Logitech Earnings 2020-12-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

logi-20201231

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2020

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

For the Transition Period from to

Commission File Number: 0-29174

LOGITECH INTERNATIONAL S.A.

(Exact name of registrant as specified in its charter)


Canton of Vaud,	Switzerland	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

1015 Lausanne, Switzerland

c/o Logitech Inc.

7700 Gateway Boulevard

Newark, California 94560

(Address of principal executive offices and zip code)

510 795-8500

(Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Registered Shares	LOGN	SIX Swiss Exchange
Registered Shares	LOGI	Nasdaq Global Select Market

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.

Large Accelerated Filer

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý

As of January 6, 2021, there were 168,921,326 shares of the Registrant’s share capital outstanding.

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TABLE OF CONTENTS


		Page

Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2020 and 2019	4
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended December 31, 2020 and 2019	5
	Condensed Consolidated Balance Sheets as of December 31, 2020 and March 31, 2020	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2020 and 2019	7
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three and Nine Months Ended December 31, 2020 and 2019	8
	Notes to the Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	61
Item 5.	Other Information	61
Item 6.	Exhibit Index	62
Signatures

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.

The Company’s fiscal year ends on March 31. Interim quarters are generally thirteen-week periods, each ending on a Friday of each quarter. The third quarter of fiscal year 2021 ended on December 25, 2020. The same quarter in the prior fiscal year ended on December 27, 2019. For purposes of presentation, the Company has indicated its quarterly periods end on the last day of the calendar quarter.

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

Our Internet website and the information contained, incorporated or referenced therein do not constitute a part of and are not intended to be incorporated into this Quarterly Report on Form 10-Q.

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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 December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Net sales	$	1,667,302	$	902,687	$	3,716,354	$	2,266,603
Cost of goods sold	914,851		564,283		2,082,088		1,410,605
Amortization of intangible assets	3,441		3,951		9,800		10,493
Gross profit	749,010		334,453		1,624,466		845,505

Operating expenses:
Marketing and selling	204,485		134,950		496,520		392,138
Research and development	53,910		43,292		157,014		127,499
General and administrative	37,606		22,344		98,341		68,551
Amortization of intangible assets and acquisition-related costs	4,946		5,084		13,886		12,898
Change in fair value of contingent consideration for business acquisition	—		—		5,716		—
Restructuring charges (credits), net	—		(45)		(54)		69
Total operating expenses	300,947		205,625		771,423		601,155

Operating income	448,063		128,828		853,043		244,350
Interest income	311		2,063		1,444		7,006
Other income, net	6,483		1,101		9,661		2,852
Income before income taxes	454,857		131,992		864,148		254,208
Provision for income taxes	72,334		14,467		142,638		18,405
Net income	$	382,523	$	117,525	$	721,510	$	235,803

Net income per share:
Basic	$	2.26	$	0.70	$	4.28	$	1.41
Diluted	$	2.22	$	0.69	$	4.21	$	1.39

Weighted average shares used to compute net income per share:
Basic	169,050		167,063		168,448		166,678
Diluted	172,587		169,685		171,378		169,173

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

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LOGITECH INTERNATIONAL S.A.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(unaudited)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Net income	$	382,523	$	117,525	$	721,510	$	235,803
Other comprehensive income (loss):
Currency translation gain (loss), net of taxes	19,500		1,736		23,944		(2,639)
Reclassification of currency translation loss included in other income, net	—		—		(1,738)		—
Defined benefit plans:
Net loss and prior service costs, net of taxes	(863)		(231)		(319)		(274)
Amortization included in other income, net	178		53		523		160
Hedging gain (loss):
Deferred hedging gain (loss), net of taxes	(6,326)		(1,381)		(9,752)		56
Reclassification of hedging loss included in cost of goods sold	3,446		(739)		5,085		(1,097)
Total other comprehensive income (loss)	15,935		(562)		17,743		(3,794)
Total comprehensive income	$	398,458	$	116,963	$	739,253	$	232,009

