(1) The 2020 share repurchase program expired on July 27, 2023. See Note 14 to the consolidated financial statements for further information.
(2) In June 2023, our Board of Directors approved a new, three-year share repurchase program. The Swiss Takeover Board approved the 2023 share repurchase program in July 2023 and the program became effective on July 28, 2023. See Note 14 to the consolidated financial statements for further information.
The following tables present certain information related to purchases made by Logitech of its equity securities under its publicly announced share repurchase programs (in thousands, except per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Weighted Average Price Per Share | | Remaining Amount that May Yet Be Repurchased under the Program |
| During Fiscal Year Ended | | Shares Repurchased(1) | | CHF (LOGN) | | USD (LOGI) | |
| March 31, 2022 | | 4,607 | | | 82.15 | | 89.36 | | | $ | 423,696 | |
| March 31, 2023 | | 7,562 | | | 52.94 | | 55.25 | | | $ | 505,844 | |
| March 31, 2024 | | 7,100 | | | 65.46 | | 73.63 | | | $ | 635,750 | |
(1) In fiscal years 2022, 2023 and 2024, the number of shares repurchased on the SIX was 3.9 million, 7.4 million, and 6.9 million, respectively, and the number of shares repurchased on NASDAQ was 0.7 million, 0.2 million, and 0.2 million, respectively. Shares were repurchased in fiscal year 2022 and fiscal year 2023 to support equity incentive plans. In fiscal year 2024, 4.1 million shares were repurchased for cancellation and the remaining shares were repurchased to support equity incentive plans.
Logitech International S.A. | Fiscal 2024 Form 10-K | 36
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Number of Shares
Repurchased | | Weighted Average Price Paid Per Share | | Remaining Amount that May Yet Be
Repurchased under the Program |
During the three months ended March 31, 2024 | | | CHF (LOGN) | | USD (LOGI) | |
| Month 1 | | | | | | | | |
December 30, 2023 to January 26, 2024 | | | | | | | | |
| SIX | | 430 (1) | | 79.71 | | | N/A | | $ | 727,751 | |
| Nasdaq | | — | | | N/A | | — | | | 727,751 | |
| Month 2 | | | | | | | | |
January 27, 2024 to February 23, 2024 | | | | | | | | |
| SIX | | 465 (2) | | 75.13 | | N/A | | 687,750 | |
| Nasdaq | | — | | N/A | | — | | | 687,750 | |
| Month 3 | | | | | | | | |
February 24, 2024 to March 31, 2024 | | | | | | | | |
| SIX | | 577 (2) | | 80.00 | | N/A | | 635,750 | |
| Nasdaq | | — | | N/A | | — | | | 635,750 | |
| | 1,472 | | | 78.38 | | N/A | | $ | 635,750 | |
(1) Includes 346,000 shares repurchased on the ordinary trading line to support equity incentive plans and 84,000 shares repurchased on the second trading line for cancellation under the 2023 share repurchase program.
(2) Shares repurchased on the second line for cancellation under the 2023 share repurchase program.
Performance Graph
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 2024 Form 10-K | 37
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, 2019 and calculates the annual return through March 31, 2024. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | March 31, |
| | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 |
| Logitech | | $ | 100 | | | $ | 111 | | | $ | 274 | | | $ | 195 | | | $ | 157 | | | $ | 246 | |
| Nasdaq Composite Index | | $ | 100 | | | $ | 101 | | | $ | 175 | | | $ | 189 | | | $ | 164 | | | $ | 222 | |
| S&P 500 Information and Technology Index | | $ | 100 | | | $ | 110 | | | $ | 184 | | | $ | 222 | | | $ | 212 | | | $ | 310 | |
ITEM 6. (Reserved)
Logitech International S.A. | Fiscal 2024 Form 10-K | 38
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.
Company Overview
Logitech designs software-enabled hardware solutions that help businesses thrive and bring people together when working, creating, gaming and streaming. As a point of connection between people and the digital world, our mission is to extend human potential in work and play, in a way that is good for people and the planet. We sell these products through a number of brands, including Logitech, Logitech G and others.
Our diverse portfolio includes: Gaming, Keyboards & Combos, Pointing Devices, Video Collaboration, Webcams, Tablet Accessories, and Headsets. These products are all classified under a single operating segment: Peripherals (see Note 15 to our consolidated financial statements).
We sell our products to a broad network of international customers, in the Americas, Europe, the Middle East and Africa (“EMEA”) and Asia Pacific. This includes direct sales to retailers, e-tailers, and end consumers through our e-commerce platform, and indirect sales to end customers through distributors.
From time to time, we may seek to partner with or acquire, when appropriate, companies that have products, personnel, and technologies that complement our strategic direction. We continually review our product offerings and our strategic direction in light of our profitability targets, competitive conditions, changing consumer trends and the evolving nature of the interface between the consumer and the digital world.
Impacts of Macroeconomic and Geopolitical Conditions on our Business
Our business has been impacted by adverse macroeconomic and geopolitical conditions. These conditions include inflation, interest rate and foreign currency fluctuations, changes in fiscal policies, slowdown of economic activity around the world, and lower consumer and enterprise spending.
The global and regional economic and political conditions adversely affected demand for our products. In addition, these conditions have caused and may continue to cause volatility in the cost of materials and logistics, and transportation delays, and as a result may impact the pricing of our products, product availability and our results of operations.
For additional information, see Item 1A "Risk Factors," including under the captions "Adverse global and regional economic and geopolitical conditions can materially adversely affect our business, results of operations and financial condition," “We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components,” “Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well as potential tariffs, adverse trade regulations, adverse tax consequences and pressure to move or diversify our manufacturing locations,” “If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected,” and "If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales and our business and operating results could be adversely affected.”
Trends and Uncertainties
Several long-term secular-trends offer long-term structural growth opportunities across Logitech’s product portfolio. We design, create and sell products that benefit from these secular trends which include the following:
•Hybrid work: Hybrid work provides an opportunity to equip multiple workspaces including in the office and other places of work, as well as at home and away from home. Hybrid work also provides an opportunity for increased enterprise and consumer adoption of video conferencing. Our video collaboration products are compatible with a variety of video conference platforms, including Zoom, Microsoft Teams and Google Meet
Logitech International S.A. | Fiscal 2024 Form 10-K | 39
•Gaming: The ongoing growth and evolution of gaming creates an opportunity for us to provide more tools to a wider community of gamers. In particular, social gaming continues to gain popularity through online gaming, multi-platform experiences and esports.
•AI: AI has reshaped expectations for productivity improvements, product innovation and technology ecosystem evolution. While we have used AI solutions and machine learning to enhance the features of different products in our portfolio, AI offers additional growth opportunities and risks as we work to integrate our capabilities with our ecosystem partners.
•Climate change: Climate change affects everyone. We already consider sustainability as part of our product design and in other areas and intend to continue to do so in the future.
•The importance of trust: With our well-established Logitech brand, consumer-centric design philosophy, and commitment to high privacy and security standards, we strive to deliver trusted user experiences.
While we believe we will further benefit from these secular trends, we have experienced and will continue to experience challenges that impact our business and financial results. These challenges include (i) the current macroeconomic environment, including interest rate fluctuations, inflation, foreign exchange movements, changes in fiscal policies and low economic growth in certain regions, (ii) the uncertainty with overall consumer and enterprise demand, (iii) the uncertainty with enterprise strategy for office space utilization and related timing of enterprise investments in infrastructure and technology, and (iv) the timing of further development of our B2B go-to-market capabilities.
We expect these challenges to continue in the near-term. We have taken steps to mitigate the impact of these challenges, including but not limited to: (i) reduction in our operating expenses in order to maintain margins and size the business for the current market, (ii) reduction in inventories to more appropriately align with demand, (iii) continued investment in our B2B capabilities, and (iv) release of new products to increase the value proposition of our portfolio.
For additional information, see Part I, Item 1A “Risk Factors.”
Business Seasonality and Product Introductions
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 patterns of product introductions should be considered reliable indicators of our future pattern of product introductions, future sales or financial performance. Furthermore, cash flow is correspondingly lower in the first half of our fiscal year as we typically build inventories in advance for the third quarter and we pay an annual dividend following our Annual General Meeting, which is typically in September.
