Form 10-Q LOGITECH INTERNATIONAL For: Jun 30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended June 30, 2022
Or
For the Transition Period from to
Commission File Number: 0-29174
(Exact name of registrant as specified in its charter)
| Canton of Vaud, | None | ||||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
Logitech International S.A.
EPFL - Quartier de l'Innovation
Daniel Borel Innovation Center
(Address of principal executive offices and zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Registered Shares | LOGN | SIX Swiss Exchange | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| ý | Smaller reporting company | ||||||||||||||||
| Accelerated filer | ☐ | Emerging Growth Company | |||||||||||||||
| Non-accelerated filer | ☐ | ||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý
As of July 14, 2022, there were 163,631,242 shares of the Registrant’s share capital outstanding.
TABLE OF CONTENTS
| Page | ||||||||
| Part I | FINANCIAL INFORMATION | |||||||
Exhibits
In this document, unless otherwise indicated, references to the “Company,” “Logitech,” "we," "our," and "us" are to Logitech International S.A. and its consolidated subsidiaries. Unless otherwise specified, all references to U.S. Dollar, Dollar or $ are to the United States Dollar, the legal currency of the United States of America. All references to CHF are to the Swiss Franc, the legal currency of Switzerland.
Logitech, the Logitech logo, and the Logitech products referred to herein are either the trademarks or the registered trademarks of Logitech. All other trademarks are the property of their respective owners.
Our fiscal year ends on March 31. Interim quarters are generally thirteen-week periods, each ending on a Friday of each quarter. The first quarter of fiscal year 2023 ended on July 1, 2022. The same quarter in the prior fiscal year ended on July 2, 2021. For purposes of presentation, we have indicated our quarterly periods end on the last day of the calendar quarter.
The term “sales” means net sales, except as otherwise specified.
We make available, free of charge on our website, access to our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after we file or furnish them electronically with the Securities and Exchange Commission ("SEC").
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We webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations website at https://ir.logitech.com. Additionally, we provide notifications of news or announcements regarding our operations and financial performance, including SEC filings, investor events, and press and earnings releases as part of our investor relations website. We intend to use our investor relations website as means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Our corporate governance information also is available on our investor relations website.
All references to our websites are intended to be inactive textual references only, and the content of such websites do not constitute a part of and are not intended to be incorporated into this Quarterly Report on Form 10-Q.
2
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
LOGITECH INTERNATIONAL S.A.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
| Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| 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 | ||||||||||||||
| Change in fair value of contingent consideration for business acquisition | ( | |||||||||||||
| 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 condensed consolidated financial statements.
3
LOGITECH INTERNATIONAL S.A.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(unaudited)
| Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| 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 gain included in cost of goods sold | ( | ( | ||||||||||||
| Total other comprehensive income (loss) | ( | |||||||||||||
| Total comprehensive income | $ | $ | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
LOGITECH INTERNATIONAL S.A.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)
| June 30, 2022 | March 31, 2022 | |||||||||||||
| 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 10) | ||||||||||||||
| Shareholders’ equity: | ||||||||||||||
Registered shares, CHF | ||||||||||||||
Issued shares — | ||||||||||||||
Additional shares that may be issued out of conditional capitals — | ||||||||||||||
Additional shares that may be issued out of authorized capital — | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
Shares in treasury, at cost — | ( | ( | ||||||||||||
| Retained earnings | ||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Total shareholders’ equity | ||||||||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
LOGITECH INTERNATIONAL S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
| Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||||
| Depreciation | ||||||||||||||
| Amortization of intangible assets | ||||||||||||||
| Gain on investments | ( | ( | ||||||||||||
| Share-based compensation expense | ||||||||||||||
| Deferred income taxes | ( | |||||||||||||
| Change in fair value of contingent consideration for business acquisition | ( | |||||||||||||
| Other | ( | |||||||||||||
| Changes in assets and liabilities, net of acquisitions: | ||||||||||||||
| Accounts receivable, net | ( | |||||||||||||
| Inventories | ( | ( | ||||||||||||
| Other assets | ( | |||||||||||||
| Accounts payable | ( | ( | ||||||||||||
| Accrued and other liabilities | ( | ( | ||||||||||||
| Net cash used in 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 deferred compensation investments | ( | ( | ||||||||||||
| Proceeds from sales of deferred compensation investments | ||||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Purchases of registered shares | ( | ( | ||||||||||||
| Proceeds from exercises of stock options and purchase rights | ||||||||||||||
| Tax withholdings related to net share settlements of restricted stock units | ( | ( | ||||||||||||
| Net cash used in financing activities | ( | ( | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | |||||||||||||
| Net decrease in cash and cash equivalents | ( | ( | ||||||||||||
| Cash and cash equivalents, beginning of the period | ||||||||||||||
| Cash and cash equivalents, 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 | $ | $ | ||||||||||||
| Non-cash contingent consideration for acquisition | $ | $ | ||||||||||||
| Supplemental cash flow information: | ||||||||||||||
| Income taxes paid, net | $ | $ | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
LOGITECH INTERNATIONAL S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands)
(unaudited)
Three Months Ended June 30, 2022
| Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Registered Shares | Treasury Shares | Retained Earnings | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Purchases of registered shares | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Issuance of shares upon vesting of restricted stock units | — | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| June 30, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2021
| Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Registered Shares | Treasury Shares | Retained Earnings | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Purchases of registered shares | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Sales of shares upon exercise of stock options and purchase rights | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares upon vesting of restricted stock units | — | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| June 30, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
LOGITECH INTERNATIONAL S.A.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 — The Company and Summary of Significant Accounting Policies and Estimates
The Company
Logitech International S.A, together with its consolidated subsidiaries ("Logitech" or the "Company"), designs, manufactures and markets products that help connect people to digital and cloud experiences. Forty years ago, Logitech created products to improve experiences around the personal computer ("PC") platform, and today it is a multi-brand, multi-category company designing products that enable better experiences consuming, sharing and creating any digital content such as computing, gaming, video, and music, whether it is on a computer, mobile device or in the cloud.
The Company sells its products to a broad network of domestic and international customers, including direct sales to retailers, e-tailers and enterprise customers, and indirect sales through distributors.
Logitech was founded in Switzerland in 1981 and Logitech International S.A. has been the parent holding company of Logitech since 1988. Logitech International S.A. is a Swiss holding company with its registered office in Hautemorges, Switzerland, and headquarters in Lausanne, Switzerland, which conducts its business through subsidiaries in the Americas, Europe, Middle East and Africa ("EMEA") and Asia Pacific. Shares of Logitech International S.A. are listed on both the SIX Swiss Exchange under the trading symbol LOGN and the Nasdaq Global Select Market under the trading symbol LOGI.
Basis of Presentation
The condensed consolidated financial statements include the accounts of Logitech and its subsidiaries. All intercompany balances and transactions have been eliminated. The condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and therefore do not include all the information required by U.S. GAAP for complete financial statements. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2022, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on May 18, 2022.
In the opinion of management, these condensed consolidated financial statements include all adjustments, consisting of only normal and recurring adjustments, necessary and in all material aspects, for a fair statement of the results of operations, comprehensive income, financial position, cash flows and changes in shareholders' equity for the periods presented. Operating results for the three months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2023, or any future periods.
Changes in Significant Accounting Policies
Other than the recent accounting pronouncements adopted and discussed below under Recent Accounting Pronouncements Adopted, there have been no material changes in the Company’s significant accounting policies during the three months ended June 30, 2022 compared with the significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended March 31, 2022.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Significant estimates and assumptions made by management involve the fair value of goodwill and intangible assets acquired from business acquisitions, contingent consideration for a business acquisition and periodic reassessment of its fair value, valuation of investment in privately held companies classified under Level 3 fair value hierarchy, pension obligations, accruals for customer incentives, cooperative marketing, and pricing programs and related breakage when appropriate, inventory valuation, share-based compensation expense, uncertain tax positions, and valuation allowances for deferred tax assets. Although these
8
Risks and Uncertainties
Impacts of Macroeconomic and Geopolitical Conditions on the Company's Business
During the first quarter of fiscal year 2023, the Company was impacted by adverse macroeconomic and geopolitical conditions. These conditions include but are not limited to inflation, foreign currency fluctuations, and lower consumer spending. The Company also continues to be affected by supply chain challenges, and the war in Ukraine has further increased existing global supply chain, logistics, and inflationary challenges. Such global or regional economic and political conditions adversely affect demand for the Company's products. These conditions also have an impact on its suppliers, contract manufacturers, logistics providers, and distributors, causing increases in cost of materials and higher shipping and transportation rates, and as a result impacting the pricing of its products. Price increases may not successfully offset cost increases or may cause the Company to lose market share and in turn adversely impact its results of operations.
Impacts of COVID-19 on the Company's Business
In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the world. The COVID-19 pandemic has resulted in, and could continue to result in, industry-wide global supply chain challenges, including manufacturing, transportation and logistics. The Company purchases certain products and key components from a limited number of sources, and depends on the supply chain, including freight, to receive components, transport finished goods and deliver its products across the world. While the Company proactively manages its supply chain, it expects to continue to be impacted by higher logistics and component costs, prolonged delays, and challenges with component availability. Most recently, Shanghai, China, experienced a two-month lockdown beginning in late March 2022 due to another outbreak of COVID-19, resulting in a lockdown of the city, closures of ports and airports, and disruption of commercial activities, further constraining the Company's supply chain. If additional lockdowns or similar measures are instituted in Shanghai or Suzhou, where the Company's manufacturing facility is located, or other places where the Company's suppliers and partners are located, such measures, depending on their duration, could cause additional negative impact on the Company's business and results of operations.
Recent Accounting Pronouncements Adopted
In October 2021, the Financial Accounting Standard Board ("FASB") issued ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" (ASU 2021-08). The update requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, as if it had originated the contracts. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company early adopted the standard effective April 1, 2022 and applies the standard prospectively to business combinations that occurred on or after April 1, 2022. The adoption of ASU 2021-08 did not have a material impact on the Company's condensed consolidated financial statements.
9
Note 2 — Net Income Per Share
The following table summarizes the computations of basic and diluted net income per share for the three months ended June 30, 2022 and 2021 (in thousands, except per share amounts):
| Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Net income | $ | $ | ||||||||||||
| Shares used in net income per share computation: | ||||||||||||||
| Weighted average shares outstanding - basic | ||||||||||||||
| Effect of potentially dilutive equivalent shares | ||||||||||||||
| Weighted average shares outstanding - diluted | ||||||||||||||
| Net income per share: | ||||||||||||||
| Basic | $ | $ | ||||||||||||
| Diluted | $ | $ | ||||||||||||
Share equivalents attributable to outstanding stock options, restricted stock units ("RSUs") and employee share purchase plans ("ESPP") totaling 3.4 million and 0.5 million for the three months ended June 30, 2022 and 2021, respectively, were excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive. A small number of performance-based awards were not included in the calculation because all necessary conditions had not been satisfied by the end of the respective period, and those shares were not issuable if the end of the reporting period were the end of the performance contingency period.
Note 3 — Employee Benefit Plans
Employee Share Purchase Plans and Stock Incentive Plans
As of June 30, 2022, the Company offers the 2006 Employee Share Purchase Plan, as amended and restated (Non-U.S.) ("2006 ESPP"), the 1996 Employee Share Purchase Plan (U.S.), as amended and restated ("1996 ESPP"), and the 2006 Stock Incentive Plan ("2006 Plan") as amended and restated. Shares issued to employees as a result of purchases or exercises under these plans are generally issued from shares held in treasury stock.
The following table summarizes the share-based compensation expense and total income tax benefit recognized for share-based awards for the three months ended June 30, 2022 and 2021 (in thousands):
| Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Cost of goods sold | $ | $ | ||||||||||||
| Marketing and selling | ||||||||||||||
| Research and development | ||||||||||||||
| General and administrative | ||||||||||||||
| Total share-based compensation expense | ||||||||||||||
| Income tax benefit | ( | ( | ||||||||||||
| Total share-based compensation expense, net of income tax benefit | $ | $ | ||||||||||||
The income tax benefit in the respective periods primarily consisted of tax benefits related to the share-based compensation expense for the period and direct tax benefit realized, including net excess tax benefits recognized from share-based awards vested or exercised during the period.
During the three months ended June 30, 2022 and 2021, share-based compensation costs of $1.8 million and $1.7 million, respectively, were capitalized as part of inventory.
10
Defined Benefit Plans
Certain of the Company’s subsidiaries sponsor defined benefit pension plans or non-retirement post-employment benefits covering substantially all of their employees. Benefits are provided based on employees’ years of service and earnings, or in accordance with applicable employee benefit regulations. The Company’s practice is to fund amounts sufficient to meet the requirements set forth in the applicable employee benefit and tax regulations. The costs recorded of $2.8 million and $3.3 million for the three months ended June 30, 2022 and 2021, respectively, were primarily related to service costs.
Note 4 — Income Taxes
The Company is incorporated in Switzerland but operates in various countries with differing tax laws and rates. Further, a portion of the Company’s income before taxes and the provision for (benefit from) income taxes are generated outside of Switzerland.
The income tax provision for the three months ended June 30, 2022 was $21.7 million based on an effective income tax rate of 17.7 % of pre-tax income, compared to an income tax provision of $25.0 million based on an effective income tax rate of 11.8 % of pre-tax income for the three months ended June 30, 2021.
The change in the effective income tax rate for the three months ended June 30, 2022, compared to the same period ended June 30, 2021 was primarily due to the mix of income and losses in the various tax jurisdictions in which the Company operates. There were discrete tax benefits of $1.4 million and $1.2 million from the recognition of excess tax benefits in the United States and reversal of uncertain tax positions from the expiration of statutes of limitations, respectively, in the three month period ended June 30, 2022, compared with $13.7 million and $1.0 million, respectively, in the three month period ended June 30, 2021.
As of June 30, 2022 and March 31, 2022, the total amount of unrecognized tax benefits due to uncertain tax positions was $174.3 million and $176.0 million, respectively, all of which would affect the effective income tax rate if recognized.
As of June 30, 2022 and March 31, 2022, the Company had $82.9 million and $83.4 million, respectively, in non-current income taxes payable including interest and penalties, related to the Company's income tax liability for uncertain tax positions.
The Company recognizes interest and penalties related to unrecognized tax positions in the income tax provision. As of June 30, 2022 and March 31, 2022, the Company had $4.3 million and $3.6 million, respectively, of accrued interest and penalties related to uncertain tax positions in non-current income taxes payable.
Although the Company has adequately provided for uncertain tax positions, the provisions related to these positions may change as revised estimates are made or the underlying matters are settled or otherwise resolved. During fiscal year 2023, the Company continues to review its tax positions and provide for or reverse unrecognized tax benefits as they arise. During the next twelve months, it is reasonably possible that the amount of unrecognized tax benefits could increase or decrease significantly due to changes in tax law in various jurisdictions, new tax audits and changes in the U.S. dollar as compared to other currencies. Excluding these factors, uncertain tax positions may decrease by as much as $4.2 million from the lapse of the statutes of limitations in various jurisdictions during the next twelve months.
11
Note 5 — Balance Sheet Components
The following table presents the components of certain balance sheet asset amounts (in thousands):
| June 30, 2022 | March 31, 2022 | |||||||||||||
| Accounts receivable, net: | ||||||||||||||
| Accounts receivable | $ | $ | ||||||||||||
| 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: | ||||||||||||||
| Value-added tax ("VAT") receivables | $ | $ | ||||||||||||
| Prepaid expenses and other assets | ||||||||||||||
| $ | $ | |||||||||||||
| Property, plant and equipment, net: | ||||||||||||||
| Property, plant and equipment | $ | $ | ||||||||||||
| Less: accumulated depreciation and amortization | ( | ( | ||||||||||||
| $ | $ | |||||||||||||
| Other assets: | ||||||||||||||
| Deferred tax assets | $ | $ | ||||||||||||
| Investments in privately held companies | ||||||||||||||
| Right-of-use assets | ||||||||||||||
| Investments for deferred compensation plan | ||||||||||||||
| Other assets | ||||||||||||||
| $ | $ | |||||||||||||
12
| June 30, 2022 | March 31, 2022 | |||||||||||||
| Accrued and other current liabilities: | ||||||||||||||
| Accrued customer marketing, pricing and incentive programs | $ | $ | ||||||||||||
| Accrued personnel expenses | ||||||||||||||
| Accrued sales return liability | ||||||||||||||
| Warranty accrual | ||||||||||||||
| Accrued payables - non-inventory | ||||||||||||||
| VAT payable | ||||||||||||||
| Income taxes payable | ||||||||||||||
| Operating lease liabilities | ||||||||||||||
| Contingent consideration | ||||||||||||||
| Other current liabilities | ||||||||||||||
| $ | $ | |||||||||||||
| Other non-current liabilities: | ||||||||||||||
| Employee benefit plan obligations | $ | $ | ||||||||||||
| Operating lease liabilities | ||||||||||||||
| Obligation for deferred compensation plan | ||||||||||||||
| Warranty accrual | ||||||||||||||
| Deferred tax liabilities | ||||||||||||||
| Contingent consideration | ||||||||||||||
| Other non-current liabilities | ||||||||||||||
| $ | $ | |||||||||||||
Note 6 — Fair Value Measurements
Fair Value Measurements
The Company considers fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company utilizes the following three-level fair value hierarchy to establish the priorities of the inputs used to measure fair value:
•Level 1 — Quoted prices in active markets for identical assets or liabilities.
•Level 2 — Observable inputs other than quoted market prices included in Level 1, such as: quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
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| June 30, 2022 | March 31, 2022 | |||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||
| Cash equivalents | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Investments for deferred compensation plan included in other assets: | ||||||||||||||||||||||||||||||||||||||
| Cash | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Common stock | ||||||||||||||||||||||||||||||||||||||
| Money market funds | ||||||||||||||||||||||||||||||||||||||
| Mutual funds | ||||||||||||||||||||||||||||||||||||||
| Total of investments for deferred compensation plan | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Currency derivative assets included in other current assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||
| Contingent consideration included in accrued and other current liabilities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Contingent consideration included in other non-current liabilities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Currency derivative liabilities included in accrued and other current liabilities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Contingent Consideration for Business Acquisitions
| Three Months Ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Beginning of the period | $ | $ | |||||||||
Fair value of contingent consideration upon acquisition (1) | |||||||||||
| Change in fair value of contingent consideration | ( | ||||||||||
| End of the period | $ | $ | |||||||||
The contingent consideration arising from the technology acquisition on May 19, 2021, represents the future potential earn-out payments of up to $10.0 million payable in cash only upon the achievement of three technical development milestones required to be completed as of December 31, 2021, June 30, 2022, and June 30, 2023. The fair value of the contingent consideration as of the acquisition date was $10.0 million, which was determined using a probability-weighted expected payment model and discounted at the estimated cost of debt. During the third quarter of fiscal year 2022, $0.9 million of the contingent consideration was released from other current liabilities upon cash settlement of the contingent consideration for the first technical development milestone. During the first quarter of fiscal year 2023, the second technical development milestone was achieved and the related contingent consideration is expected to be paid in fiscal year 2023.
The contingent consideration arising from the Mevo Acquisition on February 17, 2021 represents the future potential earn-out payments of up to $17.0 million payable in cash only upon the achievement of certain net sales for the period from December 26, 2020 to December 31, 2021. As of March 31, 2021 the fair value of the contingent consideration was $3.4 million. As of December 31, 2021, the fair value of the contingent consideration was
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released from other current liabilities as the net sales milestone was not achieved upon completion of the earn-out period.
The contingent consideration arising from the technology acquisition on January 4, 2021, represents the future potential earn-out payments of up to $3.0 million payable in cash upon the achievement of two technical development milestones required to be completed as of December 31, 2021 and March 31, 2022. The fair value of the contingent amount was determined using a probability-weighted expected payment model and discounted at the estimated cost of debt. The contingent consideration is expected to be paid in fiscal year 2023.
Although the estimate of contingent consideration is based on management’s best knowledge of current events, the estimate could change significantly from period to period. Actual results that differ from the assumptions used and any changes to the significant assumptions and unobservable inputs used could have an impact on future results of operations.
Investment for Deferred Compensation Plan
The marketable securities for the Company's deferred compensation plan were recorded at a fair value of $28.3 million and $28.4 million, as of June 30, 2022 and March 31, 2022, 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 the three months ended June 30, 2022 and 2021 were not material and were included in other income (expense), net in the Company's condensed consolidated statements of operations.
Equity Method Investments
The Company has certain non-marketable investments included in other assets that are accounted for under the equity method of accounting, with a carrying value of $44.8 million and $40.2 million as of June 30, 2022 and March 31, 2022, respectively. Unrealized gains (losses) related to equity investments for the three months ended June 30, 2022 and 2021 were not material and are included in other income (expense), net in the Company's condensed consolidated statements of operations. There was no
Other Assets Measured at Fair Value on a Nonrecurring Basis
Financial Assets. The Company has certain investments without readily determinable fair values due to the absence of quoted market prices, the inherent lack of liquidity, and the fact that inputs used to measure fair value are unobservable and require management's judgment. When certain events or circumstances indicate that impairment may exist, the Company revalues the investments using various assumptions, including the financial metrics and ratios of comparable public companies. The carrying value is also adjusted for observable price changes with the same or similar security from the same issuer. The amount of these investments included in other assets was $11.7 million and $2.9 million as of June 30, 2022 and March 31, 2022, respectively. During the three months ended June 30, 2022, the Company recorded an unrealized gain, before tax, of $6.9 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 no
Non-Financial Assets. Goodwill, intangible assets, and property, plant and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur (or tested at least annually for goodwill) such that a non-financial instrument is required to be evaluated for impairment and an impairment is recorded to reduce the non-financial instrument's carrying value to the fair value as a result of such triggering events, the non-financial assets and liabilities are measured at fair value during such period. There was no
Note 7 — Derivative Financial Instruments
Under certain agreements with the respective counterparties to the Company’s derivative contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same type with a single net amount payable by one party to the other. However, the Company presents its derivative assets and derivative liabilities on a gross basis in other current assets and accrued and other current liabilities, respectively, on the
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condensed consolidated balance sheets as of June 30, 2022 and March 31, 2022. See Note 6 for the fair values of the Company’s derivative instruments as of June 30, 2022 or March 31, 2022.
Cash Flow Hedges
The Company enters into cash flow hedge contracts to protect against exchange rate exposure of forecasted inventory purchases. These hedging contracts mature within four months . Gains and losses in the fair value of the effective portion of the hedges are deferred as a component of accumulated other comprehensive loss until the hedged inventory purchases are sold, at which time the gains or losses are reclassified to cost of goods sold. Cash flows from such hedges are classified as operating activities in the condensed consolidated statements of cash flows. Hedging relationships are discontinued when hedging contract is no longer eligible for hedge accounting, or is sold, terminated or exercised, or when the Company removes hedge designation for the contract. Gains and losses in the fair value of the effective portion of the discontinued hedges continue to be reported in accumulated other comprehensive loss until the hedged inventory purchases are sold, unless it is probable that the forecasted inventory purchases will not occur by the end of the originally specified time period or within an additional two-month period of time thereafter.
The notional amounts of foreign currency exchange forward contracts outstanding related to forecasted inventory purchases were $96.2 million and $125.4 million as of June 30, 2022 and March 31, 2022, respectively. The Company had $6.4 million of net gains related to its cash flow hedges included in accumulated other comprehensive loss as of June 30, 2022, which will be reclassified into earnings within the next twelve months.
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| Amount of Gain Deferred as a Component of Accumulated Other Comprehensive Loss | Amount of Gain Reclassified from Accumulated Other Comprehensive Loss to Costs of Goods Sold | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| Cash flow hedges | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||
The Company presents the earnings impact from forward points in the same line item that is used to present the earnings impact of the hedged item, i.e. cost of goods sold, for hedging forecasted inventory purchases and such amount is not material for all periods presented.
Other Derivatives
The Company also enters into foreign currency exchange forward and swap contracts to reduce the short-term effects of currency exchange rate fluctuations on certain receivables or payables denominated in currencies other than the functional currencies of its subsidiaries. These contracts generally mature within a month. The primary risk managed by using forward and swap contracts is the currency exchange rate risk. The gains or losses on these contracts are not material and included in other income (expense), net in the condensed consolidated statements of operations based on the changes in fair value. The notional amounts of these contracts outstanding as of June 30, 2022 and March 31, 2022 were $206.4 million and $226.5 million, respectively. Foreign currency exchange forward and swap contracts outstanding as of June 30, 2022 and March 31, 2022 consisted of contracts in Japanese Yen, Australian Dollars, Canadian Dollars, Chinese Renminbi, Mexican Pesos, New Taiwan Dollars, and Brazilian Real, to be settled at future dates at pre-determined exchange rates.
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Note 8 — Goodwill and Other Intangible Assets
The Company conducts its impairment analysis of goodwill and indefinite life intangible assets annually at December 31 or more frequently if changes in facts and circumstances indicate that it is more likely than not that the fair value of the Company’s reporting unit may be less than its carrying amount. There have been no triggering events identified affecting the valuation of goodwill and indefinite life intangible assets during the three months ended June 30, 2022 and 2021.
The following table summarizes the activities in the Company’s goodwill balance (in thousands):
| As of March 31, 2022 | $ | |||||||
| Acquisition | ||||||||
| Effects of foreign currency translation | ( | |||||||
| As of June 30, 2022 | $ | |||||||
The Company's acquired intangible assets were as follows (in thousands):
| June 30, 2022 | March 31, 2022 | |||||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||
| Trademark and trade names | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| Developed technology | ( | ( | ||||||||||||||||||||||||||||||||||||
| Customer contracts/relationships | ( | ( | ||||||||||||||||||||||||||||||||||||
| In-process R&D | — | — | ||||||||||||||||||||||||||||||||||||
| Effects of foreign currency translation | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Note 9 — Financing Arrangements
The Company had several uncommitted, unsecured bank lines of credit aggregating $185.9 million and $195.0 million as of June 30, 2022 and March 31, 2022, respectively. There are no financial covenants under these lines of credit with which the Company must comply. As of June 30, 2022 and March 31, 2022, the Company had outstanding bank guarantees of $23.9 million and $25.5 million, respectively, under these lines of credit. There was no
Note 10 — Commitments and Contingencies
Product Warranties
Changes in the Company’s warranty liability for the three months ended June 30, 2022 and 2021 were as follows (in thousands):
| Three Months Ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Beginning of the period | $ | $ | |||||||||
| Provision | |||||||||||
| Settlements | ( | ( | |||||||||
| Effects of foreign currency translation | ( | ||||||||||
| End of the period | $ | $ | |||||||||
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Indemnifications
The Company indemnifies certain of its suppliers and customers for losses arising from matters such as intellectual property disputes and product safety defects, subject to certain restrictions. The scope of these indemnities varies, but in some instances, includes indemnification for damages and expenses, including reasonable attorneys’ fees. As of June 30, 2022, no material amounts have been accrued for these indemnification provisions. The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under its indemnification arrangements.
The Company also indemnifies its current and former directors and certain of its current and former officers. Certain costs incurred for providing such indemnification may be recoverable under various insurance policies. The Company is unable to reasonably estimate the maximum amount that could be payable under these arrangements because these exposures are not limited, the obligations are conditional in nature and the facts and circumstances involved in any situation that might arise are variable.
Legal Proceedings
From time to time the Company is involved in claims and legal proceedings which arise in the ordinary course of its business. The Company is currently subject to several such claims and a small number of legal proceedings. The Company believes that these matters lack merit and intends to vigorously defend against them. Based on currently available information, the Company does not believe that resolution of pending matters will have a material adverse effect on its financial position, cash flows or results of operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that the Company's defenses will be successful or that any such lawsuit or claim would not have a material adverse impact on the Company's business, financial position, cash flows or results of operations in a particular period. Any claims or proceedings against the Company, whether meritorious or not, can have an adverse impact because of defense costs, diversion of management and operational resources, negative publicity and other factors. Any failure to obtain a necessary license or other rights, or litigation arising out of intellectual property claims, could adversely affect the Company's business.
Note 11 — Shareholders’ Equity
Share Repurchases
In May 2020, the Company's Board of Directors approved the 2020 share repurchase program, which authorized the Company to use up to $250.0 million to purchase up to 17.3 million of Logitech shares. The Company's share repurchase program is expected to remain in effect for a period of three years through July 27, 2023. Shares may be repurchased from time to time on the open market, through block trades or otherwise. Purchases may be started or stopped at any time without prior notice depending on market conditions and other factors. In April 2021, the Company's Board of Directors approved an increase of $750.0 million of 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. As of June 30, 2022, $303.1 million is still available for repurchase under the 2020 repurchase program.
In July 2022, the Company’s Board of Directors approved an increase of $500 million to the 2020 share repurchase program, to an aggregate amount of up to $1.5 billion to purchase up to 17.3 million of Logitech shares. This increase is subject to approval by the Swiss Takeover Board.
Accumulated Other Comprehensive Income (Loss)
The accumulated other comprehensive income (loss) was as follows (in thousands):
| Cumulative Translation Adjustment | Defined Benefit Plans | Deferred Hedging Gains | Total | |||||||||||||||||||||||
| March 31, 2022 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | ( | |||||||||||||||||||||||
| June 30, 2022 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
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Note 12 — Segment Information
The Company operates in a single operating segment that encompasses the design, manufacturing and marketing of peripherals for PCs, tablets and other digital platforms. Operating performance measures are provided directly to the Company's CEO, who is considered to be the Company’s Chief Operating Decision Maker. The CEO periodically reviews information such as sales and adjusted operating income (loss) to make business decisions. These operating performance measures do not include share-based compensation expense, amortization of intangible assets, acquisition-related costs and change in fair value of contingent consideration from business acquisition.
Sales by product categories and sales channels, excluding intercompany transactions, for the three months ended June 30, 2022 and 2021 were as follows (in thousands):
| Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Pointing Devices | $ | $ | ||||||||||||
| Keyboards & Combos | ||||||||||||||
| PC Webcams | ||||||||||||||
| Tablet & Other Accessories | ||||||||||||||
Gaming (1) | ||||||||||||||
| Video Collaboration | ||||||||||||||
| Mobile Speakers | ||||||||||||||
| Audio & Wearables | ||||||||||||||
Other (2) | ||||||||||||||
| Total Sales | $ | $ | ||||||||||||
(1) Gaming includes streaming services revenue generated by Streamlabs.
(2) Other includes Smart Home.
Sales by geographic region (based on the customers’ locations) for the three months ended June 30, 2022 and 2021 were as follows (in thousands):
| Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Americas | $ | $ | ||||||||||||
| EMEA | ||||||||||||||
| Asia Pacific | ||||||||||||||
| Total sales | $ | $ | ||||||||||||
Revenue from sales to customers in the United States, Germany and China each represented 10% or more of the total consolidated sales for each of the periods presented herein. No other countries represented 10% or more of the Company’s total consolidated sales for the periods presented herein.
Switzerland, the Company’s home domicile, represented 2 % and 3 % of the Company's total consolidated sales for the three months ended June 30, 2022 and 2021, respectively.
Three and two customers of the Company each represented 10% or more of the total consolidated sales for the three months ended June 30, 2022 and 2021, respectively.
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| June 30, 2022 | March 31, 2022 | |||||||||||||
| Americas | $ | $ | ||||||||||||
| EMEA | ||||||||||||||
| Asia Pacific | ||||||||||||||
| Total | $ | $ | ||||||||||||
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on beliefs of our management as of the filing date of this Quarterly Report on Form 10-Q. These forward-looking statements include, among other things, statements related to:
•Our strategy for growth, future revenues, earnings, cash flow, uses of cash and other measures of financial performance, and market position;
•Our business strategy and investment priorities in relation to competitive offerings and evolving consumer demand trends affecting our products and markets, worldwide economic and capital market conditions, fluctuations in currency exchange rates, and current and future general regional economic conditions for fiscal year 2023 and beyond;
•The scope, nature or impact of acquisition, strategic alliance, and divestiture activities and restructuring of our organizational structure;
•Our expectations regarding the success of our strategic acquisitions, including integration of acquired operations, products, technology, internal controls, personnel and management teams;
•Our expectations regarding our effective tax rate, future tax benefits, tax settlements, the adequacy of our provisions for uncertain tax positions;
•Our expectations regarding our potential indemnification obligations, and the outcome of pending or future legal proceedings and tax audits;
•Our business and product plans and development and product innovation and their impact on future operating results and anticipated operating costs for fiscal year 2023 and beyond;
•Opportunities for growth and our ability to execute on and take advantage of them, market opportunities, and marking initiatives and strategy and our expectations regarding the success thereof;
•Potential tariffs, their effects and our ability to mitigate their effects;
•Capital investments and research and development;
•Our expectations regarding our share repurchase and dividend programs;
•The sufficiency of our cash and cash equivalents, cash generated from operations, and available borrowings under our bank lines of credit to fund capital expenditures and working capital needs;
•The effects of environmental and other laws and regulations in the United States and other countries in which we operate; and
•The impact of global and regional events, such as the coronavirus ("COVID-19") pandemic, inflation and the war in Ukraine, and any associated economic downturn and impacts to our business and future operating and financial performance.