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

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LOGITECH INTERNATIONAL S.A.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(unaudited)


	December 31, 2020		March 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	1,388,743	$	715,566
Accounts receivable, net	894,937		394,743
Inventories	476,802		229,249
Other current assets	117,741		74,920
Total current assets	2,878,223		1,414,478
Non-current assets:
Property, plant and equipment, net	96,683		76,119
Goodwill	400,993		400,917
Other intangible assets, net	103,314		126,941
Other assets	333,733		345,019
Total assets	$	3,812,946	$	2,363,474
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	811,786	$	259,120
Accrued and other current liabilities	704,573		455,024
Total current liabilities	1,516,359		714,144
Non-current liabilities:
Income taxes payable	60,799		40,788
Other non-current liabilities	134,021		119,274
Total liabilities	1,711,179		874,206
Commitments and contingencies (Note 10)
Shareholders’ equity:
Registered shares, CHF 0.25 par value:	30,148		30,148
Issued shares — 173,106 at December 31 and March 31, 2020
Additional shares that may be issued out of conditional capitals — 50,000 at December 31 and March 31, 2020
Additional shares that may be issued out of authorized capital — 17,311 at December 31 and 34,621 at March 31, 2020
Additional paid-in capital	108,140		75,097
Shares in treasury, at cost — 4,243 at December 31, 2020 and 6,210 at March 31, 2020	(198,435)		(185,896)
Retained earnings	2,264,831		1,690,579
Accumulated other comprehensive loss	(102,917)		(120,660)
Total shareholders’ equity	2,101,767		1,489,268
Total liabilities and shareholders’ equity	$	3,812,946	$	2,363,474

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

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LOGITECH INTERNATIONAL S.A.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)


	Nine Months Ended December 31,
	2020		2019
Cash flows from operating activities:
Net income	$	721,510	$	235,803
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	36,010		32,154
Amortization of intangible assets	23,627		21,958
Loss on investments	4,692		772
Share-based compensation expense	64,714		40,301
Deferred income taxes	37,683		480
Change in fair value of contingent consideration for business acquisition	5,716		—
Other	(1,670)		(1,012)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net	(476,804)		(147,292)
Inventories	(239,378)		(15,170)
Other assets	(53,281)		2,866
Accounts payable	541,024		155,190
Accrued and other liabilities	264,576		(1,896)
Net cash provided by operating activities	928,419		324,154
Cash flows from investing activities:
Purchases of property, plant and equipment	(46,163)		(28,667)
Investment in privately held companies	(3,525)		(310)
Acquisitions, net of cash acquired	(360)		(91,569)
Proceeds from the sale of property, plant and equipment	—		1,037
Proceeds from return of strategic investments	2,934		—


Purchases of trading investments	(10,672)		(3,071)
Proceeds from sales of trading investments	11,332		3,139
Net cash used in investing activities	(46,454)		(119,441)
Cash flows from financing activities:

Payment of cash dividends	(146,705)		(124,180)

Purchases of registered shares	(72,725)		(15,127)
Proceeds from exercises of stock options and purchase rights	29,709		11,540
Tax withholdings related to net share settlements of restricted stock units	(29,475)		(23,096)
Net cash used in financing activities	(219,196)		(150,863)
Effect of exchange rate changes on cash and cash equivalents	10,408		(2,320)
Net increase in cash and cash equivalents	673,177		51,530
Cash and cash equivalents, beginning of the period	715,566		604,516
Cash and cash equivalents, end of the period	$	1,388,743	$	656,046
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	$	14,663	$	4,871
Non-cash contingent consideration for acquisition	$	28,463	$	—

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

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LOGITECH INTERNATIONAL S.A.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands)

(unaudited)