Summary of Financial Results
Our total sales for fiscal year 2024 decreased 5%, compared to fiscal year 2023, primarily driven by a decline in sales of most of our product categories as a result of lower demand.
Sales for fiscal year 2024 decreased 16% and 2% in the Asia Pacific and Americas regions, respectively, and were flat in EMEA, compared to fiscal year 2023.
Gross margin for fiscal year 2024 increased by 350 basis points to 41.4%, compared to 37.9% for fiscal year 2023, primarily due to lower material and logistics costs as well as lower promotional spend, partially offset by unfavorable product mix.
Operating expenses for fiscal year 2024 were $1,190.7 million, or 27.7% of sales, compared to $1,261.0 million, or 27.8% of sales, for fiscal year 2023. The decrease in operating expenses was primarily driven by a reduction in marketing spend.
Logitech International S.A. | Fiscal 2024 Form 10-K | 40
Included in the income tax provision of $9.5 million and $98.9 million in fiscal year 2024 and 2023 was $20.7 million of tax benefit and $46.0 million of tax expense, respectively, from Switzerland.
Net income for fiscal year 2024 was $612.1 million, compared to $364.6 million for fiscal year 2023, reflecting higher gross margin as well as lower operating expenses and income tax provision.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires us to make assumptions, judgments, and estimates that affect reported amounts of assets, liabilities, sales and expenses, and the disclosure of contingent assets and liabilities.
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 assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Although these assumptions, judgments, and estimates are based on management's best knowledge of current events and actions that may impact us in the future, actual results could differ. Management has discussed the development, selection and disclosure of these critical accounting estimates with the Audit Committee of the Board of Directors.
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. Customer Programs require management to estimate the percentage of those programs that will not be claimed in the current period or will not be earned by customers, which is commonly referred to as "breakage." Breakage is estimated based on historical claim experience, the period in which the claims are expected to be submitted, specific terms and conditions with customers, and other factors. 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.
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 predetermined performance criteria. Consumer rebates are offered from time to time at our discretion for the primary benefit of end-users. 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.
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 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. Assessing the period in which claims are expected to be submitted and the relevance of the historical claim experience require significant management judgment to estimate the breakage of Customer Programs in any accounting period.
Logitech International S.A. | Fiscal 2024 Form 10-K | 41
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 that consider the assumptions about future demand and market conditions. Inventory on hand that 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 are 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. We also extend the assessment to non-cancelable purchase orders if the inventories are considered excess and record the liability that is reasonably possible to be incurred in accrued and other liabilities.
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 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.
For additional information about our Critical Accounting Estimates, see Note 2—Summary of Significant Accounting Policies in our Notes to our consolidated financial statements below.
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 to be adopted.
Logitech International S.A. | Fiscal 2024 Form 10-K | 42
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 rate fluctuations 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.
References 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
Our sales in fiscal year 2024 decreased 5%, compared to fiscal year 2023, primarily driven by a decline in sales of most of our product categories as a result of lower demand. If currency exchange rates had been constant in fiscal years 2024 and 2023, our sales decline in constant currency would have been 6%.
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, Australian Dollar, Canadian Dollar, Pound Sterling and New Taiwan Dollar. For the years ended March 31, 2024 and 2023, approximately 50% and 51%, respectively, 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 2024 compared with fiscal year 2023:
| | | | | | | | | | | | | | |
|
| | Sales Growth Rate | | Sales Growth Rate in Constant Currency |
| Americas | | (2) | % | | (2) | % |
| EMEA | | — | | | (4) | |
| Asia Pacific | | (16) | | | (13) | |
Americas:
The decrease in sales in the Americas region for fiscal year 2024, compared to fiscal year 2023, was primarily driven by decreases in sales for mobile speakers and PC speakers in our Other category.
EMEA:
Sales in the EMEA region for fiscal year 2024, compared to fiscal year 2023, remained flat. Increases in sales for Gaming and Pointing Devices were offset by decreases in sales for Webcams and Video Collaboration.
Logitech International S.A. | Fiscal 2024 Form 10-K | 43
Asia Pacific:
The decrease in sales in the Asia Pacific region for fiscal year 2024, compared to fiscal year 2023, was primarily driven by decreases in sales of Gaming, Keyboards & Combos and Video Collaboration.
Sales by Product Category
During the first quarter of fiscal year 2024, we changed the presentation of sales by product category to provide a simpler and clearer view of our business. The change in presentation did not have an impact on previously reported total sales. As a result of these changes, certain prior-period amounts for the fiscal year 2023 have been reclassified to conform to the current period presentation. See Note 2 to the consolidated financial statements for further information on the change in presentation.
Sales by product category in the current presentation for fiscal years 2024 and 2023 were as follows (Dollars in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended March 31, | | Change |
| | | 2024 | | 2023 | | 2024 vs. 2023 |
Gaming (1) | | $ | 1,231,063 | | | $ | 1,288,313 | | | (4) | % |
| Keyboards & Combos | | 821,441 | | | 836,432 | | | (2) | |
| Pointing Devices | | 742,987 | | | 728,357 | | | 2 | |
| Video Collaboration | | 609,361 | | | 677,923 | | | (10) | |
| Webcams | | 325,225 | | | 378,688 | | | (14) | |
| Tablet Accessories | | 254,060 | | | 254,374 | | | — | |
| Headsets | | 168,478 | | | 176,576 | | | (5) | |
Other (2) | | 145,852 | | | 198,155 | | | (26) | |
| Total Sales | | 4,298,467 | | | 4,538,818 | | | (5) | % |
(1) Gaming includes streaming services revenue generated by Streamlabs.
(2) Other primarily consists of mobile speakers and PC speakers.
Gaming
Our Gaming category includes gaming mice, steering wheels, headsets, keyboards, console gaming headsets, studio-quality Blue Microphones and Streamlabs services.
During fiscal year 2024, Gaming sales decreased 4%, compared to fiscal year 2023, primarily driven by decreases in sales of gaming keyboards, Blue Microphones, and Streamlabs services.
Keyboards & Combos
Our Keyboards & Combos category includes PC keyboards and keyboard/mice combo products.
During fiscal year 2024, Keyboards & Combos sales decreased 2%, compared to fiscal year 2023, primarily driven by a decrease in sales of our cordless keyboards, partially offset by an increase in sales of our cordless combos.
Pointing Devices
Our Pointing Devices category includes PC- and Mac-related mice including trackballs and presentation tools.
During fiscal year 2024, Pointing Devices sales increased 2%, compared to fiscal year 2023, primarily driven by increases in sales of cordless mice and presentation tools.
Video Collaboration
Our Video Collaboration category includes Logitech’s conference room cameras, which combine affordable enterprise-quality audio and high definition 4K video to bring video conferencing to a variety of room sizes.
During fiscal year 2024, Video Collaboration sales decreased 10%, compared to fiscal year 2023, primarily due to decreases in sales of many Video Collaboration products driven by lower enterprise spending.
Logitech International S.A. | Fiscal 2024 Form 10-K | 44
Webcams
Our Webcams category includes PC-based webcams that are targeted primarily at consumers, including streaming cameras, and VC webcams that turn any desktop into an instant collaboration space.
During fiscal year 2024, Webcams sales decreased 14%, compared to fiscal year 2023, primarily driven by decreases in sales of most of our VC webcams and PC-based webcams.
Tablet Accessories
Our Tablet Accessories category primarily includes tablet keyboards.
During fiscal year 2024, Tablet Accessories sales remained flat, compared to fiscal year 2023.
Headsets
Our Headsets category includes PC and VC headsets, in-ear headphones, and premium wireless earbuds.
During fiscal year 2024, Headsets sales decreased 5%, compared to 2023, primarily driven by decreases in sales of VC headsets and corded PC headsets.
Other
Our Other category primarily consists of mobile speakers and PC speakers.
During fiscal year 2024, Other sales decreased 26% compared to 2023, primarily driven by a decline in sales of mobile speakers.
