
Company
from
1997
to
2002,
with
P&G
from
1991
to
1997,
and
with
PepsiCo
Inc.
from
1987
to
1989.
Mr.
Darrell
holds
a
BA
degree
from
Hendrix
College
and
an
MBA
from
Harvard
University.

Vincent
Pilette
joined
Logitech
in
September
2013
as
Chief
Financial
Officer.
Prior
to
joining
Logitech,
Mr.
Pilette
served
as
Chief
Financial

Officer
of
Electronics
for
Imaging,
Inc.,
a
digital
printing
innovation
and
solutions
company,
from
January
2011
through
August
2013.
From
January
2009
through
December
2010,
he
served
as
Vice
President
of
Finance
for
the
Enterprise
Server,
Storage
and
Networking
Group
at
Hewlett-Packard
Company
(HP).
Prior
to
this
role,
Mr.
Pilette
served
as
Vice
President
of
Finance
for
the
HP
Software
Group
from
December
2005
through
December
2008.
Mr.
Pilette
held
various
other
finance
positions
at
HP,
in
the
U.S
and
Europe,
Middle
East
and
Africa,
since
joining
HP
in
1997.
Mr.
Pilette
holds
an
MS
in
Engineering
and
Business
from
Université
Catholique
de
Louvain
in
Belgium
and
an
MBA
from
Kellogg
School
of
Management
at
Northwestern
University.

Nate
Olmstead
joined
Logitech
in
April
2019
as
Vice
President
of
Business
Finance
and
was
appointed
interim
Chief
Financial
Officer
to
be

effective
as
of
June
2019.
Prior
to
joining
Logitech,
Mr.
Olmstead
served
in
various
financial
management
roles
at
Hewlett-Packard
Company
and
Hewlett-Packard
Enterprise,
a
multinational
information
technology
company,
most
recently
as
the
Vice
President
of
Finance
for
Global
Operations
at
Hewlett-Packard
Enterprise
from
June
2017
to
March
2019.
He
also
served
as
Vice
President
of
Finance,
EG
Global
Supply
Chain
and
Quality
from
February
2015
to
June
2017,
Vice
President
of
Finance,
HP
Storage
and
HP
Converged
Systems
from
2009
to
February
2015,
and
Director,
HP
Investor
Relations
from
2006
to
2009.
Mr.
Olmstead
holds
a
BA
degree
from
Stanford
University
and
an
MBA
from
Harvard
Business
School.

Available Information

Our
Investor
Relations
website
is
located
at
https://ir.logitech.com.
We
post
and
maintain
an
archive
of
our
earnings
and
other
press
releases,

current
reports,
annual
and
quarterly
reports,
earnings
release
schedule,
information
regarding
annual
general
meetings,
further
information
on
corporate
governance,
and
other
information
regarding
the
Company
on
the
Investor
Relations
website.
The
information
we
post
includes
filings
we
make
with
the
SEC,
including
reports
on
Forms
10-K,
10-Q,
8-K,
and
our
proxy
statement
related
to
our
annual
shareholders'
meeting
and
any
amendments
to
those
reports
or
statements
filed
or
furnished
pursuant
to
U.S.
securities
laws
or
Swiss
laws.
All
such
filings
and
information
are
available
free
of
charge
on
the
website,
and
we
make
them
available
on
the
website
as
soon
as
reasonably
possible
after
we
file
or
furnish
them
with
the
SEC.
The
contents
of
these
websites
are
not
intended
to
be
incorporated
by
reference
into
this
report
or
in
any
other
report
or
document
we
file
and
our
references
to
these
websites
are
intended
to
be
inactive
textual
references
only.

In
addition,
Logitech
publishes
press
releases
upon
the
occurrence
of
significant
events
within
Logitech.
Shareholders
and
members
of
the
public
may
elect
to
receive
e-mails
when
Logitech
issues
press
releases
upon
the
occurrence
of
significant
events
within
Logitech
or
other
press
releases
by
subscribing
through
http://ir.logitech.com/alerts.cfm.

As
a
Swiss
company
traded
on
the
SIX
Swiss
Exchange,
and
as
a
company
subject
to
the
provisions
of
Section
16
of
the
Securities
Exchange

Act
of
1934,
as
amended,
we
file
reports
on
transactions
in
Logitech
securities
by
members
of
Logitech's
Board
of
Directors
and
executive
officers.
The
reports
that
we
file
with
the
Securities
and
Exchange
Commission
on
Forms
3,
4
and
5,
along
with
our
other
SEC
filings,
may
be
accessed
on
our
website
or
on
the
Securities
and
Exchange
Commission's
website
at
http://www.sec.gov,
and
the
reports
we
file
that
are
published
by
the
SIX
Swiss
Exchange
may
be
accessed
at
http://www.six-exchange-regulation.com/obligations/management_transactions_en.html.

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International
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Table of Contents

ITEM 1A.    RISK FACTORS

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

Our
revenues
and
profitability
are
difficult
to
predict
due
to
the
nature
of
the
markets
in
which
we
compete,
fluctuating
user
demand,
the

uncertainty
of
current
and
future
global
economic
conditions,
and
for
many
other
reasons,
including
the
following:

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

Customers
generally
order
on
an
as-needed
basis
and
we
typically
do
not
obtain
firm,
long-term
purchase
commitments
from
our
customers.
As
a
result,
our
revenues
in
any
quarter
depend
primarily
on
orders
booked
and
shipped
in
that
quarter.

•

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

• Our
sales
are
impacted
by
consumer
demand
and
current
and
future
global
economic
and
political
conditions,
including
trade
restrictions

and
tariffs,
and
can,
therefore,
fluctuate
abruptly
and
significantly
during
periods
of
uncertain
economic
conditions
or
geographic
distress,
as
well
as
from
shifts
in
distributor
inventory
practices
and
consumer
buying
patterns.

• We
must
incur
a
large
portion
of
our
costs
in
advance
of
sales
orders
because
we
must
plan
research
and
production,
order
components,

buy
tooling
equipment,
and
enter
into
development,
sales
and
marketing,
and
other
operating
commitments
prior
to
obtaining
firm
commitments
from
our
customers.
This
makes
it
difficult
for
us
to
rapidly
adjust
our
costs
during
the
quarter
in
response
to
a
revenue
shortfall,
which
could
adversely
affect
our
operating
results.

• We
engage
in
acquisitions
and
divestitures,
and
such
activity
varies
from
period
to
period.
Such
variance
may
affect
our
growth,
our

previous
outlook
and
expectations,
and
comparisons
of
our
operating
results
and
financial
statements
between
periods.

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

•

Fluctuations
in
currency
exchange
rates
can
impact
our
revenues,
expenses
and
profitability
because
we
report
our
financial
statements
in
U.S.
Dollars,
whereas
a
significant
portion
of
our
revenues
and
expenses
are
in
other
currencies.
We
attempt
to
adjust
product
prices
over
time
to
offset
the
impact
of
currency
movements.
However,
over
short
periods
of
time,
during
periods
of
weakness
in
consumer
spending
or
given
high
levels
of
competition
in
many
product
categories,
our
ability
to
change
local
currency
prices
to
offset
the
impact
of
currency
fluctuations
is
limited.

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

cause
the
price
of
our
shares
to
decline.

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

Our
product
categories
are
characterized
by
short
product
life
cycles,
intense
competition,
frequent
new
product
introductions,
rapidly
changing
technology,
dynamic
consumer
demand
and
evolving
industry
standards.
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.

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The
success
of
our
product
portfolio
depends
on
several
factors,
including
our
ability
to:

•


•


•

•


•


Identify
new
features,
functionality
and
opportunities;

Anticipate
technology,
market
trends
and
consumer
preferences;

Develop
innovative,
high-quality,
and
reliable
new
products
and
enhancements
in
a
cost-effective
and
timely
manner;

Distinguish
our
products
from
those
of
our
competitors;
and

Offer
our
products
at
prices
and
on
terms
that
are
attractive
to
our
customers
and
consumers.

If
we
do
not
execute
on
these
factors
successfully,
products
that
we
introduce
or
technologies
or
standards
that
we
adopt
may
not
gain
widespread
commercial
acceptance,
and
our
business
and
operating
results
could
suffer.
In
addition,
if
we
do
not
continue
to
differentiate
our
products
through
distinctive,
technologically
advanced
features,
designs,
and
services
that
are
appealing
to
our
customers
and
consumers,
as
well
as
continue
to
build
and
strengthen
our
brand
recognition
and
our
access
to
distribution
channels,
our
business
could
be
adversely
affected.

The
development
of
new
products
and
services
can
be
very
difficult
and
requires
high
levels
of
innovation.
The
development
process
also
can

be
lengthy
and
costly.
There
are
significant
initial
expenditures
for
research
and
development,
tooling,
manufacturing
processes,
inventory
and
marketing,
and
we
may
not
be
able
to
recover
those
investments.
If
we
fail
to
accurately
anticipate
technological
trends
or
our
users’
needs
or
preferences,
are
unable
to
complete
the
development
of
products
and
services
in
a
cost-effective
and
timely
fashion
or
are
unable
to
appropriately
increase
production
to
fulfill
customer
demand,
we
will
be
unable
to
successfully
introduce
new
products
and
services
into
the
market
or
compete
with
other
providers.
Even
if
we
complete
the
development
of
our
new
products
and
services
in
a
cost-effective
and
timely
manner,
they
may
not
be
competitive
with
products
developed
by
others,
they
may
not
achieve
acceptance
in
the
market
at
anticipated
levels
or
at
all,
they
may
not
be
profitable
or,
even
if
they
are
profitable,
they
may
not
achieve
margins
as
high
as
our
expectations
or
as
high
as
the
margins
we
have
achieved
historically.

As
we
introduce
new
or
enhanced
products,
integrate
new
technology
into
new
or
existing
products,
or
reduce
the
overall
number
of
products

offered,
we
face
risks
including,
among
other
things,
disruption
in
customers’
ordering
patterns,
excessive
levels
of
new
and
existing
product
inventories,
revenue
deterioration
in
our
existing
product
lines,
insufficient
supplies
of
new
products
to
meet
customers’
demand,
possible
product
and
technology
defects,
and
a
potentially
different
sales
and
support
environment.
Premature
announcements
or
leaks
of
new
products,
features
or
technologies
may
exacerbate
some
of
these
risks
by
reducing
the
effectiveness
of
our
product
launches,
reducing
sales
volumes
of
current
products
due
to
anticipated
future
products,
making
it
more
difficult
to
compete,
shortening
the
period
of
differentiation
based
on
our
product
innovation,
straining
relationships
with
our
partners
or
increasing
market
expectations
for
the
results
of
our
new
products
before
we
have
had
an
opportunity
to
demonstrate
the
market
viability
of
the
products.
Our
failure
to
manage
the
transition
to
new
products
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.

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.
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
it
may
continue
to
decline
in
the
future.
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.
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.
Global
economic
concerns,
such
as
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

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Table of Contents

other
countries,
conflicts
with
either
local
or
global
financial
implications
and
economic
slowdown
in
China,
create
unpredictability
and
add
risk
to
our
future
outlook.

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.
Our
investments
may
not
result
in
the
growth
we
expect,
or
when
we
expect
it,
for
a
variety
of
reasons
including
those
described
below.

Creativity & Productivity .
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.
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.

Gaming .
We
are
building
a
diverse
business
that
features
a
variety
of
gaming
peripherals.
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.

Video Collaboration. While
we
view
the
small
and
medium-sized
user
groups
opportunity
to
be
large
and
relatively
unaddressed,
this
is
a
new
and
evolving
market
segment
that
we
and
our
competitors
are
developing.
If
the
market
opportunity
proves
to
be
sustainable,
we
expect
increased
competition
from
established
competitors
in
the
video
conferencing
market
as
well
as
from
new
entrants
who
are
gaining
traction
as
the
industry
comes
to
accept
new
technology
and
new
solutions.
In
order
to
continue
to
grow
in
this
opportunity,
we
may
need
to
further
build
and
scale
our
own
enterprise
sales
force,
a
capability
that
several
of
our
competitors
in
this
category
already
have.

Music. We
are
focused
on
products
for
the
consumption
of
digital
music
as
a
sales
growth
area.
Competition
in
the
mobile
speaker
and

headphone
categories
is
intense,
and
we
expect
it
to
increase.
Moreover,
the
market
for
mobile
speakers
appears
to
be
maturing
with
slower
growth
or
even
declining.
If
we
are
not
able
to
grow
our
existing
and
acquired
product
lines
and
introduce
differentiated
products
and
marketing
strategies
to
separate
our
products
and
brands
from
competitors'
products
and
brands,
our
mobile
speaker
and
audio
headphone
efforts
will
not
be
successful,
and
our
business
and
results
of
operations
could
be
adversely
affected.

Smart Home .
While
we
are
a
leader
in
programmable,
performance
remote
controls
for
home
entertainment,
the
smart
home
market
is
still
in
its

early
stages
and
it
is
not
yet
clear
when
the
category
will
produce
dynamic
growth
or
which
products
will
succeed
and
be
able
to
take
advantage
of
market
growth
or
to
help
define
and
grow
the
market.
Despite
its
early
stages,
the
smart
home
market
already
is
experiencing
increasing
competition
from
strong
competitors.

In
addition
to
our
current
growth
opportunities,
our
future
growth
may
be
reliant
on
our
ability
to
identify
and
develop
potential
new
growth
opportunities.
This
process
is
inherently
risky
and
will
result
in
investments
in
time
and
resources
for
which
we
do
not
achieve
any
return
or
value.

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.
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.
In
addition,
some
of
these
growth
categories
and
opportunities
are
characterized
by
price
competition,
erosion
of
premium-priced
segments
and
average
selling
prices,
commoditization,
and
sensitivity
to
general
economic
conditions
and
cyclical
downturns.
The
growth
opportunities
and
strength
and
number
of
competitors
that
we
face
in
all
of
our
product
categories
means
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.
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

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International
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|
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Table of Contents

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.

We
have
developed
long-term
value
in
our
brands
and
have
invested
significantly
in
design
and
in
our
existing
and
new
brands
over
the
past

several
years.
We
believe
that
our
design
and
brands
have
significantly
contributed
to
the
success
of
our
business
and
that
maintaining
and
enhancing
our
brands
is
very
important
to
our
future
growth
and
success.
Maintaining
and
enhancing
our
brands
will
require
significant
investments
and
will
depend
largely
on
our
future
design,
products
and
marketing,
which
may
not
be
successful
and
may
damage
our
brands.
Our
brands
and
reputation
are
also
dependent
on
third
parties,
such
as
suppliers,
manufacturers,
distributors,
retailers,
product
reviewers
and
the
media
as
well
as
online
consumer
product
reviews,
consumer
recommendations
and
referrals.
It
can
take
significant
time,
resources
and
expense
to
overcome
negative
publicity,
reviews
or
perception.
Any
negative
effect
on
our
brands,
regardless
of
whether
it
is
in
our
control,
could
adversely
affect
our
reputation,
business
and
results
of
operations.

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

The
peripherals
industry
is
intensely
competitive.
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.
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.
Our
competitors
have
the
ability
to
bring
new
products
to
market
quickly
and
at
competitive
prices.
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.
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.

In
recent
years,
we
have
expanded
the
categories
of
products
we
sell
and
entered
new
markets.
We
remain
alert
to
opportunities
in
new
categories
and
markets.
As
we
do
so,
we
are
confronting
new
competitors,
many
of
which
have
more
experience
in
the
categories
or
markets
and
have
greater
marketing
resources
and
brand
name
recognition
than
we
have.
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.
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.

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.
In
addition,
Microsoft,
Apple,
Google
and
Amazon
each
has
significantly
greater
financial,
technical,
sales,
marketing
and
other
resources
than
Logitech,
as
well
as
greater
name
recognition
and
a
larger
customer
base.
As
a
result,
Microsoft,
Apple,
Google
and
Amazon
each
may
be
able
to
improve
the
functionality
of
its
products,
if
any,
or
may
choose
to
show
preference
to
our
competitors'
products,
to
correspond
with
ongoing
enhancements
to
its
operating
systems,
hardware
and
software
applications
before
we
are
able
to
make
such
improvements.
This
ability
could
provide
Microsoft,
Apple,
Google,
Amazon
or
other
competitors
with
significant
lead-time
advantages.
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.

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|
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Table of Contents

Creativity & Productivity

Pointing Devices. Apple,
Microsoft
and
HP
are
our
main
competitors
worldwide.
We
also
experience
competition
and
pricing
pressure
from
less-

established
brands,
including
house
brands
and
local
competitors
in
Asian
markets
such
as
Elecom,
Buffalo,
Rapoo
and
Xiaomi.

Keyboards & Combo .
Microsoft
and
Apple
are
our
main
competitors
in
our
PC
keyboard
and
combo
product
lines.
We
also
experience
competition
and
pricing
pressure
for
keyboard
and
combos
from
less-established
brands,
including
house
brands
and
local
competitors
in
Asian
markets.

Tablet & Other Accessories .
Competitors
in
the
tablet
keyboard
market
are
Apple,
Zagg,
Kensington,
Belkin,
Targus
and
other
less-established

brands.
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.
Competitors
in
the
tablet
case
market
include
Apple,
Otter,
Speck
and
a
large
number
of
small
brands.

PC Webcams. 
Our
primary
competitors
for
PC
webcams
are
Microsoft
and
other
manufacturers
taking
smaller
market
share
such
as
Razer.


Gaming

Competitors
for
our
Gaming
products
include
Razer,
Corsair,
Component,
SteelSeries,
Turtle
Beach
and
Kingston,
among
others.

Video Collaboration

Our
competitors
for
Video
Collaboration
products
are
numerous
across
various
categories
with
many
new
entrants.
Competitors
include
Cisco

Systems,
Polycom,
Inc.
(acquired
by
Plantronics),
GN
Netcom/Jabra
(which
recently
acquired
Altia
Systems),
AVer
Information,
among
others.

Music

Mobile Speakers. 

Our
competitors
for
Bluetooth
wireless
speakers
include
Bose,
Harman
(owned
by
Samsung)
and
Beats
(owned
by
Apple)

among
others.
Harman
is
our
largest
competitor.
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.
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.
Amazon
is
also
a
significant
customer
of
our
products.

Audio & Wearables .
For
PC
speakers,
our
competitors
include
Bose,
Cyber
Acoustics,
Phillips
and
Creative
Labs,
Apple
and
Samsung.
For
PC
headset,
we
face
numerous
competitors,
including
Plantronics
and
GN
Netcom
among
others.
In-ear
headphones
competitors
include
Beats,
Bose,
Apple
Sony,
JBL
and
Sennheiser,
among
others.
Our
competitors
for
Blue
Microphones
products
include
Rode,
Audio-Technica,
Samson,
Shure,
Razer
and
Apogee,
among
others.

Smart Home

Direct
competitors
in
the
remote
control
market
include
pro-installer-focused
Universal
Remote
Control
and
new
“DIY”
entrants.
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.

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.
Many
of
these
companies
also
integrate
their
products
with
Logitech's
smart
home
and
Harmony
remote
products.


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.

Logitech
International
S.A.
|
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2019
Form
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|
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Table of Contents

Our
peripherals
business
has
historically
been
built
largely
around
the
PC
platform,
which
over
time
became
relatively
open,
and
its
inputs
and
operating
system
standardized.
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.
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
. Our
business
in
these
categories
relies
on
our
access
to
the
platforms
of
third
parties,
some
of
whom
are
our
competitors.
Platform
owners
that
are
competitors
have
a
competitive
advantage
in
designing
products
for
their
platforms
and
may
produce
peripherals
or
other
products
that
work
better,
or
are
perceived
to
work
better,
than
our
products
in
connection
with
those
platforms.
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.

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.
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.

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.

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

We
use
our
forecasts
of
product
demand
to
make
decisions
regarding
investments
of
our
resources
and
production
levels
of
our
products.
Although
we
receive
forecasts
from
our
customers,
many
are
not
obligated
to
purchase
the
forecasted
demand.
Also,
actual
sales
volumes
for
individual
products
in
our
retail
distribution
channel
can
be
volatile
due
to
changes
in
consumer
preferences
and
other
reasons.
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.
We
could
also
frustrate
our
customers
and
lose
shelf
space.
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.

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.

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.

In
addition,
starting
in
fiscal
year
2016,
we
increased
the
number
of
our
products
that
we
manufacture
in
our
own
facilities.
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.


We
have
experienced
large
differences
between
our
forecasts
and
actual
demand
for
our
products.
We
expect
other
differences
between
forecasts
and
actual
demand
to
arise
in
the
future.
If
we
do
not
accurately
predict
product
demand,
our
business
and
operating
results
could
be
adversely
affected.

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International
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|
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Our success largely depends on our ability to hire, retain, integrate and motivate sufficient numbers of qualified personnel, including
senior management. Our strategy and our ability to innovate, design and produce new products, sell products, maintain operating
margins and control expenses depend on key personnel that may be difficult to replace.

Our
success
depends
on
our
ability
to
attract
and
retain
highly
skilled
personnel,
including
senior
management
and
international
personnel.

From
time
to
time,
we
experience
turnover
in
some
of
our
senior
management
positions.

We
compensate
our
employees
through
a
combination
of
salary,
bonuses,
benefits
and
equity
compensation.
Recruiting
and
retaining
skilled

personnel,
including
software
and
hardware
engineers,
is
highly
competitive.
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.
If
we
do
not
retain
our
senior
managers
or
other
key
employees
for
any
reason,
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.
If
we
are
unable
to
manage
the
size
of
our
employee
base,
particularly
engineers,
we
may
fail
to
develop
and
introduce
new
products
successfully
and
in
a
cost-effective
and
timely
manner.
If
our
revenue
growth
or
employee
levels
vary
significantly,
our
operating
cash
flows
and
financial
condition
could
be
adversely
affected.
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.
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.

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.
We
have
also
experienced
turnover
in
our
workforce.
These
reductions
and
turnover
have
resulted
in
reallocations
of
duties,
which
could
result
in
employee
uncertainty
and
discontent.
Reductions
in
our
workforce
could
make
it
difficult
to
attract,
motivate
and
retain
employees,
which
could
adversely
affect
our
business.

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

Our
gross
margins
can
vary
due
to
consumer
demand,
competition,
product
pricing,
product
lifecycle,
product
mix,
new
product
introductions,

unit
volumes,
acquisitions
and
divestitures,
commodity,
supply
chain
and
logistics
costs,
capacity
utilization,
geographic
sales
mix,
currency
exchange
rates,
trade
policy
and
tariffs,
the
complexity
and
functionality
of
new
product
innovations
and
other
factors.
In
particular,
if
we
are
not
able
to
introduce
new
products
in
a
timely
manner
at
the
product
cost
we
expect,
or
if
consumer
demand
for
our
products
is
less
than
we
anticipate,
or
if
there
are
product
pricing,
marketing
and
other
initiatives
by
our
competitors
to
which
we
need
to
react
or
that
are
initiated
by
us
to
drive
sales
that
lower
our
margins,
then
our
overall
gross
margin
will
be
less
than
we
project.

In
addition,
our
gross
margins
may
vary
significantly
by
product
line,
sales
geography
and
customer
type,
as
well
as
within
product
lines.
When
the
mix
of
products
sold
shifts
from
higher
margin
product
lines
to
lower
margin
product
lines,
to
lower
margin
sales
geographies,
or
to
lower
margin
products
within
product
lines,
our
overall
gross
margins
and
our
profitability
may
be
adversely
affected.

As
we
expand
within
and
into
new
product
categories,
our
products
in
those
categories
may
have
lower
gross
margins
than
in
our
traditional
product
categories.
Consumer
demand
in
these
product
categories,
based
on
style,
color
and
other
factors,
tends
to
be
less
predictable
and
tends
to
vary
more
across
geographic
markets.
As
a
result,
we
may
face
higher
up-front
investments,
inventory
costs
associated
with
attempting
to
anticipate
consumer
preferences,
and
increased
inventory
write-offs.
If
we
are
unable
to
offset
these
potentially
lower
margins
by
enhancing
the
margins
in
our
more
traditional
product
categories,
our
profitability
may
be
adversely
affected.

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.

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

Our
strategy
over
the
past
several
years
has
been
based
in
part
on
simplifying
the
organization,
reducing
operating
costs
through
global
workforce
reductions
and
a
reduction
in
the
complexity
of
our
product
portfolio,
with
the
goal
of
better
aligning
costs
with
our
current
business.
We
restructured
our
business
in
fiscal
years
2014
through
2016,
and
we
may
continue
to
divest
or
discontinue
non-strategic
product
categories.
During
the
third
quarter
of
fiscal
year
2016,
we
divested
our
Lifesize
video
conferencing
business
and
completed
our
exit
from
the
OEM
business.
During
the
first
quarter
of
fiscal
year
2019,
we
implemented
a
restructuring
plan
to
streamline
and
realign
our
overall
organizational
structure
and
reallocate
resources
to
support
long-term
growth
opportunities.
We
expect
to
have
substantially
completed
this
restructuring
within
the
next
three
months.

Our
ability
to
achieve
the
desired
and
anticipated
cost
savings
and
other
benefits
from
these
simplification,
cost-cutting
and
restructuring
activities,
and
within
our
desired
and
expected
timeframes,
are
subject
to
many
estimates
and
assumptions,
and
the
actual
savings
and
timing
for
those
savings
may
vary
materially
based
on
factors
such
as
local
labor
regulations,
negotiations
with
third
parties,
and
operational
requirements.
These
estimates
and
assumptions
are
also
subject
to
significant
economic,
competitive
and
other
uncertainties,
some
of
which
are
beyond
our
control.
There
can
be
no
assurance
that
we
will
fully
realize
the
desired
and
anticipated
benefits
from
these
activities.
To
the
extent
that
we
are
unable
to
improve
our
financial
performance,
further
restructuring
measures
may
be
required
in
the
future.
Furthermore,
we
are
expecting
to
be
able
to
use
the
anticipated
cost
savings
from
these
activities
to
fund
and
support
our
current
growth
opportunities
and
incremental
investments
for
future
growth.
If
the
cost-savings
do
not
materialize
as
anticipated,
or
within
our
expected
timeframes,
our
ability
to
invest
in
growth
may
be
limited
and
our
business
and
operating
results
may
be
adversely
affected.
As
we
grow,
explore
new
opportunities
and
markets,
hire
new
management
and
other
personnel,
and
fund
research
and
development,
marketing,
brand
development,
sales,
operations,
investments
in
intellectual
property
and
acquisitions
to
support
this
growth
and
our
new
opportunities,
some
or
all
of
which
may
not
succeed,
we
expect
to
experience
continued
pressure
on
our
cost
structure
and
expenses.

As
part
of
the
restructuring
plans,
we
reduced
the
size
of
our
product
portfolio
and
the
assortment
of
similar
products
at
similar
price
points
within
each
product
category
over
the
past
several
fiscal
years.
While
we
are
constantly
replacing
products
and
are
dependent
on
the
success
of
our
new
products,
this
product
portfolio
simplification
has
made
us
even
more
dependent
on
the
success
of
the
new
products
that
we
are
introducing.

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

We
continue
to
review
our
product
portfolio
and
update
our
non-strategic
product
categories
and
products.
During
the
third
quarter
of
fiscal
year

2016,
we
divested
our
Lifesize
video
conferencing
business
and
completed
our
exit
from
the
OEM
business.
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.
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.
Divestitures
may
also
involve
warranties,
indemnification
or
covenants
that
could
restrict
our
business
or
result
in
litigation,
additional
expenses
or
liabilities.
In
addition,
discontinuing
product
categories,
even
categories
that
we
consider
non-strategic,
reduces
the
size
and
diversification
of
our
business
and
causes
us
to
be
more
dependent
on
a
smaller
number
of
product
categories.

As
we
attempt
to
grow
our
business
in
strategic
product
categories
and
emerging
market
geographies,
we
will
consider
growth
through
acquisition
or
investment.
We
will
evaluate
acquisition
opportunities
that
could
provide
us
with
additional
product
or
service
offerings
or
with
additional
industry
expertise,
assets
and
capabilities.
For
example,
we
acquired
ASTRO
Gaming
to
expand
into
the
console
gaming
market,
we
acquired
Jaybird
to
expand
into
the
wireless
audio
wearables
market,
we
acquired
Saitek
to
expand
into
the
gaming
simulation
and
controller
markets,
and
we
acquired
Blue
Microphones
to
expand
into
the
microphones
market.
Acquisitions
could
result
in
difficulties
integrating
acquired
operations,
products,
technology,
internal
controls,
personnel
and
management
teams
and
result
in
the
diversion
of
capital
and
management’s
attention
away
from
other
business
issues
and
opportunities.
If
we
fail
to
successfully
integrate
acquisitions,
our
business
could
be
harmed.
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

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International
S.A.
|
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Table of Contents

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.
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.
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.
In
addition,
from
time
to
time
we
make
strategic
venture
investments
in
other
companies
that
provide
products
and
services
that
are
complementary
to
ours.
If
these
investments
are
unsuccessful,
this
could
have
an
adverse
impact
on
our
results
of
operations,
operating
cash
flows
and
financial
condition.

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

We
primarily
sell
our
products
to
a
network
of
distributors,
retailers
and
e-tailers
(together
with
our
direct
sales
channel
partners).
We
are
dependent
on
those
direct
sales
channel
partners
to
distribute
and
sell
our
products
to
indirect
sales
channel
partners
and
ultimately
to
consumers.
The
sales
and
business
practices
of
all
such
sales
channel
partners,
their
compliance
with
laws
and
regulations,
and
their
reputations
-
of
which
we
may
or
may
not
be
aware
-
may
affect
our
business
and
our
reputation.

While
our
overall
distribution
relationships
are
diffuse,
over
a
quarter
of
our
gross
sales
are
concentrated
with
two
customers
-
Amazon
Inc.
and
Ingram
Micro
-
and
their
affiliated
entities.

If
online
sales
grow
as
a
percentage
of
overall
sales,
we
expect
that
we
will
become
even
more
reliant
on
Amazon.
While
we
believe
that
we
have
good
relationships
with
Amazon
and
Ingram
Micro,
any
adverse
change
in
either
of
those
relationships
could
have
an
adverse
on
our
results
of
operations
and
financial
condition.

The
impact
of
economic
conditions,
evolving
consumer
preferences,
and
purchasing
patterns
on
our
distribution
partners,
or
competition

between
our
sales
channels,
could
result
in
sales
channel
disruption.
For
example,
if
sales
at
large
retail
stores
are
displaced
as
a
result
of
bankruptcy,
competition
from
Internet
sales
channels
or
otherwise,
our
product
sales
could
be
adversely
affected.
Any
loss
of
a
major
partner
or
distribution
channel
or
other
channel
disruption
could
make
us
more
dependent
on
alternate
channels,
increase
pricing
and
promotional
pressures
from
other
partners
and
distribution
channels,
increase
our
marketing
costs,
or
adversely
impact
buying
and
inventory
patterns,
payment
terms
or
other
contractual
terms.

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

If
product
competitors
offer
our
sales
channel
partners
more
favorable
terms,
have
more
products
available
to
meet
their
needs,
or
utilize
the
leverage
of
broader
product
lines
sold
through
the
channel,
or
if
our
sales
channel
partners
show
preference
for
their
own
house
brands,
our
sales
channel
partners
may
de-emphasize
or
decline
to
carry
our
products.
In
addition,
certain
of
our
sales
channel
partners
could
decide
to
de-emphasize
the
product
categories
that
we
offer
in
exchange
for
other
product
categories
that
they
believe
provide
them
with
higher
returns.
If
we
are
unable
to
maintain
successful
relationships
with
these
sales
channel
partners
or
to
maintain
our
distribution
channels,
our
business
will
suffer.

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.
These
new
partners,
practices
and
models
may
require
significant
management
attention
and
operational
resources
and
may
affect
our
accounting,
including
revenue
recognition,
gross
margins,
and
the
ability
to
make
comparisons
from
period
to
period.
Entrenched
and
more
experienced
competitors
will
make
these
transitions
difficult.
Certain
products
categories,
such
as
Video
Collaboration,
may
also
require
that
we
further
build
and
scale
our
own
enterprise
sales
force.
Several
of
our
competitors
already
have
large
enterprise
sale
forces
and
experience
and
success
with
that
sales
model.
If
we
are
unable
to
build
successful
distribution
channels,
build
and
scale
our
own
and
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.

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International
S.A.
|
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We
reserve
for
cooperative
marketing
arrangements,
incentive
programs
and
pricing
programs
with
our
sales
channel
partners.
These
reserves

are
based
on
judgments
and
estimates,
using
historical
experience
rates,
inventory
levels
in
distribution,
current
trends
and
other
factors.
There
could
be
significant
differences
between
the
actual
costs
of
such
arrangements
and
programs
and
our
estimates.


We
use
sell-through
data,
which
represents
sales
of
our
products
by
our
direct
retailer
and
e-tailer
customers
to
consumers,
and
by
our
distributor
customers
to
their
customers,
along
with
other
metrics,
to
assess
consumer
demand
for
our
products.
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.
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.
In
addition,
we
rely
on
channel
inventory
data
from
our
sales
channel
partners.
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.

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.

We
produce
approximately
half
of
our
products
at
the
facilities
we
own
in
China.
The
majority
of
our
other
production
is
performed
by
third-party

contract
manufacturers,
including
original
design
manufacturers,
in
China
and
Malaysia.

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,
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.

Our
manufacturing
operations
at
third-party
contractors
could
be
adversely
affected
by
contractual
disagreements,
by
labor
unrest,
by
natural
disasters,
by
strains
on
local
communications,
trade,
and
other
infrastructures,
by
competition
for
the
available
labor
pool
or
manufacturing
capacity,
by
increasing
labor
and
other
costs,
and
by
other
trade
customs
and
practices
that
are
dissimilar
to
those
in
the
United
States
and
Europe.

Further,
we
may
be
exposed
to
fluctuations
in
the
value
of
the
local
currency
in
the
countries
in
which
manufacturing
occurs.
Future
appreciation

of
these
local
currencies
could
increase
our
component
and
other
raw
material
costs.
In
addition,
our
labor
costs
could
continue
to
rise
as
wage
rates
increase
and
the
available
labor
pool
declines.
These
conditions
could
adversely
affect
our
financial
results.

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

Our
business
requires
us
to
coordinate
the
manufacture
and
distribution
of
our
products
over
much
of
the
world.
We
rely
on
third
parties
to

manufacture
many
of
our
products,
manage
centralized
distribution
centers,
and
transport
our
products.
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.
Transportation
costs,
fuel
costs,
labor
unrest,
natural
disasters
and
other
adverse
effects
on
our
ability,
timing
and
cost
of
delivering
products
can
increase
our
inventory,
decrease
our
margins,
adversely
affect
our
relationships
with
distributors
and
other
customers
and
otherwise
adversely
affect
our
results
of
operations
and
financial
condition.

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|
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A
significant
portion
of
our
quarterly
retail
orders
and
product
deliveries
generally
occur
in
the
last
weeks
of
the
fiscal
quarter.
This
places
pressure
on
our
supply
chain
and
could
adversely
affect
our
revenues
and
profitability
if
we
are
unable
to
successfully
fulfill
customer
orders
in
the
quarter.

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.

We
purchase
certain
products
and
key
components
from
a
limited
number
of
sources.
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
go
out
of
business
as
a
result
of
adverse
global
economic
conditions
or
natural
disasters,
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.
From
time
to
time,
we
have
experienced
component
shortages
and
extended
lead
times
on
semiconductors,
such
as
micro-controllers
and
optical
sensors,
and
base
metals
used
in
our
products.
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.

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
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.
Additional
reporting
obligations
are
being
considered
by
the
European
Union.
The
implementation
of
the
existing
U.S.
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.
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.

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.
As
our
supply
chain
is
complex
and
we
use
contract
manufacturers
for
some
of
our
products,
we
may
not
be
able
to
sufficiently
verify
the
origins
of
the
relevant
minerals
used
in
our
products
through
the
due
diligence
procedures
that
we
implement,
which
may
adversely
affect
our
reputation.
We
may
also
encounter
challenges
to
satisfy
those
customers
who
require
that
all
of
the
components
of
our
products
be
certified
as
conflict-free,
which
could,
if
we
are
unable
to
satisfy
their
requirements
or
pass
through
any
increased
costs
associated
with
meeting
their
requirements
place
us
at
a
competitive
disadvantage,
adversely
affect
our
business
and
operating
results,
or
both.
We
filed
our
report
for
the
calendar
year
2017
with
the
SEC
on
May
31,
2018.

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.

We
conduct
operations
in
a
number
of
countries
and
have
invested
significantly
in
growing
our
personnel
and
sales
and
marketing
activities
in

China
and,
to
a
lesser
extent,
other
emerging
markets.
We
may
also
increase
our
investments
to
grow
sales
in
other
emerging
markets,
such
as
Latin
America,
Eastern
Europe,
the
Middle
East
and
Africa.
There
are
risks
inherent
in
doing
business
in
international
markets,
including:

•

Difficulties
in
staffing
and
managing
international
operations;

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International
S.A.
|
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|
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Table of Contents

•

•

•

•

•

•

•


•


•

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;

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;

Exposure
to
political
and
financial
instability,
especially
with
the
uncertainty
associated
with
the
ongoing
sovereign
debt
crisis
in
certain
Eurozone
countries
and
the
stability
of
the
European
Union,
which
may
lead
to
reduced
sales,
currency
exchange
losses
and
collection
difficulties
or
other
losses;

Political
and
economic
uncertainty
around
the
world,
including
uncertainty
resulting
from
the
recent
United
States
presidential
and
congressional
elections,
change
of
administration
in
the
United
States
and
the
United
Kingdom's
referendum
in
June
2016,
and
other
national
elections
and
policy
shifts;

Import
or
export
restrictions
or
licensing
requirements
that
could
affect
some
of
our
products,
including
those
with
encryption
technology;

Trade
protection
measures,
custom
duties,
tariffs,
import
or
export
duties,
and
other
trade
barriers,
restrictions
and
regulations;

Lack
of
infrastructure
or
services
necessary
or
appropriate
to
support
our
products
and
services;

Exposure
to
fluctuations
in
the
value
of
local
currencies;

Difficulties
and
increased
costs
in
establishing
sales
and
distribution
channels
in
unfamiliar
markets,
with
their
own
market
characteristics
and
competition,
including
entrenched
local
competition;

•
 Weak
protection
of
our
intellectual
property
rights;

•


•


•


•


•


Higher
credit
risks;

Changes
in
VAT
(value-added
tax)
or
VAT
reimbursement;

Imposition
of
currency
exchange
controls;

Delays
from
customs
brokers
or
government
agencies;
and

A
broad
range
of
customs,
consumer
trends,
and
more.

Any
of
these
risks
could
adversely
affect
our
business,
financial
condition
and
operating
results.

Sales
growth
in
key
markets,
including
China,
is
an
important
part
of
our
expectations
for
our
business.
As
a
result,
if
economic,
political
or
business
conditions
deteriorate
in
these
markets,
or
if
one
or
more
of
the
risks
described
above
materialize
in
these
markets,
our
overall
business
and
results
of
operations
will
be
adversely
affected.

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.

The
U.S.
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.
As
noted
previously,
we
have
invested
significantly
in
manufacturing
facilities
in
China
and
Southeast
Asia.
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.
Tariffs
already
announced
and
implemented
are
having
an
adverse
effect
on
certain
of
our
products,
tariffs
announced
but
not
yet
implemented

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Table of Contents

may
have
an
adverse
effect
on
many
of
our
products,
and
threatened
tariffs
could
adversely
affect
more
or
all
of
our
products.
There
are
also
risks
associated
with
retaliatory
tariffs
and
resulting
trade
wars.
We
cannot
predict
future
trade
policy,
the
terms
of
any
renegotiated
trade
agreements
or
treaties,
or
tariffs
and
their
impact
on
our
business.
A
trade
war
could
have
a
significant
adverse
effect
on
world
trade
and
the
world
economy.
To
the
extent
that
trade
tariffs
and
other
restrictions
imposed
by
the
United
States
or
other
countries
increase
the
price
of,
or
limit
the
amount
of,
our
products
or
components
or
materials
used
in
our
products
imported
into
the
United
States
or
other
countries,
or
create
adverse
tax
consequences,
the
cost
or
gross
margin
of
our
products
may
be
adversely
affected
and
the
demand
from
our
customers
for
products
and
services
may
be
diminished.
Uncertainty
surrounding
international
trade
policy
and
disputes
and
protectionist
measures
could
also
have
an
adverse
effect
on
consumer
confidence
and
spending.
If
we
deem
it
necessary
to
alter
all
or
a
portion
of
our
activities
or
operations
in
response
to
such
policies,
agreements
or
tariffs,
our
capital
and
operating
costs
may
increase.
Our
ongoing
efforts
to
address
these
risks
may
not
be
effective
and
may
have
long-term
adverse
effects
on
our
operations
and
operating
results
that
we
may
not
be
able
to
reverse.
Such
efforts
may
also
take
time
to
implement
or
to
have
an
effect,
and
may
result
in
adverse
quarterly
financial
results
or
fluctuations
in
our
quarterly
financial
results.
As
a
result,
changes
in
international
trade
policy,
changes
in
trade
agreements
and
tariffs
could
adversely
affect
our
business,
results
of
operations
and
financial
condition.

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

A
significant
portion
of
our
business
is
conducted
in
currencies
other
than
the
U.S.
Dollar.
Therefore,
we
face
exposure
to
movements
in

currency
exchange
rates.

Our
primary
exposure
to
movements
in
currency
exchange
rates
relates
to
non-U.S.
Dollar-denominated
sales
and
operating
expenses
worldwide.
For
fiscal
year
2019,
approximately
50%
of
our
revenue
was
in
non-U.S.
denominated
currencies.
The
weakening
of
currencies
relative
to
the
U.S.
Dollar
adversely
affects
the
U.S.
Dollar
value
of
our
non-U.S.
Dollar-denominated
sales
and
earnings.
If
we
raise
international
pricing
to
compensate,
it
could
potentially
reduce
demand
for
our
products,
adversely
affecting
our
sales
and
potentially
having
an
adverse
impact
on
our
market
share.
Margins
on
sales
of
our
products
in
non-U.S.
Dollar-denominated
countries
and
on
sales
of
products
that
include
components
obtained
from
suppliers
in
non-U.S.
Dollar-denominated
countries
could
be
adversely
affected
by
currency
exchange
rate
fluctuations.
In
some
circumstances,
for
competitive
or
other
reasons,
we
may
decide
not
to
raise
local
prices
to
fully
offset
the
U.S.
Dollar’s
strengthening,
which
would
adversely
affect
the
U.S.
Dollar
value
of
our
non-U.S.
Dollar-denominated
sales
and
earnings.
Competitive
conditions
in
the
markets
in
which
we
operate
may
also
limit
our
ability
to
increase
prices
in
the
event
of
fluctuations
in
currency
exchange
rates.
Conversely,
strengthening
of
currency
rates
may
also
increase
our
product
component
costs
and
other
expenses
denominated
in
those
currencies,
adversely
affecting
operating
results.
We
further
note
that
a
larger
portion
of
our
sales
than
of
our
expenses
are
denominated
in
non-U.S.
denominated
currencies.

We
use
derivative
instruments
to
hedge
certain
exposures
to
fluctuations
in
currency
exchange
rates.
The
use
of
such
hedging
activities
may
not

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

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.

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.

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.
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.
Companies,
businesses
and
assets
that
we
acquire
may
not
be
in
compliance
with
regulations
in
all
jurisdictions.These
requirements
create
procurement
and
design
challenges,
which,
among
other
things,
require
us
to
incur
additional
costs
identifying
suppliers
and
contract
manufacturers
who
can
provide
or
obtain
compliant
materials,
parts
and
end
products.
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.

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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.
In
addition
to
the
extra
costs
and
regulatory
burdens
of
our
dual
regulatory
obligations,
the
two
regulatory
regimes
may
not
always
be
compatible
and
may
impose
disclosure
obligations,
operating
restrictions
or
tax
effects
on
our
business
to
which
our
competitors
and
other
companies
are
not
subject.

For
example,
on
January
1,
2014,
subject
to
certain
transitional
provisions,
the
Swiss
Federal
Council
Ordinance
Against
Excessive
Compensation
at
Public
Companies
(the
Ordinance)
became
effective
in
connection
with
the
Minder
initiative
approved
by
Swiss
voters
during
2013.

The
Ordinance,
among
other
things,
(a)
requires
a
binding
shareholder
“say
on
pay”
vote
with
respect
to
the
compensation
of
members
of
our
executive
management
and
Board
of
Directors,
(b)
generally
prohibits
the
making
of
severance,
advance,
transaction
premiums
and
similar
payments
to
members
of
our
executive
management
and
Board
of
Directors,
(c)
imposes
other
restrictive
compensation
practices,
and
(d)
requires
that
our
articles
of
incorporation
specify
various
compensation-
related
matters.
In
addition,
during
2013,
Swiss
voters
considered
an
initiative
to
limit
pay
for
a
chief
executive
officer
to
a
multiple
of
no
more
than
twelve
times
the
salary
of
the
lowest-paid
employee.
Although
voters
rejected
that
initiative,
it
did
receive
substantial
voter
support.
The
Ordinance,
potential
future
initiatives
relating
to
corporate
governance
or
executive
compensation,
and
Swiss
voter
sentiment
in
favor
of
such
regulations
may
increase
our
non-operating
costs
and
adversely
affect
our
ability
to
attract
and
retain
executive
management
and
members
of
our
Board
of
Directors.

We
prepare
our
consolidated
financial
statements
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
(U.S.
GAAP)
which
are
subject
to
interpretation
or
changes
by
the
Financial
Accounting
Standards
Board
(FASB),
the
SEC
and
other
various
bodies
formed
to
promulgate
and
interpret
appropriate
accounting
principles.
New
accounting
pronouncements
and
changes
in
accounting
principles
have
occurred
in
the
past
and
are
expected
to
occur
in
the
future
which
may
have
a
significant
effect
on
our
financial
results
or
our
compliance
with
regulations.

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

We
operate
in
multiple
jurisdictions
and
our
profits
are
taxed
pursuant
to
the
tax
laws
of
these
jurisdictions.
Our
effective
income
tax
rate
may
be

affected
by
changes
in
or
interpretations
of
tax
laws,
treaties,
rulings,
regulations
or
agreements
in
any
given
jurisdiction,
utilization
of
net
operating
loss
and
tax
credit
carryforwards,
changes
in
geographical
allocation
of
income
and
expense,
and
changes
in
management’s
assessment
of
matters
such
as
the
realizability
of
deferred
tax
assets.
In
the
past,
we
have
experienced
fluctuations
in
our
effective
income
tax
rate.
Our
effective
income
tax
rate
in
a
given
fiscal
year
reflects
a
variety
of
factors
that
may
not
be
present
in
the
succeeding
fiscal
year
or
years.
There
is
no
assurance
that
our
effective
income
tax
rate
will
not
change
in
future
periods.