Forward-looking statements also include, among others, those statements including the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should,” “will,” and similar language. These statements reflect our views and assumptions as of the date of this Quarterly Report on Form 10-Q. All forward-looking statements involve risks and uncertainties that could cause our actual performance to differ materially from those anticipated in the forward-looking statements depending on a variety of factors. Important information as to these factors can be found in this Quarterly Report on Form 10-Q under the headings of “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Overview of our Company,” “Critical Accounting Estimates,” and “Liquidity and Capital Resources,” among others. Factors that might cause or contribute to such differences include, but are not limited to, those discussed under Part II, Item 1A “Risk Factors” as well as elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the U.S. Securities and Exchange Commission, or “SEC.” You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
You should read the following discussion in conjunction with the interim unaudited condensed consolidated financial statements and related notes.
Overview of Our Company
Logitech is a world leader in designing, manufacturing and marketing products that help connect people to digital and cloud experiences. Forty years ago, Logitech created products to improve experiences around the
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personal computer ("PC") platform, and today it is a multi-brand, multi-category company designing products that enable people to pursue their passions and connect to the world. Logitech’s products align with several large secular trends including work and learn from anywhere, video everywhere, the increasing popularity of gaming as a spectator and participant sport, and the democratization of content creation. Logitech's brands include Logitech, Logitech G, ASTRO Gaming, Streamlabs, Blue Microphones, and Ultimate Ears. Our Company's website is www.logitech.com.
Our products participate primarily in four large market opportunities: Creativity & Productivity, Gaming, Video Collaboration and Music. We sell our products to a broad network of domestic and international customers, including direct sales to retailers, e-tailers and enterprise customers and indirect sales through distributors. Our worldwide channel network includes consumer electronics distributors, retailers, e-tailers, mass merchandisers, specialty stores, computer and telecommunications stores, value-added resellers and online merchants. We primarily sell our services directly to end customers.
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
During the first quarter of fiscal year 2023, we were impacted by adverse macroeconomic and geopolitical
conditions. These conditions include but are not limited to inflation, foreign currency fluctuations, and lower consumer spending. We also continue to be affected by supply chain challenges, and the war in Ukraine has further increased existing global supply chain, logistics, and inflationary challenges. Such global or regional economic and political conditions adversely affect demand for our products. These conditions also have an impact on our suppliers, contract manufacturers, logistics providers, and distributors, causing increases in cost of materials and higher shipping and transportation rates, and as a result impacting the pricing of our products. Price increases may not successfully offset cost increases or may cause us to lose market share and in turn adversely impact our results of operations.
For additional information, see Part II item 1A "Risk Factors," including under the caption "Adverse global and regional economic and geopolitical conditions can materially adversely affect our business, results of operations and financial condition," “We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components,” “Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well as potential tariffs, adverse tax consequences and pressure to move or diversify our manufacturing locations” and “If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected.”
Impacts of COVID-19 on Our Business
In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the world.
The COVID-19 pandemic has resulted in, and could continue to result in, industry-wide global supply chain challenges, including manufacturing, transportation and logistics. We purchase certain products and key components from a limited number of sources, and depend on the supply chain, including freight, to receive components, transport finished goods and deliver our products across the world. While we proactively manage our supply chain, we expect to continue to be impacted by higher logistics and component costs, prolonged delays, and challenges with component availability. Most recently, Shanghai, China, experienced a two-month lockdown beginning in late March 2022 due to another outbreak of COVID-19, resulting in a lockdown of the city, closures of ports and airports, and disruption of commercial activities, further constraining our supply chain. If additional lockdowns or similar measures are instituted in Shanghai or Suzhou, where our manufacturing facility is located, or other places where our suppliers and partners are located, such measures, depending on their duration, could cause additional negative impact on our business and results of operations.
It is still difficult to predict the progression, the duration and all of the effects of COVID-19, how restrictions and shelter-at-home guidelines will continue evolving on a global basis, how consumer demand, supply chain challenges, including inventory and logistical effects and costs, may change over time, and the impact on our future sales and results of operations. The full extent of the impact of the COVID-19 pandemic on our business and our
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operational and financial performance remains uncertain and will depend on many factors outside our control. For additional information, see "Liquidity and Capital Resources" below and Item 1A "Risk Factors," including under the caption "The full effect of the COVID-19 pandemic is still uncertain and cannot be predicted, and could adversely affect our business, results of operations and financial condition," "If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales” and “We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components.”
Summary of Financial Results
Our total sales for the three months ended June 30, 2022 decreased 12% compared to the same period of the prior fiscal year, driven by decline in sales for most of our product categories, particularly Gaming, PC Webcams and Audio & Wearables.
Sales for the three months ended June 30, 2022 increased 7% in the Asia Pacific region, and decreased 19%, and 18% in the EMEA and Americas regions, respectively, compared to the same period of the prior fiscal year.
Gross margin for the three months ended June 30, 2022 decreased by 380 basis points to 39.6% compared to 43.4% for the same period of the prior fiscal year, primarily due to higher material and logistics costs, unfavorable impacts from changes in currency exchange rates and increased promotional spending.
Operating expenses for the three months ended June 30, 2022 were $344.1 million, or 29.7% of sales, compared to $365.8 million, or 27.9% of sales, in the same period of the prior fiscal year.
Net income for the three months ended June 30, 2022 was $100.8 million compared to the same period of the prior fiscal year of $186.8 million.
Trends in Our Business
Our products participate primarily in four large multi-category market opportunities, including Creativity & Productivity, Gaming, Video Collaboration and Music. The following discussion represents key trends specific to our market opportunities.
Trends Specific to Our Market Opportunities
Creativity & Productivity: In the past few years, mice and keyboard shipments have been strong due to work-from-home, learn-from-home and hybrid work trends as well as increased PC shipments. We believe that innovative PC peripherals, such as our mice and keyboards, can renew the PC usage experience and help improve the productivity and engagement of remote work and learning, thus providing growth opportunities. Hybrid work culture is also greatly expanding the number of new workspaces to which we can attach our PC peripherals. Increasing adoption of various cloud-based applications has led to multiple unique consumer use cases, which we are addressing with our innovative product portfolio and a deep understanding of our customer base. The popularity of streaming coupled with work-from-home trends, provide growth opportunities for our webcam products as well as other products in our portfolio. Smaller mobile computing devices, such as tablets, have created new markets and usage models for peripherals and accessories. We offer a number of products to enhance the use of mobile devices, including a combo backlit keyboard case with trackpad for the iPad.
Gaming: Despite recent declines in the gaming market, PC gaming and console gaming platforms have strong long-term structural growth opportunities driven largely by the popularity of social gaming through online gaming, multi-platform experiences, and esports. We expect gaming will increasingly become one of the largest participant and spectator sports in the world. We believe Logitech is well positioned to benefit from overall gaming market growth. In addition, our acquisition of Streamlabs provides a solid platform to deliver recurring services and subscriptions to gamers and streamers.
Video Collaboration: The long-term structural growth opportunities in the video collaboration market continue to be strong as commercial and consumer adoption of video has seen substantial growth since the start of the COVID-19 pandemic. Video meetings continue to be an opportunity as companies want lower-cost, cloud-based solutions that can provide their employees with the ability to work from anywhere. We are continuing our efforts to create and sell innovative products to accommodate the increasing demand from home offices and small-size meeting rooms, such as huddle rooms, to medium and large-sized meeting rooms. We will continue to invest in the
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development of select business-specific products (both hardware and software), targeted product marketing and sales channel development. The digitization of learning and hybrid learning environments have also created demand and growth opportunities in the education market.
Music: Consumers are optimizing their audio experiences on their tablets and smartphones with a variety of music peripherals including wireless mobile speakers and in-ear and other headphones. However, the mobile speaker market has matured and the integration of personal voice assistants has increased competition in the speaker category. In addition, the retail footprint has decreased significantly due to the COVID-19 pandemic. These factors have led to a decline in our Mobile Speakers category sales in the past few years. In the wireless headphone industry, the largest growth in recent years has been in true wireless headphones while traditional wireless headphones have declined significantly. We will continue developing truly wireless audio products as growth in this category of the wireless audio market continues to be strong.
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.
Capitalization and amortization of research and development expenses in the U.S.
Pursuant to the Tax Cuts and Jobs Act of 2017, research and development expenses are required to be capitalized and amortized over five years for U.S. tax purposes if the research and development activities are performed in the United States, effective for tax year beginning after December 31, 2021. Absent a change in legislation, the provision is effective for us beginning in fiscal year 2023 which delays the deductibility of research and development expenses. As a result, cash tax payments in the United States have generally increased beginning in fiscal year 2023 compared to prior years.
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 base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments and estimates. We also discuss our critical accounting policies and estimates with the Audit Committee of the Board of Directors.
We believe that the assumptions, judgments and estimates involved in the accounting for accruals for customer incentives and related breakage when appropriate, accrued sales return liability, inventory valuation, uncertain tax positions, and business acquisitions have the greatest potential impact on our condensed consolidated financial statements. These areas are key components of our results of operations and are based on complex rules requiring us to make judgments and estimates and consequently, we consider these to be our critical accounting policies. Historically, our assumptions, judgments and estimates relative to our critical accounting policies have not differed materially from actual results.
There have been no material changes in our critical accounting estimates during the three months ended June 30, 2022 compared with the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.
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Adoption of New Accounting Pronouncements
Refer to Note 1 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for recent accounting pronouncements adopted.
Constant Currency
We refer to our net sales growth rates excluding the impact of currency exchange rate fluctuations as "constant currency" sales growth rates. Percentage of constant currency sales growth is calculated by translating prior period sales in each local currency at the current period’s average exchange rate for that currency and comparing that to current period sales.
Given our global sales presence and the reporting of our financial results in U.S. Dollars, our financial results could be affected by significant shifts in currency exchange rates. See “Results of Operations” for information on the effect of currency exchange results on our sales. If the U.S. Dollar appreciates or depreciates in comparison to other currencies in future periods, this will affect our results of operations in future periods as well.
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 the three months ended June 30, 2022, decreased 12% compared to the same period of the prior fiscal year. The decrease in sales for the three month period was primarily driven by a decline in sales for most of our product categories, particularly Gaming, PC Webcams and Audio & Wearables. Our sales for the three month periods were negatively impacted from lower demand, higher promotions and unfavorable changes in currency exchange rates. If currency exchange rates had been constant in the three months ended June 30, 2022 and 2021, our constant dollar sales reduction rate would have been 9% for the three months ended June 30, 2022.
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. During the three months ended June 30, 2022, approximately 51% 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 the three months ended June 30, 2022, compared with the three months ended June 30, 2021:
| Sales Growth Rate | Constant Dollar Sales Growth Rate | |||||||||||||
| Americas | (18) | % | (18) | % | ||||||||||
| EMEA | (19) | % | (12) | % | ||||||||||
| Asia Pacific | 7 | % | 11 | % | ||||||||||
Americas:
The decrease in sales in the Americas region for the three month period presented above was primarily driven by a decrease in sales of Gaming, Audio & Wearables and PC Webcams.
EMEA:
The decrease in sales in our EMEA region for the three month period was primarily driven by the decrease in sales of most of the product categories, partially offset by an increase in sales in Video Collaboration.
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Asia Pacific:
The increase in sales in our Asia Pacific region for the three month period presented above was primarily driven by an increase in sales of Gaming, partially offset by a decrease in sales in Video Collaboration and PC Webcams.
Sales by Product Categories
Sales by product categories for the three months ended June 30, 2022 and 2021 were as follows (Dollars in thousands):
| Three Months Ended June 30, | ||||||||||||||||||||
| 2022 | 2021 | Change | ||||||||||||||||||
| Pointing Devices | $ | 183,283 | $ | 182,878 | — | % | ||||||||||||||
| Keyboards & Combos | 227,720 | 218,357 | 4 | |||||||||||||||||
| PC Webcams | 59,386 | 109,918 | (46) | |||||||||||||||||
| Tablet & Other Accessories | 66,585 | 79,272 | (16) | |||||||||||||||||
Gaming (1) | 282,806 | 335,397 | (16) | |||||||||||||||||
| Video Collaboration | 246,242 | 234,885 | 5 | |||||||||||||||||
| Mobile Speakers | 22,310 | 28,484 | (22) | |||||||||||||||||
| Audio & Wearables | 69,446 | 116,607 | (40) | |||||||||||||||||
Other (2) | 2,087 | 6,260 | (67) | |||||||||||||||||
| Total Sales | $ | 1,159,865 | $ | 1,312,058 | (12) | % | ||||||||||||||
(1) Gaming includes streaming services revenue generated by Streamlabs.
(2) Other includes Smart Home.
Creativity & Productivity Market:
Pointing Devices
Our Pointing Devices category comprises PC- and Mac-related mice including trackballs, touchpads and presentation tools.
Pointing Devices sales remained flat for the three months ended June 30, 2022, compared to the same period of the prior fiscal year.
Keyboards & Combos
Our Keyboards & Combos category comprises PC keyboards, keyboard/mice combo products, and living room keyboards.
Sales of Keyboards & Combos increased 4% for the three months ended June 30, 2022, compared to the same period of the prior fiscal year, primarily driven by the increase in sales of our cordless PC keyboards.
PC Webcams
Our PC Webcams category comprises PC-based webcams targeted primarily at consumers, including streaming cameras.
Sales of PC Webcams decreased 46% for the three months ended June 30, 2022, compared to the same period of the prior fiscal year, primarily driven by the decrease in sales of our HD Pro Webcam C920, 1080p Pro Stream Webcam, Webcam C260 and Streamcam.
Tablet & Other Accessories
Our Tablet & Other Accessories category primarily comprises keyboards for tablets.
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Sales of Tablet & Other Accessories products decreased 16% for the three months ended June 30, 2022, compared to the same period of the prior fiscal year, primarily driven by the decrease in sales of most of our products, partially offset by increases in sales of our Rugged Combo 3 Touch and Combo Touch for iPad Air.
Gaming market:
Gaming
Our Gaming category comprises gaming mice, keyboards, headsets, gamepads, steering wheels, simulation controllers, console gaming headsets, console gaming controllers, and Streamlabs services.
Sales of Gaming decreased 16% for the three months ended June 30, 2022, compared to the same period of the prior fiscal year, primarily driven by the decrease in sales our gaming mice, console gaming headsets, and gaming keyboards.
Video Collaboration market:
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 businesses of any size, as well as webcams and headsets that turn any desktop into an instant collaboration space.
Sales of Video Collaboration products increased 5% for the three months ended June 30, 2022, compared to the same period of the prior fiscal year, primarily due to an increase in sales of conference room cameras and headsets, partially offset by a decline in sales of webcams.
Music market:
Mobile Speakers
Our Mobile Speakers category is made up entirely of Bluetooth wireless speakers.
Sales of Mobile Speakers decreased 22% for the three months ended June 30, 2022, compared to the same period of the prior fiscal year primarily due to a decrease in sales of most of our Mobile speaker sub-categories, partially offset by an increase in sales of our Hyperboom mobile speakers.
Audio & Wearables
Our Audio & Wearables category comprises PC speakers, PC headsets, in-ear headphones, premium wireless audio wearables and studio-quality Blue Microphones for professionals and consumers.
Sales of Audio & Wearables decreased 40% for the three months ended June 30, 2022, compared to the same period of the prior fiscal year, primarily due to a decrease in sales of our Blue Microphone products and cordless and cordless headsets.
Gross Profit
Gross profit for the three months ended June 30, 2022 and 2021 was as follows (Dollars in thousands):
| Three Months Ended June 30, | ||||||||||||||||||||
| 2022 | 2021 | Change | ||||||||||||||||||
| Net sales | $ | 1,159,865 | $ | 1,312,058 | (12) | % | ||||||||||||||
| Gross profit | $ | 459,603 | $ | 568,926 | (19) | % | ||||||||||||||
| Gross margin | 39.6 | % | 43.4 | % | ||||||||||||||||
Gross profit consists of sales, less cost of goods sold (which includes materials, direct labor and related overhead costs, costs of manufacturing facilities, royalties, costs of purchasing components from outside suppliers,
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distribution costs, warranty costs, customer support costs, shipping and handling costs, outside processing costs and write-down of inventories), and amortization of intangible assets.
Gross margin decreased by 380 basis points to 39.6% for the three months ended June 30, 2022, compared to the same period of the prior fiscal year. Our gross margin declined due to higher material and logistics costs, unfavorable impacts from changes in currency exchange rates, and increased promotional spending.
Operating Expenses
Operating expenses for the three months ended June 30, 2022 and 2021 were as follows (Dollars in thousands):
| Three Months Ended June 30, | |||||||||||||||||
| 2022 | 2021 | ||||||||||||||||
| Marketing and selling | $ | 229,378 | $ | 252,314 | |||||||||||||
| % of sales | 19.8 | % | 19.2 | % | |||||||||||||
| Research and development | 75,517 | 69,246 | |||||||||||||||
| % of sales | 6.5 | % | 5.3 | % | |||||||||||||
| General and administrative | 35,860 | 40,542 | |||||||||||||||
| % of sales | 3.1 | % | 3.1 | % | |||||||||||||
| Amortization of intangible assets and acquisition-related costs | 3,369 | 5,217 | |||||||||||||||
| % of sales | 0.3 | % | 0.4 | % | |||||||||||||
| Change in fair value of contingent consideration for business acquisition | — | (1,474) | |||||||||||||||
| % of sales | — | % | (0.1) | % | |||||||||||||
| Total operating expenses | $ | 344,124 | $ | 365,845 | |||||||||||||
| % of sales | 29.7 | % | 27.9 | % | |||||||||||||
The decrease in total operating expenses during the three months ended June 30, 2022, compared to the same period of the prior fiscal year, were mainly due to decreases in marketing and selling expenses and general and administrative expenses, partially offset by an increase in research and development expenses.
Marketing and Selling
Marketing and selling expenses consist of personnel and related overhead costs, corporate and product marketing, promotions, advertising, trade shows, technical support for customer experiences and facilities costs.
During the three months ended June 30, 2022, marketing and selling expenses decreased $22.9 million, compared to the same period of the prior fiscal year, primarily driven by lower third-party marketing and advertising spend, partially offset by increases in personnel-related costs due to increased headcount to support business growth.
Research and Development
Research and development expenses consist of personnel and related overhead costs for contractors and outside consultants, supplies and materials, equipment depreciation and facilities costs, all associated with the design and development of new products and enhancements of existing products.
During the three months ended June 30, 2022, research and development expenses increased $6.3 million, compared to the same period of the prior fiscal year, primarily driven by higher personnel-related costs due to increased headcount to support our investment in innovation.
General and Administrative
General and administrative expenses consist primarily of personnel and related overhead, information technology, and facilities costs for the infrastructure functions such as finance, information systems, executives, human resources and legal.
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During the three months ended June 30, 2022, general and administrative expenses decreased $4.7 million, compared to the same period of the prior fiscal year, primarily driven by lower personnel-related costs.
Amortization of Intangible Assets and Acquisition-Related Costs
Amortization of intangible assets consists of amortization of acquired intangible assets, including customer relationships and trademarks and trade names. Acquisition-related costs include legal expenses, due diligence costs, and other professional costs incurred for business acquisitions.
During the three months ended June 30, 2022, amortization of intangible assets and acquisition-related costs decreased $1.8 million, compared to the same period of the prior fiscal year, primarily due to certain acquired intangible assets becoming fully amortized and the write-off of Jaybird intangible assets in the third quarter of fiscal year 2022.
Interest Income
Interest income for the three months ended June 30, 2022 and 2021 was as follows (in thousands):
Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Interest Income | $ | 1,449 | $ | 316 | ||||||||||
We invest in highly liquid instruments with an original maturity of three months or less at the date of purchase, which are classified as cash equivalents. During the three months ended June 30, 2022 interest income increased $1.1 million, compared to the same period of the prior fiscal year, primarily driven by the increase in interest rates.
Other Income (Expense), Net
Other income (expense), net for the three months ended June 30, 2022 and 2021 was as follows (Dollars in thousands):
| Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Investment income (expense) related to the deferred compensation plan | $ | (3,386) | $ | 1,168 | ||||||||||
| Currency exchange gain (loss), net | (2,960) | 5,717 | ||||||||||||
| Gain on investments, net | 11,357 | 1,071 | ||||||||||||
| Other | 613 | 479 | ||||||||||||
| Total | $ | 5,624 | $ | 8,435 | ||||||||||
Investment income related to the deferred compensation plan represents earnings, gains, and losses on marketable securities related to a deferred compensation plan offered by one of our subsidiaries. The decrease in investment income for three months ended June 30, 2022 compared to the same period of the prior fiscal year primarily relates to the change in market performance of the underlying securities.
Currency exchange gain (loss), net, relates to balances denominated in currencies other than the functional currency in our subsidiaries, as well as to the sale of currencies, and gains or losses recognized on currency exchange forward contracts. We do not speculate in currency positions, but we are alert to opportunities to maximize currency exchange gains and minimize currency exchange losses. The loss for the three months ended June 30, 2022 was primarily due to the weakening of the Brazilian Real, Australian Dollar and Japanese Yen against the U.S. Dollar. The gain for the three months ended June 30, 2021 was primarily due to the strengthening of the Brazilian Real against the U.S. Dollar.
Gain on investments, net, represents unrealized gain (loss) from the fair value change of investment and gain (loss) on equity-method investments during the periods presented, as applicable. The gain for the three months ended June 30, 2022 was primarily due to the unrealized gain resulting from observable price changes on equity investments without a readily determinable fair value and gains on equity-method investments.
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Provision for Income Taxes
The provision for income taxes and effective income tax rates for the three months ended June 30, 2022 and 2021 were as follows (Dollars in thousands):
| Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Provision for income taxes | $ | 21,716 | $ | 24,991 | ||||||||||
| Effective income tax rate | 17.7 | % | 11.8 | % | ||||||||||
The change in the effective income tax rate for the three months ended June 30, 2022, compared to the same period ended June 30, 2021 was primarily due to the mix of income and losses in the various tax jurisdictions in which we operate. There were discrete tax benefits of $1.4 million and $1.2 million from the recognition of excess tax benefits in the United States and reversal of uncertain tax positions from the expiration of statutes of limitations, respectively, in the three month period ended June 30, 2022, compared with $13.7 million and $1.0 million, respectively, in the three month period ended June 30, 2021.
As of June 30, 2022 and March 31, 2022, the total amount of unrecognized tax benefits due to uncertain tax positions was $174.3 million and $176.0 million, respectively, all of which would affect the effective income tax rate if recognized.
Liquidity and Capital Resources
Cash Balances, Available Borrowings, and Capital Resources
As of June 30, 2022, we had cash and cash equivalents of $1,106.7 million, compared with $1,328.7 million as of March 31, 2022. Our cash and cash equivalents consist of bank demand deposits and short-term time deposits, of which 62% is held in Switzerland, and 14% were held in China (including Hong Kong), and 10% held in Germany. We do not expect to incur any material adverse tax impact except for what has already been recognized, or to be significantly inhibited by any country in which we do business from the repatriation of funds to Switzerland, our home domicile.
As of June 30, 2022, our working capital was $1,604.8 million, compared to $1,651.8 million as of March 31, 2022. The decrease was primarily driven by lower cash balances, resulting from higher share repurchases, and lower inventories, partially offset by decreases in accrued liabilities and accounts payable and an increase in accounts receivable, net.
We had several uncommitted, unsecured bank lines of credit aggregating $185.9 million as of June 30, 2022. There are no financial covenants under these lines of credit with which we must comply. As of June 30, 2022, we had outstanding bank guarantees of $23.9 million under these lines of credit.
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The following tables present selected financial information and statistics as of and for the three months ended June 30, 2022 and 2021 (Dollars in thousands):
| As of June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Accounts receivable, net | $ | 706,886 | $ | 545,907 | ||||||||||
| Accounts payable | $ | 558,983 | $ | 709,741 | ||||||||||
| Inventories | $ | 917,356 | $ | 778,596 | ||||||||||
| Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
Days sales in accounts receivable (“DSO”) (Days) (1) | 55 | 37 | ||||||||||||
Days accounts payable outstanding (“DPO”) (Days) (2) | 72 | 86 | ||||||||||||
Inventory turnover (“ITO”) (x)(3) | 3.1 | 3.8 | ||||||||||||
(1) DSO is determined using ending accounts receivable, net as of the most recent quarter-end and sales for the most recent quarter.
(2) DPO is determined using ending accounts payable as of the most recent quarter-end and cost of goods sold for the most recent quarter.
(3) ITO is determined using ending inventories and annualized cost of goods sold (based on the most recent quarterly cost of goods sold).
DSO for the three months ended June 30, 2022 increased by 18 days to 55 days, compared to 37 days for the same period of the prior fiscal year, primarily due to a comparatively higher percentage of sales in the last month of the current quarter.
DPO for the three months ended June 30, 2022 decreased by 14 days, compared to 86 days for the same period of the prior fiscal year, primarily due to lower inventory purchases than prior year resulting from softened demand and lower marketing spend.
ITO for the three months ended June 30, 2022 decreased by 0.7, compared to 3.8 for the same period of the prior fiscal year, primarily due to lower demand than prior year.
If we are not successful in launching and phasing in our new products, or market competition increases, or we are not able to sell the new products at the prices planned, it could have a material impact on our sales, gross profit margin, operating results including operating cash flow, and inventory turnover in the future.
The following table summarizes our condensed consolidated statements of cash flows (Dollars in thousands):
| Three Months Ended June 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Net cash used in operating activities | $ | (35,668) | $ | (114,970) | ||||||||||
| Net cash used in investing activities | (27,469) | (40,347) | ||||||||||||
| Net cash used in financing activities | (144,763) | (102,533) | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (14,159) | 5,244 | ||||||||||||
| Net decrease in cash and cash equivalents | $ | (222,059) | $ | (252,606) | ||||||||||
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For the three months ended June 30, 2022, we used net cash of $35.7 million from operating activities, resulting from net income of $100.8 million, a favorable impact from adding back non-cash expenses totaling $37.3 million, and an unfavorable net change in operating assets and liabilities of $173.8 million. Non-cash expenses were primarily related to share-based compensation expenses, depreciation, amortization, and gains on investments. The increase in accounts receivable, net was primarily driven by timing of sales within the quarter. The decrease in inventories was primarily driven by lower inventory purchases. The decrease in accounts payable was primarily driven by lower inventory purchases and marketing spend. The decrease in accrued liabilities was primarily driven by payment of the fiscal year 2022 annual bonus.
For the three months ended June 30, 2022, net cash used in investing activities was $27.5, primarily due to $19.6 million of purchases of property, plant, and equipment and $5.8 million payments for acquisitions, net of cash acquired.
For the three months ended June 30, 2022, net cash used in financing activities was $144.8 million, resulting from repurchases of our registered shares of $120.6 million, and tax withholdings related to net share settlements of restricted stock units of $24.1 million.
For the three months ended June 30, 2022, there was a $14.2 million loss from currency exchange rate effect on cash and cash equivalents, primarily due to the weakening of the Euro, Chinese Renminbi, Swiss Franc, Australian Dollar versus the U.S. Dollar by 6%, 5%, 4% and 10%, respectively. The gain from currency translation exchange effect during the three months ended June 30, 2021 was primarily due to the strengthening of the Brazilian Real and the Chinese Renminbi against the U.S. Dollar by 14% and 2%, respectively, during 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. The current market volatility and future impact of COVID-19 cannot be predicted with certainty and may increase our costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity.
In May 2022, the Board of Directors recommended that we pay cash dividends for fiscal year 2022 of CHF 0.96 per share (approximately $1.04 per share based on the exchange rate on March 31, 2022). Based on our shares outstanding, net of treasury shares, as of March 31, 2022 (165,252,020 shares), this would result in an aggregate gross dividend of approximately CHF 159.0 million (or approximately $172.1 million based on the exchange rate on March 31, 2022). In fiscal year 2022, we paid a cash dividend of CHF 147.0 million (U.S. Dollar amount of $159.4 million) out of fiscal year 2021 retained earnings. In fiscal year 2021, we paid a cash dividend of CHF 134.0 million (U.S. Dollar amount of $146.7 million) out of fiscal year 2020 retained earnings.
In May 2020, our Board of Directors approved a new share repurchase program, which authorized us to invest up to $250.0 million to purchase our own shares, following the expiration date of the 2017 share repurchase program. In April 2021, our Board of Directors approved an increase of $750.0 million of the 2020 share repurchase program, to an aggregate amount of $1.0 billion. The Swiss Takeover Board approved this increase and it became effective on May 21, 2021. As of June 30, 2022, $303.1 million was available for repurchase under the 2020 repurchase program.
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. This increase is subject to approval by the Swiss Takeover Board.
Although we enter into trading plans for systematic repurchases (e.g., 10b5-1 trading plans) from time to time, our 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. Shares may be repurchased from time to time on the open market, through block trades or otherwise. Opportunistic purchases may be started or stopped at any time without prior notice depending on market conditions and other factors.
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.
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Operating Leases Obligations
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. There have been no other material changes to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for the year ended March 31, 2022. The remaining terms of our non-cancelable operating leases expire in various years through 2031.
Purchase Commitments
As of June 30, 2022, we had non-cancelable purchase commitments of $674.0 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 June 30, 2022, the liability for these purchase commitments was $43.1 million and is recorded in accrued and other current liabilities in the condensed consolidated balance sheet.
We have firm purchase commitments of $28.0 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.
Other Contractual Obligations and Commitments
For further detail about our contractual obligations and commitments, refer to our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.
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 June 30, 2022, no amounts have been accrued for indemnification provisions. We do not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under our indemnification arrangements.
We also indemnify our current and former directors and certain current and former officers. Certain costs incurred for providing such indemnification may be recoverable under various insurance policies. We are unable to reasonably estimate the maximum amount that could be payable under these arrangements because these exposures are not capped, the obligations are conditional in nature, and the facts and circumstances involved in any situation that might arise are variable.
Legal Proceedings
From time to time we are involved in claims and legal proceedings that arise in the ordinary course of our business. For more information about Legal Proceedings, see Part II Item 1 Legal Proceedings of this quarterly report on Form 10-Q for the period ended June 30, 2022.
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ITEM 3. 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 over 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 three months ended June 30, 2022, approximately 51% of our sales were in non-U.S. denominated currencies, with 21% 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 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 $15.6 million and $24.4 million as of June 30, 2022 and March 31, 2022, respectively. The adverse effect as of June 30, 2022 and March 31, 2022 is after consideration of the offsetting effect of approximately $20.0 million and $15.9 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 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 June 30, 2022 and March 31, 2022 would have been approximately $9.6 million and $12.5 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.
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ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Logitech's management, with the participation of the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the CEO and the CFO have concluded that, as of such date, our disclosure controls and procedures are effective at the reasonable assurance level.
Definition of Disclosure Controls
Disclosure Controls are controls and procedures designed to reasonably assure that information required to be disclosed in the Company’s reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure Controls are also designed to reasonably assure that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. The Company’s Disclosure Controls include components of its internal control over financial reporting, which consists of control processes designed to provide reasonable assurance regarding the reliability of its financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. To the extent that components of the Company’s internal control over financial reporting are included within its Disclosure Controls, they are included in the scope of the Company’s annual controls evaluation.
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 or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time-to-time we are involved in claims and legal proceedings that arise in the ordinary course of our business. We are currently subject to several such claims and a small number of legal proceedings. We believe that these matters lack merit and we intend to vigorously defend against them. Based on the currently available information, we do not believe that resolution of pending matters will have a material adverse effect on our financial condition, cash flows or results of operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that our defenses will be successful or that any such lawsuit or claim would not have a material adverse impact on our business, financial condition, cash flows and results of operations in a particular period. Any
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claims or proceedings against us, whether meritorious or not, can have an adverse impact because of defense costs, diversion of management and operational resources, negative publicity and other factors. Any failure to obtain a necessary license or other rights, or litigation arising out of intellectual property claims, could adversely affect our business.
ITEM 1A. RISK FACTORS
The risk factors summarized and disclosed below could adversely affect our business, results of operations and financial condition, and may cause volatility in the price of our shares. These are not all the risks we face and other factors not presently known to us or that we currently believe are immaterial may also affect our business if they occur. See also the other information set forth in this Quarterly Report on Form 10-Q, including in Part I Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations and our Condensed Consolidated Financial Statements and the related Notes.
Summary of Risk Factors
Risks Related to our Business
•If we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories, our business and operating results could be adversely affected.
•Our future growth will depend on our diversified product growth opportunities, and if we do not successfully execute on our growth opportunities, or if our growth opportunities are more limited than we expect, our operating results could be adversely affected.
•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 successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales.
•If we are not able to maintain and enhance our brands, or if our brands or reputation are damaged, our reputation, business and operating results could be adversely affected.
•If we do not compete effectively, demand for our products could decline and our business and operating results could be adversely affected.
•The full effect of the COVID-19 pandemic is still uncertain and cannot be predicted, and could adversely affect our business, results of operations and financial condition.