Gross Profit
Gross profit for fiscal years 2024 and 2023 was as follows (Dollars in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended March 31, |
| | | 2024 | | 2023 | | Change |
| Net sales | | $ | 4,298,467 | | | $ | 4,538,818 | | | (5.3) | % |
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For fiscal year 2024, net cash provided by operating activities was $1,145.1 million resulting from net income of $612.1 million, a favorable impact from adding back non-cash adjustments totaling $143.5 million, and a favorable net change in operating assets and liabilities of $389.4 million. Non-cash adjustments were primarily related to depreciation and amortization, share-based compensation expense, and deferred income taxes. The decrease in accounts receivable, net, was primarily driven by the timing of sales within the fourth quarter of fiscal years 2024 and 2023. The decrease in inventories was primarily driven by our effort to manage inventory level to align with softened demand. The increase in accounts payable was primarily driven by an increase in inventory purchases to replenish certain products during the fourth quarter of fiscal year 2024.
For fiscal year 2024, net cash used in investing activities was $70.3 million, primarily due to $55.9 million purchases of property, plant, and equipment. Our expenditures for property, plant and equipment during fiscal year 2024 were primarily for building improvements, tooling and equipment, and computer hardware and software.
Logitech International S.A. | Fiscal 2024 Form 10-K | 50
For fiscal year 2024, net cash used in financing activities was $690.2 million, primarily resulting from repurchases of our registered shares of $504.2 million, payments of cash dividends of $182.3 million, and tax withholdings related to net share settlements of restricted stock units of $29.7 million, partially offset by proceeds from exercise of stock options and purchase rights of $32.2 million.
During fiscal year 2024, there was a $12.8 million loss from currency exchange rate effect on cash and cash equivalents, primarily due to exchange rate fluctuations of Euro, Chinese Renminbi, Australian Dollar and Swiss Franc versus the U.S. Dollar and timing of our cash transactions over the period.
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. Market volatility driven by the current macroeconomic and geopolitical environment may increase our costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity.
In May 2024, the Board of Directors recommended that we pay cash dividends for fiscal year 2024 of CHF 1.16 per share (approximately $1.28 per share based on the exchange rate on March 31, 2024). Based on our shares outstanding, net of treasury shares, as of March 31, 2024 (153,863,262 shares), this would result in an aggregate gross dividend of approximately CHF 178.5 million (approximately $197.2 million based on the exchange rate on March 31, 2024). In fiscal year 2024, we paid a cash dividend of CHF 1.06 per share, or CHF 169.1 million (U.S. Dollar amount of $182.3 million based on the exchange rate on the date of payment) out of fiscal year 2023 retained earnings. In fiscal year 2023, we paid a cash dividend of CHF 0.96 per share, or CHF 156.1 million (U.S. Dollar amount of $158.7 million based on the exchange rate on the date of payment) out of fiscal year 2022 retained earnings. In fiscal year 2022, we paid a cash dividend of CHF 0.87 per share, or CHF 147.0 million (U.S. Dollar amount of $159.4 million) out of fiscal year 2021 retained earnings.
In May 2020, our Board of Directors approved the 2020 share repurchase program, which authorized us to invest up to $250.0 million to purchase our own shares to support equity incentive plans or potential acquisitions. In April 2021, our Board of Directors approved an increase of $750.0 million to the 2020 share repurchase program, to an aggregate amount of $1.0 billion. The Swiss Takeover Board approved this increase and it became effective on May 21, 2021. In July 2022, our Board of Directors approved an increase of $500 million to the 2020 share repurchase program, to an aggregate amount of up to $1.5 billion. The Swiss Takeover Board approved this increase and it became effective on August 19, 2022. The 2020 share repurchase program expired on July 27, 2023. We repurchased 16.7 million shares for an aggregate cost of $1.2 billion under the 2020 share repurchase program, of which 2.6 million shares for an aggregate cost of $159.1 million were repurchased during fiscal year 2024 prior to the expiration of the program.
In June 2023, our Board of Directors approved a new, three-year share repurchase program, which allows us to use up to $1.0 billion to repurchase our shares. The 2023 share repurchase program enables us to repurchase shares for cancellation, as well as to support equity incentive plans or potential acquisitions. The Swiss Takeover Board approved the 2023 share repurchase program in July 2023 and the program became effective on July 28, 2023. During the fiscal year ended March 31, 2024, we repurchased 4.5 million shares for an aggregate cost of $364.7 million, under the 2023 share repurchase program, of which $19.5 million of the aggregate cost was not paid yet as of March 31, 2024. 4.1 million shares for an aggregate cost of $332.1 million were repurchased for cancellation and the remaining shares were repurchased to support equity incentive plans. As of March 31, 2024, $635.8 million was available for repurchase under the 2023 share repurchase program.
Swiss law limits a company’s ability to hold or repurchase its own shares. The aggregate par value of all shares held in treasury by us and our subsidiaries may not exceed 10% of our share capital, which corresponds to approximately 17.3 million registered shares. This limitation does not apply to shares repurchased for cancellation, due to the Board of Directors' authority under the capital band set forth in the Company's Articles of Incorporation to cancel shares up to a limit of 10% of our current share capital. As of March 31 2024, we had a total of 19.2 million shares held in treasury stock, which includes 4.1 million shares that have been repurchased for cancellation.
Logitech International S.A. | Fiscal 2024 Form 10-K | 51
Although we enter into trading plans for systematic repurchases (e.g., 10b5-1 trading plans) from time to time, our 2023 share repurchase 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 through July 27, 2026. To the extent that the shares are repurchased to support equity incentive plans or potential acquisitions, the shares are repurchased on the ordinary trading line of Swiss Exchange ("SIX") and/or the Nasdaq Global Select Market ("Nasdaq"). Shares repurchased for cancellation purposes are repurchased via a second trading line on SIX. Opportunistic purchases may be started or stopped at any time without prior notice depending on market conditions and other factors.
For over ten years, we have generated positive cash flows from our operating activities, including cash from operations of $1,145.1 million and $534.0 million during fiscal years 2024 and 2023, 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
Purchase Commitments
As of March 31, 2024, we had non-cancelable purchase commitments of $396.8 million for inventory purchases made in the normal course of business from original design manufacturers, contract manufacturers and other suppliers, the majority of which are expected to be fulfilled within the next 12 months. We recorded a liability for firm, non-cancelable, and unhedged inventory purchase commitments in excess of anticipated demand or net realizable value consistent with our valuation of excess and obsolete inventory. As of March 31, 2024, the liability for these purchase commitments was $29.3 million and is recorded in accrued and other current liabilities in the consolidated balance sheet.
We have firm purchase commitments of $13.4 million for capital expenditures primarily related to commitments for tooling and equipment for new and existing products. We expect to continue making capital expenditures in the future to support product development activities and ongoing and expanded operations. Although open purchase commitments are considered enforceable and legally binding, the terms generally allow us to reschedule or adjust our requirements based on business needs prior to delivery of goods or performance of services.
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 2033. See Note 17 - Leases in our Notes to the consolidated financial statements included in this report for more information on leases.
Income Taxes Payable
As of March 31, 2024, we had $112.6 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.
Indemnifications
We indemnify certain 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, 2024, no material 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 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
Logitech International S.A. | Fiscal 2024 Form 10-K | 52
exposures are not capped, the obligations are conditional in nature, and the facts and circumstances involved in any situation that might arise are variable.
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 company with global operations, 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 accumulated other comprehensive income (loss) ("AOCI") 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 approximately 30 currencies worldwide, of which the most significant to operations are the Euro, Chinese Renminbi, Japanese Yen, Australian Dollar, Canadian Dollar, Pound Sterling and New Taiwan Dollar. For the year ended March 31, 2024, approximately 50% of our sales were in non-U.S. denominated currencies, with 24% of our sales denominated in Euro. The mix of our costs 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 has a more unfavorable impact on our sales compared to the favorable impact on our cost of goods sold and 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 contracts generally mature within approximately 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 had been 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 $19.1 million and $17.0 million as of March 31, 2024 and 2023, respectively. The adverse effect as of March 31, 2024 and 2023 is after consideration of the offsetting effect of approximately $6.9 million and $8.1 million, respectively, from foreign exchange contracts in place as of such dates.