We
are
incorporated
in
the
Canton
of
Vaud
in
Switzerland
and
our
effective
income
tax
rate
benefits
from
a
longstanding
ruling
from
the
Canton
of
Vaud.
The
tax
rules
in
Switzerland
are
expected
to
change
in
response
to
certain
guidance
and
demands
from
both
the
European
Union
and
the
Organization
for
Economic
Co-operation
and
Development
and
that
could
have
an
adverse
effect
on
our
tax
ruling
and
effective
income
tax
rate.
These
changes
continue
to
progress
through
Switzerland
legislative
process.
Switzerland’s
implementation
of
any
material
change
in
tax
laws
or
policies
or
its
adoption
of
new
interpretations
of
existing
tax
laws
and
rulings,
or
changes
in
our
tax
ruling
from
the
Canton
of
Vaud,
could
result
in
a
higher
effective
income
tax
rate
on
our
worldwide
earnings
and
such
change
could
adversely
affect
our
net
income.

We
file
Swiss
and
foreign
tax
returns.
We
are
frequently
subject
to
tax
audits,
examinations
and
assessments
in
various
jurisdictions.
If
any
tax
authority
successfully
challenges
our
operational
structure,
intercompany
pricing
policies
or
the
taxable
presence
of
our
key
subsidiaries
in
certain
countries,
if
the
terms
of
certain
income
tax
treaties
are
interpreted
in
a
manner
that
is
adverse
to
our
structure,
or
if
we
lose
a
material
tax
dispute
in
any
country,
our
effective
income
tax
rate
could
increase.
For
example,
policy
changes
in
the
United
States
or
China
predicated
on
our
presence
in
those
countries
could
adversely
affect
where
we
recognize
profit
and
our
effective
income
tax
rate.
A
material
assessment
by
a
governing
tax
authority
could
adversely
affect
our
profitability.
If
our
effective
income
tax
rate
increases
in
future
periods,
our
net
income
and
cash
flows
could
be
adversely
affected.

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

We
have
been
expanding
the
categories
of
products
we
sell,
such
as
entering
new
markets
and
introducing
products
for
tablets,
other
mobile
devices,
digital
music,
and
video
collaboration.
We
expect
to
continue
to
enter
new
categories
and
markets.
As
we
do
so,
we
face
an
increased
risk
that
claims
alleging
we
infringe
the
patent
or
other
intellectual
property
rights
of
others,
regardless
of
the
merit
of
the
claims,
may
increase
in
number
and
significance.
Infringement
claims
against
us
may
also
increase
as
the
functionality
of
video,
voice,
data
and
conferencing
products
begin
to
overlap.
This
risk
is
heightened
by
the
increase
in
lawsuits
brought
by
holders
of
patents
that
do
not
have
an
operating
business
or
are
attempting
to
license
broad
patent
portfolios
and
by
the
increasing
attempts
by
companies
in
the
technology
industries
to
enjoin
their
competitors
from
selling
products
that
they
claim
infringe
their
intellectual
property
rights.
Intellectual
property
lawsuits
are
subject
to
inherent
uncertainties
due
to
the
complexity
of
the
technical
issues
involved,
and
we
cannot
be
certain
that
we
will
be
successful
in
defending
ourselves
against
intellectual
property
claims.
A
successful
claimant
could
secure
a
judgment
that
requires
us
to
pay
substantial
damages
or
prevents
us
from
distributing
certain
products
or
performing
certain
services.
We
might
also
be
required
to
seek
a
license
for
the
use
of
such
intellectual
property,
which
may
not
be
available
on
commercially
acceptable
terms
or
at
all.
Alternatively,
we
may
be
required
to
develop
non-infringing
technology,
which
could
require
significant
effort
and
expense
and
may
ultimately
not
be
successful.
Any
claims
or
proceedings
against
us,
whether
meritorious
or
not,
could
be
time-consuming,
result
in
costly
litigation
or
the
diversion
of
significant
operational
resources,
or
require
us
to
enter
into
royalty
or
licensing
agreements,
any
of
which
could
materially
and
adversely
affect
our
business
and
results
of
operations.

We may be unable to protect our proprietary rights. Unauthorized use of our technology may result in the development of products that
compete with our products.

Our
future
success
depends
in
part
on
our
proprietary
technology,
technical
know-how
and
other
intellectual
property.
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.

We
hold
various
United
States
patents
and
pending
applications,
together
with
corresponding
patents
and
pending
applications
from
other
countries.
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.
In
addition,
other
intellectual
property
laws
or
our
confidentiality
procedures
and
contractual
provisions
may
not
adequately
protect
our
intellectual
property.
Also,
others
may
independently
develop
similar
technology,
duplicate
our
products,
or
design
around
our
patents
or
other
intellectual
property
rights.
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.

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

The
market
for
our
products
is
characterized
by
rapidly
changing
technology
and
evolving
industry
standards.
To
remain
competitive,
we
must
continually
introduce
new
products
and
technologies.
The
products
that
we
sell
could
contain
defects
in
design
or
manufacture.
Defects
could
also
occur
in
the
products
or
components
that
are
supplied
to
us.
There
can
be
no
assurance
we
will
be
able
to
detect
and
remedy
all
defects
in
the
hardware
and
software
we
sell.
Failure
to
do
so
could
result
in
product
recalls,
product
liability
claims
and
litigation,
product
redesign
efforts,
lost
revenue,
loss
of
reputation,
and
significant
warranty
and
other
expenses
to
remedy.

While
we
maintain
reserves
for
reasonably
estimable
liabilities
and
purchase
liability
insurance,
our
reserves
may
not
be
adequate
to
cover
such

claims
and
liabilities
and
our
insurance
is
subject
to
deductibles
and
may
not
be
adequate
to
cover
such
claims
and
liabilities.
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.

Significant disruptions in, or breaches in security of, our websites or information technology systems 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.
We

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also
rely
on
our
centralized
information
technology
systems
for
product-related
information
and
to
store
intellectual
property,
forecast
our
business,
maintain
financial
records,
manage
operations
and
inventory,
and
operate
other
critical
functions.
We
allocate
significant
resources
to
maintain
our
information
technology
systems
and
deploy
network
security,
data
encryption,
training
and
other
measures
to
protect
against
unauthorized
access
or
misuse.
Nevertheless,
our
websites
and
information
technology
systems
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.
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.

In
connection
with
certain
of
our
products,
we
collect
data
related
to
our
consumers.
This
information
is
increasingly
subject
to
legislation
and

regulations
in
numerous
jurisdictions
around
the
world,
and
especially
in
Europe.
For
example,
the
European
Union
adopted
the
General
Data
Protection
Regulation
(GDPR),
which
is
applicable
to
us
and
to
all
companies
processing
data
of
European
Union
residents,
became
effective
in
May
2018
and
imposes
significant
fines
and
sanctions
for
violation
of
the
Regulation.
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.
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.
Such
laws
and
regulations,
and
the
variation
between
jurisdictions,
as
well
as
additional
security
measures
and
risk,
could
subject
us
to
costs,
allocation
of
additional
resources,
liabilities
or
negative
publicity
that
could
adversely
affect
our
business.

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

In
connection
with
Section
404
of
the
Sarbanes-Oxley
Act,
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.
The
most
recent
material
weakness
was
identified
during
the
preparation
of
our
audited
financial
statements
for
the
year
ended
March
31,
2017,
and
was
related
to
the
allowances
and
accruals
for
customer
incentives,
cooperative
marketing
and
pricing
programs.
In
the
past,
we
have
identified
other
material
weaknesses
in
our
internal
control
over
financial
reporting,
as
described
in
our
Annual
Reports
on
Form
10-K
for
fiscal
year
2017,
certain
of
which
resulted
in
late
filings
of
and
an
amendment
to
our
periodic
reports
and
in
restatements
of
our
financial
results.
A
material
weakness
is
defined
as
a
deficiency,
or
combination
of
deficiencies,
in
internal
control
over
financial
reporting,
such
that
there
is
a
reasonable
possibility
that
a
material
misstatement
of
our
annual
or
interim
financial
statements
will
not
be
prevented
or
detected
on
a
timely
basis.
If
our
remediation
efforts
are
not
effective
or
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.

We cannot ensure that our current share repurchase program will be fully utilized or that it will enhance long-term shareholder value.
Share repurchases may also increase the volatility of the trading price of our shares. We similarly cannot ensure that we will continue to
increase our dividend payments or to pay dividends at all. Share repurchases and dividends diminish our cash reserves.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
31







Table of Contents

In
March
2017,
our
Board
of
Directors
authorized
a
three-year
$250.0
million
repurchase
program
of
our
registered
shares.
We
have
also
paid

cash
dividends
and
increased
the
size
of
our
dividend,
each
year
since
fiscal
year
2013.
Our
share
repurchase
program
and
dividend
policy
may
be
affected
by
many
factors,
including
general
business
and
economic
conditions,
our
financial
condition
and
operating
results,
our
views
on
potential
future
capital
requirements,
restrictions
imposed
in
any
future
debt
agreements,
the
emergence
of
alternative
investment
or
acquisition
opportunities,
changes
in
our
business
strategy,
legal
requirements,
changes
in
tax
laws,
and
other
factors.
Our
share
repurchase
program
does
not
obligate
us
to
repurchase
all
or
any
of
the
dollar
value
of
shares
authorized
for
repurchase.
The
program
could
also
increase
the
volatility
of
the
trading
price
of
our
shares.
Similarly,
we
are
not
obligated
to
pay
dividends
on
our
registered
shares.
Under
Swiss
law,
we
may
only
pay
dividends
upon
the
approval
of
a
majority
of
our
shareholders,
which
is
under
the
discretion
of
and
generally
follows
a
recommendation
by
our
Board
of
Directors
that
such
a
dividend
is
in
the
best
interests
of
our
shareholders.
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.
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.
Any
announcement
of
termination
or
suspension
of
our
share
repurchase
program
or
dividend
may
result
in
a
decrease
in
our
share
price.
The
share
repurchase
program
and
payment
of
cash
dividends
could
also
diminish
our
cash
reserves
that
may
be
needed
for
investments
in
our
business,
acquisitions
or
other
purposes.
Without
dividends,
the
trading
price
of
our
shares
must
appreciate
for
investors
to
realize
a
gain
on
their
investment.

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


Goodwill
associated
with
a
number
of
previous
acquisitions
could
result
in
impairment
charges.
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.
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.
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.
Additional
impairment
charges
could
adversely
affect
our
results
of
operations.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
32

Table of Contents

ITEM 2.    PROPERTIES

Our
headquarters
is
located
in
Lausanne,
Switzerland,
where
we
occupy
approximately
50,500
square
feet
under
a
lease
that
expires
in
July

2020.
Our
principal
corporate
and
administrative
offices,
which
includes
our
headquarters
in
Lausanne,
Switzerland,
and
corporate
offices
in
Newark,
California
and
Hsinchu,
Taiwan,
together
make
up
approximately
286,000
square
feet
of
leased
space.
Both
our
Lausanne,
Switzerland
and
Newark,
California
locations
serve
our
research
and
development,
product
marketing,
sales
management,
technical
support
and
administrative
functions.
Our
Hsinchu,
Taiwan
location
serves
our
mechanical
engineering,
process
engineering,
manufacturing
support,
quality
assurance,
design,
research
and
development,
and
administrative
functions.
We
maintain
marketing
and
channel
support
offices
in
approximately
77
locations
and
40
countries,
with
lease
expiration
dates
from
2019
to
2030.

As
of
March
31,
2019
,
the
majority
of
our
properties
are
leased;
however,
we
also
own
some
of
the
manufacturing
units
and
employee
dormitories
in
Suzhou,
China,
from
which
we
occupy
approximately
722,000
square
feet.
We
anticipate
no
difficulty
in
extending
the
leases
of
our
facilities
or
obtaining
comparable
facilities
in
suitable
locations.
We
also
contract
with
various
third-party
distribution
centers
in
North
America,
South
America,
Europe
and
Asia
Pacific
for
additional
warehouses
in
which
we
store
inventory.
We
believe
that
our
manufacturing
and
distribution
facilities
are
adequate
for
our
ongoing
needs
and
we
continue
to
evaluate
the
need
for
facilities
to
meet
current
and
anticipated
future
requirements.

ITEM 3.    LEGAL PROCEEDINGS

From
time-to-time,
we
are
involved
in
claims
and
legal
proceedings
that
arise
in
the
ordinary
course
of
our
business.
We
are
currently
subject

to
several
such
claims
and
a
small
number
of
legal
proceedings.
We
believe
that
these
matters
lack
merit
and
we
intend
to
vigorously
defend
against
them.
Based
on
the
currently
available
information,
we
do
not
believe
that
resolution
of
pending
matters
will
have
a
material
adverse
effect
on
our
financial
condition,
cash
flows
or
results
of
operations.
However,
litigation
is
subject
to
inherent
uncertainties,
and
there
can
be
no
assurances
that
our
defenses
will
be
successful
or
that
any
such
lawsuit
or
claim
would
not
have
a
material
adverse
impact
on
our
business,
financial
condition,
cash
flows
and
results
of
operations
in
a
particular
period.
Any
claims
or
proceedings
against
us,
whether
meritorious
or
not,
can
have
an
adverse
impact
because
of
defense
costs,
diversion
of
management
and
operational
resources,
negative
publicity
and
other
factors.
Any
failure
to
obtain
a
necessary
license
or
other
rights,
or
litigation
arising
out
of
intellectual
property
claims,
could
adversely
affect
our
business.

ITEM 4.    MINE SAFETY DISCLOSURES

None
.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
33

Table of Contents

PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES

Logitech's
shares
are
listed
and
traded
on
both
the
SIX
Swiss
Exchange,
where
the
share
price
is
denominated
in
Swiss
francs
and
on
the
Nasdaq
Global
Select
Market,
where
the
share
price
is
denominated
in
U.S.
Dollars.
The
trading
symbol
for
Logitech
shares
is
LOGN
on
the
SIX
Swiss
Exchange
and
LOGI
on
the
Nasdaq
Global
Select
Market.
As
of
May
3,
2019
,
there
were
173,106,620
shares
issued
(including
6,508,074
shares
held
as
treasury
stock)
held
by
16,510
holders
of
record,
and
the
closing
price
of
our
shares
was
CHF
41.21
($40.45
based
on
exchange
rates
on
such
date)
per
share
on
the
SIX
Swiss
Exchange
and
$40.35
per
share
as
reported
by
the
Nasdaq
Global
Select
Market.

Dividends

Under
Swiss
law,
a
corporation
may
only
pay
dividends
upon
a
vote
of
its
shareholders.
This
vote
typically
follows
the
recommendation
of
the

corporation's
Board
of
Directors.
In
May
2019,
the
Board
of
Directors
recommended
that
the
Company
increase
the
cash
dividend
for
fiscal
year
2019
by
approximately
10%
to
CHF
121.8
million
(
$122.4
million
based
on
the
exchange
rate
on
March
31,
2019).
On
September
5,
2018,
Logitech's
shareholders
approved
a
cash
dividend
payment
of
CHF
110.7
million
out
of
retained
earnings
to
Logitech
shareholders
who
owned
shares
on
September
18,
2018.
Eligible
shareholders
were
paid
CHF
0.67
per
share
($0.69
per
share
in
U.S.
Dollars),
totaling
$114.0
million
in
U.S.
Dollars
on
September
21,
2018.
On
September
12,
2017,
Logitech's
shareholders
approved
a
cash
dividend
payment
of
CHF
100.0
million
out
of
retained
earnings
to
Logitech
shareholders
who
owned
shares
on
September
22,
2017.
Eligible
shareholders
were
paid
CHF
0.61
per
share
($0.63
per
share
in
U.S.
Dollars),
totaling
$104.2
million
in
U.S.
Dollars
on
September
27,
2017.

Dividends
paid
and
similar
cash
or
in-kind
distributions
made
by
Logitech
to
a
holder
of
Logitech
shares
(including
dividends
or
liquidation
proceeds
and
stock
dividends),
other
than
distributions
of
qualifying
additional
paid-in-capital
if
it
is
available
under
the
current
Swiss
tax
regime,
are
subject
to
a
Swiss
federal
anticipatory
tax
at
a
rate
of
35%.
The
anticipatory
tax
must
be
withheld
by
Logitech
from
the
gross
distribution
and
paid
to
the
Swiss
Federal
Tax
Administration.

A
Swiss
resident
holder
and
beneficial
owner
of
Logitech
shares
may
qualify
for
a
full
refund
of
the
Swiss
anticipatory
tax
withheld
from
such

dividends.
A
holder
and
beneficial
owner
of
Logitech
shares
who
is
a
non-resident
of
Switzerland,
but
a
resident
of
a
country
that
maintains
a
double
tax
treaty
with
Switzerland,
may
qualify
for
a
full
or
partial
refund
of
the
Swiss
anticipatory
tax
withheld
from
such
dividends
by
virtue
of
the
provisions
of
the
applicable
treaty
between
Switzerland
and
the
country
of
residence
of
the
holder
and
beneficial
owner
of
the
Logitech
shares.

In
accordance
with
the
tax
convention
between
the
United
States
and
the
Swiss
Confederation
(Treaty),
a
mechanism
is
provided
whereby
a
U.S.
resident
(as
determined
under
the
Treaty),
and
U.S.
corporations,
other
than
U.S.
corporations
having
a
"permanent
establishment"
or
a
fixed
base,
as
defined
in
the
Treaty,
in
Switzerland,
generally
can
obtain
a
refund
of
the
Swiss
anticipatory
tax
withheld
from
dividends
in
respect
of
Logitech
shares,
to
the
extent
that
15%
of
the
gross
dividend
is
withheld
as
final
withholding
tax
(i.e.
20%
of
the
gross
dividend
may
generally
be
refunded).
In
specific
cases,
U.S.
companies
not
having
a
"permanent
establishment"
or
a
fixed
base
in
Switzerland
owning
at
least
10%
of
Logitech
registered
shares
may
receive
a
refund
of
the
Swiss
anticipatory
tax
withheld
from
dividends
to
the
extent
it
exceeds
5%
of
the
gross
dividend
(i.e.,
30%
of
the
gross
dividend
may
be
refunded).
To
get
the
benefit
of
a
refund,
holders
must
beneficially
own
Logitech
shares
at
the
time
such
dividend
becomes
due.

Share Repurchases

In
fiscal
year
2019,
the
following
approved
share
buyback
program
was
in
place
(in
thousands):

Share Buyback Program
March
2017

Approved Shares  (1)

Approved Amounts

17,311   $

250,000

(1)
The
approval
of
our
share
buyback
programs
by
the
Swiss
Takeover
Board
limits
the
number
of
shares
that
we
may
repurchase
to
no
more
than
10%
of
our
authorized
share
capital
and
voting
rights.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
34

 
Table of Contents

The
following
table
presents
certain
information
related
to
purchases
made
by
Logitech
of
its
equity
securities
under
its
publicly
announced

share
buyback
programs
(in
thousands,
except
per
share
amounts):

During Fiscal Year Ended
March
31,
2017

March
31,
2018

March
31,
2019

During the three months ended March 31, 2019

Month
1

December
29,
2018
to
January
25,
2019

Month
2

January
26,
2019
to
February
22,
2019

Month
3

February
23,
2019
to
March
31,
2019

Performance Graph

Weighted Average Price Per Share

Shares
Repurchased

CHF (LOGN)

USD (LOGI)

4,027  

22.00   15.29

863   34.53

808  

39.58  

  Remaining Amount
that May Yet Be
Repurchased under
the Program

  $

—   $

—   $

94,642

219,893

187,433

  Weighted Average Price Paid Per Share  

Total Number of
Shares
Repurchased

CHF (LOGN)

USD (LOGI)

Remaining
Amount that May
Yet Be
Repurchased
under the Program

—  

276  

—  

276  

—  

—   $

197,428

35.95  

—  

187,433

—  

35.95  

—  

—   $

187,433

187,433

The information contained in the Performance Graph shall not be deemed to be "soliciting material" or "filed" with the SEC or subject to the
liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), except to the extent that we specifically incorporate
it by reference into a document filed under the Securities Act of 1933, as amended (the Securities Act), or the Exchange Act .

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
35

 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
   
 
   
   
   
   
 
   
   
   
   
 
 
 
Table of Contents

The
following
graph
compares
the
cumulative
total
stockholder
return
on
our
shares,
the
Nasdaq
Composite
Index,
and
the
S&P
500

Information
and
Technology
Index.
The
graph
assumes
that
$100
was
invested
in
our
LOGI
shares,
the
Nasdaq
Composite
Index
and
the
S&P
500
Information
and
Technology
Index
on
March
31,
2014
,
and
calculates
the
annual
return
through
March
31,
2019
.
The
stock
price
performance
on
the
following
graph
is
not
necessarily
indicative
of
future
stock
price
performance.

________________________________________

*$100
invested
on
March
31,
2014,
in
stock
or
index,
including
reinvestment
of
dividends.
Copyright©
2019
Standard
&
Poor's,
a
division
of
S&P
Global.
All
rights
reserved.

Logitech

Nasdaq
Composite
Index

S&P
500
Information
and
Technology
Index

ITEM 6.    Selected Financial Data

March 31,

2014

2015

2016

2017

2018

2019

  $

  $

  $

100   $

100   $

100   $

90   $

118   $

118   $

113   $

119   $

128   $

232   $

146   $

159   $

273   $

176   $

204   $

296

195

235

This 
financial 
data 
should 
be 
read 
in 
conjunction 
with 
Item 
7, 
Management's 
Discussion 
and 
Analysis 
of 
Financial 
Condition 
and 
Results 
of

Operations.
These
historical
results
are
not
necessarily
indicative
of
the
results
to
be
expected
in
the
future.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
36

 
 
 
 
 
 
 
 
 
Table of Contents

Consolidated statement of operations and cash
flow data

Net
sales

Operating
income

Net
income
from
continuing
operations

Loss
from
discontinued
operations

(1)

Net
income

Net
income
(loss)
per
share
-
basic:

Continuing
operations

Discontinued
operations

Net
income
per
share
-
basic

Net
Income
(loss)
per
share
-
diluted:

Continuing
operations

Discontinued
operations

Net
income
per
share
-
diluted

Cash
dividend
per
share

Net
cash
provided
by
operating
activities



Net
cash
used
in
investing
activities

(2)

Consolidated balance sheet data

Cash
and
cash
equivalents

Total
assets

Total
shareholders'
equity

2019

2018

2017

2016 (1)

2015 (1)

Years ended March 31,

(in thousands, except for per share amounts)

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

2,788,322   $

2,566,863   $

2,221,427   $

2,018,100   $

2,004,908

263,194   $

257,573   $

—   $

229,733   $

208,542   $

—   $

211,860   $

205,876   $

129,058   $

128,362   $

154,184

148,429

—   $

(9,045)   $

(139,146)

257,573   $

208,542   $

205,876   $

119,317   $

9,283

1.56   $

—   $

1.56   $

1.52

$

—   $

1.52   $

1.27   $

—   $

1.27   $

1.23   $

—   $

1.23   $

1.27   $

—   $

1.27   $

1.24   $

—   $

1.24   $

0.79   $

(0.06)   $

0.73   $

0.77   $

(0.05)   $

0.72   $

0.91

(0.85)

0.06

0.89

(0.83)

0.06

0.69   $

0.63   $

0.57   $

0.53   $

0.27

305,181   $

346,261   $

(173,345)   $

(128,704)   $

288,389   $

(99,679)   $

185,195   $

(59,975)   $

181,463

(48,289)

2019

2018

March 31,

2017

2016 (3)

2015 (3)

604,516   $

641,947   $

547,533   $

519,195   $

533,380

2,024,124   $

1,743,157   $

1,498,677   $

1,324,147   $

1,426,680

1,176,339   $

1,050,557   $

856,111   $

759,948   $

758,134

_______________________________________________________________________________

(1) On
December
28,
2015,
we
divested
our
Lifesize
video
conferencing
business
and,
as
a
result,
we
have
reflected
the
Lifesize
video

conferencing
business
as
discontinued
operations
in
our
consolidated
statements
of
operations
data
above
for
all
periods
noted.
Historical
cash
flows
from
discontinued
operations
were
not
material
and
are
included
in
the
cash
flow
data
above.

(2) The
line
item
previously
called
Change
in
restricted
cash
has
been
eliminated
from
the
statements
of
cash
flows
and
instead
restricted
cash

has
been
included
in
the
cash,
cash
equivalents
and
restricted
cash
line
items
to
conform
to
the
consolidated
statements
of
cash
flows
for
fiscal
year
2019
due
to
the
adoption
of
ASU
2016-18.
The
impact
was
not
material.

(3) The
above
consolidated
cash
and
cash
equivalents
exclude
Lifesize
video
conferencing
business.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
37

 
 
 
 
 
 
 
 
 
   
   
   
   
   
 
 
 


 


 


 


 


 


 


 


 


 


   
   
   
   
   
 
   
   
   
   
   
 
   
   
   
   
   
 
 
 
 
 
 
 
 
 


 


 


 


 


Table of Contents

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS










The following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements
that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these statements as a result of certain factors,
including those set forth above in Item 1A, Risk Factors, and below in Item 7A, Quantitative and Qualitative Disclosures about Market Risk. Please
read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and
related notes included under Item 8 of this Annual Report on Form 10-K.

Overview of Our Company

Logitech
is
a
world
leader
in
designing,
manufacturing
and
marketing
products
that
help
connect
people
to
digital
and
cloud
experiences.
More
than
35
years
ago,
Logitech
created
products
to
improve
experiences
around
the
personal
PC
platform,
and
today
it
is
a
multi-brand,
multi-category
company
designing
products
that
enable
better
experiences
consuming,
sharing
and
creating
any
digital
content
such
as
music,
gaming,
video
and
computing,
whether
it
is
on
a
computer,
mobile
device
or
in
the
cloud.
Logitech's
brands
include
Logitech,
Jaybird,
Ultimate
Ears,
Logitech
G,
ASTRO
Gaming
and
Blue
Microphones.

Our
products
participate
in
five
large
market
opportunities:
Creativity
&
Productivity,
Gaming,
Video
Collaboration,
Music
and
Smart
Home.
We

sell
our
products
to
a
broad
network
of
domestic
and
international
customers,
including
direct
sales
to
retailers
and
e-tailers,
and
indirect
sales
through
distributors.
Our
worldwide
channel
network
includes
consumer
electronics
distributors,
retailers,
mass
merchandisers,
specialty
stores,
computer
and
telecommunications
stores,
value-added
resellers
and
online
merchants.

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.
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.

On
August
21,
2018,
we
acquired
all
equity
interests
in
Blue
Microphones
Holding
Corporation
(Blue
Microphones)
for
a
total
consideration
of

$134.8
million
in
cash
(the
Blue
Microphones
Acquisition),
which
included
a
working
capital
adjustment
and
repayment
of
debt
on
behalf
of
Blue
Microphones.
Blue
Microphones
is
a
leading
audio
manufacturer
that
designs
and
produces
microphones,
headphones,
recording
tools,
and
accessories
for
audio
professionals,
musicians
and
consumers.
The
Blue
Microphones
Acquisition
supplements
our
product
portfolio.

On
August
11,
2017,
we
acquired
certain
assets
and
liabilities
constituting
the
ASTRO
Gaming
business
(ASTRO)
from
AG
Acquisition

Corporation
for
a
purchase
price
of
$85.0
million
in
cash
(the
ASTRO
Acquisition).
ASTRO
is
a
leading
console
gaming
accessory
brand
with
a
history
of
producing
award-winning
headsets
for
professional
gamers
and
enthusiasts.
ASTRO
provides
a
strong
growth
platform
in
the
console
gaming
accessories
market.

Summary of Financial Results

Our
total
sales
for
fiscal
year
2019
increased
9%
in
comparison
to
fiscal
year
2018
.
The
growth
was
broad-based
across
our
regions
and

across
most
of
our
product
categories.
The
results
of
operations
for
Blue
Microphones
have
been
included
in
our
consolidated
statements
of
operations
from
the
acquisition
date.
For
fiscal
year
2019
,
Blue
Microphones
contributed
approximately
2
percentage
points
of
the
sales
growth
rate.

Sales
for
fiscal
year
2019
increased
6%
,
5%
and
17%
in
the
Americas,
EMEA
and
Asia
Pacific,
respectively.

Gross
margin
increased
by
180
basis
points
to
37.2%
during
fiscal
year
2019
,
compared
to
fiscal
year
2018
.
The
increase
in
gross
margin

was
primarily
driven
by
favorable
product
mix
and
cost
reductions.
In
addition,
extra
costs
from
the
transition
of
the
distribution
center
in
North
America
in
the
third
quarter
of
fiscal
year
2018
negatively
affected
the
gross
margin
in
fiscal
year
2018.

Operating
expenses
for
fiscal
year
2019
were
$773.8
million
,
or
27.8%
of
sales,
compared
to
$679.5
million
,
or
26.5%
of
sales,
for
fiscal
year

2018
.
The
increase
in
operating
expenses
was
primarily
driven
by:
$47.8
million
higher
personnel-related
cost
due
to
restructuring
charges
in
the
current
period,
increased
performance-based
variable
compensation
and
additional
headcount
from
business
acquisitions;
$32.6
million
higher
third-
party
costs,
primarily
advertising
and
marketing
expenses
to
support
our
new
product
introductions
and
new
market

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
38

Table of Contents

opportunities;
$5.0
million
higher
amortization
of
intangible
assets
from
the
business
acquisitions;
and
a
$4.9
million
non-recurring
credit
for
change
in
fair
value
of
contingent
consideration
from
an
acquisition
recorded
in
fiscal
year
2018.

Net
income
for
fiscal
year
2019
was
$257.6
million
,
compared
to
$208.5
million
for
fiscal
year
2018
.

Trends in Our Business

Our
strategy
focuses
on
five
large
multi-category
market
opportunities
including
Creativity
&
Productivity,
Gaming,
Video
Collaboration,
Music
and
Smart
Home.
We
see
opportunities
to
deliver
growth
with
products
in
all
these
markets.
The
following
discussion
represents
key
trends
specific
to
our
market
opportunities.

Trends Specific to Our Five Market Opportunities

Creativity & Productivity: 

Although
new
PC
shipments
continue
to
be
weak,
the
installed
base
of
PC
users
remains
large.
We
believe
that

innovative
PC
peripherals,
such
as
our
mice
and
keyboards,
can
renew
the
PC
usage
experience,
thus
providing
growth
opportunities.
Increasing
adoption
of
various
cloud-based
applications
has
led
to
multiple
new
consumer
use
cases,
which
we
are
addressing
with
our
innovative
product
portfolio.
The
increasing
popularity
of
streaming
and
broadcasting
provides
additional
growth
opportunities
for
our
Webcam
products
. 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
for
the
iPad
Pro
and
keyboard
folios
for
the
iPad
and
iPad
mini.
In
fiscal
year
2019,
we
have
seen
a
recovery
of
the
iPad
tablet
market,
and
our
Tablet
&
Other
Accessories
category
has
benefited
from
the
recovery
along
with
our
innovative
products.

Gaming: The
PC
gaming
and
console
gaming
platforms
continue
to
show
strong
growth
as
online
gaming,
multi-platform
experiences,
and

esports
gain
greater
popularity
and
gaming
content
becomes
increasingly
more
demanding.
We
believe
Logitech
is
well
positioned
to
benefit
from
the
gaming
market
growth.
With
ASTRO
Gaming,
we
are
also
strengthening
our
portfolio
in
adjacent
categories,
such
as
the
console
controller
market.

Video Collaboration: 

The
near
and
long-term
structural
growth
opportunities
in
the
video
collaboration
market
are
significant
and
are
already

attracting
more
competition.
Video
meetings
are
on
the
rise,
and
companies
increasingly
want
lower-cost,
cloud-based
solutions.
We
are
continuing
our
efforts
to
create
and
sell
innovative
products
to
accommodate
the
increasing
demand
from
medium
and
large-sized
meeting
rooms
to
small-
sized
rooms
such
as
huddle
rooms.
We
will
continue
to
invest
in
select
business-specific
products,
targeted
product
marketing
and
sales
channel
development.

Music: The
music
market
grew
during
fiscal
year
2019,
driven
by
growing
consumption
of
music
through
mobile
devices
such
as
smartphones

and
tablets.
The
integration
of
personal
voice
assistants
has
become
increasingly
competitive
in
the
speaker
categories,
but
the
market
for
third-
party,
voice-enabled
speakers
has
not
yet
gained
traction.
Moreover,
the
market
for
mobile
speakers
appears
to
be
maturing,
which
led
to
a
decline
in
Ultimate
Ears
sales
in
fiscal
year
2019.
In
fiscal
year
2019,
the
headphone
industry
continued
to
flourish
with
strong
revenue
growth.
The
largest
growth
came
in
True
Wireless
headphones
where
the
market
tripled
year
over
year
and
added
substantial
increases
to
average
selling
price.
Continued
growth
in
the
headphone
category
is
expected
for
the
next
several
years
as
consumers
increasingly
adopt
wireless
headphones
over
wired
headphones.
With
Blue
Microphones,
we
are
strengthening
our
portfolio
in
adjacent
categories,
such
as
the
microphones
market
.

Smart Home: Our
remote
business
declined
substantially
in
fiscal
year
2019
as
the
attachment
to
the
voice
assistants
of
Harmony
Hub-based

remote
controls
was
not
a
sustainable
trend.
In
general,
the
space
is
under
pressure
as
the
way
people
consume
content
is
changing.
We
will
continue
to
explore
other
innovative
experiences
for
the
Smart
Home
category.

Business Seasonality, Product Introductions and Business Acquisitions

We
have
historically
experienced
higher
sales
in
our
third
fiscal
quarter
ending
December
31,
compared
to
other
fiscal
quarters
in
our
fiscal

year,
primarily
due
to
the
increased
consumer
demand
for
our
products
during
the
year-end
holiday
buying
season
and
year-end
spending
by
enterprises.
Additionally,
new
product
introductions
and
business
acquisitions
can
significantly
impact
sales,
product
costs
and
operating
expenses.
Product
introductions
can
also
impact
our
sales
to
distribution
channels
as
these
channels
are
filled
with
new
product
inventory
following
a
product
introduction,
and
often
channel
inventory
of
an
earlier
model
product
declines
as
the
next
related
major
product
launch
approaches.
Sales
can
also
be
affected
when
consumers
and
distributors
anticipate
a
product
introduction
or
changes
in
business
circumstances.
However,
neither
historical
seasonal
patterns
nor
historical

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
39

Table of Contents

patterns
of
product
introductions
should
be
considered
reliable
indicators
of
our
future
pattern
of
product
introductions,
future
sales
or
financial
performance.

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.

We
consider
an
accounting
estimate
critical
if
it:
(i)
requires
management
to
make
judgments
and
estimates
about
matters
that
are
inherently

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

We
base
our
estimates
on
historical
experience
and
on
various
other
assumptions
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.
Management
has
discussed
the
development,
selection
and
disclosure
of
these
critical
accounting
estimates
with
the
Audit
Committee
of
the
Board
of
Directors.

We
believe
the
following
accounting
estimates
are
most
critical
to
our
business
operations
and
to
an
understanding
of
our
financial
condition

and
results
of
operations
and
reflect
the
more
significant
judgments
and
estimates
used
in
the
preparation
of
our
consolidated
financial
statements.

Accruals for Customer Programs and Product Returns

We
record
accruals
for
cooperative
marketing,
customer
incentive,
pricing
programs
(Customer
Programs)
and
product
returns.
The
estimated
cost
of
these
programs
is
usually
recorded
as
a
reduction
of
revenue.
Significant
management
judgments
and
estimates
must
be
used
to
determine
the
cost
of
these
programs
in
any
accounting
period.
Certain
Customer
Programs
require
management
to
estimate
the
percentage
of
those
programs
which
will
not
be
claimed
or
will
not
be
earned
by
customers
based
on
historical
experience
and
on
the
specific
terms
and
conditions
of
particular
programs.
The
percentage
of
these
customer
programs
that
will
not
be
claimed
or
earned
is
commonly
referred
to
as
"breakage".
If
we
receive
a
separately
identifiable
benefit
from
a
customer
and
can
reasonably
estimate
the
fair
value
of
that
benefit,
the
cost
of
the
Customer
Programs
is
recognized
in
operating
expenses.

Cooperative Marketing Arrangements. 



We
enter
into
customer
marketing
programs
with
many
of
our
customers,
and
with
certain
indirect

partners,
allowing
customers
to
receive
a
credit
equal
to
a
set
percentage
of
their
purchases
of
our
products,
or
a
fixed
dollar
credit
for
various
marketing
programs.
The
objective
of
these
arrangements
is
to
encourage
advertising
and
promotional
events
to
increase
sales
of
our
products.

Customer Incentive Programs. 



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

Cooperative
marketing
arrangements
and
customer
incentive
programs
are
considered
variable
consideration,
which
we
estimate
and
record

as
a
reduction
to
revenue
at
the
time
of
sale
based
on
negotiated
terms,
historical
experiences,
forecasted
incentives,
the
anticipated
volume
of
future
purchases,
and
inventory
levels
in
the
channel.

Pricing Programs. 



We
have
agreements
with
certain
customers
that
contain
terms
allowing
price
protection
credits
to
be
issued
in
the
event
of
a
subsequent
price
reduction.
At
our
discretion,
we
also
offer
special
pricing
discounts
to
certain
customers.
Special
pricing
discounts
are
usually
offered
only
for
limited
time
periods
or
for
sales
of
selected
products
to
specific
indirect
partners.
Our
decision
to
make
price
reductions
is
influenced
by
product
life
cycle
stage,
market
acceptance
of
products,
the
competitive
environment,
new
product
introductions
and
other
factors.
Accruals
for
estimated
expected
future
pricing
actions
are
recognized
at
the
time
of
sale
based
on
analysis
of
historical
pricing
actions
by
customer
and
by
product,
inventories
owned
by
and
located
at
distributors
and
retailers,
current
customer
demand,
current
operating
conditions,
and
other
relevant
customer
and
product
information,
such
as
stage
of
product
life-cycle.

Product Returns. 



We
grant
limited
rights
to
return
products.
Return
rights
vary
by
customer
and
range
from
just
the
right
to
return
the

defective
product
to
stock
rotation
rights
limited
to
a
percentage
of
sales
approved
by
management.
Estimates
of
expected
future
product
returns
are
recognized
at
the
time
of
sale
based
on
analyses
of

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International
S.A.
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historical
return
trends
by
the
customer
and
by
product,
inventories
owned
by
and
located
at
customers,
current
customer
demand,
current
operating
conditions,
and
other
relevant
customer
and
product
information.
Upon
recognition,
we
reduce
sales
and
cost
of
goods
sold
for
the
estimated
return.
Return
trends
are
influenced
by
product
life
cycle
status,
new
product
introductions,
market
acceptance
of
products,
sales
levels,
product
sell-
through,
the
type
of
customer,
seasonality,
product
quality
issues,
competitive
pressures,
operational
policies
and
procedures,
and
other
factors.
Return
rates
can
fluctuate
over
time
but
are
sufficiently
predictable
to
allow
us
to
estimate
expected
future
product
returns.

We
apply
a
breakage
rate
to
reduce
our
accruals
of
Customer
Programs
based
on
the
estimated
percentage
of
these
customer
programs
that

will
not
be
claimed
or
earned.
The
breakage
rate
is
applied
at
the
time
of
sale.
Significant
management
judgments
and
estimates
are
used
to
determine
the
breakage
of
the
programs
in
any
accounting
period.

We
regularly
evaluate
the
adequacy
of
our
accruals
for
Customer
Programs
and
product
returns.
Future
market
conditions
and
product

transitions
may
require
us
to
take
action
to
increase
such
programs.
In
addition,
when
the
variables
used
to
estimate
these
costs
change,
or
if
actual
costs
differ
significantly
from
the
estimates,
we
would
be
required
to
record
incremental
increases
or
reductions
to
revenue
or
operating
expenses.

Inventory Valuation

We
must
order
components
for
our
products
and
build
inventory
in
advance
of
customer
orders.
Further,
our
industry
is
characterized
by
rapid

technological
change,
short-term
customer
commitments
and
rapid
changes
in
demand.

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.
A
review
of
inventory
is
performed
each
fiscal
quarter
that
considers
factors
including
the
marketability
and
product
lifecycle
stage,
product
development
plans,
component
cost
trends,
historical
sales
and
demand
forecasts
which
consider
the
assumptions
about
future
demand
and
market
conditions.
Inventory
on
hand
which
is
not
expected
to
be
sold
or
utilized
is
considered
excess,
and
we
recognize
the
write-down
in
the
cost
of
goods
sold
at
the
time
of
such
determination.
The
write-down
is
determined
by
the
excess
of
cost
over
net
realizable
value.
Net
realizable
value
is
the
estimated
selling
price
in
the
ordinary
course
of
business,
less
reasonably
predictable
costs
of
completion,
disposal
and
transportation.
At
the
time
of
loss
recognition,
new
cost
basis
per
unit
and
the
lower-cost
basis
for
that
inventory
is
established
and
subsequent
changes
in
facts
and
circumstances
would
not
result
in
an
increase
in
the
cost
basis.
If
there
is
an
abrupt
and
substantial
decline
in
demand
for
Logitech's
products
or
an
unanticipated
change
in
technological
or
customer
requirements,
we
may
be
required
to
record
additional
write-downs
that
could
adversely
affect
gross
margins
in
the
period
when
the
write-downs
are
recorded.

Share-Based Compensation Expense

The
grant
date
fair
value
for
stock
options
and
stock
purchase
rights
is
estimated
using
the
Black-Scholes-Merton
option-pricing
valuation
model.
The
grant
date
fair
value
of
restricted
stock
units
(RSUs)
that
vest
upon
meeting
certain
market
conditions
is
estimated
using
the
Monte-Carlo
simulation
method.
The
grant
date
fair
value
of
time-based
RSUs
and
RSUs
with
performance
conditions
is
calculated
based
on
the
closing
market
price
on
the
date
of
grant,
adjusted
by
estimated
dividends
yield
prior
to
vesting.

Our
estimates
of
share-based
compensation
expense
require
a
number
of
complex
and
subjective
assumptions
including
our
stock
price
volatility,
the
probability
of
achievement
of
the
set
performance
conditions,
dividend
yield,
related
tax
effects
and
the
selection
of
an
appropriate
fair
value
model.
We
estimate
expected
share
price
volatility
based
on
historical
volatility
using
daily
prices
over
the
term
of
options,
RSUs
or
purchase
offerings,
as
we
consider
historical
share
price
volatility
as
most
representative
of
future
volatility.
The
dividend
yield
assumption
is
based
on
our
history
and
expectations
of
future
dividend
payouts.

The
assumptions
used
in
calculating
the
fair
value
of
share-based
compensation
expense
and
related
tax
effects
represent
our
best
estimates,
but
these
estimates
involve
inherent
uncertainties
and
the
application
of
management
judgments.
As
a
result,
if
factors
change
and
we
use
different
assumptions,
or
if
we
decide
to
use
a
different
valuation
model,
our
share-based
compensation
expense
could
be
materially
different
in
the
future
from
what
we
have
recorded
in
the
current
period,
which
could
materially
affect
our
results
of
operations.

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International
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|
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2019
Form
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Table of Contents

Accounting for Income Taxes

We
operate
in
multiple
jurisdictions
and
our
profits
are
taxed
pursuant
to
the
tax
laws
of
these
jurisdictions.
Our
effective
income
tax
rate
may

be
affected
by
the
changes
in
or
interpretations
of
tax
laws
and
tax
agreements
in
any
given
jurisdiction,
utilization
of
net
operating
loss
and
tax
credit
carryforwards,
changes
in
geographical
mix
of
income
and
expense,
and
changes
in
our
assessment
of
matters
such
as
the
ability
to
realize
deferred
tax
assets.
As
a
result
of
these
considerations,
we
must
estimate
income
taxes
in
each
of
the
jurisdictions
in
which
we
operate.
This
process
involves
estimating
current
tax
exposure
together
with
assessing
temporary
differences
resulting
from
the
different
treatment
of
items
for
tax
and
accounting
purposes.
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
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.
In
the
event
that
uncertain
tax
positions
are
resolved
for
amounts
different
than
our
estimates,
or
the
related
statutes
of
limitations
expire
without
the
assessment
of
additional
income
taxes,
we
will
be
required
to
adjust
the
amounts
of
the
related
assets
and
liabilities
in
the
period
in
which
such
events
occur.
Such
adjustments
may
have
a
material
impact
on
our
income
tax
provision
and
our
results
of
operations.

Goodwill Impairment Analysis

We
conduct
a
goodwill
impairment
analysis
annually
at
December
31
or
more
frequently
if
indicators
of
impairment
exist
or
if
a
decision
is

made
to
sell
or
exit
a
business.
Refer
to
Note
11
to
the
consolidated
financial
statements
included
in
this
Annual
Report
on
Form
10-K
for
the
disclosures.
Significant
judgments
are
involved
in
determining
if
an
indicator
of
impairment
has
occurred.
Such
indicators
may
include
deterioration
in
general
economic
conditions,
negative
developments
in
equity
and
credit
markets,
adverse
changes
in
the
markets
in
which
an
entity
operates,
increases
in
input
costs
that
have
a
negative
effect
on
earnings
and
cash
flows,
a
trend
of
negative
or
declining
cash
flows,
a
decline
in
actual
or
planned
revenue
or
earnings
compared
with
actual
and
projected
results
of
relevant
prior
periods,
or
other
relevant
entity-specific
events
such
as
changes
in
management,
key
personnel,
strategy
or
customers,
contemplation
of
bankruptcy,
or
litigation.
The
fair
value
that
could
be
realized
in
an
actual
transaction
may
differ
from
that
used
to
evaluate
the
impairment
of
goodwill.

In
reviewing
goodwill
for
impairment,
we
have
the
option
to
first
assess
qualitative
factors
to
determine
whether
the
existence
of
events
or
circumstances
leads
to
a
determination
that
it
is
more
likely
than
not
(greater
than
50%)
that
the
estimated
fair
value
of
a
reporting
unit
is
less
than
its
carrying
amount.
For
the
year
ended
March
31,
2019,
we
elected
to
perform
a
qualitative
assessment
and
determined
that
impairment
was
not
more
likely
than
not
and
no
further
analysis
was
required.
We
also
may
elect
not
to
perform
the
qualitative
assessment
and,
instead,
proceed
directly
to
the
quantitative
impairment
test.
The
ultimate
outcome
of
the
goodwill
impairment
review
for
a
reporting
unit
should
be
the
same
whether
an
entity
chooses
to
perform
the
qualitative
assessment
or
proceeds
directly
to
the
quantitative
impairment
test.
Goodwill
is
allocated
among
and
evaluated
for
impairment
at
the
reporting
unit
level,
which
is
defined
as
an
operating
segment
or
one
level
below
an
operating
segment.
We
currently
have
only
one
reporting
unit.

Product Warranty Accrual

We
estimate
the
cost
of
product
warranties
at
the
time
the
related
revenue
is
recognized
based
on
historical
and
projected
warranty
claim

rates,
historical
and
projected
costs,
and
knowledge
of
specific
product
failures
that
are
outside
of
our
typical
experience.
Each
fiscal
quarter,
we
reevaluate
estimates
to
assess
the
adequacy
of
recorded
warranty
liabilities.
When
we
experience
changes
in
warranty
claim
activity
or
costs
associated
with
fulfilling
those
claims,
the
warranty
liability
is
adjusted
accordingly.
If
actual
product
failure
rates
or
repair
costs
differ
from
estimates,
revisions
to
the
estimated
warranty
liabilities
would
be
required
and
could
materially
affect
our
results
of
operations.