Three Months Ended December 31, 2019


				Additional Paid-in Capital							Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Registered Shares					Treasury Shares			Retained Earnings
	Shares	Amount				Shares	Amount
September 30, 2019	173,106	$	30,148	$	50,913	6,203	$	(163,728)	$	1,359,134	$	(108,930)	$	1,167,537
Total comprehensive income	—	—		—		—	—		117,525		(562)		116,963

Sales of shares upon exercise of stock options and purchase rights	—	—		(1,551)		(213)	3,191		—		—		1,640
Issuance of shares upon vesting of restricted stock units	—	—		(3,535)		(89)	1,347		—		—		(2,188)
Share-based compensation	—	—		13,841		—	—		—		—		13,841

December 31, 2019	173,106	$	30,148	$	59,668	5,901	$	(159,190)	$	1,476,659	$	(109,492)	$	1,297,793

Nine Months Ended December 31, 2019


				Additional Paid-in Capital							Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Registered Shares					Treasury Shares			Retained Earnings
	Shares	Amount				Shares	Amount
March 31, 2019	173,106	$	30,148	$	56,655	7,244	$	(169,802)	$	1,365,036	$	(105,698)	$	1,176,339
Total comprehensive income	—	—		—		—	—		235,803		(3,794)		232,009

Purchases of registered shares	—	—		—		389	(15,127)		—		—		(15,127)
Sales of shares upon exercise of stock options and purchase rights	—	—		2,607		(604)	8,933		—		—		11,540
Issuance of shares upon vesting of restricted stock units	—	—		(39,902)		(1,128)	16,806		—		—		(23,096)
Share-based compensation	—	—		40,308		—	—		—		—		40,308
Cash dividends ($0.74 per share)	—	—		—		—	—		(124,180)		—		(124,180)
December 31, 2019	173,106	$	30,148	$	59,668	5,901	$	(159,190)	$	1,476,659	$	(109,492)	$	1,297,793

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Three Months Ended December 31, 2020


				Additional Paid-in Capital							Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Registered Shares					Treasury Shares			Retained Earnings
	Shares	Amount				Shares	Amount
September 30, 2020	173,106	$	30,148	$	78,617	4,357	$	(166,258)	$	1,882,308	$	(118,852)	$	1,705,963
Total comprehensive income	—	—		—		—	—		382,523		15,935		398,458

Purchases of registered shares	—	—		—		603	(50,271)		—		—		(50,271)
Sales of shares upon exercise of stock options and purchase rights	—	—		(2,733)		(250)	6,376		—		—		3,643
Issuance of shares upon vesting of restricted stock units	—	—		(5,833)		(77)	2,102		—		—		(3,731)
Issuance of shares for contingent consideration	—	—		18,847		(390)	9,616		—		—		28,463
Share-based compensation	—	—		19,242		—	—		—		—		19,242

December 31, 2020	173,106	$	30,148	$	108,140	4,243	$	(198,435)	$	2,264,831	$	(102,917)	$	2,101,767

Nine Months Ended December 31, 2020


				Additional Paid-in Capital							Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Registered Shares					Treasury Shares			Retained Earnings
	Shares	Amount				Shares	Amount
March 31, 2020	173,106	$	30,148	$	75,097	6,210	$	(185,896)	$	1,690,579	$	(120,660)	$	1,489,268
Total comprehensive income	—	—		—		—	—		721,510		17,743		739,253
Cumulative effect of adoption of new accounting standard (Note 1)	—	—		—		—	—		(553)		—		(553)
Purchases of registered shares	—	—		—		915	(72,725)		—		—		(72,725)
Sales of shares upon exercise of stock options and purchase rights	—	—		(1,368)		(1,461)	31,077		—		—		29,709
Issuance of shares upon vesting of restricted stock units	—	—		(48,968)		(1,031)	19,493		—		—		(29,475)
Issuance of shares for contingent consideration	—	—		18,847		(390)	9,616		—		—		28,463
Share-based compensation	—	—		64,532		—	—		—		—		64,532
Cash dividends ($0.87 per share)	—	—		—		—	—		(146,705)		—		(146,705)
December 31, 2020	173,106	$	30,148	$	108,140	4,243	$	(198,435)	$	2,264,831	$	(102,917)	$	2,101,767

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

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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 have an everyday place in people's lives, connecting them to the digital experiences they care about. Almost 40 years ago, Logitech created products to improve experiences around the personal PC platform, and today it is a multi-brand, multi-category company designing products that enable better experiences consuming, sharing and creating any digital content such as 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 and e-tailers and indirect sales through distributors.