We enter into cash flow hedge contracts to protect against exchange rate exposure of forecasted inventory purchases. These hedging contracts mature within approximately four months. Gains and losses in the fair value of the effective portion of the hedges are deferred as a component of AOCI 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 had weakened by 10%, the amount recorded in AOCI related to our foreign exchange contracts before tax effect as of March 31, 2024 and 2023 would have been approximately $9.0 million and $7.3 million lower, respectively. 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
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 provided in the section titled "Financial Statements."
Logitech International S.A. | Fiscal 2024 Form 10-K | 53
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 specified 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.
Attached as exhibits to this Annual Report are certifications of the CEO and CFO, which are required in 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, 2024.
The effectiveness of the Company's internal control over financial reporting as of March 31, 2024 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 the Company's internal control over financial reporting during the fourth quarter of fiscal year 2024 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 the 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
Logitech International S.A. | Fiscal 2024 Form 10-K | 54
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
Securities Trading Plans of Directors and Executive Officers
During the fourth quarter of fiscal year 2024, the following officer, as defined in Rule 16a-1(f), adopted a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Regulation S-K Item 408.
, , our , a Rule 10b5-1 trading arrangement providing for the sale of an aggregate of up to shares of our common stock acquired by Mr. Arunkundrum under our equity plans. The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c). The first date that sales of any shares are permitted to be sold under the trading arrangement will be July 31, 2024. The trading arrangement terminates on December 15, 2024, or upon the earlier completion of all transactions thereunder.
No other officers or directors, as defined in Rule 16a-1(f), and/or a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K, during the last fiscal quarter.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
Logitech International S.A. | Fiscal 2024 Form 10-K | 55
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.
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.
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 through the following address or phone number:
Logitech
Investor Relations
3930 North First Street
San Jose, CA 95134 USA
Main (510) 795-8500
We have an Insider Trading Policy which applies to our executive officers, directors and employees, filed as Exhibit 19.1 to this Annual Report on Form 10-K.
Other information required by this Item may be found in the definitive Proxy Statement for the 2024 Annual Meeting of Shareholders and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item may be found in the Proxy Statement for the 2024 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 2024 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 2024 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 2024 Annual Meeting of Shareholders and is incorporated herein by reference.
Logitech International S.A. | Fiscal 2024 Form 10-K | 56
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:
2. Financial Statement Schedule
3. Exhibits
Logitech International S.A. | Fiscal 2024 Form 10-K | 57
Index to Exhibits
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Incorporated by Reference | | |
| Exhibit No. | | | | Exhibit | | Form | | File No. | | Filing Date | | Exhibit No. | | Filed
Herewith |
| | | | | | | | | | |
|
|
Logitech International S.A. | Fiscal 2024 Form 10-K | 63
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, 2024 and 2023, 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, 2024, and the related notes and financial statement schedule II (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of March 31, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2024, 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, 2024 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
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. 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 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
Logitech International S.A. | Fiscal 2024 Form 10-K | 64
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.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of the significant assumptions underlying the breakage rates for certain Customer Programs
As discussed in Notes 2 and 8 to the consolidated financial statements, the Company recorded accounts receivable allowances totaling $193.0 million and accrued Customer Program liabilities totaling $170.4 million as of March 31, 2024 for various cooperative marketing arrangements and customer incentive and pricing programs (collectively, Customer Programs). The Company estimates the percentage of Customer Programs that will not be claimed or will not be earned by customers, which is commonly referred to as “breakage”. Breakage reduces the Company’s allowances and accruals for certain Customer Programs and it is applied at the time of sale. The Company uses judgment in assessing the period in which claims are expected to be submitted and the relevance of historical claim experience.
We identified the evaluation of the significant assumptions underlying the breakage rates for certain Customer Programs as a critical audit matter. The significant assumptions in the breakage rates estimate included: 1) the determination of the period in which the claims are expected to be submitted by the customers, 2) the assessment of the relevance of historical customer claim experience, and 3) the assessment of the relevance of the historical trend of claims submitted after the expected period. A high degree of auditor judgment was required to evaluate the significant assumptions, due to the inherent uncertainties related to such assumptions as well as recent changes in certain customers’ claim processing behavior in the current economic environment.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of internal control related to the process to determine the breakage rates estimate. This included a control related to the Company’s evaluation of the significant assumptions in the breakage rates estimate. We evaluated the underlying information related to the expected period that a customer claim will be submitted and assessed the relevance of historical claim experience by analyzing the trend in the customers’ historical claims and accruals information for certain Customer Programs. We assessed the relevance of the historical trend of claims submitted after the expected period by analyzing the trend of historical claims received after the expected period compared to the total earned amount of each respective period. In addition, we evaluated the Company’s ability to estimate the breakage rates by comparing the estimated breakage from fiscal year 2023 to actual subsequent breakage in fiscal year 2024.
Assessment of the accruals for certain Customer Programs
As discussed in Notes 2 and 8 to the consolidated financial statements, the Company recorded accrued Customer Program liabilities of $170.4 million as of March 31, 2024. The Company records these accruals as a reduction of revenue at the time of sale. For certain of these accruals, the Company estimated the amounts based on historical data or future commitments that are planned and controlled by the Company. The Company uses judgment in analyzing historical trends, inventories owned by and located at the customers, products sold by the direct customers to end customers or resellers, known product quality issues, negotiated terms, and
Logitech International S.A. | Fiscal 2024 Form 10-K | 65
other relevant customer and product information, such as stage of product life-cycle, which are expected to experience unusually high discounting.
We identified the assessment of the accruals for certain Customer Programs as a critical audit matter. Historical experience being predictive of Customer Programs’ earned amounts is the significant assumption used to estimate the accruals for Customer Programs. Due to the inherent uncertainties related to the relevance of the predictive historical experience to the determination of the estimate, the testing required a high degree of auditor judgment.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the Company’s assessment of whether historical experience is predictive of Customer Programs’ earned amounts and the Company’s validation of the underlying channel inventory data used to estimate the accruals for Customer Programs. We assessed the historical experience used in estimating the accruals for certain Customer Programs using a combination of the Company’s internal historical information of sales, Customer Programs’ earned amounts, third-party contracts, and relevant and reliable third-party channel inventory and sell-through data. We inspected selected customer contracts to assess the terms and conditions related to certain Customer Programs. We analyzed channel inventory data trends by product and by region comparing fiscal year 2024 quarterly channel inventory weeks on-hand ratios to prior fiscal years. In addition, we evaluated the Company’s ability to estimate the accruals for certain Customer Programs by comparing recorded accruals from fiscal year 2023 to actual subsequent Customer Programs’ earned amounts in fiscal year 2024.
/s/
We have served as the Company’s auditor since 2014.
May 16, 2024
Logitech International S.A. | Fiscal 2024 Form 10-K | 66
LOGITECH INTERNATIONAL S.A.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended March 31, |
| | | 2024 | | 2023 | | 2022 |
| Net sales | | $ | | | | $ | | | | $ | | |
| Cost of goods sold | | | | | | | | | |
| Amortization of intangible assets | | | | | | | | | |
| Gross profit | | | | | | | | | |
| Operating expenses: | | | | | | |
| Marketing and selling | | | | | | | | | |
| Research and development | | | | | | | | | |
| General and administrative | | | | | | | | | |
| Amortization of intangible assets and acquisition-related costs | | | | | | | | | |
| Impairment of intangible assets | | | | | | | | | |
| Change in fair value of contingent consideration for business acquisition | | () | | | | | | () | |
| Restructuring charges, 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 | | | | | | | | | |
| | |
| | |
The accompanying notes are an integral part of these consolidated financial statements.