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International
S.A.
|
Fiscal
2019
Form
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|
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Table of Contents

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
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.

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

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.

Constant Currency

We
refer
to
our
net
sales
growth
rates
excluding
the
impact
of
currency
exchange
rate
fluctuations
as
"constant
currency"
sales
growth
rates.
Percentage
of
constant
currency
sales
growth
is
calculated
by
translating
prior
period
sales
in
each
local
currency
at
the
current
period’s
average
exchange
rate
for
that
currency
and
comparing
that
to
current
period
sales.

Given
our
global
sales
presence
and
the
reporting
of
our
financial
results
in
U.S.
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.
If
the
U.S.
Dollar
appreciates
or
depreciates
in
comparison
to
other
currencies
in
future
periods,
this
will
affect
our
results
of
operations
in
future
periods
as
well.

Reference to Sales

The
term
“sales”
means
net
sales,
except
as
otherwise
specified
and
the
sales
growth
discussion
and
sales
growth
rate
percentages
are
in

U.S.
Dollars,
except
as
otherwise
specified.

Results of Operations

Net Sales

During
fiscal
year
2019
,
sales
increased
9%
in
comparison
to
fiscal
year
2018
.
If
currency
exchange
rates
had
been
constant
in
2019
and

2018
,
our
constant
currency
sales
growth
rate
would
have
been
10%
.
We
grew
across
most
of
our
product
categories,
with
double-digit
growth
in
our
Gaming,
Video
Collaboration,
Tablet
&
Other
Accessories
and
Audio
&
Wearables
product
categories
and
strong
growth
in
Keyboards
&
Combos.
Sales
declined
for
Mobile
Speakers
and
Smart
Home
product
categories.
Blue
Microphones
contributed
approximately
2
percentage
points
of
the
sales
growth
rate.
The
adoption
of
Topic
606
increased
our
sales
for
fiscal
year
2019
by
$3.7
million
.

During
fiscal
year
2018,
sales
increased
16%
in
comparison
to
fiscal
year
2017.
If
currency
exchange
rates
had
been
constant
in
2018
and

2017,
our
constant
currency
sales
growth
rate
would
have
been
13%
.
We
grew
across
almost
all
our
product
categories.
Tablet
&
Other
Accessories,
Video
Collaboration,
Gaming,
and
Smart

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|
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2019
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Table of Contents

Home
grew
double
digits,
with
Gaming
contributing
more
than
8
percentage
points
of
the
sales
growth
rate
during
the
year,
including
approximately
2
percentage
points
contributed
by
ASTRO.

Sales Denominated in Other Currencies

Although
our
financial
results
are
reported
in
U.S.
Dollars,
a
portion
of
our
sales
was
generated
in
currencies
other
than
the
U.S.
Dollar,
such

as
the
Euro,
Chinese
Renminbi,
Japanese
Yen,
Canadian
Dollar,
Taiwan
Dollar,
British
Pound
and
Australian
Dollar.
For
each
of
the
fiscal
years
2019
,
2018
and
2017
,
50%
of
our
sales
were
denominated
in
currencies
other
than
the
U.S.
Dollar.

Sales by Region

The
following
table
presents
the
change
in
sales
by
region
for
fiscal
year
2019
compared
with
fiscal
year
2018
,
and
fiscal
year
2018
compared

with
fiscal
year
2017
:

  Sales
Growth
Rate

2019 vs. 2018

Sales
Growth
Rate
in
Constant
Currency

Sales
Growth
Rate

2018 vs. 2017

Sales
Growth
Rate
in
Constant
Currency

6%  

5

17

7%  

7

19

16%  

10

23

16%

4

22

Americas

EMEA

Asia
Pacific

Americas

The
increase
in
sales
in
fiscal
year
2019
of
6%
compared
with
fiscal
year
2018
was
driven
by
growth
in
Gaming,
Video
Collaboration,
Audio
&

Wearables,
Keyboards
and
Combos,
Tablet
&
Other
Accessories
and
PC
Webcams,
partially
offset
by
sales
declines
in
Mobile
Speakers,
Smart
Home
and
Pointing
Devices.

The
increase
in
sales
in
fiscal
year
2018
of
16%
compared
with
fiscal
year
2017
was
driven
by
growth
in
Pointing
Devices,
Tablet
&
Other

Accessories,
Video
Collaboration,
Gaming,
and
Smart
Home.

EMEA

The
increase
in
sales
in
fiscal
year
2019
of
5%
compared
with
fiscal
year
2018
was
driven
by
several
of
our
product
categories,
with
growth
in

Video
Collaboration,
Gaming,
Pointing
Devices
and
Tablet
&
Other
Accessories,
partially
offset
by
sales
declines
in
Mobile
Speakers
and
Smart
Home.

The
increase
in
sales
in
fiscal
year
2018
of
10%
compared
with
fiscal
year
2017
was
driven
by
several
of
our
product
categories,
with
growth
in

Video
Collaboration,
Gaming,
and
Smart
Home,
partially
offset
by
Pointing
Devices
and
Audio
&
Wearables.

Asia Pacific

The
increase
in
sales
in
fiscal
year
2019
of
17%
compared
with
fiscal
year
2018
was
primarily
driven
by
sales
increases
in
Gaming,
Video

Collaboration,
Keyboard
&
Combos
and
Pointing
Devices,
offset
by
sales
declines
in
Mobile
Speakers.

The
increase
in
sales
in
fiscal
year
2018
of
23%
compared
with
fiscal
year
2017
was
primarily
driven
by
sales
increases
in
Pointing
Devices,

Video
Collaboration,
Music
and
Gaming.

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Sales by Product Categories

Sales
by
product
categories
for
fiscal
years
2019
,
2018
and
2017
were
as
follows
(Dollars
in
thousands):

Years Ended March 31,

Change

2019

2018

2017

2019 vs. 2018

Pointing
Devices

Keyboards
&
Combos

PC
Webcams

Tablet
&
Other
Accessories

Video
Collaboration

Mobile
Speakers

Audio
&
Wearables

Gaming

Smart
Home
Other
(1)

Total
Sales

  $

536,890   $

516,637   $

536,619  

121,282  

128,315  

259,521  

230,378  

277,429  

648,130  

49,344  

414  

498,472  

112,147  

107,942  

182,717  

314,817  

252,330  

491,995  

89,373  

433  

501,562  

480,312  

107,087  

76,879  

127,009  

301,021  

246,390  

314,362  

65,510  

1,295  

  $

2,788,322   $

2,566,863   $

2,221,427  

(1) Other
category
includes
products
which
we
currently
intend
to
phase
out,
or
have
already
phased
out,

because
they
are
no
longer
strategic
to
our
business.

Sales by Product Categories:

Creativity & Productivity market:

Pointing Devices

  2018 vs. 2017
3
%

4
%  

8

8

19

42

(27)

10

32

(45)

(4)

9

4

5

40

44

5

2

57

36

(67)

16

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

During
fiscal
year
2019
,
Pointing
Devices
sales
increased
4%
,
compared
to
fiscal
year
2018
.
The
increase
was
primarily
driven
by
the

increases
in
sales
of
cordless
mice
and
presentation
tools.
The
increase
in
cordless
mice
was
lead
by
strong
contribution
from
the
MX
family
of
premium
cordless
mice,
including
the
Vertical
Wireless
Mouse
introduced
in
the
second
quarter
of
fiscal
year
2019
as
well
as
continued
performance
for
MX
Master
2S
Wireless
Mouse
and
B220
Silent
Mouse.

During
fiscal
year
2018,
Pointing
Devices
sales
increased
3%
,
compared
to
fiscal
year
2017.
The
increase
was
primarily
driven
by
the

increases
in
sales
of
cordless
mice,
trackball
and
presentation
tools,
partially
offset
by
a
decrease
in
the
sales
of
corded
mice.

Keyboards & Combos

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

During
fiscal
year
2019
,
Keyboards
&
Combos
sales
increased
8%
,
compared
to
fiscal
year
2018
.
The
increase
was
primarily
driven
by
the

increases
in
sales
of
wireless
keyboard/mice
combos,
mainly
from
increased
sales
of
our
MK
540,
MK270
and
MK110
wireless
keyboard/mice
combo,
and
an
increase
in
sales
of
our
wireless
PC
keyboard.

During
fiscal
year
2018,
Keyboards
&
Combos
sales
increased
4%
,
compared
to
fiscal
year
2017.
The
increase
was
primarily
driven
by
the

introduction
of
Craft
cordless
keyboard
and
increased
sales
of
our
MK270
and
MK235
wireless
keyboard/mice
combo,
partially
offset
by
the
decreases
in
sales
of
the
MK710
wireless
keyboard/mice
combo
and
K400
Plus
wireless
keyboard.

PC Webcams

Our
PC
Webcams
category
comprises
PC-based
webcams
targeted
primarily
at
consumers.

During
fiscal
year
2019
,
PC
Webcams
sales
increased
8%
,
compared
to
fiscal
year
2018
.
The
increase
was
primarily
driven
by
the
increases

in
sales
of
our
HD
Pro
Webcam
C920
and
1080
Pro
Steam
Webcam.

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During
fiscal
year
2018,
PC
Webcams
sales
increased
5%
,
compared
to
fiscal
year
2017.
The
increase
was
primarily
driven
by
the
increases

in
sales
of
our
1080P
Pro
Stream
Webcam,
partially
offset
by
the
decrease
in
sales
of
our
HD
Pro
Webcam
C920
and
HD
Webcam
C525.

Tablet & Other Accessories

Our
Tablet
&
Other
Accessories
category
comprises
keyboards
for
tablets
and
smartphones
as
well
as
other
accessories
for
mobile
devices.

During
fiscal
year
2019
,
Tablet
&
Other
Accessories
sales
increased
19%
,
compared
to
fiscal
year
2018
.
The
increase
was
primarily
driven

by
the
introductions
of
our
Slim
Folio
keyboard
cases
for
the
iPad
5th/6th
Generation,
education-based
Rugged
Combo
2,
Slim
Combo
keyboard
cases
for
the
iPad
5th/6th
Generation,
Crayon
(a
digital
pencil)
and
POWERED
(a
wireless
charging
dock
for
iPhone)
during
fiscal
year
2019.

During
fiscal
year
2018,
Tablet
&
Other
Accessories
sales
increased
40%
,
compared
to
fiscal
year
2017.
The
increase
was
primarily
driven
by

the
introduction
of
Slim
Folio
keyboard
cases
for
the
iPad
5th
Generation,
Slim
Combo
keyboard
cases
for
the
iPad
Pro,
and
Rugged
Combo
keyboard
case,
partially
offset
by
a
decrease
in
sales
of
Create
and
Type+
keyboard
cases.

Gaming market:

Gaming

Our
Gaming
category
comprises
gaming
mice,
keyboards,
headsets,
gamepads,
steering
wheels,
simulation
controllers,
console
gaming

headsets
and
console
gaming
controllers.

During
fiscal
year
2019
,
Gaming
sales
increased
32%
,
compared
to
fiscal
year
2018
.
The
increase
was
primarily
due
to
increases
in
sales
of

our
core
PC
gaming
products
and
console
gaming
headsets,
which
benefited
from
the
growing
gaming
market,
growth
in
eSports,
expansions
in
new
channels
and
regions,
and
expansion
in
product
portfolios.
The
increase
for
fiscal
year
2019
was
also
driven
by
the
fact
that
the
ASTRO
Acquisition
closed
on
August
11,
2017,
in
the
middle
of
our
fiscal
year
2018
second
quarter,
resulting
in
a
partial
comparative
period
impact.
The
growth
was
partially
offset
by
a
slight
decline
in
our
simulation
products.

During
fiscal
year
2018,
Gaming
sales
increased
57%
,
compared
to
fiscal
year
2017.
Growth
in
Gaming
sales
was
broad-based,
especially

driven
by
the
ASTRO
Acquisition,
the
sales
increases
of
the
G29
Driving
Force
steering
wheel,
the
G502
Proteus
Spectrum
gaming
mouse
and
the
G203
gaming
mouse,
and
the
introduction
of
the
G903
gaming
mouse.
For
fiscal
year
2018,
ASTRO
contributed
$54.1
million
to
sales.

Video Collaboration market:

Video Collaboration

Our
Video
Collaboration
category
includes
Logitech’s
ConferenceCams,
which
combines
affordable
enterprise-quality
audio
and
high
definition

(HD)
1080p
video
to
bring
video
conferencing
to
businesses
of
any
size.

During
fiscal
year
2019
,
Video
Collaboration
sales
increased
42%
,
compared
to
fiscal
year
2018
.
The
increase
was
primarily
due
to
increases

in
sales
of
our
MeetUp
and
PTZ
Pro
2
video
conference
cameras,
BRIO
Pro
Webcam
and
C925E
Webcam,
and
the
introductions
of
our
Rally
and
Rally
Ultra-HD
PTZ
Conference
Camera
in
the
third
quarter
of
fiscal
year
2019
.

During
fiscal
year
2018,
Video
Collaboration
sales
increased
44%
,
compared
to
fiscal
year
2017.
The
increase
was
primarily
due
to
the
introductions
of
MeetUp
and
PTZ
Pro
2
video
conference
cameras
and
increases
in
sales
of
our
Logitech
Group
conference
camera,
C930e
and
Brio
4K
Pro
webcams.
The
sales
increase
was
partially
offset
by
a
decrease
in
sales
of
our
PTZ
Pro
video
conference
camera.

Music market:

Mobile Speakers

Our
Mobile
Speakers
category
comprises
portable
wireless
Bluetooth
and
Wi-Fi
speakers.

During
fiscal
year
2019
,
Mobile
Speakers
sales
decreased
27%
,
compared
to
fiscal
year
2018
.
The
decrease
was
primarily
due
to
decreases
in
sales
of
our
existing
Ultimate
Ears
speakers.
The
decrease
was
partially
offset
by
sales
from
the
introductions
of
our
Ultimate
Ears
MEGABOOM
3
and
BOOM
3
mobile
speakers
in
the
second
quarter
of
fiscal
year
2019
.

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During
fiscal
year
2018,
Mobile
Speakers
sales
increased
5%
,
compared
to
fiscal
year
2017.
The
increase
was
primarily
due
to
the
increases

in
sales
of
the
Ultimate
Ears
WONDERBOOM
product
and
the
introductions
of
the
Ultimate
Ears
BLAST
and
MEGABLAST,
which
were
both
released
in
the
third
quarter
of
fiscal
year
2018.
The
sales
increase
was
partially
offset
by
a
decrease
in
sales
of
our
Ultimate
Ears
BOOM
2,
Ultimate
Ears
MEGABOOM,
and
Ultimate
Ears
ROLL
2.

Audio & Wearables

Our
Audio
&
Wearables
category
comprises
PC
speakers,
PC
headsets,
in-ear
headphones,
premium
wireless
audio
wearables
and
studio-

quality
microphones
for
professionals
and
consumers.

During
fiscal
year
2019
,
Audio
&
Wearables
sales
increased
10%
,
compared
to
fiscal
year
2018
.
The
increase
was
primarily
due
to
the
increase
in
sales
of
our
corded
headsets
and
sales
from
products
as
a
result
of
the
Blue
Microphones
Acquisition
(see
Note
3
to
the
consolidated
financial
statements),
partially
offset
by
a
decrease
in
sales
of
our
PC
speakers
and
Jaybird
wireless
in-ear
headphones.

During
fiscal
year
2018,
Audio
&
Wearables
sales
increased
2%
,
compared
to
fiscal
year
2017.
The
increase
was
primarily
due
to
the
increase

in
sales
from
our
Jaybird
wireless
in-ear
headphones,
partially
offset
by
a
decrease
in
sales
of
our
PC
speakers.

Smart Home market:

Smart Home

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

During
fiscal
year
2019
,
Smart
Home
sales
decreased
45%
,
compared
to
fiscal
year
2018
.
The
decrease
was
primarily
due
to
the
decreases

in
sales
of
our
Harmony
remotes
and
home
security
cameras.

During
fiscal
year
2018,
Smart
Home
sales
increased
36%
,
compared
to
fiscal
year
2017.
The
increase
was
primarily
due
to
the
introductions

of
our
Circle
2
wired
and
wireless
home
security
cameras,
in
addition
to
the
increase
in
sales
of
our
Harmony
Elite
remote,
partially
offset
by
a
decrease
in
sales
of
our
Harmony
650
remote.

Gross Profit

Gross
profit
for
fiscal
years
2019
,
2018
and
2017
was
as
follows
(Dollars
in
thousands):

Net
sales

Gross
profit

Gross
margin

Years Ended March 31,

2019

2018

  $

  $

2,788,322

1,037,011

  $

  $

2,566,863

909,241

  $

  $

2017

2,221,427

820,041

37.2%  

35.4%  

36.9%

Gross
profit
consists
of
sales,
less
cost
of
goods
sold
(which
includes
materials,
direct
labor
and
related
overhead
costs,
costs
of
manufacturing

facilities,
royalties,
costs
of
purchasing
components
from
outside
suppliers,
distribution
costs,
warranty
costs,
customer
support,
shipping
and
handling
costs,
outside
processing
costs
and
write-down
of
inventories),
amortization
of
intangible
assets
and
purchase
accounting
effect
on
inventory.

Gross
margin
increased
by
180
basis
points
to
37.2%
during
fiscal
year
2019
,
compared
to
fiscal
year
2018
.
The
increase
in
gross
margin

was
primarily
driven
by
favorable
product
mix
and
cost
reductions.
In
addition,
extra
costs
incurred
due
to
the
transition
of
the
distribution
center
in
North
America
in
the
third
quarter
of
fiscal
year
2018
negatively
affected
the
gross
margin
in
fiscal
year
2018.

Gross
margin
decreased
by
150
basis
points
to
35.4%
during
fiscal
year
2018,
compared
to
fiscal
year
2017.
The
decrease
in
gross
margin

was
primarily
driven
by
increases
in
Customer
Program
spend,
additional
costs
incurred
due
to
the
transition
of
the
distribution
center
in
North
America
in
the
third
quarter
of
fiscal
year
2018,
and
product
mix,
partially
offset
by
product
cost
reductions
and
favorable
currency
exchange
rates.
In
addition,
in
fiscal
year
2017,
we
recorded
a
benefit
of
$14.4
million
primarily
due
to
a
change
in
estimated
breakage
attributable
to
Customer
Program
accruals
in
EMEA.

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International
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|
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2019
Form
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|
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Table of Contents

Operating Expenses

Operating
expenses
for
fiscal
years
2019
,
2018
and
2017
were
as
follows
(Dollars
in
thousands):

Marketing
and
selling

%
of
sales

Research
and
development

%
of
sales

General
and
administrative

%
of
sales

Amortization
of
intangible
assets
and
acquisition-related
costs

%
of
sales

Change
in
fair
value
of
contingent
consideration
for
business
acquisition

%
of
sales

Restructuring
charges
(credits),
net

%
of
sales

Total
operating
expenses

%
of
sales

Years Ended March 31,

2019
488,263

  $

2018
435,489

  $

2017
379,641

  $

17.5%  

17.0
%  

161,230

143,760

5.8%  

98,732

3.5%  

14,290

0.5%  

—  

—%  

11,302

0.4%  

5.6
%  

96,353

3.8
%  

8,930

0.3
%  

(4,908)

(0.2)%  

(116)

—
%  

17.1
%

130,525

5.9
%

100,270

4.5
%

5,814

0.3
%

(8,092)

(0.4)%

23

—
%

  $

773,817

  $

679,508

  $

608,181

27.8%  

26.5
%  

27.4
%

The
increase
in
total
operating
expenses
during
fiscal
year
2019,
compared
to
fiscal
year
2018,
was
due
to
increases
in
marketing
and
selling

expenses,
research
and
development
expenses,
restructuring
charges,
amortization
of
intangible
assets
from
the
business
acquisitions,
and
a
credit
from
the
change
in
fair
value
of
contingent
consideration
recorded
in
fiscal
year
2018
for
a
business
acquisition
completed
in
fiscal
year
2017.

The
increase
in
total
operating
expenses
during
fiscal
year
2018,
compared
to
fiscal
year
2017,
was
due
to
increases
in
marketing
and
selling

expenses,
research
and
development
expenses,
amortization
of
intangible
assets
from
the
business
acquisitions,
and
a
lower
credit
from
the
change
in
fair
value
of
contingent
consideration
for
business
acquisition,
partially
offset
by
the
decrease
in
general
and
administrative
expenses.

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
2019
,
marketing
and
selling
expenses
increased
$52.8
million
,
compared
to
fiscal
year
2018
.
The
increase
was
primarily

due
to
an
increase
of
$25.4
million
in
third-party
costs
including
advertising
and
marketing
expenses
to
support
our
new
products
and
an
increase
of
$23.9
million
in
personnel-related
costs
due
to
increased
headcount,
partly
resulting
from
the
Blue
Microphones
Acquisition,
and
increased
performance-based
variable
compensation.

During
fiscal
year
2018,
marketing
and
selling
expenses
increased
$55.8
million,
compared
to
fiscal
year
2017.
The
increase
was
primarily
due
to
an
increase
of
$30.2
million
in
expenses
for
external
advertising
and
marketing
and
an
increase
of
$23.2
million
in
personnel-related
costs
due
to
increased
headcount
during
the
last
twelve
months
to
expand
our
marketing
team
to
support
our
increased
advertising
and
marketing
efforts
for
our
products,
including
the
increased
headcount
resulting
from
the
ASTRO
Acquisition.

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

2019
,
research
and
development
expenses
increased
$17.5
million
,
compared
to
fiscal
year
2018
.
The
increase
was

primarily
due
to
an
increase
of
$9.6
million
in
personnel-related
costs
for
the
development

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International
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2019
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Table of Contents

of
new
products
and
increased
headcount,
partly
resulting
from
the
Blue
Microphones
Acquisition,
and
an
increase
of
$5.8
million
in
third-party
costs.

During
fiscal
year
2018,
research
and
development
expenses
increased
$13.2
million,
compared
to
fiscal
year
2017.
The
increase
was

primarily
due
to
an
increase
in
higher
personnel-related
costs
for
the
development
of
new
products
and
increased
headcount
from
the
ASTRO
Acquisition.

General and Administrative

General
and
administrative
expenses
consist
primarily
of
personnel
and
related
overhead
and
facilities
costs
for
the
finance,
information

systems,
executives,
human
resources
and
legal
functions.

During
fiscal
year
2019
,
general
and
administrative
expenses
increased
$2.4
million
,
compared
to
fiscal
year
2018
.
The
increase
was
primarily
due
to
an
increase
of
$2.8
million
in
personnel-related
costs
and
an
increase
of
$1.4
million
in
third-party
costs
including
consulting
costs,
partially
offset
by
a
decrease
of
$1.9
million
in
infrastructure
costs.






During
fiscal
year
2018,
general
and
administrative
expenses
decreased
$3.9
million,
compared
to
fiscal
year
2017.
The
decrease
was

primarily
due
to
a
decrease
of
$6.8
million
in
third-party
costs,
including
mainly
consulting
costs,
partially
offset
by
an
increase
of
$2.6
million
in
personnel-related
costs.

Amortization of Intangibles and Acquisition-Related Costs

Amortization
of
intangibles
included
in
operating
expense
and
acquisition-related
costs
during
fiscal
years
2019
,
2018

and
2017
were
as

follows
(in
thousands):

Amortization
of
intangible
assets

Acquisition-related
costs

Total

Years Ended March 31,

2019

2018

2017

  $

  $

12,594   $

1,696  

14,290   $

7,518   $

1,412  

8,930   $

4,352

1,462

5,814

Amortization
of
intangible
assets
consists
of
amortization
of
acquired
intangible
assets,
including
customer
relationships
and
trademarks
and
trade
names.
Acquisition-related
costs
include
legal
expense,
due
diligence
costs,
and
other
professional
costs
incurred
for
business
acquisitions.

The
increase
in
amortization
of
intangible
assets
from
fiscal
year
2018
to
2019
was
primarily
due
to
the
Blue
Microphones
Acquisition
and
the
ASTRO
Acquisition.
The
increase
in
amortization
of
intangible
assets
from
fiscal
year
2018
to
2017
was
primarily
driven
by
the
ASTRO
Acquisition.

Change in Fair Value of Contingent Consideration for Business Acquisition

The
change
in
fair
value
of
contingent
consideration
for
business
acquisition
during
fiscal
years
2018
and
2017
is
primarily
due
to
lower-than-

expected
sales
of
Jaybird
products,
and
revised
projected
sales
of
Jaybird
products
during
the
remaining
Jaybird
Acquisition
earn-out
period,
primarily
driven
by
supply
constraints,
an
evolving
product
portfolio
and
changes
in
the
competitive
target
market.

In
October
2017,
Logitech
and
the
sellers
of
Jaybird
entered
into
an
agreement
fully,
irrevocably
and
unconditionally
releasing
Logitech
from

the
earn-out
rights
and
payments
in
exchange
for
$5.0
million
in
cash.

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International
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|
Fiscal
2019
Form
10-K
|
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Table of Contents

Restructuring Charges (Credits)

The
following
table
summarizes
restructuring-related
activities
during
fiscal
years
2019
,
2018
and
2017
from
continuing
operations
(in

thousands):

Accrual
balance
at
March
31,
2016

  $

Charges,
net

Cash
payments

Accrual
balance
at
March
31,
2017

Credits,
net

Cash
payments

Accrual
balance
at
March
31,
2018

Charges,
net

Cash
payments

Accrual
balance
at
March
31,
2019

  $

Restructuring - Continuing Operations

Termination 
Benefits

Lease Exit 
Costs

Total

5,907   $

23  

(5,195)

735  

(116)

(619)

—  

11,302  

(6,913)

4,389   $

125   $

—  

(125)  

—  

—  

—  

—  

—  

—  

—   $

6,032

23

(5,320)

735

(116)

(619)

—

11,302

(6,913)

4,389

During
the
first
quarter
of
fiscal
year
2019,
we
implemented
a
restructuring
plan
to
streamline
and
realign
our
overall
organizational
structure

and
reallocate
resources
to
support
long-term
growth
opportunities.
In
July
2018,
the
Board
of
Directors
approved
additional
costs
under
this
restructuring
plan,
totaling
pre-tax
charges
of
approximately
$10.0
million
to
$15.0
million,
of
which
$11.3
million
was
recognized
during
fiscal
year
2019.
The
total
charges
consisted
of
cash
severance
and
other
personnel
costs
and
are
presented
as
restructuring
charges
(credits),
net
in
the
Consolidated
Statements
of
Operations.
We
expect
to
have
substantially
completed
this
restructuring
within
the
next
three
months.

The
restructuring-related
activities
for
the
years
ended
March
31,
2018
and
2017
include
activities
from
our
restructuring
plan
implemented
in

fiscal
year
2016.

Interest Income

Interest
income
for
fiscal
years
2019
,
2018
and
2017
was
as
follows
(in
thousands):

Interest
Income

Years Ended March 31,

2019

2018

2017

  $

8,375   $

4,969   $

1,452

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
increases
in
interest
income
for
fiscal
years
2019
and
2018
compared
to
the
prior
periods
were
both
due
to
higher
yield
earned
on
those
investments.


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International
S.A.
|
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2019
Form
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|
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Table of Contents

Other Income (Expense), Net

Other
income
and
expense
for
fiscal
years
2019
,
2018
and
2017
was
as
follows
(in
thousands):

Years Ended March 31,

2019

2018

2017

Investment
income
related
to
the
deferred
compensation
plan

  $

664   $

1,386   $

Currency
exchange
gain
(loss),
net

Other

Total

(3,608)  

2,508  

(4,613)  

790  

  $

(436)   $

(2,437)   $

1,343

169

165

1,677

Investment
income
related
to
the
deferred
compensation
plan
for
fiscal
years
2019
,
2018
and
2017
represents
earnings,
gains,
and
losses
on

trading
investments
related
to
a
deferred
compensation
plan
offered
by
one
of
our
subsidiaries.

Currency
exchange
gains
or
losses
relate
to
balances
denominated
in
currencies
other
than
the
functional
currency
in
our
subsidiaries,
as
well

as
to
the
sale
of
currencies,
and
to
gains
or
losses
recognized
on
currency
exchange
forward
contracts.
We
do
not
speculate
in
currency
positions,
but
we
are
alert
to
opportunities
to
maximize
currency
exchange
gains
and
minimize
currency
exchange
losses.

The
components
of
net
periodic
benefit
cost
other
than
the
service
cost
component
for
the
year
ended
March
31,
2019
are
included
in
the
line

“Other”
above
as
a
result
of
adopting
ASU
2017-07
effective
April
1,
2018.
The
impact
to
the
comparative
period
was
immaterial
and
therefore
the
prior
period
statements
of
operations
were
not
revised.

Provision for Income Taxes

The
provision
for
income
taxes
and
the
effective
income
tax
rate
for
fiscal
years
2019
,
2018
and
2017
were
as
follows
(Dollars
in
thousands):

Provision
for
income
taxes

Effective
income
tax
rate

Years Ended March 31,

2019

2018

2017

  $

13,560

  $

23,723

  $

5.0%  

10.2%  

9,113

4.2%

The
change
in
the
effective
income
tax
rate
between
fiscal
years
2019
and
2018
was
primarily
due
to
the
mix
of
income
and
losses
in
the

various
tax
jurisdictions
in
which
we
operate
and
provisional
income
tax
accounting
impact
from
the
enactment
of
H.R.1,
also
known
as
the
"Tax
Cuts
and
Jobs
Act"
(the
Tax
Act)
in
the
United
States
on
December
22,
2017.
The
Tax
Act
permanently
reduced
the
corporate
income
tax
rate
in
the
United
States
from
35%
to
21%.
We
recorded
a
provisional
income
tax
charge
of
$21.7
million,
net
of
valuation
allowance
against
tax
credits,
in
fiscal
year
2018
to
remeasure
the
deferred
tax
effects
at
21%.
Furthermore,
we
recognized
$10.1
million
and
$13.4
million
of
excess
tax
benefits,
net
of
shortfalls,
in
fiscal
year
2019
and
2018,
respectively.
In
the
same
periods,
there
were
tax
benefits
of
$2.9
million
and
$8.3
million,
respectively,
from
the
reversal
of
uncertain
tax
positions
from
the
expiration
of
statutes
of
limitations.

The
change
in
the
effective
income
tax
rate
between
fiscal
years
2018
and
2017
was
primarily
driven
by
provisional
impacts
in
fiscal
year
2018
from
the
Tax
Act
described
above.
We
recognized
$13.4
million
of
excess
tax
benefits,
net
of
shortfalls,
in
fiscal
year
2018
after
the
adoption
of
ASU
2016-09.
Furthermore,
there
was
a
tax
benefit
of
$8.3
million
in
fiscal
year
2018
related
to
the
reversal
of
uncertain
tax
positions
resulting
from
the
expiration
of
statutes
of
limitations,
compared
to
$15.4
million
in
fiscal
year
2017.

As
of
March
31,
2019
and
2018
,
the
total
amounts
of
unrecognized
tax
benefits
due
to
uncertain
tax
positions
were
$76.5
million
and
$69.1

million
,
respectively,
all
of
which
would
affect
the
effective
income
tax
rates
if
recognized.

As
of
March
31,
2019
and
2018
,
we
had
$36.4
million
and
$35.0
million
,
respectively,
in
non-current
income
taxes
payable,
including
interest
and
penalties,
related
to
our
income
tax
liability
for
uncertain
tax
positions.
We
recognized
$0.6
million
,
$0.6
million
and
$0.7
million
in
interest
and
penalties
related
to
unrecognized
tax
positions

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International
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|
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2019
Form
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|
51

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

in
income
tax
expense
during
fiscal
years
2019
,
2018
and
2017
,
respectively.
As
of
March
31,
2019
and
2018
,
we
had
$2.5
million
and
$2.3
million
,
respectively,
of
accrued
interest
and
penalties
related
to
uncertain
tax
positions.

We
file
Swiss
and
foreign
tax
returns.
We
received
final
tax
assessments
in
Switzerland
through
fiscal
year
2017.
For
other
foreign
jurisdictions
such
as
the
United
States,
we
are
generally
not
subject
to
tax
examinations
for
years
prior
to
fiscal
year
2016
.
We
are
under
examination
and
have
received
assessment
notices
in
foreign
tax
jurisdictions.
If
the
examinations
are
resolved
unfavorably,
there
is
a
possibility
that
they
may
have
a
material
negative
impact
on
our
results
of
operations.

Liquidity and Capital Resources

Cash Balances, Available Borrowings, and Capital Resources

As
of
March
31,
2019
,
we
had
cash
and
cash
equivalents
of
$604.5
million
,
compared
with
$641.9
million
as
of
March
31,
2018
.
Our
cash

and
cash
equivalents
consist
of
bank
demand
deposits
and
short-term
time
deposits,
of
which
77%
is
held
in
Switzerland
and
10%
is
held
in
China
(including
Hong
Kong).
We
do
not
expect
to
incur
any
material
adverse
tax
impact,
except
for
what
has
been
recognized,
or
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,
2019
,
our
working
capital
was
$632.6
million
,
compared
with
working
capital
of
$597.4
million
as
of
March
31,
2018
.
The

increase
in
working
capital
over
fiscal
year
2018
was
primarily
due
to
higher
accounts
receivable,
net,
higher
inventories
and
other
current
assets,
and
lower
balance
of
accounts
payable,
partially
offset
by
lower
balances
of
cash
and
cash
equivalents
and
higher
accrued
and
other
current
liabilities.

We
had
several
uncommitted,
unsecured
bank
lines
of
credit
aggregating
to
$80.6
million
as
of
March
31,
2019
.
There
are
no
financial

covenants
under
these
lines
of
credit
with
which
we
must
comply.
As
of
March
31,
2019
,
we
had
outstanding
bank
guarantees
of
$34.3
million
under
these
lines
of
credit.

The
following
table
presents
selected
financial
information
and
statistics
as
of
March
31,
2019
,
2018
and
2017
(Dollars
in
thousands):

Accounts
receivable,
net

Accounts
payable

Inventories
Days
sales
in
accounts
receivable
(DSO)(Days)
(1)
Days
accounts
payable
outstanding
(DPO)
(Days)
(2)
Inventory
turnover
(ITO)(x)
(3)

______________________________

2019

March 31,

2018

  $

  $

  $

383,309   $

214,885   $

283,922   $

293,988   $

293,495   $

259,906   $

55  

65  

5.3  

33  

70  

5.9  

2017

185,179

274,805

253,401

33

79

4.9

(1) DSO
is
determined
using
ending
accounts
receivable,
net
as
of
the
most
recent
quarter-end
and
sales
for
the
most
recent
quarter.
(2) DPO
is
determined
using
ending
accounts
payable
as
of
the
most
recent
quarter-end
and
cost
of
goods
sold
for
the
most
recent
quarter.
(3) ITO
is
determined
using
ending
inventories
and
the
annualized
cost
of
goods
sold
(based
on
cost
of
goods
sold
for
the
most
recent
quarter).

DSO
as
of
March
31,
2019
increased
by
22
days
to
55
days,
as
compared
to
33
days
as
of
March
31,
2018.
The
adoption
of
Topic
606
negatively
impacted
our
DSO
for
the
year
ended
March
31,
2019
by
18
days,
mainly
as
a
result
of
changes
in
the
balance
sheet
presentation
of
certain
reserve
balances
previously
shown
net
within
accounts
receivable
which
are
now
presented
as
accrued
and
other
current
liabilities.
The
adoption
of
Topic
606
did
not
have
an
impact
over
the
total
cash
flows
from
operating,
investing
or
financing
activities.
Refer
to
Note
2
to
the
consolidated
financial
statements
for
the
details
of
the
adoption
impact
of
Topic
606.
Timing
of
sales
also
increased
DSO
by
4
days.
DSO
as
of
March
31,
2018
was
consistent
with
DSO
as
of
March
31,
2017.

DPO
as
of
March
31,
2019
decreased
5
days,
compared
to
March
31,
2018,
primarily
due
to
the
timing
of
purchases.
DPO
as
of

March
31,
2018
decreased
9
days,
compared
to
March
31,
2017,
primarily
due
to
the
timing
of
purchases
and
payments.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
52

 
 
 
 
 
 
 
 
 
Table of Contents

ITO
as
of
March
31,
2019
was
lower
compared
to
March
31,
2018,
due
to
higher
inventory
related
to
new
product
introductions
and
inventory

from
the
Blue
Microphones
Acquisition.
ITO
as
of
March
31,
2018
was
higher
compared
to
March
31,
2017,
due
to
higher
sales
growth
(hence
higher
cost
of
goods
sold)
than
inventory
increase.

If
we
are
not
successful
in
launching
and
phasing
in
our
new
products
launched
during
the
current
fiscal
year,
or
we
are
not
able
to
sell
the
new

products
at
the
prices
planned,
it
could
have
a
material
impact
on
our
revenue,
gross
profit
margin,
operating
results
including
operating
cash
flow,
and
inventory
turnover
in
the
future.

During
fiscal
year
2019
,
we
generated
$
305.2
million
in
cash
from
operating
activities.
Our
main
sources
of
operating
cash
flows
were
from

net
income,
after
adding
back
non-cash
expenses
of
depreciation,
amortization,
and
share-based
compensation
expense,
and
from
changes
in
operating
assets
and
liabilities.
The
increase
in
accounts
receivable,
net
was
primarily
driven
by
growth
and
timing
of
sales.


The
decrease
in
accounts
payable
was
primarily
driven
by
the
timing
of
purchases.
The
increase
in
inventories
net
of
effect
of
acquisition
was
primarily
driven
by
new
product
introductions.
The
increase
in
accrued
and
other
liabilities
was
primarily
due
to
higher
accrued
personnel
expenses
and
increase
in
warranty
liabilities.

Net
cash
used
in
investing
activities
was
$173.3
million
,
primarily
due
to
$133.8
million
of
the
purchase
price
(net
of
cash
acquired)
for
business
acquisitions,
$35.9
million
of
purchases
of
property,
plant,
and
equipment,
and
$2.7
million
of
investments
in
privately
held
companies.

Net
cash
used
in
financing
activities
was
$159.1
million
,
primarily
due
to
$114.0
million
of
cash
dividends
paid
during
the
year,
$32.4
million
of
repurchases
of
our
registered
shares
and
$30.8
million
of
tax
withholdings
related
to
net
share
settlements
of
restricted
stock
units,
partially
offset
by
$18.1
million
in
proceeds
received
from
the
sale
of
shares
upon
exercise
of
stock
options
and
purchase
rights.

Our
expenditures
for
property,
plant
and
equipment
during
fiscal
years

2019
,

2018

and

2017

were
primarily
for
tooling
and
equipment,

computer
hardware
and
software
and
leasehold
improvements.
Our
expenditures
for
property,
plant
and
equipment
decreased
during
fiscal
year
2019
,
compared
to
fiscal
year
2018
,
primarily
due
to
a
lower
amount
of
tooling
purchases.
Our
expenditures
for
property,
plant
and
equipment
increased
during
fiscal
year
2018,
compared
to
fiscal
year
2017,
primarily
due
to
a
higher
amount
of
tooling
purchases.


Our
payments
for
acquisitions,
net
of
cash
acquired,
during
fiscal
year
2019
were
primarily
for
the
Blue
Microphones
Acquisition.
Our
payments

for
acquisitions,
net
of
cash
acquired,
during
fiscal
year
2018,
were
primarily
for
the
ASTRO
Acquisition
(refer
to
"Note
3
-
Business
Acquisitions"
to
the
consolidated
financial
statements).
Our
payments
for
acquisitions,
net
of
cash
acquired,
during
fiscal
year
2017,
were
for
the
Jaybird
Acquisition
and
the
Saitek
Acquisition.

The
purchases
and
sales
of
trading
investments
during
fiscal
years
2019
,
2018
and
2017
represent
mutual
fund
activity
directed
by

participants
in
a
deferred
compensation
plan
offered
by
one
of
our
subsidiaries.
The
mutual
funds
are
held
by
a
Rabbi
Trust.

During
fiscal
year
2019
,
there
was
a
$10.1
million
loss
of
currency
translation
exchange
rate
effect
on
cash
and
cash
equivalents,
compared
to

a
gain
of
$4.7
million
of
currency
translation
exchange
rate
effect
during
fiscal
year
2018
,
and
a
$5.4
million
loss
of
currency
translation
exchange
rate
effect
during
fiscal
year
2017
.
Currency
translation
exchange
effects
during
fiscal
year
2019
were
primarily
due
to
the
weakening
of
Euro
and
Chinese
Renminbi
versus
the
U.S.
Dollar
by
9%
and
7%,
respectively,
in
fiscal
year
2019.
Currency
translation
exchange
effects
during
fiscal
year
2018
were
primarily
due
to
the
strengthening
of
the
Euro
versus
the
U.S.
Dollar
by
15%
in
fiscal
year
2018.

Cash Outlook

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.

In
May
2019
,
the
Board
of
Directors
recommended
that
the
Company
pay
CHF
121.8
million
(
$122.4
million
based
on
the
exchange
rate
on

March
31,
2019
)
in
cash
dividends
for
fiscal
year
2019
.
In
fiscal
year
2019,
we
paid
a
cash
dividend
of
CHF110.7
million
(U.S.
Dollar
amount
of
$114.0
million)
out
of
retained
earnings.
In
fiscal
year
2018,
we
paid
a
cash
dividend
of
CHF100.0
million
(U.S.
Dollar
amount
of

$104.2
million)
out
of
retained
earnings.
During
fiscal
year
2017,
we
paid
a
cash
dividend
of
CHF
90.2
million
(U.S.
Dollar
amount
of
$93.1
million)
out
of
retained
earnings.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
53

Table of Contents

In
March
2017,
our
Board
of
Directors
approved
a
new
share
buyback
program,
which
authorizes
us
to
invest
up
to
$250.0
million
to
purchase
our
own
shares,
following
the
expiration
date
of
the
2014
share
buyback
program.
The
new
program
was
approved
by
the
Swiss
Takeover
Board
in
May
2017.
Although
we
enter
into
trading
plans
for
systematic
repurchases
(e.g.
10b5-1
trading
plans)
from
time
to
time,
our
share
buyback
program
provides
us
with
the
opportunity
to
make
opportunistic
repurchases
during
periods
of
favorable
market
conditions
and
is
expected
to
remain
in
effect
for
a
period
of
three
years.
Shares
may
be
repurchased
from
time
to
time
on
the
open
market,
through
block
trades
or
otherwise.
Opportunistic
purchases
may
be
started
or
stopped
at
any
time
without
prior
notice
depending
on
market
conditions
and
other
factors.
As
of
March
31,
2019
,
the
remaining
amount
that
may
be
repurchased
under
the
program
is

$187.4
million
.

For
over
ten
years,
we
have
generated
positive
cash
flows
from
our
operating
activities,
including
cash
from
operations
of
$305.2
million
,

$346.3
million
and
$288.4
million
during
fiscal
years
2019
,
2018
,
and
2017
,
respectively.
If
we
do
not
generate
sufficient
operating
cash
flows
to
support
our
operations
and
future
planned
cash
requirements,
our
operations
could
be
harmed
and
our
access
to
credit
facilities
could
be
restricted
or
eliminated.
However,
we
believe
that
the
trend
of
our
historical
cash
flow
generation,
our
projections
of
future
operations
and
our
available
cash
balances
will
provide
sufficient
liquidity
to
fund
our
operations
for
at
least
the
next
12
months.

Our
other
contractual
obligations
and
commitments
that
require
cash
are
described
in
the
following
sections.

Contractual Obligations and Commitments

The
following
table
summarizes
our
contractual
obligations
and
commitments
as
of
March
31,
2019
(in
thousands):

Inventory
purchase
commitments

Capital
purchase
commitments

Expected
contribution
to
employee
benefit
plan

Operating
leases
obligations

Total

  March 31, 2019
  $

227,609   $

12,132  

5,456  

39,620  

Payments Due by Period

<1 year

1-3 years

3-5 years

>5 years

227,609   $

12,132  

5,456  

11,849  

—   $

—  

*  

—   $

—  

*  

17,884  

6,241  

  $

284,817   $

257,046   $

17,884   $

6,241   $

—

—

*

3,646

3,646

*
Expected
contribution
to
employee
benefit
plan:
Commitments
under
the
retirement
plans
relate
to
expected
contributions
to
be
made
to
our
defined
benefit

plans
for
the
next
year
only.
We
fund
our
pension
plans
so
that
we
meet
at
least
the
minimum
contribution
requirements,
as
established
by
local
government,
funding
and
taxing
authorities.
Expected
contributions
and
payments
to
our
defined
benefit
pension
plans
and
non-retirement
post-employment
benefit
plans
beyond
one
year
are
excluded
from
the
contractual
obligations
table
because
they
are
dependent
on
numerous
factors
that
may
result
in
a
wide
range
of
outcomes
and
thus
are
impractical
to
estimate.
For
more
information
on
our
defined
benefit
pension
plans
and
non-retirement
post-employment
benefit
plans,
see
Note
5
to
the
Consolidated
Financial
Statements
in
Item
8,
which
is
incorporated
herein
by
reference.


Purchase Commitments

As
of
March
31,
2019
,
we
have
non-cancelable
purchase
commitments
of
$227.6
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
2020.
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,
2019
,
the
liability
for
these
purchase
commitments
was

$14.1
million

and
is
recorded
in
accrued
and
other
current
liabilities
and
is
not
included
in
the
preceding
table.
We
have
firm
purchase
commitments
of
$
12.1
million
for
capital
expenditures,
primarily
related
to
commitments
for
tooling,
computer
hardware
and
leasehold
improvements.
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
the
option
to
reschedule
and
adjust
our
requirements
based
on
business
needs
prior
to
delivery
of
goods.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
54

 
   
 
 
 
 
 
 
 
 
Table of Contents

Operating Leases Obligation

We
lease
facilities
under
operating
leases,
certain
of
which
require
us
to
pay
property
taxes,
insurance
and
maintenance
costs.
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
2030.

Income Taxes Payable

As
of
March
31,
2019
,
we
had
$36.4
million
in
non-current
income
taxes
payable,
including
interest
and
penalties,
related
to
our
income
tax

liability
for
uncertain
tax
positions.
At
this
time,
we
are
unable
to
make
a
reasonably
reliable
estimate
of
the
timing
of
payments
in
individual
years
in
connection
with
these
tax
liabilities;
therefore,
such
amounts
are
not
included
in
the
contractual
obligation
table
above.

Indemnifications

We
indemnify
certain
of
our
suppliers
and
customers
for
losses
arising
from
matters
such
as
intellectual
property
disputes
and
product
safety

defects,
subject
to
certain
restrictions.
The
scope
of
these
indemnities
varies,
but
in
some
instances
includes
indemnification
for
damages
and
expenses,
including
reasonable
attorneys'
fees.
As
of
March
31,
2019
,
no
amounts
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.