Logitech was founded in Switzerland in 1981 and Logitech International S.A. has been the parent holding company of Logitech since 1988. Logitech International S.A. is a Swiss holding company with its registered office in Apples, Switzerland and headquarters in Lausanne, Switzerland, which conducts its business through subsidiaries in the Americas, 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 (GAAP) for interim financial information and therefore do not include all the information required by 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, 2020, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on May 27, 2020.

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 and nine months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2021, 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 nine months ended December 31, 2020 compared with the significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

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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. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Significant estimates and assumptions made by management involve fair value of goodwill and intangible assets acquired from business acquisitions, valuation of right-of-use assets, valuation of investment in privately held companies classified under Level 3 of the fair value hierarchy, pensions obligations, warranty liabilities, accruals for customer incentives, cooperative marketing, and pricing programs (Customer Programs) and related breakage when appropriate, accrued sales return liability, inventory valuation, share-based compensation expense, uncertain tax positions, and valuation allowances for deferred tax assets. Although these estimates are based on management’s best knowledge of current events and actions that may impact the Company in the future, actual results could differ materially from these estimates.

Risks and Uncertainties

We are subject to risks and uncertainties as a result of the novel coronavirus (COVID-19). Capital markets and economies worldwide have been negatively impacted by COVID-19 and it is still unclear how lasting and deep the economic impacts will be. During the three and nine months ended December 31, 2020, the COVID-19 pandemic had mixed effects on the Company’s results of operations, and it may continue to have mixed or adverse effects. While there was high demand for and consumption of certain of our products that led to increased sales and operating income during the three and nine months ended December 31, 2020, at the same time the Company experienced disruptions and higher costs in our manufacturing, supply chain and logistics operations and outsourced services. The ongoing and full extent of the impact of the COVID-19 pandemic on the Company's business and operational and financial performance and condition, including the sustainability of its effect on trends positive to the Company, is uncertain and will depend on many factors outside the Company's control, including but not limited to the timing, extent, duration and effects of the virus and any of its mutations, the availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective public safety and other protective measures and the public's response to such measures, the impact of COVID-19 on the global economy and demand for the Company's products and services. Should the COVID-19 pandemic or global economic slowdown not improve or worsen, or if the Company's attempt to mitigate its impact on its operations and costs is not successful, the Company's business, results of operations, financial condition and prospects may be adversely affected.

Recent Accounting Pronouncements Adopted

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13), which was further updated and clarified by the FASB through issuance of additional related ASUs, replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including trade receivables. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this standard effective April 1, 2020, using a modified retrospective approach. Upon adoption, the Company updated its credit loss models to utilize a forward-looking current expected credit losses (CECL) model in place of the incurred loss methodology for financial instruments measured at amortized cost, including accounts receivable. The cumulative effect adjustment from adoption was not material to the Company's condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements" (ASU 2018-13), which eliminates, adds and modifies certain disclosure requirements for fair value measurements, including eliminating the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and requiring the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. Some of these disclosure changes must be applied prospectively while others retrospectively depending on requirement. The Company adopted this standard effective April 1, 2020. The adoption of ASU 2018-13 did not have a material impact on the Company's condensed consolidated financial statements.