Logitech International S.A. | Fiscal 2024 Form 10-K | 67
LOGITECH INTERNATIONAL S.A.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended March 31, |
| | | 2024 | | 2023 | | 2022 |
| Net income | | $ | | | | $ | | | | $ | | |
| Other comprehensive income (loss): | | | | | | |
| Currency translation gain (loss): | | | | | | |
| Currency translation gain (loss), net of taxes | | () | | | | | | () | |
| Reclassification of cumulative translation adjustments included in other income (expense), net | | | | | | | | | |
| Defined benefit plans: | | | | | | |
| Net gain (loss) and prior service costs, net of taxes | | () | | | | | | | |
| Reclassification of amortization included in other income (expense), net | | | | | () | | | () | |
| Hedging gain (loss): | | | | | | |
| Deferred hedging gain, net of taxes | | | | | | | | | |
| Reclassification of hedging loss (gain) included in cost of goods sold | | | | | () | | | () | |
| Total other comprehensive income (loss) | | () | | | | | | | |
| Total comprehensive income | | $ | | | | $ | | | | $ | | |
The accompanying notes are an integral part of these consolidated financial statements.
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LOGITECH INTERNATIONAL S.A.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
| | | | | | | | | | | | | | |
| | | March 31, |
| | | 2024 | | 2023 |
| Assets | | | | |
| 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 | | $ | | | | $ | | |
| Liabilities and Shareholders' Equity | | | | |
| Current liabilities: | | | | |
| Accounts payable | | $ | | | | $ | | |
| 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) | | par value: | | | | | | |
Issued shares — at March 31, 2024 and 2023 | | | | |
Additional shares that may be issued out of conditional capital — at March 31, 2024 and 2023 | | | | |
Additional shares that may be issued out of authorized capital — at March 31, 2024 and 2023 | | | | |
| Additional paid-in capital | | | | | | |
Shares in treasury, at cost — and shares at March 31, 2024 and 2023, 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 2024 Form 10-K | 69
LOGITECH INTERNATIONAL S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended March 31, |
| | | 2024 | | 2023 | | 2022 |
| Cash flows from operating activities: | | | | | | |
| Net income | | $ | | | | $ | | | | $ | | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | |
| Depreciation | | | | | | | | | |
| Amortization of intangible assets | | | | | | | | | |
| Impairment of intangible assets | | | | | | | | | |
| | |
| Loss on investments | | | | | | | | | |
| Share-based compensation expense | | | | | | | | | |
| Deferred income taxes | | () | | | | | | | |
| Change in fair value of contingent consideration for business acquisition | | () | | | | | | () | |
| Pension curtailment gains | | | | | () | | | | |
| 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 | | () | | | () | | | () | |
| | |
| Purchases of short-term investments | | | | | | | | () | |
| Proceeds from the sale of short-term investments | | | | | | | | | |
| | |
| Purchases of deferred compensation investments | | () | | | () | | | () | |
| Proceeds from sales of deferred compensation investments | | | | | | | | | |
| Net cash used in investing activities | | () | | | () | | | () | |
| Cash flows from financing activities: | | | | | | |
| Payment of cash dividends | | () | | | () | | | () | |
| Payment of contingent consideration for business acquisition | | () | | | () | | | () | |
| Purchases of registered shares | | () | | | () | | | () | |
| Proceeds from exercises of stock options and purchase rights | | | | | | | | | |
| Tax withholdings related to net share settlements of restricted stock units | | () | | | () | | | () | |
| Other financing activities | | () | | | | | | | |
| Net cash used in financing activities | | () | | | () | | | () | |
| Effect of exchange rate changes on cash and cash equivalents | | () | | | () | | | () | |
Net increase (decrease) in cash and cash equivalents | | | | | () | | | () | |
| Cash and cash equivalents at beginning of the period | | | | | | | | | |
| Cash and cash equivalents at end of the period | | $ | | | | $ | | | | $ | | |
| | | | | | |
| Supplementary Cash Flow Disclosures: | | | | | | |
| Non-cash investing and financing activities: | | | | | | |
| Property, plant and equipment purchased during the period and included in period end liability accounts | | $ | | | | $ | | | | $ | | |
| | |
| | |
| Fair value of contingent consideration in accrued and other liabilities | | $ | | | | $ | | | | $ | | |
| Supplemental cash flow information: | | | | | | |
| Income taxes paid, net | | $ | | | | $ | | | | $ | | |
The accompanying notes are an integral part of these consolidated financial statements.
Logitech International S.A. | Fiscal 2024 Form 10-K | 70
LOGITECH INTERNATIONAL S.A.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Registered shares | | Additional
paid-in
capital | | Treasury shares | | Retained
earnings | | Accumulated
other
comprehensive
loss | | |
| | Shares | | Amount | | Shares | | Amount | | | Total |
| March 31, 2021 | | | | $ | | | | $ | | | | | | | $ | () | | | $ | | | | $ | () | | | $ | | |
| 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 | — | | | — | | | () | | | () | | | | | | — | | | — | | | () | |
| Issuance of shares from contingent consideration | — | | | — | | | | | | () | | | | | | — | | | — | | | | |
| Share-based compensation | — | | | — | | | | | | — | | | — | | | — | | | — | | | | |
Cash dividends ($ per share) | — | | | — | | | — | | | — | | | — | | | () | | | — | | | () | |
| March 31, 2022 | | | | $ | | | | $ | | | | | | | $ | () | | | $ | | | | $ | () | | | $ | | |
| | | | | | | | | | | |
| 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 ($ per share) | — | | | — | | | — | | | — | | | — | | | () | | | — | | | () | |
| March 31, 2023 | | | | $ | | | | $ | | | | | | | $ | () | | | $ | | | | $ | () | | | $ | | |
| | | | | | | | | | | |
| 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 | — | | | — | | | () | | | () | | | | | | — | | | — | | | () | |
| Issuance of shares from contingent consideration | — | | | — | | | | | | () | | | | | | — | | | — | | | | |
| Share-based compensation | — | | | — | | | | | | | | — | | | — | | | — | | | | |
Cash dividends ($ per share) | — | | | — | | | — | | | — | | | — | | | () | | | — | | | () | |
| March 31, 2024 | | | | $ | | | | $ | | | | | | | $ | () | | | $ | | | | $ | () | | | $ | | |
The accompanying notes are an integral part of these consolidated financial statements.
Logitech International S.A. | Fiscal 2024 Form 10-K | 71
LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1—
Note 2—
Logitech International S.A. | Fiscal 2024 Form 10-K | 72
| | $ | | | (1) | $ | | |
| Keyboards & Combos | | | | | | | | | |
| Pointing Devices | | | | | | | | | |
| Video Collaboration | | | | | () | | (2) (3) | | |
Webcams (3) | | | | | | | (3) | | |
| Tablet Accessories | | | | | | | | | |
| Headsets | | | | | | | (2) | | |
| Other | | | | | | | (4) (5) | | |
| Mobile Speakers | | | | | () | | (4) | | |
| Audio & Wearables | | | | | () | | (1) (2) (5) | | |
| Total Sales | | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | | | | | | | | | | |
| | Year ended March 31, 2022 |
| | As previously reported | | Reclassifications | | As adjusted |
| Gaming | | $ | | | | $ | | | (1) | $ | | |
| Keyboards & Combos | | | | | | | | | |
| Pointing Devices | | | | | | | | | |
| Video Collaboration | | | | | () | | (2) (3) | | |
Webcams (3) | | | | | | | (3) | | |
| Tablet Accessories | | | | | | | | | |
| Headsets | | | | | | | (2) | | |
| Other | | | | | | | (4) (5) | | |
| Mobile Speakers | | | | | () | | (4) | | |
| Audio & Wearables | | | | | () | | (1) (2) (5) | | |
| Total Sales | | $ | | | | $ | | | | $ | | |
(1) Reclassification of Blue Microphones from "Audio & Wearables" to the Gaming category.
(2) Reclassification of VC headsets and PC headsets to the new Headsets category from "Video Collaboration" and "Audio & Wearables," respectively.
(3) The Webcams category includes amounts previously reported as "PC Webcams" as well as amounts from VC webcams reclassified from "Video Collaboration."
(4) Reclassification of all amounts previously reported in "Mobile Speakers" to the Other category.
(5) Reclassification of PC speakers previously reported in "Audio & Wearables" to the Other category.