We
also
indemnify
our
current
and
former
directors
and
certain
of
our
current
and
former
officers.
Certain
costs
incurred
for
providing
such
indemnification
may
be
recoverable
under
various
insurance
policies.
We
are
unable
to
reasonably
estimate
the
maximum
amount
that
could
be
payable
under
these
arrangements
because
these
exposures
are
not
capped,
the
obligations
are
conditional
in
nature,
and
the
facts
and
circumstances
involved
in
any
situation
that
might
arise
are
variable.

Off-Balance Sheet Arrangements

We
do
not
have
any
off-balance
sheet
arrangements
that
have,
or
are
reasonably
likely
to
have,
a
current
or
future
effect
on
our
financial

condition,
changes
in
financial
condition,
revenues
or
expenses,
results
of
operations,
liquidity,
capital
expenditures
or
capital
resources
that
are
material
to
investors.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Market
risk
represents
the
potential
for
loss
due
to
adverse
changes
in
the
fair
value
of
financial
instruments.
As
a
global
concern,
we
face
exposure
to
adverse
movements
in
currency
exchange
rates
and
interest
rates.
These
exposures
may
change
over
time
as
business
practices
evolve
and
could
have
a
material
adverse
impact
on
our
financial
results.

Currency Exchange Rates

We
report
our
results
in
U.S.
Dollars.
Changes
in
currency
exchange
rates
compared
to
the
U.S.
Dollar
can
have
a
material
impact
on
our

results
when
the
financial
statements
of
our
non-U.S.
subsidiaries
are
translated
into
U.S.
Dollars.
The
functional
currency
of
our
operations
is
primarily
the
U.S.
Dollar.
Certain
operations
use
the
Swiss
Franc
or
the
local
currency
of
the
country
as
their
functional
currencies.
Accordingly,
unrealized
currency
gains
or
losses
resulting
from
the
translation
of
net
assets
or
liabilities
denominated
in
other
currencies
to
the
U.S.
Dollar
are
accumulated
in
the
cumulative
translation
adjustment
component
of
other
comprehensive
income
(loss)
in
shareholders'
equity.

We
are
exposed
to
currency
exchange
rate
risk
as
we
transact
business
in
multiple
currencies,
including
exposure
related
to
anticipated
sales,

anticipated
purchases
and
assets
and
liabilities
denominated
in
currencies
other
than
the
U.S.
Dollar.
We
transact
business
in
over
30
currencies
worldwide,
of
which
the
most
significant
to
operations
are
the
Euro,
Chinese
Renminbi,
Australian
Dollar,
Taiwanese
Dollar,
British
Pound,
Brazilian
Real,
Canadian
Dollar,
Japanese
Yen
and
Mexican
Peso.
For
the
year
ended
March
31,
2019
,
approximately
50%
of
our
sales
were
in
non-U.S.
denominated
currencies,
with
25%
of
our
sales
denominated
in
Euro.
The
mix
of
our
cost
of
goods
sold
and
operating
expenses
by
currency
are
significantly
different
from
the
mix
of
our
sales,
with
a
larger
portion
denominated
in
U.S.
Dollar
and
less
denominated
in
Euro
and
other
currencies.
A
strengthening
U.S.
Dollar

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International
S.A.
|
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2019
Form
10-K
|
55

Table of Contents

has
a
more
unfavorable
impact
on
our
sales
than
the
favorable
impact
on
our
operating
expenses,
resulting
in
an
adverse
impact
on
our
operating
results.

We
enter
into
currency
forward
and
swap
contracts
to
reduce
the
short-term
effects
of
currency
fluctuations
on
certain
receivables
or
payables
denominated
in
currencies
other
than
the
functional
currencies
of
our
subsidiaries.
These
forward
contracts
generally
mature
within
one
month.
The
gains
or
losses
on
these
contracts
are
recognized
in
earnings
based
on
the
changes
in
fair
value.

If
an
adverse
10%
foreign
currency
exchange
rate
change
was
applied
to
total
monetary
assets
and
liabilities
denominated
in
currencies
other

than
the
functional
currencies
at
the
balance
sheet
dates,
it
would
have
resulted
in
an
adverse
effect
on
income
before
income
taxes
of
approximately
$7.8
million
and
$10.0
million
as
of
March
31,
2019

and

2018
,
respectively.
The
adverse
effect
as
of

March
31,
2019

and

2018

is
after
consideration
of
the
offsetting
effect
of
approximately
$4.2
million
for
both
periods
from
open
foreign
exchange
contracts
in
place
as
of
March
31,
2019

and

2018
.

We
enter
into​
cash
flow
hedge​
contracts
to
​protect​
against
exchange
rate
exposure​
of
​forecasted
inventory
purchases.
These
hedging
contracts
mature
within
four
months.
Gains
and
losses
in
the
fair
value
of
the
effective
portion
of
the
hedges
are
deferred
as
a
component
of
accumulated
other
comprehensive
loss
until
the
hedged
inventory
purchases
are
sold,
at
which
time
the
gains
or
losses
are
reclassified
to
cost
of
goods
sold.

If
the
U.S.
dollar
weakened
by
10%
as
of

March
31,
2019
,
the
amount
recorded
in
accumulated
other
comprehensive
income
(AOCI)
related
to
our
foreign
exchange
contracts
before
tax
effect
would
have
been
approximately
$4.1
million
lower
as
of

March
31,
2019
.
As
of
March
31,
2018,
there
were
no
currency
forward
contracts
outstanding
related
to
forecasted
inventory
purchases.
The
change
in
the
fair
value
recorded
in
AOCI
would
be
expected
to
offset
a
corresponding
foreign
currency
change
in
cost
of
goods
sold
when
the
hedged
inventory
purchases
are
sold.


ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Logitech's
financial
statements
and
supplementary
data
required
by
this
item
are
set
forth
as
a
separate
section
of
this
Annual
Report
on
Form
10-K.
See
Item
15(a)
for
a
listing
of
financial
statements
and
supplementary
data
provided
in
the
section
titled
"Financial
Statements
and
Supplementary
Data."

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not
applicable.

ITEM 9A.    CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The
Company's
management,
with
the
participation
of
the
Company’s
Chief
Executive
Officer
(CEO)
and
Chief
Financial
Officer
(CFO),
has

conducted
an
evaluation
of
the
effectiveness
of
the
design
and
operation
of
the
Company's
disclosure
controls
and
procedures
(as
defined
in
Rules
13a-15(e)
and
15d-15(e)
under
the
Securities
Exchange
Act
of
1934,
as
amended
(the
Exchange
Act))
as
of
the
end
of
the
period
covered
by
this
Annual
Report
on
Form
10-K
(this
Annual
Report)
required
by
Exchange
Act
Rules
13a-15(b)
or
15d-15(b).
Disclosure
controls
and
procedures
are
designed
to
reasonably
assure
that
information
required
to
be
disclosed
in
our
reports
filed
or
submitted
under
the
Exchange
Act,
such
as
this
Annual
Report
on
Form
10-K,
is
recorded,
processed,
summarized
and
reported
within
the
time
periods
s
pecified
in
the
Securities
and
Exchange
Commission's
rules
and
forms.
Disclosure
controls
and
procedures
are
also
designed
to
reasonably
assure
that
this
information
is
accumulated
and
communicated
to
our
management,
including
the
CEO
and
CFO,
to
allow
timely
decisions
regarding
required
disclosure.
Based
on
this
evaluation,
the
CEO
and
CFO
concluded
that,
as
of
the
end
of
the
period
covered
by
this
Annual
Report,
the
Company’s
disclosure
controls
and
procedures
were
effective
at
a
reasonable
assurance
level.

The
Company
acquired
Blue
Microphones
on
August
21,
2018.
Management
excluded
from
its
evaluation
of
the
effectiveness
of
its
internal

control
over
financial
reporting
as
of
March
31,
2019
the
acquired
entity’s
internal
control
over
financial
reporting
associated
with
8%
of
total
assets
and
2%
of
total
sales
included
in
the
consolidated
financial
statements
as
of
and
for
the
year
ended
March
31,
2019.

Attached
as
exhibits
to
this
Annual
Report
are
certifications
of
the
CEO
and
CFO,
which
are
required
in

Logitech
International
S.A.
|
Fiscal
2019
Form
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|
56

Table of Contents

accordance
with
Rule
13a-14
of
the
Exchange
Act.
This
Controls
and
Procedures
section
includes
the
information
concerning
the
controls
evaluation
referred
to
in
the
certifications,
and
it
should
be
read
in
conjunction
with
the
certifications
for
a
more
complete
understanding
of
the
topics
presented.

(b) Management's Report on Internal Control over Financial Reporting

The
Company's
management
is
responsible
for
establishing
and
maintaining
adequate
internal
control
over
financial
reporting
as
defined
in

Rules
13a-15(f)
and
15d-15(f)
under
the
Exchange
Act.
Under
the
supervision
and
with
the
participation
of
the
Company’s
management,
including
the
CEO
and
CFO,
the
Company
conducted
an
evaluation
of
the
effectiveness
of
its
internal
control
over
financial
reporting
based
on
the
criteria
established
in
the
Internal
Control-Integrated
Framework
(2013),
issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission.
Based
on
this
evaluation,
management
has
concluded
that
our
internal
control
over
financial
reporting
was
effective
as
of
March
31,
2019
.

The
effectiveness
of
the
Company's
internal
control
over
financial
reporting
as
of
March
31,
2019
has
been
audited
by
KPMG
LLP,
an

independent
registered
public
accounting
firm,
as
stated
in
its
report,
which
appears
in
Item
15.

(c) Changes in Internal Control over Financial Reporting

There
were
no
changes
in
our
internal
control
over
financial
reporting
during
the
fourth
quarter
of
fiscal
year
2019
that
have
materially
affected,

or
are
reasonably
likely
to
materially
affect,
our
internal
control
over
financial
reporting.

(d) Limitations on the Effectiveness of Controls

The
Company's
management,
including
the
CEO
and
CFO,
does
not
expect
that
the
Company's
disclosure
controls
and
procedures
or
internal

control
over
financial
reporting
will
prevent
all
errors
and
all
fraud.
Internal
control
over
financial
reporting,
no
matter
how
well
designed
and
operated,
can
provide
only
reasonable,
not
absolute,
assurance
that
the
objectives
will
be
met.
Because
of
the
inherent
limitations
in
internal
control
over
financial
reporting,
no
evaluation
of
controls
can
provide
absolute
assurance
that
all
control
issues
and
instances
of
fraud,
if
any,
within
the
Company
have
been
detected.
These
inherent
limitations
include
the
realities
that
judgments
in
decision
making
can
be
faulty
and
that
breakdowns
can
occur
because
of
simple
error
or
mistake.
Controls
can
also
be
circumvented
by
the
individual
acts
of
some
persons,
by
collusion
of
two
or
more
people,
or
by
management
override
of
the
controls.
The
design
of
any
system
of
controls
is
based
in
part
on
certain
assumptions
about
the
likelihood
of
future
events,
and
there
can
be
no
assurance
that
any
design
will
succeed
in
achieving
its
stated
goals
under
all
potential
future
conditions.
Over
time,
controls
may
become
inadequate
because
of
changes
in
conditions
or
deterioration
in
the
degree
of
compliance
with
policies
or
procedures.
Because
of
the
inherent
limitations
in
a
cost-effective
control
system,
misstatements
due
to
error
or
fraud
may
occur
and
not
be
detected.

ITEM 9B.    OTHER INFORMATION

None.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
57

Table of Contents

PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 

Information
regarding
our
executive
officers
is
incorporated
herein
by
reference
to
Part
I,
Item
1,
above.









Other
information
required
by
this
Item
may
be
found
in
the
definitive
Proxy
Statement
for
the
2019
Annual
Meeting
of
Shareholders
and
is
incorporated
herein
by
reference.
The
definitive
Proxy
Statement
will
be
filed
with
the
Commission
within
120
days
after
our
fiscal
year
end
of
March
31,
2019
(the
Proxy
Statement).









The
Company's
code
of
ethics
policy
entitled,
"Logitech
Code
of
Conduct"
covers
members
of
the
Company's
board
of
directors,
the
principal
executive
officer,
principal
financial
and
accounting
officer
and
other
executive
officers
as
well
as
all
other
employees.









Any
amendments
or
waivers
of
the
code
of
ethics
for
members
of
the
Company's
board
of
directors
or
executive
officers
will
be
disclosed
in
the
investor
relations
section
of
the
Company's
website
within
four
business
days
following
the
date
of
the
amendment
or
waiver.
During
fiscal
year
2016,
the
Company
updated
and
revised
its
code
of
ethics.
The
new
code
was
posted
to
the
investor
relations
section
of
the
Company's
website.









Logitech's
code
of
ethics
is
available
on
the
Company's
website
at
www.logitech.com,
and
for
no
charge,
a
copy
of
the
Company's
code
of
ethics
can
be
requested
via
the
following
address
or
phone
number:

Logitech
Investor
Relations
7700
Gateway
Boulevard
Newark,
CA
94560
USA
Main
(510)
795-8500





ITEM 11.    EXECUTIVE COMPENSATION 

The
information
required
by
this
item
may
be
found
in
the
Proxy
Statement
for
the
2019
Annual
Meeting
of
Shareholders
and
is
incorporated

herein
by
reference.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 

The
information
required
by
this
item
may
be
found
in
the
Proxy
Statement
for
the
2019
Annual
Meeting
of
Shareholders
and
is
incorporated

herein
by
reference.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 

The
information
required
by
this
item
may
be
found
in
the
Proxy
Statement
for
the
2019
Annual
Meeting
of
Shareholders
and
is
incorporated

herein
by
reference.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES 

The
information
required
by
this
item
may
be
found
in
the
Proxy
Statement
for
the
2019
Annual
Meeting
of
Shareholders
and
is
incorporated

herein
by
reference.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
58

Table of Contents

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The
following
documents
are
filed
as
part
of
this
Annual
Report
on
Form
10-K:

1.
Financial
Statements
and
Supplementary
Data

Financial
Statements:

Report
of
Independent
Registered
Public
Accounting
Firm

Consolidated
Statements
of
Operations—Years
Ended
March
31,
2019,
2018
and
2017

Consolidated
Statements
of
Comprehensive
Income—Years
Ended
March
31,
2019,
2018
and
2017

Consolidated
Balance
Sheets—March
31,
2019
and
2018

Consolidated
Statements
of
Cash
Flows—Years
Ended
March
31,
2019,
2018
and
2017

Consolidated
Statements
of
Changes
in
Shareholders'
Equity—Years
Ended
March
31,
2019,
2018
and
2017

Notes
to
Consolidated
Financial
Statements

Supplementary
Data:

Unaudited
Quarterly
Financial
Data

2.
Financial
Statement
Schedule

Schedule
II—Valuation
and
Qualifying
Accounts

3.
Exhibits

Logitech
International
S.A.
|
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2019
Form
10-K
|
59

Table of Contents

Exhibit No.
2.1

2.2

***

2.3

***

2.4

***

2.5

***

Index to Exhibits

Exhibit
Agreement
and
Plan
of
Merger,
dated
as
of
November
10,
2009,
as
amended
by
the
First
Amendment
to
Agreement
and
Plan
of
Merger,
entered
into
as
of
November
16,
2009,
both
by
and
among
Logitech
Inc.,
Agora
Acquisition
Corporation,
Lifesize
Communications,
Inc.,
Shareholder
Representative
Services
LLC,
as
stockholder
representative,
and
U.S.
Bank
National
Association,
as
escrow
agent.

Securities
Purchase
Agreement,
dated
as
of
April
12,
2016,
by
and
among
Logitech
Europe
S.A.,
JayBird,
LLC,
the
unitholders
of
JayBird,
LLC,
and
Judd
Armstrong
(as
the
sellers'
representative)

Asset
Purchase
Agreement,
dated
as
of
July
10,
2017,
by
and
between
AG
Acquisition
Corporation
and
Logitech
Europe
S.A.

Amendment
No.
1
to
Asset
Purchase
Agreement,
dated
as
of
August
11,
2017,
by
and
between
AG
Acquisition
Corporation
and
Logitech
Europe
S.A.

Stock
Purchase
Agreement
,
dated
as
of
July
30,
2018,
by
and
among
Blue
Microphones
Holding
Corporation,
Riverside
Micro-Cap
Fund
II,
L.P.
the
other
stockholders
and
optionholders
of
Blue
Microphones
Holding
Corporation,
Logitech
Europe
S.A.
and
Logitech
Inc.

Incorporated by Reference

Form  
8-K

File No.
0-29174

Filing Date
12/14/2009

Exhibit
No.
2.1

Filed
Herewith

10-K

0-29174

5/23/2016

2.2

10-Q

0-29174

11/1/2017

2.1

10-Q

0-29174

11/1/2017

2.2

10-Q

0-29174

10/25/2018

2.1

3.1

3.2

Articles
of
Incorporation
of
Logitech
International
S.A.,
as
amended

Organizational
Regulations
of
Logitech
International
S.A.,
as
amended

X

X

10.1

**

1996
Stock
Plan,
as
amended

S-8

333-

5/27/2003

4.2

10.2

**

Logitech
International
S.A.
2006
Stock
Incentive
Plan,
as
amended
and
restated
effective
September
7,
2016

100854  

DEFA14A

0-29174

7/22/2016

App.
A

10.3   **

  Logitech
Inc.
Management
Deferred
Compensation
Plan

10-Q   0-29174  

11/4/2008

DEFA14A

0-29174

7/23/2013

10.1

App.
A

10.4

**

10.5

**

10.6

**

10.7

**

10.8

**

10.9

**

1996
Employee
Share
Purchase
Plan
(U.S.),
as
amended
and
restated

2006
Employee
Share
Purchase
Plan
(Non-U.S.),
as
amended
and
restated

Form
of
Director
and
Officer
Indemnification
Agreement
with
Logitech
International
S.A.

Form
of
Director
and
Officer
Indemnification
Agreement
with
Logitech
Inc.

Logitech
Management
Performance
Bonus
Plan,
as
amended
and
restated

Employment
agreement
dated
January
28,
2008
between
Logitech
Inc.
and
Guerrino
De
Luca

DEFA14A

0-29174

7/23/2013

App.
B

20-F

0-29174

5/21/2003

20-F

0-29174

5/21/2003

4.1

4.2

DEFA14A

0-29174

7/23/2013

App.
C

10-K

0-29174

5/30/2008

10.1

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
60

 
 
 
   
 
   
 
 
 
 
 
 
 
 


 
 
 
 
 
 


 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 


 
   
   
   
   
 
 


 
   
   
   
   
 
 
 
 
 
 
 


 
 
 
 
 
 
 


 
 
 


 
 
 
 
 
 
 


 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
Table of Contents

10.10

**

Representative
form
of
stock
option
agreement
(employees)
under
the
Logitech
International
S.A.
2006
Stock
Incentive
Plan

10-Q

0-29174

11/4/2009

10.2

10.11

**

2012
Stock
Inducement
Equity
Plan

10.12

**

10.13

**

10.14

**

10.15

**

10.16

**

10.17

**

10.18

**

10.19

10.20

**

10.21

**

10.22

**

10.23

**

10.24

**

Representative
form
of
stock
option
agreement
under
the
2012
Stock
Inducement
Equity
Plan

Representative
form
of
performance
stock
option
agreement
(executives
and
other
employees)
under
the
Logitech
International
S.A.
2006
Stock
Incentive
Plan

Representative
form
of
performance
restricted
stock
unit
agreement
(non-executive
employees)
under
the
Logitech
International
S.A.
2006
Stock
Incentive
Plan

Representative
form
of
performance
share
unit
agreement
(executives
and
other
employees)
under
the
Logitech
International
S.A.
2006
Stock
Incentive
Plan
for
grants
starting
in
April
2013

Employment
Agreement
between
Logitech
Inc.
and
Bracken
Darrell,
dated
as
of
December
18,
2015

Employment
Agreement
between
Logitech
Inc.
and
Vincent
Pilette,
dated
as
of
December
18,
2015

Employment
Agreement
between
Logitech
Inc.
and
L.
Joseph
Sullivan,
dated
as
of
December
18,
2015

Series
B
Preferred
Stock
Purchase
Agreement,
dated
as
of
December
28,
2015,
by
and
between
Logitech
International
S.A.,
Lifesize,
Inc.,
and
Investors
associated
with
Redpoint
Ventures,
Sutter
Hill
Ventures
and
Meritech
Capital
Partners.

Representative
form
of
restricted
stock
unit
agreement
(executives
and
other
employees)
under
the
Logitech
International
S.A.
2006
Stock
Incentive
Plan

Representative
form
of
performance
share
unit
agreement
(executives
and
other
employees)
under
the
Logitech
International
S.A.
2006
Stock
Incentive
Plan

Representative
form
of
restricted
stock
unit
agreement
(executives
and
other
employees)
under
the
Logitech
International
S.A.
2006
Stock
Incentive
Plan

Representative
form
of
performance
share
unit
agreement
(executives
and
other
employees)
under
the
Logitech
International
S.A.
2006
Stock
Incentive
Plan

Representative
form
of
restricted
stock
unit
agreement
(non-
employee
directors)
under
the
Logitech
International
S.A.
2006
Stock
Incentive
Plan

S-8

S-8

333-

4/13/2012

10.1

180726  

333-

4/13/2012

10.2

180726  

10-Q

0-29174

2/5/2013

10.2

10-Q

0-29174

2/5/2013

10.3

10-K

0-29174

5/30/2013

10.39

10-Q

0-29174

1/22/2016

10.1

10-Q

0-29174

1/22/2016

10.2

10-Q

0-29174

1/22/2016

10.3

10-Q

0-29174

1/22/2016

10.5

10-K

0-29174

5/23/2016

10.31

10-K

0-29174

5/23/2016

10.32

10-K

0-29174

5/26/2017

10.33

10-K

0-29174

5/26/2017

10.34

10-K

0-29174

5/26/2017

10.35

10.25

**

Letter
Agreement,
dated
as
of
July
22,
2017,
between
Logitech
Europe
S.A.
and
Marcel
Stolk

10-Q

0-29174

11/1/2017

10.1

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
61

 
 
 
 
 
 
   
 
 
 
 
 
 


 
 
 
 
 
 


 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
   
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
Table of Contents

10.26

**

21.1   


23.1   


24.1

31.1

31.2

32.1

*

101.INS

Representative
form
of
restricted
stock
unit
agreement
(non-
executive
board
members)
under
the
Logitech
International
S.A.
2006
Stock
Incentive
Plan

  List
of
subsidiaries
of
Logitech
International
S.A.

  Consent
of
Independent
Registered
Public
Accounting
Firm  

Power
of
Attorney
(incorporated
by
reference
to
the
signature
page
of
this
Annual
Report
on
Form
10-K)

Certification
by
Chief
Financial
Officer
pursuant
to
section
302
of
the
Sarbanes-Oxley
Act
of
2002

Certification
by
Chief
Executive
Officer
pursuant
to
section
302
of
the
Sarbanes-Oxley
Act
of
2002

Certification
by
Chief
Executive
Officer
and
Chief
Financial
Officer
pursuant
to
section
906
of
the
Sarbanes-Oxley
Act
of
2002

XBRL
Instance
Document
-
the
instance
document
does
not
appear
in
the
Interactive
Data
File
because
its
XBRL
tags
are
embedded
within
the
Inline
XBRL
document

101.SCH 
  

  XBRL
Taxonomy
Extension
Schema
Document

101.CAL 
  

  XBRL
Taxonomy
Extension
Calculation
Linkbase
Document    

101.DEF 
  

  XBRL
Taxonomy
Extension
Definition
Linkbase
Document

101.LAB 
  

  XBRL
Taxonomy
Extension
Label
Linkbase
Document

101.PRE 


XBRL
Taxonomy
Extension
Presentation
Linkbase
Document

_______________________________________________________________________________

10-Q

0-29174

10/25/2018

10.1

X

X

X

X

X

X

X

X

X

X

X

X

*
This
exhibit
is
furnished
herewith,
but
not
deemed
"filed"
for
purposes
of
Section
18
of
the
Securities
Exchange
Act
of
1934,
as
amended,
or
otherwise
subject
to
liability
under
that
section.
Such
certification
will
not
be
deemed
to
be
incorporated
by
reference
into
any
filing
under
the
Securities
Act
or
the
Exchange
Act,
except
to
the
extent
that
we
explicitly
incorporate
it
by
reference.

**
Indicates
management
compensatory
plan,
contract
or
arrangement.

***
Confidential
treatment
has
been
requested
for
certain
provisions
omitted
from
this
exhibit
pursuant
to
Rule
406
promulgated
under

the
Securities
Act
of
1933,
as
amended.
The
omitted
information
has
been
filed
separately
with
the
Securities
and
Exchange
Commission
.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
62

 
 
 
 
 
 
   
 


 


 


 


 


 


 


 


 
 


 
 


 


 


 


 
 


 
 


 


 


 


 
 


 
 


 


 


 


 
 
 
 


 


 


 


 
 


 
 


 


 


 


 
   
   
   
   
 
   
   
   
 
   
   
   
   
 
   
   
   
   
 
 
 
   
   
   
   
 
Table of Contents

SIGNATURES

Pursuant
to
the
requirements
of
Section
13
or
15(d)
of
the
Securities
Exchange
Act
of
1934,
the
Registrant
has
duly
caused
this
Report
to
be

signed
on
its
behalf
by
the
undersigned,
thereunto
duly
authorized.

LOGITECH
INTERNATIONAL
S.A.

/s/
BRACKEN
DARRELL

Bracken
Darrell


President and Chief Executive Officer

/s/
VINCENT
PILETTE

Vincent
Pilette


Chief Financial Officer

May
17,
2019

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
63

 
 
 




 
 
 


 
 
 


 
 
Table of Contents

POWER OF ATTORNEY

KNOW
ALL
PERSONS
BY
THESE
PRESENTS,
that
each
person
whose
signature
appears
below
constitutes
and
appoints
Bracken
Darrell

and
Vincent
Pilette,
jointly
and
severally,
his
or
her
attorney-in-fact,
with
the
power
of
substitution,
for
him
or
her
in
any
and
all
capacities,
to
sign
any
amendments
to
this
Annual
Report
on
Form
10-K
and
to
file
the
same,
with
exhibits
thereto
and
other
documents
in
connection
therewith,
with
the
Securities
and
Exchange
Commission,
hereby
ratifying
and
confirming
all
that
each
of
said
attorneys-in-fact,
or
his
or
her
substitute
or
substitutes,
may
do
or
cause
to
be
done
by
virtue
hereof.

Pursuant
to
the
requirements
of
the
Securities
Exchange
Act
of
1934,
this
Annual
Report
on
Form
10-K
has
been
signed
below
by
the

following
persons
on
behalf
of
the
Registrant
and
in
the
capacities
and
on
the
dates
indicated.

Signature

Title

Date

/s/
GUERRINO
DE
LUCA
Guerrino
De
Luca

/s/
BRACKEN
DARRELL
Bracken
Darrell

/s/
VINCENT
PILETTE
Vincent
Pilette

/s/
PATRICK
AEBISCHER
Patrick
Aebischer

/s/
WENDY
BECKER
Wendy
Becker

/s/
EDOUARD
BUGNION
Edouard
Bugnion

/s/
DIDIER
HIRSCH
Didier
Hirsch

/s/
NEIL
HUNT
Neil
Hunt

/s/
MARJORIE
LAO

Marjorie
Lao

/s/
NEELA
MONTGOMERY
Neela
Montgomery

/s/
DIMITRI
PANAYOTOPOULOS
Dimitri
Panayotopoulos

/s/
LUNG
YEH
Lung
Yeh


 Chairman
of
the
Board


 President,
Chief
Executive
Officer
and
Director

Chief
Financial
Officer
(Principal
Financial
Officer
and
Principal
Accounting
Officer)


 Director


 Director


 Director


 Director


 Director


 Director


 Director

  Director


 Director

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
64

May
17,
2019

May
17,
2019

May
17,
2019

May
17,
2019

May
17,
2019

May
17,
2019

May
17,
2019

May
17,
2019

May
17,
2019

May
17,
2019

May
17,
2019

May
17,
2019

 
   
 
 
 
 



 













 
 




 


 
 


Table of Contents

Report
of
Independent
Registered
Public
Accounting
Firm

Consolidated
Statements
of
Operations—Years
Ended
March
31,
2019,
2018
and
2017

Consolidated
Statements
of
Comprehensive
Income—Years
Ended
March
31,
2019,
2018
and
2017

Consolidated
Balance
Sheets
—
March
31,
2019
and
2018

Consolidated
Statements
of
Cash
Flows
—Years
Ended
March
31,
2019,
2018
and
2017

Consolidated
Statements
of
Changes
in
Shareholders'
Equity—Years
Ended
March
31,
2019,
2018
and
2017

Notes
to
Consolidated
Financial
Statements

INDEX TO SUPPLEMENTARY DATA

Unaudited
Quarterly
Financial
Data

Page

66

68

69

70

71

72

73

110

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International
S.A.
|
Fiscal
2019
Form
10-K
|
65

 
 
Table of Contents

Report of Independent Registered Public Accounting Firm

To
the
Shareholders
and
Board
of
Directors

Logitech
International
S.A.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We
have
audited
the
accompanying
consolidated
balance
sheets
of
Logitech
International
S.A.
and
subsidiaries
(“the
Company”)
as
of
March
31,
2019
and
2018,
the
related
consolidated
statements
of
operations,
comprehensive
income,
changes
in
shareholders’
equity,
and
cash
flows
for
each
of
the
years
in
the
three-year
period
ended
March
31,
2019,
and
the
related
notes
and
financial
statement
schedule
(collectively,
the
“consolidated
financial
statements”).
We
also
have
audited
the
Company’s
internal
control
over
financial
reporting
as
of
March
31,
2019,
based
on
criteria
established
in
Internal Control - Integrated Framework (2013) issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission.

In
our
opinion,
the
consolidated
financial
statements
referred
to
above
present
fairly,
in
all
material
respects,
the
financial
position
of
the
Company
as
of
March
31,
2019
and
2018,
and
the
results
of
its
operations
and
its
cash
flows
for
each
of
the
years
in
the
three-year
period
ended
March
31,
2019,
in
conformity
with
U.S.
generally
accepted
accounting
principles.
Also
in
our
opinion,
the
Company
maintained,
in
all
material
respects,
effective
internal
control
over
financial
reporting
as
of
March
31,
2019
based
on
criteria
established
in
Internal Control - Integrated Framework (2013)
issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission.

The
Company
acquired
Blue
Microphone
Holding
Corporation
(Blue
Microphones)
on
August
21,
2018.
Management
excluded
from
its
evaluation
of
the
effectiveness
of
the
Company’s
internal
control
over
financial
reporting
as
of
March
31,
2019,
the
acquired
entity’s
internal
control
over
financial
reporting
associated
with
8%
of
total
assets
and
2%
of
total
sales
included
in
the
consolidated
financial
statements
of
the
Company
as
of
and
for
the
year
ended
March
31,
2019.
Our
audit
of
internal
control
over
financial
reporting
of
the
Company
also
excluded
an
evaluation
of
the
internal
control
over
financial
reporting
of
Blue
Microphones.

Change in Accounting Principle

As
discussed
in
Note
2
to
the
consolidated
financial
statements,
the
Company
changed
its
method
of
accounting
for
revenue
in
2019
due
to
the
adoption
of
the
FASB’s
Accounting
Standards
Codification
(“ASC”)
Topic
606,
Revenue from Contracts with Customers and
its
method
of
accounting
for
excess
tax
benefits
from
share-based
payments
in
2018
due
to
the
adoption
of
ASC
Topic
718,
Improvements to Employee Share-
Based Payment Accounting .

Basis for Opinions

The
Company’s
management
is
responsible
for
these
consolidated
financial
statements,
for
maintaining
effective
internal
control
over
financial
reporting,
and
for
its
assessment
of
the
effectiveness
of
internal
control
over
financial
reporting,
included
in
the
accompanying
Management’s
Report
on
Internal
Control
over
Financial
Reporting
included
in
Item
9A.
Our
responsibility
is
to
express
an
opinion
on
the
Company’s
consolidated
financial
statements
and
an
opinion
on
the
Company’s
internal
control
over
financial
reporting
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
(“PCAOB”)
and
are
required
to
be
independent
with
respect
to
the
Company
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.

We
conducted
our
audits
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audits
to
obtain
reasonable
assurance
about
whether
the
consolidated
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud,
and
whether
effective
internal
control
over
financial
reporting
was
maintained
in
all
material
respects.

Our
audits
of
the
consolidated
financial
statements
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
consolidated
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
consolidated
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
66

Table of Contents

the
consolidated
financial
statements.
Our
audit
of
internal
control
over
financial
reporting
included
obtaining
an
understanding
of
internal
control
over
financial
reporting,
assessing
the
risk
that
a
material
weakness
exists,
and
testing
and
evaluating
the
design
and
operating
effectiveness
of
internal
control
based
on
the
assessed
risk.
Our
audits
also
included
performing
such
other
procedures
as
we
considered
necessary
in
the
circumstances.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A
company’s
internal
control
over
financial
reporting
is
a
process
designed
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles.
A
company’s
internal
control
over
financial
reporting
includes
those
policies
and
procedures
that
(1)
pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately
and
fairly
reflect
the
transactions
and
dispositions
of
the
assets
of
the
company;
(2)
provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with
generally
accepted
accounting
principles,
and
that
receipts
and
expenditures
of
the
company
are
being
made
only
in
accordance
with
authorizations
of
management
and
directors
of
the
company;
and
(3)
provide
reasonable
assurance
regarding
prevention
or
timely
detection
of
unauthorized
acquisition,
use,
or
disposition
of
the
company’s
assets
that
could
have
a
material
effect
on
the
financial
statements.

Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections
of
any
evaluation
of
effectiveness
to
future
periods
are
subject
to
the
risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
with
the
policies
or
procedures
may
deteriorate.

/s/
KPMG
LLP

We
have
served
as
the
Company’s
auditor
since
2015.

Santa
Clara,
California

May
17,
2019

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
67

Table of Contents

LOGITECH INTERNATIONAL S.A.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

Net
sales

Cost
of
goods
sold

Amortization
of
intangible
assets
and
purchase
accounting
effect
on
inventory

Gross
profit

Operating
expenses:

Marketing
and
selling

Research
and
development

General
and
administrative

Amortization
of
intangible
assets
and
acquisition-related
costs

Change
in
fair
value
of
contingent
consideration
for
business
acquisition

Restructuring
charges
(credits),
net

Total
operating
expenses

Operating
income

Interest
income

Other
income
(expense),
net

Income
before
income
taxes

Provision
for
income
taxes

Net
income

Net
income
per
share:

Basic

Diluted

Weighted
average
shares
used
to
compute
net
income
per
share:

Basic

Diluted

Years Ended March 31,

2019
2,788,322   $

2018
2,566,863   $

  $

1,737,969  

1,648,744  

13,342  

1,037,011  

8,878  

909,241  

488,263  

161,230  

98,732  

14,290  

—  

11,302  

773,817  

263,194  

8,375  

(436)  

271,133  

13,560  

435,489  

143,760  

96,353  

8,930  

(4,908)  

(116)  

679,508  

229,733  

4,969  

(2,437)  

232,265  

23,723  

2017

2,221,427

1,395,211

6,175

820,041

379,641

130,525

100,270

5,814

(8,092)

23

608,181

211,860

1,452

1,677

214,989

9,113

  $

257,573   $

208,542   $

205,876

  $

  $

1.56   $

1.52   $

1.27   $

1.23   $

1.27

1.24

165,609  

168,965  

164,038  

168,971  

162,058

165,540




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

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
68

 
 
 
 
 
 
 
 
 
 


 


 


 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
 


 


 


 
   
   
   
 


 


 


 
 
Table of Contents

Net
income

Other
comprehensive
income
(loss):

Currency
translation
gain
(loss):

LOGITECH INTERNATIONAL S.A.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Years Ended March 31,

2019

2018

2017

  $

257,573   $

208,542   $

205,876

Currency
translation
gain
(loss),
net
of
taxes

(7,790)  

5,860  

(5,670)

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

(510)  

—  

—

Defined
benefit
plans:

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

Reclassification
of
amortization
included
in
other
income
(expense),
net

Hedging
gain
(loss):

Deferred
hedging
gain
(loss),
net
of
taxes

Reclassification
of
hedging
loss
(gain)
included
in
cost
of
goods
sold

Total
other
comprehensive
income
(loss)

Total
comprehensive
income

(7,353)  

(181)  

1,781  

1,810  

(12,243)  

3,955  

127  

(8,499)  

5,808  

7,251  

  $

245,330   $

215,793   $

14,201

1,490

2,928

(1,670)

11,279

217,155




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

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
69

 
 
 
 
 
 
 


 


 


 


 


 


 
 
 


 


 


 
 
 


 


 


 
 
 
LOGITECH INTERNATIONAL S.A.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

Assets

Table of Contents

Current
assets:

Cash
and
cash
equivalents

Accounts
receivable,
net

Inventories

Other
current
assets

Total
current
assets

Non-current
assets:

Property,
plant
and
equipment,
net

Goodwill

Other
intangible
assets,
net

Other
assets

Total
assets

Current
liabilities:

Accounts
payable

Liabilities and Shareholders' Equity

Accrued
and
other
current
liabilities

Total
current
liabilities

Non-current
liabilities:

Income
taxes
payable

Other
non-current
liabilities

Total
liabilities

Commitments
and
contingencies
(Note
13)

Shareholders'
equity:

Registered
shares,
CHF
0.25
par
value:

Issued
shares—173,106
at
March
31,
2019
and
2018

Additional
shares
that
may
be
issued
out
of
conditional
capitals
—
50,000
at
March
31,
2019
and
March
31,
2018

Additional
shares
that
may
be
issued
out
of
authorized
capital
—
34,621
at
March
31,
2019
and
none
at
March
31,
2018

Additional
paid-in
capital

Shares
in
treasury,
at
cost—
7,244
and
8,527
shares
at
March
31,
2019
and
2018,
respectively

Retained
earnings

Accumulated
other
comprehensive
loss

Total
shareholders'
equity

Total
liabilities
and
shareholders'
equity




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

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
70

March 31,

2019

2018

  $

604,516   $

383,309  

293,495  

69,116  

641,947

214,885

259,906

56,362

1,350,436  

1,173,100

78,552  

343,684  

118,999  

132,453  

86,304

275,451

87,547

120,755

  $

2,024,124   $

1,743,157

  $

283,922   $

433,897  

717,819  

36,384  

93,582  

847,785  

293,988

281,732

575,720

34,956

81,924

692,600

30,148  

30,148

56,655  

(169,802)  

47,234

(165,686)

1,365,036  

1,232,316

(105,698)  

(93,455)

1,176,339  

1,050,557

  $

2,024,124   $

1,743,157

 
 
 
 
 
   
   
   
   
 
 
 
 
 


 


 
 
 
 
   
 


   
 


 
 
 


 


 
 
 
 
 
   
 


 
   
 


   
 


   
   
 
 
 
 
 
Table of Contents

LOGITECH INTERNATIONAL S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Cash flows from operating activities:

Net
income

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

Depreciation

Amortization
of
intangible
assets

Share-based
compensation
expense

Gain
on
investments

Deferred
income
taxes

Change
in
fair
value
of
contingent
consideration
for
business
acquisition

Other

Changes
in
assets
and
liabilities,
net
of
acquisitions:

Accounts
receivable,
net

Inventories

Other
assets

Accounts
payable

Accrued
and
other
liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Purchases
of
property,
plant
and
equipment

Investment
in
privately
held
companies

Acquisitions,
net
of
cash
acquired

Proceeds
from
return
of
investments

Purchases
of
short-term
investments

Sales
of
short-term
investments

Purchases
of
trading
investments

Proceeds
from
sales
of
trading
investments

Net cash used in investing activities

Cash flows from financing activities:

Payment
of
cash
dividends

Purchases
of
registered
shares

Payment
of
contingent
consideration
for
business
acquisition

Proceeds
from
exercises
of
stock
options
and
purchase
rights

Tax
withholdings
related
to
net
share
settlements
of
restricted
stock
units

Years Ended March 31,

2019

2018

2017

  $

257,573   $

208,542   $

205,876

43,471  

24,180  

50,265  

(816)  

(12,257)  

—  

(230)  

(58,798)  

(21,551)  

(8,800)  

(19,134)  

51,278  

41,295  

15,607  

44,138  

(669)  

7,141  

(4,908)  

(11)  

(26,363)  

16,047  

(16,908)  

17,695  

44,655  

305,181  

346,261  

(35,930)  

(2,717)  

(133,814)  

124  

(1,505)  

—  

(5,203)  

5,700  

(39,748)  

(1,240)  

(88,323)  

237  

(6,789)  

6,789  

(6,053)  

6,423  

(173,345)  

(128,704)  

(113,971)  

(32,449)  

—  

18,057  

(30,770)  

(104,248)  

(30,722)  

(5,000)  

41,910  

(29,813)  

41,121

9,367

35,890

(569)

(2,397)

(8,092)

107

(46,553)

(15,428)

(5,309)

24,459

49,917

288,389

(31,804)

(960)

(66,987)

—

—

—

(7,052)

7,124

(99,679)

(93,093)

(83,786)

—

39,574

(18,412)

Net cash used in financing activities

(159,133)  

(127,873)  

(155,717)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of the period

(10,134)  

(37,431)  

641,947  

4,730  

94,414  

547,533  

Cash, cash equivalents and restricted cash at end of the period

  $

604,516   $

641,947   $

(5,370)

27,623

519,910

547,533

Supplementary Cash Flow Disclosures:

Non-cash
investing
activities:

Property,
plant
and
equipment
purchased
during
the
period
and
included
in
period
end
liability
accounts

Supplemental cash flow information:

Income
taxes
paid,
net

  $

  $

3,983   $

3,869   $

5,072

15,312   $

15,051   $

11,323

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

 
 
 
 
 
 
   
   
   
 


 


 


 
 
 
 
 
 
 
 


 


 


 
 
 
 
 
 
 


 


 


 
 
 
 
 
 
 
 
 
 


 


 


 
 
 
 
 
 
 
 
 
 
   
   
   
   
   
   
 


 


 


 


 


 


Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
71

Table of Contents

LOGITECH INTERNATIONAL S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(In thousands)

March
31,
2016

Shares
173,106   $

Total
comprehensive
income

Purchases
of
registered
shares

Tax
effects
from
share-based
awards
Sale
of
shares
upon
exercise
of
stock
options
and
purchase
rights
Issuance
of
shares
upon
vesting
of
restricted
stock
units

Share-based
compensation

Cash
dividends
($0.57
per
share)

March
31,
2017
Cumulative
effect
of
adoption
of
new
accounting
standard
(Note
2)

Total
comprehensive
income

Purchases
of
registered
shares
Sale
of
shares
upon
exercise
of
stock
options
and
purchase
rights
Issuance
of
shares
upon
vesting
of
restricted
stock
units

Share-based
compensation

Cash
dividends
($0.63
per
share)

March
31,
2018
Cumulative
effect
of
adoption
of
new
accounting
standard
(Note
2)

Total
comprehensive
income

Purchases
of
registered
shares
Sale
of
shares
upon
exercise
of
stock
options
and
purchase
rights
Issuance
of
shares
upon
vesting
of
restricted
stock
units

Share-based
compensation

Cash
dividends
($0.69
per
share)

—  
—  
—  

—  

—  
—  
—  

173,106   $

—  
—  
—  

—  

—  
—  
—  

173,106   $

—  
—  
—  

—  

—  
—  
—  

March
31,
2019

173,106   $

Registered shares

Treasury shares

Amount

30,148   $
—  
—  
—  

Additional
paid-in
capital

6,616  
—  
—  
(1,251)  

Retained
earnings

Amount

Shares
10,697   $ (128,407)   $ 963,576   $
—  
(83,786)  
—  

205,876  
—  
—  

—  
4,027  
—  

Accumulated
other
comprehensive
loss
(111,985)   $ 759,948

Total

11,279  
—  
—  

217,155

(83,786)

(1,251)

—  

15,403  

(2,513)  

24,171  

—  

—  

39,574

—  
—  
—  
30,148   $

—  
—  
—  

—  

(30,148)  
35,976  
—  
26,596  

3,297  

—  

(1,484)  
—  
—  

13,985  
—  
—  
10,727   $ (174,037)   $ 1,074,110   $

(2,249)  
—  
(93,093)  

—  
—  
—  

(18,412)

35,976

(93,093)
(100,706)   $ 856,111

—  
—  
863  

—  
—  
(30,722)  

53,912  
208,542  
—  

—  
7,251  
—  

57,209

215,793

(30,722)

21,315  

(1,527)  

20,595  

—  

—  

41,910

—  
—  
—  
30,148   $

(48,291)  
44,317  
—  
47,234  

(1,536)  
—  
—  

18,478  
—  
—  
8,527   $ (165,686)   $ 1,232,316   $

(104,248)  

—  
—  
—  

(29,813)

44,317

(104,248)
(93,455)   $ 1,050,557

—  
—  
—  

—  

—  

—  

—  
—  
808  

—  
—  
(32,449)  

(10,882)  
257,573  
—  

—  
(12,243)  
—  

(10,882)

245,330

(32,449)

10,526  

(575)  

7,531  

—  

—  

18,057

—  
—  
—  
30,148   $

(51,572)  
50,467  
—  
56,655  

(1,516)  
—  
—  

20,802  
—  
—  
7,244   $ (169,802)   $ 1,365,036   $

—  
(113,971)  

—  
—  
—  

(30,770)

50,467

(113,971)
(105,698)   $ 1,176,339




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

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
72

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

Note 1—The Company

LOGITECH INTERNATIONAL S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Logitech
International
S.A,
together
with
its
consolidated
subsidiaries
(Logitech
or
the
Company),
designs,
manufactures
and
markets
products

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


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

and
indirect
sales
through
distributors.

Logitech
was
founded
in
Switzerland
in
1981
and
Logitech
International
S.A.
has
been
the
parent
holding
company
of
Logitech
since
1988.

Logitech
International
S.A.
is
a
Swiss
holding
company
with
its
registered
office
in
Apples,
Switzerland
and
headquarters
in
Lausanne,
Switzerland,
which
conducts
its
business
through
subsidiaries
in
the
Americas,
EMEA
and
Asia
Pacific.
Shares
of
Logitech
International
S.A.
are
listed
on
both
the
SIX
Swiss
Exchange
under
the
trading
symbol
LOGN
and
the
Nasdaq
Global
Select
Market
under
the
trading
symbol
LOGI.

Business Acquisitions

In
August
2018,
the
Company
acquired
Blue
Microphones
Holding
Corporation.
During
fiscal
year
2018,
the
Company
acquired
ASTRO
Gaming
business
and
another
small
technology
company.
See
"Note
3
-
Business
Acquisitions"
for
more
information.

Reference to Sales

References
to
"sales"
in
the
notes
to
the
consolidated
financial
statements
means
net
sales,
except
as
otherwise
specified.

Note 2—Summary of Significant Accounting Policies

Basis of Presentation

The
consolidated
financial
statements
include
the
accounts
of
Logitech
and
its
subsidiaries.
All
intercompany
balances
and
transactions
have

been
eliminated.
The
consolidated
financial
statements
are
presented
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
(U.S.
GAAP).