•We rely on third parties to sell and distribute our products, and we rely on their information to manage our business. Disruption of our relationship with these channel partners, changes in or issues with their business practices, their failure to provide timely and accurate information, changes in distribution partners, practices or models, conflicts among our channels of distribution, or failure to build and scale our own sales force for certain product categories and enterprise channel partners could adversely affect our business, results of operations, operating cash flows and financial condition.
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•If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected.
•Our business depends in part on access to third-party platforms or technologies, and if the access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected.
•Our success largely depends on our ability to hire, retain, integrate and motivate sufficient numbers of qualified personnel, including senior management. Our strategy and our ability to innovate, design and produce new products, sell products, maintain operating margins and control expenses depend on key personnel that may be difficult to replace.
•As we focus on growth opportunities, we are divesting or discontinuing non-strategic product categories and pursuing strategic acquisitions and investments, which could have an adverse impact on our business.
•Product quality issues could adversely affect our reputation, business and operating results.
Risks Related to Global Nature of our Operations and Regulatory Environment
•Adverse global and regional economic and geopolitical conditions can materially adversely affect our business, results of operations and financial condition.
•We conduct operations in a number of countries and have invested significantly in growing our sales and marketing activities in China, and the effect of business, legal and political risks associated with international operations could adversely affect us.
•Changes in trade policy and regulations in the United States and other countries, including changes in trade agreements and the imposition of tariffs and the resulting consequences, may have adverse impacts on our business, results of operations and financial condition.
•Our financial performance is subject to risks associated with fluctuations in currency exchange rates and interest rates.
•We are subject to risks related to our environmental, social and governance activities and disclosures.
•As a company operating in many markets and jurisdictions, expanding into new growth categories, and engaging in acquisitions, and as a Swiss, dual-listed company, we are subject to risks associated with new, existing and potential future laws and regulations.
•As a result of changes in tax laws, treaties, rulings, regulations or agreements, or their interpretation, of Switzerland or any other country in which we operate, the loss of a major tax dispute or a successful challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, or other factors, our effective income tax rates may increase, which could adversely affect our net income and cash flows.
Risks Related to Cyber Security, Privacy, and Intellectual Property
•Significant disruptions in, or breaches in security of, our websites or information technology systems could adversely affect our business.
•The collection, storage, transmission, use and distribution of user data could give rise to liabilities and additional costs of operation as a result of laws, governmental regulation and risks of data breaches and security incidents.
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•Claims by others that we infringe their proprietary technology could adversely affect our business.
•We may be unable to protect our proprietary rights. Unauthorized use of our technology may result in the development of products that compete with our products.
Risks Related to our Financial Results
•Our operating results are difficult to predict and fluctuations in results may cause volatility in the price of our shares
•Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results.
•We cannot ensure that our current share repurchase program will be fully utilized or that it will enhance long-term shareholder value. Share repurchases may also increase the volatility of the trading price of our shares. We similarly cannot ensure that we will continue to increase our dividend payments or to pay dividends at all. Share repurchases and dividends diminish our cash reserves.
Risk Factors
Risks Related to our Business
If we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories, our business and operating results could be adversely affected.
Our product categories are characterized by short product life cycles, intense competition, frequent new product introductions, rapidly changing technology, dynamic consumer demand and evolving industry standards. As a result, we must continually innovate in our new and existing product categories, introduce new products and technologies, and enhance existing products in order to remain competitive.
The success of our product portfolio depends on several factors, including our ability to:
•Identify new features, functionality and opportunities;
•Anticipate technology, market trends and consumer preferences;
•Develop innovative, high-quality, and reliable new products and enhancements in a cost-effective and timely manner;
•Distinguish our products from those of our competitors; and
•Offer our products at prices and on terms that are attractive to our customers and consumers.
If we do not execute on these factors successfully, products that we introduce or technologies or standards that we adopt may not gain widespread commercial acceptance, and our business and operating results could suffer. In addition, if we do not continue to differentiate our products through distinctive, technologically advanced features, designs, and services that are appealing to our customers and consumers, as well as continue to build and strengthen our brand recognition and our access to distribution channels, our business could be adversely affected.
The development of new products and services can be very difficult and requires high levels of innovation. The development process also can be lengthy and costly. There are significant initial expenditures for research and development, tooling, manufacturing processes, inventory and marketing, and we may not be able to recover those investments. If we fail to accurately anticipate technological trends or our users’ needs or preferences, are unable to complete the development of products and services in a cost-effective and timely fashion or are unable to appropriately increase production to fulfill customer demand, we will be unable to successfully introduce new products and services into the market or compete with other providers. Even if we complete the development of our new products and services in a cost-effective and timely manner, they may not be competitive with products developed by others, they may not achieve acceptance in the market at anticipated levels or at all, they may not be
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profitable or, even if they are profitable, they may not achieve margins as high as our expectations or as high as the margins we have achieved historically.
As we introduce new or enhanced products, integrate new technology into new or existing products, or reduce the overall number of products offered, we face risks including, among other things, disruption in customers’ ordering patterns, excessive levels of new and existing product inventories, revenue deterioration in our existing product lines, insufficient supplies of new products to meet customers’ demand, possible product and technology defects, and a potentially different sales and support environment. Premature announcements or leaks of new products, features or technologies may exacerbate some of these risks by reducing the effectiveness of our product launches, reducing sales volumes of current products due to anticipated future products, making it more difficult to compete, shortening the period of differentiation based on our product innovation, straining relationships with our partners or increasing market expectations for the results of our new products before we have had an opportunity to demonstrate the market viability of the products. Our failure to manage the transition to new products and services or the integration of new technology into new or existing products and services could adversely affect our business, results of operations, operating cash flows and financial condition.
Our future growth will depend on our diversified product growth opportunities, and if we do not successfully execute on our growth opportunities, or if our growth opportunities are more limited than we expect, our operating results could be adversely affected.
We have historically targeted peripherals for the PC platform and in recent years, have expanded the categories of products we sell and entered new markets.
Our sales of our products might be less than we expect due to a decline in business or economic conditions in one or more of the countries or regions, a greater decline than we expect in demand for our products, our inability to successfully execute our sales and marketing plans, or for other reasons. Global economic concerns, such as the ongoing COVID-19 pandemic, Russia’s invasion of Ukraine and the varying pace of global economic recovery, tariffs and policies that inhibit trade, the impact of sovereign debt issues in Europe, the impact of oil prices from Russia and other countries, conflicts with either local or global financial implications and economic slowdown in China, create unpredictability and add risk to our future outlook. In particular, there are a number of factors worldwide contributing to supply chain challenges, which are due in large part to the COVID-19 pandemic and the resulting economic disruption, rising prices, labor and material shortages, and most recently Russia’s invasion of Ukraine.
As a result, we are attempting to diversify our product category portfolio. We also are focusing more of our attention, which may include personnel, financial resources and management attention, on product innovations and growth opportunities, including products and services for gaming, for video collaboration, for the consumption of digital music, and on other potential growth opportunities in addition to our PC peripherals product categories. Our investments may not result in the growth we expect, or when we expect it, for a variety of reasons, including but not limited to, changes in growth trends, evolving and changing market and increasing competition, market opportunities, and product innovation.
Trends and opportunities in each of our product categories are rapidly evolving, declining in some categories and increasing in others, and may also be different by region, as a result of which we are constantly required to adapt to such changing markets, increased competition, and new challenges and opportunities. If we don’t allocate our resources in line with the market and new opportunities, our business and results of operations could be adversely affected.
In addition to our current growth opportunities, our future growth may be reliant on our ability to identify and develop potential new growth opportunities. This process is inherently risky and will result in investments in time and resources for which we do not achieve any return or value.
Our growth opportunities and those we may pursue are subject to constant and rapidly changing and evolving technologies and evolving industry standards and may be replaced by new technology concepts or platforms. Some of these growth categories and opportunities are also characterized by short product cycles, frequent new product introductions and enhancements and rapidly changing and evolving consumer preferences with respect to design and features that require calculated risk-taking and fast responsiveness and result in short opportunities to establish a market presence. In addition, some of these growth categories and opportunities are characterized by price competition, erosion of premium-priced segments and average selling prices, commoditization, and sensitivity to
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general economic conditions and cyclical downturns. The growth opportunities and strength and number of competitors that we face in all of our product categories mean that we are at risk of new competitors coming to market with more innovative products that are more attractive to customers than ours or priced more competitively. If we do not develop innovative and reliable product offerings and enhancements in a cost-effective and timely manner that are attractive to consumers in these markets, if we are otherwise unsuccessful entering and competing in these growth categories or responding to our many competitors and to the rapidly changing conditions in these growth categories, if the growth categories in which we invest our limited resources do not emerge as the opportunities or do not produce the growth or profitability we expect, or when we expect it, or if we do not correctly anticipate changes and evolutions in technology and platforms, our business and results of operations could be adversely affected.
We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components.
We purchase certain products and key components from a limited number of sources. If the supply of these products or key components were to be delayed or constrained, impacted by global shortages of semiconductor chips, or if one or more of our single-source suppliers experience disruptions or go out of business as a result of adverse global economic conditions, natural disasters or regional or global pandemics, including COVID-19, we might be unable to find a new supplier on acceptable terms, or at all, and our product shipments to our customers could be delayed, which could adversely affect our business, financial condition and operating results. In particular, there are a number of factors worldwide contributing to supply chain challenges, which are due in large part to the COVID-19 pandemic and the resulting economic disruption, rising prices, labor and material shortages, and most recently Russia’s invasion of Ukraine.
Lead times for materials, components and products ordered by us or by our contract manufacturers can vary significantly and depend on factors such as contract terms, demand for a component, and supplier capacity. From time to time, we have experienced component shortages and extended lead times on semiconductors, such as microcontrollers and optical sensors, and base metals used in our products. Shortages or interruptions in the supply of components or subcontracted products, or our inability to procure these components or products from alternate sources at acceptable prices in a timely manner, could delay shipment of our products or increase our production costs, which could adversely affect our business and operating results.
Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well as potential tariffs, adverse tax consequences and pressure to move or diversify our manufacturing locations.
We produce approximately half of our products at the facilities we own in China. The majority of our other production is performed by third-party contract manufacturers, including original design manufacturers, in China, Taiwan, Hong Kong, Malaysia, and Vietnam.
Our manufacturing operations in China could be adversely affected by changes in the interpretation and enforcement of legal standards, strains on China’s available labor pool, changes in labor costs and other employment dynamics, high turnover among Chinese employees, infrastructure issues, import-export issues, cross-border intellectual property and technology restrictions, currency transfer restrictions, natural disasters, regional or global pandemics, conflicts or disagreements between China and Taiwan or China and the United States, labor unrest, and other trade customs and practices that are dissimilar to those in the United States and Europe. Interpretation and enforcement of China’s laws and regulations continue to evolve, and we expect differences in interpretation and enforcement to continue in the foreseeable future.
Our manufacturing operations at third-party contractors could be adversely affected by contractual disagreements, by labor unrest, by natural disasters, by regional or global pandemics, such as the COVID-19 pandemic, by wars and armed conflicts, by strains on local communications, trade, and other infrastructures, by competition for the available labor pool or manufacturing capacity, by increasing labor and other costs, and by other trade customs and practices that are dissimilar to those in the United States and Europe.
Further, we have been exposed in the past and may be exposed to fluctuations in the value of the local currency in the countries in which manufacturing occurs. Future appreciation of these local currencies could increase our
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component and other raw material costs. In addition, our labor costs could continue to rise as wage rates increase and the available labor pool declines. These conditions could adversely affect our financial results.
If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales.
Our business requires us to coordinate the manufacture and distribution of our products over much of the world. We rely on third parties to manufacture many of our products, manage centralized distribution centers, and transport our products. If we do not successfully coordinate the timely manufacturing and distribution of our products, if our manufacturers, distribution logistics providers or transport providers are not able to successfully and timely process our business or if we do not receive timely and accurate information from such providers, and especially if we expand into new product categories or our business grows in volume, we may have an insufficient supply of products to meet customer demand, we could lose sales, we may experience a build-up in inventory, we may incur additional costs, and our financial performance and reporting may be adversely affected.
By locating our manufacturing in China and Southeast Asia, we are reliant on third parties to get our products to distributors around the world. Transportation costs, fuel costs, labor unrest, natural disasters, regional or global pandemics, military conflicts, and other adverse effects on our ability, timing and cost of delivering products can increase our inventory, decrease our margins, adversely affect our relationships with distributors and other customers and otherwise adversely affect our results of operations and financial condition.
A significant portion of our quarterly retail orders and product deliveries generally occur in the last weeks of the fiscal quarter. This places pressure on our supply chain and could adversely affect our revenues and profitability if we are unable to successfully fulfill customer orders.
If we are not able to maintain and enhance our brands, or if our brands or reputation are damaged, our reputation, business and operating results could be adversely affected.
We have developed long-term value in our brands and have invested significantly in design and in our existing and new brands over the past several years. We believe that our design and brands have significantly contributed to the success of our business and that maintaining and enhancing our brands is very important to our future growth and success. Maintaining and enhancing our brands will require significant investments and will depend largely on our future design, products and marketing, which may not be successful and may damage our brands. Our brands and reputation are also dependent on third parties, such as suppliers, manufacturers, distributors, retailers, product reviewers and the media as well as online consumer product reviews, consumer recommendations and referrals. It can take significant time, resources and expense to overcome negative publicity, reviews or perception. Any negative effect on our brands, regardless of whether it is in our control, could adversely affect our reputation, business and results of operations.
If we do not compete effectively, demand for our products could decline and our business and operating results could be adversely affected.
The industry in which we operate is intensely competitive. Most of our product categories are characterized by large, well-financed competitors with strong brand names and highly effective research and development, marketing and sales capabilities, short product life cycles, continual performance enhancements, and rapid adoption of technological and product advancements by competitors in our product markets. Many of our competitors have broad product portfolios across several of our product categories and are able to use the strength of their brands to move into adjacent categories. Our competitors have the ability to bring new products to market quickly and at competitive prices. We experience aggressive price competition and other promotional activities from our primary competitors and from less-established brands, including brands owned by retail customers known as house brands. As we shift the focus of our marketing efforts in certain categories from a push model to a demand-generating pull model, the pressures from this competition and from our distribution channels, combined with the implementation risks of such a strategy shift, could adversely affect our competitive position, market share and business. In addition, our competitors may offer customers terms and conditions that may be more favorable than our terms and conditions and may require us to take actions to maintain or increase our customer incentive programs, which could impact our revenues and operating margins.
We have historically expanded the categories of products we sell and entered new markets. We remain alert to opportunities in new categories and markets. As we do so, we are confronting new competitors, many of which have
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more experience in the categories or markets and have greater marketing resources and brand name recognition than we have. In addition, because of the continuing convergence of the markets for computing devices and consumer electronics, we expect greater competition in the future from well-established consumer electronics companies in our developing categories as well as in future categories we might enter. Many of these companies, such as Microsoft, Apple, Google, Cisco, Sony, Samsung, Amazon and others, have greater financial, technical, sales, marketing and other resources than we have.
Microsoft, Apple, Google and Amazon are leading producers of operating systems, hardware, platforms and applications with which our mice, keyboards, wireless speakers and other products are designed to operate. In addition, Microsoft, Apple, Google and Amazon each has significantly greater financial, technical, sales, marketing and other resources than Logitech, as well as greater name recognition and a larger customer base. As a result, Microsoft, Apple, Google and Amazon each may be able to improve the functionality of its products, if any, or may choose to show preference to our competitors' products, to correspond with ongoing enhancements to its operating systems, hardware and software applications before we are able to make such improvements. This ability could provide Microsoft, Apple, Google, Amazon or other competitors with significant lead-time advantages. In addition, Microsoft, Apple, Google, Amazon or other competitors may be able to control distribution channels or offer pricing advantages on bundled hardware and software products that we may not be able to offer, and maybe financially positioned to exert significant downward pressure on product prices and upward pressure on promotional incentives in order to gain market share. For additional information, see "Competition” in Item 1 of the Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on May 18, 2022.
The full effect of the COVID-19 pandemic is still uncertain and cannot be predicted, and could adversely affect our business, results of operations and financial condition.
COVID-19 has spread rapidly throughout the world, causing volatility and disruption in financial markets, curtailing global economic activity, raising the prospect of an extended global recession, and prompting governments and businesses to take unprecedented measures in response. Such measures have included restrictions on travel and business operations, quarantines and shelter-at-home orders, and often resulted in indefinite business closures. The full effects of the COVID-19 pandemic cannot be predicted as a result of uncertainties, including if and how the extent and rate of the spread continue to fluctuate in different parts of the world, the gravity and transmissibility level of the current and future variants, the availability and effectiveness of treatments and vaccines, and vaccination progress. The impact of different variants cannot be predicted at this time, and could depend on numerous factors, including the effectiveness of COVID-19 vaccines against such variants and the response by governmental bodies and regulators.
The COVID-19 pandemic and the measures taken by many countries in response have contributed to a general slowdown in the global economy and had a mixed effect and could in the future have a mixed or adverse effect on our business and operations, our customers and our partners. We have experienced and may continue to experience disruptions and higher costs in our manufacturing, supply chain and logistics operations and outsourced services, resulting in shortages of our products in our distribution channels and loss of market share and opportunities. We have also incurred additional costs related to business continuity. Most recently, Shanghai, China, began a two-month lockdown beginning in late March 2022 due to another outbreak of COVID-19, resulting in a lockdown of the city, closures of ports and airports, and disruption of commercial activities. If additional lockdowns or similar measures are instituted in Shanghai, or Suzhou, where our manufacturing facility is located, or other places where our suppliers and partners are located, such measures, depending on their duration, could cause additional negative impact on our business and results of operations.
While we believe that the pandemic accelerated certain trends favorable to us, its effects on the use patterns and demand for our products has been evolving. The COVID-19 pandemic also may have the effect of heightening many of the other risks described under this heading “Risk Factors.” We continue to monitor the situation and attempt to take appropriate actions in accordance with the recommendations and requirements of relevant authorities. The full extent of the impact of the COVID-19 pandemic on our business and on our operational and financial performance and condition is still uncertain and will depend on many factors outside our control, including but not limited to the timing, extent, duration and effects of the virus and any of its mutations and variants, the further development and availability of effective treatments and vaccines and the vaccination progress, the imposition of effective public safety and other protective measures, the impact of COVID-19 on the global economy and demand for our products and services, and the impact of the virus on the business, operations and financial condition of our partners and customers. Should the COVID-19 situation or global economic slowdown not improve or worsen, or if our attempts to mitigate its impact on our operations and costs are not successful, our business, results of operations, financial condition and prospects may be adversely affected.
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We rely on third parties to sell and distribute our products, and we rely on their information to manage our business. Disruption of our relationship with these channel partners, changes in or issues with their business practices, their failure to provide timely and accurate information, changes in distribution partners, practices or models, conflicts among our channels of distribution, or failure to build and scale our own sales force for certain product categories and enterprise channel partners could adversely affect our business, results of operations, operating cash flows and financial condition.
We primarily sell our products to a network of distributors, retailers, e-tailers and enterprise customers (together with our direct sales channel partners). We are dependent on those direct sales channel partners to distribute and sell our products to indirect sales channel partners and ultimately to consumers. The sales and business practices of all such sales channel partners, their compliance with laws and regulations, and their reputations - of which we may or may not be aware - may affect our business and our reputation.
While our overall distribution relationships are diffuse, in fiscal year 2022 our gross sales were concentrated with three customers - Amazon Inc., Ingram Micro and TD Synnex - and their affiliated entities. We do not have long-term commitments with those customers. If online sales grow as a percentage of overall sales, we expect that we will become even more reliant on Amazon. While we believe that we have good relationships with Amazon, Ingram Micro and TD Synnex, any adverse change in those relationships could have an adverse impact on our results of operations and financial condition.
The impact of economic conditions, labor issues, natural disasters, regional or global pandemics, evolving consumer preferences, and purchasing patterns on our distribution partners, or competition between our sales channels, could result in sales channel disruption. For example, if sales at large retail stores are displaced as a result of bankruptcy, competition from Internet sales channels or otherwise, our product sales could be adversely affected and our product mix could change, which could adversely affect our operating costs and gross margins. Any loss of a major partner or distribution channel or other channel disruption could make us more dependent on alternate channels, increase pricing and promotional pressures from other partners and distribution channels, increase our marketing costs, or adversely impact buying and inventory patterns, payment terms or other contractual terms, sell-through or delivery of our products to consumers, our reputation and brand equity, or our market share.
Our sales channel partners also sell products offered by our competitors and, in the case of retailer house brands, may also be our competitors. If product competitors offer our sales channel partners more favorable terms, have more products available to meet their needs, or utilize the leverage of broader product lines sold through the channel, or if our sales channel partners show preference for their own house brands, our sales channel partners may de-emphasize or decline to carry our products. In addition, certain of our sales channel partners could decide to de-emphasize the product categories that we offer in exchange for other product categories that they believe provide them with higher returns. If we are unable to maintain successful relationships with these sales channel partners or to maintain our distribution channels, our business will suffer.
As we expand into new product categories and markets in pursuit of growth, we will have to build relationships with new channel partners and adapt to new distribution and marketing models. These new partners, practices and models may require significant management attention and operational resources and may affect our accounting, including revenue recognition, gross margins, and the ability to make comparisons from period to period. Entrenched and more experienced competitors will make these transitions difficult. Certain product categories, such as Video Collaboration, may also require that we further build and scale our own enterprise sales force. Several of our competitors already have large enterprise sales forces and experience and success with that sales model. If we are unable to build successful distribution channels, build and scale our own enterprise sales force, or successfully market our products in these new product categories, we may not be able to take advantage of the growth opportunities, and our business and our ability to grow our business could be adversely affected.
We reserve for cooperative marketing arrangements, incentive programs and pricing programs with our sales channel partners. These reserves are based on judgments and estimates, using historical experience rates, inventory levels in distribution, current trends and other factors. There could be significant differences between the actual costs of such arrangements and programs and our estimates.
We use sell-through data, which represents sales of our products by our direct retailer and e-tailer customers to consumers, and by our distributor customers to their customers, along with other metrics, to assess consumer demand for our products. Sell-through data is subject to limitations due to collection methods and the third-party
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nature of the data and thus may not be an accurate indicator of actual consumer demand for our products. The customers supplying sell-through data vary by geographic region and from period to period, but typically represent a majority of our retail sales. In addition, we rely on channel inventory data from our sales channel partners. If we do not receive this information on a timely and accurate basis, if this information is not accurate, or if we do not properly interpret this information, our results of operations and financial condition may be adversely affected.
If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected.
We use our forecasts of product demand to make decisions regarding investments of our resources and production levels of our products. Although we receive forecasts from our customers, many are not obligated to purchase the forecasted demand. Also, actual sales volumes for individual products in our retail distribution channel can be volatile due to changes in consumer preferences and other reasons. In addition, our products have short product life cycles, so a failure to accurately predict high demand for a product can result in lost sales that we may not recover in subsequent periods, or higher product costs if we meet demand by paying higher costs for materials, production and delivery. We could also frustrate our customers and lose shelf space and market share. Our failure to predict low demand for a product can result in excess inventory, lower cash flows and lower margins if we are required to reduce product prices in order to reduce inventories.
If our sales channel partners have excess inventory of our products or decide to decrease their inventories for any reason, they may decrease the number of products they acquire in subsequent periods, which could cause disruption in our business and adversely affect our forecasts and sales.
Over the past few years, we have expanded the types of products we sell and the geographic markets in which we sell them. The changes in our product portfolio and the expansion of our sales markets have increased the difficulty of accurately forecasting product demand. We are also utilizing sea shipments more extensively than air delivery, which will cause us to build and ship products to our distribution centers earlier and will also result in increases in inventory. These operational shifts increase the risk that we have excess or obsolete inventory if we do not accurately forecast product demand.
In addition, market demand remains less predictable and more volatile than pre-COVID-19. As a result, we have experienced in the past and may continue experiencing large differences between our forecasts and actual demand for our products that may result in excess inventory or product unavailability, inventory and restructuring reserves, increases in operational logistics and other costs, damaged relationships with suppliers or customers, opportunities for our competitors, and lost market share and revenue. If we do not accurately predict product demand, our business and operating results could be adversely affected.
Our business depends in part on access to third-party platforms or technologies, and if the access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected.
Our peripherals business has historically been built largely around the PC platform, which over time became relatively open, and its inputs and operating system standardized. With the growth of mobile, tablet, gaming and other computer devices, digital music and personal voice assistants, the number of platforms has grown, and with it the complexity and increased need for us to have business and contractual relationships with the platform owners in order to produce products compatible with these platforms. Our product portfolio includes current and future products designed for use with third-party platforms or software, such as the Apple iPad, iPod, iPhone and Siri, Android phones and tablets, Google Assistant and Amazon Alexa. Our business in these categories relies on our access to the platforms of third parties, some of whom are our competitors. Platform owners that are competitors have a competitive advantage in designing products for their platforms and may produce peripherals or other products that work better, or are perceived to work better, than our products in connection with those platforms. As we expand the number of platforms and software applications with which our products are compatible, we may not be successful in launching products for those platforms or software applications, we may not be successful in establishing strong relationships with the new platform or software owners, or we may negatively impact our ability to develop and produce high-quality products on a timely basis for those platforms and software applications or we may otherwise adversely affect our relationships with existing platform or software owners.
Our access to third-party platforms may require paying a royalty, which lowers our product margins or may otherwise be on terms that are not acceptable to us. In addition, the third-party platforms or technologies used to
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interact with our product portfolio can be delayed in production or can change without prior notice to us, which can result in our having excess inventory, lower margins, lost investment in time and expense, or lost opportunity cost.
If we are unable to access third-party platforms or technologies, or if our access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies are delayed or changed without notice to us, our business and operating results could be adversely affected.
Our success largely depends on our ability to hire, retain, integrate and motivate sufficient numbers of qualified personnel, including senior leadership. Our strategy and our ability to innovate, design and produce new products, sell products, maintain operating margins and control expenses depend on key personnel that may be difficult to replace.
Our success depends on our ability to attract and retain highly skilled personnel, including senior leadership and international personnel. From time to time, we experience turnover in some of our senior leadership positions.
We compensate our employees through a combination of salary, bonuses, benefits and equity compensation. Recruiting and retaining skilled personnel, including software and hardware engineers, is highly competitive. The pandemic and hybrid work environment have driven acute competition for talent, increased employee burnout and attrition across multiple industries. If we fail to provide an attractive working environment and competitive compensation to our employees, it will be difficult to retain, hire and integrate qualified employees and contractors, and we may not be able to maintain and expand our business. If we do not retain or maintain the continuity of our senior leaders or other key employees for any reason, including voluntary or involuntary departure, death or permanent or temporary disability, we risk losing institutional knowledge, experience, expertise and other benefits of continuity as well as the ability to attract and retain other key employees. In addition, we must carefully balance the size of our employee base with our current infrastructure, management resources and anticipated operating cash flows. If we are unable to manage the size of our employee base, particularly engineers, product managers and designers, we may fail to develop and introduce new products successfully and in a cost-effective and timely manner. If our revenue growth or employee levels vary significantly, our operating cash flows and financial condition could be adversely affected. Volatility or lack of positive performance in our stock price may also affect our ability to retain key employees, many of whom have been granted equity incentives. Logitech’s practice has been to provide equity incentives to its employees, but the number of shares available for equity grants is limited. We may find it difficult to provide competitive equity incentives, and our ability to hire, retain and motivate key personnel may suffer.
As we focus on growth opportunities, we are divesting or discontinuing non-strategic product categories and pursuing strategic acquisitions and investments, which could have an adverse impact on our business.
We continue to review our product portfolio and update our non-strategic product categories and products. During the third quarter of fiscal year 2022, we ceased future product launches under the Jaybird brand within our Audio & Wearables product category and during the fourth quarter of fiscal 2021, we discontinued our Harmony line of home entertainment controllers within our Smart Home product category. If we are unable to effect sales on favorable terms or if realignment is more costly or distracting than we expect or has a negative effect on our organization, employees and retention, then our business and operating results may be adversely affected. Discontinuing products with service components may also cause us to continue to incur expenses to maintain services within the product life cycle or may adversely affect our customer and consumer relationships and brand. Divestitures may also involve warranties, indemnification or covenants that could restrict our business or result in litigation, additional expenses or liabilities. In addition, discontinuing product categories, even categories that we consider non-strategic, reduces the size and diversification of our business and causes us to be more dependent on a smaller number of product categories.
As we attempt to grow our business in strategic product categories and emerging market geographies, we will consider growth through acquisition or investment. We will evaluate acquisition opportunities that could provide us with additional product or service offerings or with additional industry expertise, assets and capabilities. For example, we acquired ASTRO Gaming to expand into the console gaming market, we acquired Saitek to expand into the gaming simulation and controller markets, we acquired Blue Microphones to expand into the microphones market, we acquired General Workings, Inc. ("Streamlabs") to expand our software and service capabilities and tools for the streaming market, and we acquired Mevo Inc. to expand our camera hardware and software for live streaming and video conferencing. Acquisitions could result in difficulties integrating acquired operations, products, technology, internal controls, personnel and management teams and result in the diversion of capital and management’s attention away from other business issues and opportunities. If we fail to successfully integrate acquisitions, our business could be harmed. Acquisitions could also result in the assumption of known and unknown
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liabilities, product, regulatory and other compliance issues, dilutive issuances of our equity securities, the incurrence of debt, disputes over earn-outs or other litigation, and adverse effects on relationships with our and our target’s employees, customers and suppliers. Moreover, our acquisitions may not be successful in achieving our desired strategy, product, financial or other objectives or expectations, which would also cause our business to suffer.
Acquisitions can also lead to large non-cash charges that can have an adverse effect on our results of operations as a result of write-offs for items such as future impairments of intangible assets and goodwill or the recording of share-based compensation.
If we divest or discontinue product categories or products that we previously acquired, or if the value of those parts of our business become impaired, we may need to evaluate the carrying value of our goodwill. Additional impairment charges could adversely affect our results of operations. Several of our past acquisitions have not been successful and have led to significant impairment charges. Acquisitions and divestitures may also cause our operating results to fluctuate and make it difficult for investors to compare operating results and financial statements between periods. In addition, from time to time we make strategic venture investments in other companies that provide products and services that are complementary to ours. If these investments are unsuccessful, this could have an adverse impact on our results of operations, operating cash flows and financial condition.
Product quality issues could adversely affect our reputation, business and operating results.
The market for our products is characterized by rapidly changing technology and evolving industry standards. To remain competitive, we must continually introduce new products and technologies. The products that we sell could contain defects in design or manufacture. Defects could also occur in the products or components that are supplied to us. There can be no assurance we will be able to detect and remedy all defects in the hardware and software we sell. Failure to do so could result in product recalls, product liability claims and litigation, product redesign efforts, lost revenue, loss of reputation, and significant warranty and other expenses to remedy.
While we maintain reserves for reasonably estimable liabilities and purchase liability insurance, our reserves may not be adequate to cover such claims and liabilities and our insurance is subject to deductibles and may not be adequate to cover such claims and liabilities. Furthermore, our contracts with distributors and retailers may contain warranty, indemnification and other provisions related to product quality issues, and claims under those provisions may adversely affect our business and operating results.
Risks Related to our Global Operations and Regulatory Environment
Adverse global and regional economic and geopolitical conditions can materially adversely affect our business, results of operations and financial condition.
We conduct operations internationally with sales in the Americas, EMEA and Asia Pacific regions. Our manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia and we also purchase certain products and key components from a limited number of sources, and depend on the supply chain, including freight, to receive components, transport finished goods and deliver our products across the world. As a result, adverse global and regional economic and geopolitical conditions can materially adversely affect our business, results of operations and financial condition.
Such conditions, including but not limited to inflation, slower growth or recession, new or increased tariffs, trade restrictions, changes to fiscal and monetary policy, higher interest rates and currency fluctuations, and other conditions that are susceptible to impact consumer confidence and spending could adversely affect demand for our products. During the first quarter of fiscal year 2023, we were impacted by adverse macroeconomic conditions including but not limited to inflation, foreign currency fluctuations, and lower consumer spending. We also continue being affected by supply chain challenges, and the war in Ukraine has further increased existing global supply chain, logistics, and inflationary challenges. In the fourth quarter of fiscal year 2022, we indefinitely ceased all sales and shipments to Russia. Our sales in Ukraine have also been halted due to the ongoing military operations on the Ukrainian territory. Our business in Russia and Ukraine was not material to our results and accounted for approximately 2% of total revenue for fiscal year 2022.
Global or regional economic and political conditions also have an impact on our suppliers, contract manufacturers, logistics providers, and distributors, causing increases in cost of materials and higher shipping and transportation rates, and as a result impacting the pricing of our products. Price increases may not successfully offset cost increases or may cause us to lose market share and in turn adversely impact our operations.
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All these and other global and regional economic and geopolitical factors can materially adversely affect our business, results of operations and financial condition.
We conduct operations in a number of countries and have invested significantly in growing our sales and marketing activities in China, and the effect of business, legal and political risks associated with international operations could adversely affect us.