Logitech International S.A. | Fiscal 2024 Form 10-K | 73
or shorter term. The Company elects 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.
The Company also recognizes revenue from subscription services that provide professional streamers with access to streaming software and tools that represent a single stand-ready performance obligation. Subscriptions are paid for at the time of or in advance of delivering the services. The proceeds received in advance from such arrangements is recognized as deferred revenue and then recognized as revenue ratably over the subscription period.
The Company normally requires payment from customers within thirty to 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 generally 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.
Logitech International S.A. | Fiscal 2024 Form 10-K | 74
Logitech International S.A. | Fiscal 2024 Form 10-K | 75
As of March 31, 2024 and 2023, the Company did not have any material deferred contract costs.
Total advertising costs including those characterized as revenue deductions during fiscal years 2024, 2023 and 2022 were $ million, $ million and $ million, respectively, out of which $ million, $ million, and $ million, respectively, were included as operating expense in the consolidated statements of operations.
Logitech International S.A. | Fiscal 2024 Form 10-K | 76
% | | | % | | | % | | Customer B | | | % | | | % | | | % |
Customer C | | | % | | | % | | | % |
The Company had the following customers that individually comprised 10% or more of its accounts receivable:
| | | | | | | | | | | | | | |
| | | March 31, |
| | | 2024 | | 2023 |
| Customer A | | | % | | | % |
| Customer B | | | % | | | % |
| Customer C | | | % | | | % |
|
|
The Company recorded liabilities 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.
, equipment over useful lives from three to , internal-use Logitech International S.A. | Fiscal 2024 Form 10-K | 77
, tooling over useful lives from to , and leasehold improvements over the lesser of the term of the lease or .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 cost of goods sold or operating expenses, depending on the nature of the property and equipment.
.
reporting unit. For the year ended March 31, 2024, the Company Logitech International S.A. | Fiscal 2024 Form 10-K | 78
Logitech International S.A. | Fiscal 2024 Form 10-K | 79
to . The warranty period varies by product and by region. The Company’s standard warranty does not provide a service beyond assuring that the product complies with agreed-upon specifications and is not sold separately. The standard 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.
Logitech International S.A. | Fiscal 2024 Form 10-K | 80
Note 3—
| | $ | | | | $ | | | | | |
| | |
| | | | | | |
| 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 | | $ | | | | $ | | | | $ | | |
| | |
| | |
| | |
| | |
| | |
| | | Share equivalents attributable to outstanding stock options, restricted stock units and employee share purchase plans ("ESPP") totaling million, million, and million shares during fiscal years 2024, 2023 and 2022, respectively, were excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive. A small number of PSUs were not included in the dilutive net income per share calculation
Logitech International S.A. | Fiscal 2024 Form 10-K | 81
Note 4—
% of the fair market value at the beginning or the end of each offering period, which is generally . Subject to continued participation in these plans, purchase agreements are automatically executed at the end of each offering period. An aggregate of million shares were reserved for issuance under the 1996 and 2006 ESPP plans. As of March 31, 2024, a total of million shares were 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, and restricted stock units. 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. On June 29, 2022, the Board authorized million additional shares for issuance under the 2006 Plan. An aggregate of million shares were reserved for issuance under the 2006 Plan. As of March 31, 2024, a total of million shares were available for new awards under this plan.
Stock options granted to employees under the 2006 Plan have terms not exceeding and are issued at exercise prices not less than the fair market value on the date of grant.
Service-based restricted stock units ("RSUs") granted to employees under the 2006 Plan generally vest in equal annual installments on the grant date anniversary. 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 the annual general meeting, the date of the next annual general meeting following the grant date.
Restricted stock units with certain market- and performance-based conditions ("PSUs") granted to employees under the 2006 Plan generally vest at the end of the performance period upon meeting predetermined financial metrics over , with the number of shares to be received upon vesting determined based on constant currency revenue growth rate, adjusted operating income (loss) and the Company's total shareholder return ("TSR") relative to the performance of companies in the Russell 3000 Index over the same period.
| | $ | | | | $ | | |
| Marketing and selling | | | | | | | | | |
| Research and development | | | | | | | | | |
| General and administrative | | | | | | | | | |
| Total share-based compensation expense | | | | | | | | | |
| | |
|
| | $ | | | $ | |
(1) stock options were granted for fiscal years 2024 and 2023.
| | | | | | | | | | | | | | | | | | | | |
| PSUs | | Years Ended March 31, |
| | | 2024 | | 2023 | | 2022 |
| Expected dividend rate | | | % | | | % | | | % |
| Risk-free interest rate | | | % | | | % | | | % |
| Expected volatility | | | % | | | % | | | % |
| Expected term (years) | | | | | | |
The expected dividend rate assumption is based on the Company's history and future expectations of dividend payouts. The unvested PSUs or unexercised options are not eligible for these dividends. The expected term is based on the purchase offerings periods expected to remain outstanding for employee stock purchase plan or the performance period for PSUs. The expected term for stock options represents the estimated period of time until option exercise. Since the Company has limited historical stock option exercise experience, the Company used the simplified method in estimating the expected term, which is calculated as the average of the sum of the vesting term and the original contractual term of the stock options. Expected volatility is based on historical volatility using the Company's daily closing prices, or including the volatility of components of the Russell 3000 Index for PSUs, over the expected term. The Company considers the historical price volatility of its shares as most representative of future volatility. The risk-free interest rate assumptions are based upon the implied yield of U.S. Treasury zero-coupon issues or Switzerland government bonds appropriate for the expected term of the Company's share-based awards.
For PSUs, 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.
Logitech International S.A. | Fiscal 2024 Form 10-K | 83
| | | | | | | | Granted | | | | | | | | | |
| Exercised | | () | | | | | | | $ | | |
| | | | | | | | |
Outstanding, March 31, 2022 | | | | | | | | | |
| | | | | | | | |
| Exercised | | () | | | | | | | $ | | |
| Forfeited | | () | | | | | | | |
Outstanding, March 31, 2023 | | | | | $ | | | | | | $ | | |
| Exercised | | () | | | $ | | | | | | $ | | |
| Forfeited | | () | | | $ | | | | | | |
Outstanding, March 31, 2024 | | | | | $ | | | | | | $ | | |
Vested and exercisable, March 31, 2024 | | | | | $ | | | | | | $ | | | | | $ | | | | |
| Granted—RSUs | | | | | $ | | | | |
| Granted—PSUs | | | | | $ | | | | |
| Vested | | () | | | | | $ | | |
| Forfeited | | () | | | | | |
Outstanding, March 31, 2022 | | | | | $ | | | | |
| Granted—RSUs | | | | | $ | | | | |
| Granted—PSUs | | | | | $ | | | | |
| Vested | | () | | | | | $ | | |
| Forfeited | | () | | | | | |
Outstanding, March 31, 2023 | | | | | $ | | | | |
| Granted—RSUs | | | | | $ | | | | |
| Granted—PSUs | | | | | $ | | | | |
| Vested | | () | | | $ | | | | $ | | |
| Forfeited | | () | | | $ | | | | |
Outstanding, March 31, 2024 | | | | | $ | | | | |
| | | | | | | million shares of PSUs. The Company presents the number of PSUs and weighted-average grant date fair value at percent of the performance target; however, the aggregate fair value of shares vested is based on the actual number of PSUs
Note 5—
Logitech International S.A. | Fiscal 2024 Form 10-K | 84
| | $ | | | | $ | | |
| Interest costs | | | | | | | | | |
| Expected return on plan assets | | () | | | () | | | () | |
| Amortization: | | | | | | |
| | |
|
|
|
| | | | | | | | | | | | |
| | |
| | $ | | | | Less: projected benefit obligations | | | | | | |
| Underfunded status | | $ | () | | | $ | () | |
Logitech International S.A. | Fiscal 2024 Form 10-K | 86
| | $ | | | | Non-current liabilities | | | | | | |
| Total liabilities | | $ | | | | $ | | |
| | $ | | | | Net actuarial gain (loss) | | () | | | | |
| Accumulated other comprehensive income (loss) | | () | | | | |
| Deferred taxes | | () | | | () | |
| Accumulated other comprehensive income (loss), net of tax | | $ | () | | | $ | | | %- % | % - % |
| Estimated rate of compensation increase | | % - % | | % - % |
| Cash balance interest credit rate | | % - % | | % - % |
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended March 31, |
| | 2024 | | 2023 | | 2022 |
| Net Periodic Costs: | | | | | | |
| Discount rate | | % - % | | % - % | | % - % |
| Estimated rate of compensation increase | | % - % | | % - % | | % - % |
| Expected average rate of return on plan assets | | % - % | | % - % | | % - % |
| Cash balance interest credit rate | | % - % | | % - % | | % - % |
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.