Fiscal Year

The
Company's
fiscal
year
ends
on
March
31.
Interim
quarters
are
generally
thirteen-week
periods,
each
ending
on
a
Friday.
For
purposes
of

presentation,
the
Company
has
indicated
its
quarterly
periods
end
on
the
last
day
of
the
calendar
quarter.

Reclassification

Certain
amounts
from
the
comparative
periods
in
the
accompanying
consolidated
financial
statements
have
been
reclassified
to
conform
to
the

consolidated
financial
statement
presentation
as
of
and
for
the
year
ended
March
31,
2019
,
due
to
the
adoption
of
the
new
accounting
pronouncements
during
the
year.

Use of Estimates

The
preparation
of
financial
statements
in
conformity
with
U.S.
GAAP
requires
management
to
make
judgments,
estimates
and
assumptions

that
affect
the
amounts
reported
in
the
consolidated
financial
statements.
Management
bases
its
estimates
on
historical
experience
and
various
other
assumptions
believed
to
be
reasonable.
Significant
estimates
and
assumptions
made
by
management
involve
the
fair
value
of
goodwill,
intangible
assets
acquired
from
business
acquisitions,
warranty
liabilities,
accruals
for
customer
incentives,
cooperative
marketing,
and
pricing
programs
(Customer
Programs)
and
related
breakage
when
appropriate,
sales
return
reserves,
allowance
for
doubtful
accounts,
inventory
valuation,
contingent
consideration
from
business
acquisitions
and
periodical
reassessment
of
its
fair
value,
share-based
compensation
expense,
uncertain
tax
positions,
and
valuation
allowances
for
deferred
tax
assets.
Although
these
estimates
are
based
on
management’s

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International
S.A.
|
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2019
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|
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Table of Contents

best
knowledge
of
current
events
and
actions
that
may
impact
the
Company
in
the
future,
actual
results
could
differ
materially
from
those
estimates.

Currencies

The
functional
currency
of
the
Company's
operations
is
primarily
the
U.S.
Dollar.
Certain
operations
use
the
Euro,
Chinese
Renminbi,
Swiss
Franc,
or
other
local
currencies
as
their
functional
currencies.
The
financial
statements
of
the
Company's
subsidiaries
whose
functional
currency
is
other
than
the
U.S.
Dollar
are
translated
to
U.S.
Dollars
using
period-end
rates
of
exchange
for
assets
and
liabilities
and
monthly
average
rates
for
sales,
income
and
expenses.
Cumulative
translation
gains
and
losses
are
included
as
a
component
of
shareholders'
equity
in
accumulated
other
comprehensive
loss.
Gains
and
losses
arising
from
transactions
denominated
in
currencies
other
than
a
subsidiary's
functional
currency
are
reported
in
other
income
(expense),
net
in
the
consolidated
statements
of
operations.

Revenue Recognition

Revenue
is
recognized
when
a
customer
obtains
control
of
promised
goods
or
service
in
an
amount
that
reflects
the
transaction
price
the

Company
expects
to
receive
in
exchange
for
those
goods
or
services.

Substantially
all
revenue
recognized
by
the
Company
relates
to
the
contracts
with
customers
to
sell
products
that
allow
people
to
connect
through
music,
gaming,
video,
computing,
and
other
digital
platforms.
These
products
are
hardware
devices,
which
may
include
embedded
software
that
function
together,
and
are
considered
as
one
performance
obligation.
Hardware
devices
are
generally
plug
and
play,
requiring
no
configuration
and
little
or
no
installation.
Revenue
is
recognized
at
a
point
in
time
when
control
of
the
products
is
transferred
to
the
customer
which
generally
occurs
upon
shipment.
The
Company’s
sales
contracts
with
its
customers
have
a
one
year
or
shorter
term.
The
Company
applies
the
practical
expedient
of
not
disclosing
the
value
of
unsatisfied
performance
obligations
for
contracts
with
an
original
expected
duration
of
one
year
or
less.

The
Company
also
provides
post-contract
customer
support
(“PCS”)
for
certain
products
and
related
software,
which
includes
unspecified

software
updates
and
upgrades,
bug
fixes
and
maintenance.
The
transaction
price
is
allocated
to
two
performance
obligations
in
such
contracts,
based
on
a
relative
standalone
selling
price.
The
transaction
price
allocated
to
PCS
is
recognized
as
revenue
on
a
straight-line
basis,
which
reflects
the
pattern
of
delivery
of
PCS,
over
the
estimated
term
of
the
support
that
is
between
one
to
two
years.
Deferred
revenue
associated
with
remaining
PCS
performance
obligation
as
of
March
31,
2019
and
March
31,
2018
was
not
material.

The
Company
normally
requires
payment
from
customers
within
thirty
to
sixty
days
from
the
invoice
date.
However,
terms
may
vary
by

customer
type,
by
country
and
by
selling
season.
Extended
payment
terms
are
sometimes
offered
to
a
limited
number
of
customers
during
the
second
and
third
fiscal
quarters.
The
Company
does
not
modify
payment
terms
on
existing
receivables.
The
Company's
contracts
with
customers
do
not
include
significant
financing
components
as
the
period
between
the
satisfaction
of
performance
obligations
and
timing
of
payment
are
generally
within
one
year.

The
transaction
price
received
by
the
Company
from
sales
to
its
distributors,
retail
companies
("retailers"),
and
authorized
resellers
is
calculated
as
selling
price
net
of
variable
consideration
which
may
include
product
returns
and
the
Company’s
payments
for
Customer
Programs
related
to
current
period
product
revenue.
The
estimated
impact
of
these
programs
is
recorded
as
a
reduction
of
transaction
price
or
as
an
operating
expense
if
the
Company
receives
a
distinct
good
or
service
from
the
customer
and
can
reasonably
estimate
the
fair
value
of
that
good
or
service
received.
Certain
Customer
Programs
require
management
to
estimate
the
percentage
of
those
programs
which
will
not
be
claimed
or
will
not
be
earned
by
customers
based
on
historical
experience
and
on
the
specific
terms
and
conditions
of
particular
programs.
The
percentage
of
these
Customer
Programs
that
will
not
be
claimed
or
earned
is
commonly
referred
to
as
"breakage".
The
Company
accounts
for
breakage
as
part
of
variable
consideration,
subject
to
constraint,
and
records
the
estimated
impact
in
the
same
period
when
revenue
is
recognized
at
the
expected
value.
Significant
management
judgments
and
estimates
are
used
to
determine
the
impact
of
the
program
and
breakage
in
any
accounting
period.

The
Company
enters
into
cooperative
marketing
arrangements
with
many
of
its
customers
and
with
certain
indirect
partners,
allowing

customers
to
receive
a
credit
equal
to
a
set
percentage
of
their
purchases
of
the
Company's
products,
or
a
fixed
dollar
amount
for
various
marketing
and
incentive
programs.
The
objective
of
these
arrangements
is
to
encourage
advertising
and
promotional
events
to
increase
sales
of
the
Company's
products.

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International
S.A.
|
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2019
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|
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Table of Contents

Customer
incentive
programs
include
consumer
rebates
and
performance-based
incentives.
Consumer
rebates
are
offered
to
the
Company's

customers
and
indirect
partners
at
the
Company's
discretion
for
the
primary
benefit
of
end-users.
In
addition,
the
Company
offers
performance-
based
incentives
to
many
of
its
customers
and
indirect
partners
based
on
predetermined
performance
criteria.
At
management's
discretion,
the
Company
also
offers
special
pricing
discounts
to
certain
customers.
Special
pricing
discounts
are
usually
offered
only
for
limited
time
periods
or
for
sales
of
selected
products
to
specific
indirect
partners.

Cooperative
marketing
arrangements
and
customer
incentive
programs
are
considered
variable
consideration,
which
the
Company
estimates

and
records
as
a
reduction
to
revenue
at
the
time
of
sale
based
on
negotiated
terms,
historical
experiences,
forecasted
incentives,
anticipated
volume
of
future
purchases,
and
inventory
levels
in
the
channel.

The
Company
has
agreements
with
certain
customers
that
contain
terms
allowing
price
protection
credits
to
be
issued
in
the
event
of
a
subsequent
price
reduction.
Management's
decision
to
make
price
reductions
is
influenced
by
product
life
cycle
stage,
market
acceptance
of
products,
the
competitive
environment,
new
product
introductions
and
other
factors.
Accruals
for
estimated
expected
future
pricing
actions
are
recognized
at
the
time
of
sale
based
on
analyses
of
historical
pricing
actions
by
customer
and
by
product,
inventories
owned
by
and
located
at
customers,
current
customer
demand,
current
operating
conditions,
and
other
relevant
customer
and
product
information,
such
as
stage
of
product
life-cycle.

Product
return
rights
vary
by
customer.
Estimates
of
expected
future
product
returns
qualify
as
variable
consideration
and
are
recorded
as
a

reduction
of
the
transaction
price
of
the
contract
at
the
time
of
sale
based
on
an
analyses
of
historical
return
trends
by
customer
and
by
product,
inventories
owned
by
and
located
at
customers,
current
customer
demand,
current
operating
conditions,
and
other
relevant
customer
and
product
information.
The
Company
assesses
the
estimated
asset
for
recovery
value
for
impairment,
and
adjusts
the
value
of
the
asset
for
any
impairment.
Return
trends
are
influenced
by
product
life
cycle
status,
new
product
introductions,
market
acceptance
of
products,
sales
levels,
product
sell-
through,
the
type
of
customer,
seasonality,
product
quality
issues,
competitive
pressures,
operational
policies
and
procedures,
and
other
factors.
Return
rates
can
fluctuate
over
time
but
are
sufficiently
predictable
to
allow
the
Company
to
estimate
expected
future
product
returns.

Typically,
variable
consideration
does
not
need
to
be
constrained
as
estimates
are
based
on
predictive
historical
data
or
future
commitments

that
are
planned
and
controlled
by
the
Company.
However,
the
Company
continues
to
assess
variable
consideration
estimates
such
that
it
is
probable
that
a
significant
reversal
of
revenue
will
not
occur.

The
Company
regularly
evaluates
the
adequacy
of
its
estimates
for
Customer
Programs
and
product
returns.
Future
market
conditions
and

product
transitions
may
require
the
Company
to
take
action
to
change
such
programs
and
related
estimates.
When
the
variables
used
to
estimate
these
costs
change,
or
if
actual
costs
differ
significantly
from
the
estimates,
the
Company
would
be
required
to
increase
or
reduce
revenue
or
operating
expenses
to
reflect
the
impact.
During
the
year
ended
March
31,
2019,
changes
to
these
estimates
related
to
performance
obligations
satisfied
in
prior
periods
were
not
material.

Sales
taxes
and
value-added
taxes
(“VAT”)
collected
from
customers,
if
applicable,
which
are
remitted
to
governmental
authorities
are
not

included
in
revenue,
and
are
reflected
as
a
liability
on
the
consolidated
balance
sheets.

Shipping and Handling Costs

The
Company's
shipping
and
handling
costs
are
included
in
cost
of
goods
sold
in
the
consolidated
statements
of
operations
for
all
periods

presented.

Contract Balances

The
Company
records
accounts
receivable
from
contracts
with
customers
when
it
has
an
unconditional
right
to
consideration,
as
accounts

receivable,
net
on
the
consolidated
balance
sheet.

The
Company
records
contract
liabilities
when
cash
payments
are
received
or
due
in
advance
of
performance,
primarily
for
implied
support

and
subscriptions.
Contract
liabilities
are
included
in
accrued
and
other
current
liabilities
on
the
consolidated
balance
sheets.

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International
S.A.
|
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2019
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|
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Table of Contents

As
of
March
31,
2019
and
for
the
year
then
ended,
and
as
of
April
1,
2018,
the
Company
did
not
have
any
material
contract
liabilities
balances

or
changes.

Contract Costs

The
Company
recognizes
the
incremental
costs
of
obtaining
contracts
as
an
expense
when
incurred
if
the
amortization
period
of
the
assets

that
otherwise
would
have
been
recognized
is
one
year
or
less.
These
costs
are
included
in
marketing
and
selling
expenses
in
the
consolidated
statements
of
operations.
As
of
March
31,
2019
and
March
31,
2018,
the
Company
did
not
have
any
material
deferred
contract
costs.

Research and Development Costs

Costs
related
to
research,
design
and
development
of
products,
which
consist
primarily
of
personnel,
product
design
and
infrastructure

expenses,
are
charged
to
research
and
development
expense
as
they
are
incurred.

Advertising Costs

Advertising
costs
are
recorded
as
either
a
marketing
and
selling
expense
or
a
deduction
from
revenue
as
they
are
incurred.
Advertising
costs

paid
or
reimbursed
by
the
Company
to
direct
or
indirect
customers
must
have
an
identifiable
benefit
and
an
estimable
fair
value
in
order
to
be
classified
as
an
operating
expense.
If
these
criteria
are
not
met,
the
payment
is
classified
as
a
reduction
of
revenue.
Advertising
costs
recorded
as
marketing
and
selling
expense
are
expensed
as
incurred.
Total
advertising
costs
including
those
characterized
as
revenue
deductions
during
fiscal
years
2019
,
2018
and
2017
were
$278.2
million
,
$233.7
million
and
$208.7
million
,
respectively,
out
of
which
$58.8
million
,
$36.7
million
and
$32.2
million
,
respectively,
were
included
as
operating
expense
in
the
consolidated
statements
of
operations.

Cash Equivalents

The
Company
classifies
all
highly
liquid
instruments
purchased
with
an
original
maturity
of
three
months
or
less
at
the
date
of
purchase
to
be

cash
equivalents.
Cash
equivalents
are
carried
at
cost,
which
approximates
their
fair
value.

All
of
the
Company's
bank
time
deposits
have
an
original
maturity
of
three
months
or
less
and
are
classified
as
cash
equivalents
and
are

recorded
at
cost,
which
approximates
their
fair
value.

Concentration of Credit Risk

Financial
instruments
that
potentially
subject
the
Company
to
concentrations
of
credit
risk
consist
principally
of
cash
and
cash
equivalents
and

accounts
receivable.
The
Company
maintains
cash
and
cash
equivalents
with
various
financial
institutions
to
limit
exposure
with
any
one
financial
institution,
but
is
exposed
to
credit
risk
in
the
event
of
default
by
financial
institutions
to
the
extent
that
cash
balances
with
individual
financial
institutions
are
in
excess
of
amounts
that
are
insured.

The
Company
sells
to
large
distributors
and
retailers
and,
as
a
result,
maintains
individually
significant
receivable
balances
with
such

customers.

The
Company
had
the
following
customers
that
individually
comprised
10%
or
more
of
its
gross
sales:

Customer
A

Customer
B

Years Ended March 31,

2019

2018

2017

13%  

14%  

15%  

13%  

15%

12%

The
Company
had
the
following
customers
that
individually
comprised
10%
or
more
of
accounts
receivable:

Customer
A

Customer
B

Customer
C

*
Less
than
10%
 

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
76

March 31,

2019

2018

14%  

15%  

*

15%

12%

11%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

Typical
payment
terms
require
customers
to
pay
for
product
sales
generally
within
30
to
60

days;
however,
terms
may
vary
by
customer
type,

by
country
and
by
selling
season.
Extended
payment
terms
are
sometimes
offered
to
a
limited
number
of
customers
during
the
second
and
third
fiscal
quarters.
The
Company
does
not
modify
payment
terms
on
existing
receivables.

The
Company
manages
its
accounts
receivable
credit
risk
through
ongoing
credit
evaluation
of
its
customers'
financial
conditions.
The

Company
generally
does
not
require
collateral
from
its
customers.

Allowances for Doubtful Accounts

Allowances
for
doubtful
accounts
are
maintained
for
estimated
losses
resulting
from
the
Company's
customers'
inability
to
make
required
payments.
The
allowances
are
based
on
the
Company's
regular
assessment
of
the
credit-worthiness
and
financial
condition
of
specific
customers,
as
well
as
its
historical
experience
with
bad
debts
and
customer
deductions,
receivables
aging,
current
economic
trends,
geographic
or
country-
specific
risks
and
the
financial
condition
of
its
distribution
channels.

Inventories

Inventories
are
stated
at
the
lower
of
cost
and
net
realizable
value.
Costs
are
computed
under
the
standard
cost
method,
which
approximates

actual
costs
determined
on
the
first-in,
first-out
basis.
The
Company
records
write-downs
of
inventories
which
are
obsolete
or
in
excess
of
anticipated
demand
or
net
realizable
value
based
on
a
consideration
of
marketability
and
product
life
cycle
stage,
product
development
plans,
component
cost
trends,
historical
sales
and
demand
forecasts
which
consider
the
assumptions
about
future
demand
and
market
conditions.
Inventory
on
hand
which
is
not
expected
to
be
sold
or
utilized
is
considered
excess,
and
the
Company
recognizes
the
write-down
in
cost
of
goods
sold
at
the
time
of
such
determination.
The
write-down
is
determined
by
the
excess
of
cost
over
net
realizable
value.
Net
realizable
value
is
the
estimated
selling
price
in
the
ordinary
course
of
business,
less
reasonably
predictable
costs
of
completion,
disposal
and
transportation.
At
the
time
of
loss
recognition,
new
cost
basis
per
unit
and
lower-cost
basis
for
that
inventory
are
established
and
subsequent
changes
in
facts
and
circumstances
would
not
result
in
an
increase
in
the
cost
basis.

As
of
March
31,
2019
and
2018
,
the
Company
also
recorded
a
liability
of
$14.1
million
and
$12.6
million
,
respectively,
arising
from
firm,
non-
cancelable,
and
unhedged
inventory
purchase
commitments
in
excess
of
anticipated
demand
or
net
realizable
value
consistent
with
its
valuation
of
excess
and
obsolete
inventory.
Such
liability
is
included
in
accrued
and
other
current
liabilities
on
the
consolidated
balance
sheets.

Property, Plant and Equipment

Property,
plant
and
equipment
are
stated
at
cost.
Additions
and
improvements
are
capitalized,
and
maintenance
and
repairs
are
expensed
as

incurred.
The
Company
capitalizes
the
cost
of
software
developed
for
internal
use
in
connection
with
major
projects.
Costs
incurred
during
the
feasibility
stage
are
expensed,
whereas
direct
costs
incurred
during
the
application
development
stage
are
capitalized.

Depreciation
expense
is
recognized
using
the
straight-line
method.
Plant
and
buildings
are
depreciated
over
estimated
useful
lives
of
twenty-

five
years
,
equipment
over
useful
lives
from
three
to
five
years,
internal-use
software
over
useful
lives
from
three
to
seven
years,
tooling
over
useful
lives
from
six
months
to
one
year
,
and
leasehold
improvements
over
the
lesser
of
the
useful
life
of
the
improvement
or
the
term
of
the
lease.

When
property
and
equipment
is
retired
or
otherwise
disposed
of,
the
cost
and
accumulated
depreciation
are
relieved
from
the
accounts
and

the
net
gain
or
loss
is
included
in
operating
expenses.

Intangible Assets

The
Company's
intangible
assets
principally
include
goodwill,
acquired
technology,
trademarks,
and
customer
relationships
and
contracts.

Intangible
assets
with
finite
lives,
which
include
acquired
technology,
trademarks,
customer
relationships
and
contracts,
and
others
are
carried
at
cost
and
amortized
using
the
straight-line
method
over
their
useful
lives
ranging
from
four
to
ten
years.
Intangible
assets
with
indefinite
lives,
which
include
only
goodwill,
are
recorded
at
cost
and
evaluated
at
least
annually
for
impairment.

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Impairment of Long-Lived Assets

The
Company
reviews
long-lived
assets,
such
as
property
and
equipment,
and
finite-lived
intangible
assets,
for
impairment
whenever
events

indicate
that
the
carrying
amounts
might
not
be
recoverable.
Recoverability
of
property
and
equipment,
and
other
finite-lived
intangible
asset
is
measured
by
comparing
the
projected
undiscounted
net
cash
flows
associated
with
those
assets
to
their
carrying
values.
If
an
asset
is
considered
impaired,
it
is
written
down
to
its
fair
value,
which
is
determined
based
on
the
asset's
projected
discounted
cash
flows
or
appraised
value,
depending
on
the
nature
of
the
asset.
For
purposes
of
recognition
of
impairment
for
assets
held
for
use,
the
Company
groups
assets
and
liabilities
at
the
lowest
level
for
which
cash
flows
are
separately
identifiable.

Impairment of Goodwill

Goodwill
represents
the
excess
of
the
purchase
price
over
the
fair
value
of
the
net
tangible
and
identifiable
intangible
assets
acquired
in
each

business
combination.
The
Company
conducts
a
goodwill
impairment
analysis
annually
at
December
31
or
more
frequently
if
indicators
of
impairment
exist
or
if
a
decision
is
made
to
sell
or
exit
a
business.
Significant
judgments
are
involved
in
determining
if
an
indicator
of
impairment
has
occurred.
Such
indicators
may
include
deterioration
in
general
economic
conditions,
negative
developments
in
equity
and
credit
markets,
adverse
changes
in
the
markets
in
which
an
entity
operates,
increases
in
input
costs
that
have
a
negative
effect
on
earnings
and
cash
flows,
or
a
trend
of
negative
or
declining
cash
flows
over
multiple
periods,
among
others.
The
fair
value
that
could
be
realized
in
an
actual
transaction
may
differ
from
that
used
to
evaluate
the
impairment
of
goodwill.

In
reviewing
goodwill
for
impairment,
the
Company
has
the
option
to
first
assess
qualitative
factors
to
determine
whether
the
existence
of
events
or
circumstances
leads
to
a
determination
that
it
is
more
likely
than
not
(greater
than
50%)
that
the
estimated
fair
value
of
a
reporting
unit
is
less
than
its
carrying
amount.
For
the
year
ended
March
31,
2019,
the
Company
elected
to
perform
a
qualitative
assessment
and
determined
that
an
impairment
was
not
more
likely
than
not
and
no
further
analysis
was
required.
The
Company
also
may
elect
not
to
perform
the
qualitative
assessment
and,
instead,
proceed
directly
to
the
quantitative
impairment
test.
The
ultimate
outcome
of
the
goodwill
impairment
review
for
a
reporting
unit
should
be
the
same
whether
the
Company
chooses
to
perform
the
qualitative
assessment
or
proceeds
directly
to
the
quantitative
impairment
test.

Income Taxes

The
Company
provides
for
income
taxes
using
the
asset
and
liability
method,
which
requires
that
deferred
tax
assets
and
liabilities
be

recognized
for
the
expected
future
tax
consequences
of
temporary
differences
resulting
from
differing
treatment
of
items
for
tax
and
financial
reporting
purposes,
and
for
operating
losses
and
tax
credit
carryforwards.
In
estimating
future
tax
consequences,
expected
future
events
are
taken
into
consideration,
with
the
exception
of
potential
tax
law
or
tax
rate
changes.
The
Company
records
a
valuation
allowance
to
reduce
deferred
tax
assets
to
amounts
management
believes
are
more
likely
than
not
to
be
realized.

The
Company's
assessment
of
uncertain
tax
positions
requires
that
management
makes
estimates
and
judgments
about
the
application
of
tax
law,
the
expected
resolution
of
uncertain
tax
positions
and
other
matters.
In
the
event
that
uncertain
tax
positions
are
resolved
for
amounts
different
than
the
Company's
estimates,
or
the
related
statutes
of
limitations
expire
without
the
assessment
of
additional
income
taxes,
the
Company
will
be
required
to
adjust
the
amounts
of
the
related
assets
and
liabilities
in
the
period
in
which
such
events
occur.
Such
adjustments
may
have
a
material
impact
on
the
Company's
income
tax
provision
and
its
results
of
operations.

Fair Value of Financial Instruments

The
carrying
value
of
certain
of
the
Company's
financial
instruments,
including
cash
equivalents,
accounts
receivable
and
accounts
payable

approximates
their
fair
value
due
to
their
short
maturities.

The
Company's
investment
securities
portfolio
consists
of
bank
time
deposits
with
an
original
maturity
of
three
months
or
less
and
marketable

securities
(money
market
and
mutual
funds)
related
to
a
deferred
compensation
plan.

The
Company's
trading
investments
related
to
the
deferred
compensation
plan
are
reported
at
fair
value
based
on
quoted
market
prices.
The
marketable
securities
related
to
the
deferred
compensation
plan
are
classified
as
non-current
trading
investments,
as
they
are
intended
to
fund
the
deferred
compensation
plan's
long-term
liability.
Since
participants
in
the
deferred
compensation
plan
may
select
the
mutual
funds
in
which
their
compensation
deferrals
are
invested
within
the
confines
of
the
Rabbi
Trust
which
holds
the
marketable
securities,

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|
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2019
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Table of Contents

the
Company
has
designated
these
marketable
securities
as
trading
investments,
although
there
is
no
intent
to
actively
buy
and
sell
securities
with
the
objective
of
generating
profits
on
short-term
differences
in
market
prices.
These
securities
are
recorded
at
fair
value
based
on
quoted
market
prices.
Earnings,
gains
and
losses
on
trading
investments
are
included
in
other
income
(expense),
net
in
the
consolidated
statements
of
operations.

The
Company
also
holds
non-marketable
investments
in
equity
and
other
securities
that
are
accounted
under
the
equity
method,
which
are

classified
as
other
assets.
In
addition,
the
Company
has
certain
investments
without
readily
determinable
fair
values
due
to
the
absence
of
quoted
market
prices,
the
inherent
lack
of
liquidity,
and
the
fact
that
inputs
used
to
measure
fair
value
are
unobservable
and
require
management's
judgment.
The
Company
elected
the
measurement
alternative
to
record
these
investments
at
cost
and
to
adjust
for
impairments
and
observable
price
changes
resulting
from
transactions
with
the
same
issuer
within
the
statement
of
operations.

Net Income per Share

Basic
net
income
per
share
is
computed
by
dividing
net
income
by
the
weighted
average
outstanding
shares.
Diluted
net
income
per
share
is
computed
using
the
weighted
average
outstanding
shares
and
dilutive
share
equivalents.
Dilutive
share
equivalents
consist
of
share-based
awards,
including
stock
options,
purchase
rights
under
employee
share
purchase
plan,
and
restricted
stock
units
(RSUs).

The
dilutive
effect
of
in-the-money
share-based
compensation
awards
is
calculated
based
on
the
average
share
price
for
each
fiscal
period

using
the
treasury
stock
method.

Share-Based Compensation Expense

Share-based
compensation
expense
includes
compensation
expense
for
share-based
awards
granted
based
on
the
grant
date
fair
value.
The

grant
date
fair
value
for
stock
options
and
stock
purchase
rights
is
estimated
using
the
Black-Scholes-Merton
option-pricing
valuation
model.
The
grant
date
fair
value
of
RSUs
which
vest
upon
meeting
certain
market
conditions
is
estimated
using
the
Monte-Carlo
simulation
method.
The
grant
date
fair
value
of
time-based
and
performance-based
RSUs
is
calculated
based
on
the
market
price
on
the
date
of
grant,
reduced
by
estimated
dividends
yield
prior
to
vesting.
With
respect
to
awards
with
service
conditions
only,
compensation
expense
is
recognized
ratably
over
the
vesting
period
of
the
awards.
For
performance-based
RSUs,
the
Company
recognizes
the
estimated
expense
using
a
graded-vesting
method
over
requisite
service
periods
of
one
to
three
years
when
the
performance
condition
is
determined
to
be
probable.
The
performance
period
and
the
service
period
of
the
market-based
grants
of
the
Company
are
both
approximately
three
years
and
the
estimated
expense
is
recognized
ratably
over
the
service
period.

In
March
2016,
the
FASB
issued
ASU
2016-09,
"Compensation-Stock
Compensation
(Topic
718)":
Improvements
to
Employee
Share-Based

Payment
Accounting"
(ASU
2016-09).
The
Company
adopted
this
standard
effective
April
1,
2017
using
modified
retrospective
approach.
Under
the
new
standard,
the
Company
accounts
for
forfeitures
as
they
occur.
The
change
in
accounting
for
forfeitures
resulted
in
a
cumulative-effect
adjustment
to
decrease
retained
earnings
as
of
April
1,
2017
by

$3.3
million
.
The
Company
further
recognized
a
cumulative-effect
adjustment
to
increase
retained
earnings
as
of
April
1,
2017
by

$57.2
million

upon
adoption
of
the
new
guidance
to
account
for
gross
excess
tax
benefits
of

$75.2
million

that
were
previously
not
recognized
because
the
related
tax
deduction
had
not
reduced
current
income
taxes,
offset
by
a
valuation
allowance
of

$18.0
million

to
reduce
the
deferred
tax
assets
to
amounts
that
are
more
likely
than
not
to
be
realized.

Product Warranty Accrual

All
of
the
Company's
products
are
covered
by
warranty
to
be
free
from
defects
in
material
and
workmanship
for
periods
ranging
from
one
year

to
five
years
.
The
warranty
period
varies
by
product
and
by
region.
The
Company’s
warranty
doesn’t
provide
a
service
beyond
assuring
that
the
product
complies
with
agreed-upon
specifications
and
is
not
sold
separately.
The
warranty
the
Company
provides
qualifies
as
an
assurance
warranty
and
is
not
treated
as
a
separate
performance
obligation.
The
Company
estimates
cost
of
product
warranties
at
the
time
the
related
revenue
is
recognized
based
on
historical
warranty
claim
rates,
historical
costs,
and
knowledge
of
specific
product
failures
that
are
outside
of
the
Company's
typical
experience.
The
Company
accrues
a
warranty
liability
for
estimated
costs
to
provide
products,
parts
or
services
to
repair
or
replace
products
in
satisfaction
of
the
warranty
obligation.
Each
quarter,
the
Company
reevaluates
estimates
to
assess
the
adequacy
of
recorded
warranty
liabilities.
When
the
Company
experiences
changes
in
warranty
claim
activity
or
costs
associated
with
fulfilling
those
claims,
the
warranty
liability
is
adjusted
accordingly.
If
actual
product
failure
rates
or
repair
costs
differ
from
estimates,
revisions
to
the
estimated
warranty
liabilities
would
be
required
and
could
materially
affect
the
Company's
results
of
operations.

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International
S.A.
|
Fiscal
2019
Form
10-K
|
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Table of Contents

Comprehensive Income (Loss)

Comprehensive
income
(loss)
is
defined
as
the
total
change
in
shareholders'
equity
during
the
period
other
than
from
transactions
with
shareholders.
Comprehensive
income
(loss)
consists
of
net
income
(loss)
and
other
comprehensive
income
(loss).
Other
comprehensive
income
(loss)
is
comprised
of
currency
translation
adjustments
from
those
entities
not
using
the
U.S.
Dollar
as
their
functional
currency,
net
deferred
gains
and
losses
and
prior
service
costs
and
credits
for
defined
benefit
pension
plans,
and
net
deferred
gains
and
losses
on
hedging
activity.

Treasury Shares

The
Company
periodically
repurchases
shares
in
the
market
at
fair
value.
Shares
repurchased
are
recorded
at
cost
as
a
reduction
of
total
shareholders'
equity.
Treasury
shares
held
may
be
reissued
to
satisfy
the
exercise
of
employee
stock
options
and
purchase
rights
and
the
vesting
of
restricted
stock
units,
or
may
be
canceled
with
shareholder
approval.
Treasury
shares
that
are
reissued
are
accounted
for
using
the
first-in,
first-out
basis.

Derivative Financial Instruments

The
Company
enters
into
foreign
exchange
forward
contracts
to
reduce
the
short-term
effects
of
currency
fluctuations
on
certain
foreign
currency
receivables
or
payables
and
to
hedge
against
exposure
to
changes
in
currency
exchange
rates
related
to
its
subsidiaries'
forecasted
inventory
purchases.

Gains
and
losses
for
changes
in
the
fair
value
of
the
effective
portion
of
the
Company's
forward
contracts
related
to
forecasted
inventory
purchases
are
deferred
as
a
component
of
accumulated
other
comprehensive
income
(loss)
until
the
hedged
inventory
purchases
are
sold,
at
which
time
the
gains
or
losses
are
reclassified
to
cost
of
goods
sold.
The
Company
presents
the
earnings
impact
from
forward
points
in
the
same
line
item
that
is
used
to
present
the
earnings
impact
of
the
hedged
item,
i.e.
cost
of
goods
sold,
for
hedging
forecasted
inventory
purchases.

Gains
or
losses
from
changes
in
the
fair
value
of
forward
contracts
that
offset
translation
losses
or
gains
on
foreign
currency
receivables
or

payables
are
recognized
immediately
and
included
in
other
income
(expense),
net
in
the
consolidated
statements
of
operations.

Restructuring Charges

The
Company's
restructuring
charges
consist
of
employee
severance,
one-time
termination
benefits
and
ongoing
benefits
related
to
the
reduction
of
its
workforce,
lease
exit
costs,
and
other
costs.
Liabilities
for
costs
associated
with
a
restructuring
activity
are
measured
at
fair
value
and
are
recognized
when
the
liability
is
incurred,
as
opposed
to
when
management
commits
to
a
restructuring
plan.
One-time
termination
benefits
are
expensed
at
the
date
the
entity
notifies
the
employee,
unless
the
employee
must
provide
future
service,
in
which
case
the
benefits
are
expensed
ratably
over
the
future
service
period.
Ongoing
benefits
are
expensed
when
restructuring
activities
are
probable
and
the
benefit
amounts
are
estimable.
Costs
to
terminate
a
lease
before
the
end
of
its
term
are
recognized
when
the
property
is
vacated.
Other
costs
primarily
consist
of
legal,
consulting,
and
other
costs
related
to
employee
terminations
are
expensed
when
incurred.
Termination
benefits
are
calculated
based
on
regional
benefit
practices
and
local
statutory
requirements.

Recent Accounting Pronouncements Adopted

In
May
2014,
the
Financial
Accounting
Standards
Board
("FASB")
issued
Accounting
Standard
Update
(ASU)
No.
2014-09,
"Revenue
from
Contracts
with
Customers
(Topic
606)"
(ASU
2014-09
or
Topic
606)
which
supersedes
the
revenue
recognition
requirements
under
ASC
605
(Topic
605),
Revenue
Recognition.
ASU
2014-09
outlines
a
new,
single,
comprehensive
model
for
entities
to
use
in
accounting
for
revenue
arising
from
contracts
with
customers
and
supersedes
existing
revenue
recognition
guidance,
including
industry-specific
guidance.
Under
the
new
guidance,
recognition
of
revenue
occurs
when
a
customer
obtains
control
of
promised
goods
or
services
in
an
amount
that
reflects
the
consideration
to
which
the
entity
expects
to
be
entitled
in
exchange
for
those
goods
or
services.
The
new
standard
requires
reporting
companies
to
disclose
the
nature,
amount,
timing,
and
uncertainty
of
revenue
and
cash
flows
arising
from
contracts
with
customers.
On
April
1,
2018,
the
Company
adopted
the
new
standard
and
all
related
amendments
using
the
modified
retrospective
method
applied
to
those
contracts
that
were
not
completed
as
of
April
1,
2018.
Results
for
reporting
periods
beginning
after
April
1,
2018
are
presented
under
Topic
606,
while
prior
period
amounts
are
not
adjusted
and
continue
to
be
reported
in
accordance
with
historic
accounting
standards
under
Topic
605.

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Table of Contents

As
a
result
of
the
adoption
of
the
new
standard,
the
Company
recorded:
a)
a
reduction
to
retained
earnings
as
of
April
1,
2018;
and
b)
reclassifications
of
certain
allowances
for
sales
returns
and
certain
other
Customer
Programs
from
accounts
receivable,
net
to
accrued
and
other
current
liabilities
and
other
current
assets.

The
cumulative
effect
of
the
changes
to
the
consolidated
balance
sheet
from
the
adoption
of
Topic
606
was
as
follows
(in
thousands):

Accounts
receivable,
net

Other
current
assets

Accrued
and
other
current
liabilities

Retained
earnings

Net Reduction to Retained Earnings as of April 1, 2018

As of
 March 31, 2018

Effect of Adoption of
Topic 606

As of
April 1, 2018

  $

214,885   $

105,768   $

56,362  

281,732  

1,232,316  

6,195  

122,845  

(10,882)  

320,653

62,557

404,577

1,221,434

•

•

Under
Topic
605,
accruals
for
certain
Customer
Programs
were
recognized
as
a
reduction
of
revenue
at
the
later
of
when
the
related
revenue
is
recognized
or
when
the
program
is
offered
to
the
customer.
Under
Topic
606,
these
programs
qualify
as
variable
consideration
and
are
recorded
as
a
reduction
of
the
transaction
price
at
the
contract
inception
based
on
the
expected
value
method.
The
Company
is
required
to
estimate
the
accruals
for
these
programs
ahead
of
commitment
date
if
customary
business
practice
creates
an
implied
expectation
that
such
activities
will
occur
in
the
future.

Under
Topic
606,
variable
consideration
must
be
estimated
at
the
outset
of
the
arrangement,
subject
to
the
constraint
guidance
to
ensure
that
a
significant
revenue
reversal
will
not
occur.
As
a
result,
upon
adoption
of
Topic
606,
estimated
breakage
for
accruals
of
certain
Customer
Programs
is
recognized
sooner
as
compared
to
Topic
605.

Balance Sheet Reclassifications

•

•

Under
Topic
605,
the
gross
amount
of
accrued
revenue
reserves
for
sales
returns
of
$31.4
million
,
net
of
expected
returned
inventory
of
$11.4
million
was
included
within
accounts
receivable,
net
as
of
March
31,
2018.
Expected
scrap
cost
of
$5.2
million
for
such
expected
returned
inventory
was
included
in
accrued
and
other
current
liabilities
as
of
March
31,
2018.
Subsequent
to
the
adoption
of
Topic
606,
such
balances
are
presented
on
a
gross
basis
as
accrued
revenue
reserve
from
returns
of
$31.4
million
included
in
accrued
and
other
current
liabilities
and
as
return
assets
of
$6.2
million
included
in
other
current
assets.

Under
Topic
605,
revenue
reserves
for
certain
Customer
Programs
totaling
$76.7
million
,
which
were
estimated
using
portfolio
approach
based
on
aggregated
customer
level
data,
were
included
within
accounts
receivable,
net
as
of
March
31,
2018.
Subsequent
to
the
adoption
of
Topic
606,
such
balances
are
presented
as
accrued
customer
marketing,
pricing
and
incentive
programs
included
in
accrued
and
other
current
liabilities.

Certain
balances
of
allowances
for
sales
return
and
accruals
for
Customer
Programs
which
were
accrued
based
on
Customer
Program
offers

made
to
individual
customers,
met
the
right
of
offset
criteria
in
accordance
with
ASC
210-20,
"Balance
Sheet
(Topic
210)",
and
are
still
included
within
accounts
receivable,
net
.

The
adoption
of
Topic
606
did
not
have
an
impact
on
the
total
cash
flows
from
operating,
investing,
or
financing
activities.

The
following
tables
summarize
the
impacts
of
adopting
Topic
606
on
the
Company’s
consolidated
statements
of
operations
for
the
year
ended

March
31,
2019,
and
consolidated
balance
sheet
as
of
March
31,
2019
(in
thousands):

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Net
sales

  $

2,788,322   $

2,784,636   $

3,686

Year Ended March 31, 2019

As Reported Under
Topic 606

If Reported Under Topic
605

Effect of Change

Accounts
receivable,
net

Other
current
assets

Accrued
and
other
current
liabilities

Retained
earnings

As of March 31, 2019

As Reported Under
Topic 606

Balance Under Topic
605

Effect of Change

  $

383,309   $

260,401   $

69,116  

433,897  

1,365,036  

60,449  

295,126  

1,372,232  

122,908

8,667

138,771

(7,196)

In
January
2016,
the
FASB
issued
ASU
2016-01,
"Financial
Instruments-Recognition
and
Measurement
of
Financial
Assets
and
Financial
Liabilities
(Subtopic
825-10)"
(ASU
2016-01).
ASU
2016-01
requires
equity
investments
that
are
not
accounted
for
under
the
equity
method
or
do
not
result
in
consolidation
to
be
recorded
at
fair
value
and
any
changes
in
fair
value
to
be
recognized
within
the
statement
of
operations.
The
Company
adopted
ASU
2016-01
effective
April
1,
2018,
on
a
prospective
basis
for
its
privately
held
strategic
equity
investments
without
readily
determinable
fair
values.
The
Company
elected
the
measurement
alternative
to
record
these
investments
at
cost
and
to
adjust
for
impairments
and
observable
price
changes
resulting
from
transactions
with
the
same
issuer
within
the
statement
of
operations.
The
adoption
of
ASU
2016-01
did
not
have
a
material
impact
on
the
Company's
consolidated
financial
statements.

In
October
2016,
the
FASB
issued
ASU
2016-16,
"Income
Taxes
(Topic
740):
Intra-Entity
Transfers
of
Assets
Other
Than

Inventory"
(ASU
2016-16),
which
eliminates
the
deferral
of
income
tax
effects
of
intra-entity
asset
transfers
until
the
transferred
asset
is
sold
to
an
unrelated
party
or
recovered
through
use.
However,
this
standard
does
not
apply
to
intra-entity
transfer
of
inventory.
The
Company
adopted
this
standard
effective
April
1,
2018
on
a
modified
retrospective
basis,
and
the
adoption
of
ASU
2016-16
did
not
have
a
material
impact
on
its
consolidated
financial
statements.

In
December
2016,
the
FASB
issued
ASU
2016-18,
"Statement
of
Cash
Flows
(Topic
230):
Restricted
Cash"
(ASU
2016-18),
which
requires

that
a
statement
of
cash
flows
explains
the
change
during
the
period
in
the
total
of
cash,
cash
equivalents,
and
amounts
generally
described
as
restricted
cash
or
restricted
cash
equivalents.
The
Company
adopted
this
standard
effective
April
1,
2018,
utilizing
the
retrospective
transition
method
to
each
period
presented
and
the
adoption
of
ASU
2016-18
did
not
have
a
material
impact
on
its
consolidated
financial
statements.
The
consolidated
statement
of
cash
flows
for
the
year
ended
March
31,
2017
has
been
revised
as
a
result
of
the
adoption
and
the
Company
has
no
restricted
cash
balances
or
activities
since
then.

In
January
2017,
the
FASB
issued
ASU
2017-01,
"Business
Combination
(Topic
805):
Clarifying
the
Definition
of
a
Business"
(ASU
2017-01),

which
changes
the
definition
of
a
business
to
assist
with
evaluating
when
a
set
of
transferred
assets
and
activities
is
a
business.
The
Company
adopted
this
standard
effective
April
1,
2018,
and
the
adoption
of
ASU
2017-01
did
not
have
a
material
impact
on
its
consolidated
financial
statements.

In
March
2017,
the
FASB
issued
ASU
2017-07,
"Compensation-Retirement
Benefit
(Topic
715):
Improving
the
Presentation
of
Net
Periodic

Pension
Cost
and
Net
Periodic
Postretirement
Benefit
Cost"
(ASU
2017-07),
which
requires
that
the
Company
disaggregate
the
service
cost
component
from
the
other
components
of
net
benefit
cost,
and
also
provides
guidance
on
how
to
present
the
service
cost
component
and
the
other
components
of
net
benefit
cost
in
the
income
statement
and
allow
only
the
service
cost
component
of
net
benefit
cost
to
be
eligible
for
capitalization.
The
Company
adopted
this
standard
effective
April
1,
2018
using
a
retrospective
adoption
method.
Other
than
the
revised
statement
of
operations
presentation
for
the
periods
in
the
current
year,
the
adoption
of
ASU
2017-07
did
not
have
an
impact
on
the
Company’s
consolidated
financial
statements.
The
impact
to
the
comparative
periods
was
immaterial
and
therefore
the
prior
period
statements
of
operations
were
not
revised.

In
August
2017,
the
FASB
issued
ASU
2017-12,
"Derivatives
and
Hedging
(Topic
815):
Targeted
Improvements
to
Accounting
for
Hedging
Activities"
(ASU
2017-12),
which
improves
the
financial
reporting
of
hedging
relationships
to
better
portray
the
economic
results
of
an
entity’s
risk
management
activities
in
its
financial
statements
and

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Table of Contents

simplifies
the
application
of
the
hedge
accounting
guidance.
The
Company
adopted
this
standard
prospectively
effective
April
1,
2018,
and
the
adoption
of
ASU
2017-12
did
not
have
a
material
impact
on
its
consolidated
financial
statements.
In
accordance
with
ASU
2017-12,
the
Company
has
started
presenting
the
earnings
impact
from
forward
points
in
the
cost
of
goods
sold
line
item,
which
is
used
to
present
the
earnings
impact
of
the
hedged
item.

Recent Accounting Pronouncements To Be Adopted

In
February
2016,
the
FASB
issued
ASU
2016-02,
"Leases
(Topic
842)"
(ASU
2016-02
or
Topic
842),
which
generally
requires
lessees
to

recognize
right-of-use
(ROU)
assets
and
lease
liabilities
arising
from
operating
and
financing
leases
with
terms
longer
than
12
months
in
the
consolidated
balance
sheets
and
and
to
disclose
key
information
about
leasing
arrangements.
In
July
2018,
the
FASB
issued
ASU
2018-11,
"Leases
(Topic
842):
Targeted
Improvements
(ASU
2016-02
or
Topic
842)",
which
provides
an
alternative
modified
transition
method.
Under
this
method,
the
cumulative-effect
adjustment
to
the
opening
balance
of
retained
earnings
is
recognized
on
the
date
of
adoption
with
comparative
prior
periods
not
restated.
The
new
standard,
including
related
amendments
subsequently
issued
by
the
FASB,
is
effective
for
our
interim
and
annual
periods
beginning
April
1,
2019.
The
Company
will
adopt
the
new
guidance
in
the
first
quarter
of
fiscal
year
2020
on
the
alternative
modified
transition
basis,
thereby
recognizing
the
cumulative
effect
of
initially
applying
Topic
842
as
an
adjustment
to
opening
retained
earnings
on
the
adoption
date,
without
revising
the
balances
in
comparative
periods.
The
Company
plans
on
electing
the
package
of
transitional
practical
expedients
upon
adoption
which,
among
other
provisions,
allows
the
Company
to
not
to
reassess
under
the
new
standard
our
prior
conclusions
about
lease
identification,
lease
classification
and
initial
direct
cost,
for
any
existing
leases
on
the
adoption
date.
In
addition,
for
the
facility
leases,
the
Company
intends
to
elect
to
account
for
lease
and
non-lease
components
as
a
single
lease
component.
The
Company
will
also
make
an
accounting
policy
election
not
to
record
leases
that,
at
the
lease
commencement
date,
have
a
lease
term
of
12
months
or
less
on
the
balance
sheet.
The
Company
has
substantially
completed
its
evaluation
of
the
effect
that
the
adoption
of
this
guidance
will
have
on
its
consolidated
financial
statements.
In
connection
with
the
adoption
of
the
new
guidance,
the
Company
expects
to
recognize
ROU
assets
in
the
range
of
$25
million
to
$35
million
and
lease
liabilities
in
the
range
of
$30
million
to
$40
million
on
its
statement
of
financial
position
for
operating
leases,
with
limited
impact
to
its
results
of
operations
and
cash
flows.
The
Company
believes
that
substantially
all
of
its
undiscounted
future
minimum
operating
lease
commitments
based
on
its
current
lease
portfolio
that
were
not
recognized
on
its
consolidated
balance
sheet
as
of
March
31,
2019
and
as
disclosed
in
Note
13
to
the
consolidated
financial
statements,
will
be
subject
to
the
new
standard.