We conduct operations in a number of countries and have invested significantly in growing our personnel and sales and marketing activities in China and, to a lesser extent, other emerging markets. We may also increase our investments to grow sales in other emerging markets, such as Latin America, Eastern Europe, the Middle East and Africa. There are risks inherent in doing business in international markets, including:
•Difficulties in staffing and managing international operations;
•Compliance with increasing amounts of laws and regulations, including environmental, tax, import/export and anti-corruption laws, which vary from country to country, and the European Union legislation, and over time, increasing the costs of compliance and potential risks of non-compliance;
•Varying laws, regulations and other legal protections, uncertain and varying enforcement of those laws and regulations, dependence on local authorities, and the importance of local networks and relationships;
•Varying accounting, auditing and financial reporting standards, accountability and protections, including risks related to the lack of access by the Public Company Accounting Oversight Board (United States) ("PCAOB") to inspect PCAOB-registered accounting firms in emerging market countries such as China;
•Exposure to political and financial instability, especially with the uncertainty associated with the ongoing sovereign debt crisis in certain Euro zone countries and the stability of the European Union, which may lead to reduced sales, currency exchange losses and collection difficulties or other losses;
•Political and economic uncertainty around the world. For example, Russia’s invasion of Ukraine in February 2022 resulted in a sharp increase of commodity prices, sanctions and trade restrictions have been imposed on Russian banks, businesses, and individuals, and the conflict has sparked a massive refugee crisis. This conflict has driven and could continue to drive economic uncertainty, including inflation and restricted component availability, among other things;
•Import or export restrictions or licensing requirements that could affect some of our products, including those with encryption technology;
•Trade protection measures, custom duties, tariffs, import or export duties, and other trade barriers, restrictions and regulations, including recent and ongoing United States - China tariffs and trade restrictions, including China's 2021 Anti-Foreign Sanctions Law;
•Lack of infrastructure or services necessary or appropriate to support our products and services;
•Effects of the COVID-19 pandemic that may be more concentrated where we operate internationally;
•Exposure to fluctuations in the value of local currencies;
•Difficulties and increased costs in establishing sales and distribution channels in unfamiliar markets, with their own market characteristics and competition, including entrenched local competition;
•Weak protection of our intellectual property rights;
•Higher credit risks;
•Variations in VAT (value-added tax) or VAT reimbursement;
•Imposition of currency exchange controls;
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•Delays from customs brokers or government agencies; and
•A broad range of customs, consumer trends, and more.
Any of these risks could adversely affect our business, financial condition and operating results.
Sales growth in key markets, including China, is an important part of our expectations for our business. As a result, if economic, political or business conditions deteriorate in these markets, or if one or more of the risks described above materialize in these markets, our overall business and results of operations will be adversely affected.
Changes in trade policy and regulations in the United States and other countries, including changes in trade agreements and the imposition of tariffs and the resulting consequences, may have adverse impacts on our business, results of operations and financial condition.
In recent years, the U.S. government has instituted or proposed changes to international trade policy through the renegotiation, and potential termination, of certain existing bilateral or multilateral trade agreements and treaties with, and the imposition of tariffs on a wide range of products and other goods from, China, countries in EMEA and other countries. As previously disclosed, we have invested significantly in manufacturing facilities in China and Southeast Asia. Given our manufacturing principally in those countries, and our lack of manufacturing elsewhere, policy or regulations changes in the United States or other countries present particular risks for us.
In addition, the current Chinese administration has imposed an increased volume of regulation creating a more challenging environment for non-Chinese companies operating in the region, including in the areas of intellectual property, trade, contract enforcement, data privacy, capital markets and human rights. As a result, such regulations may have the effect of limiting our growth and market share in China, and disrupting manufacturing and operations in the region.
For example, on June 10, 2021, the National People’s Congress Standing Committee of the People’s Republic of China passed China's new Anti-Foreign Sanctions Law. The Anti-Foreign Sanctions Law took immediate effect and allows China to take “retaliatory action” against any “discriminatorily restrictive measures” imposed by foreign countries against Chinese organizations and citizens. As a result, China may impose countermeasures against government and private entities and/or persons that formulate, implement or comply with any regulation deemed a “discriminatorily restrictive measure.” Penalties may include denial of entry to China, prohibition of doing business in or with China, freezing of assets and “any other necessary measures.”
New or increased tariffs could adversely affect more or all of our products. There also are risks associated with retaliatory tariffs and resulting trade wars. We cannot predict future trade policy and regulations in the United States and other countries, the terms of any renegotiated trade agreements or treaties, or tariffs and their impact on our business. A trade war could have a significant adverse effect on world trade and the world economy. To the extent that trade tariffs and other restrictions imposed by the United States or other countries increase the price of, or limit the amount of, our products or components or materials used in our products imported into the United States or other countries, or create adverse tax consequences, the sales, cost or gross margin of our products may be adversely affected and the demand from our customers for products and services may be diminished. Uncertainty surrounding international trade policy and regulations as well as disputes and protectionist measures could also have an adverse effect on consumer confidence and spending. If we deem it necessary to alter all or a portion of our activities or operations in response to such policies, agreements or tariffs, our capital and operating costs may increase.
In addition, as a result of Russia’s invasion of Ukraine in February 2022, sanctions and trade restrictions have been imposed on Russia, including banks, businesses, and individuals, by the U.S., the European Union and Switzerland. This conflict has driven and could continue to drive economic uncertainty, including inflation, and component availability, among other things.
Our ongoing efforts to address these risks may not be effective and may have long-term adverse effects on our operations and operating results that we may not be able to reverse. Such efforts may also take time to implement or to have an effect and may result in adverse quarterly financial results or fluctuations in our quarterly financial results. As a result, changes in trade policy and regulations in the United States and other countries as well as
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changes in trade agreements and tariffs and sanctions imposed on Russia could adversely affect our business, results of operations and financial condition.
Our financial performance is subject to risks associated with fluctuations in currency exchange rates.
A significant portion of our business is conducted in currencies other than the U.S. Dollar. Therefore, we face exposure to movements in currency exchange rates.
Our primary exposure to movements in currency exchange rates relates to non-U.S. Dollar-denominated sales and operating expenses worldwide. For the three months ended June 30, 2022, approximately 51% of our revenue was in non-U.S. denominated currencies. The weakening of currencies relative to the U.S. Dollar adversely affects the U.S. Dollar value of our non-U.S. Dollar-denominated sales and earnings. If we raise international pricing to compensate, it could potentially reduce demand for our products, adversely affecting our sales and potentially having an adverse impact on our market share. Margins on sales of our products in non-U.S. Dollar-denominated countries and on sales of products that include components obtained from suppliers in non-U.S. Dollar-denominated countries could be adversely affected by currency exchange rate fluctuations. In some circumstances, for competitive or other reasons, we may decide not to raise local prices to fully offset the U.S. Dollar’s strengthening, which would adversely affect the U.S. Dollar value of our non-U.S. Dollar-denominated sales and earnings. Competitive conditions in the markets in which we operate may also limit our ability to increase prices in the event of fluctuations in currency exchange rates. Conversely, strengthening of currency rates may also increase our product component costs and other expenses denominated in those currencies, adversely affecting operating results. We further note that a larger portion of our sales than of our expenses are denominated in non-U.S. denominated currencies.
We use derivative instruments to hedge certain exposures to fluctuations in currency exchange rates. The use of such hedging activities may not offset any, or more than a portion, of the adverse financial effects of unfavorable movements in currency exchange rates over the limited time the hedges are in place and do not protect us from long term shifts in currency exchange rates.
As a result, fluctuations in currency exchange rates could and have in the past adversely affect our business, operating results and financial condition. Moreover, these exposures may change over time.
We are subject to risks related to our environmental, social and governance (“ESG”) activities and disclosures.
Concern over climate change may result in new or additional legal, legislative and regulatory requirements to reduce or mitigate the effects of climate change on the environment, which could result in future tax, transportation and other cost increases that could adversely affect our business. Compliance with such requirements could also require additional expenditures by us or our suppliers, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
In addition, ESG reporting and disclosure requirements continue to evolve, with increasing global regulation and heightened investor expectations. Companies must develop an expanded set of metrics and measures, data collection and processing, controls, and reporting processes in order to meet regulatory requirements and stakeholder expectations. Failure to promptly and accurately meet these expectations and requirements may result in reputational and brand damage, regulatory penalties and litigation among other things.
As a company operating in many markets and jurisdictions, expanding into new growth categories, and engaging in acquisitions, and as a Swiss, dual-listed company, we are subject to risks associated with new, existing and potential future laws and regulations.
Based on our current business model and as we expand into new markets and product categories and acquire companies, businesses and assets, we must comply with a wide variety of laws, standards and other requirements governing, among other things, health and safety, hazardous materials usage, product-related energy consumption, conflict minerals, packaging, recycling, environmental and human rights matters. Our products may be required to obtain regulatory approvals and satisfy other regulatory concerns in the various jurisdictions where they are manufactured, sold or both. Companies, businesses and assets that we acquire may not be in compliance with regulations in all jurisdictions. These requirements create procurement and design challenges, which, among other things, require us to incur additional costs identifying suppliers and contract manufacturers who can provide or
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obtain compliant materials, parts and end products. Failure to comply with such requirements can subject us to liability, additional costs, and reputational harm and, in severe cases, force us to recall products or prevent us from selling our products in certain jurisdictions. We also are subject to the SEC disclosure requirements regarding the use of certain minerals, known as conflict minerals, which are mined from the Democratic Republic of Congo and adjoining countries, as well as procedures regarding a manufacturer’s efforts to identify and prevent the sourcing of such minerals and metals produced from those minerals. The moral and regulatory imperatives to avoid purchasing conflict minerals are causing us to incur additional expenses, could limit the supply and increase the cost of certain metals used in manufacturing our products and could adversely affect the distribution and sales of our products.
As a Swiss company with shares listed on both the SIX Swiss Exchange and the Nasdaq Global Select Market, we are also subject to both Swiss and United States corporate governance and securities laws and regulations. In addition to the extra costs and regulatory burdens of our dual regulatory obligations, the two regulatory regimes may not always be compatible and may impose disclosure obligations, operating restrictions or tax effects on our business to which our competitors and other companies are not subject. For example, on January 1, 2014, subject to certain transitional provisions, the Swiss Federal Council Ordinance Against Excessive Compensation at Public Companies ("Ordinance") became effective in connection with the Minder initiative approved by Swiss voters during 2013. The Ordinance, among other things, (a) requires a binding shareholder “say on pay” vote with respect to the compensation of members of our executive management and Board of Directors, (b) generally prohibits the making of severance, advance, transaction premiums and similar payments to members of our executive management and Board of Directors, (c) imposes other restrictive compensation practices, and (d) requires that our articles of incorporation specify various compensation-related matters. In addition, during 2013, Swiss voters considered an initiative to limit pay for a chief executive officer to a multiple of no more than twelve times the salary of the lowest-paid employee. Although voters rejected that initiative, it did receive substantial voter support. The Ordinance, potential future initiatives relating to corporate governance or executive compensation, and Swiss voter sentiment in favor of such regulations may increase our non-operating costs and adversely affect our ability to attract and retain executive management and members of our Board of Directors.
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP") which are subject to interpretation or changes by the Financial Accounting Standard Board ("FASB"), the SEC and other various bodies formed to promulgate and interpret appropriate accounting principles. New accounting pronouncements and changes in accounting principles have occurred in the past and are expected to occur in the future which may have a significant effect on our financial results or our compliance with regulations.
As a result of changes in tax laws, treaties, rulings, regulations or agreements, or their interpretation, of Switzerland or any other country in which we operate, the loss of a major tax dispute or a successful challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, or other factors, our effective income tax rates may increase, which could adversely affect our net income and cash flows.
We are incorporated in the canton of Vaud in Switzerland, and our effective income tax rate benefited from a longstanding ruling from the canton of Vaud through December 31, 2019. As a result of the Federal Act on the Tax Reform and AHV Financing (“TRAF”), the canton of Vaud enacted tax reforms on March 10, 2020 that took effect as of January 1, 2020. As a result of the reform, Logitech will incur cash income taxes that will increase over time as the deferred income tax benefit established in connection with the reform diminishes. The canton’s tax authority is primarily delegated by the Swiss federal government and its implementation of TRAF in general or with respect to Logitech is subject to Swiss federal review and challenge. Implementation of any material change in tax laws or policies or the adoption of new interpretations of existing tax laws and rulings, or termination or replacement of our tax arrangements with the canton of Vaud, by Switzerland or the canton of Vaud could result in a higher effective income tax rate, or a decreased tax asset, a charge to earnings and an accelerated pace of increase in our effective income tax rate, or a combination of such impacts, on our worldwide earnings and any such change will adversely affect our net income. Changes in our effective income tax rate may also make it more difficult to compare our net income and earnings per share between periods.
We operate in multiple jurisdictions and our profits are taxed pursuant to the tax laws of these jurisdictions. Our effective income tax rate may be affected by changes in or interpretations of tax laws, treaties, rulings, regulations or agreements in any given jurisdiction, or changes in international tax reform by the Organization for Economic Co-operation and Development and similar organizations, utilization of net operating loss and tax credit carryforwards, changes in geographical allocation of income and expense, and changes in management’s assessment of matters
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such as the realizability of deferred tax assets. In the past, we have experienced fluctuations in our effective income tax rate. Our effective income tax rate in a given fiscal year reflects a variety of factors that may not be present in the succeeding fiscal year or years. There is no assurance that our effective income tax rate will not change in future periods.
We file Swiss and foreign tax returns. We are frequently subject to tax audits, examinations and assessments in various jurisdictions. If any tax authority successfully challenges our operational structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, if the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure, or if we lose a material tax dispute in any country, our effective income tax rate could increase. For example, policy changes in Switzerland, the United States or China predicated on our presence in those countries could adversely affect where we recognize profit and our effective income tax rate. A material assessment by a governing tax authority could adversely affect our profitability. If our effective income tax rate increases in future periods, our net income and cash flows could be adversely affected.
Risks Related to Cyber Security, Privacy, and Intellectual Property
Significant disruptions in, or breaches in security of, our websites, or information technology systems, or our products could adversely affect our business.
As a consumer electronics company, our websites are an important presentation of our company, identity and brands and an important means of interaction with and source of information for consumers of our products. We also rely on our centralized information technology systems for product-related information and to store intellectual property, forecast our business, maintain financial records, manage operations and inventory, and operate other critical functions. We allocate significant resources to maintain our information technology systems and deploy network security, data encryption, training and other measures to protect against unauthorized access or misuse. Nevertheless, our websites and information technology systems have been and could continue to be subject to or threatened with, and are susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, structural or operational failures, computer viruses, attacks by computer hackers, other data security issues, telecommunication failures, user error, malfeasance, catastrophes, system or software upgrades, integration or migration, or other foreseeable and unforeseen events. From time to time, we and our suppliers have identified vulnerabilities or other issues that we believe have been addressed, and we expect such issues to continue to arise. None of such disruptions or issues has individually or in the aggregate resulted in security incidents with a material impact on us. Moreover, due to the COVID-19 pandemic, there is an increased risk that we may experience security breach related incidents as a result of our employees, service providers, and third parties working remotely on less secure systems. In addition, our growth, and increased frequency and sophistication of cyber and product security attacks may increase the likelihood of the Company becoming a target of increasingly complex and damaging attacks that substantially disrupt operations and expose sensitive data. Further, the U.S. Cybersecurity and Infrastructure Security Agency and the European Central Bank have both issued warnings about potential Russian cyberattacks as a result of Russia’s invasion of Ukraine and sanctions imposed on Russia. Breaches or disruptions of our websites or information technology systems, breaches of confidential information, data corruption or other data security issues could adversely affect our brands, reputation, relationships with customers or business partners, or consumer or investor perception of our company, business or products or result in disruptions of our operations, loss of intellectual property or our customers’ or our business partners’ data, reduced value of our investments in our brands, design, research and development or engineering, or costs to address regulatory inquiries or actions or private litigation, to respond to customers or partners or to rebuild or restore our websites or information technology systems.
The collection, storage, transmission, use and distribution of user data could give rise to liabilities and additional costs of operation as a result of laws, governmental regulation and risks of data breaches and security incidents.
In connection with our operations, we collect personal data, including that of our consumers. This information is increasingly subject to legislation, regulations and enforcement in numerous jurisdictions around the world. Global data privacy regulation is increasingly fragmented, with increasing enforcement efforts and penalties. Such fragmentation requires more complex and costly compliance structures, while heightened enforcement increases the cost and reputational risk associated with even minor compliance errors.
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For example, the General Data Protection Regulation ("GDPR"), which is applicable to us and to all companies processing data of people in the European Union, imposes significant fines and sanctions for violation of the Regulation. Compliance with the GDPR's international transfer rules has been made more difficult by the invalidation of the U.S. European Union Privacy Shield and we are now required to put in place additional privacy protective measures for transfer of data of people in the European Union to certain countries outside of the European Economic Area. In the United States, California and Virginia have already adopted privacy laws and other legislations may follow, at states and federal levels. Such laws and regulations are typically intended to protect the privacy and security of personal information and its collection, storage, transmission, use and distribution in or from the governing jurisdiction. In addition, because various jurisdictions have different laws and regulations concerning the use, storage and transmission of such information, we may face requirements that pose compliance challenges in existing markets as well as new international markets that we seek to enter. The collection of user data heightens the risk of security breaches and other data security issues related to our IT systems and the systems of third-party data storage and other service and IT providers. Such laws and regulations, and the variation between jurisdictions, as well as additional security measures and risk, could subject us to increased costs, allocation of additional resources, financial penalties or other liabilities or negative publicity that could adversely affect our business.
Claims by others that we infringe their proprietary technology could adversely affect our business.
We have been expanding the categories of products we sell, such as entering new markets and introducing products for tablets, other mobile devices, digital music, and video collaboration. We expect to continue to enter new categories and markets. As we do so, we face an increased risk that claims alleging we infringe the patent or other intellectual property rights of others, regardless of the merit of the claims, may increase in number and significance. Infringement claims against us may also increase as the functionality of video, voice, data and conferencing products begin to overlap. This risk is heightened by the increase in lawsuits brought by holders of patents that do not have an operating business or are attempting to license broad patent portfolios and by the increasing attempts by companies in the technology industries to enjoin their competitors from selling products that they claim infringe their intellectual property rights. Intellectual property lawsuits are subject to inherent uncertainties due to the complexity of the technical issues involved, and we cannot be certain that we will be successful in defending ourselves against intellectual property claims. A successful claimant could secure a judgment that requires us to pay substantial damages or prevents us from distributing certain products or performing certain services. We might also be required to seek a license for the use of such intellectual property, which may not be available on commercially acceptable terms or at all. Alternatively, we may be required to develop non-infringing technology, which could require significant effort and expense and may ultimately not be successful. Any claims or proceedings against us, whether meritorious or not, could be time consuming, result in costly litigation or the diversion of significant operational resources, or require us to enter into royalty or licensing agreements, any of which could materially and adversely affect our business and results of operations.
We may be unable to protect our proprietary rights. Unauthorized use of our technology may result in the development of products that compete with our products.
Our future success depends in part on our proprietary technology, technical know-how and other intellectual property. We rely on a combination of patent, trade secret, copyright, trademark and other intellectual property laws, and confidentiality procedures and contractual provisions such as nondisclosure terms and licenses, to protect our intellectual property.
We hold various United States patents and pending applications, together with corresponding patents and pending applications from other countries. It is possible that any patent owned by us will be invalidated, deemed unenforceable, circumvented or challenged, that the patent rights granted will not provide competitive advantages to us, or that any of our pending or future patent applications will not be granted, maintained or enforced. In addition, other intellectual property laws or our confidentiality procedures and contractual provisions may not adequately protect our intellectual property. Also, others may independently develop similar technology, duplicate our products, or design around our patents or other intellectual property rights. Unauthorized parties have copied and may in the future attempt to copy aspects of our products or to obtain and use information that we regard as proprietary. Any of these events could adversely affect our business, financial condition and operating results.
Risks Related to our Financial Results
Our operating results are difficult to predict and fluctuations in results may cause volatility in the price of our shares.
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Our revenues and profitability are difficult to predict due to the nature of the markets in which we compete, fluctuating user demand, the uncertainty of current and future global economic conditions, and for many other reasons, including the following:
•Our operating results are highly dependent on the volume and timing of orders received during the quarter, which are difficult to forecast. Customers generally order on an as-needed basis and we typically do not obtain firm, long-term purchase commitments from our customers. As a result, our revenues in any quarter depend primarily on orders booked and shipped in that quarter.
•A significant portion of our quarterly retail sales typically occurs in the last weeks of each quarter, further increasing the difficulty in predicting quarterly revenues and profitability.
•Our sales are impacted by consumer demand and current and future global economic and political conditions, including trade restrictions and tariffs, and can, therefore, fluctuate abruptly and significantly during periods of uncertain economic conditions or geographic distress, as well as from shifts in distributor inventory practices and consumer buying patterns.
•We must incur a large portion of our costs in advance of sales orders because we must plan research and production, order components, buy tooling equipment, and enter into development, sales and marketing, and other operating commitments prior to obtaining firm commitments from our customers. This makes it difficult for us to rapidly adjust our costs during the quarter in response to a revenue shortfall, which could adversely affect our operating results.
•From time to time, we engage in opportunistic marketing and sales activities, including advertising and promotional events to enhance our brand awareness. The effectiveness of our marketing and sales efforts is uncertain and it is difficult to predict whether our marketing and sales efforts will result in increased sales.
•The COVID-19 pandemic has led to evolving changes in our supply, operations, logistics and related expenses and use patterns and demand for certain of our products that may not recur or be sustainable in future periods, as well as uncertainty in global macroeconomic conditions.
•We engage in acquisitions and divestitures, and such activity varies from period to period. Such variance may affect our growth, our previous outlook and expectations, and comparisons of our operating results and financial statements between periods.
•We are continuously attempting to simplify our organization, to control operating costs through expense and global workforce management, to reduce the complexity of our product portfolio, and to better align costs with our current business as we expand from PC accessories and provide leverage for growth opportunities in accessories and other products and services for creativity and productivity, gaming, video collaboration, mobile devices, music, digital home and other product categories. We may not achieve the cost savings or other anticipated benefits from these efforts, and the success or failure of such efforts may cause our operating results to fluctuate and to be difficult to predict.
•Fluctuations in currency exchange rates can impact our revenues, expenses and profitability because we report our financial statements in U.S. Dollars, whereas a significant portion of our revenues and expenses are in other currencies. We attempt to adjust product prices over time to offset the impact of currency movements. However, over short periods of time, during periods of weakness in consumer spending or given high levels of competition in many product categories, our ability to change local currency prices to offset the impact of currency fluctuations is limited.
Because our operating results are difficult to predict, our results may be below the expectations of financial analysts and investors, which could cause the price of our shares to decline.
Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results.
Our gross margins can vary due to consumer demand, competition, product pricing, product lifecycle, product mix, new product introductions, unit volumes, acquisitions and divestitures, commodity, supply chain and logistics
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costs, capacity utilization, geographic sales mix, currency exchange rates, trade policy and tariffs, and the complexity and functionality of new product innovations and other factors. In particular, if we are not able to introduce new products in a timely manner at the product cost we expect, or if consumer demand for our products is less than we anticipate, or if there are product pricing, marketing and other initiatives by our competitors to which we need to react or that are initiated by us to drive sales that lower our margins, then our overall gross margin will be less than we project.
In addition, our gross margins may vary significantly by product line, sales geography and customer type, as well as within product lines. When the mix of products sold shifts from higher margin product lines to lower margin product lines, to lower margin sales geographies, or to lower margin products within product lines, our overall gross margins and our profitability may be adversely affected.
As we expand within and into new product categories, our products in those categories may have lower gross margins than in our traditional product categories. Consumer demand in these product categories, based on style, color and other factors, tends to be less predictable and tends to vary more across geographic markets. As a result, we may face higher up-front investments, inventory costs associated with attempting to anticipate consumer preferences, and increased inventory write-offs. If we are unable to offset these potentially lower margins by enhancing the margins in our more traditional product categories, our profitability may be adversely affected.
Changes in trade policy, including tariffs and the tariffs focused on China in particular, and currency exchange rates also have adverse impacts on our gross margins.
The impact of these factors on gross margins can create unanticipated fluctuations in our operating results, which may cause volatility in the price of our shares.
We cannot ensure that our current share repurchase program will be fully utilized or that it will enhance long-term shareholder value. Share repurchases may also increase the volatility of the trading price of our shares. We similarly cannot ensure that we will continue to increase our dividend payments or to pay dividends at all. Share repurchases and dividends diminish our cash reserves.
In July 2022, our Board of Directors approved a $500 million increase to our current repurchase program of our registered shares up to $1.5 billion. We have also paid cash dividends and increased the size of our dividend, each year since fiscal year 2013. Our share repurchase program and dividend policy may be affected by many factors, including general business and economic conditions, our financial condition and operating results, our views on potential future capital requirements, restrictions imposed in any future debt agreements, the emergence of alternative investment or acquisition opportunities, changes in our business strategy, legal requirements, changes in tax laws, and other factors. Our share repurchase program does not obligate us to repurchase all or any of the dollar value of shares authorized for repurchase. The program could also increase the volatility of the trading price of our shares. Similarly, we are not obligated to pay dividends on our registered shares. Under Swiss law, we may only pay dividends upon the approval of a majority of our shareholders, which is under the discretion of and generally follows a recommendation by our Board of Directors that such a dividend is in the best interests of our shareholders. There can be no assurance that our Board of Directors will continue to recommend, or that our shareholders will approve, dividend increases or any dividend at all. If we do not pay a regular dividend, we may lose the interest of investors that focus their investments on dividend-paying companies, which could create downward pressure on our share price. Any announcement of termination or suspension of our share repurchase program or dividend may result in a decrease in our share price. The share repurchase program and payment of cash dividends could also diminish our cash reserves that may be needed for investments in our business, acquisitions or other purposes. Without dividends, the trading price of our shares must appreciate for investors to realize a gain on their investment.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Share Repurchases
The following table presents certain information related to purchases made by Logitech of its equity securities under the 2020 share repurchase program (in thousands, except per share amounts):
| 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 June 30, 2022 | CHF (LOGN) | USD (LOGI) | ||||||||||||||||||||||||
| Month 1 | ||||||||||||||||||||||||||
| April 1, 2022 to April 29, 2022 | ||||||||||||||||||||||||||
| SIX | 477 | 66.68 | $ | — | $ | 389,818 | ||||||||||||||||||||
| Nasdaq | 26 | 69.32 | 388,051 | |||||||||||||||||||||||
| Month 2 | ||||||||||||||||||||||||||
| April 30, 2022 to May 27, 2022 | ||||||||||||||||||||||||||
| SIX | 578 | 59.70 | 352,990 | |||||||||||||||||||||||
| Nasdaq | 31 | 64.68 | 350,991 | |||||||||||||||||||||||
| Month 3 | ||||||||||||||||||||||||||
| May 28, 2022 to July 1, 2022 | ||||||||||||||||||||||||||
| SIX | 827 | 53.5 | 305,643 | |||||||||||||||||||||||
| Nasdaq | 42 | 59.65 | 303,149 | |||||||||||||||||||||||
| 1,980 | 58.88 | $ | 60.87 | $ | 303,149 | |||||||||||||||||||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
Exhibit Index
| Exhibit No. | Description | |||||||
| 10.1 | ** | |||||||
| 10.2 | ** | |||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | * | |||||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 101.DEF | XBRL Taxonomy Definition Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
* This exhibit is furnished herewith, but not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we explicitly incorporate it by reference.
** Indicates management compensatory plan, contract or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| LOGITECH INTERNATIONAL S.A. | |||||||||||
| July 28, 2022 | /s/ Bracken Darrell | ||||||||||
| Date | Bracken Darrell | ||||||||||
| President and Chief Executive Officer | |||||||||||
| July 28, 2022 | /s/ Nate Olmstead | ||||||||||
| Date | Nate Olmstead | ||||||||||
| Chief Financial Officer | |||||||||||
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Exhibit 10.1
LOGITECH INTERNATIONAL S.A. 2006 STOCK INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement, including any country-specific terms and conditions set forth in the attached Appendix (collectively, the “Agreement”), is between Logitech International S.A., a Swiss company (the “Company”), and the Participant named below and is made pursuant to the Logitech International S.A. 2006 Stock Incentive Plan (the “Plan”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning given to them in the Plan. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms of the Plan shall prevail.
In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:
1.Grant of Restricted Stock Units. The Company hereby grants to the Participant named below the number of Restricted Stock Units corresponding to Shares specified below, subject to the terms and conditions of this Agreement and of the Plan, which is incorporated in this Agreement by reference:
Participant’s Name: [NAME]
Grant Date: [GRANT DATE]
Total Number of Restricted Stock Units granted: [UNITS]
2.Vesting. The Restricted Stock Units subject to this Award shall vest [INSERT VESTING CRITERIA] (each such date being a “Vesting Date”), subject to the Participant’s continuous Service through the applicable Vesting Date, until all Restricted Stock Units subject to this Award are vested in full. In no event shall any Restricted Stock Units vest after the Participant’s termination of Service. Notwithstanding the foregoing, the Restricted Stock Units shall be subject to the provisions contained in Sections 5(b) and 5(c) hereof [FOR MEMBERS OF THE LEADERSHIP TEAM ONLY: and in Addendum A, which is attached to this Agreement, and to the terms and conditions of any change of control severance agreement between the Company or Employer (as defined in Section 6) and the Participant (a “COC Severance Agreement”)].
3.Settlement of Vested Restricted Stock Units. The Participant’s vested Restricted Stock Units shall be settled promptly after the applicable Vesting Date pursuant to Section 2 or accelerated vesting event pursuant to Section 5(b) [FOR MEMBERS OF THE LEADERSHIP TEAM ONLY: or Addendum A], provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless and until the Participant has satisfied any applicable tax and/or other obligations pursuant to Section 8 below and such issuance otherwise complies with Applicable Laws. The foregoing notwithstanding, Restricted Stock Units shall be settled within sixty (60) days after the applicable Vesting Date or accelerated vesting event, subject to Section 24 hereof. At the time of settlement, the Participant shall receive one Share for each vested Restricted Stock Unit, net of applicable withholdings. The Company in its discretion may designate a brokerage firm to assist with settlement of Restricted Stock Units, or as the sole means for settlement of Restricted Stock Units.
4.Nature of Restricted Stock Units. The Restricted Stock Units are mere bookkeeping entries and represent only an unfunded and unsecured obligation of the Company to issue or deliver Shares on a future date. As a holder of Restricted Stock Units, the Participant has no rights other than the rights of a general creditor of the Company. The Restricted Stock Units carry neither voting rights nor rights to cash or other dividends. The Participant has no rights as a shareholder of the Company by virtue of the Restricted Stock Units unless and until the Restricted Stock Units are settled by issuing or delivering Shares.
5.Termination of Service.
a.Except as otherwise provided in Sections 5(b) or 5(c) [FOR MEMBERS OF THE LEADERSHIP TEAM ONLY: or Section (b) of Addendum A], if the Participant’s Service terminates for any reason,
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whether or not such termination is later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any, all unvested Restricted Stock Units shall be forfeited effective on the date the Participant’s Service terminates. The Participant’s date of termination of Service shall mean the date upon which the Participant’s active Service terminates, regardless of any notice period or period in lieu of notice of termination of employment or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of a written employment agreement, if any. The Administrator shall have the exclusive discretion to determine when the Participant’s active Service terminates for purposes of this Award (i.e., when the Participant has ceased active performance of services for purposes of vesting in this Award), including whether a leave of absence constitutes a termination of Service for purposes of this Award.
b.If the Participant’s Service terminates by reason of death or Disability, any unvested Restricted Stock Units shall vest immediately as of the date of such termination of Service.
c.If the Participant’s Service terminates by reason of Retirement, any unvested Restricted Stock Units shall continue to vest (in accordance with the schedule set forth in Section 2) on any Vesting Date that occurs subsequent to the Participant’s date of termination of Service without regard to the requirement that the Participant continue in Service through the applicable Vesting Date and subject to the Participant’s continued compliance with any post-termination restrictive covenants to which the Participant may be subject, including, without limitation, the provisions of the Logitech Employee Non-disclosure Agreement. For purposes of this Section 5(c), the definition of Retirement is set forth in the country-specific provisions in the attached Appendix that apply to the Participant.
6.Recovery of Erroneously Awarded Compensation. If the Participant is now or is hereafter subject to the Executive Clawback Policy adopted by the Company’s Board of Directors, or any committee thereof, or any policy providing for the recovery of Awards, Shares, proceeds, or payments to Participant in the event of fraud or as required by Applicable Laws or governance considerations or in other similar circumstances, then this Award, and any Shares or other payments resulting from settlement of the Restricted Stock Units or proceeds therefrom, are subject to potential recovery by the Company or the Participant’s employer (the “Employer”) under the circumstances set out in the Executive Clawback Policy or such other similar policy as in effect from time to time.