Logitech International S.A. | Fiscal 2024 Form 10-K | 87
| | 2026 | | | |
| 2027 | | | |
| 2028 | | | |
| 2029 | | | |
| Next five fiscal years | | | |
| Total expected benefit payments by the plan | | $ | | |
The Company expects to contribute $ million to its defined benefit pension plans during fiscal year 2025.
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 2024, 2023 and 2022, were $ million, $ million and $ million, respectively.
Deferred Compensation Plan
One of the Company's subsidiaries offers a deferred compensation plan that permits eligible employees to make % 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 were recorded at a fair value of $ million and $ million as of March 31, 2024 and 2023, respectively, based on quoted market prices (see Note 9). The Company also had deferred compensation liability of $ million and $ million, which are included in other non-current liabilities on the consolidated balance sheets as of March 31, 2024 and 2023, respectively. Earnings, gains and losses on deferred compensation investments are included in other income (expense), net (see Note 6) and corresponding changes in deferred compensation liability are included in operating expenses and cost of goods sold in the consolidated statements of operations.
Note 6—
| | $ | () | | | $ | | | | Currency exchange loss, net | | () | | | () | | | () | |
Loss on investments, net (1) | | () | | | () | | | () | |
Non-service cost net pension income and other (2) | | | | | | | | | |
| Other income (expense), net | | $ | () | | | $ | () | | | $ | | |
(1) Includes realized gain (loss) on sales of investments, unrealized gain (loss) from the change in fair value of investments, gain (loss) on equity-method investments, and impairment of investments during the periods presented, as applicable (see Note 9).
(2) Includes the components of net periodic benefit cost of defined benefit plans other than the service cost component (see Note 5).
Logitech International S.A. | Fiscal 2024 Form 10-K | 88
Note 7—
| | $ | | | | $ | | | | Non-Swiss | | | | | | | | | |
| Income before taxes | | $ | | | | $ | | | | $ | | |
| | $ | | | | $ | | | | Non-Swiss | | | | | | | | | |
| Deferred: | | | | | | |
| | |
| Swiss | | () | | | | | | | |
| Non-Swiss | | | | | | | | () | |
| Provision for income taxes | | $ | | | | $ | | | | $ | | |
% is reconciled below (in thousands): | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended March 31, |
| | | 2024 | | 2023 | | 2022 |
| Expected tax provision at statutory income tax rates | | $ | | | | $ | | | | $ | | |
| Income taxes at different rates | | | | | | | | | |
| Research and development tax credits | | () | | | () | | | () | |
Swiss Tax Ruling | | () | | | | | | | |
| Executive compensation | | | | | | | | | |
| Stock-based compensation | | | | | | | | () | |
| Deferred tax effects from TRAF | | () | | | | | | | |
| Valuation allowance | | | | | | | | | |
| Impairment | | | | | | | | | |
| Restructuring charges / (credits) | | | | | () | | | | |
| Unrecognized tax benefits | | | | | | | | | |
| Audit settlement | | | | | | | | () | |
| FDII deduction | | () | | | | | | | |
| Other, net | | | | | | | | | |
| Provision for income taxes | | $ | | | | $ | | | | $ | | |
Logitech International S.A. | Fiscal 2024 Form 10-K | 89
million, net of assessment for uncertain tax positions. The remeasurement of the step-up will be amortized over the remaining ten-year amortization period.On December 29, 2023, a change to the cantonal tax legislation was published. According to the law approved by the Vaud parliament, a progressive scale will be applicable for cantonal tax purposes resulting in an increase from the current tax rate of % to % effective fiscal year 2025. The increase in tax rate resulted in a tax benefit of $ million due to a remeasurement of the Company's Swiss deferred tax assets in the fiscal year ended March 31, 2024.
On March 28, 2024, the Company executed a Swiss Tax Ruling with the canton of Vaud that provides future tax benefit for ten years. The Swiss Tax Ruling resulted in an income tax benefit of $ million, which will be utilized over a ten-year period.
The Tax Cuts and Jobs Act enacted Section 250, which provides for a deduction with respect to Global Intangible Low-Taxed Income ("GILTI") and Foreign-Derived Intangible Income ("FDII") in the US. The application of this tax incentive is inherently complex. During the fiscal year ended March 31, 2024, the Company analyzed the applicability of FDII and determined that this tax incentive applies in fiscal 2021 to 2023 tax years. As a result, the Company realized a tax benefit of $ million related to FDII. The Company has also concluded that any GILTI tax since the enactment of Tax Cuts and Jobs Act is immaterial.
| | $ | | | | Future tax deduction from Swiss Tax Ruling | | | | | | |
| Accruals | | | | | | |
| Depreciation and amortization | | | | | | |
| Tax step-up of goodwill from TRAF | | | | | | |
| Share-based compensation | | | | | | |
| Gross deferred tax assets | | | | | | |
| Valuation allowance | | () | | | () | |
| Deferred tax assets after valuation allowance | | | | | | |
| Deferred tax liabilities: | | | | |
| Acquired intangible assets and other | | () | | | () | |
| Deferred tax liabilities | | () | | | () | |
| Deferred tax assets, net | | $ | | | | $ | | |
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 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 against deferred tax assets of $ million at March 31, 2024, compared to $ million at March 31, 2023. The Company had a valuation allowance of $ million as of March 31, 2024 against deferred tax assets in the state of California, an increase from $ million as of March 31,
Logitech International S.A. | Fiscal 2024 Form 10-K | 90
million which will begin to expire in fiscal year 2028. The Company had net operating loss and tax credit carryforwards in the United States for income tax purposes of $ million and $ million, respectively, as of March 31, 2024. Unused net operating loss carryforwards will expire at various dates beginning in fiscal year 2030. 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 2028.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. 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, 2024, the cumulative amount of unremitted earnings of non-Swiss subsidiaries for which no income taxes have been provided is approximately $ million. The amount of unrecognized deferred income tax liability related to these earnings is estimated to be approximately $ 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, 2024 and 2023, the total amount of unrecognized tax benefits due to uncertain tax positions was $ million and $ million, respectively, all of which would affect the effective income tax rate if recognized.
As of March 31, 2024 and 2023, the Company had $ million and $ million, respectively, in non-current income taxes payable, including interest and penalties, related to the Company's income tax liability for uncertain tax positions.
| | Lapse of statute of limitations | | () | |
Settlements with taxing authorities | | () | |
| Increases in balances related to tax positions taken during the year | | | |
| March 31, 2022 | | $ | | |
| Lapse of statute of limitations | | () | |
| Increases in balances related to tax positions taken during the year | | | |
| March 31, 2023 | | $ | | |
| Lapse of statute of limitations | | () | |
| Settlements with taxing authorities | | | |
Increases in balances related to tax positions taken during prior years | | | |
| Increases in balances related to tax positions taken during the year | | | |
| March 31, 2024 | | $ | | |
The Company recognizes interest and penalties related to unrecognized tax positions in income tax expense. The Company recognized $ million and $ million, in interest and penalties related to unrecognized tax positions in income tax expense during fiscal years 2024 and 2023, respectively. As of March 31, 2024 and 2023, the Company had $ million, and $ million, respectively, of accrued interest and penalties related to uncertain tax positions.