In
August
2018,
the
FASB
issued
ASU
2018-13,
"Fair
Value
Measurement
(Topic
820):
Disclosure
Framework
-
Changes
to
the
Disclosure
Requirements
for
Fair
Value
Measurements"
(ASU
2018-13),
which
aims
to
improve
the
overall
usefulness
of
disclosures
to
financial
statement
users
and
reduce
unnecessary
costs
to
companies
when
preparing
fair
value
measurement
disclosures.
ASU
2018-13
is
effective
for
annual
and
interim
periods
in
fiscal
years
beginning
after
December
15,
2019.
Early
adoption
is
permitted.
Retrospective
adoption
is
required,
except
for
certain
disclosures
which
will
be
required
to
be
applied
prospectively
for
only
the
most
recent
interim
or
annual
period
presented
in
the
initial
fiscal
year
of
adoption.
The
Company
does
not
expect
the
adoption
of
ASU
2018-13
will
have
a
material
impact
on
its
consolidated
financial
statements
and
will
adopt
the
standard
effective
April
1,
2020.

In
August
2018,
the
FASB
issued
ASU
2018-14,
"Compensation
-
Retirement
Benefits
-
Defined
Benefits
Plans
-
General
(Subtopic
715-20):

Disclosure
Framework
-
Changes
to
the
Disclosure
Requirements
for
Defined
Benefit
Plans"
(ASU
2018-14),
which
aims
to
improve
the
overall
usefulness
of
disclosures
to
financial
statement
users
and
reduce
unnecessary
costs
to
companies
when
preparing
defined
benefit
plan
disclosures.
ASU
2018-14
is
effective
for
annual
periods
in
fiscal
years
ending
after
December
15,
2020.
Retrospective
adoption
is
required
and
early
adoption
is
permitted.
The
Company
does
not
expect
the
adoption
of
ASU
2018-14
will
have
a
material
impact
on
its
consolidated
financial
statements
and
will
adopt
the
standard
effective
April
1,
2020.

In
August
2018,
the
FASB
issued
ASU
2018-15,
"Intangibles
-
Goodwill
and
Other
-
Internal-Use
Software
(Subtopic
350-40):
Customer's

Accounting
for
Implementation
Costs
Incurred
in
a
Cloud
Computing
Arrangement
That
Is
a
Service
Contract"
(ASU
2018-15),
which
clarifies
that
implementation
costs
incurred
by
customers
in
cloud
computing
arrangements
are
deferred
if
they
would
be
capitalized
by
customers
in
software
licensing
arrangements
under
the
internal-use
software
guidance.
ASU
2018-15
is
effective
for
annual
and
interim
periods
in
fiscal
years
beginning
after
December
15,
2019,
with
early
adoption
permitted.
Entities
have
the
option
to
apply
the
guidance
prospectively
to
all
implementation
costs
incurred
after
the
date
of
adoption
or
retrospectively.
The
Company
does
not
expect
the
adoption
of
ASU
2018-15
will
have
a
material
impact
on
its
consolidated
financial
statements
and
will
adopt
the
standard
prospectively
effective
April
1,
2019.

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Table of Contents

Note 3—Business Acquisitions

Fiscal Year 2019 Acquisition

Blue Microphones Acquisition

On
August
21,
2018
(the
"Blue
Microphones
Acquisition
Date"),
the
Company
acquired
all
equity
interests
in
Blue
Microphones
Holding

Corporation
("Blue
Microphones")
for
a
total
consideration
of
$134.8
million
in
cash
(the
"Blue
Microphones
Acquisition"),
which
included
a
working
capital
adjustment
and
repayment
of
debt
on
behalf
of
Blue
Microphones.

Blue
Microphones
is
a
leading
audio
manufacturer
that
designs
and
produces
microphones,
headphones,
recording
tools,
and
accessories
for

audio
professionals,
musicians
and
consumers.
The
Blue
Microphones
Acquisition
supplements
the
Company's
product
portfolio.


Blue
Microphones
met
the
definition
of
a
business,
and
therefore
the
acquisition
is
accounted
for
using
the
acquisition
method.

The
following
table
summarizes
the
estimated
fair
values
of
the
assets
acquired
and
liabilities
assumed
at
the
Blue
Microphones
Acquisition

Date
(in
thousands):

Cash
and
cash
equivalents

Accounts
receivable

Inventories

Other
current
assets

Property,
plant
and
equipment

Intangible
assets

Total
identifiable
assets
acquired

Accounts
payable

Accrued
liabilities

Other
long-term
liabilities

Net
identifiable
assets
acquired

Goodwill

Net
assets
acquired

  Estimated Fair Value
1,110
  $

10,979

19,546

997

452

55,567

88,651

(10,322)

(11,162)

(661)

66,506

68,269

134,775

  $

  $

  $

Goodwill
related
to
the
acquisition
is
primarily
attributable
to
opportunities
and
economies
of
scale
from
combining
the
operations
and

technologies
of
Logitech
and
Blue
Microphones
and
is
not
deductible
for
tax
purposes.

The
fair
value
of
the
inventory
acquired
is
estimated
at
its
net
realizable
value,
which
uses
the
estimated
selling
prices,
less
the
cost
of
disposal

and
a
reasonable
profit
allowance
for
the
selling
efforts.
The
difference
between
the
fair
value
of
the
inventories
and
the
amount
recorded
by
Blue
Microphones
immediately
before
the
acquisition
date
is
$1.8
million
,
which
has
been
recognized
in
"amortization
of
intangibles
assets
and
purchase
accounting
effect
on
inventory"
in
the
consolidated
statements
of
operations
upon
the
sale
of
the
acquired
inventory.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
84

 
 
 
 
 
 
 
 
 
 
Table of Contents

The
following
table
summarizes
the
estimated
fair
values
and
estimated
useful
lives
of
the
components
of
intangible
assets
acquired
as
of
the

Blue
Microphones
Acquisition
Date
(Dollars
in
thousands):

Developed
technology

Customer
relationships

Trademark
and
trade
name

Total
intangible
assets
acquired

$

$

Fair Value

17,967  

25,100  

12,500  

55,567  

Estimated Useful Life (years)
5.0

10.0

7.0

7.7

Intangible
assets
acquired
as
a
result
of
the
Blue
Microphones
Acquisition
are
being
amortized
over
their
estimated
useful
lives
using
the
straight-line
method
of
amortization,
which
materially
approximates
the
distribution
of
the
economic
value
of
the
intangible
assets.
Amortization
of
developed
technology
of
$2.1
million
during
the
year
ended
March
31,
2019
is
included
in
"amortization
of
intangible
assets
and
purchase
accounting
effect
of
inventory"
in
the
consolidated
statements
of
operations.
Amortization
of
customer
relationships,
trademark
and
trade
names
of
$2.5
million
during
the
year
ended
March
31,
2019
is
included
in
"
amortization
of
intangible
assets
and
acquisition-related
costs
"
in
the
consolidated
statements
of
operations.

Developed
technology
relates
to
existing
Blue
Microphones
products.
The
economic
useful
life
was
determined
based
on
the
technology
cycle

related
to
developed
technology
of
existing
products,
as
well
as
the
cash
flows
anticipated
over
the
forecasted
periods.

Customer
relationships
represent
the
fair
value
of
future
projected
revenue
that
will
be
derived
from
sales
of
products
to
existing
customers
of

Blue
Microphones.
The
economic
useful
life
was
determined
based
on
historical
customer
attrition
rates
and
industry
benchmarks.

Trademark
and
trade
name
relates
to
“Blue
Microphones”.
The
economic
useful
life
was
determined
based
on
the
expected
life
of
the
trade

name
and
the
cash
flows
anticipated
over
the
forecasted
periods.

The
fair
values
of
developed
technology
and
trade
name
were
estimated
using
the
relief-from-royalty
method,
an
income
approach
(Level
3),
which
estimates
the
cost
savings
that
accrue
to
the
owner
of
the
intangible
assets
that
would
otherwise
be
payable
as
royalties
or
license
fees
on
revenues
earned
through
the
use
of
the
asset.
A
royalty
rate
is
applied
to
the
projected
revenues
associated
with
the
intangible
assets
to
determine
the
amount
of
savings,
which
is
then
discounted
to
determine
the
fair
value.
The
developed
technology
and
trade
name
were
valued
using
royalty
rates
of

10%

and

3%
,
respectively,
and
both
were
discounted
at
a
rate
of
11%
.

The
fair
value
of
customer
relationships
was
estimated
using
the
excess
earnings
method,
an
income
approach
(Level
3),
which
converts
projected
revenues
and
costs
into
cash
flows.
To
reflect
the
fact
that
certain
other
assets
contributed
to
the
cash
flows
generated,
the
returns
for
these
contributory
assets
were
removed
to
arrive
at
estimated
cash
flows
solely
attributable
to
the
customer
relationships,
which
were
discounted
at
a
rate
of

11%
.

The
Company
believes
the
fair
value
of
the
intangible
assets
recorded
above
approximates
the
amounts
a
market
participant
would
pay
for

these
intangible
assets
as
of
the
Acquisition
Date.

The
Company
included
Blue
Microphones'
estimated
fair
value
of
assets
acquired
and
liabilities
assumed
in
its
consolidated
balance
sheet
beginning
on
the
Blue
Microphones
Acquisition
Date.
The
results
of
operations
for
Blue
Microphones
subsequent
to
the
acquisition
date
have
been
included
in,
but
are
not
material
to,
the
Company's
consolidated
statements
of
operations.
For
the
year
ended
March
31,
2019,
Blue
Microphones
contributed
$45.7
million

to
sales,
representing
approximately
2%
of
the
sales
of
the
Company.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
85

 
 
Table of Contents

Fiscal Year 2018 Acquisitions

ASTRO Acquisition

On
August
11,
2017
(the
ASTRO
Acquisition
Date),
the
Company
acquired
certain
assets
and
liabilities
constituting
the
ASTRO
Gaming
business
(ASTRO)
from
AG
Acquisition
Corporation
for
a
purchase
price
of
$85.0
million
in
cash
(the
ASTRO
Acquisition).
ASTRO
is
a
leading
console
gaming
accessory
brand
with
a
history
of
producing
award-winning
headsets
for
professional
gamers
and
enthusiasts.
ASTRO
provides
the
Company
with
a
strong
growth
platform
in
the
console
gaming
accessories
market.

ASTRO
meets
the
definition
of
a
business,
and
its
acquisition
is
accounted
for
using
the
acquisition
method.
The
following
table
summarizes
the

estimated
fair
values
of
the
assets
acquired
and
liabilities
assumed
at
the
ASTRO
Acquisition
Date
(in
thousands):

Inventories

Property,
plant
and
equipment

Intangible
assets

Other
assets

Total
identifiable
assets
acquired

Accrued
liabilities

Net
identifiable
assets
acquired

Goodwill

Net
assets
acquired

  Estimated Fair Value
10,331
  $

2,760

52,520

605

66,216

(2,982)

63,234

21,766

85,000

  $

Goodwill
related
to
the
acquisition
is
primarily
attributable
to
opportunities
and
economies
of
scale
from
combining
the
operations
and

technologies
of
Logitech
and
ASTRO.
Goodwill
is
expected
to
be
deductible
for
tax
purposes.

The
fair
value
of
the
inventory
acquired
is
estimated
at
their
net
realizable
value,
which
uses
the
estimated
selling
prices,
less
the
costs
of
disposal
and
a
reasonable
profit
allowance
for
the
selling
efforts.
The
difference
between
the
fair
value
of
the
inventories
and
the
amount
recorded
by
ASTRO
immediately
before
the
ASTRO
Acquisition
Date
is
$0.8
million
,
which
has
been
recognized
in
"amortization
of
intangibles
assets
and
purchase
accounting
effect
on
inventory"
in
the
consolidated
statements
of
operations
upon
the
sale
of
the
acquired
inventory.

The
following
table
summarizes
the
estimated
fair
values
and
estimated
useful
lives
of
the
components
of
intangible
assets
acquired
as
of
the

ASTRO
Acquisition
Date
(Dollars
in
thousands):

Developed
technology

Customer
relationships

Trademark
and
trade
name

Total
intangible
assets
acquired

$

$

Fair Value

12,540  

33,100  

6,880  

52,520  

Estimated Useful Life (years)
4.0

8.0

6.0

6.8

Intangible
assets
acquired
as
a
result
of
the
ASTRO
Acquisition
are
being
amortized
over
their
estimated
useful
lives
using
the
straight-line
method
of
amortization,
which
materially
approximates
the
distribution
of
the
economic
value
of
the
intangible
assets.
Amortization
of
developed
technology
of
$3.1
million
and
$2.0
million
during
the
year
ended
March
31,
2019
and
2018,
respectively,
is
included
in
"amortization
of
intangible
assets
and
purchase
accounting
effect
of
inventory"
in
the
consolidated
statements
of
operations.
Amortization
of
customer
relationships
and
trade
name
of
$5.3
million
and
$3.3
million
during
the
year
ended
March
31,
2019
and
2018,
respectively,
is
included
in
"
amortization
of
intangible
assets
and
acquisition-related
costs
"
in
the
consolidated
statements
of
operations.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
86

 
 
 
 
 
 
 
 
 
 
Table of Contents

Developed
technology
relates
to
existing
ASTRO
gaming
headset
products.
The
economic
useful
life
was
determined
based
on
the
technology

cycle
related
to
developed
technology
of
existing
products,
as
well
as
the
cash
flows
anticipated
over
the
forecasted
periods.

Customer
relationships
represent
the
fair
value
of
future
projected
revenue
that
will
be
derived
from
sales
of
products
to
existing
customers
of

ASTRO.
The
economic
useful
life
was
determined
based
on
historical
customer
attrition
rates
and
industry
benchmarks.

Trademark
and
trade
name
relates
to
“ASTRO”.
The
economic
useful
life
was
determined
based
on
the
expected
life
of
the
trade
name
and
the

cash
flows
anticipated
over
the
forecasted
periods.

The
fair
value
of
developed
technology
and
trade
name
was
estimated
using
the
relief-from-royalty
method,
an
income
approach
(Level
3),
which
estimates
the
cost
savings
that
accrue
to
the
owner
of
the
intangible
assets
that
would
otherwise
be
payable
as
royalties
or
license
fees
on
revenues
earned
through
the
use
of
the
asset.
A
royalty
rate
is
applied
to
the
projected
revenues
associated
with
the
intangible
assets
to
determine
the
amount
of
savings,
which
is
then
discounted
to
determine
the
fair
value.
The
developed
technology
and
trade
name
were
valued
using
royalty
rates
of

10%

and

2%
,
respectively,
and
both
were
discounted
at
a
rate
of
13%
.

The
fair
value
of
customer
relationships
was
estimated
using
the
excess
earnings
method,
an
income
approach
(Level
3),
which
converts
projected
revenues
and
costs
into
cash
flows.
To
reflect
the
fact
that
certain
other
assets
contributed
to
the
cash
flows
generated,
the
returns
for
these
contributory
assets
were
removed
to
arrive
at
estimated
cash
flows
solely
attributable
to
the
customer
relationships,
which
were
discounted
at
a
rate
of

13%
.

The
Company
believes
the
value
of
intangible
assets
recorded
above
approximates
the
amounts
a
market
participant
would
pay
for,
these

intangible
assets
as
of
the
ASTRO
Acquisition
Date.

The
Company
included
ASTRO's
estimated
fair
value
of
assets
acquired
and
liabilities
assumed
in
its
consolidated
balance
sheets
beginning
on

the
ASTRO
Acquisition
Date.
The
results
of
operations
for
ASTRO
have
been
included
in,
but
are
not
material
to,
the
Company's
consolidated
statements
of
operations
from
the
ASTRO
Acquisition
Date.

In
November
2017,
the
Company
also
made
a
small
technology
acquisition
for
a
total
consideration
of
$5.2
million
,
including
cash
acquired
of

$0.9
million
.

Change in fair value of contingent consideration for business acquisition

On
April
20,
2016
(the
Jaybird
Acquisition
Date),
the
Company
acquired
all
of
the
equity
interests
of
JayBird,
LLC
(Jaybird),
a
Utah
limited
liability
company
that
develops
Bluetooth
earbuds,
activity
trackers,
and
accessories
for
sports
and
active
lifestyles,
for
a
purchase
price
of
$54.2
million
in
cash,
with
an
additional
earn-out
of
up
to
$45.0
million
based
on
the
achievement
of
certain
net
revenue
growth
targets
over
approximately
a
two
year
period
(the
Jaybird
Acquisition).
If
the
net
revenue
growth
targets
would
have
been
met,
the
Company
would
have
paid
a
maximum
of
$25.0
million
and
$20.0
million
in
fiscal
years
2018
and
2019,
respectively.

The
fair
value
of
the
earn-out
as
of
the
Jaybird
Acquisition
Date
was

$18.0
million
.
The
fair
value
of
the
contingent
consideration
decreased
by
$4.9
million
and
$8.1
million
for
the
year
ended
March
31,
2018
and
2017,
respectively,
resulting
primarily
from
Jaybird's
lower-than-expected
sales
and
revised
projected
sales
in
the
remaining
earn-out
period.
In
October
2017,
Logitech
and
the
sellers
of
Jaybird
entered
into
an
agreement
fully,
irrevocably
and
unconditionally
releasing
Logitech
from
the
earn-out
rights
and
payments
in
exchange
for
$5.0
million
in
cash,
which
was
paid
in
November
2017.

Acquisition-related costs and pro forma results of operations

The
Company
incurred
acquisition-related
costs
of
approximately
$1.7
million
,
$1.4
million
and
$1.5
million
,
in
aggregate,
for
the
year
ended

March
31,
2019
, 2018
and
2017,
respectively.
The
acquisition-related
costs
are
included
in
"
Amortization
of
intangible
assets
and
acquisition-
related
costs
"
in
the
consolidated
statements
of
operations.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
87

Table of Contents

Pro
forma
results
of
operations
for
the
all
the
acquisitions
completed
in
fiscal
year
2019
and
2018
have
not
been
presented
because
the
effects

of
these
acquisitions
are
not
material
to
the
consolidated
statements
of
operations
individually
or
in
aggregate
for
each
year.

Note 4—Net Income per Share

The
computations
of
basic
and
diluted
net
income
per
share
for
the
Company
were
as
follows
(in
thousands
except
per
share
amounts):

Net Income

Shares used in net income per share computation:

Weighted
average
shares
outstanding
-
basic

Effect
of
potentially
dilutive
equivalent
shares

Weighted
average
shares
outstanding
-
diluted

Net income per share:

Basic

Diluted

Years Ended March 31,

2019

2018

2017

  $

257,573   $

208,542   $

205,876

165,609  

3,356  

168,965  

164,038  

4,933  

168,971  

162,058

3,482

165,540

  $

  $

1.56   $

1.52   $

1.27   $

1.23   $

1.27

1.24

Share
equivalents
attributable
to
outstanding
stock
options,
restricted
stock
units
("RSUs")
and
employee
share
purchase
rights
totaling
1.8

million
,
1.1
million
and
1.4
million
during
fiscal
years
2019
,
2018
and
2017
were
excluded
from
the
calculation
of
diluted
net
income
per
share
because
the
combined
exercise
price
and
average
unamortized
grant
date
fair
value
of
these
options
and
ESPP
or
vesting
of
RSUs
were
greater
than
the
average
market
price
of
the
Company's
shares
during
the
periods
presented
herein,
and
therefore
their
inclusion
would
have
been
anti-
dilutive.
Performance-based
awards
were
not
included
because
all
necessary
conditions
have
not
been
satisfied
by
the
end
of
the
respective
period,
and
those
shares
were
not
issuable
if
the
end
of
the
reporting
period
were
the
end
of
the
contingency
period
.

Note 5—Employee Benefit Plans

Employee Share Purchase Plans and Stock Incentive Plans

As
of
March
31,
2019
,
the
Company
offers
the
2006
Employee
Share
Purchase
Plan,
as
amended
and
restated
(Non-U.S.)
(2006
ESPP),
the

1996
Employee
Share
Purchase
Plan
(U.S.),
as
amended
and
restated
(1996
ESPP),
the
2006
Stock
Incentive
Plan
(2006
Plan)
as
amended
and
restated
and
the
2012
Stock
Inducement
Equity
Plan
(2012
Plan).
Shares
issued
to
employees
as
a
result
of
purchases
or
exercises
under
these
plans
are
generally
issued
from
shares
held
in
treasury
stock.

Logitech
International
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|
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2019
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|
88

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 


 


 
 
 
 
 
 
Table of Contents

The
following
table
summarizes
share-based
compensation
expense
and
total
income
tax
benefit
recognized
for
fiscal
years
2019
,
2018
and

2017
(in
thousands):

Cost
of
goods
sold

Marketing
and
selling

Research
and
development

General
and
administrative

Total
share-based
compensation
expense

Income
tax
benefit

  $

3,812   $

3,733   $

20,630  

7,368  

18,455  

50,265  

(17,091)  

17,765  

6,381  

16,259  

44,138  

(15,998)  

Total
share-based
compensation
expense,
net
of
income
tax
benefit

  $

33,174   $

28,140   $

2,663

14,723

4,200

14,304

35,890

(8,536)

27,354

Years Ended March 31,

2019

2018

2017

The 
income 
tax 
benefit 
in 
the 
respective 
period 
primarily 
consists 
of 
tax 
benefit 
related 
to 
the 
share-based 
compensation 
expense 
for 
the
period
and
direct
tax
benefit
realized,
including
net
excess
tax
benefits
recognized
from
share-based
awards
vested
or
exercised
upon
the
adoption
of
ASU
2016-09
on
April
1,
2017.
The
income
tax
benefit
for
the
year
ended
March
31,
2018
was
reduced
by
the
income
tax
provision
resulting
from
the
remeasurement
of
applicable
deferred
tax
assets
and
liabilities
due
to
the
enactment
of
the
Tax
Act
in
the
United
States
on
December
22,
2017.
See
"Note
7
-
Income
Taxes"
for
more
information.

As
of
March 
31, 
2019
 ,
2018
and
2017
, 
the
balance 
of 
capitalized 
stock-based 
compensation 
included 
in
inventory 
was
 $0.9
million
,
$0.7

million
and
$0.6
million
,
respectively.

The
following
table
summarizes
total
unamortized
share-based
compensation
expense
and
the
remaining
period
over
which
such
expense
is

expected
to
be
recognized,
on
a
weighted-average
basis
by
type
of
grant
(in
thousands,
except
number
of
months):

ESPP

Stock
Options

Time-based
RSUs

Market-based
and
performance-based
RSUs

Total
unamortized
share-based
compensation
expense

March 31, 2019

Unamortized
Expense

Remaining
Months

  $

  $

1,515  

7,384  

65,798  

16,277  

90,974  

4

35

33

20

Under
the
1996
ESPP
and
2006
ESPP
plans,
eligible
employees
may
purchase
shares
at
the
lower
of
85%
of
the
fair
market
value
at
the
beginning
or
the
end
of
each
offering
period,
which
is
generally
six
months
.
Subject
to
continued
participation
in
these
plans,
purchase
agreements
are
automatically
executed
at
the
end
of
each
offering
period.
An
aggregate
of
29.0
million
shares
was
reserved
for
issuance
under
the
1996
and
2006
ESPP
plans.
As
of
March
31,
2019
,
a
total
of
5.4
million
shares
was
available
for
new
awards
under
these
plans.

The
2006
Plan
provides
for
the
grant
to
eligible
employees
and
non-employee
directors
of
stock
options,
stock
appreciation
rights,
restricted

stock
and
RSUs.
Awards
under
the
2006
Plan
may
be
conditioned
on
continued
employment,
the
passage
of
time
or
the
satisfaction
of
performance
and
market
vesting
criteria.
The
2006
Plan,
as
amended,
has
no
expiration
date.
All
stock
options
under
this
plan
have
terms
not
exceeding
ten
years
and
are
issued
at
exercise
prices
not
less
than
the
fair
market
value
on
the
date
of
grant.
An
aggregate
of
30.6
million
shares
was
reserved
for
issuance
under
the
2006
Plan.
As
of
March
31,
2019
,
a
total
of
9.2
million
shares
was
available
for
new
awards
under
this
plan.

Time-based
RSUs
granted
to
employees
under
the
2006
Plan
generally
vest
in
four
equal
annual
installments
on
the
grant
date
anniversary.

Time-based
RSUs
granted
to
non-executive
board
members
under
the
2006
Plan
vest
on
the
grant
date
anniversary,
or
if
earlier
and
only
if
the
non-
executive
board
member
is
not
re-elected
as
a
director
at
such
annual
general
meeting,
the
date
of
the
next
annual
general
meeting
following
the
grant
date.

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|
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2019
Form
10-K
|
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Table of Contents

Performance-based
RSUs
granted
in
fiscal
years
2016
and
2017
under
the
2006
Plan
vest
contingent
upon
the
achievement
of
predetermined

financial
metrics,
the
performance
period
of
which
is
approximately
three
years
.
The
performance
condition
can
be
achieved
before
the
end
of
the
performance
period.
Market-based
options
granted
under
the
2006
Plan
vest
upon
meeting
the
Company's
share
price
performance
criteria.
The
number
of
shares
of
common
stock
to
be
received
at
vesting
for
market-based
RSUs
granted
in
fiscal
years
2016
and
2017
under
the
2006
Plan
will
range
from

0
percent
to

150
percent

of
the
target
number
of
stock
units
based
on
the
Company's
total
stockholder
return
(TSR)
relative
to
the
performance
of
companies
in
the
NASDAQ-100
Index
for
each
measurement
period,
generally
over
a
three
-year
period.
In
fiscal
years
2018
and
2019,
the
Company
granted
RSUs
with
both
performance
and
market
conditions,
which
vest
at
the
end
of
the
three
-year
performance
period
upon
meeting
predetermined
financial
metrics
over
three
years
,
with
the
number
of
shares
to
be
received
upon
vesting
determined
based
on
weighted
average
constant
currency
revenue
growth
rate
and
the
Company's
TSR
relative
to
the
performance
of
companies
in
the
NASDAQ-100
Index
over
the
same
three
years
period.
The
Company
presents
shares
granted
and
vested
at

100
percent

of
the
target
of
the
number
of
stock
units
that
may
potentially
vest.


Under
the
2012
Plan,
stock
options
and
RSUs
may
be
granted
to
eligible
employees
to
serve
as
an
inducement
to
enter
into
employment
with

the
Company.
Awards
under
the
2012
Plan
may
be
conditioned
on
continued
employment,
the
passage
of
time
or
the
satisfaction
of
market
stock
performance
criteria,
based
on
individually
written
employment
offer
letter.
The
2012
Plan
has
an
expiration
date
of
March
28,
2022.
An
aggregate
of
1.8
million
shares
was
reserved
for
issuance
under
the
2012
Plan.
As
of
March
31,
2019
,
no
shares
were
available
for
new
awards
under
this
plan.

The
estimates
of
share-based
compensation
expense
require
a
number
of
complex
and
subjective
assumptions
including
stock
price
volatility,

employee
exercise
patterns,
probability
of
achievement
of
the
set
performance
condition,
dividend
yield,
related
tax
effects
and
the
selection
of
an
appropriate
fair
value
model.

The
grant
date
fair
value
of
the
awards
using
the
Black-Scholes-Merton
option-pricing
valuation
model
and
Monte-Carlo
simulation
method
is

determined
with
the
following
assumptions
and
values:

Stock Options

 Employee Stock Purchase Plans

Years Ended March 31,

Years Ended March 31,

Dividend
yield

Risk-free
interest
rate

Expected
volatility

Expected
life
(years)

2019

1.72%  

2.45%  

33%  

6.2

Weighted
average
grant
date
fair
value
per
share

  $

11.55

*
Not
applicable
as
no
stock
options
were
granted
in
the
period.

2018
*

*

*

*

*

2017
*

*

*

*

*

2019

2018

1.73%  

2.35%  

31%  

0.5

1.67%  

1.37%  

27%  

0.5

2017
2.50%

0.51%

35%

0.5

$

9.33

  $

8.69

  $

5.73

RSUs with Market Conditions

Dividend
yield

Risk-free
interest
rate

Expected
volatility

Expected
life
(years)

Years Ended March 31,

2019

2018

2017

1.59%  

2.51%  

30%  

3.0

1.75%  

1.40%  

31%  

3.0

3.29%

0.86%

34%

3.0

The
dividend
yield
assumption
is
based
on
the
Company's
history
and
future
expectations
of
dividend
payouts.
The
unvested
RSUs
or

unexercised
options
are
not
eligible
for
these
dividends.
The
expected
life
is
based
on
the
purchase
offerings
periods
expected
to
remain
outstanding
for
employee
stock
purchase
plan,
or
the
performance
period
for
RSUs
with
market
conditions.
The
expected
life
for
stock
options
is
based
on
historical
settlement
rates,
which
the
Company
believes
are
most
representative
of
future
exercise
and
post-vesting
termination
behaviors.
Expected
volatility
is
based
on
historical
volatility
using
the
Company's
daily
closing
prices,
or
including
the
volatility
of
components
of
the
NASDAQ
100
index
for
market-based
RSUs,
over
the
expected
life.
The
Company
considers
the
historical
price
volatility
of
its
shares
as
most
representative
of
future
volatility.
The
risk-free
interest
rate

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90

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

assumptions
are
based
upon
the
implied
yield
of
U.S.
Treasury
zero-coupon
issues
appropriate
for
the
expected
life
of
the
Company's
share-based
awards.

For
RSUs
with
performance
conditions,
the
Company
estimates
the
probability
and
timing
of
the
achievement
of
the
set
performance
condition
at
the
time
of
the
grant
based
on
the
historical
financial
performance
and
the
financial
forecast
in
the
remaining
performance
period
and
reassesses
the
probability
in
subsequent
periods
when
actual
results
or
new
information
become
available.

A
summary
of
the
Company's
stock
option
activities
under
all
stock
plans
for
fiscal
years
2019
,
2018
and
2017
is
as
follows:

Outstanding,
March
31,
2016

Granted

Exercised

Canceled
or
expired

Outstanding,
March
31,
2017

Granted

Exercised

Canceled
or
expired

Outstanding,
March
31,
2018

Granted

Exercised

Canceled
or
expired

Outstanding,
March
31,
2019

Vested
and
exercisable,
March
31,
2019

  Number of Shares  

Weighted-Average
Exercise Price

Weighted-Average
Remaining Contractual
Term

Aggregate Intrinsic
Value

(In thousands)

(Years)

(In thousands)

5,334  

—  

(1,784)  

(500)  

3,050  

—  

(994)  

(16)  

2,040   $

649   $

(82)   $

—  

2,607   $

1,958   $

14  

39  

21  

20  

13  

  $

14,627

  $

8,347

  $

1,707

4.8   $

3.1   $

51,005

50,593

As
of
March
31,
2019
,
the
exercise
price
of
outstanding
options
ranged
from
$2
to
$39
per
share
option.

The
tax
benefit
realized
for
the
tax
deduction
from
options
exercised
during
fiscal
years
2019
,
2018
and
2017
was
$0.2
million
,
$1.8
million

and
$4.2
million
,
respectively.

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91

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

A
summary
of
the
Company's
time-based,
market-based,
and
performance-based
RSU
activities
for
fiscal
years
2019
,
2018
and
2017
is
as

follows:

Number of Shares  

(In thousands)

Weighted-Average
Grant Date Fair
Value

Weighted-Average
Remaining Vesting
Period

Aggregate
Fair Value

(Years)

(In thousands)

Outstanding,
March
31,
2016

Granted—time-based

Granted—market-based

Granted
-
performance-based

Vested

Canceled
or
expired

Outstanding,
March
31,
2017

Granted—time-based

Granted
-
performance-based

Vested

Canceled
or
expired

Outstanding,
March
31,
2018

Granted—time-based

Granted—market
and
performance-based

Vested

Canceled
or
expired

Outstanding,
March
31,
2019

5,521  

2,390   $

160   $

604   $

(2,126)  

(368)  

6,181   $

1,212   $

409   $

(2,248)  

(333)  

5,221   $

1,290   $

381   $

(2,148)   $

(323)   $

4,421   $

16  

15  

15  

14  

33  

33  

20  

40  

39  

17  

26  

29  

  $

48,644

  $

81,582

  $

89,159

1.2   $

173,970

The
RSU
outstanding
as
of
March
31,
2019
above
includes
1.1
million
shares
with
market-based
and
performance-based
vesting
conditions.

The
tax
benefit
realized
for
the
tax
deduction
from
RSUs
that
vested
during
fiscal
years
2019
,
2018
and
2017
was
$16.2
million
,
$20.3
million

and
$13.1
million
,
respectively.

Defined Contribution Plans

Certain
of
the
Company's
subsidiaries
have
defined
contribution
employee
benefit
plans
covering
all
or
a
portion
of
their
employees.
Contributions
to
these
plans
are
discretionary
for
certain
plans
and
are
based
on
specified
or
statutory
requirements
for
others.
The
charges
to
expense
for
these
plans
for
fiscal
years
2019
,
2018
and
2017
,
were
$8.7
million
,
$7.6
million
and
$5.8
million
,
respectively.

Defined Benefit Plans

Certain
of
the
Company's
subsidiaries
sponsor
defined
benefit
pension
plans
or
non-retirement
post-employment
benefits
covering
substantially
all
of
their
employees.
Benefits
are
provided
based
on
employees'
years
of
service
and
earnings,
or
in
accordance
with
applicable
employee
benefit
regulations.
The
Company's
practice
is
to
fund
amounts
sufficient
to
meet
the
requirements
set
forth
in
the
applicable
employee
benefit
and
tax
regulations.

The
Company
recognizes
the
overfunded
or
underfunded
status
of
defined
benefit
pension
plans
and
non-retirement
post-employment
benefit
obligations
as
an
asset
or
liability
in
its
consolidated
balance
sheets
and
recognizes
changes
in
the
funded
status
of
defined
benefit
pension
plans
in
the
year
in
which
the
changes
occur
through
accumulated
other
comprehensive
income
(loss),
which
is
a
component
of
shareholders'
equity.
Each
plan's
assets
and
benefit
obligations
are
remeasured
as
of
March
31
each
year.

Logitech
International
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|
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2019
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92

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

The
net
periodic
benefit
cost
of
the
defined
benefit
pension
plans
and
the
non-retirement
post-employment
benefit
obligations
for
fiscal
years

2019
,
2018
and
2017
was
as
follows
(in
thousands):

Service
costs

Interest
costs

Expected
return
on
plan
assets

Amortization:





Net
transition
obligation

Net
prior
service
credit
recognized

Net
actuarial
loss
recognized

Settlement

Total
net
periodic
benefit
cost

Years Ended March 31,

2019

2018

2017

  $

10,564   $

9,715   $

1,301  

(2,167)  

—  

(443)  

450  

(97)  

1,126  

(1,792)  

—  

(51)  

242  

—  

10,385

800

(1,724)

4

(117)

1,032

—

  $

9,608   $

9,240   $

10,380

The
components
of
net
periodic
benefit
cost
other
than
the
service
costs
component
are
included
in
the
line
“other
income(expense),
net”
in

the
consolidated
statements
of
operations.

The
changes
in
projected
benefit
obligations
for
fiscal
years
2019
and
2018
were
as
follows
(in
thousands):

Projected
benefit
obligations,
beginning
of
the
year

  $

128,915   $

114,640

Years Ended March 31,

2019

2018

Service
costs

Interest
costs

Plan
participant
contributions

Actuarial
gains
(losses)

Benefits
paid

Plan
amendment
related
to
statutory
change

Settlement
and
curtailment

Administrative
expense
paid

Currency
exchange
rate
changes
and
other

Projected
benefit
obligations,
end
of
the
year

10,564  

1,301  

3,666  

9,506  

(3,793)  

(705)  

(335)  

(142)  

(5,315)  

9,715

1,126

3,522

(1,580)

(1,202)

(2,519)

—

(144)

5,357

  $

143,662   $

128,915

The
accumulated
benefit
obligation
for
all
defined
benefit
pension
plans
as
of
March
31,
2019
and
2018
was
$118.7
million
and
$108.9
million
,

respectively.





The
following
table
presents
the
changes
in
the
fair
value
of
defined
benefit
pension
plan
assets
for
fiscal
years
2019
and
2018
(in
thousands):

Fair
value
of
plan
assets,
beginning
of
the
year

  $

84,718   $

Years Ended March 31,

2019

2018

Actual
return
on
plan
assets

Employer
contributions

Plan
participant
contributions

Benefits
paid

Settlement
and
curtailment

Administrative
expenses
paid

Currency
exchange
rate
changes

3,350  

6,383  

3,666  

(3,793)  

(335)  

(142)  

(3,482)  

Fair
value
of
plan
assets,
end
of
the
year

  $

90,365   $

71,376

1,824

5,995

3,522

(1,202)

—

(144)

3,347

84,718

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
93

Table of Contents

The
Company's
investment
objectives
are
to
ensure
that
the
assets
of
its
defined
benefit
plans
are
invested
to
provide
an
optimal
rate
of
investment
return
on
the
total
investment
portfolio,
consistent
with
the
assumption
of
a
reasonable
risk
level,
and
to
ensure
that
pension
funds
are
available
to
meet
the
plans'
benefit
obligations
as
they
become
due.
The
Company
believes
that
a
well-diversified
investment
portfolio
will
result
in
the
highest
attainable
investment
return
with
an
acceptable
level
of
overall
risk.
Investment
strategies
and
allocation
decisions
are
also
governed
by
applicable
governmental
regulatory
agencies.
The
Company's
investment
strategy
with
respect
to
its
largest
defined
benefit
plan,
which
is
available
only
to
Swiss
employees,
is
to
invest
per
the
following
allocation:
33%
in
equities,
34%
in
bonds,
28%
in
real
estate,
2%
in
cash
and
cash
equivalents
and
the
remaining
in
other
investments.
The
Company
also
can
invest
in
real
estate
funds,
commodity
funds,
and
hedge
funds
depending
upon
economic
conditions.

The
following
tables
present
the
fair
value
of
the
defined
benefit
pension
plan
assets
by
major
categories
and
by
levels
within
the
fair
value

hierarchy
as
of
March
31,
2019
and
2018
(in
thousands):

Cash
and
cash
equivalents

Equity
securities

Debt
securities

Swiss
real
estate
funds

Hedge
funds

Other

Total
fair
value
of
plan
assets

Level 1
  $ 10,737   $

27,559  

26,823  

21,659  

—  

2,377  

2019

Level 2

—   $

—  

—  

—  

912  

298  

March 31,

2018

Total
10,737   $

Level 1

Level 2

18,331   $

24   $

27,559  

26,823  

21,659  

912  

2,675  

26,204  

25,150  

12,096  

—  

—  

—  

—  

—  

2,623  

290  

Total
18,355

26,204

25,150

12,096

—

2,913

  $ 89,155   $

1,210   $

90,365   $

84,404   $

314   $

84,718

The
funded
status
of
the
plans
was
as
follows
(in
thousands):

Fair
value
of
plan
assets

Less:
projected
benefit
obligations

Underfunded
status


Amounts
recognized
on
the
balance
sheet
for
the
plans
were
as
follows
(in
thousands):

Current
liabilities

Non-current
liabilities

Total
liabilities

Years Ended March 31,

2019

2018

90,365   $

143,662  

(53,297)   $

84,718

128,915

(44,197)

March 31,

2019

2018

1,849   $

51,448  

53,297   $

1,763

42,434

44,197

  $

  $

  $

  $

Amounts
recognized
in
accumulated
other
comprehensive
loss
related
to
defined
benefit
pension
plans
were
as
follows
(in
thousands):

Net
prior
service
credits

Net
actuarial
loss

Accumulated
other
comprehensive
loss

Deferred
tax

2019

March 31,

2018

  $

3,965   $

3,843   $

(17,630)  

(13,665)  

(267)  

(9,821)  

(5,978)  

(420)  

Accumulated
other
comprehensive
loss,
net
of
tax

  $

(13,932)   $

(6,398)   $

2017

1,274

(11,407)

(10,133)

(347)

(10,480)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
94

Table of Contents

The
following
table
presents
the
amounts
included
in
accumulated
other
comprehensive
loss
as
of
March
31,
2019
,
which
are
expected
to
be

recognized
as
a
component
of
net
periodic
benefit
cost
in
fiscal
year
2020
(in
thousands):

Amortization
of
net
prior
service
credits

Amortization
of
net
actuarial
loss

Year Ending
March 31, 2020

  $

  $

(432)

645

213

The
Company
reassesses
its
benefit
plan
assumptions
on
a
regular
basis.
The
actuarial
assumptions
for
the
defined
benefit
plans
for
fiscal

years
2019
and
2018
were
as
follows:

Benefit Obligations:

Discount
rate

Estimated
rate
of
compensation
increase

Periodic Costs:

Discount
rate

Estimated
rate
of
compensation
increase

Expected
average
rate
of
return
on
plan
assets

Years Ended March 31,

2019

2018


0.55%
-
7.25%


2.50%
-
10.00%  

0.85%-7.50%

2.25%-10.00%


0.75%
-
7.50%

0.75%-7.00%


2.50%
-
10.00%  

2.50%-10.00%


0.75%
-
2.75%

1.00%-2.50%

The
discount
rate
is
estimated
based
on
corporate
bond
yields
or
securities
of
similar
quality
in
the
respective
country,
with
a
duration
approximating
the
period
over
which
the
benefit
obligations
are
expected
to
be
paid.
The
Company
bases
the
compensation
increase
assumptions
on
historical
experience
and
future
expectations.
The
expected
average
rate
of
return
for
the
Company's
defined
benefit
pension
plans
represents
the
average
rate
of
return
expected
to
be
earned
on
plan
assets
over
the
period
that
the
benefit
obligations
are
expected
to
be
paid,
based
on
government
bond
notes
in
the
respective
country,
adjusted
for
corporate
risk
premiums
as
appropriate.

The
following
table
reflects
the
benefit
payments
that
the
Company
expects
the
plans
to
pay
in
the
periods
noted
(in
thousands):

Years Ending March 31,
2020

2021

2022

2023

2024

2025-2029

  $

  $

7,956

7,225

7,553

7,294

7,607

39,367

77,002

The
Company
expects
to
contribute
$5.5
million
to
its
defined
benefit
pension
plans
during
fiscal
year
2020
.

Deferred Compensation Plan

One
of
the
Company's
subsidiaries
offers
a
deferred
compensation
plan
that
permits
eligible
employees
to
make
100%
vested
salary
and

incentive
compensation
deferrals
within
established
limits.
The
Company
does
not
make
contributions
to
the
plan.

The
deferred
compensation
plan's
assets
consist
of
marketable
securities
and
are
included
in
other
assets
on
the
consolidated
balance
sheets.

The
marketable
securities
are
classified
as
trading
investments
and
were
recorded
at
a
fair
value
of
$20.4
million
and
$17.7
million
as
of
March
31,
2019
and
2018
,
respectively,
based
on
quoted
market
prices.
The
Company
also
had
$20.4
million
and
$17.7
million
in
deferred
compensation
liability
as
of
March
31,
2019
and
2018
,
respectively.
Earnings,
gains
and
losses
on
trading
investments
are
included
in
other

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International
S.A.
|
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2019
Form
10-K
|
95

 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
 
 
   
 
 
 
 
 
 
Table of Contents

income
(expense),
net
and
corresponding
changes
in
deferred
compensation
liability
are
included
in
operating
expenses
and
cost
of
goods
sold.

Note 6—Other Income (Expense), net

Other
income
(expense),
net
comprises
of
the
following
(in
thousands):

Investment
income
related
to
the
deferred
compensation
plan

  $

664   $

1,386   $

Currency
exchange
gain
(loss),
net

Other

Other
income
(expense),
net

(3,608)  

2,508  

(4,613)  

790  

  $

(436)   $

(2,437)   $

1,343

169

165

1,677

Years Ended March 31,

2019

2018

2017

The
components
of
net
periodic
benefit
cost
other
than
the
service
cost
component
for
the
year
ended
March
31,
2019
are
included
in
the
line
“Other”
above
as
a
result
of
adopting
ASU
2017-07
effective
April
1,
2018.
The
impact
to
the
comparative
periods
was
immaterial
and
therefore
the
prior
period
statements
of
operations
were
not
revised.

Note 7—Income Taxes

The
Company
is
incorporated
in
Switzerland
but
operates
in
various
countries
with
differing
tax
laws
and
rates.
Further,
a
portion
of
the

Company's
income
(loss)
before
taxes
and
the
provision
for
(benefit
from)
income
taxes
is
generated
outside
of
Switzerland.

Income
from
continuing
operations
before
income
taxes
for
fiscal
years
2019
,
2018
and
2017
is
summarized
as
follows
(in
thousands):

Swiss

Non-Swiss

Income
before
taxes

Years Ended March 31,

2019

2018

2017

  $

212,986   $

177,935   $

58,147  

54,330  

  $

271,133   $

232,265   $

161,544

53,445

214,989

The
provision
for
(benefit
from)
income
taxes
is
summarized
as
follows
(in
thousands):

Current:

Swiss

Non-Swiss

Deferred:

Non-Swiss

Provision
for
income
taxes

Years Ended March 31,

2019

2018

2017

  $

1,364   $

3,526   $

24,334  

13,142  

(12,138)  

7,055  

  $

13,560   $

23,723   $

1,934

9,774

(2,595)

9,113

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
96

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

The
difference
between
the
provision
for
income
taxes
and
the
expected
tax
provision
at
the
statutory
income
tax
rate
of
8.5%
is
reconciled

below
(in
thousands):

Years Ended March 31,

2019

2018

2017

Expected
tax
provision
at
statutory
income
tax
rates

  $

23,046   $

19,743   $

Income
taxes
at
different
rates

Research
and
development
tax
credits

Executive
compensation

Stock-based
compensation

Deferred
tax
effects
from
Tax
Act

Valuation
allowance

Restructuring
charges
/
(credits)

Tax
reserves
(releases),
net

Other,
net

Provision
for
income
taxes

(10,113)  

(5,432)  

3,344  

(7,288)  

—  

1,891  

961  

8,269  

(1,118)  

(9,611)  

(4,124)  

1,835  

(9,376)  

22,325  

533  

(10)  

3,627  

(1,219)  

  $

13,560   $

23,723   $

Deferred
income
tax
assets
and
liabilities
consist
of
the
following
(in
thousands):

Deferred
tax
assets:

Net
operating
loss
carryforwards

Tax
credit
carryforwards

Accruals

Depreciation
and
amortization

Share-based
compensation

Gross
deferred
tax
assets

Valuation
allowance

Gross
deferred
tax
assets
after
valuation
allowance

Deferred
tax
liabilities:

Acquired
intangible
assets
and
other

Gross
deferred
tax
liabilities

Deferred
tax
assets,
net

March 31,

2019

2018

  $

16,323   $

52,263  

52,304  

5,716  

8,703  

135,309  

(28,375)  

106,934  

(18,176)  

(18,176)  

  $

88,758   $

18,274

(5,247)

(2,309)

654

1,794

—

1,024

2

(5,570)

491

9,113

15,476

45,421

42,765

1,505

7,479

112,646

(25,148)

87,498

(4,827)

(4,827)

82,671

The
Tax
Act
enacted
in
the
United
States
in
fiscal
year
2018
permanently
reduced
the
corporate
income
tax
rate
from
35%
to
21%
effective
for
tax
years
including
or
commencing
on
January
1,
2018.
It
also
repealed
corporate
alternative
minimum
tax,
limited
various
business
deductions
such
as
executive
compensation
under
IRC
162(m)
and
modified
the
maximum
deduction
of
net
operating
loss
with
no
carryback
but
indefinite
carryforward
provision
among
other
things.
The
Company
recorded
a
provisional
income
tax
charge
of
$21.7
million
,
net
of
valuation
allowance
against
tax
credits,
in
fiscal
year
2018
to
remeasure
the
deferred
tax
effects
at
21%.