7.Suspension or Cancellation for Misconduct. If at any time (including after vesting but before settlement) the Administrator reasonably believes that the Participant has committed an act of misconduct as described in this Section 7, the Administrator may suspend the vesting or settlement of Restricted Stock Units, pending a determination of whether an act of misconduct has been committed. If the Administrator determines that the Participant has committed an act of embezzlement, fraud or breach of fiduciary duty, or if the Participant makes an unauthorized disclosure of any trade secret or confidential information of the Company or any of its Subsidiaries or Affiliates, or induces any customer to breach a contract with the Company or any of its Subsidiaries or Affiliates, then this Agreement shall terminate immediately and cease to be outstanding. Any determination by the Administrator with respect to the foregoing shall be final, conclusive and binding on all interested parties. If the Participant holds the title of Vice President or above, the determination of the Administrator shall be subject to the approval of the Company’s Board of Directors.
8.Responsibility for Taxes.
a.Regardless of any action the Company or the Employer takes with respect to any or all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including, but not limited to, the grant, vesting or settlement of the Restricted Stock Units, the issuance of Shares upon settlement of the Restricted Stock Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any dividend equivalents; and
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(ii) do not commit to and are under no obligation to structure the terms of the Award or any aspect of the Restricted Stock Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
b.Prior to any relevant taxable or tax withholding event, as applicable, the Participant will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable obligations with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from the Participant’s wages or other cash compensation paid to the Participant by the Company and/or the Employer; or (ii) withholding from proceeds of the sale of Shares acquired upon settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization); (iii) any other method of withholding determined by the Company and, to the extent required by Applicable Laws or the Plan, approved by the Administrator; or (iv) withholding in Shares to be issued upon vesting of the Restricted Stock Units, provided, however, that if the Participant is a Section 16 officer of the Company under the Exchange Act, then the Company will withhold in Shares upon the relevant taxable or tax withholding event (other than U.S. Federal Insurance Contribution Act taxes or other Tax-Related Items that become payable in a year prior to the year in which Shares are issued upon settlement of the Restricted Stock Units), as applicable, unless the use of such withholding method is problematic under applicable tax or securities law or has materially adverse accounting consequences, in which case, any applicable obligations for Tax-Related Items may be satisfied by one or a combination of methods (i) - (iii) hereof.
c.The Company may withhold or account for Tax-Related Items by considering statutory or other withholding rates, including minimum or maximum rates applicable in the jurisdictions applicable to the Participant. In the event of over-withholding, the Participant may receive a refund from the Company of any over-withheld amount in cash (with no entitlement to the equivalent in Shares), or if not refunded by the Company, the Participant must seek a refund from the local tax authorities to the extent the Participant wishes to recover the over-withheld amount in the form of a refund. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant will be deemed to have been issued the full number of Shares subject to the vested Restricted Stock Units, notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.
d.The Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
9.Compliance with Applicable Laws; No Company Liability. No Shares shall be issued or delivered pursuant to the settlement of the Restricted Stock Units unless such issuance or delivery complies with Applicable Laws. The Company shall not be liable to the Participant or other persons as to (a) the non-issuance or delivery of Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance or delivery of any Shares hereunder and (b) any tax consequence expected, but not realized, by the Participant or other person due to the receipt, vesting or settlement of the Restricted Stock Units.
10.Non-Transferability of Restricted Stock Units. The Restricted Stock Units and this Agreement may not be transferred in any manner otherwise than by will, by the laws of descent or distribution or, if the Company permits, by a written beneficiary designation. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, beneficiaries, successors and assigns of the Participant.
11.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant should consult with his or her
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own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
12.Nature of Grant. In accepting the grant, the Participant acknowledges, understands and agrees that:
a.the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;
b.the grant of the Restricted Stock Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted in the past;
c.all decisions with respect to future Restricted Stock Units grants, if any, will be at the sole discretion of the Company;
d.the Participant’s participation in the Plan shall not create a right to further Service with the Employer and shall not interfere with the ability of the Employer to terminate the Participant’s Service at any time;
e.the Participant is voluntarily participating in the Plan;
f.the Restricted Stock Units and the Shares subject to the Restricted Stock Units are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which are outside the scope of the Participant’s employment contract, if any;
g.the Restricted Stock Units and the Shares subject to the Restricted Stock Units are not intended to replace any pension rights or compensation;
h.the Restricted Stock Units and the Shares subject to the Restricted Stock Units are not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
i.the grant of the Restricted Stock Units and the Participant’s participation in the Plan will not be interpreted to form an employment contract or relationship with the Company or any Subsidiary or Affiliate;
j.the future value of the underlying Shares is unknown and cannot be predicted with certainty;
k.no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resulting from termination of the Participant’s Service by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any);
l.unless otherwise provided in the Plan or by the Company in its discretion, the Restricted Stock Units and the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares of the Company;
m.unless otherwise agreed with the Company, the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income and value of the same, are not granted as consideration for, or in connection with, the Service the Participant may provide as a director of any Subsidiary or Affiliate; and
n.neither the Company, the Employer nor any Subsidiary or Affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar or the Swiss Franc, as applicable, that may affect the value of the Restricted Stock Units or of any amounts due to the Participant pursuant to the settlement of the Restricted Stock Units or the subsequent sale of any Shares acquired upon settlement.
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13.Data Privacy.
a.Data Collection and Usage. The Company or any of its Subsidiaries or Affiliates, including the Employer, may collect, process and use certain personal information about the Participant, including, but not limited to, the Participant’s name, home address, telephone number(s), email address(es), date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Restricted Stock Units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the purposes of implementing, administering and managing the Plan. The legal basis, where required, for the processing of Data is the Participant’s consent.
b.Stock Plan Administration Service Providers. The Company transfers Data to Equatex AG and Equatex US Inc. and their respective affiliates (the “Plan Broker”) and to other third-party service providers, which are assisting the Company with the implementation, administration and management of the Plan. In the future, the Company may select different service providers and share Data with such other providers serving in a similar manner. The Participant may be asked to agree on separate terms and data processing practices with the service providers, with such agreements being a condition to the ability to participate in the Plan.
c.International Data Transfers. The Company and its service providers are based in Switzerland, the United States, the United Kingdom and/or Germany, and the Participant’s country or jurisdiction may have different data privacy laws and protections than these countries. The Company's legal basis, where required, for the transfer of Data is the Participant’s consent.
d.Data Retention. The Company will hold and use the Data only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan, or as required to comply with legal or regulatory obligations, including under tax and security laws.
e.Voluntariness and Consequences of Consent Denial or Withdrawal. Participation in the Plan is voluntary and the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s salary from or employment and career with the Employer will not be affected; the only consequence of refusing or withdrawing the Participant’s consent is that the Company would not be able to grant Restricted Stock Units or other awards to the Participant or administer or maintain such awards, and the Participant would no longer be able to participate in the Plan and would forfeit opportunities associated with the Plan.
f.Data Subject Rights. The Participant understands that data subject rights regarding the processing of Data vary depending on applicable law and that, depending on where the Participant is based and subject to the conditions set out in such applicable law, the Participant may have, without limitation, the right to (i) inquire whether and what kind of Data the Company holds about the Participant and how it is processed, and to access or request copies of such Data in a simplified format or by means of a complete declaration, (ii) request the correction or supplementation of Data about the Participant that is inaccurate, incomplete or out-of-date in light of the purposes underlying the processing, (iii) obtain the anonymization, blockage or erasure of Data no longer necessary for the purposes underlying the processing, (iv) request the Company to restrict the processing of the Participant’s Data in certain situations where the Participant feels its processing is inappropriate, (v) object to or oppose, in certain circumstances, the processing of Data for legitimate interests,(vi) request information about the institutions with which Data is shared, and (vii) request portability of the Participant’s Data that the Participant has actively or passively provided to the Company or the Employer (which does not include data derived or inferred from the collected data), where the processing of such Data is based on consent or the Participant’s employment and is carried out by automated means. In case of concerns, the Participant understands that he or she may also have the right to lodge a complaint with the competent local data protection authority. Further, to receive clarification of, or to exercise any of, the Participant’s rights, the Participant understands that he or she should contact his or her local human resources representative.
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By accepting the grant and indicating consent by signing this Agreement below or via the Company’s online acceptance procedure, the Participant is declaring that he or she agrees with the data processing practices described herein and expressly consents to the collection, processing and use of Data by the Company and the transfer of Data to the recipients mentioned above, including recipients located in countries which do not adduce an adequate level of protection from a European, Brazilian or other non-U.S. data protection law perspective, for the purposes described above.
14.Exchange Control and Foreign Asset/Account Reporting Acknowledgement. Local foreign exchange laws may affect the grant of the Restricted Stock Units, the receipt of Shares upon settlement of the Restricted Stock Units, the sale of Shares received upon settlement of the Restricted Stock Units and/or the receipt of dividends or dividend equivalents (if any). Such laws may affect the Participant’s ability to hold funds outside the Participant’s country and may require the repatriation of any cash, dividends or dividend equivalents received in connection with the Restricted Stock Units. The Participant may also be subject to foreign asset/account reporting requirements as a result of the acquisition, holding or transfer of Shares or cash resulting from participation in the Plan, to or from a brokerage/bank account or entity located outside the Participant’s country. The applicable laws of the Participant’s country may require that he or she report such assets, accounts, the balances therein, or the transactions related thereto to the applicable authorities in such country. The Participant is responsible for being aware of and satisfying any exchange control and foreign asset/account reporting requirements that may be necessary in connection with the Restricted Stock Units. Neither the Company nor any of its Subsidiaries or Affiliates will be responsible for such requirements or liable for the failure on the Participant’s part to know and abide by the requirements that are the Participant’s responsibility. The Participant should consult with his or her own personal legal advisers to ensure compliance with local laws.
15.Adjustments Upon Changes in Capitalization. In the event of a declaration of a stock dividend, a stock split, combination or reclassification of shares, extraordinary dividend of cash and/or assets, recapitalization, reorganization or any similar event affecting the Shares or other securities of the Company, the Administrator shall equitably adjust the number and kind of Restricted Stock Units or other securities which are subject to this Agreement, in order to reflect such change and thereby preclude a dilution or enlargement of benefits under this Agreement.
16.Entire Agreement; Governing Law. The Plan and this Agreement [FOR MEMBERS OF THE LEADERSHIP TEAM ONLY: (including Addendum A) and any COC Severance Agreement] constitute the entire agreement of the parties with respect to the subject matter of this Agreement and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter of this Agreement. This Agreement is governed by the internal substantive laws, but not the choice of law rules of Switzerland (the Company’s jurisdiction of organization).
17.Language. If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
18.Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
19.Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
20.Appendix. The Restricted Stock Units and any Shares subject to the Restricted Stock Units shall be subject to any special terms and conditions set forth in the Appendix to this Agreement for the Participant’s country. Moreover, if the Participant relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.
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21.Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the Restricted Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
22.Permitted Modifications to Comply with Laws. The Company reserves the right to unilaterally amend this Agreement [FOR MEMBERS OF THE LEADERSHIP TEAM ONLY: , prior to a Change in Control (as defined in Addendum A),] solely to facilitate compliance with existing or adopted applicable ordinances, laws, rules or regulations (“Laws”) (even if such Laws have not yet taken effect), including but not limited to any Laws related to the Minder initiative in Switzerland.
23.Insider Trading Restrictions/Market Abuse Laws. Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, including, but not limited to, Switzerland, the United States and Participant’s country, which may affect Participant’s ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., Restricted Stock Units) or rights linked to the value of Shares under the Plan during such times as Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Neither the Company nor any of its Subsidiaries or Affiliates will be responsible for such restrictions or liable for the failure on the Participant’s part to know and abide by such restrictions. The Participant should consult with his or her own personal legal advisers to ensure compliance with local laws.
24.Internal Revenue Code Section 409A.
a.Notwithstanding anything in this Agreement, for purposes of complying with Code Section 409A, if the Restricted Stock Units are considered an item of non-qualified deferred compensation subject to Code Section 409A (“Deferred Compensation”), the vested Restricted Stock Units shall be settled within sixty (60) days after the earlier of (i) the applicable Vesting Date, (ii) the Participant’s “separation from service” within the meaning of Code Section 409A in connection with an accelerated vesting event pursuant to Section 5(b) (provided that the Participant’s Disability must constitute a “disability” within the meaning of Code Section 409A and the U.S. Treasury Regulations) [FOR MEMBERS OF THE LEADERSHIP TEAM ONLY: and, if applicable, Section (b) or (e) of Addendum A (only to the extent the Change in Control constitutes a “change in control event” within the meaning of Code Section 409A and the U.S. Treasury Regulations)], and (iii) the Participant’s death. In addition, in the event of Restricted Stock Units that are Deferred Compensation and settled on a date that is by reference to the Participant’s separation from service, if the Participant is a “specified employee” within the meaning of Code Section 409A on the date the Participant experiences a separation from service, then the Restricted Stock Units shall be settled on the first business day of the seventh month following the Participant’s separation from service, or, if earlier, on the date of the Participant’s death, solely to the extent such delayed payment is required in order to avoid a prohibited distribution under Code Section 409A.
b.The Restricted Stock Units are intended to be exempt from or compliant with Code Section 409A and the U.S. Treasury Regulations relating thereto so as not to subject the Participant to the payment of additional taxes and interest under Code Section 409A or other adverse tax consequences. In furtherance of this intent, the provisions of this Agreement will be interpreted, operated, and administered in a manner consistent with these intentions. The Administrator may modify the terms of this Agreement and/or the Plan without the consent of the Participant, in the manner that the Administrator may determine to be necessary or advisable in order to comply with Code Section 409A or to mitigate any additional tax, interest and/or penalties or other adverse tax consequences that may apply under Code Section 409A if compliance is not practical. This Section 24(b) does not create an obligation on the part of the Company to modify the terms of this Agreement or the Plan and does not guarantee that the Restricted Stock Units or the delivery of Shares upon settlement of the Restricted Stock Units will not be subject to taxes, interest and penalties or any other adverse tax consequences under Code Section 409A. Nothing in this Agreement shall provide a basis for any person to take any action against the Company or any of its Subsidiaries or Affiliates based on matters covered by Code Section 409A, including the tax treatment of any amounts paid under this Agreement, and neither the Company nor any of its Subsidiaries or Affiliates will have any liability under any circumstances to the Participant or any other party if the Restricted Stock Units, the delivery of Shares
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upon vesting/settlement of the Restricted Stock Units or other payment or tax event hereunder that is intended to be exempt from, or compliant with, Code Section 409A, is not so exempt or compliant or for any action taken by the Administrator with respect thereto.
* * *
By the Participant’s agreement to this Agreement, the Participant agrees that the Restricted Stock Units are granted under and governed by the terms and conditions of the Plan and this Agreement. The Participant has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the Plan and Agreement. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and Agreement.
In order to agree to this Agreement, please click “I Agree” below.
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[FOR MEMBERS OF THE LEADERSHIP TEAM ONLY:
LOGITECH INTERNATIONAL S.A. 2006 STOCK INCENTIVE PLAN
ADDENDUM A
Change in Control Provisions
The following provisions shall be incorporated into the Restricted Stock Unit Agreement to which this Addendum A is attached (the “Agreement”). To the extent any capitalized terms used in this Addendum A are not defined, they shall have the meanings given to them in the Agreement or the Plan, as applicable.
a.Change in Control. Notwithstanding the provisions of the Agreement, if a Change in Control occurs and the Participant’s Service has not terminated prior to the consummation of the Change in Control (the “Change in Control Date”), then the Participant’s outstanding Restricted Stock Units will continue to vest subject to the Participant’s continuous Service from the Grant Date through the Vesting Date set forth in Section 2 of the Agreement, except as otherwise provided in Section 5(b) or 5(c) of the Agreement and in this Addendum A.
b.Vesting Acceleration Upon an Involuntary Termination. In the event of a Change in Control in which the successor company or an affiliate thereof assumes, substitutes or otherwise replaces the Restricted Stock Units, if the Participant experiences an Involuntary Termination within 12 months after a Change in Control Date, all Restricted Stock Units shall immediately vest upon such termination date.
c.Settlement. Restricted Stock Units that vest pursuant to this Addendum A shall be settled in accordance with Section 3 and, if applicable, Section 24 of the Agreement.
d.Definitions. The following definitions shall apply for purposes of this Addendum A:
i.Base Salary. The term “Base Salary” shall mean the greater of (i) the Participant’s annual base salary, as in effect immediately prior to the Participant’s termination of employment with the Company or Employer, or (ii) the Participant’s annual base salary as in effect on the effective date of the COC Severance Agreement.
ii.Cause. The term “Cause” shall mean the Participant’s: (A) willful dishonesty or fraud with respect to the business affairs of the Company and its direct and indirect subsidiaries (collectively, “Logitech”); (B) intentional falsification of any employment or Logitech records; (C) misappropriation of or intentional damage to the business or property of Logitech, including (but not limited to) the improper use or disclosure of the confidential or proprietary information of Logitech (excluding misappropriation or damage that results in a loss of little or no consequence to the business or property of Logitech); (D) conviction (including any plea of guilty or nolo contendere) of a felony that, in the judgment of the Board (excluding the Participant, as applicable), materially impairs the Participant's ability to perform his or her duties for Logitech or adversely affects Logitech’s standing in the community or reputation; (E) willful misconduct that is injurious to the reputation or business of Logitech; or (F) refusal or willful failure to perform any assigned duties reasonably expected of a person in his or her position (excluding during any statutory leaves of absence as permitted by law, and with reasonable accommodations for any disability required by law) after receipt of written notice by the Chief Executive Officer or Executive Chairman of the Company or Employer of such refusal or failure and a reasonable opportunity to cure (as described below). The Participant shall be given written notice by the Employer of its intention to terminate the Participant for Cause, which notice (a) shall state with particularity the grounds on which the proposed termination for Cause is based and (b) shall be given no later than (i) ninety (90) days after the occurrence of the event giving rise to such grounds (or ninety (90) days after such later date as represents the actual knowledge by an executive officer of the Company or Employer (excluding the Participant) of such grounds) or (ii) such longer or shorter period imposed by applicable laws. The termination shall be effective upon the Participant's receipt of such notice; provided, however, that with respect to subsection (F) of this Section (d)(ii), the Participant shall have thirty (30) days (or such longer or shorter period imposed by applicable laws) after receiving
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such notice in which to cure any refusal or willful failure to perform (to the extent such cure is possible). If the Participant fails to cure such failure to perform within such thirty-day (30-day) or legally applicable period, the Participant’s employment with the Employer (and Service to the Company) shall thereupon be terminated for Cause.
iii.Change in Control. The term “Change in Control” shall mean the occurrence of any of the following events:
A.A merger or consolidation of the Company with any other entity, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;
B.The complete liquidation of the Company;
C.The sale or other disposition by the Company of all or substantially all of the Company’s assets; or
D.Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becoming the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities.
iv.Good Reason. The term “Good Reason” shall mean: (A) a substantial reduction of the facilities and perquisites (including office space and location) available to the Participant immediately prior to such reduction, without the Participant’s express written consent and without good business reasons; (B) a material reduction of the Participant’s Base Salary; (C) a material reduction in the kind or level of employee benefits to which the Participant is entitled immediately prior to such reduction, with the result that the Participant’s overall benefits package is significantly reduced; (D) the relocation of the Participant to a facility or location more than 30 miles from his or her current location, without the Participant’s express written consent; (E) the Company’s failure to obtain the assumption by any successor of the Company of any COC Severance Agreement (to the extent contemplated under such COC Severance Agreement); or (F) a material reduction of the Participant’s duties, position or responsibilities relative to the Participant’s duties, position or responsibilities in effect immediately prior to such reduction, without the Participant’s express written consent. Clause (C) above shall not apply in the event of any reduction of the amount of the bonus actually paid but shall apply in the event of a material reduction of the target bonus or bonus opportunity. A condition shall not be considered “Good Reason” unless the Participant gives the Company or Employer (or a successor of the Company or Employer, if applicable) written notice of such condition within 90 days after such condition comes into existence and the Company or Employer (or a successor of the Company or Employer, if applicable) fails to remedy such condition within 30 days after receiving the Participant’s written notice.
v.Involuntary Termination. The term “Involuntary Termination” shall mean that the Participant experiences a Separation from Service caused by (i) a termination by the Company or Employer of the Participant’s employment with the Company or Employer that is not effected for Cause or (ii) a resignation by the Participant of his or her employment with the Company or Employer for Good Reason.
vi.Separation from Service. The term “Separation from Service” shall mean a “separation from service,” as defined in the regulations under Section 409A of the Code.
e.Effect of Change of Control Severance Agreement. Notwithstanding any provisions in this Addendum A, the applicable provisions contained in any COC Severance Agreement shall supersede the provisions contained in this Addendum A.
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f.Effect of Merger. In the event that the Company is a party to a merger, consolidation or reorganization, the Restricted Stock Units subject to this Award shall be subject to Section 16 of the Plan; provided that any action taken pursuant to Section 16 of the Plan shall either (i) preserve the exemption of this Award from Section 409A of the Code or (ii) comply with Section 409A of the Code.]
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LOGITECH INTERNATIONAL S.A. 2006 STOCK INCENTIVE PLAN
APPENDIX
ADDITIONAL TERMS AND CONDITIONS OF
RESTRICTED STOCK UNIT AGREEMENT
This Appendix includes additional terms and conditions that govern the Restricted Stock Units granted to the Participant under the Plan if the Participant resides in one of the countries listed below. Capitalized terms used but not defined in this Appendix shall have the meanings set forth in the Plan and/or the Agreement.
This Appendix also includes information regarding securities law and other issues of which the Participant should be aware with respect to participation in the Plan. The information is based on the securities law and other laws in effect in the respective countries as of February 2022. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Appendix as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date at the time that the Restricted Stock Units vest or the Participant sells Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to the Participant’s situation.
Finally, if the Participant is a citizen or resident of a country other than the one in which the Participant is currently working or transfers employment between countries after the Grant Date, the Participant may be subject to the special terms and conditions for more than one country and/or the information for more than one country may be applicable to the Participant. It is also possible that the special terms and conditions and the information may not be applicable to the Participant in such a case.
ALL CURRENT EUROPEAN ECONOMIC AREA ("EEA") MEMBER COUNTRIES
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) due to actual retirement upon satisfying the eligibility requirements for retirement under local law in the Participant’s country. If there are no applicable retirement provisions under local law in the Participant’s country, then Retirement shall be determined in accordance with the policies established by the Administrator from time to time.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
ARGENTINA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
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Securities Law Information. Neither the Restricted Stock Units nor the underlying Shares are publicly offered or listed on any stock exchange in Argentina.
AUSTRALIA
Nature of Plan. The Plan is a plan to which Subdivision 83A-C of the Income Tax Assessment Act of 1997 (Cth) (the “Act”) applies (subject to the conditions of the Act).
Grant of Restricted Stock Units. This provision supplements Section 1 of the Agreement:
The offer of the Restricted Stock Units is intended to comply with the provisions of the Corporations Act 2001, Australian Securities and Investments Commission (“ASIC”) Regulatory Guide 49 and ASIC Class Order 14/1000. Additional details are set forth in the Offer Document for the Offer of Restricted Stock Units to Australian Resident Employees.
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) due to actual retirement upon satisfying the eligibility requirements for retirement under local law in the Participant’s country. If there are no applicable retirement provisions under local law in the Participant’s country, then Retirement shall be determined in accordance with the policies established by the Administrator from time to time.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
BRAZIL
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Nature of Grant. This provision supplements Section 12 of the Agreement:
In accepting the grant, the Participant agrees that (i) he or she is making an investment decision, (ii) he or she will be entitled to receive Shares pursuant to the Restricted Stock Units only if the vesting conditions are met, and (iii) the value of the underlying Shares is not fixed and may increase or decrease without compensation to the Participant.
Compliance with Law. In accepting the grant, the Participant acknowledges that he or she agrees to comply with applicable Brazilian laws and pay any and all applicable taxes associated with the Restricted Stock Units and the Shares acquired under the Plan.
CANADA
Settlement of Vested Restricted Stock Units. The following provision supplements Section 3 of the Agreement:
Notwithstanding any discretion set forth in Section 11(e) of the Plan, settlement of vested Restricted Stock Units granted to Participants residing in Canada will be made in the form of Shares only.
Termination of Service. This provision replaces Section 5(a) of the Agreement:
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Except as otherwise provided in Sections 5(b) or 5(c) [FOR MEMBERS OF THE LEADERSHIP TEAM ONLY: or Section (b) of Addendum A], if the Participant’s Service terminates for any reason (whether or not later found to be invalid, unlawful or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), all unvested Restricted Stock Units shall be immediately forfeited without consideration. For purposes of the preceding sentence, the Participant’s right to vest in the Restricted Stock Units will terminate effective as of the date that is the earlier of (i) the date of termination of the Participant’s Service, or (ii) the date on which the Participant receives notice of termination of Service from the Company or the Employer, regardless of any notice period or period of pay in lieu of such notice or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of a written employment agreement, if any (including, but not limited to statutory law, regulatory law and/or common law). Notwithstanding the foregoing, if applicable employment standards legislation explicitly requires continued vesting during a statutory notice period, the Participant’s right to vest in the Restricted Stock Units, if any, will terminate effective upon the expiry of the minimum statutory notice period, but the Participant will not earn or be entitled to pro-rated vesting if any applicable Vesting Date falls after the end of the statutory notice period, nor will the Participant be entitled to any compensation for lost vesting.
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. The Participant is permitted to sell Shares acquired under the Plan through the Plan Broker, provided the resale of Shares acquired under the Plan takes place outside Canada through the facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the SIX Swiss Exchange and on the Nasdaq Global Select Market.
The following provisions will also apply if the Participant is a resident of Quebec:
Language Consent. The parties acknowledge that it is their express wish that the Agreement, including this Appendix, as well as all documents, notices, and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Consentement relatif à la langue utilisée. Les parties reconnaissent avoir expressément souhaité que la convention («Agreement») ainsi que cette Annexe, ainsi que tous les documents, avis et procédures judiciares, éxécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à la présente convention, soient rédigés en langue anglaise.
Data Privacy. This provision supplements Section 13 of the Agreement:
The Participant hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. The Participant further authorizes the Company, any Parent, Subsidiary or Affiliate and any stock plan service provider that may be selected by the Company to assist with the Plan to disclose and discuss the Plan with their advisors. The Participant further authorizes the Company and any Parent, Subsidiary or Affiliate to record such information and to keep such information in the Participant’s employee file.
CHILE
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the
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Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. The offer of the Restricted Stock Units constitutes a private offering in Chile effective as of the Grant Date. The offer of Restricted Stock Units is made subject to general ruling n° 336 of the Chilean Commission for the Financial Market (“CMF”). The offer refers to securities not registered at the securities registry or at the foreign securities registry of the CMF, and, therefore, such securities are not subject to oversight of the CMF. Given that the Restricted Stock Units are not registered in Chile, the Company is not required to provide information about the Restricted Stock Units or Shares in Chile. Unless the Restricted Stock Units and/or the Shares are registered with the CMF, a public offering of such securities cannot be made in Chile.
Esta oferta de las Unidades de Acciones Restringidas se considera una oferta privada in Chile efectiva a partir de la Fecha de la Concesión. Esta oferta de las Unidades de Acciones Restringidas se hace sujeta a la regla general no. 336 de la Comisión para el Mercado Financiero Chilena (“CMF”). La oferta se refiere a valores no inscritos en el registro de valores o en el registro de valores extranjeros de la CMF y, por lo tanto, tales valores no están sujetos a la fiscalización de ésta. Dado que las las Unidades de Acciones Restringidas no están registradas en Chile, no se requiere que la Compañía provea información sobre las Unidades de Acciones Restringidas o acciones en Chile. A menos que las Unidades de Acciones Restringidas y/o acciones estén registradas con la CMF, una oferta pública de tales valores no puede hacerse en Chile.
CHINA
The following terms and conditions will be applicable to the Participant to the extent that the Company, in its discretion, determines that the Restricted Stock Units or the Participant's participation in the Plan will be subject to exchange control restrictions in the People’s Republic of China (the “PRC”), as implemented by the PRC State Administration of Foreign Exchange (“SAFE”).
Vesting. The following provision supplements Section 2 of the Agreement:
In addition to any other vesting and settlement conditions and notwithstanding anything to the contrary in the Plan or the Agreement, the Restricted Stock Units will not vest and no Shares will be delivered to the Participant unless and until all necessary approvals from SAFE or its relevant branch have been received and remain effective, as determined by the Company in its sole discretion (“SAFE Approval”). In the event that SAFE Approval has not been obtained prior to or is not effective as of any date(s) on which the Restricted Stock Units are scheduled to vest in accordance with Section 2 of the Agreement, the Restricted Stock Units will not vest until the Company determines that SAFE Approval is obtained and is effective (the “Actual Vesting Date”). If the Participant’s Service terminates prior to the Actual Vesting Date, the Participant shall not be entitled to vest in any portion of the Restricted Stock Units and the Restricted Stock Units shall be forfeited without any liability to the Company, the Employer or any Subsidiary or Affiliate.
Settlement of Vested Restricted Stock Units and Sale of Shares. The following provision supplements Section 3 of the Agreement:
To facilitate compliance with any applicable laws or regulations in China, the Participant agrees (i) to the immediate sale of any Shares issued to the Participant either upon vesting and settlement of the Restricted Stock Units, upon termination of the Participant’s Service, or within any other time frame as the Company determines to be necessary or recommended to comply with local regulatory requirements, and/or (ii) to hold any Shares issued to the Participant upon vesting and settlement in an account with the Plan Broker until such Shares are sold. The Participant further agrees that the Company is authorized to instruct the Plan Broker to assist with the mandatory sale of such Shares (on the Participant’s behalf pursuant to this authorization) and the Participant expressly authorizes the Plan Broker to complete the sale of such Shares. The Participant acknowledges that the Plan Broker is under no obligation to arrange for the sale of the Shares at any particular price. Upon the sale of the Shares, the Company agrees to pay the Participant the cash proceeds from the sale of the Shares, less any brokerage fees or commissions and subject to any obligation to satisfy Tax-Related Items. The Participant acknowledges that the
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Participant is not aware of any material nonpublic information with respect to the Company or any securities of the Company as of the date of the Agreement.
Termination of Service Due to Retirement. The following replaces Section 5(c) of the Agreement:
If the Participant’s Service terminates by reason of Retirement, any unvested Restricted Stock Units shall vest in full as of the Participant’s date of termination of Service, provided, however, the Company has determined that SAFE Approval has been obtained and is effective as of the date the Participant’s Service terminates. "Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Exchange Control Requirements. The Participant understands and agrees that, pursuant to local exchange control requirements, the Participant will be required to repatriate the cash proceeds from the sale of the Shares to China. The Participant further understands that, under local law, such repatriation of the Participant’s cash proceeds may need to be effectuated through a special exchange control account established by the Company, its Parent, Subsidiary or Affiliate or the Employer, and the Participant hereby consents and agrees that any proceeds from the sale of any Shares the Participant acquires may be transferred to such special account prior to being delivered to the Participant. The Participant agrees to bear any currency fluctuation risk between the time the Shares are sold and the time sales proceeds are distributed through any special exchange control account established by the Company. The Participant further agrees to comply with any other requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China. This repatriation requirement will not apply to non-PRC nationals.
FRANCE
Language Consent. By accepting the grant of the Restricted Stock Units, the Participant confirms having read and understood the Plan and the Agreement, which were provided in the English language. The Participant accepts the terms of those documents accordingly.
Consentement relatif à la langue utilisée. En acceptant cette attribution gratuite d’actions, le Participant confirme avoir lu et compris le Plan et ce Contrat, incluant tous leurs termes et conditions, qui ont été transmis en langue anglaise. Le Participant accepte les dispositions de ces documents en connaissance de cause.
HONG KONG
Settlement of Vested Restricted Stock Units. The following provision supplements Section 3 of the Agreement:
Notwithstanding any discretion set forth in Section 11(e) of the Plan, settlement of vested Restricted Stock Units granted to Participants residing in Hong Kong will be made in the form of Shares only.
In the unlikely event the Restricted Stock Units vest and are settled within six months of the Grant Date, the Participant agrees that he or she will not dispose of the Shares issued to him or her or otherwise offer the Shares to the public prior to the six-month anniversary of the Grant Date. The Participant agrees that any Shares acquired upon vesting and settlement are accepted as a personal investment.
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
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Securities Law Information. WARNING: The Restricted Stock Units and any Shares issued upon settlement of the Restricted Stock Units do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company, its Parent, Subsidiary or Affiliate. The Agreement, including this Appendix, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, nor have the documents been reviewed by any regulatory authority in Hong Kong. The Restricted Stock Units are intended only for the personal use of each eligible employee of the Employer, the Company or any Parent, Subsidiary or Affiliate and may not be distributed to any other person. If the Participant is in any doubt about any of the contents of the Agreement, including this Appendix, or the Plan, the Participant should obtain independent professional advice.
Nature of Scheme. The Company specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.
INDIA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Exchange Control Information. The Participant understands that the Participant must repatriate any funds related to the Plan to India within 90 days of receipt (in the case of sale process) and within 180 days (in the case of dividends), or within such time as prescribed under applicable Indian exchange control laws as may be amended from time to time. The Participant will receive a foreign inward remittance certificate (“FIRC”) from the bank where the Participant deposits the foreign currency. The Participant should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Employer requests proof of repatriation. The Participant should consult with his or her personal legal advisor to ensure compliance with applicable exchange control requirements.