Logitech International S.A. | Fiscal 2024 Form 10-K | 91
Logitech International S.A. | Fiscal 2024 Form 10-K | 92
Note 8—
| | $ | | | | Allowance for doubtful accounts | | | | | () | |
| Allowance for sales returns | | () | | | () | |
| Allowance for cooperative marketing arrangements | | () | | | () | |
| Allowance for customer incentive programs | | () | | | () | |
| Allowance for pricing programs | | () | | | () | |
| | $ | | | | $ | | |
| Inventories: | | | | |
| Raw materials | | $ | | | | $ | | |
| Finished goods | | | | | | |
| | $ | | | | $ | | |
| Other current assets: | | | | |
| VAT receivables | | $ | | | | $ | | |
| Prepaid expenses and other assets | | | | | | |
| | $ | | | | $ | | |
| 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 | | $ | | | | $ | | |
| Right-of-use assets | | | | | | |
| Investments in privately held companies | | | | | | |
| Investments for deferred compensation plan | | | | | | |
| Other assets | | | | | | |
| | $ | | | | $ | | |
Logitech International S.A. | Fiscal 2024 Form 10-K | 93
| | $ | | | | Accrued personnel expenses | | | | | | |
| Accrued sales return liability | | | | | | |
| Accrued loss for inventory purchase commitments | | | | | | |
| VAT payable | | | | | | |
| Warranty liabilities | | | | | | |
| Income taxes payable | | | | | | |
Deferred revenue (1) | | | | | | |
| Operating lease liabilities | | | | | | |
| Contingent consideration | | | | | | |
| Other current liabilities | | | | | | |
| | $ | | | | $ | | |
| Other non-current liabilities: | | | | |
| Operating lease liabilities | | $ | | | | $ | | |
| Employee benefit plan obligations | | | | | | |
| Obligation for deferred compensation plan | | | | | | |
Deferred revenue (1) | | | | | | |
| Warranty liabilities | | | | | | |
| Deferred tax liabilities | | | | | | |
|
| Other non-current liabilities | | | | | | |
| | $ | | | | $ | | |
(1) Includes deferred revenue for PCS and other services.
Note 9—
Logitech International S.A. | Fiscal 2024 Form 10-K | 94
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | Investments for deferred compensation plan included in other assets: | | | | | | | | | | | | |
| Cash | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| Common stock | | | | | | | | | | | | | | | | | | |
| Money market funds | | | | | | | | | | | | | | | | | | |
| Mutual funds | | | | | | | | | | | | | | | | | | |
| Total investments for deferred compensation plan | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | | |
| Currency derivative assets included in other current assets | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | |
| Contingent consideration included in accrued and other current liabilities | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | | | |
| Currency derivative liabilities included in accrued and other current liabilities | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
Contingent Consideration for Business Acquisitions
| | $ | | | | Fair value of contingent consideration upon acquisition | | | | | | |
| Change in fair value of contingent consideration | | () | | | | |
Settlements of contingent consideration | | () | | () | |
| Effect of foreign currency exchange rate changes | | | | | () | |
| End of the period | | $ | | | | $ | | |
Investments for Deferred Compensation Plan
The marketable securities for the Company's deferred compensation plan were recorded at a fair value of $ million and $ million as of March 31, 2024 and 2023, respectively, based on quoted market prices. Quoted market prices are observable inputs that are classified as Level 1 within the fair value hierarchy. Unrealized gains (losses) related to marketable securities for fiscal years 2024, 2023 and 2022 were not material and were included in other income (expense), net (see Note 6) and corresponding changes in the deferred compensation liability were included in operating expenses and cost of goods sold, in the Company's consolidated statements of operations.
Equity Method Investments
The Company has certain non-marketable investments included in other assets that are accounted for as equity method investments, with a carrying value of $ million and $ million as of March 31, 2024 and 2023, respectively. Gains (losses) related to equity method investments for fiscal years 2024, 2023 and 2022 were not material and are included in other income (expense), net in the Company's consolidated statements of operations (see Note 6).
Logitech International S.A. | Fiscal 2024 Form 10-K | 95
million for one of its equity method investments as it was determined that the carrying value of the investment was not recoverable. The impairment charge is included in other income (expense), net in the Company's consolidated statement of operations for fiscal year 2023. There was impairment of equity method investments during fiscal years 2022 and 2024. Assets Measured at Fair Value on a Nonrecurring Basis
Financial Assets. The Company has certain equity 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. 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 equity investments without readily determinable fair value included in other assets was $ million and $ million as of March 31, 2024 and 2023, respectively. During fiscal year 2023, the Company recorded an unrealized gain, before tax, of $ million for its investment in a private company as a result of observable price changes for similar securities issued by this company (level 2 fair value measurement). There was impairment of these investments during fiscal year 2022 and the impairment charges related to these investments were material during fiscal years 2023 and 2024.
During fiscal year 2024, the Company recorded an impairment loss, before tax, of $ million as a result of the write-off of a note receivable which has been deemed no longer recoverable. This note receivable was previously obtained in conjunction with an exchange transaction related to the Company's investment in a privately held company. The impairment loss is included in other income (expense), net, in the Company's consolidated statement of operations for the fiscal year 2024.
million and $ million, respectively, related to intangible as impairment of non-financial assets during the fiscal year of 2023.
Note 10—
. 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 the 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.The notional amounts of foreign currency exchange forward contracts outstanding related to forecasted inventory purchases were $ million and $ million as of March 31, 2024 and 2023, respectively. The
Logitech International S.A. | Fiscal 2024 Form 10-K | 96
million of net gain related to its cash flow hedges included in accumulated other comprehensive loss as of March 31, 2024, which will be reclassified into earnings within the next twelve months.
| $ | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
|
|
|
|
|
(1) The accrual balances are included in accrued and other current liabilities on the Company’s consolidated balance sheets.
Note 17 —
million, $ million and $ million for the years ended March 31, 2024, 2023, and 2022, respectively. Total variable lease costs were not Logitech International S.A. | Fiscal 2024 Form 10-K | 102
| | $ | | | | $ | | |
| ROU assets obtained in the exchange for operating lease liabilities | | $ | | | | $ | | | | $ | | |
| | 2026 | | |
| 2027 | | |
| 2028 | | |
| 2029 | | |
| Thereafter | | |
| Total lease payments | $ | | |
| Less: imputed interest | () | |
Less: tenant improvement allowance | () | |
| Present value of lease liabilities | $ | | |
| | | Weighted-average discount rate | | | % | | | % |
Logitech International S.A. | Fiscal 2024 Form 10-K | 103
Schedule II
LOGITECH INTERNATIONAL S.A.
| | $ | () | | | $ | | | | $ | | | | 2023 | | $ | | | | $ | () | | | $ | () | | | $ | | |
| 2022 | | $ | | | | $ | | | | $ | () | | | $ | | |
| Allowance for sales returns: | | | | | | | | |
| 2024 | | $ | | | | $ | | | | $ | () | | | $ | | |
| 2023 | | $ | | | | $ | | | | $ | () | | | $ | | |
| 2022 | | $ | | | | $ | | | | $ | () | | | $ | | |
| Allowance for cooperative marketing arrangements: | | | | | | | | |
| 2024 | | $ | | | | $ | | | | $ | () | | | $ | | |
| 2023 | | $ | | | | $ | | | | $ | () | | | $ | | |
| 2022 | | $ | | | | $ | | | | $ | () | | | $ | | |
| Allowance for customer incentive programs: | | | | | | | | |
| 2024 | | $ | | | | $ | | | | $ | () | | | $ | | |
| 2023 | | $ | | | | $ | | | | $ | () | | | $ | | |
| 2022 | | $ | | | | $ | | | | $ | () | | | $ | | |
| Allowance for pricing programs: | | | | | | | | |
| 2024 | | $ | | | | $ | | | | $ | () | | | $ | | |
| 2023 | | $ | | | | $ | | | | $ | () | | | $ | | |
| 2022 | | $ | | | | $ | | | | $ | () | | | $ | | |
| Tax valuation allowance: | | | | | | | | |
| 2024 | | $ | | | | $ | | | | $ | | | | $ | | |
| 2023 | | $ | | | | $ | | | | $ | | | | $ | | |
| 2022 | | $ | | | | $ | | | | $ | | | | $ | | |
Logitech International S.A. | Fiscal 2024 Form 10-K | 104
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