The
Company
completed
its
review,
in
the
third
quarter
of
fiscal
year
2019,
of
previously
recorded
provisional
income
tax
amounts
related
to
net
deferred
tax
assets
impacted
by
the
Tax
Act
and
concluded
that
additional
information,
interpretation
and
guidance
that
became
available
during
the
twelve-month
measurement
period
did
not
alter
the
Company’s
application
of
tax
law
in
remeasuring
gross
deferred
tax
assets
and
related
valuation
allowance.
There
were
no
adjustments
deemed
necessary
in
fiscal
year
2019.

Management
regularly
assesses
the
ability
to
realize
deferred
tax
assets
recorded
in
the
Company's
entities
based
upon
the
weight
of

available
evidence,
including
such
factors
as
recent
earnings
history
and
expected
future
taxable
income.
In
the
event
that
the
Company
changes
its
determination
as
to
the
amount
of
deferred
tax
assets

Logitech
International
S.A.
|
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2019
Form
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|
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Table of Contents

that
can
be
realized,
the
Company
will
adjust
its
valuation
allowance
with
a
corresponding
impact
to
the
provision
for
income
taxes
in
the
period
in
which
such
determination
is
made.

The
Company
had
a
valuation
allowance
of
$28.4
million
at
March
31,
2019
,
compared
to
$25.1
million
at
March
31,
2018
.
The
federal
valuation
allowance
against
tax
credits
was
reduced
from
$2.3
million
as
of
March
31,
2018
to
$1.9
million
as
of
March
31,
2019
due
to
a
release
of
$0.4
million
.
The
Company
had
a
valuation
allowance
of
$25.7
million
as
of
March
31,
2019
against
deferred
tax
assets
in
the
state
of
California,
an
increase
from
$22.1
million
as
of
March
31,
2018
.
The
increase
primarily
relates
to
$2.3
million
and
$1.3
million
from
activities
related
to
deferred
tax
assets
and
the
acquisition
of
Blue
Microphones,
respectively.
The
remaining
valuation
allowance
primarily
represents
$0.8
million
for
various
tax
credit
carryforwards.
The
Company
determined
that
it
is
more
likely
than
not
that
the
Company
would
not
generate
sufficient
taxable
income
in
the
future
to
utilize
such
deferred
tax
assets.

As
of
March
31,
2019
,
the
Company
had
foreign
net
operating
loss
and
tax
credit
carryforwards
for
income
tax
purposes
of
$252.6
million
and

$58.1
million
.
Unused
net
operating
loss
carryforwards
will
expire
at
various
dates
in
fiscal
years
2020
to
2039.
Certain
net
operating
loss
carryforwards
in
the
United
States
relate
to
acquisitions
and,
as
a
result,
are
limited
in
the
amount
that
can
be
utilized
in
any
one
year.
The
tax
credit
carryforwards
will
begin
to
expire
in
fiscal
year
2020.

Swiss
income
taxes
and
non-Swiss
withholding
taxes
associated
with
the
repatriation
of
earnings
or
for
other
temporary
differences
related
to
investments
in
non-Swiss
subsidiaries
have
not
been
provided
for,
as
the
Company
intends
to
reinvest
the
earnings
of
such
subsidiaries
indefinitely
or
the
Company
has
concluded
that
no
additional
tax
liability
would
arise
on
the
distribution
of
such
earnings.
If
these
earnings
were
distributed
to
Switzerland
in
the
form
of
dividends
or
otherwise,
or
if
the
shares
of
the
relevant
non-Swiss
subsidiaries
were
sold
or
otherwise
transferred,
the
Company
may
be
subject
to
additional
Swiss
income
taxes
and
non-Swiss
withholding
taxes.
As
of
March
31,
2019
,
the
cumulative
amount
of
unremitted
earnings
of
non-Swiss
subsidiaries
for
which
no
income
taxes
have
been
provided
is
approximately
$100.3
million
.
The
amount
of
unrecognized
deferred
income
tax
liability
related
to
these
earnings
is
estimated
to
be
approximately
$0.8
million
.

The
Company
follows
a
two-step
approach
in
recognizing
and
measuring
uncertain
tax
positions.
The
first
step
is
to
evaluate
the
tax
position
for
recognition
by
determining
if
the
weight
of
available
evidence
indicates
that
it
is
more
likely
than
not
that
the
position
will
be
sustained
on
audit,
including
resolution
of
related
appeals
or
litigation
processes,
if
any.
The
second
step
is
to
measure
the
tax
benefit
as
the
largest
amount
that
is
more
than
50%
likely
of
being
realized
upon
ultimate
settlement.

As
of
March
31,
2019
and
2018
,
the
total
amount
of
unrecognized
tax
benefits
due
to
uncertain
tax
positions
was
$76.5
million
and
$69.1

million
,
respectively,
all
of
which
would
affect
the
effective
income
tax
rate
if
recognized.

As
of
March
31,
2019
and
2018
,
the
Company
had
$36.4
million
and
$35.0
million
,
respectively,
in
non-current
income
taxes
payable,

including
interest
and
penalties,
related
to
the
Company's
income
tax
liability
for
uncertain
tax
positions.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
98

Table of Contents

The
aggregate
changes
in
gross
unrecognized
tax
benefits
in
fiscal
years
2019
,
2018
and
2017
were
as
follows
(in
thousands):

March
31,
2016

Lapse
of
statute
of
limitations

Decreases
in
balances
related
to
tax
positions
taken
during
prior
years

Increases
in
balances
related
to
tax
positions
taken
during
the
year

March
31,
2017

Lapse
of
statute
of
limitations

Decreases
in
balances
related
to
tax
positions
taken
during
prior
years

Increases
in
balances
related
to
tax
positions
taken
during
the
year

March
31,
2018

Lapse
of
statute
of
limitations

Decreases
in
balances
related
to
tax
positions
taken
during
prior
years

Increases
in
balances
related
to
tax
positions
taken
during
the
year

March
31,
2019

  $

  $

  $

  $

69,879

(14,161)

(1,610)

9,559

63,667

(7,505)

(704)

13,673

69,131

(2,511)

(1,550)

11,479

76,549

The
Company
recognizes
interest
and
penalties
related
to
unrecognized
tax
positions
in
income
tax
expense.
The
Company
recognized
$0.6
million
,
$0.6
million
and
$0.7
million
in
interest
and
penalties
in
income
tax
expense
during
fiscal
years
2019
,
2018
and
2017
,
respectively.
As
of
March
31,
2019
and
2018
,
the
Company
had
$2.5
million
and
$2.3
million
,
respectively,
of
accrued
interest
and
penalties
related
to
uncertain
tax
positions.

The
Company
files
Swiss
and
foreign
tax
returns.
The
Company
received
final
tax
assessments
in
Switzerland
through
fiscal
year
2017.
For
other
foreign
jurisdictions
such
as
the
United
States,
the
Company
is
generally
not
subject
to
tax
examinations
for
years
prior
to
fiscal
year
2016
.
The
Company
is
under
examination
and
has
received
assessment
notices
in
foreign
tax
jurisdictions.
If
the
examinations
are
resolved
unfavorably,
there
is
a
possibility
they
may
have
a
material
negative
impact
on
its
results
of
operations.

Although
the
Company
has
adequately
provided
for
uncertain
tax
positions,
the
provisions
on
these
positions
may
change
as
revised
estimates

are
made
or
the
underlying
matters
are
settled
or
otherwise
resolved.
During
the
next
12
months,
it
is
reasonably
possible
that
the
amount
of
unrecognized
tax
benefits
could
increase
or
decrease
significantly
due
to
chang
es
in
tax
law
in
various
jurisdictions,
new
tax
audits
and
changes
in
the
U.S.
Dollar
as
compared
to
other
currencies.
Excluding
these
factors,
uncertain
tax
positions
may
decrease
by
as
much
as
$3.8
million
primarily
from
the
lapse
of
the
statutes
of
limitations
in
various
jurisdictions
during
the
next
12
months.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
99

 
 
 
 
 
 
 
 
 
Table of Contents

Note 8—Balance Sheet Components

The
following
table
presents
the
components
of
certain
balance
sheet
asset
amounts
as
of
March
31,
2019
and
2018
(in
thousands):

Accounts
receivable,
net:

Accounts
receivable

Allowance
for
doubtful
accounts
Allowance
for
sales
returns
(1)
Allowance
for
cooperative
marketing
arrangements
(1)
Allowance
for
customer
incentive
programs
(1)
Allowance
for
pricing
programs
(1)

Inventories:

Raw
materials

Finished
goods

Other
current
assets:

Value-added
tax
receivables
Prepaid
expenses
and
other
assets
(1)

Property,
plant
and
equipment,
net:

Plant,
buildings
and
improvements

Equipment
and
tooling

Computer
equipment

Software

Less:
accumulated
depreciation
and
amortization

Construction-in-process

Land

Other
assets:

Deferred
tax
assets

Trading
investments
for
deferred
compensation
plan

Investment
in
privately
held
companies

Other
assets

March 31,

2019

2018

  $

573,348   $

(84)  

(6,486)  

(35,080)  

(60,036)  

(88,353)  

383,309   $

40,970   $

252,525  

293,495   $

34,321   $

34,795  

69,116   $

65,219   $

197,540  

24,132  

62,663  

349,554  

(280,793)  

68,761  

7,021  

2,770  

78,552   $

90,808   $

20,363  

16,022  

5,260  

132,453   $

  $

  $

  $

  $

  $

  $

  $

  $

  $

482,872

(122)

(25,515)

(30,389)

(70,592)

(141,369)

214,885

33,603

226,303

259,906

29,477

26,885

56,362

60,747

183,466

22,752

65,723

332,688

(260,284)

72,404

11,029

2,871

86,304

84,651

17,748

12,448

5,908

120,755

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
100

 
 
 
 
 
   
 


 
 
 
 
 
 
 


 


 
 
 


 


 
 
 


 


 
 
 
 
 
 
 
 
 
 
 
 


 


 
 
 
 
Table of Contents

The
following
table
presents
the
components
of
certain
balance
sheet
liability
amounts
as
of
March
31,
2019
and
2018
(in
thousands):

Accrued
and
other
current
liabilities:

Accrued
personnel
expenses
Accrued
sales
return
liability

(1)

Accrued
customer
marketing,
pricing
and
incentive
programs
(1)
Warranty
accrual

Income
taxes
payable

Other
current
liabilities

Other
non-current
liabilities:

Warranty
accrual

Obligation
for
deferred
compensation
plan

Employee
benefit
plan
obligation

Deferred
tax
liability

Other
non-current
liabilities

March 31,

2019

2018

  $

103,166   $

82,330

  $

  $

37,749  

143,888  

21,524  

6,207  

121,363  

433,897   $

12,705   $

20,363  

51,448  

2,050  

7,016  

  $

93,582   $

—

71,962

16,279

4,354

106,807

281,732

11,294

17,748

42,434

1,980

8,468

81,924

(1)
Certain
allowances
for
sales
return
and
certain
other
Customer
Programs
were
included
within
accounts
receivable,
net
balance
as
of
March
31,
2018
.
Upon
adoption
of
Topic
606,
such
balances
are
presented
as
accrued
revenue
reserve
from
returns
and
accrued
customer
marketing,
pricing
and
incentive
programs
included
in
accrued
and
other
current
liabilities,
and
as
return
assets
included
in
other
current
assets,
respectively,
on
the
consolidated
balance
sheet
as
of
March
31,
2018.
Refer
to
Note
2
to
the
consolidated
financial
statements
for
more
information.

Note 9—Fair Value Measurements

The
Company
considers
fair
value
as
the
exchange
price
that
would
be
received
for
an
asset
or
paid
to
transfer
a
liability
(an
exit
price)
in
the
principal
or
most
advantageous
market
for
the
asset
or
liability
in
an
orderly
transaction
between
market
participants
at
the
measurement
date.
The
Company
utilizes
the
following
three-level
fair
value
hierarchy
to
establish
the
priorities
of
the
inputs
used
to
measure
fair
value:

•
•

•

Level
1—Quoted
prices
in
active
markets
for
identical
assets
or
liabilities.
Level
2—Observable
inputs
other
than
quoted
market
prices
included
in
Level
1,
such
as
quoted
prices
for
similar
assets
and
liabilities
in
active
markets;
quoted
prices
for
identical
or
similar
assets
and
liabilities
in
markets
that
are
not
active;
or
other
inputs
that
are
observable
or
can
be
corroborated
by
observable
market
data.
Level
3—Unobservable
inputs
that
are
supported
by
little
or
no
market
activity
and
that
are
significant
to
the
fair
value
of
the
assets
or
liabilities.
This
includes
certain
pricing
models,
discounted
cash
flow
methodologies
and
similar
techniques
that
use
significant
unobservable
inputs.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
101

 
 
 
 
 
 


 


 
 
 
 
 
 
 


 


 
 
 
 
 
Table of Contents

The
following
table
presents
the
Company's
financial
assets
and
liabilities
that
were
accounted
for
at
fair
value
on
a
recurring
basis,
excluding

assets
related
to
the
Company's
defined
benefit
pension
plans,
classified
by
the
level
within
the
fair
value
hierarchy
(in
thousands):

Assets:

Cash
equivalents

Trading
investments
for
deferred
compensation
plan
included
in
other
assets:

Money
market
funds

Mutual
funds

Total
of
trading
investments
for
deferred
compensation
plan

March 31, 2019

March 31, 2018

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

  $

496,434   $

—   $

—   $

492,535   $

—   $

  $

4,080   $

16,283  

—   $

—  

—   $

—  

2,881   $

14,867  

  $

20,363   $

—   $

—   $

17,748   $

—   $

—  

—   $

Currency
derivative
assets
included
in
other
current
assets

  $

—   $

455   $

—   $

—   $

—   $

Liabilities:

Currency
derivative
liabilities
included
in
accrued
and
other
current
liabilities

Investment Securities

  $

—   $

36   $

—   $

—   $

34   $

—

—

—

—

—

—

The
marketable
securities
for
the
Company's
deferred
compensation
plan
are
recorded
at
a
fair
value
of
$20.4
million
and
$17.7
million
as
of
March
31,
2019
and
2018
,
respectively,
based
on
quoted
market
prices.
Quoted
market
prices
are
observable
inputs
that
are
classified
as
Level
1
within
the
fair
value
hierarchy.
Unrealized
trading
gains
related
to
trading
securities
for
fiscal
years
2019
,
2018
and
2017
were
not
material
and
are
included
in
other
income
(expense),
net
in
the
consolidated
statements
of
operations.

Equity Method Investments

The
Company
has
certain
non-marketable
investments
included
in
other
assets
that
are
accounted
for
under
the
equity
method
of
accounting,

with
a
carrying
value
of

$6.6
million

and

$5.1
million

as
of
March
31,
2019
and
2018
,
respectively.

Assets Measured at Fair Value on a Nonrecurring Basis

The
Company’s
non-financial
assets,
such
as
intangible
assets
and
acquisition-related
property,
plant
and
equipment,
are
recorded
at
fair

value
only
upon
initial
recognition
or
if
an
impairment
is
recognized.
There
was
no
impairment
of
long-lived
assets
during
fiscal
years
2019
,
2018
and
2017
.

Financial Assets. The
Company
has
certain
investments
in
equity
securities
of
privately
held
entities
without
readily
determinable
fair
values
due
to
the
absence
of
quoted
market
prices,
the
inherent
lack
of
liquidity,
and
the
fact
that
inputs
used
to
measure
fair
value
are
unobservable
and
require
management's
judgment.
When
certain
events
or
circumstances
indicate
that
impairment
may
exist,
the
Company
revalues
the
investments
using
various
assumptions,
including
the
financial
metrics
and
ratios
of
comparable
public
companies.
The
carrying
value
is
also
adjusted
for
observable
price
changes
with
the
same
or
similar
security
from
the
same
issuer.
The
amount
of
these
investments
included
in
other
assets
as
of
March
31,
2019
and
March
31,
2018
was
$9.5
million
and
$7.3
million
,
respectively.
There
was
no
impairment
of
these
assets
during
fiscal
years
2019
and
2018.

Non-Financial Assets. Goodwill,
intangible
assets,
and
property,
plant
and
equipment,
are
not
required
to
be
measured
at
fair
value
on
a
recurring
basis.
However,
if
certain
triggering
events
occur
(or
tested
at
least
annually
for
goodwill)
such
that
a
non-financial
instrument
is
required
to
be
evaluated
for
impairment
and
an
impairment
is
recorded
to
reduce
the
non-financial
instrument's
carrying
value
to
the
fair
value
as
a
result
of
such
triggering
events,
the
non-financial
assets
and
liabilities
are
measured
at
fair
value
for
the
period
such
triggering
events
occur.
See
Note
2
to
the
consolidated
financial
statements
for
additional
information
about
how
the
Company
tests
various
asset
classes
for
impairment.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
102

 
 
 
 
 
 
 
 
 
 
 


   
   
 


 


 


 


   
   
 


 


 


 
 
   
   
   
   
   
   
 
   
   
   
   
   
   
   
   
   
   
   
   
Table of Contents

Note 10—Derivative Financial Instruments


Under
certain
agreements
with
the
respective
counterparties
to
the
Company's
derivative
contracts,
subject
to
applicable
requirements,
the

Company
is
allowed
to
net
settle
transactions
of
the
same
type
with
a
single
net
amount
payable
by
one
party
to
the
other.
However,
the
Company
presents
its
derivative
assets
and
derivative
liabilities
on
a
gross
basis
in
other
current
assets
or
accrued
and
other
current
liabilities
on
the
consolidated
balance
sheets
as
of
March
31,
2019
and
2018
.

The
fair
values
of
the
Company’s
derivative
instruments
were
not
material
as
of
March
31,
2019
or
March
31,
2018
(refer
to
Note
9
to
the
consolidated
financial
statements
for
more
information).
The
following
table
presents
the
amounts
of
gains
and
losses
on
the
Company's
derivative
instruments
designated
as
hedging
instruments
for
fiscal
years
2019
,
2018
and
2017
and
their
locations
on
its
consolidated
statements
of
operations
and
consolidated
statements
of
comprehensive
income
(in
thousands):

Amount of 
Gain (Loss) Deferred as 
a Component of 
Accumulated Other 
Comprehensive Loss

Amount of Loss (Gain) 
Reclassified from 
Accumulated Other 
Comprehensive Loss 
to Costs of Goods Sold

2019

2018

2017

2019

2018

2017

Designated
as
hedging
instruments:

Cash
flow
hedges

$

1,781   $

(8,499)   $

2,928   $

1,810  

5,808   $

(1,670)

Upon
adoption
of
ASU
2017-12,
the
Company
has
started
presenting
the
earnings
impact
from
forward
points
in
the
same
line
item
that
is
used

to
present
the
earnings
impact
of
the
hedged
item,
i.e.
cost
of
goods
sold,
for
hedging
forecasted
inventory
purchases
and
such
amount
is
not
material
for
all
periods
presented.

Cash Flow Hedges: The
Company
enters
into​
cash
flow
hedge​
contracts
to
​protect​
against
exchange
rate
exposure
​of
​forecasted
inventory
purchases.
These
hedging
contracts
mature
within
four
months
.
Gains
and
losses
in
the
fair
value
of
the
effective
portion
of
the
hedges
are
deferred
as
a
component
of
accumulated
other
comprehensive
loss
until
the
hedged
inventory
purchases
are
sold,
at
which
time
the
gains
or
losses
are
reclassified
to
cost
of
goods
sold.
Cash
flows
from
such
hedges
are
classified
as
operating
activities
in
the
consolidated
statements
of
cash
flows.
Hedging
relationships
are
discontinued
when
hedging
contract
is
no
longer
eligible
for
hedge
accounting,
or
is
sold,
terminated
or
exercised,
or
when
the
Company
removes
hedge
designation
for
the
contract.
Gains
and
losses
in
the
fair
value
of
the
effective
portion
of
the
discontinued
hedges
continue
to
be
reported
in
accumulated
other
comprehensive
loss
until
the
hedged
inventory
purchases
are
sold,
unless
it
is
probable
that
the
forecasted
inventory
purchases
will
not
occur
by
the
end
of
the
originally
specified
time
period
or
within
an
additional
two-month
period
of
time
thereafter.
As
of
March
31,
2019
,
the
notional
amounts
of
currency
forward
contracts
outstanding
related
to
forecasted
inventory
purchases
was
$41.4
million.
As
of
March
31,
2018
,
there
were
no
currency
forward
contracts
outstanding
related
to
forecasted
inventory
purchases.
The
Company
estimates
that

$0.4
million
of
net
gain
related
to
its
cash
flow
hedges
included
in
accumulated
other
comprehensive
loss
as
of
March
31,
2019
will
be
reclassified
into
earnings
within
the
next
twelve
months
.

Other Derivatives: The
Company
also
enters
into
currency
forward
and
swap
contracts
to
reduce
the
short-term
effects
of
currency
fluctuations

on
certain
receivables
or
payables
denominated
in
currencies
other
than
the
functional
currencies
of
its
subsidiaries.
These
forward
and
swap
contracts
generally
mature
within
one
month
.
The
primary
risk
managed
by
using
forward
and
swap
contracts
is
the
currency
exchange
rate
risk.
The
gains
or
losses
on
these
contracts
are
recognized
in
other
income
(expense),
net
in
the
consolidated
statements
of
operations
based
on
the
changes
in
fair
value.
The
notional
amounts
of
these
contracts
outstanding
as
of
March
31,
2019
and
2018
were
$50.4
million
and
$47.2
million
,
respectively.
Open
forward
and
swap
contracts
as
of
March
31,
2019
and
2018
consisted
of
contracts
in
Taiwanese
Dollars,
Australian
Dollars,
Mexican
Pesos,
Japanese
Yen
and
Canadian
Dollars
to
be
settled
at
future
dates
at
pre-determined
exchange
rates.

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

forward
rates.
Cash
flows
from
these
contracts
are
classified
as
operating
activities
in
the
consolidated
statements
of
cash
flows.

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International
S.A.
|
Fiscal
2019
Form
10-K
|
103

 
 
 
 
 
 
 
 
 
 


 


 
 
 


 


Table of Contents

Note 11—Goodwill and Other Intangible Assets

The
Company
performed
its
annual
impairment
analysis
of
goodwill
as
of
December
31,
2018
by
performing
a
qualitative
assessment
and

concluded
that
it
was
more
likely
than
not
that
the
fair
value
of
its
peripherals
reporting
unit,
exceeded
its
carrying
amount.
In
assessing
the
qualitative
factors,
the
Company
considered
the
impact
of
these
key
factors:
change
in
industry
and
competitive
environment,
growth
in
market
capitalization,
and
budgeted-to-actual
revenue
performance
for
the
twelve
months
ended
December
31,
2018
.
There
have
been
no
significant
events
or
circumstances
affecting
the
valuation
of
goodwill
subsequent
to
the
annual
impairment
test.


The
following
table
summarizes
the
activity
in
the
Company's
goodwill
balance
during
fiscal
years
2019
and
2018
(in
thousands):

Beginning
of
the
period

Acquisitions

Currency
exchange
rate
impact

End
of
the
period

Years Ended March 31,

2019

2018

  $

  $

275,451   $

68,269  

(36)  

343,684   $

249,741

25,800

(90)

275,451

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

2019

2018

March 31,

Gross Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Gross Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Trademarks
and
trade
names

  $

36,370   $

(13,659)   $

22,711   $

23,870   $

(9,482)   $

Developed
technology

Customer
contracts/relationships

95,207  

84,610  

(62,341)  

(21,188)  

32,866  

63,422  

77,175  

59,510  

(50,755)  

(12,771)  

  $

216,187   $

(97,188)   $

118,999   $

160,555   $

(73,008)   $

14,388

26,420

46,739

87,547

For
fiscal
years
2019
,
2018
and
2017
,
amortization
expense
for
intangible
assets
was,
$24.2
million
,
$15.6
million
and
$9.4
million
,

respectively.
The
Company
expects
that
annual
amortization
expense
for
fiscal
years
2020,
2021,
2022,
2023
and
2024
will
be
$27.5
million
,
$23.2
million
,
$20.0
million
,
$15.9
million
and
$13.0
million
,
respectively,
and
$19.3
million
thereafter.

Note 12—Financing Arrangements

The
Company
had
several
uncommitted,
unsecured
bank
lines
of
credit
aggregating
$80.6
million
as
of
March
31,
2019
.
There
are
no
financial
covenants
under
these
lines
of
credit
with
which
the
Company
must
comply.
As
of
March
31,
2019
,
the
Company
had
outstanding
bank
guarantees
of
$34.3
million
under
these
lines
of
credit.
There
was
no
borrowing
outstanding
under
the
line
of
credit
as
of
March
31,
2019
or
March
31,
2018
.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
104

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

Note 13—Commitments and Contingencies

Operating Leases

The
Company
leases
facilities
under
operating
leases,
certain
of
which
require
it
to
pay
property
taxes,
insurance
and
maintenance
costs.
Operating
leases
for
facilities
are
generally
renewable
at
the
Company's
option
and
usually
include
escalation
clauses
linked
to
inflation.
Future
minimum
annual
rentals
under
non-cancelable
operating
leases
at
March
31,
2019
are
as
follows
(in
thousands):

Years Ending March 31,
2020

2021

2022

2023

2024

Thereafter

  $

  $

11,849

10,002

7,882

5,111

1,130

3,646

39,620

Rent
expense
for
fiscal
years
2019
,
2018
and
2017
was
$12.4
million
,
$11.2
million
and
$9.9
million
,
respectively.

In
connection
with
its
leased
facilities,
the
Company
recognized
a
liability
for
asset
retirement
obligations
for
2019
and
2018
representing
the

present
value
of
estimated
remediation
costs
to
be
incurred
at
lease
expiration.
The
liabilities
for
asset
retirement
obligations
were
not
material
as
of
March
31,
2019
and
2018
.

Product Warranties

Changes
in
the
Company's
warranty
liability
for
fiscal
years
2019
and
2018
were
as
follows
(in
thousands):

Beginning
of
the
period

Assumed
from
business
acquisition

Provision

Settlements

Currency
translation

End
of
the
period

Indemnifications

Years Ended March 31,

2019

2018

  $

27,573   $

351  

36,927  

(29,874)  

(748)  

  $

34,229   $

21,911

1,230

25,103

(21,766)

1,095

27,573

The
Company
indemnifies
certain
of
its
suppliers
and
customers
for
losses
arising
from
matters
such
as
intellectual
property
disputes
and
product
safety
defects,
subject
to
certain
restrictions.
The
scope
of
these
indemnities
varies,
but
in
some
instances
includes
indemnification
for
damages
and
expenses,
including
reasonable
attorneys'
fees.
As
of
March
31,
2019
,
no
amounts
have
been
accrued
for
these
indemnification
provisions.
The
Company
does
not
believe,
based
on
historical
experience
and
information
currently
available,
that
it
is
probable
that
any
material
amounts
will
be
required
to
be
paid
under
its
indemnification
arrangements.

The
Company
also
indemnifies
its
current
and
former
directors
and
certain
of
its
current
and
former
officers.
Certain
costs
incurred
for
providing
such
indemnification
may
be
recoverable
under
various
insurance
policies.
The
Company
is
unable
to
reasonably
estimate
the
maximum
amount
that
could
be
payable
under
these
arrangements
because
these
exposures
are
not
limited,
the
obligations
are
conditional
in
nature
and
the
facts
and
circumstances
involved
in
any
situation
that
might
arise
are
variable.

Legal Proceedings

From
time
to
time
the
Company
is
involved
in
claims
and
legal
proceedings
which
arise
in
the
ordinary
course
of
its
business.
The
Company
is

currently
subject
to
several
such
claims
and
a
small
number
of
legal
proceedings.
The
Company
believes
that
these
matters
lack
merit
and
intends
to
vigorously
defend
against
them.
Based
on
currently
available
information,
the
Company
does
not
believe
that
resolution
of
pending
matters
will
have
a
material

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International
S.A.
|
Fiscal
2019
Form
10-K
|
105

   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

adverse
effect
on
its
financial
position,
cash
flows
or
results
of
operations.
However,
litigation
is
subject
to
inherent
uncertainties,
and
there
can
be
no
assurances
that
the
Company's
defenses
will
be
successful
or
that
any
such
lawsuit
or
claim
would
not
have
a
material
adverse
impact
on
the
Company's
business,
financial
position,
cash
flows
or
results
of
operations
in
a
particular
period.
Any
claims
or
proceedings
against
the
Company,
whether
meritorious
or
not,
can
have
an
adverse
impact
because
of
defense
costs,
diversion
of
management
and
operational
resources,
negative
publicity
and
other
factors.
Any
failure
to
obtain
a
necessary
license
or
other
rights,
or
litigation
arising
out
of
intellectual
property
claims,
could
adversely
affect
the
Company's
business.

Note 14—Shareholders' Equity

Share Capital

The
Company's
nominal
share
capital
is
CHF

43.3
million
,
consisting
of
173,106,620
shares
with
a
par
value
of
CHF

0.25
each,
all
of
which

were
issued
and
7,243,733
of
which
were
held
in
treasury
shares
as
of
March
31,
2019
.

The
Company's
has
reserved
conditional
capital
of
25,000,000
shares
for
potential
issuance
on
the
exercise
of
rights
granted
under
the
Company's
employee
equity
incentive
plans
and
additional
conditional
capital
for
financing
purposes,
representing
the
issuance
of
up
to
25,000,000
shares
to
cover
any
conversion
rights
under
a
future
convertible
bond
issuance.
This
conditional
capital
was
created
in
order
to
provide
financing
flexibility
for
future
expansion,
investments
or
acquisitions.
During
the
2018
Annual
General
Meeting,
the
shareholders
of
the
Company
authorized
the
Board
of
Directors
to
issue
up
to
an
additional
34,621,324
shares
of
the
Company
until
September
5,
2020.

Dividends

Pursuant
to
Swiss
corporate
law,
the
payment
of
dividends
is
limited
to
certain
amounts
of
unappropriated
retained
earnings
(CHF

940.9

million
or
$945.2
million
based
on
the
exchange
rate
at
March
31,
2019
)
and
is
subject
to
shareholder
approval.

In
May
2019,
the
Board
of
Directors
recommended
that
the
Company
pay
CHF
121.8
million
(
$122.4
million
based
on
the
exchange
rate
on

March
31,
2019)
in
cash
dividends
for
fiscal
year
2019.
In
September
2018,
the
Company
declared
and
paid
cash
dividends
of
CHF

0.67

(USD
equivalent
of

$0.69
)
per
common
share,
totaling

$114.0
million

on
the
Company's
outstanding
common
stock.
In
September
2017,
the
Company
declared
and
paid
cash
dividends
of
CHF
0.61
(USD
equivalent
of
$0.63
)
per
common
share,
totaling
approximately
$104.2
million
in
U.S.
Dollars,
on
the
Company’s
outstanding
common
stock.
In
September
2016,
the
Company
declared
and
paid
cash
dividends
of
CHF
0.56
(USD
equivalent
of
$0.57
)
per
common
share,
totaling
approximately
$93.1
million
in
U.S.
Dollars,
on
the
Company’s
outstanding
common
stock.

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

Legal Reserves

Under
Swiss
corporate
law,
a
minimum
of
5%
of
the
Company's
annual
net
income
must
be
retained
in
a
legal
reserve
until
this
legal
reserve

equals
20%
of
the
Company's
issued
and
outstanding
aggregate
par
value
per
share
capital.
These
legal
reserves
represent
an
appropriation
of
retained
earnings
that
are
not
available
for
distribution
and
totaled
$9.6
million
at
March
31,
2019
(based
on
the
exchange
rate
at
March
31,
2019
).

Share Repurchases

In
March
2014,
the
Company's
Board
of
Directors
approved
the
2014
share
buyback
program,
which
authorizes
the
Company
to
use
up
to
$250.0
million
to
purchase
its
own
shares.
This
share
buyback
program
expired
in
April
2017.
In
March
2017,
the
Company's
Board
of
Directors
approved
the
2017
share
buyback
program,
which
authorizes
the
Company
to
use
up
to
$250.0
million
to
purchase
its
own
shares
following
the
expiration
date
of
2014
buyback
program.
The
Company's
share
buyback
program
is
expected
to
remain
in
effect
for
a
period
of
three
years
.
Shares
may
be
repurchased
from
time
to
time
on
the
open
market,
through
block
trades
or
otherwise.
Purchases
may
be
started
or
stopped
at
any
time
without
prior
notice
depending
on
market
conditions
and
other
factors.
As
of
March
31,
2019
, $187.4
million
is
still
available
for
repurchase
under
the
2017
buyback
program.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
106

Table of Contents

A
summary
of
the
approved
and
active
share
buyback
program
is
shown
in
the
following
table
(in
thousands,
excluding
transaction
costs):

Share Buyback Program
March
2014

March
2017

Approved

Repurchased

Shares  (1)  

Amounts

Shares

Amounts

17,311   $

17,311   $

250,000  

250,000  

9,113   $

1,651   $

155,983

62,567

(1)
The
approval
of
each
of
the
share
buyback
programs
by
the
Swiss
Takeover
Board
limits
the
number
of
shares
that
the
Company
may
repurchase
to
no
more
than
10%
of
its
authorized
share
capital
and
voting
rights.

Accumulated Other Comprehensive Loss

The
components
of
accumulated
other
comprehensive
loss
were
as
follows
(in
thousands):

March
31,
2018

Other
comprehensive
income
(loss)

March
31,
2019

_______________________________________

Accumulated Other Comprehensive Income (Loss)

Cumulative
Translation
Adjustment (1)

Defined
Benefit
Plans (1)

Deferred
Hedging
Gains (Losses)

  $

  $

(83,848)   $

(8,300)  

(92,148)   $

(6,398)   $

(7,534)  

(13,932)   $

(3,209)   $

3,591  

382   $

Total

(93,455)

(12,243)

(105,698)

(1)
Tax
effect
was
not
significant
as
of
March
31,
2019
or
2018
.

There
was
a
$0.5
million
reclassification
of
currency
translation
loss
included
in
other
income
(expense),
net
for
the
year
ended
March
31,

2019
due
to
the
liquidation
of
one
of
the
Company's
subsidiaries.

Note 15—Segment Information

The
Company
operates
in
a
single
operating
segment
that
encompasses
the
design,
manufacturing
and
marketing
of
peripherals
for
PCs,
tablets
and
other
digital
platforms.
Operating
performance
measures
are
provided
directly
to
the
Company's
CEO,
who
is
considered
to
be
the
Company’s
Chief
Operating
Decision
Maker.
The
CEO
periodically
reviews
information
such
as
sales
and
adjusted
operating
income
(loss)
to
make
business
decisions.
These
operating
performance
measures
do
not
include
restructuring
charges
(credits),
net,
share-based
compensation
expense,
amortization
of
intangible
assets,
charges
from
the
purchase
accounting
effect
on
inventory,
acquisition-related
costs,
or
change
in
fair
value
of
contingent
consideration
from
business
acquisition.

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International
S.A.
|
Fiscal
2019
Form
10-K
|
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Table of Contents

Sales
by
product
categories
were
as
follows
(in
thousands):

Pointing
Devices

Keyboards
&
Combos

PC
Webcams

Tablet
&
Other
Accessories

Video
Collaboration

Mobile
Speakers

Audio
&
Wearables

Gaming

Smart
Home
Other

(1)
Total
Sales

Years Ended March 31,

2019

2018

2017

  $

536,890   $

516,637   $

536,619  

121,282  

128,315  

259,521  

230,378  

277,429  

648,130  

49,344  

414  

498,472  

112,147  

107,942  

182,717  

314,817  

252,330  

491,995  

89,373  

433  

501,562

480,312

107,087

76,879

127,009

301,021

246,390

314,362

65,510

1,295

  $

2,788,322   $

2,566,863   $

2,221,427

(1) Other
category
includes
products
that
the
Company
currently
intends
to
phase
out,
or
have
already
phased
out,
because
they
are
no
longer

strategic
to
the
Company's
business.

Sales
by
geographic
region
for
fiscal
years
2019
,
2018
and
2017
(based
on
the
customers'
locations)
were
as
follows
(in
thousands):

Americas

EMEA

Asia
Pacific

Total
Sales

Years Ended March 31,

2019

2018

2017

  $

1,190,216   $

1,118,324   $

861,731  

736,375  

820,347  

628,192  

963,674

746,898

510,855

  $

2,788,322   $

2,566,863   $

2,221,427

Revenues
from
sales
to
customers
in
the
United
States
represented
36%
,
37%
and
37%
of
sales
in
fiscal
years
2019
,
2018
and
2017
,
respectively.
Revenues
from
sales
to
customers
in
Germany
represented
18%
,
16%
and
17%
of
sales
in
fiscal
years
2019
, 2018
and
2017
,
respectively.
Revenues
from
sales
to
customers
in
China
represented
10%
of
sales
in
fiscal
year
2019
.
No
other
single
country
represented
more
than
10%
of
sales
during
these
periods.
Revenues
from
sales
to
customers
in
Switzerland,
the
Company's
home
domicile,
represented
3%
,
2%
and
2%
of
sales
in
fiscal
years
2019
,
2018
and
2017
,
respectively.

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

Americas

EMEA

Asia
Pacific

Total
Property,
plant
and
equipment,
net

March 31,

2019

2018

  $

  $

29,813   $

4,537  

44,202  

78,552   $

35,404

4,690

46,210

86,304

Property,
plant
and
equipment,
net
in
the
United
States
and
China
were
$29.8
million
and
$36.4
million
,
respectively,
as
of
March
31,
2019
,

and
$35.3
million
and
$37.9
million
,
respectively,
as
of
March
31,
2018
.
No
other
countries
represented
more
than
10%
of
the
Company's
total
consolidated
property,
plant
and
equipment,
net
at
March
31,
2019
or
2018
.
Property,
plant
and
equipment,
net
in
Switzerland,
the
Company's
home
domicile,
were
$1.7
million
and
$1.9
million
at
March
31,
2019
and
2018
,
respectively.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
108

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

Note 16—Restructuring

During
the
first
quarter
of
fiscal
year
2019,
the
Company
implemented
a
restructuring
plan
to
streamline
and
realign
the
Company's
overall

organizational
structure
and
reallocate
resources
to
support
long-term
growth
opportunities.
In
July
2018,
the
Company's
Board
of
Directors
approved
additional
costs
under
this
restructuring
plan,
totaling
pre-tax
charges
of
approximately
$10.0
million
to
$15.0
million
,
of
which
$11.3
million
was
recognized
during
fiscal
year
2019.
The
total
charges
consisted
of
cash
severance
and
other
personnel
costs
and
are
presented
as
restructuring
charges
(credits),
net
in
the
Consolidated
Statements
of
Operations.
The
Company
expects
to
have
substantially
completed
this
restructuring
within
the
next
three
months.

The
restructuring-related
activities
for
the
years
ended
March
31,
2018
and
2017
include
activities
from
the
restructuring
plan
implemented
in

fiscal
year
2016.

The
following
table
summarizes
restructuring-related
activities
during
fiscal
year
2019
,
2018
and
2017
(in
thousands):

Restructuring - Continuing Operations

Termination
Benefits

Lease Exit
Costs

Total

Accrual
balance
at
March
31,
2016

  $

5,907   $

Charges,
net

Cash
payments

Accrual
balance
at
March
31,
2017

Credits,
net

Cash
payments

Accrual
balance
at
March
31,
2018

Charges,
net

Cash
payments

23  

(5,195)

735  

(116)

(619)

—  

11,302  

(6,913)

125   $

—  

(125)  

—  

—  

—  

—  

—  

—  

Accrual
balance
at
March
31,
2019

  $

4,389   $

—   $

The
accrual
balances
are
included
in
accrued
and
other
current
liabilities
on
the
Company’s
consolidated
balance
sheets.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
109

6,032

23

(5,320)

735

(116)

(619)

—

11,302

(6,913)

4,389



 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

LOGITECH INTERNATIONAL S.A.

SUPPLEMENTARY DATA

QUARTERLY FINANCIAL DATA

(unaudited)

The 
following 
table 
contains 
selected 
unaudited 
quarterly 
financial 
data 
for 
fiscal 
years
 2019
 and
 2018
 (in 
thousands, 
except 
per 
share

amounts):

Year ended March 31, 2019  (1)

Year ended March 31, 2018 (1)

Net
sales

Cost
of
goods
sold
Amortization
of
intangible
assets
and
purchase
accounting
effect
on
inventory

Gross
profit

Operating
expenses:

Marketing
and
selling

Research
and
development

General
and
administrative
Amortization
of
intangible
assets
and
acquisition-related
costs
Change
in
fair
value
of
contingent
consideration
for
business
acquisition

Restructuring
charges
(credits),
net

Total
operating
expenses

Operating
income

Interest
income

Other
income
(expense),
net

Income
before
income
taxes

Provision
for
(benefit
from)
income
taxes

Net
Income

Net
income
per
share:

Basic

Diluted

$

$

$

$

Shares
used
to
compute
net
income
per
share:

Basic

Diluted

______________________________

Q2

Q1
608,480   $ 691,146   $ 864,388   $ 624,308   $ 529,946   $ 632,470   $ 812,021   $ 592,426
382,171  

388,028  

535,707  

402,722  

334,774  

432,063  

533,631  

377,617

Q4  

Q1

Q2

Q3

Q4

Q3

2,372  
223,937  

2,966  
256,117  

4,699  
323,982  

3,305  
232,975  

1,504  
193,668  

2,011  
227,737  

2,789   $

2,574

275,601  

212,235

114,584  
38,987  
25,473  

121,801  
39,542  
25,206  

132,250  
40,591  
24,496  

119,628  
42,110  
23,557  

102,378  
35,099  
25,409  

107,386  
36,647  
25,266  

116,153  
34,398  
22,291  

109,572

37,616

23,387

2,521  

4,317  

3,539  

3,913  

1,390  

2,491  

2,496  

2,553

—  
9,921  
191,486  
32,451  
2,369  

(1,571)
33,249  

(5,217)
38,466   $

—  
119  
190,985  
65,132  
1,858  
3,389  
70,379  
6,203  
64,176   $ 112,810   $

—  
(278)  
200,598  
123,384  
1,482  
(2,747)  
122,119  
9,309  

—  
1,540  
190,748  
42,227  
2,666  
493  
45,386  
3,265  
42,121   $

(1,978)  
(55)  
162,243  
31,425  
1,175  
(1,029)  
31,571  
(5,436)  
37,007   $

(2,930)  
(61)  
168,799  
58,938  
1,048  
459  
60,445  
4,087  
56,358   $

—  
—  
175,338  
100,263  
874  
(324)  
100,813  
20,040  
80,773   $

—

—

173,128

39,107

1,872

(1,543)

39,436

5,032

34,404

0.23   $
0.23   $

0.39   $
0.38   $

0.68   $
0.67   $

0.25   $
0.25   $

0.23   $
0.22   $

0.34   $
0.33   $

0.49   $
0.48   $

0.21

0.20

165,317  
168,756  

165,630  
169,234  

165,707  
168,907  

165,776  
168,956  

163,407  
168,339  

164,120  
169,078  

164,248  
169,079  

164,374

169,387

(1)
Financial
results
of
all
the
periods
in
fiscal
years
2019
and
2018
included
the
impact
from
businesses
acquired
during
the
year.
Refer
to
Note
3
to
the
consolidated
financial
statements.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
110

 
 
 
 
 
 
 
 
 
 


 


 


 


   
   
   
   
 
 
 
 
   
   
   
   
   
   
   


 


 


 


   
   
   
   
 
 
   
   
   
   
   
   
   


 


 


 


   
   
   
   
Table of Contents

LOGITECH INTERNATIONAL S.A.

VALUATION AND QUALIFYING ACCOUNTS

For the Fiscal Years Ended March 31, 2019 , 2018 and 2017 (in thousands)

Schedule II

The
Company's
Schedule
II
includes
valuation
and
qualifying
accounts
related
to
allowances
for
doubtful
accounts,
sales
returns,
cooperative

marketing
arrangements,
customer
incentive
programs,
and
pricing
programs,
for
direct
customers
and
tax
valuation
allowances.
The
Company
also
has
sales
incentive
programs
for
indirect
customers
with
whom
it
does
not
have
a
direct
sales
and
receivable
relationship.
These
programs
are
recorded
as
accrued
liabilities
and
are
not
considered
valuation
or
qualifying
accounts.

Allowance
for
doubtful
accounts:

2019

2018

2017

Allowance
for
sales
returns:

2019

(2)
2018

2017

Allowance
for
cooperative
marketing
arrangements:

2019

(2)
2018

2017

Allowance
for
customer
incentive
programs:

2019

(2)
2018

2017

Allowance
for
pricing
programs:

2019

(2)
2018

2017

Tax
valuation
allowance:

2019
2018
(3)
2017

Balance at
Beginning of
Year

Charged
(Credited) to
Statement of
Operations (1)(2)(3)

Claims and
Adjustments
Applied Against
Allowances (1)

Balance at
End of
Year

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

  $

122   $

607   $

667   $

25,515   $

18,800   $

18,526   $

30,389   $

28,022   $

28,157   $

70,592   $

60,857   $

60,872   $

141,369   $

102,289   $

81,553   $

25,148   $

6,626   $

5,338   $

840   $

(404)   $

47   $

94,381   $

111,969   $

78,242   $

176,323   $

160,664   $

144,656   $

237,580   $

230,838   $

196,363   $

444,540   $

445,048   $

322,118   $

3,244   $

18,496   $

1,299   $

(878)   $

(81)   $

(107)   $

(113,410)   $

(105,254)   $

(77,968)   $

(171,632)   $

(158,297)   $

(144,791)   $

(248,136)   $

(221,103)   $

(196,378)   $

84

122

607

6,486

25,515

18,800

35,080

30,389

28,022

60,036

70,592

60,857

(497,556)   $

88,353

(405,968)   $

141,369

(301,382)   $

102,289

(17)   $

26   $

(11)   $

28,375

25,148

6,626

(1)
The
amounts
for
fiscal
years
2019
and
2018
both
include
immaterial
impacts
from
the
business
acquisitions
during
the
year.
Refer
to
Note
3
to
the
consolidated
financial
statements.