INDONESIA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Language Consent and Notification. By accepting this Award, the Participant (i) confirms having read and understood the documents relating to this Award (i.e., the Plan and the Agreement) which were provided in the English language, (ii) accepts the terms of those documents accordingly, and (iii) agrees not to challenge the validity of this document based on Law No. 24 of 2009 on National Flag, Language, Coat of Arms and National Anthem or the implementing Presidential Regulation (when issued).
IRELAND
Director Notification Obligation. If the Participant is a director, shadow director or secretary of the Company’s Irish Subsidiary or Affiliate the Participant must notify the Irish Subsidiary or Affiliate in writing if the Participant
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receives or disposes of an interest exceeding 1% of the Company (e.g., Restricted Stock Units, Shares), if the Participant becomes aware of the event giving rise to the notification requirement, or if the Participant becomes a director or secretary if such an interest exists at that time. This notification requirement also applies with respect to the interests of a spouse, civil partner or children under the age of 18 (whose interests will be attributed to the director, shadow director or secretary). The Participant should consult with his or her own personal legal adviser to ensure compliance with this requirement, if applicable.
ITALY
Plan Document Acknowledgment. In accepting the Restricted Stock Units, the Participant acknowledges that the Participant has received a copy of the Plan and the Agreement and has reviewed the Plan and the Agreement, including this Appendix, in their entirety and fully understands and accepts all provisions of the Plan and the Agreement, including this Appendix. The Participant further acknowledges that the Participant has read and specifically and expressly approves the following sections of the Agreement: Grant of Restricted Stock Units, Vesting, Settlement of Vested Restricted Stock Units, Termination of Service, Recovery of Erroneously Awarded Compensation, Suspension or Cancellation for Misconduct, Responsibility for Taxes, Nature of Grant, Exchange Control and Foreign Asset/Account Reporting Acknowledgment, Entire Agreement, Governing Law, Language, Appendix, Imposition of Other Requirements, and Permitted Modifications to Comply with Laws.
JAPAN
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
KOREA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
MALAYSIA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
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Data Privacy. This provision replaces Section 13 of the Agreement:
| The Participant hereby explicitly, voluntarily and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Agreement and any other grant materials by and among, as applicable, the Employer, the Company and any of its other Subsidiaries or Affiliates or any third parties authorised by the same in assisting in the implementation, administration and management of the Participant’s participation in the Plan. The Participant understands that the Company and the Employer may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, email address, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, the fact and conditions of the Participant’s participation in the Plan, details of all Restricted Stock Units or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan. The source of the Data is the Participant’s Employer as well as information which the Participant is providing to the Company and the Employer in connection with the Plan including this Appendix. | Peserta dengan ini secara eksplisit, sukarela dan tanpa sebarang keraguan mengizinkan pengumpulan, penggunaan dan pemindahan, dalam bentuk elektronik atau lain-lain, data peribadinya seperti yang diterangkan dalam Perjanjian dan apa-apa bahan geran oleh dan di antara, seperti mana yang terpakai, Majikan, Syarikat dan mana-mana Anak Syarikat yang lain atau Syarikat Sekutu atau mana-mana pihak ketiga yang diberi kuasa oleh yang sama dalam membantu dalam pelaksanaan, pentadbiran dan pengurusan penyertaan Peserta dalam Pelan. Peserta memahami bahawa Syarikat dan Majikan mungkin memegang maklumat peribadi tertentu tentang Peserta, termasuk, tetapi tidak terhad kepada, nama Peserta, alamat rumah dan nombor telefon, alamat emel, tarikh lahir, nombor insurans sosial, passport atau nombor pengenalan lain, gaji, kewarganegaraan, jawatan, apa-apa saham atau jawatan pengarah yang dipegang dalam Syarikat, fakta dan syarat-syarat mengenai penyertaan Peserta dalam Pelan, butir-butir tentang semua Unit-unit Saham Terbatas atau apa-apa hak lain untuk Saham yang dianugerahkan, dibatalkan, dilaksanakan, terletak hak, tidak diletak hak ataupun yang belum dijelaskan bagi faedah Peserta (“Data”), untuk tujuan ekslusif bagi melaksanakan, mentadbir dan menguruskan Pelan tersebut. Sumber Data adalah daripada Majikan Peserta dan juga maklumat dimana Peserta menyediakan kepada Syarikat dan Majikan berhubung dengan Pelan tersebut termasuk Lampiran ini. | ||||
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| The Participant also authorizes any transfer of Data, as may be required, to Equatex AG, Equatex US Inc. or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan and/or with whom any Shares acquired upon vesting of the Restricted Stock Units are deposited. The Participant acknowledges that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections to the Participant’s country, which may not give the same level of protection to Data. The Participant understands that the Participant may request a list with the names and addresses of any potential recipients of Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company, Equatex AG, Equatex US Inc. and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Participant’s participation in the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case, without cost, by contacting in writing the Participant’s local human resources representative, whose contact details are Director of People and Culture Asia Pacific at peopleconnect@logitech.com. | Peserta juga memberi kuasa mengenai apa-apa pemindahan Data, yang mungkin diperlukan, kepada Equatex AG, Equatex US Inc. atau pembekal perkhidmatan pelan saham yang mungkin dipilih oleh Syarikat pada masa depan, yang membantu Syarikat dengan pelaksanaan, pentadbiran dan pengurusan Pelan dan/atau dengan siapa sahaja Saham yang diperolehi semasa peletakan hak Unit-unit Saham Terbatas didepositkan. Peserta memaklumkan bahawa penerima-penerima ini mungkin berada di negara Peserta atau mana-mana tempat lain, dan bahawa negara penerima (contohnya di Amerika Syarikat) mungkin mempunyai undang-undang privasi data dan perlindungan yang berbeza dengan negara Peserta, dimana mungkin tidak memberi tahap perlindungan Data yang sama. Peserta memahami bahawa Peserta boleh meminta satu senarai yang mengandungi nama dan alamat penerima-penerima Data yang berpotensi dengan menghubungi wakil sumber manusia tempatan Peserta. Peserta memberi kuasa kepada Syarikat, Equatex AG, Equatex US Inc. dan mana-mana penerima-penerima lain yang mungkin membantu Syarikat (pada masa sekarang atau pada masa depan) dengan melaksanakan, mentadbir dan mengurus penyertaan Peserta dalam Pelan untuk menerima, memiliki, menggunakan, mengekalkan dan memindahkan Data, dalam bentuk elektronik atau lain-lain, semata-mata dengan tujuan untuk melaksanakan, mentadbir dan menguruskan penyertaan Peserta dalam Pelan. Peserta memahami bahawa Data hanya akan disimpan untuk tempoh yang perlu bagi melaksanakan, mentadbir dan menguruskan penyertaan Peserta dalam Pelan. Peserta memahami bahawa dia boleh, pada bila-bila masa, melihat Data, meminta maklumat tambahan mengenai penyimpanan dan pemprosesan Data, meminta bahawa pindaan-pindaan dilaksanakan ke atas Data atau menolak atau menarik balik persetujuan dalam ini, dalam mana-mana kes, tanpa kos, dengan menghubungi secara bertulis wakil sumber manusia tempatan Peserta, dimana butir-butir hubungan adalah Director of People and Culture Asia Pacific di peopleconnect@logitech. | ||||
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| Further, the Participant understands that he or she is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke consent, the Participant’s employment status or service and career with the Company and/or the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing consent is that the Company would not be able to grant future Restricted Stock Units or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative. | Selanjutnya, Peserta memahami bahawa dia telah memberikan persetujuan di sini secara sukarela. Jika Peserta tidak bersetuju, atau jika Peserta kemudian membatalkan persetujuan, status pekerjaan atau perkhidmatan dan kerjaya Peserta dengan Syarikat dan / atau Majikan tidak akan terjejas; satu-satunya akibat buruk jika tidak bersetuju atau menarik balik persetujuan adalah bahawa Syarikat tidak akan dapat memberikan Unit-unit Saham Terbatas atau anugerah ekuiti yang lain kepada Peserta pada masa hadapan atau mentadbir atau mengekalkan anugerah tersebut. Oleh itu, Peserta memahami bahawa keengganan atau penarikan balik persetujuan boleh menjejaskan keupayaan Peserta untuk mengambil bahagian dalam Pelan. Untuk maklumat lanjut mengenai akibat keengganan Peserta untuk memberikan persetujuan atau penarikan balik persetujuan, Peserta memahami bahawa dia boleh menghubungi wakil sumber manusia tempatanny | ||||
Director Notification Obligation. If the Participant is a director of the Company's Malaysian Subsidiary or Affiliate, the Participant is subject to certain notification requirements under the Malaysian Companies Act. Among these requirements is an obligation to notify the Malaysian Subsidiary or Affiliate in writing when the Participant receives or disposes of an interest (e.g., Restricted Stock Units, Shares) in the Company or any related company. Such notifications must be made within 14 days of receiving or disposing of any interest in the Company or any related company.
MEXICO
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Labor Law Acknowledgement. These provisions supplement Section 12 of the Agreement:
Modification. By accepting the Restricted Stock Units, the Participant understands and agrees that any modification of the Plan or the Agreement or its termination shall not constitute a change or impairment of the terms and conditions of employment.
Policy Statement. The Award of Restricted Stock Units the Company is making under the Plan is unilateral and discretionary and, therefore, the Company reserves the absolute right to amend it and discontinue it at any time without any liability.
The Company, with registered offices at EPFL – Quartier de l’Innovation, Daniel Borel Innovation Center, 1015 Lausanne, Switzerland, is solely responsible for the administration of the Plan and participation in the Plan and the acquisition of Shares does not, in any way, establish an employment relationship between the Participant and the Company since the Participant is participating in the Plan on a wholly commercial basis and the sole employer is Logitech Servicios Latinoamérica, S.A. de C.V., and nor does it establish any rights between the Participant and the Employer.
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Plan Document Acknowledgment. By accepting the Award of Restricted Stock Units, the Participant acknowledges that the Participant has received copies of the Plan, has reviewed the Plan and the Agreement in their entirety and fully understands and accepts all provisions of the Plan and the Agreement.
In addition, by signing the Agreement, the Participant further acknowledges that the Participant has read and specifically and expressly approves the terms and conditions in the Nature of Grant, Section 12 of the Agreement, in which the following is clearly described and established: (i) participation in the Plan does not constitute an acquired right; (ii) the Plan and participation in the Plan is offered by the Company on a wholly discretionary basis; (iii) participation in the Plan is voluntary; and (iv) the Company and any Parent, Subsidiary or Affiliate are not responsible for any decrease in the value of the Shares underlying the Restricted Stock Units.
Finally, the Participant hereby declares that the Participant does not reserve any action or right to bring any claim against the Company for any compensation or damages as a result of the Participant’s participation in the Plan and therefore grants a full and broad release to the Employer, the Company and any Parent, Subsidiary or Affiliate with respect to any claim that may arise under the Plan.
Securities Law Information. The Restricted Stock Units and the Shares offered under the Plan have not been registered with the National Register of Securities maintained by the Mexican National Banking and Securities Commission and cannot be offered or sold publicly in Mexico. In addition, the Plan, the Agreement and any other document relating to the Award may not be publicly distributed in Mexico. These materials are addressed to the Participant only because of the Participant’s existing relationship with the Company and these materials should not be reproduced or copied in any form. The offer contained in these materials does not constitute a public offering of securities but rather constitutes a private placement of securities addressed specifically to individuals who are present service providers of the Company’s Subsidiaries or Affiliates in Mexico made in accordance with the provisions of the Mexican Securities Market Law, and any rights under such offering shall not be assigned or transferred.
Spanish Translation
Reconocimiento de la Ley Laboral. Estas disposiciones complementan el apartado 12 del Acuerdo:
Modification. Al aceptar las Unidades de Acción Restringida, el Participante reconoce y acuerda que cualquier modificación del Plan o su terminación no constituye un cambio o desmejora de los términos y condiciones de empleo.
Declaración de Política. El Otorgamiento de Unidades de Acción Restringida de la Compañía en virtud del Plan es unilateral y discrecional y, por lo tanto, la Compañía se reserva el derecho absoluto de modificar y discontinuar el mismo en cualquier tiempo, sin responsabilidad alguna.
La Compañía, con oficinas registradas ubicadas EPFL – Quartier de l’Innovation, Daniel Borel Innovation Center, 1015 Lausanne, Switzerland, es la única responsable de la administración del Plan y de la participación en el mismo y la adquisición de Acciones no establece de forma alguna una relación de trabajo entre el Participante y la Compañía, ya que su participación en el Plan es completamente comercial y el único empleador es Logitech Servicios Latinoamérica, S.A. de C.V., en caso de ser aplicable, así como tampoco establece ningún derecho entre la persona que tenga el derecho a optar y el Empleador.
Reconocimiento del Documento del Plan. Al aceptar el Otorgamiento de las Unidades de Acción Restringida, el Participante reconoce que ha recibido copias del Plan, ha revisado el mismo, al igual que la totalidad del Acuerdo y, que ha entendido y aceptado completamente todas las disposiciones contenidas en el Plan y en el Acuerdo.
Adicionalmente, al firmar el Acuerdo, reconoce que ha leído, y que aprueba específica y expresamente los términos y condiciones contenidos en la Renuncia de Derecho o Reclamo por Compensación, apartado 12 del Acuerdo, en el cual se encuentra claramente descrito y establecido lo siguiente: (i) la participación en el Plan no constituye un derecho adquirido; (ii) el Plan y la participación en el mismo es ofrecida por la Compañía de forma enteramente discrecional; (iii) la participación en el Plan es voluntaria; y (iv) la Compañía, así como su Sociedad controlante, Subsidiaria o Filiales no son responsables por cualquier disminución en el valor de las Acciones en relación a las Unidades de Acción Restringida.
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Finalmente, declara que no se reserva ninguna acción o derecho para interponer una demanda en contra de la Compañía por compensación, daño o perjuicio alguno como resultado de su participación en el Plan y, en consecuencia, otorga el más amplio finiquito al Empleador, así como a la Compañía, a su Sociedad controlante, Subsidiaria o Filiales con respecto a cualquier demanda que pudiera originarse en virtud del Plan.
La Ley de Valores. Las Unidades de Acciones Restringidas y las Acciones ofrecidos bajo el Plan no se han registrado con el Registro Nacional de Valores que se mantiene por la Comisión Nacional Bancaria y de Valores y no pueden ser ofrecidos públicamente en México. Además, el Plan, el Acuerdo y cualquier documento que se relata al Otorgamiento no puede ser distribuido públicamente en México. Esta materiales se dirigen al Participante solo por causa de la relación existente del Participante con la Compañía y estas materia no deben ser reproducidas en cualquier forma. La oferta que se contiene en estas materiales no constituye una oferta pública de valores, sino más bien constituye una colocación privada de valores que se dirige específicamente a individuos quienes están prestando servicios a las Subsidiarias o Filiales de la Compañía en México y se hace conforme con las provisiones de la Ley del Mercado de Valores, y cualquier derechos bajo tal oferta no serán asignados o transferidos.
NEW ZEALAND
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) due to actual retirement upon satisfying the eligibility requirements for retirement under local law in the Participant’s country. If there are no applicable retirement provisions under local law in the Participant’s country, then Retirement shall be determined in accordance with the policies established by the Administrator from time to time.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. WARNING: The Participant is being offered Restricted Stock Units which, upon vesting and settlement in accordance with the terms of the Plan and the Agreement, will be converted into Shares which will give the Participant a stake in the ownership of the Company. The Participant may receive a return if dividends are paid on the Shares. If the Company runs into financial difficulties and is wound up, the Participant will be paid only after all creditors have been paid. The Participant may lose some or all of his or her investment.
New Zealand law normally requires people who offer financial products to give information to investors before they invest. This information is designed to help investors make an informed decision. The usual rules do not apply to this offer because it is made under an employee share scheme. As a result, the Participant may not be given all the information usually required. The Participant will also have fewer other legal protections for this investment.
The Participant should ask questions, read all documents carefully, and seek independent financial advice before committing to the Restricted Stock Units.
The Shares are currently listed on the SIX Swiss Exchange (the "SIX") and the Nasdaq Global Select Market (the Nasdaq"). This means the Participant may be able to sell them on the SIX or the NASDAQ if there are interested buyers. The Participant may get less than the amount invested (or less than the value of the Shares at the time they were received). The price will depend on the demand for the Shares.
For a copy of the Company’s most recent financial statements (and, where applicable, a copy of the auditor’s report on those financial statements) and for information on risk factors impacting the Company’s business that may affect the value of the Shares, the Participant should refer to the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are filed with the U.S. Securities and Exchange Commission and are available online at www.sec.gov, as well as on the Company’s “Investor Relations” website at http://ir.logitech.com/investor-relations/default.aspx.
RUSSIA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
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“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Non-Russian Transaction. The Participant understands that the Restricted Stock Units shall be valid and this Agreement shall be concluded and become effective only when the Agreement is received by the Company in Switzerland. Upon vesting of the Restricted Stock Units, any Shares to be issued to the Participant shall be delivered to the Participant through a bank or brokerage account in Switzerland.
Securities Law Information. This Appendix, the Agreement, the Plan and all other materials that the Participant may receive regarding participation in the Plan do not constitute advertising or an offering of securities in Russia. The issuance of securities pursuant to the Plan has not and will not be registered in Russia; hence, the securities described in any Plan-related documents may not be used for offering or public circulation in Russia.
Exchange Control Information. The Participant understands that, under exchange control regulations in Russia, he or she may be required to repatriate certain funds to the Participant’s bank account in Russia prior to using those funds for any purpose, including reinvestment. If the repatriation requirements apply, such funds must be initially credited to the Participant through a foreign currency account at an authorized bank in Russia. After the funds are initially received in Russia, they may be further remitted to foreign banks in accordance with Russian exchange control laws. The Participant should consult with his or her personal legal advisor to determine whether the repatriation requirements apply and to ensure compliance with applicable exchange control requirements. The Participant should be aware that exchange control requirements are subject to frequent change in Russia, and the Participant should consult with a personal legal advisor to ensure compliance with all applicable exchange control requirements.
SINGAPORE
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. The grant of the Restricted Stock Units is being made pursuant to the “Qualifying Person” exemption” under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Participant should note that the Restricted Stock Units are subject to section 257 of the SFA and the Participant will not be able to make (i) any subsequent sale of the Shares in Singapore or (ii) any offer of such subsequent sale of the Shares subject to the Restricted Stock Units in Singapore, unless such sale or offer is made (i) after six (6) months from the Grant Date or (ii) pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.
Chief Executive Officer and Director Notification Obligation. If the Participant is the chief executive officer (“CEO”) or a director (including an associate director or shadow director) of a Subsidiary or Affiliate of the Company in Singapore, the Participant is subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Singaporean Subsidiary or Affiliate in writing when the Participant receives or disposes of an interest (e.g., Restricted Stock Units, Shares) in the Company or any Subsidiary or Affiliate. These notifications must be made within two days of receiving or disposing of any interest in the Company or any Subsidiary or Affiliate. In addition, a notification must be made of
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the Participant’s interests in the Company or any Subsidiary or Affiliate within two days of becoming the CEO or a director.
SOUTH AFRICA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Responsibility for Taxes. The following provision supplements Section 8 of the Agreement:
By accepting the Restricted Stock Units, the Participant agrees that, immediately upon vesting and settlement of the Restricted Stock Units, the Participant will notify the Employer of the amount of any gain realized. If the Participant fails to advise the Employer of the gain realized upon vesting and settlement and the Employer is subject to penalties or interest as a result of not being able to withhold Tax-Related Items, the Employer may recover any such penalty or interest amounts from the Participant. In addition, if the Participant fails to notify the Employer of the amount of any gain realized upon vesting and settlement, the Participant may be liable for a fine.
SPAIN
Nature of Grant. The following provision supplements Section 12 of the Agreement:
By accepting the Award, the Participant consents to participation in the Plan and acknowledges that the Participant has received a copy of the Plan.
The Participant understands that the Company has unilaterally, gratuitously and in its sole discretion decided to grant Restricted Stock Units under the Plan to individuals who may be Service Providers throughout the world. The decision is limited and entered into based upon the express assumption and condition that any Restricted Stock Units will not economically or otherwise bind the Company or any Parent, Subsidiary or Affiliate, including the Employer, on an ongoing basis. Consequently, the Participant understands that the grant is made on the assumption and condition that the Restricted Stock Units shall not become part of any employment contract (whether with the Company or any Parent, Subsidiary or Affiliate, including the Employer) and shall not be considered a mandatory benefit, salary for any purpose (including severance compensation) or any other right whatsoever. The Participant also understands that this grant would not be made but for the assumptions and conditions set forth above; thus, the Participant understands, acknowledges and freely accepts that, should any or all of the assumptions be mistaken or any of the conditions not be met for any reason, the grant of the Restricted Stock Units and any right to the underlying Shares shall be null and void.
The Participant understands and agrees that, as a condition of the grant of the Restricted Stock Units, the termination of the Participant’s Service for any reason (including the reasons listed below) will automatically result in the loss of the Restricted Stock Units to the extent the Restricted Stock Units have not vested as of date the Participant has ceased active performance of service, as described in Section 6 of the Agreement. In particular, the Participant understands and agrees that any unvested Restricted Stock Units as of the date the Participant has ceased active Service will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of the termination of the Participant’s Service by reason of, but not limited to, resignation, retirement, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without cause, individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985. The Participant acknowledges that he or she has read and specifically accepts the conditions referred to in Section 5 of the Agreement.
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Securities Law Information. No “offer to the public,” as defined under Spanish Law, has taken place or will take place in the Spanish territory in connection with the Restricted Stock Units. The Plan, the Agreement (including this Appendix) and any other documents evidencing the grant of the Restricted Stock Units have not been, nor will they be, registered with the Comisión Nacional del Mercado de Valores (the Spanish securities regulator), and none of those documents constitutes a public offering prospectus.
SWITZERLAND
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. The grant of the Restricted Stock Units does not qualify as the provision of financial services in Switzerland, nor is it either subject to registration in Switzerland or the requirement to publish a prospectus under the Swiss Financial Services Act.
This Agreement does not constitute individual investment advice and does not release the Participant from making his or her own assessment with respect to an investment. The Participant must not take any investment decisions solely based on the information contained in this Agreement and shall, if necessary or appropriate in consultation with external advisers, assess the information based on the Participant’s individual circumstances in terms of suitability and appropriateness and any legal, regulatory, tax, accounting or other consequences such an investment may have.
TAIWAN
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. The offer of participation in the Plan is available only for Service Providers. The offer of participation in the Plan is not a public offer of securities by a Taiwanese company.
THAILAND
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
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Exchange Control Information. The Participant understands that he or she must repatriate any proceeds from the sale of Shares to Thailand immediately upon receipt if the amount of such funds is equal to or greater than US$1,000,000 in a single transaction. In this case, the Participant must convert such funds to Thai Baht or deposit the funds in a foreign exchange account with a commercial bank in Thailand within 360 days of repatriation and provide details of the transaction (i.e., identification information and purpose of the transaction) to the receiving bank.
TURKEY
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. Under Turkish law, the Participant is not permitted to sell any Shares acquired under the Plan in Turkey. The Shares are currently listed on the SIX Swiss Exchange and the Nasdaq Global Select Market, which are located outside Turkey, and the Shares may be sold through one of these exchanges.
UNITED ARAB EMIRATES
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Nature of Grant. The following provision supplements Section 12 of the Agreement:
The Participant acknowledges that the Restricted Stock Units and related benefits do not constitute a component of the Participant’s “wages” for any legal purpose. Therefore, the Restricted Stock Units and related benefits will not be included and/or considered for purposes of calculating any and all labor benefits, such as social insurance contributions and/or any other labor-related amounts which may be payable.
Securities Law Information. The Restricted Stock Units under the Plan are granted only to select Service Providers of the Company or a Parent, Subsidiary or Affiliate, and are in the nature of providing employee equity incentives in the United Arab Emirates. The Plan and the Agreement are intended for distribution only to such Service Providers and must not be delivered to, or relied on by, any other person. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If the Participant does not understand the contents of the Plan and the Agreement, he or she should consult an authorized financial adviser. The Emirates Securities and Commodities Authority has no responsibility for reviewing or verifying any documents in connection with the Plan. Neither the Ministry of Economy nor the Dubai Department of Economic Development have approved the Plan or the Agreement nor taken steps to verify the information set out therein, and have no responsibility for such documents.
UNITED KINGDOM (“U.K.”)
Settlement of Vested Restricted Stock Units. The following provision supplements Section 3 of the Agreement:
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Notwithstanding any discretion set forth in Section 11(e) of the Plan, settlement of vested Restricted Stock Units granted to Participants residing in the U.K. will be made in the form of Shares only.
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) due to actual retirement upon satisfying the eligibility requirements for retirement under local law in the Participant’s country. If there are no applicable retirement provisions under local law in the Participant’s country, then Retirement shall be determined in accordance with the policies established by the Administrator from time to time.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Responsibility for Taxes. The following provision supplements Section 8 of the Agreement:
Without limitation to Section 8 of the Agreement, the Participant agrees that he or she is liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items, as and when requested by the Company or, if different, the Employer or by Her Majesty’s Revenue & Customs (“HRMC”) (or any other tax authority or any other relevant authority). The Participant also agrees to indemnify and keep indemnified the Company and, if different, the Employer against any Tax-Related Items that they are required to pay or withhold on the Participant’s behalf or have paid or will pay to HMRC (or any other tax authority or any other relevant authority).
Notwithstanding the foregoing, if the Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), the amount of any uncollected income tax may constitute a benefit to the Participant on which additional income tax and national insurance contributions (“NICs”) may be payable. The Participant will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for paying the Company or the Employer (as appropriate) the value of any employee NICs due on this additional benefit.
Joint Election for Transfer of Secondary Class 1 National Insurance Contributions to the Participant. The Participant agrees to accept any liability for secondary Class 1 NICs (the “Employer’s NICs”) which may be payable by the Company and/or the Employer in connection with the Restricted Stock Units and any event giving rise to Tax-Related Items. Without limitation to the above, the Participant agrees to execute a joint election with the Company, the form of such joint election being formally approved by HMRC (the “Joint Election”), and any other consent or elections required to accomplish the transfer of the Employer’s NICs to the Participant. The Participant further agrees to execute such other joint elections as may be required between the Participant and any successor to the Company and/or the Employer. The Participant further agrees that the Company and/or the Employer may collect the Employer’s NICs by any of the means set forth in Section 8 of the Agreement. The Participant agrees to enter into a Joint Election prior to the vesting of any Restricted Stock Units or any other event giving rise to Tax-Related Items. If the Participant fails to do so, he or she may not be entitled to vest in the Restricted Stock Units or to receive any other benefit pursuant to the Restricted Stock Units, without any liability to the Company or the Employer.
UNITED STATES (“U.S.”)
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Data Privacy. This provision supplements Section 13 of the Agreement:
The Company does not sell participants’ personal information or share it for cross‐context behavioral advertising. The Company’s online California Consumer Privacy Act Privacy Policy can be found at https://drive.google.com/
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drive/u/0/folders/1_tHuHEJmIIGhMk0bR1J3SoRaiqwaRJXa. If the Participant has a visual disability, the Participant should contact his or her local human resources representative for accommodations.
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Exhibit 10.2
LOGITECH INTERNATIONAL S.A. 2006 STOCK INCENTIVE PLAN
PERFORMANCE SHARE UNIT AGREEMENT
This Performance Share Unit Agreement, including any country-specific terms and conditions set forth in the attached Appendix (collectively, the “Agreement”), is between Logitech International S.A., a Swiss company (the “Company”), and the Participant named below and is made pursuant to the Logitech International S.A. 2006 Stock Incentive Plan (the “Plan”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning given to them in the Plan. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms of the Plan shall prevail.
In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:
1.Grant of Restricted Stock Units. The Company hereby grants to the Participant named below the number of Restricted Stock Units corresponding to Shares specified below, subject to the terms and conditions of this Agreement and of the Plan, which is incorporated in this Agreement by reference:
Participant’s Name: [NAME]
Grant Date: [GRANT DATE]
Performance Period: From: [START DATE]
To: [END DATE]
Total Number of Restricted Stock [UNITS]
Units granted (subject to the actual
attainment level of the performance goals
in accordance with Section 2 below):
Vesting Date: [VESTING DATE]
2.Vesting and Performance Goals.
a.Vesting. As soon as reasonably practicable after the close of the Performance Period and no later than the Vesting Date, the Administrator shall determine the vested percentage of the total number of Restricted Stock Units subject to this Award. Except as otherwise provided in Sections 5(b) or 5(c) hereof and in Addendum A, which is attached to this Agreement, the vested percentage of the total number of Restricted Stock Units subject to this Award, as determined by the Administrator, shall vest on the Vesting Date, subject to the Participant’s continuous Service from the Grant Date through the date that is designated as the Vesting Date in Section 1 without giving effect to any delay that is contemplated in the following sentence. The “Vesting Date” for purposes of this Agreement shall mean the date set forth above in Section 1 or such later date on which the Administrator determines the vested percentage pursuant to this Section 2 to the extent the Administrator delays its determination in consideration of an adjustment that is or may be made to a performance criteria to be reported in a subsequent public report that is filed or furnished to the SEC, provided that if the Restricted Stock Units are considered an item of Deferred Compensation (as defined in Section 24(a)), as determined by the Administrator in its sole discretion, the Administrator shall not delay its determination if such delay would result in a violation under Code Section 409A. The number of Restricted Stock Units that are determined to vest pursuant to this Section 2 shall be rounded down to the nearest whole number of Restricted Stock Units to the extent the vesting results in a fractional number.
The vested percentage shall be determined in accordance with a formula that is equal to [INSERT PERFORMANCE-BASED VESTING CRITERIA].
b.Performance Goals. [INSERT PERFORMANCE-BASED VESTING CRITERIA].
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c.Administrator Determination. The Administrator shall determine the level of attainment of the performance goals set forth in this Section 2 and its determination shall be conclusive and binding on the Participant and the Company.
3.Settlement of Vested Restricted Stock Units. The Participant’s vested Restricted Stock Units shall be settled promptly after the Vesting Date pursuant to Section 2 or accelerated vesting event pursuant to Section 5(b) [FOR MEMBERS OF THE GROUP MANAGEMENT TEAM AND LEADERSHIP TEAM ONLY: or Addendum A], provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless and until the Participant has satisfied any applicable tax and/or other obligations pursuant to Section 8 below and such issuance otherwise complies with Applicable Laws. The foregoing notwithstanding, Restricted Stock Units shall be settled within sixty (60) days after the applicable Vesting Date or accelerated vesting event, subject to Section 24 hereof. At the time of settlement, the Participant shall receive one Share for each vested Restricted Stock Unit, net of applicable withholdings. The Company in its discretion may designate a brokerage firm to assist with settlement of Restricted Stock Units, or as the sole means for settlement of Restricted Stock Units.
4.Nature of Restricted Stock Units. The Restricted Stock Units are mere bookkeeping entries and represent only an unfunded and unsecured obligation of the Company to issue or deliver Shares on a future date. As a holder of Restricted Stock Units, the Participant has no rights other than the rights of a general creditor of the Company. The Restricted Stock Units carry neither voting rights nor rights to cash or other dividends. The Participant has no rights as a shareholder of the Company by virtue of the Restricted Stock Units unless and until the Restricted Stock Units are settled by issuing or delivering Shares.
5.Termination of Service.
a.Except as otherwise provided in Sections 5(b) or 5(c) [FOR MEMBERS OF THE GROUP MANAGEMENT TEAM AND LEADERSHIP TEAM ONLY: or Section (c) of Addendum A], if the Participant’s Service terminates for any reason, whether or not such termination is later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any, all unvested Restricted Stock Units shall be forfeited effective on the date the Participant’s Service terminates. The Participant’s date of termination of Service shall mean the date upon which the Participant’s active Service terminates, regardless of any notice period or period in lieu of notice of termination of employment or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of a written employment agreement, if any. The Administrator shall have the exclusive discretion to determine when the Participant’s active Service terminates for purposes of this Award (i.e., when the Participant has ceased active performance of services for purposes of vesting in this Award), including whether a leave of absence constitutes a termination of Service for purposes of this Award.
b.If the Participant’s Service terminates by reason of death or Disability, any unvested Restricted Stock Units shall vest immediately as of the date of such termination of Service with respect to a number of Restricted Stock Units equal to the product of (A) the Total Number of Restricted Stock Units, multiplied by (B) the Proration Factor (the “Proration Factor”), rounded down to the nearest whole number of Restricted Stock Units. The Proration Factor for purposes of this Agreement shall mean a fraction, the numerator of which shall be the number of days of Service completed by the Participant during the Performance Period and the denominator of which shall be the total number of days contained in the Performance Period.
c.If the Participant’s Service terminates by reason of the Participant’s Retirement (as defined in the attached Appendix), the Participant shall continue to be eligible to vest (without regard to the requirement that the Participant continue in Service through the Vesting Date designated in Section 1 above) in a number of Restricted Stock Units equal to the product of (i) (A) in the event of a Retirement prior to a Change in Control Date (as defined in Addendum A), the product of (1) the vested percentage determined in accordance with Section 2 above, multiplied by (2) the Total Number of Restricted Stock Units, or (B) in the event of a Retirement on or following a Change in Control Date, the Time-Based RSUs (as determined in Addendum A), multiplied by (ii) the Proration Factor, rounded down to the nearest whole number of Restricted Stock Units.
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6.Recovery of Erroneously Awarded Compensation. If the Participant is now or is hereafter subject to the Executive Clawback Policy adopted by the Company’s Board of Directors, or any committee thereof, or any policy providing for the recovery of Awards, Shares, proceeds, or payments to Participant in the event of fraud or as required by Applicable Laws or governance considerations or in other similar circumstances, then this Award, and any Shares or other payments resulting from settlement of the Restricted Stock Units or proceeds therefrom, are subject to potential recovery by the Company or the Participant’s employer (the “Employer”) under the circumstances set out in the Executive Clawback Policy or such other similar policy as in effect from time to time.
7.Suspension or Cancellation for Misconduct. If at any time (including after vesting but before settlement) the Administrator reasonably believes that the Participant has committed an act of misconduct as described in this Section 7, the Administrator may suspend the vesting or settlement of Restricted Stock Units, pending a determination of whether an act of misconduct has been committed. If the Administrator determines that the Participant has committed an act of embezzlement, fraud or breach of fiduciary duty, or if the Participant makes an unauthorized disclosure of any trade secret or confidential information of the Company or any of its Subsidiaries or Affiliates, or induces any customer to breach a contract with the Company or any of its Subsidiaries or Affiliates, then this Agreement shall terminate immediately and cease to be outstanding. Any determination by the Administrator with respect to the foregoing shall be final, conclusive and binding on all interested parties. If the Participant holds the title of Vice President or above, the determination of the Administrator shall be subject to the approval of the Company’s Board of Directors.
8.Responsibility for Taxes.
a.Regardless of any action the Company or the Employer takes with respect to any or all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including, but not limited to, the grant, vesting or settlement of the Restricted Stock Units, the issuance of Shares upon settlement of the Restricted Stock Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any dividend equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the Award or any aspect of the Restricted Stock Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
b.Prior to any relevant taxable or tax withholding event, as applicable, the Participant will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable obligations with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from the Participant’s wages or other cash compensation paid to the Participant by the Company and/or the Employer; or (ii) withholding from proceeds of the sale of Shares acquired upon settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization); (iii) any other method of withholding determined by the Company and, to the extent required by Applicable Laws or the Plan, approved by the Administrator; or (iv) withholding in Shares to be issued upon vesting of the Restricted Stock Units, provided, however, that if the Participant is a Section 16 officer of the Company under the Exchange Act, then the Company will withhold in Shares upon the relevant taxable or tax withholding event (other than U.S. Federal Insurance Contribution Act taxes or other Tax-Related Items that become payable in a year prior to the year in which Shares are issued upon settlement of the Restricted Stock Units), as applicable, unless the use of such withholding method is problematic
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under applicable tax or securities law or has materially adverse accounting consequences, in which case, any applicable obligations for Tax-Related Items may be satisfied by one or a combination of methods (i) - (iii) hereof.
c.The Company may withhold or account for Tax-Related Items by considering statutory or other withholding rates, including minimum or maximum rates applicable in the jurisdictions applicable to the Participant. In the event of over-withholding, the Participant may receive a refund from the Company of any over-withheld amount in cash (with no entitlement to the equivalent in Shares), or if not refunded by the Company, the Participant must seek a refund from the local tax authorities to the extent the Participant wishes to recover the over-withheld amount in the form of a refund. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant will be deemed to have been issued the full number of Shares subject to the vested Restricted Stock Units, notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.
d.The Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
9.Compliance with Applicable Laws; No Company Liability. No Shares shall be issued or delivered pursuant to the settlement of the Restricted Stock Units unless such issuance or delivery complies with Applicable Laws. The Company shall not be liable to the Participant or other persons as to (a) the non-issuance or delivery of Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance or delivery of any Shares hereunder and (b) any tax consequence expected, but not realized, by the Participant or other person due to the receipt, vesting or settlement of the Restricted Stock Units.
10.Non-Transferability of Restricted Stock Units. The Restricted Stock Units and this Agreement may not be transferred in any manner otherwise than by will, by the laws of descent or distribution or, if the Company permits, by a written beneficiary designation. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, beneficiaries, successors and assigns of the Participant.
11.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant should consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
12.Nature of Grant. In accepting the grant, the Participant acknowledges, understands and agrees that:
a.the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;
b.the grant of the Restricted Stock Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted in the past;
c.all decisions with respect to future Restricted Stock Units grants, if any, will be at the sole discretion of the Company;
d.the Participant’s participation in the Plan shall not create a right to further Service with the Employer and shall not interfere with the ability of the Employer to terminate the Participant’s Service at any time;
e.the Participant is voluntarily participating in the Plan;
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f.the Restricted Stock Units and the Shares subject to the Restricted Stock Units are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which are outside the scope of the Participant’s employment contract, if any;
g.the Restricted Stock Units and the Shares subject to the Restricted Stock Units are not intended to replace any pension rights or compensation;
h.the Restricted Stock Units and the Shares subject to the Restricted Stock Units are not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any [FOR PARTICIPANTS OTHER THAN MEMBERS OF THE GROUP MANAGEMENT TEAM ONLY: severance,] resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
i.the grant of the Restricted Stock Units and the Participant’s participation in the Plan will not be interpreted to form an employment contract or relationship with the Company or any Subsidiary or Affiliate;
j.the future value of the underlying Shares is unknown and cannot be predicted with certainty;
k.no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resulting from termination of the Participant’s Service by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any);
l.unless otherwise provided in the Plan or by the Company in its discretion, the Restricted Stock Units and the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares of the Company;
m.unless otherwise agreed with the Company, the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income and value of the same, are not granted as consideration for, or in connection with, the Service the Participant may provide as a director of any Subsidiary or Affiliate; and
n.neither the Company, the Employer nor any Subsidiary or Affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar or the Swiss Franc, as applicable, that may affect the value of the Restricted Stock Units or of any amounts due to the Participant pursuant to the settlement of the Restricted Stock Units or the subsequent sale of any Shares acquired upon settlement.
13.Data Privacy.
a.Data Collection and Usage. The Company or any of its Subsidiaries or Affiliates, including the Employer, may collect, process and use certain personal information about the Participant, including, but not limited to, the Participant’s name, home address, telephone number(s), email address(es), date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Restricted Stock Units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the purposes of implementing, administering and managing the Plan. The legal basis, where required, for the processing of Data is the Participant’s consent.
b.Stock Plan Administration Service Providers. The Company transfers Data to Equatex AG and Equatex US Inc. and their respective affiliates (the “Plan Broker”) and to other third-party service providers, which are assisting the Company with the implementation, administration and
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management of the Plan. In the future, the Company may select different service providers and share Data with such other providers serving in a similar manner. The Participant may be asked to agree on separate terms and data processing practices with the service providers, with such agreements being a condition to the ability to participate in the Plan.
c.International Data Transfers. The Company and its service providers are based in Switzerland, the United States, the United Kingdom and/or Germany, and the Participant’s country or jurisdiction may have different data privacy laws and protections than these countries. The Company's legal basis, where required, for the transfer of Data is the Participant’s consent.
d.Data Retention. The Company will hold and use the Data only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan, or as required to comply with legal or regulatory obligations, including under tax and security laws.
e.Voluntariness and Consequences of Consent Denial or Withdrawal. Participation in the Plan is voluntary and the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the Participant’s consent, the Participant’s salary from or employment and career with the Employer will not be affected; the only consequence of refusing or withdrawing the Participant’s consent is that the Company would not be able to grant Restricted Stock Units or other awards to the Participant or administer or maintain such awards, and the Participant would no longer be able to participate in the Plan and would forfeit opportunities associated with the Plan.
f.Data Subject Rights. The Participant understands that data subject rights regarding the processing of Data vary depending on applicable law and that, depending on where the Participant is based and subject to the conditions set out in such applicable law, the Participant may have, without limitation, the right to (i) inquire whether and what kind of Data the Company holds about the Participant and how it is processed, and to access or request copies of such Data in a simplified format or by means of a complete declaration, (ii) request the correction or supplementation of Data about the Participant that is inaccurate, incomplete or out-of-date in light of the purposes underlying the processing, (iii) obtain the anonymization, blockage or erasure of Data no longer necessary for the purposes underlying the processing, (iv) request the Company to restrict the processing of the Participant’s Data in certain situations where the Participant feels its processing is inappropriate, (v) object to or oppose, in certain circumstances, the processing of Data for legitimate interests, (vi) request information about the institutions with which Data is shared, and (vii) request portability of the Participant’s Data that the Participant has actively or passively provided to the Company or the Employer (which does not include data derived or inferred from the collected data), where the processing of such Data is based on consent or the Participant’s employment and is carried out by automated means. In case of concerns, the Participant understands that he or she may also have the right to lodge a complaint with the competent local data protection authority. Further, to receive clarification of, or to exercise any of, the Participant’s rights, the Participant understands that he or she should contact his or her local human resources representative.
By accepting the grant and indicating consent by signing this Agreement below or via the Company’s online acceptance procedure, the Participant is declaring that he or she agrees with the data processing practices described herein and expressly consents to the collection, processing and use of Data by the Company and the transfer of Data to the recipients mentioned above, including recipients located in countries which do not adduce an adequate level of protection from a European, Brazilian, or other non-U.S. data protection law perspective, for the purposes described above.
14.Exchange Control and Foreign Asset/Account Reporting Acknowledgement. Local foreign exchange laws may affect the grant of the Restricted Stock Units, the receipt of Shares upon settlement of the Restricted Stock Units, the sale of Shares received upon settlement of the Restricted Stock Units and/or the receipt of dividends or dividend equivalents (if any). Such laws may affect the Participant’s ability to hold funds outside the Participant’s country and may require the repatriation of any cash, dividends or dividend equivalents received in connection with the Restricted Stock Units. The Participant may also be subject to foreign asset/account reporting requirements as a result of the acquisition, holding or transfer of Shares or
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cash resulting from participation in the Plan, to or from a brokerage/bank account or entity located outside the Participant’s country. The applicable laws of the Participant’s country may require that he or she report such assets, accounts, the balances therein, or the transactions related thereto to the applicable authorities in such country. The Participant is responsible for being aware of and satisfying any exchange control and foreign asset/account reporting requirements that may be necessary in connection with the Restricted Stock Units. Neither the Company nor any of its Subsidiaries or Affiliates will be responsible for such requirements or liable for the failure on the Participant’s part to know and abide by the requirements that are the Participant’s responsibility. The Participant should consult with his or her own personal legal advisers to ensure compliance with local laws.
15.Adjustments Upon Changes in Capitalization. In the event of a declaration of a stock dividend, a stock split, combination or reclassification of shares, extraordinary dividend of cash and/or assets, recapitalization, reorganization or any similar event affecting the Shares or other securities of the Company, the Administrator shall equitably adjust the number and kind of Restricted Stock Units or other securities which are subject to this Agreement, in order to reflect such change and thereby preclude a dilution or enlargement of benefits under this Agreement.
16.Entire Agreement; Governing Law. The Plan and this Agreement (including Addendum A) constitute the entire agreement of the parties with respect to the subject matter of this Agreement and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter of this Agreement. This Agreement is governed by the internal substantive laws, but not the choice of law rules of Switzerland (the Company’s jurisdiction of organization).
17.Language. If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
18.Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
19.Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
20.Appendix. The Restricted Stock Units and any Shares subject to the Restricted Stock Units shall be subject to any special terms and conditions set forth in the Appendix to this Agreement for the Participant’s country. Moreover, if the Participant relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.
21.Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the Restricted Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
22.Permitted Modifications to Comply with Laws. The Company reserves the right to unilaterally amend this Agreement, prior to a Change in Control (as defined in Addendum A), solely to facilitate compliance with existing or adopted applicable ordinances, laws, rules or regulations (“Laws”) (even if such Laws have not yet taken effect), including but not limited to any Laws related to the Minder initiative in Switzerland.
23.Insider Trading Restrictions/Market Abuse Laws. Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, including, but not limited to, Switzerland, the United States and Participant’s country, which may affect Participant’s ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., Restricted Stock Units) or rights linked to the value of Shares under the Plan during such times as Participant is considered to have “inside information” regarding the Company
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(as defined by the laws in the applicable jurisdictions). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Neither the Company nor any of its Subsidiaries or Affiliates will be responsible for such restrictions or liable for the failure on the Participant’s part to know and abide by such restrictions. The Participant should consult with his or her own personal legal advisers to ensure compliance with local laws.
24.Internal Revenue Code Section 409A.
a.Notwithstanding anything in this Agreement, for purposes of complying with Code Section 409A, if the Restricted Stock Units are considered an item of non-qualified deferred compensation subject to Code Section 409A (“Deferred Compensation”), the vested Restricted Stock Units shall be settled within sixty (60) days after the earlier of (i) the applicable Vesting Date, (ii) the Participant’s “separation from service” within the meaning of Code Section 409A in connection with an accelerated vesting event pursuant to Section 5(b) (provided that the Participant’s Disability must constitute a “disability” within the meaning of Code Section 409A and the U.S. Treasury Regulations) [FOR MEMBERS OF THE GROUP MANAGEMENT TEAM AND LEADERSHIP TEAM ONLY: and, if applicable, Section (c) of Addendum A (only to the extent the Change in Control constitutes a “change in control event” within the meaning of Code Section 409A and the U.S. Treasury Regulations)], and (iii) the Participant’s death. In addition, in the event of Restricted Stock Units that are Deferred Compensation and settled on a date that is by reference to the Participant’s separation from service, if the Participant is a “specified employee” within the meaning of Code Section 409A on the date the Participant experiences a separation from service, then the Restricted Stock Units shall be settled on the first business day of the seventh month following the Participant’s separation from service, or, if earlier, on the date of the Participant’s death, solely to the extent such delayed payment is required in order to avoid a prohibited distribution under Code Section 409A.
b.The Restricted Stock Units are intended to be exempt from or compliant with Code Section 409A and the U.S. Treasury Regulations relating thereto so as not to subject the Participant to the payment of additional taxes and interest under Code Section 409A or other adverse tax consequences. In furtherance of this intent, the provisions of this Agreement will be interpreted, operated, and administered in a manner consistent with these intentions. The Administrator may modify the terms of this Agreement and/or the Plan without the consent of the Participant, in the manner that the Administrator may determine to be necessary or advisable in order to comply with Code Section 409A or to mitigate any additional tax, interest and/or penalties or other adverse tax consequences that may apply under Code Section 409A if compliance is not practical. This Section 24(b) does not create an obligation on the part of the Company to modify the terms of this Agreement or the Plan and does not guarantee that the Restricted Stock Units or the delivery of Shares upon settlement of the Restricted Stock Units will not be subject to taxes, interest and penalties or any other adverse tax consequences under Code Section 409A. Nothing in this Agreement shall provide a basis for any person to take any action against the Company or any of its Subsidiaries or Affiliates based on matters covered by Code Section 409A, including the tax treatment of any amounts paid under this Agreement, and neither the Company nor any of its Subsidiaries or Affiliates will have any liability under any circumstances to the Participant or any other party if the Restricted Stock Units, the delivery of Shares upon vesting/settlement of the Restricted Stock Units or other payment or tax event hereunder that is intended to be exempt from, or compliant with, Code Section 409A, is not so exempt or compliant or for any action taken by the Administrator with respect thereto.
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By the Participant’s agreement to this Agreement, the Participant agrees that the Restricted Stock Units are granted under and governed by the terms and conditions of the Plan and this Agreement. The Participant has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the Plan and Agreement. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions relating to the Plan and Agreement.
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In order to agree to this Agreement, please click “I Agree” below.
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LOGITECH INTERNATIONAL S.A. 2006 STOCK INCENTIVE PLAN
ADDENDUM A
Change in Control Provisions
The following provisions shall be incorporated into the Performance Share Unit Agreement to which this Addendum A is attached (the “Agreement”). To the extent any capitalized terms used in this Addendum A are not defined, they shall have the meanings given to them in the Agreement or the Plan, as applicable.
a.Change in Control. Notwithstanding the provisions of the Agreement, if a Change in Control occurs prior to the end of the Performance Period and the Participant’s Service has not terminated prior to the consummation of the Change in Control (the “Change in Control Date”), then immediately prior to the Change in Control Date, the Participant’s outstanding Restricted Stock Units will be automatically converted into a number of time-based Restricted Stock Units (the “Time-Based RSUs”), as determined in Section (b) below, that shall vest, subject to the Participant’s continuous Service from the Grant Date through the Vesting Date set forth in Section 1 of the Agreement, except as otherwise provided in Sections 5(b) or 5(c) of the Agreement [FOR MEMBERS OF THE GROUP MANAGEMENT TEAM AND LEADERSHIP TEAM ONLY: and in this Addendum A].
b.Determination of Time-Based RSUs. The number of Time-Based RSUs that shall be eligible to vest in accordance with Section (a) above, shall equal the product of (i) the vested percentage determined in accordance with Section 2 of the Agreement as of the Change in Control Date, with any adjustments and modifications to the components comprising the performance goals and/or to the determination of the attainment of actual performance deemed appropriate by the Administrator, in its sole discretion, in light of the truncated Performance Period, multiplied by (ii) the Total Number of Restricted Stock Units.
[FOR MEMBERS OF THE GROUP MANAGEMENT TEAM AND LEADERSHIP TEAM ONLY:
c.Vesting Acceleration Upon an Involuntary Termination. In the event of a Change in Control in which the successor company or an affiliate thereof assumes, substitutes or otherwise replaces the Time-Based RSUs, if the Participant experiences an Involuntary Termination within 12 months after a Change in Control Date, any unvested Time-Based RSUs shall vest immediately as of the date of such Involuntary Termination with respect to a number of Time-Based RSUs equal to the product of (i) the Time-Based RSUs, multiplied by (B) the Proration Factor, rounded down to the nearest whole number of Restricted Stock Units.]
d.Settlement. Time-Based RSUs that vest pursuant to this Addendum A shall be settled in accordance with Section 3 and, if applicable, Section 24 of the Agreement.
e.Definitions. The following definitions shall apply for purposes of this Addendum A:
[FOR MEMBERS OF THE GROUP MANAGEMENT TEAM AND LEADERSHIP TEAM ONLY:
i.Base Salary. The term “Base Salary” shall mean the greater of (i) the Participant’s annual base salary, as in effect immediately prior to the Participant’s termination of employment with the Company or Employer, or (ii) the Participant’s annual base salary as in effect on the effective date of the [FOR MEMBERS OF THE LEADERSHIP TEAM ONLY: change in control agreement between the Company or Employer and the Participant (the “COC Severance Agreement”)] [FOR MEMBERS OF THE GROUP MANAGEMENT TEAM ONLY: Participant’s written employment agreement, if any].
ii.Cause. The term “Cause” shall mean the Participant’s: (A) willful dishonesty or fraud with respect to the business affairs of the Company and its direct and indirect subsidiaries (collectively, “Logitech”); (B) intentional falsification of any employment or Logitech records; (C) misappropriation of or intentional damage to the business or property of Logitech, including (but not limited to) the improper use or disclosure of the confidential or proprietary information of Logitech (excluding misappropriation or damage that results in a loss of little or no consequence to the business or property of Logitech); (D) conviction (including any plea of guilty or nolo contendere) of a felony that, in the judgment of the Board (excluding the Participant, as applicable),
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materially impairs the Participant's ability to perform his or her duties for Logitech or adversely affects Logitech’s standing in the community or reputation; (E) willful misconduct that is injurious to the reputation or business of Logitech; or (F) refusal or willful failure to perform any assigned duties reasonably expected of a person in his or her position (excluding during any statutory leaves of absence as permitted by law, and with reasonable accommodations for any disability required by law) after receipt of written notice by the Chief Executive Officer or Executive Chairman of the Company or Employer of such refusal or failure and a reasonable opportunity to cure (as described below). The Participant shall be given written notice by the Employer of its intention to terminate the Participant for Cause, which notice (a) shall state with particularity the grounds on which the proposed termination for Cause is based and (b) shall be given no later than (i) ninety (90) days after the occurrence of the event giving rise to such grounds (or ninety (90) days after such later date as represents the actual knowledge by an executive officer of the Company or Employer (excluding the Participant) of such grounds) or (ii) such longer or shorter period imposed by applicable laws. The termination shall be effective upon the Participant's receipt of such notice; provided, however, that with respect to subsection (F) of this Section (e)(ii), the Participant shall have thirty (30) days (or such longer or shorter period imposed by applicable laws) after receiving such notice in which to cure any refusal or willful failure to perform (to the extent such cure is possible). If the Participant fails to cure such failure to perform within such thirty-day (30-day) or legally applicable period, the Participant’s employment with the Employer (and Service to the Company) shall thereupon be terminated for Cause.]
iii.Change in Control. The term “Change in Control” shall mean the occurrence of any of the following events:
A.A merger or consolidation of the Company with any other entity, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;
B.The complete liquidation of the Company;
C.The sale or other disposition by the Company of all or substantially all of the Company’s assets; or
D.Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becoming the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities.
[FOR MEMBERS OF THE GROUP MANAGEMENT TEAM AND LEADERSHIP TEAM ONLY:
iv.Good Reason. The term “Good Reason” shall mean: (A) a substantial reduction of the facilities and perquisites (including office space and location) available to the Participant immediately prior to such reduction, without the Participant’s express written consent and without good business reasons; (B) a material reduction of the Participant’s Base Salary; (C) a material reduction in the kind or level of employee benefits to which the Participant is entitled immediately prior to such reduction, with the result that the Participant’s overall benefits package is significantly reduced; (D) the relocation of the Participant to a facility or location more than 30 miles from his or her current location, without the Participant’s express written consent; (E) the Company’s failure to obtain the assumption by any successor of the Company of the [FOR MEMBERS OF THE LEADERSHIP TEAM ONLY: COC Severance Agreement (to the extent contemplated under such COC Severance Agreement)] [FOR MEMBERS OF THE GROUP MANAGEMENT TEAM ONLY: Participant’s written employment agreement, if any (to the extent contemplated under such employment agreement)]; or (F) a material reduction of the Participant’s duties, position or responsibilities relative to the Participant’s duties, position or responsibilities in effect immediately prior to such reduction, without the Participant’s express written consent. Clause (C) above shall not apply in the
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event of any reduction of the amount of the bonus actually paid but shall apply in the event of a material reduction of the target bonus or bonus opportunity. A condition shall not be considered “Good Reason” unless the Participant gives the Company or Employer (or a successor of the Company or Employer, if applicable) written notice of such condition within 90 days after such condition comes into existence and the Company or Employer (or a successor of the Company or Employer, if applicable) fails to remedy such condition within 30 days after receiving the Participant’s written notice.
v.Involuntary Termination. The term “Involuntary Termination” shall mean that the Participant experiences a Separation from Service caused by (i) a termination by the Company or Employer of the Participant’s employment with the Company or Employer that is not effected for Cause or (ii) a resignation by the Participant of his or her employment with the Company or Employer for Good Reason.
vi.Separation from Service. The term “Separation from Service” shall mean a “separation from service,” as defined in the regulations under Section 409A of the Code.]
[FOR MEMBERS OF THE LEADERSHIP TEAM ONLY:
f.Effect of COC Severance Agreement. This Award shall be subject to the vesting terms set forth in this Agreement, including this Addendum A, which, for the avoidance of any doubt, shall supersede any vesting terms provided for in the COC Severance Agreement.]
g.Effect of Merger. In the event that the Company is a party to a merger, consolidation or reorganization, the Restricted Stock Units subject to this Award shall be subject to Section 16 of the Plan; provided that any action taken pursuant to Section 16 of the Plan shall either (i) preserve the exemption of this Award from Section 409A of the Code or (ii) comply with Section 409A of the Code.
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LOGITECH INTERNATIONAL S.A. 2006 STOCK INCENTIVE PLAN
APPENDIX
ADDITIONAL TERMS AND CONDITIONS OF
PERFORMANCE SHARE UNIT AGREEMENT
This Appendix includes additional terms and conditions that govern the Restricted Stock Units granted to the Participant under the Plan if the Participant resides in one of the countries listed below. Capitalized terms used but not defined in this Appendix shall have the meanings set forth in the Plan and/or the Agreement.
This Appendix also includes information regarding securities law and other issues of which the Participant should be aware with respect to participation in the Plan. The information is based on the securities and other laws in effect in the respective countries as of February 2022. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Appendix as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date at the time that the Restricted Stock Units vest or the Participant sells Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to the Participant’s situation.
Finally, if the Participant is a citizen or resident of a country other than the one in which the Participant is currently working or transfers employment between countries after the Grant Date, the Participant may be subject to the special terms and conditions for more than one country and/or the information for more than one country may be applicable to the Participant. It is also possible that the special terms and conditions and the information may not be applicable to the Participant in such a case.
ALL CURRENT EUROPEAN ECONOMIC AREA (“EEA”) MEMBER COUNTRIES
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) due to actual retirement upon satisfying the eligibility requirements for retirement under local law in the Participant’s country. If there are no applicable retirement provisions under local law in the Participant’s country, then Retirement shall be determined in accordance with the policies established by the Administrator from time to time.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
ARGENTINA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
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Securities Law Information. Neither the Restricted Stock Units nor the underlying Shares are publicly offered or listed on any stock exchange in Argentina.
AUSTRALIA
Nature of Plan. The Plan is a plan to which Subdivision 83A-C of the Income Tax Assessment Act of 1997 (Cth) (the “Act”) applies (subject to the conditions of the Act).
Grant of Restricted Stock Units. This provision supplements Section 1 of the Agreement:
The offer of the Restricted Stock Units is intended to comply with the provisions of the Corporations Act 2001, Australian Securities and Investments Commission (“ASIC”) Regulatory Guide 49 and ASIC Class Order 14/1000. Additional details are set forth in the Offer Document for the Offer of Restricted Stock Units to Australian Resident Employees.
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) due to actual retirement upon satisfying the eligibility requirements for retirement under local law in the Participant’s country. If there are no applicable retirement provisions under local law in the Participant’s country, then Retirement shall be determined in accordance with the policies established by the Administrator from time to time.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
BRAZIL
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Nature of Grant. This provision supplements Section 12 of the Agreement:
In accepting the grant, the Participant agrees that (i) he or she is making an investment decision, (ii) he or she will be entitled to receive Shares pursuant to the Restricted Stock Units only if the vesting conditions are met, and (iii) the value of the underlying Shares is not fixed and may increase or decrease without compensation to the Participant.
Compliance with Law. In accepting the grant, the Participant acknowledges that he or she agrees to comply with applicable Brazilian laws and pay any and all applicable taxes associated with the Restricted Stock Units and the Shares acquired under the Plan.
CANADA
Settlement of Vested Restricted Stock Units. The following provision supplements Section 3 of the Agreement:
Notwithstanding any discretion set forth in Section 11(e) of the Plan, settlement of vested Restricted Stock Units granted to Participants residing in Canada will be made in the form of Shares only.
Termination of Service. This provision replaces Section 5(a) of the Agreement:
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Except as otherwise provided in Sections 5(b) or 5(c) [FOR MEMBERS OF THE GROUP MANAGEMENT TEAM AND LEADERSHIP TEAM ONLY: or Section (c) of Addendum A], if the Participant’s Service terminates for any reason (whether or not later found to be invalid, unlawful or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), all unvested Restricted Stock Units shall be immediately forfeited without consideration. For purposes of the preceding sentence, the Participant’s right to vest in the Restricted Stock Units will terminate effective as of the date that is the earlier of (i) the date of termination of the Participant’s Service, or (ii) the date on which the Participant receives notice of termination of Service from the Company or the Employer, regardless of any notice period or period of pay in lieu of such notice or similar period mandated under employment laws in the jurisdiction where the Participant is employed or the terms of a written employment agreement, if any (including, but not limited to statutory law, regulatory law and/or common law). Notwithstanding the foregoing, if applicable employment standards legislation explicitly requires continued vesting during a statutory notice period, the Participant’s right to vest in the Restricted Stock Units, if any, will terminate effective upon the expiry of the minimum statutory notice period, but the Participant will not earn or be entitled to pro-rated vesting if the Vesting Date falls after the end of the statutory notice period, nor will the Participant be entitled to any compensation for lost vesting.
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. The Participant is permitted to sell Shares acquired under the Plan through the Plan Broker, provided the resale of Shares acquired under the Plan takes place outside Canada through the facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the SIX Swiss Exchange and on the Nasdaq Global Select Market.
The following provisions will also apply if the Participant is a resident of Quebec:
Language Consent. The parties acknowledge that it is their express wish that the Agreement, including this Appendix, as well as all documents, notices, and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Consentement relatif à la langue utilisée. Les parties reconnaissent avoir expressément souhaité que la convention («Agreement») ainsi que cette Annexe, ainsi que tous les documents, avis et procédures judiciares, éxécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à la présente convention, soient rédigés en langue anglaise.
Data Privacy. This provision supplements Section 13 of the Agreement:
The Participant hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. The Participant further authorizes the Company, any Parent, Subsidiary or Affiliate and any stock plan service provider that may be selected by the Company to assist with the Plan to disclose and discuss the Plan with their advisors. The Participant further authorizes the Company and any Parent, Subsidiary or Affiliate to record such information and to keep such information in the Participant’s employee file.
CHILE
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the
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Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. The offer of the Restricted Stock Units constitutes a private offering in Chile effective as of the Grant Date. The offer of Restricted Stock Units is made subject to general ruling n° 336 of the Chilean Commission for the Financial Market (“CMF”). The offer refers to securities not registered at the securities registry or at the foreign securities registry of the CMF, and, therefore, such securities are not subject to oversight of the CMF. Given that the Restricted Stock Units are not registered in Chile, the Company is not required to provide information about the Restricted Stock Units or Shares in Chile. Unless the Restricted Stock Units and/or the Shares are registered with the CMF, a public offering of such securities cannot be made in Chile.
Esta oferta de las Unidades de Acciones Restringidas se considera una oferta privada in Chile efectiva a partir de la Fecha de la Concesión. Esta oferta de las Unidades de Acciones Restringidas se hace sujeta a la regla general no. 336 de la Comisión para el Mercado Financiero Chilena (“CMF”). La oferta se refiere a valores no inscritos en el registro de valores o en el registro de valores extranjeros de la CMF y, por lo tanto, tales valores no están sujetos a la fiscalización de ésta. Dado que las las Unidades de Acciones Restringidas no están registradas en Chile, no se requiere que la Compañía provea información sobre las Unidades de Acciones Restringidas o acciones en Chile. A menos que las Unidades de Acciones Restringidas y/o acciones estén registradas con la CMF, una oferta pública de tales valores no puede hacerse en Chile.
CHINA
The following terms and conditions will be applicable to the Participant to the extent that the Company, in its discretion, determines that the Restricted Stock Units or the Participant's participation in the Plan will be subject to exchange control restrictions in the People’s Republic of China (the “PRC”), as implemented by the PRC State Administration of Foreign Exchange (“SAFE”).
Vesting. The following provision supplements Section 2 of the Agreement:
In addition to any other vesting and settlement conditions and notwithstanding anything to the contrary in the Plan or the Agreement, the Restricted Stock Units will not vest and no Shares will be delivered to the Participant unless and until all necessary approvals from SAFE or its relevant branch have been received and remain effective, as determined by the Company in its sole discretion (“SAFE Approval”). In the event that SAFE Approval has not been obtained prior to or is not effective as of any date(s) on which the Restricted Stock Units are scheduled to vest in accordance with Section 2 of the Agreement, the Restricted Stock Units will not vest until the Company determines that SAFE Approval is obtained and is effective (the “Actual Vesting Date”). If the Participant’s Service terminates prior to the Actual Vesting Date, the Participant shall not be entitled to vest in any portion of the Restricted Stock Units and the Restricted Stock Units shall be forfeited without any liability to the Company, the Employer or any Subsidiary or Affiliate.
Settlement of Vested Restricted Stock Units and Sale of Shares. The following provision supplements Section 3 of the Agreement:
To facilitate compliance with any applicable laws or regulations in China, the Participant agrees (i) to the immediate sale of any Shares issued to the Participant either upon vesting and settlement of the Restricted Stock Units, upon termination of the Participant’s Service, or within any other time frame as the Company determines to be necessary or recommended to comply with local regulatory requirements, and/or (ii) to hold any Shares issued to the Participant upon vesting and settlement in an account with the Plan Broker until such Shares are sold. The Participant further agrees that the Company is authorized to instruct the Plan Broker to assist with the mandatory sale of such Shares (on the Participant’s behalf pursuant to this authorization) and the Participant expressly authorizes the Plan Broker to complete the sale of such Shares. The Participant acknowledges that the Plan Broker is under no obligation to arrange for the sale of the Shares at any particular price. Upon the sale of the Shares, the Company agrees to pay the Participant the cash proceeds from the sale of the Shares, less any brokerage fees or commissions and subject to any obligation to satisfy Tax-Related Items. The Participant acknowledges that the
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Participant is not aware of any material nonpublic information with respect to the Company or any securities of the Company as of the date of the Agreement.