(2)
The
amounts
charged
to
the
Statement
of
Operations
for
allowances
for
various
Customer
Programs
and
sales
returns
in
fiscal
year
2019
include
the
impact
of
$105.8
million
reduction
as
a
result
of
the
adoption
of
ASU
2014-09
effective
April
1,
2018,
of
which
$20.0
million
was
for
allowance
for
sales
returns,
$3.2
million
was
for
the
allowance
for
cooperative
marketing
arrangements,
$18.7
million
for
allowance
for
customer
incentive
programs
and
$63.8
million
for
allowance
for
pricing
programs.
Refer
to
Note
2
to
the
consolidated
financial
statements.

(3)
The
amount
charged
to
the
Statement
of
Operations
for
the
tax
valuation
allowance
in
fiscal
year
2018
primarily
includes
the
impact
of
$18.0
million
from
the
adoption
of
ASU
2016-09
effective
April
1,
2017.

Logitech
International
S.A.
|
Fiscal
2019
Form
10-K
|
111

 
 
 
 
 
 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


LOGITECH INTERNATIONAL S.A.

ARTICLES OF INCORPORATION

TITLE I

CORPORATE NAME – REGISTERED OFFICE – PURPOSE – DURATION

Exhibit 3.1

Article 1

There exists under the corporate name

a corporation ( société anonyme ) governed by these Articles of Incorporation and by Title twenty-six of the Swiss Code of Obligations (the
"CO").

" Logitech International S.A. "

The duration of the Company shall be indefinite.

The registered office is in Apples.

Article 2

The  Company  shall be  a  holding  company with  the  purpose  of coordinating  the  activities  of various  Swiss  and  foreign subsidiaries  of  the
Logitech group.

In addition, it shall have as a purpose the acquisition and management of shareholdings in other companies, and in particular the acquisition,
holding  and/or  assignment  of  shareholdings  in  other  commercial,  industrial,  financial  or  real  property  companies  and  enterprises,  in
Switzerland or abroad, directly or indirectly, in its own name and for its own account, or for the accounts of third parties, as investments or
for other reasons, as well as for the financing of affiliated companies.

The Company may conduct, in Switzerland or abroad, any manner of activities, create branch offices, and undertake any real estate, financial
or commercial operations which relate directly or indirectly to its purpose.

1

TITLE II

SHARE CAPITAL AND SHARES

Article 3

The  share  capital  is  fixed  at  CHF  43,276,655  (forty-three  million  two  hundred  seventy-six  thousand  six  hundred  fifty-five  Swiss  francs),
entirely paid-in.

It is divided into 173,106,620 (one hundred seventy-three million one hundred and six thousand six hundred twenty) registered shares with a
nominal value of CHF 0.25 (twenty-five centimes) each.

Article 4

The shares shall be registered.

The general meeting of shareholders (the "General Meeting") shall have the authority to convert the registered shares into bearer shares by
means of an amendment to these Articles of Incorporation.

Subject  to  the  paragraph  below,  the  registered  shares  of  the  Company  will  be  uncertificated  securities  (in  terms  of  the  Swiss  Code  of
Obligations) and book entry securities (in terms of the Swiss Book Entry Securities Act).

A shareholder registered in the Company's shareholders' register may request from the Company a statement of the shareholder's registered
shares at any time. Shareholders do not have a right to the printing and delivery of share certificates. The Company may, however, print and
deliver  certificates  for  shares  at  any  time  at  its  option.  The  Company  may  also,  at  its  option,  withdraw  uncertificated  shares  from  the
custodian system where they have been registered and, with the consent of the shareholder, cancel issued certificates that are returned to the
Company.

Article 5

Each share shall confer the right to a proportional part of the profit resulting from the balance sheet and the proceeds of liquidation.

Shareholders shall only have those obligations specified in these Articles of Incorporation, and shall not be personally liable for the debts of
the Company.

Shares shall be indivisible; the Company shall recognize only one representative per share.

The ownership of a share shall entail acceptance of the provisions of these Articles of Incorporation.

Article 6

The Company shall maintain a share register which lists the names of the owners and beneficiaries of the shares as well as their domiciles.

Only those persons entered in the share register as owners shall be deemed to be shareholders of the Company.

2

The transfer of ownership of certificated shares shall require delivery of the properly endorsed share certificate to the purchaser.

The transfer of ownership of shares held as book entry securities shall be carried out according to the provisions of the Swiss Book Entry
Securities Act.

Registered shares not incorporated into a certificate and that are not held as book entry securities as well as the respective rights associated
therewith which are not incorporated into any certificate may be transferred only by assignment. Such assignment shall be valid only if the
Company has been notified thereof.

Article 7

Should a shareholder change his address, he must so inform the Company. As long as a shareholder has not provided notice of a change of
address to the Company, any written communication shall be validly made to his last address entered in the share register.

TITLE III

THE ORGANIZATION OF THE COMPANY

A. GENERAL MEETING OF SHAREHOLDERS

Article 8

The General Meeting shall be the supreme authority of the Company. It holds the inalienable rights provided by law.

The General Meeting shall convene at the place designated by the Board of Directors.

One or more shareholders who represent together at least ten percent of the share capital may demand that a General Meeting be called. One
or  more  shareholders,  who  represent  together  shares  representing  at  least  the  lesser  of  (i)  one  (1)  percent  of  the  share  capital  or  (ii)  an
aggregate  nominal  value  of  CHF  1,000,000  (one  million  Swiss  Francs),  may  demand  that  an  item  be  included  on  the  agenda  for  a
shareholders'  meeting.  A  shareholder  demand  to  call  a  meeting  and  to  include  an  item  on  the  agenda  shall  be  made  in  writing  and  shall
describe the matters to be considered and any proposals to be made to the shareholders. Such written request shall be received by the Board of
Directors at least sixty (60) days before the date proposed for the General Meeting.

Article 9

General Meetings shall be called at least twenty days before the date of the meeting by a single notice published in the media specified in
Article 24 below.

A General Meeting can alternatively be called by means of a notice sent to shareholders at the address entered in the share register. In such a
case, the twenty-day notice period referred to above shall begin on the day following the date on which the notice shall have been mailed.

3

Article 10

Each share confers the right to one vote.

Article 11

Any shareholder may appoint a representative who need not be a shareholder, provided that person holds a written proxy. Members of the
Board of Directors who are present shall decide whether to accept or refuse such proxies.

Statutory provisions relating to the representations of shareholders by the independent proxy are reserved.

Article 12

The General Meeting shall be presided over by the Chairman of the Board of Directors or any other member of the Board of Directors. In the
absence of such persons, the chairman shall be appointed by the General Meeting.

The Chairman of the General Meeting shall appoint the secretary of the General Meeting and the scrutineers.

Article 13

In the absence of any provision to the contrary in the law or these Articles of Incorporation, the General Meeting shall make resolutions and
proceed to elections by an absolute majority of the votes cast. In the event of a tie vote, the vote of the Chairman of the General Meeting shall
decide.

As a general rule, voting and elections shall be conducted by a show of hands; however, a secret ballot shall be used when the Chairman of
the General Meeting so orders or when 25 shareholders present at the meeting shall so request. An electronic vote shall be deemed a secret
ballot.

B. BOARD OF DIRECTORS

Article 14

The Board of Directors of the Company shall be composed of at least three members elected individually by the General Meeting for a term
of office expiring after completion of the subsequent Annual General Meeting and who shall be indefinitely re-eligible.

The Chairman of the Board of Directors shall also be appointed by the General Meeting for a term of office expiring after completion of the
subsequent Annual General Meeting and who shall be indefinitely re-eligible.

Unless provided otherwise in the law or these Articles of Incorporation, the Board of Directors shall organize itself. It shall be entitled to elect
one or more vice-chairmen, who shall assume the responsibilities of the Chairman of the Board of Directors if the latter is incapacitated.

4

Article 15

The Board of Directors shall make decisions and proceed to elections by a majority vote of the members present at the meeting. In the event
of a tie vote, the vote of the Chairman shall decide.

The decisions of the Board of Directors may be made in the form of a written consent (given by letter, fax or telegram) to a proposal, such
consent representing a majority of all the members of the Board of Directors inasmuch as the proposal was submitted to all the members of
the Board of Directors, unless a discussion is requested by one of them.

Article 16

The Board of Directors shall have the non-transferable and inalienable powers provided for under Art. 716a of the CO.

It may make decisions on any matters which have not been reserved to another corporate body of the Company pursuant to the law or these
Articles of Incorporation.

Article 17

The  Board  of  Directors  may,  in  compliance  with  the  organizational  regulations,  entrust  the  management  and  the  representation  of  the
Company to one or more of its members or to other natural persons who need not be shareholders (the "Management Team").

Article 17 bis

No  member  of  the  Board  of  Directors  shall  assume  more  than  ten  (10)  mandates  in  supreme  management  or  supervisory  bodies  of  legal
entities  outside  the  Logitech  group,  of  which  no  more  than  four  (4)  may  be  in  listed  companies.  In  addition,  Members  of  the  Board  of
Directors may assume up to ten (10) mandates in the governing bodies of charitable or similar organizations. The Chairman of the Board of
Directors must be informed of such mandates.

The limits contemplated in the preceding paragraph do not apply to mandates:
for companies controlled by the Company or that control the Company;
a)
that a member of the Board of Directors assumes at the request of the Company or of a company controlled by it; and
b)
for companies that are not required to be registered in the commercial registry in Switzerland or in an equivalent registry outside of
c)
Switzerland.

Mandates for legal entities under common control or at the request of such legal entities are counted as one single mandate for the purpose of
this Article 17 bis.

Article 17 ter

The Board of Directors shall establish a Compensation Committee. The Compensation Committee shall be composed of at least two members
of  the  Board  of  Directors,  who  shall  be  elected  individually  by  the  General  Meeting  for  a  term  of  office  expiring  after  completion  of  the
subsequent Annual General Meeting and who shall be indefinitely re-eligible.

5

The chairman of the Compensation Committee shall be appointed by the Board of Directors. The Compensation Committee shall otherwise
organize itself.

The  Compensation  Committee  shall  support  the  Board  of  Directors  in  establishing  and  reviewing  the  Company's  compensation  strategy,
guidelines and the performance targets, as well as in preparing the proposals to the General Meeting regarding the compensation of the Board
of Directors and of the Management Team. It may submit proposals to the Board of Directors in other compensation-related issues.

The Board of Directors shall set out in the organizational regulations (i) for which positions of the Board of Directors and of the Management
Team the Compensation Committee shall submit proposals for the compensation, and (ii) for which positions the Compensation Committee
shall determine such compensation in accordance with these Articles of Incorporation and the compensation guidelines.

The Board of Directors may delegate further tasks and powers to the Compensation Committee.

Article 18

In countries where laws or customs require for companies that important documents, or those subject to certain conditions of form have a
seal, a seal may be affixed next to the signature.

The Board of Directors shall determine those seals and set the rules regarding the use thereof.

C. MANAGEMENT TEAM

Article 18 bis

The  Company  or  companies  controlled  by  it  may  enter  into  agreements  relating  to  the  compensation  of  the  members  of  the  Management
Team  (the  "employment  agreements").  Fixed-term  employment  agreements  shall  run  for  a  maximum  period  of  one  year.  Employment
agreements entered into for an indefinite period of time shall be subject to a maximum notice period of one year.

Employment  agreements  entered  into  with  members  of  the  Management  Team  may  contemplate  a  prohibition  of  competition  after
termination of the relevant employment agreement. The total consideration for a prohibition of competition that applies after termination of
an  employment  agreement and  expiration  of  the  applicable  notice  period,  if any,  shall  not  exceed, with  respect  to  the entire  period  during
which the prohibition of competition applies, the total annual compensation of the relevant member of the Management Team.

Article 18 ter

No  member  of  the  Management  Team  may  assume  more  than  five  (5)  mandates  in  supreme  management  or  supervisory  bodies  of  legal
entities outside the Logitech group, of which no more than two (2) may be in listed companies. In addition, Members of the Management
Team may assume up to five (5) mandates in the governing bodies of charitable or similar organizations. Any such mandate shall require the
approval of the Board of Directors.

This restriction does not include mandates:
a)

for companies controlled by the Company or that control the Company;

6

b)
c)

that a member of the Management Team assumes at the request of the Company or of a company controlled by it; and
for companies that are not required to be registered in the commercial registry in Switzerland or in an equivalent registry outside of
Switzerland.

Mandates for legal entities under common control are counted as one single mandate for the purpose of this Article 18 ter.

D. AUDITORS

Article 19

The General Meeting shall appoint one or several auditors as statutory auditors. It may appoint substitute auditors.

The term of office of the auditors shall be one year; it shall end after completion of the subsequent Annual General Meeting. Reappointment
shall be possible.

TITLE IV

COMPENSATION

Article 19 bis

The compensation of the members of the Board of Directors who do not have delegated management responsibilities shall consist of cash
payments  and  shares  or  share  equivalents.  The  value  of  cash  compensation  and  shares  or  share  equivalents  shall  correspond  to  a  fixed
amount, which shall reflect the functions and responsibilities assumed. The value of shares or share equivalents shall be calculated at market
value.

Members  of the Board of Directors who  have delegated management responsibilities shall be compensated in the manner contemplated in
Article 19 ter below.

The Company shall reimburse the expenses incurred by the members of the Board of Directors. Expenses reimbursements are not part of the
compensation.

Article 19 ter

The principal components of the compensation of the Management Team shall be: (i) base salary; (ii) performance-based cash compensation,
in the form of incentive cash payments and (iii) equity incentive awards.

The  base  salary  shall  reward  the  relevant  members  of  the  Management  Team  for  their  individual  contribution  to  the  Company  and  their
expected day-to-day services.

The  performance-based  cash  compensation  shall  take  appropriate  account  of  the  achievement  of  the  Company's,  individual  employees'  or
other performance goals. The target level of the performance-based cash compensation elements shall be determined as a percentage of the
base salary. The performance-

7

based cash compensation may amount up to a pre-determined multiplier of the target level. Its amount may also reflect an overall assessment
of the relevant employee's performance or the Company's objectives.

Equity incentive awards shall provide, in particular, a direct incentive for future performances and align the interest of the Management Team
with those of the Company's shareholders. Equity incentive awards shall be governed by performance metrics that take into account strategic
or other objectives of the Company or by reference to the duration of the relevant employee's service to the Company or companies controlled
by it.

The Board of Directors or, to the extent delegated to it, the Compensation Committee, shall determine performance metrics and target levels
applicable to performance-based cash compensation and equity incentive awards, as well as their achievement.

Compensation may be paid or granted in the form of cash, shares, other benefits or in kind; compensation to members of the Management
Team may also be paid or granted in the form of financial instruments or similar units. The Board of Directors or, to the extent delegated to it,
the Compensation Committee shall decide upon each grant as well as the applicable vesting, blocking, exercise and forfeiture conditions; they
may provide for continuation, acceleration or removal of vesting and exercise conditions, for payment or grant of compensation assuming
target achievement or for forfeiture in the event of pre-determined events such as termination of employment or office or change of control.
Compensation may be paid by the Company or companies controlled by it.

Members of the Management Team may participate in share purchase plans established by the Company or companies controlled by it, under
the terms of which eligible employees may allocate a portion of their compensation to the purchase of shares of the Company at a discount to
market price.

The Company shall reimburse the expenses incurred by the members of the Management Team. Expenses reimbursements are not part of the
compensation.

Article 19 quater

Upon proposal of the Board of Directors, the General Meeting approves the maximum aggregate amount of the compensation of:

a)
b)

the Board of Directors, for the period up to the next Annual General Meeting; and
the Management Team, for the next business year.

The  Board  of  Directors  may  submit  to  the  General  Meeting  for  approval  proposals  in  respect  of  maximum  aggregate  amounts  and/or
individual compensation components for other time periods and/or propose the payment of additional amounts for special or extraordinary
services of some or all of the members of the Board of Directors or of the Management Team.

If the General Meeting rejects a proposal submitted by the Board of Directors, the latter shall submit an alternative proposal to the same or a
subsequent General Meeting.

The Company or companies controlled by it may grant or pay compensation subject to subsequent ratification at a General Meeting and claw-
back by the Company in case of rejection by the General Meeting.

8

Article 19 quinquies

If the maximum aggregate amount of compensation already approved by the General Meeting is not sufficient to also cover the compensation
of one or more persons who become members of the Management Team during a compensation period for which the General Meeting has
already approved the compensation of the Management Team (new hire), the Company or companies controlled by it shall be authorized to
pay an additional amount with respect to the compensation period already approved. Such additional amount shall not exceed:

a)

b)

for the head of the Management Team (CEO), one hundred and forty percent (140%) of the total annual compensation of the former
CEO; and
for any new hire other than the CEO, one hundred and forty percent (140%) of the highest total annual compensation of any member of
the Management Team other than the CEO.

Article 19 sexies

Subject to Article 19 quarter, paragraph 4, above, Members of the Board of Directors and the Management Team shall not receive credits or
loans from the Company or from a company controlled by it.

Compensation  paid  to  members  of  the  Board  of  Directors  or  Management  Team  for  activities  in  companies  that  are  controlled  by  the
Company shall be permitted. This compensation shall be included in the total compensation payable to the Board of Directors or Management
Team, as applicable, which shall be subject to the approval of the General Meeting.

Pension contributions and benefits shall be made or provided in accordance with the regulations applicable to the pension schemes in which
the Company or the companies controlled by it participate in Switzerland or abroad.

BUSINESS YEAR, ANNUAL ACCOUNTS AND ALLOCATION OF PROFITS

TITLE V

Article 20

The business year shall begin on April 1st and end on March 31st.

Article 21

Five  percent  of  the  annual  profits  shall  be  allocated  to  the  general  reserve  until  such  reaches  twenty  percent  of  the  paid  in  share  capital.
Should the general reserve be used in any amount the allocation of profits shall be made until this level is reached again.

The  balance  of  the  profits  arising  from  the  balance  sheet  shall  be  distributed  according  to  the  resolutions  of  the  General  Meeting,  upon
proposition of the Board of Directors; however, the mandatory legal provisions of the law relating to the legal reserve must be complied with.

9

Article 22

Dividends  shall  be  paid  at  the  time  specified  by  the  Board  of  Directors.  Any  dividend  which  has  not  been  claimed  within  five  years  of  it
becoming due is time-barred by statute of limitations and shall be forfeited to the Company by simple right and automatically.

TITLE VI

LIQUIDATION

Article 23

The  General  Meeting  shall  retain  its  right  to  approve  the  accounts  at  the  time  of  liquidation  and  shall  have  the  authority  to  discharge  the
liquidators with respect to their activities in connection therewith.

After payment of liabilities, the assets of the dissolved Company shall be distributed among the shareholders pro rata according to the par
value of each such shareholders' shares.

TITLE VII

PUBLIC NOTICES – COMMUNICATIONS

Article 24

Public notices by the Company shall be made in the Feuille Officielle Suisse du Commerce (Swiss Official Commercial Gazette).

TITLE VIII

CONDITIONAL CAPITAL AND AUTHORIZED CAPITAL

Article 25

By  the  exercise  of  share  option  or  other  rights  granted  to  certain  employees,  officers  and  directors  of  the  group  according  to  the  group's
employee equity incentive plans, the share capital of the Company may be increased at most by CHF 6,250,000 (six million two hundred fifty
thousand Swiss Francs) by way of the issue of 25,000,000 (twenty-five million) registered shares with a nominal value of CHF 0.25 (twenty-
five centimes) each.

The shareholders' preferential subscription rights shall be eliminated for such new shares.

Article 26

By the exercise of conversion rights which are granted in relation with the issue of convertible bonds, the share capital of the Company shall
be increased by a maximum aggregate amount of CHF 6,250,000 (six million, two hundred fifty thousand Swiss Francs) through the issuance
to the holders of such bonds of a maximum of 25,000,000 (twenty-five million) fully paid-in registered shares with a nominal value of CHF
0.25 (twenty-five centimes) each.

10

The shareholders shall not have the right to subscribe by preference for the shares issuable on conversion of the bonds.

The Board of Directors may limit or withdraw the shareholders' right to subscribe for the bonds by preference for valid reasons, in particular
(a) if the bonds are issued in connection with the financing or refinancing of the acquisition of one or more companies, businesses or parts of
businesses, or (b) to facilitate the placement of the bonds on the international markets or to increase the security holder base of the Company.

If the shareholders' right to subscribe for the bonds by preference is limited or withdrawn, the bonds must be issued at market conditions, the
exercise period of the conversion rights must not exceed 7 (seven) years from the date of issuance of the bonds, and the conversion price must
be set at a level that is not lower than the market price of the shares preceding the determination of the final conditions for the bonds.

Article 27

The  Board  of  Directors  is  authorized  at  any  time  until  September  5,  2020  to  increase  the  share  capital  of  the  Company  by  a  maximum
aggregate amount of CHF 8,655,331 through the issuance of not more than 34,621,324 registered shares with a par value of CHF 0.25 each,
which will have to be fully paid in.

Increases in partial amounts are permitted. The Board of Directors may authorize the issuance of new shares by means of an underwriting or
similar process carried out by one or more banks or other financial institutions with a view to offering the new shares to existing shareholders
or to third parties. The Board of Directors shall determine the type of contributions, the issue price, the time of the issue, the conditions for
the exercise of the preferential subscription rights, the use of unexercised preferential subscription rights and the date upon which the new
shares shall become entitled to dividends. The Board of Directors may authorize, restrict or exclude the trading of preferential subscription
rights.

If preferential subscription rights are granted, but not exercised, the Board of Directors shall use the rights associated with the relevant shares
in the interest of the Company.

The Board of Directors may restrict or withdraw the preferential subscription rights of existing shareholders, and allocate such rights to third
parties  or  to  the  Company  for  valid  reasons,  in  particular  if  the  new  shares  are  being  issued  in  connection  with:  (a)  the  acquisition  of
companies, enterprises, participations, assets, intellectual property rights, licenses or new investment projects; (b) a public offering or private
placement  of shares  for  the financing  and/or  refinancing  of an  acquisition  of the  kind  referred to  under  (a)  above; (c)  a  public  offering  or
private placement of shares, under circumstances in which such public offering or private placement would be difficult to carry out or could
likely  only  be  carried  out  under  less  favourable  terms  if  the  preferential  subscription  rights  of  existing  shareholders  were  not  restricted  or
withdrawn; (d) the acquisition of a stake in the Company by a strategic partner; or (e) the broadening of the shareholder base of the Company
in certain jurisdictions or in the context of a listing or admission to trading on a domestic or foreign stock exchange.

***********

These articles of incorporation were approved on June 24 th , 1993, and modified on June 27 th , 1996, February 13 th , 1998, June 25 th , 1998,
June 23 rd and June 29 th , 2000, March 19 th , 2001, May 1 st , 2001, June 1 st and 28 th , 2001, June 26 th and 27 th , 2002, June 24 th , 2004, June
16 th , 2005, June 16 th , 2006, June 19 th , June 20 th , 2007, September 10, 2008, September 11, 2008, September 8, 2010, September 5, 2012,
December 18, 2014, and September 5, 2018.

11

The above text is a translation of the original French articles of incorporation ( statuts ), which constitute the definitive text and are binding in
law.

12

ORGANIZATIONAL REGULATIONS OF LOGITECH INTERNATIONAL SA

Exhibit 3.2

1.

Governing principles

These organizational regulations (hereafter the " Regulations ") are adopted in accordance with Article 17 of the

Articles of Incorporation of the Company.

They govern the organization, the voting procedure, as well as the powers and duties of the following organs of the

Company:

-

-

-

-

Board of Directors (" Board ")

Chairman of the Board

Chief Executive Officer

Group Management Team

2.

The Board

2.1

Organization

The Board, constituted at a minimum by three members, is self-governed.

The members of the Board are elected for a 1-year term which is indefinitely renewable subject to the age

and tenure limits specified in Article 2.8 below. Employees may be members of the Board provided such

persons do not receive compensation for their activities both as members of the Board and as employees.

At the first meeting following the ordinary general shareholders' meeting, the Board appoints one or two

Vice-Chairmen  (if  any),  a  Lead  Independent  Director,  and  a  Secretary.  The  role  of  Chairman  or  Vice-

Chairman, on the one hand, and Lead Independent Director, on the other hand, may be cumulated. It is not

mandatory that the Secretary be a member of the Board or a shareholder.

The term of office of the Chairman, Vice-Chairman, and Lead Independent Director matches the term of

office of their appointment as members of the Board. These persons can be indefinitely re-elected to their

respective positions subject to the age and tenure limits specified in Article 2.8 below.

1

2.2

Meetings, convening of meetings and agenda

A meeting of the Board may be called by the Chairman as often as the business of the Company requires.

The Board may also be convened upon request of any one of the directors. Such request is made to the

Chairman in writing, and it includes the reasons for which the Board meeting is being called. Upon receipt

of  such  request,  the  Chairman  shall  convene  the  Board  without  delay.  When  necessary,  the  Lead

Independent Director may also convene the Board.

Where appropriate, but at least twice a year, the directors who meet the independence requirements of the

Nasdaq  Stock  Market  rules  and  regulations  shall  meet  in  executive  session.  Such  meetings  may  be

scheduled in conjunction with the meetings of the Board.

The notice convening the Board meeting shall mention the day, the time and the place of the meeting, as

well  as  the  agenda.  The  relevant  documentation  relating  to  the  forthcoming  meeting  shall  be  delivered

reasonably in advance. Resolutions on items that were not mentioned in the agenda may only be taken if

all members of the Board have been consulted, except in case of emergency.

The  Board  is  chaired  by  the  Chairman  and,  in  case  of  his  absence,  by  the  Vice-Chairman  or,  if  he  is

absent,  by  the  Lead  Independent  Director  or  another  member  of  the  Board.  Meetings  of  independent

directors  are  chaired  by  the  Lead  Independent  Director.  Board  meetings  may  be  validly  held  by  way  of

video conference or telephone conference.

2.3

Vote, minutes

2.3.1

Vote

The Board takes its resolutions by the approval of the absolute majority of the members who are present.

In the event of a tie, the Chairman has a casting vote.

While  preparing  its  recommendations  to  the  general  shareholders'  meeting  for  election  or  removal  of

independent  auditors,  the  Board  shall  pay  due  consideration  to  the  recommendations  of  the  Audit

Committee established pursuant to Article 2.4.3 below.

2

The resolutions of the Board may be taken by way of circular letter, provided that no member requests a

discussion.

The  resolutions  by  way  of  circular  letter  are  adopted  if  they  have  been  approved  by  the  majority  of  the

members of the Board. In the event of a tie, the Chairman has a casting vote.

2.3.2 Minutes

The discussions and the resolutions of the Board are set forth in minutes, signed by the Chairman and the

Secretary.  Each  member  of  the  Board  receives  a  copy  of  the  minutes.  The  resolutions  taken  by  way  of

circular letter must be included in the minutes of the following meeting of the Board.

The minutes of each meeting must be ratified at the following meeting of the Board.

2.4

Attribution of powers

2.4.1

Powers delegated by the Board

The  Board  delegates  the  entire  management  of  the  Company  to  the  Chief  Executive  Officer  and  to  the

Group Management Team, except where the law, the Articles of Incorporation or the present Regulations

provide differently.

2.4.2

Powers not delegated by the Board

The  Board  exercises  at  any  time  the  superior  management  and  supervision  of  the  Company.  It  issues

directives  concerning  the  business  policy  and  keeps  itself  regularly  informed  on  the  Company's

performance.

In particular, the Board has the following non-transferable and inalienable powers and duties:

1.

It ultimately oversees the Chief Executive Officer and the Group Management Team and issues the

necessary  guidelines;  this  includes  the  determination  of  strategic  objectives,  the  allocation  of

resources and the company policy;

2.

It determines the organization structure;

3

3.

4.

It establishes accounting and financial control principles as well as the financial plan;

It appoints and dismisses the Chief Executive Officer and the members of the Group Management

Team and resolves on their signatory power; it appoints and dismisses the head of the Internal Audit

function;

5.

It exercises the ultimate supervision of the persons in charge of the management of the business in

order  to  ensure  that  their  activity  is  carried  out  in  compliance  with  the  law,  the  Articles  of

Incorporation, the internal regulations and the instructions given;

6.

It oversees the preparation of the annual report, prepares the     shareholders' meetings and carries

out its decisions;

7.

8.

9.

It informs the judge in case of overindebtedness (technical insolvency);

It takes resolutions regarding the payment of non fully paid-in shares (Art. 634 a CO);

It publishes the report provided for under Article 132 para. 1 of the Swiss Federal Act on Financial

Market Infrastructures setting out the position of the Board with respect to a public takeover offer;

and

10.

It is responsible for the compensation report.

The Board keeps the power to resolve itself on the following objects:

a)

b)

c)

the signatory power of its members, if any;

the approval of the budget submitted by the Chief Executive Officer;

the approval of any type of investment or acquisition not included in the approved budgets; provided

that  management  may  from  time  to  time  request  authorization  to  make  investments  and/or

acquisitions  up  to  an  aggregate  amount  of  USD  10,000,000  without  Board  approval,  subject  to

management’s obligation to conduct periodic post close reviews of such transactions and to present

the findings of such reviews to the Board;

d)

the  approval  of  the  acquisition  and  sale,  as  well  as  the  constitution  of  security  interests,  over  the

Company's real estate; and

e)

the  approval  of  any  expenditure  of  more  than  USD  10,000,000  not  specifically  identified  in  the

approved budgets.

4

2.4.3

Special committees

The members of the Compensation  Committee  are elected individually  from among the members of the

Board  by  the  general  shareholders’  meeting.  In  addition,  the  Board  constitutes  within  its  ranks  the

following three committees in charge of specific issues:

a)

Audit Committee

b) Nominating Committee

c)

Technology and Innovation Committee

Except where otherwise contemplated in the charter of the applicable committee, the recommendations of

these four committees are submitted to the Board for approval.

In  accordance  with  the  law  and  the  Articles  of  Incorporation  of  the  Company,  the  Board  shall  issue

charters  for  each  of  these  Committees  which  define  their  attributions  and  powers,  and  shall  appoint  the

Chairman of each of these Committees.

2.5

Right to information and consultation

Each  member  of  the  Board  has  the  right  to  obtain  information  on  the  entire  business  of  the  Company.

During the meetings, each member of the Board may request information from the other members as well

as from the persons entrusted with the management.

Outside  of  the  meetings,  each  member  of  the  Board  may  request  from  the  persons  entrusted  with  the

management information regarding the course of business and, with the authorization of the Chairman, on

specific business issues. To the extent it is necessary for the accomplishment of his duties, each member

of  the  Board  may  request  from  the  Chairman  to  review  the  books  and  files.  If  the  Chairman  rejects  a

request for information, for a hearing or for consultation, the Board decides.

2.5.1

Reports

5

During each meeting, the Board must be informed by the Chief Executive Officer on the development of

the current affairs and on important events. Extraordinary events are to be notified to the members of the

Board in the shortest possible time by circular letter.

2.6

Signatory rights

The Chairman and those members of the Board who shall have the right to represent the Company shall

have either:

a.

b.

Collective signature authority, to be exercised together with another person authorized to sign, or

Individual  signature  authority,  in  which  case  their  acts  require  prior  approval  of  another  person

authorized to sign.

The signature of a member of the Board is not necessary on documents signed on behalf of the Company.

Any  two  authorized  officials  of  the  Company  registered  with  the  Register  of  Commerce,  including

members of the Board, may execute documents on behalf of the Company. In addition, other officials of

the  Company  may  execute  certain  classes  of  documents  on  behalf  of  the  Company  together  with

authorized officials under limited powers of attorney granted by the Board.

2.7

Discretion, secrecy

Each member of the Board is accountable for the documents entrusted to him. Each member is under an

obligation  to  maintain  absolute  confidence  towards  third  persons  on  the  facts  that  came  to  his  attention

during the exercise of his directorship.

2.8

Age and tenure limits

No member of the Board of Directors can seek re-election after he or she has reached the age of 70 years,

unless  a  specific  exception  is  approved  by  the  Board.  The  same  age  limit  is  applicable  to  the  Board  of

consolidated subsidiaries.

No member of the Board can seek re-election after he or she has served on the Board as a non-employee

member for 12 years, unless a specific exception is approved by the Board.

6

A member of the Board who has reached the age or tenure limit referred to above during the term of his or

her directorship may remain a director until the expiration of his or her term.

2.9

Annual review

The Board shall review at least once a year its own structure, processes, and performance, including the

adequacy of these Regulations.  Independent  directors shall assess the adequacy of their relationship  and

cooperation with executive directors.

2.10

Compensation

Subject to the powers of the general shareholders’ meeting, the Board determines the compensation of its

non-employee  members  on  the  recommendation  of  the  Compensation  Committee.  The  compensation  of

employee members of the Board is determined by the Compensation Committee.

3.

The Chairman of the Board

In urgent cases, the Chairman of the Board has the power to take on his own a decision which would otherwise fall

in the competence of the Board, provided that a resolution by way of circular letter in accordance with Article 2.3.1

above is not possible or practicable.

Decisions  taken  by  the  Chairman  of  the  Board  in  this  way  shall  be  immediately  notified  in  writing  to  the  other

members of the Board, and are subject to ratification by the Board at its next meeting or by way of circular letter.

4.

The Chief Executive Officer

4.1

General responsibilities

In application of Article 17 of the Articles of Incorporation and subject to     Article 2.4 above, the

Board delegates the entire management of the business to the Chief Executive Officer, who does not need

to be a     member of the Board.

The  Chief  Executive  Officer  spends  his  full  time  in  this  capacity.  He  conducts  the  business  with  the

support of the Group Management Team. He organizes the Group Management Team and presides at its

meetings.

7

4.2

Detailed list of responsibilities

The Chief Executive Officer has, in particular, the following responsibilities and prerogatives:

-

-

-

-

-

-

-

-

-

-

define and implement the short and medium term strategy and plans;

establish preliminary and final budgets for submission to the Board for approval;

produce the Company's preliminary financial statements as well as the annual report for submission

to the Board for approval and subsequent presentation to shareholders;

hire,  dismiss  and  promote  employees,  except  members  of  the  Group  Management  Team  and  the

head of the Internal Audit function;

take immediate measures to protect the interests of the Company where a breach of duty is suspected

from a member of the Group Management Team, including suspending the relevant member of the

Group Management Team from office. In such a case, the Board must decide on the matter within a

reasonable period of time;

implement the decisions taken by the Board;

report regularly to the Chairman of the Board on the evolution of the business;

prepare supporting documents for decisions which are to be made by the Board;

decide on issues that are brought to his attention by the Group Management Team;

keep the share register of the Company, under the supervision of the Board.

4.3

Reporting line

The Chief Executive Officer reports to the Board.

4.4

Compensation

Subject to the powers of the general shareholders’ meeting, the Compensation Committee determines the

compensation, including salary and bonus, of the Chief Executive Officer.

8

5.

The Group Management Team

5.1

Appointment, dismissal, remuneration

The Board appoints and dismisses the members of the Group Management Team.

5.2

Roles and responsibilities

The roles and responsibilities of the members of the Group Management Team are in the job descriptions

of each of the Managers.

5.3

Subordination

The members of the Group Management Team are directly subordinated to the Chief Executive Officer.

They keep him informed on the development of the business in general, as well as on events that impact

the Company. The head of the Internal Audit function is directly subordinated to the Audit Committee.

9

5.4

Compensation

Subject to the powers of the general shareholders’ meeting, the Compensation Committee determines the

compensation,  including  salary and bonus, of the members of the Group Management  Team. Subject  to

the  powers  of  the  general  shareholders’  meeting,  the  Audit  Committee  determines  the  compensation,

including salary and bonus, of the head of the Internal Audit function. The Audit Committee may delegate

this responsibility to its Chair.

6.

Prohibition on Loans to Directors and Officers

The  Company  will  not,  directly  or  indirectly,  extend  or  maintain  credit,  arrange  for  the  extension  of  credit,  or

renew an extension of credit in the form of a personal loan to or for any member of the Group Management Team

or member of the Board of the Company.

7.

Final provisions

7.1

Entry into force

The present Regulations shall take effect upon their approval by the Board.

7.2

Amendments

On the Chairman's request, the present Regulations, must be reviewed and, as the case may be, updated on

a yearly basis, i.e. during the first meeting of the Board following the ordinary shareholders meeting or as

often as the business of the Company requires.

Decisions regarding amendments of the present Regulations need to be approved by the absolute majority

of the attending members.

Adopted as of the 24 th of April, 1996, and amended as of the 28 th of June, 1999, the 14 th day of October, 2003, the
8 th day of April, 2004, the 15 th day of June, 2006, the 17 th day of June, 2008, the 5 th day of September, 2013, the
25 th day of March, 2015, the 29 th day of June, 2016 and the 6 th day of December, 2018.

ROMANEL, SWITZERLAND

Guerrino De Luca    Bryan Ko
Chairman of the Board    Secretary

10

LOGITECH INTERNATIONAL S.A.

LIST OF SUBSIDIARIES

Exhibit 21.1

Jurisdiction of Incorporation

Argentina

Brazil

Mexico

Canada

 United States of America

 United States of America

 United States of America

 United States of America

  Mexico

United States of America

United States of America

United States of America

United States of America

United States of America

United States of America

Switzerland

United Kingdom

Spain

Switzerland

Republic of France

Federal Republic of Germany

Ireland

Republic of Italy

Sweden

Kingdom of the Netherlands

Poland

Switzerland

United Arab Emirates

Switzerland

Greece

Switzerland

Switzerland

Russia

South Africa

Norway

Turkey

Name of Subsidiary

AMERICAS

Logitech Argentina S.R.L.

Logitech Do Brasil Comercio de 
Accessorios de Informatica Ltda.

Logitech de Mexico S.A. de C.V.

Logitech Canada Inc.

Logitech Inc.

Logitech (Streaming Media) Inc.

Logitech (Slim Devices) Inc.

WiLife, Inc.

Logitech Servicios Latinoamérica, 
S.A de C.V

Ultimate Ears Incorporated

SightSpeed, Inc.

UE Acquisition Inc.

Logitech Latin America, Inc.

Blue Microphones Holding Corporation

Baltic Latvian Universal Electronics,LLC

EMEA

Labtec Europe S.A.

Logitech U.K. Limited

Logitech Espana BCN SL

Logitech Europe S.A.

SAS Logitech France

Logitech GmbH

Logitech Ireland Services Limited

Logitech Italia SRL

Logitech Nordic AB

Logitech Benelux B.V.

Logitech Poland Spolka z.o.o

Logitech S.A.

Logitech Middle East FZ-LLC

Logitech (Streaming Media) SA

Logitech Hellas MEPE

Logitech Schweiz AG

Logitech Upicto GmbH

Limited Liability Company “Logitech”

Logi Peripherals Technologies 
(South Africa) (Proprietary) Limited

Logitech Norway AS

Logitech Turkey Computer Marketing Services LLC

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Name of Subsidiary

ASIA PACIFIC

LogiCool Co., Ltd

Logitech Electronic (India) Private Ltd

Logitech Far East, Ltd

Logitech Hong Kong Limited

Logitech Korea Ltd

Logitech New Zealand Co., Ltd

Logitech Service Asia Pacific Pte Ltd

Logitech Singapore Pte Ltd

Logitech Technology (Suzhou) Co, Ltd

Logitech (China) Technology Co Ltd

Logitech Asia Logistics Limited

Logitech Asia Pacific Limited

Logitech Australia Computer 
Peripherals Pty, Limited

Logitech (Beijing) Trading 
Company Limited

Logitech Technology (Shenzhen) 
Consulting Co Ltd

Logitech Engineering & Designs India 
Private Limited

Logi Computer Peripherals 
(Malaysia) Sdn. Bhd

Logitech JB Australia Pty Ltd.

Jurisdiction of Incorporation

Japan

India

Taiwan, Republic of China

Hong Kong

Korea

New Zealand

Republic of Singapore

Republic of Singapore

People’s Republic of China

People’s Republic of China

Hong Kong

Hong Kong

Commonwealth of Australia

People’s Republic of China

People’s Republic of China

India

Malaysia

Commonwealth of Australia

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Exhibit 23.1

The
Board
of
Directors

Logitech
International
S.A.:

We
consent
to
the
incorporation
by
reference
in
the
registration
statements
on
Form
S-8
(No.
333-100854,
No.
333-140429,
No.
333-157038,
No.
333-163933,
No.
333-167143,
No.
333-180725,
No.
333-180726,
No.
333-184583,
No.
333-192728
and
No.
333-221269)
of
Logitech
International
S.A.
of
our
report
dated
May
17,
2019
,
with
respect
to
the
consolidated
balance
sheets
of
Logitech
International
S.A.
and
subsidiaries
(the
Company)
as
of
March
31,
2019
and
2018,
and
the
related
consolidated
statements
of
operations,
comprehensive
income,
changes
in
shareholders’
equity,
and
cash
flows
and
the
related
notes
and
financial
statement
schedule
(collectively,
the
“consolidated
financial
statements”)
for
each
of
the
years
in
the
three-year
period
ended
March
31,
2019,
and
the
effectiveness
of
internal
control
over
financial
reporting
as
of
March
31,
2019,
which
report
appears
in
the
March
31,
2019
annual
report
on
Form
10-K
of
the
Company.

Our
report
contains
an
explanatory
paragraph
that
states
the
Company
excluded
from
its
assessment
of
the
effectiveness
of
the
Company’s
internal
control
over
financial
reporting
an
acquired
entity’s
internal
control
over
financial
reporting
and
our
audit
of
internal
control
over
financial
reporting
of
the
Company
also
excluded
an
evaluation
of
the
internal
control
over
financial
reporting
of
this
entity.

Our
report
refers
to
a
change
in
the
Company’s
method
of
accounting
for
revenue
in
2019
and
excess
tax
benefits
from
share-based
payments
in
2018
due
to
the
adoption
new
accounting
standards.

/s/
KPMG
LLP

Santa
Clara,
California

May
17,
2019

Exhibit 31.1

I,
Bracken
Darrell,
certify
that:

CERTIFICATIONS

1.



I
have
reviewed
this
annual
report
on
Form
10-K
of
Logitech
International
S.A.;

2.



Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to
make
the
statements
made,
in
light
of
the
circumstances
under
which
such
statements
were
made,
not
misleading
with
respect
to
the
period
covered
by
this
report;

3.



Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
the
financial
condition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented
in
this
report;

4.



The
registrant's
other
certifying
officer
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
in
Exchange
Act
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
Exchange
Act
Rules
13a-15(f)
and
15d-
15(f))
for
the
registrant
and
have:

a. 
 
 
 
Designed 
such 
disclosure 
controls 
and 
procedures, 
or 
caused 
such 
disclosure 
controls 
and 
procedures 
to 
be 
designed 
under 
our
supervision,
to
ensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made
known
to
us
by
others
within
those
entities,
particularly
during
the
period
in
which
this
report
is
being
prepared;

b.



Designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
our
supervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles;

c.



Evaluated
the
effectiveness
of
the
registrant's
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about
the

effectiveness
of
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
and

d.



Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recent 
fiscal 
quarter 
(the 
registrant's 
fourth 
fiscal 
quarter 
in 
the 
case 
of 
an 
annual 
report) 
that 
has 
materially 
affected, 
or 
is 
reasonably 
likely 
to
materially
affect,
the
registrant's
internal
control
over
financial
reporting;
and

5.



The
registrant's
other
certifying
officer
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
the
registrant's
auditors
and
the
audit
committee
of
the
registrant's
Board
of
Directors
(or
persons
performing
the
equivalent
functions):

a. 
 
 
 
All 
significant 
deficiencies 
and 
material 
weaknesses 
in 
the 
design 
or 
operation 
of 
internal 
control 
over 
financial 
reporting 
which 
are

reasonably
likely
to
adversely
affect
the
registrant's
ability
to
record,
process,
summarize
and
report
financial
information;
and

b.



Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal

control
over
financial
reporting.

May
17,
2019  

/s/
BRACKEN
DARRELL

Bracken
Darrell


President and Chief Executive Officer

 
 
 
 
 
 
 
 
 
 
 
 
 
 
CERTIFICATIONS

Exhibit 31.2

I,
Vincent
Pilette,
certify
that:

1.
     I
have
reviewed
this
annual
report
on
Form
10-K
of
Logitech
International
S.A.;

2.
     Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to
make
the
statements
made,
in
light
of
the
circumstances
under
which
such
statements
were
made,
not
misleading
with
respect
to
the
period
covered
by
this
report;

3.
     Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
the
financial
condition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented
in
this
report;

4.
     The
registrant's
other
certifying
officer
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
in
Exchange
Act
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
Exchange
Act
Rules
13a-15(f)
and
15d-
15(f))
for
the
registrant
and
have:

a.
          Designed 
such 
disclosure 
controls 
and 
procedures, 
or 
caused 
such 
disclosure 
controls 
and 
procedures 
to 
be 
designed 
under 
our
supervision,
to
ensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made
known
to
us
by
others
within
those
entities,
particularly
during
the
period
in
which
this
report
is
being
prepared;

b.
     Designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
our
supervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles;

c.
     Evaluated
the
effectiveness
of
the
registrant's
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about
the

effectiveness
of
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
and

d.
     Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recent 
fiscal 
quarter 
(the 
registrant's 
fourth 
fiscal 
quarter 
in 
the 
case 
of 
an 
annual 
report) 
that 
has 
materially 
affected, 
or 
is 
reasonably 
likely 
to
materially
affect,
the
registrant's
internal
control
over
financial
reporting;
and

5.
     The
registrant's
other
certifying
officer
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
the
registrant's
auditors
and
the
audit
committee
of
the
registrant's
Board
of
Directors
(or
persons
performing
the
equivalent
functions):

a.
          All 
significant 
deficiencies 
and 
material 
weaknesses 
in 
the 
design 
or 
operation 
of 
internal 
control 
over 
financial 
reporting 
which 
are

reasonably
likely
to
adversely
affect
the
registrant's
ability
to
record,
process,
summarize
and
report
financial
information;
and

b.
     Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal

control
over
financial
reporting.

May
17,
2019  

/s/
VINCENT
PILETTE

Vincent
Pilette


Chief Financial Officer

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13A-14(B) OR RULE

15D-14(B) AND SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

The 
certification 
set 
forth 
below 
is 
being 
submitted 
in 
connection 
with 
this 
annual 
report 
on 
Form 
10-K 
(the 
"Report") 
of 
Logitech
International
S.A.
("the
Company")
for
the
purpose
of
complying
with
Rule
13a-14(b)
or
Rule
15d-14(b)
of
the
Securities
Exchange
Act
of
1934
(the
"Exchange
Act")
and
Section
1350
of
Chapter
63
of
Title
18
of
the
United
States
Code.

Bracken
Darrell,
Chief
Executive
Officer
of
the
Company,
and
Vincent
Pilette,
Chief
Financial
Officer
of
the
Company,
each
certify
that,
to
the

best
of
his
knowledge:

(1)
(2)

the
Report
fully
complies
with
the
requirements
of
Section
13(a)
or
15(d)
of
the
Exchange
Act;
and
the
information
contained
in
the
Report
fairly
presents,
in
all
material
respects,
the
financial
condition
and
results
of
operations
of
the
Company.

May
17,
2019

/s/
BRACKEN
DARRELL

Bracken
Darrell


President and Chief Executive Officer

/s/
VINCENT
PILETTE

Vincent
Pilette


Chief Financial Officer