Termination of Service Due to Retirement. The following replaces Section 5(c) of the Agreement:
If the Participant’s Service terminates by reason of Retirement, any unvested Restricted Stock Units shall vest immediately as of the date of such termination of Service with respect to a number of Restricted Stock Units equal to the product of (A) the Total Number of Restricted Stock Units, multiplied by (B) the Proration Factor, rounded down to the nearest whole number of Restricted Stock Units, provided, however, the Company has determined that SAFE Approval has been obtained and is effective as of the date the Participant’s Service terminates. "Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Exchange Control Requirements. The Participant understands and agrees that, pursuant to local exchange control requirements, the Participant will be required to repatriate the cash proceeds from the sale of the Shares to China. The Participant further understands that, under local law, such repatriation of the Participant’s cash proceeds may need to be effectuated through a special exchange control account established by the Company, its Parent, Subsidiary or Affiliate or the Employer, and the Participant hereby consents and agrees that any proceeds from the sale of any Shares the Participant acquires may be transferred to such special account prior to being delivered to the Participant. The Participant agrees to bear any currency fluctuation risk between the time the Shares are sold and the time sales proceeds are distributed through any special exchange control account established by the Company. The Participant further agrees to comply with any other requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China. This repatriation requirement will not apply to non-PRC nationals.
FRANCE
Language Consent. By accepting the grant of the Restricted Stock Units, the Participant confirms having read and understood the Plan and the Agreement, which were provided in the English language. The Participant accepts the terms of those documents accordingly.
Consentement relatif à la langue utilisée. En acceptant cette attribution gratuite d’actions, le Participant confirme avoir lu et compris le Plan et ce Contrat, incluant tous leurs termes et conditions, qui ont été transmis en langue anglaise. Le Participant accepte les dispositions de ces documents en connaissance de cause.
HONG KONG
Settlement of Vested Restricted Stock Units. The following provision supplements Section 3 of the Agreement:
Notwithstanding any discretion set forth in Section 11(e) of the Plan, settlement of vested Restricted Stock Units granted to Participants residing in Hong Kong will be made in the form of Shares only.
In the unlikely event the Restricted Stock Units vest and are settled within six months of the Grant Date, the Participant agrees that he or she will not dispose of the Shares issued to him or her or otherwise offer the Shares to the public prior to the six-month anniversary of the Grant Date. The Participant agrees that any Shares acquired upon vesting and settlement are accepted as a personal investment.
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
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Securities Law Information. WARNING: The Restricted Stock Units and any Shares issued upon settlement of the Restricted Stock Units do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company, its Parent, Subsidiary or Affiliate. The Agreement, including this Appendix, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, nor have the documents been reviewed by any regulatory authority in Hong Kong. The Restricted Stock Units are intended only for the personal use of each eligible employee of the Employer, the Company or any Parent, Subsidiary or Affiliate and may not be distributed to any other person. If the Participant is in any doubt about any of the contents of the Agreement, including this Appendix, or the Plan, the Participant should obtain independent professional advice.
Nature of Scheme. The Company specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.
INDIA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Exchange Control Information. The Participant understands that the Participant must repatriate any funds related to the Plan to India within 90 days of receipt (in the case of sale process) and within 180 days (in the case of dividends), or within such time as prescribed under applicable Indian exchange control laws as may be amended from time to time. The Participant will receive a foreign inward remittance certificate (“FIRC”) from the bank where the Participant deposits the foreign currency. The Participant should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Employer requests proof of repatriation. The Participant should consult with his or her personal legal advisor to ensure compliance with applicable exchange control requirements.
INDONESIA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Language Consent and Notification. By accepting this Award, the Participant (i) confirms having read and understood the documents relating to this Award (i.e., the Plan and the Agreement) which were provided in the English language, (ii) accepts the terms of those documents accordingly, and (iii) agrees not to challenge the validity of this document based on Law No. 24 of 2009 on National Flag, Language, Coat of Arms and National Anthem or the implementing Presidential Regulation (when issued).
IRELAND
Director Notification Obligation. If the Participant is a director, shadow director or secretary of the Company’s Irish Subsidiary or Affiliate the Participant must notify the Irish Subsidiary or Affiliate in writing if the Participant
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receives or disposes of an interest exceeding 1% of the Company (e.g., Restricted Stock Units, Shares), if the Participant becomes aware of the event giving rise to the notification requirement, or if the Participant becomes a director or secretary if such an interest exists at that time. This notification requirement also applies with respect to the interests of a spouse, civil partner, or children under the age of 18 (whose interests will be attributed to the director, shadow director or secretary). The Participant should consult with his or her own personal legal adviser to ensure compliance with this requirement, if applicable.
ITALY
Plan Document Acknowledgment. In accepting the Restricted Stock Units, the Participant acknowledges that the Participant has received a copy of the Plan and the Agreement and has reviewed the Plan and the Agreement, including this Appendix, in their entirety and fully understands and accepts all provisions of the Plan and the Agreement, including this Appendix. The Participant further acknowledges that the Participant has read and specifically and expressly approves the following sections of the Agreement: Grant of Restricted Stock Units, Vesting and Performance Goals, Settlement of Vested Restricted Stock Units, Termination of Service, Recovery of Erroneously Awarded Compensation, Suspension or Cancellation for Misconduct, Responsibility for Taxes, Nature of Grant, Exchange Control and Foreign Asset/Account Reporting Acknowledgment, Entire Agreement; Governing Law, Language, Appendix, Imposition of Other Requirements, and Permitted Modifications to Comply with Laws.
JAPAN
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
KOREA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
MALAYSIA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
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Data Privacy. This provision replaces Section 13 of the Agreement:
| The Participant hereby explicitly, voluntarily and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this Agreement and any other grant materials by and among, as applicable, the Employer, the Company and any of its other Subsidiaries or Affiliates or any third parties authorised by the same in assisting in the implementation, administration and management of the Participant’s participation in the Plan. The Participant understands that the Company and the Employer may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, email address, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, the fact and conditions of the Participant’s participation in the Plan, details of all Restricted Stock Units or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan. The source of the Data is the Participant’s Employer as well as information which the Participant is providing to the Company and the Employer in connection with the Plan including this Appendix. | Peserta dengan ini secara eksplisit, sukarela dan tanpa sebarang keraguan mengizinkan pengumpulan, penggunaan dan pemindahan, dalam bentuk elektronik atau lain-lain, data peribadinya seperti yang diterangkan dalam Perjanjian dan apa-apa bahan geran oleh dan di antara, seperti mana yang terpakai, Majikan, Syarikat dan mana-mana Anak Syarikat yang lain atau Syarikat Sekutu atau mana-mana pihak ketiga yang diberi kuasa oleh yang sama dalam membantu dalam pelaksanaan, pentadbiran dan pengurusan penyertaan Peserta dalam Pelan. Peserta memahami bahawa Syarikat dan Majikan mungkin memegang maklumat peribadi tertentu tentang Peserta, termasuk, tetapi tidak terhad kepada, nama Peserta, alamat rumah dan nombor telefon, alamat emel, tarikh lahir, nombor insurans sosial, passport atau nombor pengenalan lain, gaji, kewarganegaraan, jawatan, apa-apa saham atau jawatan pengarah yang dipegang dalam Syarikat, fakta dan syarat-syarat mengenai penyertaan Peserta dalam Pelan, butir-butir tentang semua Unit-unit Saham Terbatas atau apa-apa hak lain untuk Saham yang dianugerahkan, dibatalkan, dilaksanakan, terletak hak, tidak diletak hak ataupun yang belum dijelaskan bagi faedah Peserta (“Data”), untuk tujuan ekslusif bagi melaksanakan, mentadbir dan menguruskan Pelan tersebut. Sumber Data adalah daripada Majikan Peserta dan juga maklumat dimana Peserta menyediakan kepada Syarikat dan Majikan berhubung dengan Pelan tersebut termasuk Lampiran ini. | ||||
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| The Participant also authorizes any transfer of Data, as may be required, to Equatex AG, Equatex US Inc. or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan and/or with whom any Shares acquired upon vesting of the Restricted Stock Units are deposited. The Participant acknowledges that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections to the Participant’s country, which may not give the same level of protection to Data. The Participant understands that the Participant may request a list with the names and addresses of any potential recipients of Data by contacting the Participant’s local human resources representative. The Participant authorizes the Company, Equatex AG, Equatex US Inc. and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Participant’s participation in the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case, without cost, by contacting in writing the Participant’s local human resources representative, whose contact details are Director of People and Culture Asia Pacific at peopleconnect@logitech.com. | Peserta juga memberi kuasa mengenai apa-apa pemindahan Data, yang mungkin diperlukan, kepada Equatex AG, Equatex US Inc. atau pembekal perkhidmatan pelan saham yang mungkin dipilih oleh Syarikat pada masa depan, yang membantu Syarikat dengan pelaksanaan, pentadbiran dan pengurusan Pelan dan/atau dengan siapa sahaja Saham yang diperolehi semasa peletakan hak Unit-unit Saham Terbatas didepositkan. Peserta memaklumkan bahawa penerima-penerima ini mungkin berada di negara Peserta atau mana-mana tempat lain, dan bahawa negara penerima (contohnya di Amerika Syarikat) mungkin mempunyai undang-undang privasi data dan perlindungan yang berbeza dengan negara Peserta, dimana mungkin tidak memberi tahap perlindungan Data yang sama. Peserta memahami bahawa Peserta boleh meminta satu senarai yang mengandungi nama dan alamat penerima-penerima Data yang berpotensi dengan menghubungi wakil sumber manusia tempatan Peserta. Peserta memberi kuasa kepada Syarikat, Equatex AG, Equatex US Inc. dan mana-mana penerima-penerima lain yang mungkin membantu Syarikat (pada masa sekarang atau pada masa depan) dengan melaksanakan, mentadbir dan mengurus penyertaan Peserta dalam Pelan untuk menerima, memiliki, menggunakan, mengekalkan dan memindahkan Data, dalam bentuk elektronik atau lain-lain, semata-mata dengan tujuan untuk melaksanakan, mentadbir dan menguruskan penyertaan Peserta dalam Pelan. Peserta memahami bahawa Data hanya akan disimpan untuk tempoh yang perlu bagi melaksanakan, mentadbir dan menguruskan penyertaan Peserta dalam Pelan. Peserta memahami bahawa dia boleh, pada bila-bila masa, melihat Data, meminta maklumat tambahan mengenai penyimpanan dan pemprosesan Data, meminta bahawa pindaan-pindaan dilaksanakan ke atas Data atau menolak atau menarik balik persetujuan dalam ini, dalam mana-mana kes, tanpa kos, dengan menghubungi secara bertulis wakil sumber manusia tempatan Peserta, dimana butir-butir hubungan adalah Director of People and Culture Asia Pacific di peopleconnect@logitech. | ||||
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| Further, the Participant understands that he or she is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke consent, the Participant’s employment status or service and career with the Company and/or the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing consent is that the Company would not be able to grant future Restricted Stock Units or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative. | Selanjutnya, Peserta memahami bahawa dia telah memberikan persetujuan di sini secara sukarela. Jika Peserta tidak bersetuju, atau jika Peserta kemudian membatalkan persetujuan, status pekerjaan atau perkhidmatan dan kerjaya Peserta dengan Syarikat dan / atau Majikan tidak akan terjejas; satu-satunya akibat buruk jika tidak bersetuju atau menarik balik persetujuan adalah bahawa Syarikat tidak akan dapat memberikan Unit-unit Saham Terbatas atau anugerah ekuiti yang lain kepada Peserta pada masa hadapan atau mentadbir atau mengekalkan anugerah tersebut. Oleh itu, Peserta memahami bahawa keengganan atau penarikan balik persetujuan boleh menjejaskan keupayaan Peserta untuk mengambil bahagian dalam Pelan. Untuk maklumat lanjut mengenai akibat keengganan Peserta untuk memberikan persetujuan atau penarikan balik persetujuan, Peserta memahami bahawa dia boleh menghubungi wakil sumber manusia tempatanny | ||||
Director Notification Obligation. If the Participant is a director of the Company's Malaysian Subsidiary or Affiliate, the Participant is subject to certain notification requirements under the Malaysian Companies Act. Among these requirements is an obligation to notify the Malaysian Subsidiary or Affiliate in writing when the Participant receives or disposes of an interest (e.g., Restricted Stock Units, Shares) in the Company or any related company. Such notifications must be made within 14 days of receiving or disposing of any interest in the Company or any related company.
MEXICO
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Labor Law Acknowledgement. These provisions supplement Section 12 of the Agreement:
Modification. By accepting the Restricted Stock Units, the Participant understands and agrees that any modification of the Plan or the Agreement or its termination shall not constitute a change or impairment of the terms and conditions of employment.
Policy Statement. The Award of Restricted Stock Units the Company is making under the Plan is unilateral and discretionary and, therefore, the Company reserves the absolute right to amend it and discontinue it at any time without any liability.
The Company, with registered offices at EPFL – Quartier de l’Innovation, Daniel Borel Innovation Center, 1015 Lausanne, Switzerland, is solely responsible for the administration of the Plan and participation in the Plan and the acquisition of Shares does not, in any way, establish an employment relationship between the Participant and the Company since the Participant is participating in the Plan on a wholly commercial basis and the sole employer is Logitech Servicios Latinoamérica, S.A. de C.V., and nor does it establish any rights between the Participant and the Employer.
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Plan Document Acknowledgment. By accepting the Award of Restricted Stock Units, the Participant acknowledges that the Participant has received copies of the Plan, has reviewed the Plan and the Agreement in their entirety and fully understands and accepts all provisions of the Plan and the Agreement.
In addition, by signing the Agreement, the Participant further acknowledges that the Participant has read and specifically and expressly approves the terms and conditions in the Nature of Grant, Section 12 of the Agreement, in which the following is clearly described and established: (i) participation in the Plan does not constitute an acquired right; (ii) the Plan and participation in the Plan is offered by the Company on a wholly discretionary basis; (iii) participation in the Plan is voluntary; and (iv) the Company and any Parent, Subsidiary or Affiliate are not responsible for any decrease in the value of the Shares underlying the Restricted Stock Units.
Finally, the Participant hereby declares that the Participant does not reserve any action or right to bring any claim against the Company for any compensation or damages as a result of the Participant’s participation in the Plan and therefore grants a full and broad release to the Employer, the Company and any Parent, Subsidiary or Affiliate with respect to any claim that may arise under the Plan.
Securities Law Information. The Restricted Stock Units and the Shares offered under the Plan have not been registered with the National Register of Securities maintained by the Mexican National Banking and Securities Commission and cannot be offered or sold publicly in Mexico. In addition, the Plan, the Agreement and any other document relating to the Award may not be publicly distributed in Mexico. These materials are addressed to the Participant only because of the Participant’s existing relationship with the Company and these materials should not be reproduced or copied in any form. The offer contained in these materials does not constitute a public offering of securities but rather constitutes a private placement of securities addressed specifically to individuals who are present service providers of the Company’s Subsidiaries or Affiliates in Mexico made in accordance with the provisions of the Mexican Securities Market Law, and any rights under such offering shall not be assigned or transferred.
Spanish Translation
Reconocimiento de la Ley Laboral. Estas disposiciones complementan el apartado 12 del Acuerdo:
Modification. Al aceptar las Unidades de Acción Restringida, el Participante reconoce y acuerda que cualquier modificación del Plan o su terminación no constituye un cambio o desmejora de los términos y condiciones de empleo.
Declaración de Política. El Otorgamiento de Unidades de Acción Restringida de la Compañía en virtud del Plan es unilateral y discrecional y, por lo tanto, la Compañía se reserva el derecho absoluto de modificar y discontinuar el mismo en cualquier tiempo, sin responsabilidad alguna.
La Compañía, con oficinas registradas ubicadas EPFL – Quartier de l’Innovation, Daniel Borel Innovation Center, 1015 Lausanne, Switzerland, es la única responsable de la administración del Plan y de la participación en el mismo y la adquisición de Acciones no establece de forma alguna una relación de trabajo entre el Participante y la Compañía, ya que su participación en el Plan es completamente comercial y el único empleador es Logitech Servicios Latinoamérica, S.A. de C.V., en caso de ser aplicable, así como tampoco establece ningún derecho entre la persona que tenga el derecho a optar y el Empleador.
Reconocimiento del Documento del Plan. Al aceptar el Otorgamiento de las Unidades de Acción Restringida, el Participante reconoce que ha recibido copias del Plan, ha revisado el mismo, al igual que la totalidad del Acuerdo y, que ha entendido y aceptado completamente todas las disposiciones contenidas en el Plan y en el Acuerdo.
Adicionalmente, al firmar el Acuerdo, reconoce que ha leído, y que aprueba específica y expresamente los términos y condiciones contenidos en la Renuncia de Derecho o Reclamo por Compensación, apartado 12 del Acuerdo, en el cual se encuentra claramente descrito y establecido lo siguiente: (i) la participación en el Plan no constituye un derecho adquirido; (ii) el Plan y la participación en el mismo es ofrecida por la Compañía de forma enteramente discrecional; (iii) la participación en el Plan es voluntaria; y (iv) la Compañía, así como su Sociedad controlante, Subsidiaria o Filiales no son responsables por cualquier disminución en el valor de las Acciones en relación a las Unidades de Acción Restringida.
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Finalmente, declara que no se reserva ninguna acción o derecho para interponer una demanda en contra de la Compañía por compensación, daño o perjuicio alguno como resultado de su participación en el Plan y, en consecuencia, otorga el más amplio finiquito al Empleador, así como a la Compañía, a su Sociedad controlante, Subsidiaria o Filiales con respecto a cualquier demanda que pudiera originarse en virtud del Plan.
La Ley de Valores. Las Unidades de Acciones Restringidas y las Acciones ofrecidos bajo el Plan no se han registrado con el Registro Nacional de Valores que se mantiene por la Comisión Nacional Bancaria y de Valores y no pueden ser ofrecidos públicamente en México. Además, el Plan, el Acuerdo y cualquier documento que se relata al Otorgamiento no puede ser distribuido públicamente en México. Esta materiales se dirigen al Participante solo por causa de la relación existente del Participante con la Compañía y estas materia no deben ser reproducidas en cualquier forma. La oferta que se contiene en estas materiales no constituye una oferta pública de valores, sino más bien constituye una colocación privada de valores que se dirige específicamente a individuos quienes están prestando servicios a las Subsidiarias o Filiales de la Compañía en México y se hace conforme con las provisiones de la Ley del Mercado de Valores, y cualquier derechos bajo tal oferta no serán asignados o transferidos.
NEW ZEALAND
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) due to actual retirement upon satisfying the eligibility requirements for retirement under local law in the Participant’s country. If there are no applicable retirement provisions under local law in the Participant’s country, then Retirement shall be determined in accordance with the policies established by the Administrator from time to time.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. WARNING: The Participant is being offered Restricted Stock Units which, upon vesting and settlement in accordance with the terms of the Plan and the Agreement, will be converted into Shares which will give the Participant a stake in the ownership of the Company. The Participant may receive a return if dividends are paid on the Shares. If the Company runs into financial difficulties and is wound up, the Participant will be paid only after all creditors have been paid. The Participant may lose some or all of his or her investment.
New Zealand law normally requires people who offer financial products to give information to investors before they invest. This information is designed to help investors make an informed decision. The usual rules do not apply to this offer because it is made under an employee share scheme. As a result, the Participant may not be given all the information usually required. The Participant will also have fewer other legal protections for this investment.
The Participant should ask questions, read all documents carefully, and seek independent financial advice before committing to the Restricted Stock Units.
The Shares are currently listed on the SIX Swiss Exchange (the "SIX") and the Nasdaq Global Select Market (the Nasdaq"). This means the Participant may be able to sell them on the SIX or the NASDAQ if there are interested buyers. The Participant may get less than the amount invested (or less than the value of the Shares at the time they were received). The price will depend on the demand for the Shares.
For a copy of the Company’s most recent financial statements (and, where applicable, a copy of the auditor’s report on those financial statements) and for information on risk factors impacting the Company’s business that may affect the value of the Shares, the Participant should refer to the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are filed with the U.S. Securities and Exchange Commission and are available online at www.sec.gov, as well as on the Company’s “Investor Relations” website at http://ir.logitech.com/investor-relations/default.aspx.
RUSSIA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
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“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Non-Russian Transaction. The Participant understands that the Restricted Stock Units shall be valid and this Agreement shall be concluded and become effective only when the Agreement is received by the Company in Switzerland. Upon vesting of the Restricted Stock Units, any Shares to be issued to the Participant shall be delivered to the Participant through a bank or brokerage account in Switzerland.
Securities Law Information. This Appendix, the Agreement, the Plan and all other materials that the Participant may receive regarding participation in the Plan do not constitute advertising or an offering of securities in Russia. The issuance of securities pursuant to the Plan has not and will not be registered in Russia; hence, the securities described in any Plan-related documents may not be used for offering or public circulation in Russia.
Exchange Control Information. The Participant understands that, under exchange control regulations in Russia, he or she may be required to repatriate certain funds to the Participant’s bank account in Russia prior to using those funds for any purpose, including reinvestment. If the repatriation requirements apply, such funds must be initially credited to the Participant through a foreign currency account at an authorized bank in Russia. After the funds are initially received in Russia, they may be further remitted to foreign banks in accordance with Russian exchange control laws. The Participant should consult with his or her personal legal advisor to determine whether the repatriation requirements apply and to ensure compliance with applicable exchange control requirements. The Participant should be aware that exchange control requirements are subject to frequent change in Russia, and the Participant should consult with a personal legal advisor to ensure compliance with all applicable exchange control requirements.
SINGAPORE
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. The grant of the Restricted Stock Units is being made pursuant to the “Qualifying Person” exemption” under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Participant should note that the Restricted Stock Units are subject to section 257 of the SFA and the Participant will not be able to make (i) any subsequent sale of the Shares in Singapore or (ii) any offer of such subsequent sale of the Shares subject to the Restricted Stock Units in Singapore, unless such sale or offer is made (i) after six (6) months from the Grant Date or (ii) pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA.
Chief Executive Officer and Director Notification Obligation. If the Participant is the chief executive officer (“CEO”) or a director (including an associate director or shadow director) of a Subsidiary or Affiliate of the Company in Singapore, the Participant is subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Singaporean Subsidiary or Affiliate in writing when the Participant receives or disposes of an interest (e.g., Restricted Stock Units, Shares) in the Company or any Subsidiary or Affiliate. These notifications must be made within two days of receiving or disposing of any interest in the Company or any Subsidiary or Affiliate. In addition, a notification must be made of
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the Participant’s interests in the Company or any Subsidiary or Affiliate within two days of becoming the CEO or a director.
SOUTH AFRICA
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Responsibility for Taxes. The following provision supplements Section 8 of the Agreement:
By accepting the Restricted Stock Units, the Participant agrees that, immediately upon vesting and settlement of the Restricted Stock Units, the Participant will notify the Employer of the amount of any gain realized. If the Participant fails to advise the Employer of the gain realized upon vesting and settlement and the Employer is subject to penalties or interest as a result of not being able to withhold Tax-Related Items, the Employer may recover any such penalty or interest amounts from the Participant. In addition, if the Participant fails to notify the Employer of the amount of any gain realized upon vesting and settlement, the Participant may be liable for a fine.
SPAIN
Nature of Grant. The following provision supplements Section 12 of the Agreement:
By accepting the Award, the Participant consents to participation in the Plan and acknowledges that the Participant has received a copy of the Plan.
The Participant understands that the Company has unilaterally, gratuitously and in its sole discretion decided to grant Restricted Stock Units under the Plan to individuals who may be Service Providers throughout the world. The decision is limited and entered into based upon the express assumption and condition that any Restricted Stock Units will not economically or otherwise bind the Company or any Parent, Subsidiary or Affiliate, including the Employer, on an ongoing basis. Consequently, the Participant understands that the grant is made on the assumption and condition that the Restricted Stock Units shall not become part of any employment contract (whether with the Company or any Parent, Subsidiary or Affiliate, including the Employer) and shall not be considered a mandatory benefit, salary for any purpose [FOR PARTICIPANTS OTHER THAN MEMBERS OF THE GROUP MANAGEMENT TEAM ONLY: (including severance compensation)] or any other right whatsoever. The Participant also understands that this grant would not be made but for the assumptions and conditions set forth above; thus, the Participant understands, acknowledges and freely accepts that, should any or all of the assumptions be mistaken or any of the conditions not be met for any reason, the grant of the Restricted Stock Units and any right to the underlying Shares shall be null and void.
The Participant understands and agrees that, as a condition of the grant of the Restricted Stock Units, the termination of the Participant’s Service for any reason (including the reasons listed below) will automatically result in the loss of the Restricted Stock Units to the extent the Restricted Stock Units have not vested as of date the Participant has ceased active performance of service, as described in Section 6 of the Agreement. In particular, the Participant understands and agrees that any unvested Restricted Stock Units as of the date the Participant has ceased active Service will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of the termination of the Participant’s Service by reason of, but not limited to, resignation, retirement, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without cause, individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985. The Participant acknowledges that he or she has read and specifically accepts the conditions referred to in Section 5 of the Agreement.
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Securities Law Information. No “offer to the public,” as defined under Spanish Law, has taken place or will take place in the Spanish territory in connection with the Restricted Stock Units. The Plan, the Agreement (including this Appendix) and any other documents evidencing the grant of the Restricted Stock Units have not been, nor will they be, registered with the Comisión Nacional del Mercado de Valores (the Spanish securities regulator), and none of those documents constitutes a public offering prospectus.
SWITZERLAND
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. The grant of the Restricted Stock Units does not qualify as the provision of financial services in Switzerland, nor is it either subject to registration in Switzerland or the requirement to publish a prospectus under the Swiss Financial Services Act.
This Agreement does not constitute individual investment advice and does not release the Participant from making his or her own assessment with respect to an investment. The Participant must not take any investment decisions solely based on the information contained in this Agreement and shall, if necessary or appropriate in consultation with external advisers, assess the information based on the Participant’s individual circumstances in terms of suitability and appropriateness and any legal, regulatory, tax, accounting or other consequences such an investment may have.
TAIWAN
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. The offer of participation in the Plan is available only for Service Providers. The offer of participation in the Plan is not a public offer of securities by a Taiwanese company.
THAILAND
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
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Exchange Control Information. The Participant understands that he or she must repatriate any proceeds from the sale of Shares to Thailand immediately upon receipt if the amount of such funds is equal to or greater than US$1,000,000 in a single transaction. In this case, the Participant must convert such funds to Thai Baht or deposit the funds in a foreign exchange account with a commercial bank in Thailand within 360 days of repatriation and provide details of the transaction (i.e., identification information and purpose of the transaction) to the receiving bank.
TURKEY
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Securities Law Information. Under Turkish law, the Participant is not permitted to sell any Shares acquired under the Plan in Turkey. The Shares are currently listed on the SIX Swiss Exchange and the Nasdaq Global Select Market, which are located outside Turkey, and the Shares may be sold through one of these exchanges.
UNITED ARAB EMIRATES
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Nature of Grant. The following provision supplements Section 12 of the Agreement:
The Participant acknowledges that the Restricted Stock Units and related benefits do not constitute a component of the Participant’s “wages” for any legal purpose. Therefore, the Restricted Stock Units and related benefits will not be included and/or considered for purposes of calculating any and all labor benefits, such as social insurance contributions and/or any other labor-related amounts which may be payable.
Securities Law Information. The Restricted Stock Units under the Plan are granted only to select Service Providers of the Company or a Parent, Subsidiary or Affiliate, and are in the nature of providing employee equity incentives in the United Arab Emirates. The Plan and the Agreement are intended for distribution only to such Service Providers and must not be delivered to, or relied on by, any other person. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If the Participant does not understand the contents of the Plan and the Agreement, he or she should consult an authorized financial adviser. The Emirates Securities and Commodities Authority has no responsibility for reviewing or verifying any documents in connection with the Plan. Neither the Ministry of Economy nor the Dubai Department of Economic Development have approved the Plan or the Agreement nor taken steps to verify the information set out therein, and have no responsibility for such documents.
UNITED KINGDOM (“U.K.”)
Settlement of Vested Restricted Stock Units. The following provision supplements Section 3 of the Agreement:
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Notwithstanding any discretion set forth in Section 11(e) of the Plan, settlement of vested Restricted Stock Units granted to Participants residing in the U.K. will be made in the form of Shares only.
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) due to actual retirement upon satisfying the eligibility requirements for retirement under local law in the Participant’s country. If there are no applicable retirement provisions under local law in the Participant’s country, then Retirement shall be determined in accordance with the policies established by the Administrator from time to time.
Notwithstanding anything herein to the contrary, the Administrator may cause the Restricted Stock Units to vest prior to the Vesting Date(s) in order to satisfy any Tax-Related Items that arise prior to the date of settlement of the Restricted Stock Units, subject to the limitations set forth in Section 8 of the Agreement.
Responsibility for Taxes. The following provision supplements Section 8 of the Agreement:
Without limitation to Section 8 of the Agreement, the Participant agrees that he or she is liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items, as and when requested by the Company or, if different, the Employer or by Her Majesty’s Revenue & Customs (“HRMC”) (or any other tax authority or any other relevant authority). The Participant also agrees to indemnify and keep indemnified the Company and, if different, the Employer against any Tax-Related Items that they are required to pay or withhold on the Participant’s behalf or have paid or will pay to HMRC (or any other tax authority or any other relevant authority).
Notwithstanding the foregoing, if the Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), the amount of any uncollected income tax may constitute a benefit to the Participant on which additional income tax and national insurance contributions (“NICs”) may be payable. The Participant will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for paying the Company or the Employer (as appropriate) the value of any employee NICs due on this additional benefit.
Joint Election for Transfer of Secondary Class 1 National Insurance Contributions to the Participant. The Participant agrees to accept any liability for secondary Class 1 NICs (the “Employer’s NICs”) which may be payable by the Company and/or the Employer in connection with the Restricted Stock Units and any event giving rise to Tax-Related Items. Without limitation to the above, the Participant agrees to execute a joint election with the Company, the form of such joint election being formally approved by HMRC (the “Joint Election”), and any other consent or elections required to accomplish the transfer of the Employer’s NICs to the Participant. The Participant further agrees to execute such other joint elections as may be required between the Participant and any successor to the Company and/or the Employer. The Participant further agrees that the Company and/or the Employer may collect the Employer’s NICs by any of the means set forth in Section 8 of the Agreement. The Participant agrees to enter into a Joint Election prior to the vesting of any Restricted Stock Units or any other event giving rise to Tax-Related Items. If the Participant fails to do so, he or she may not be entitled to vest in the Restricted Stock Units or to receive any other benefit pursuant to the Restricted Stock Units, without any liability to the Company or the Employer.
UNITED STATES (“U.S.”)
Termination of Service Due to Retirement. The following supplements Section 5(c) of the Agreement:
“Retirement” for purposes of Section 5(c) shall mean the Participant’s termination of Service (under circumstances that would not give rise to the Participant’s termination of Service for cause by the Employer) following the date the Participant attains age fifty-five (55) and completes ten (10) years of continuous Service with the Company or any of its Subsidiaries or Affiliates.
Data Privacy. This provision supplements Section 13 of the Agreement:
The Company does not sell participants’ personal information or share it for cross‐context behavioral advertising. The Company’s online California Consumer Privacy Act Privacy Policy can be found at https://drive.google.com/
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drive/u/0/folders/1_tHuHEJmIIGhMk0bR1J3SoRaiqwaRJXa. If the Participant has a visual disability, the Participant should contact his or her local human resources representative for accommodations.
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Exhibit 31.1
CERTIFICATIONS
I, Bracken Darrell, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Logitech International S.A.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| July 28, 2022 | ||||||||
/s/ Bracken Darrell | ||||||||
Bracken Darrell President and Chief Executive Officer | ||||||||
Exhibit 31.2
CERTIFICATIONS
I, Nate Olmstead, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Logitech International S.A.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| July 28, 2022 | ||||||||
/s/ Nate Olmstead | ||||||||
Nate Olmstead Chief Financial Officer | ||||||||
Exhibit 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(B) OR RULE 15D-14(B) AND SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF
THE UNITED STATES CODE
The certification set forth below is being submitted in connection with this quarterly report on Form 10-Q (the “Report”) of Logitech International S.A. (“the Company”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
Bracken Darrell, Chief Executive Officer of the Company, and Nate Olmstead, Chief Financial Officer of the Company, each certify that, to the best of his knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| July 28, 2022 | ||||||||
| /s/ Bracken Darrell | ||||||||
Bracken Darrell | ||||||||
| President and Chief Executive Officer | ||||||||
| /s/ Nate Olmstead | ||||||||
Nate Olmstead | ||||||||
| Chief Financial Officer | ||||||||