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In August 2018, the FASB issued ASU 2018-14, "Compensation - Retirement Benefits - Defined Benefits Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans" (ASU 2018-14), which requires that the Company remove various disclosures that no longer are considered cost-beneficial, namely amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year. Further, ASU 2018-14 requires disclosure or clarification of the reasons for significant gains or losses related to changes in the benefit obligation for the period. The Company adopted this standard effective April 1, 2020 using a retrospective approach and the updated disclosures will be included in the Company's Form 10-K for the fiscal year ending March 31, 2021. The adoption of ASU 2018-14 did not have an impact on the Company's condensed consolidated financial statements.

Recent Accounting Pronouncements To Be Adopted

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" (ASU 2019-12), which eliminates certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. This ASU also includes guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 is effective for annual and interim periods in fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently assessing the impact of ASU 2019-12 on its consolidated financial statements and plans to adopt the standard effective April 1, 2021.

Note 2 — Net Income Per Share

The following table summarizes the computations of basic and diluted net income per share for the three and nine months ended December 31, 2020 and December 31, 2019 (in thousands, except per share amounts):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Net income	$	382,523	$	117,525	$	721,510	$	235,803

Shares used in net income per share computation:
Weighted average shares outstanding - basic	169,050		167,063		168,448		166,678
Effect of potentially dilutive equivalent shares	3,537		2,622		2,930		2,495
Weighted average shares outstanding - diluted	172,587		169,685		171,378		169,173

Net income per share:
Basic	$	2.26	$	0.70	$	4.28	$	1.41
Diluted	$	2.22	$	0.69	$	4.21	$	1.39

Share equivalents attributable to outstanding stock options, restricted stock units ("RSUs") and employee share purchase plan ("ESPP") rights totaling 0.3 million and 1.8 million for the three months ended December 31, 2020 and 2019, respectively, and 0.4 million and 1.8 million for the nine months ended December 31, 2020 and 2019, respectively, were excluded from the calculation of diluted net income per share because the combined exercise price and average unamortized grant date fair value upon exercise of these options and ESPP rights or vesting of RSUs were greater than the average market price of the Company's shares during the periods presented herein, and therefore their inclusion would have been anti-dilutive. 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.

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Note 3 — Employee Benefit Plans

Employee Share Purchase Plans and Stock Incentive Plans

As of December 31, 2020, the Company offers the 2006 Employee Share Purchase Plan, as amended and restated (Non-U.S.) (2006 ESPP), the 1996 Employee Share Purchase Plan (U.S.), as amended and restated (1996 ESPP), the 2006 Stock Incentive Plan, as amended and restated (2006 Plan), and the 2012 Stock Inducement Equity Plan (2012 Plan).

The following table summarizes the share-based compensation expense and total income tax benefit recognized for share-based awards for the three and nine months ended December 31, 2020 and 2019 (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Cost of goods sold	$	1,747	$	1,210	$	4,919	$	3,552
Marketing and selling	8,390		6,216		27,559		20,016
Research and development	3,482		2,242		10,348		6,644
General and administrative	6,195		4,163		21,888		10,089

Total share-based compensation expense	19,814		13,831		64,714		40,301
Income tax benefit	(3,471)		(3,135)		(15,540)		(12,658)
Total share-based compensation expense, net of income tax benefit	$	16,343	$	10,696	$	49,174	$	27,643

The income tax benefit in the respective period primarily consists of tax benefit related to the share-based compensation expense for the period and direct tax benefit realized, including net excess tax benefits recognized from share-based awards vested or exercised during the period.

As of December 31, 2020 and 2019, the balance of capitalized share-based compensation included in inventory was $1.0 million and $0.9 million, respectively.

Defined Benefit Plans

Certain of the Company’s subsidiaries sponsor defined benefit pension plans or non-retirement post-employment benefits covering substantially all of their employees. Benefits are provided based on employees’ years of service and earnings, or in accordance with applicable employee benefit regulations. The Company’s practice is to fund amounts sufficient to meet the requirements set forth in the applicable employee benefit and tax regulations. The costs recorded of $2.9 million and $2.3 million for the three months ended December 31, 2020 and 2019, respectively, and $8.3 million and $7.1 million for the nine months ended December 31, 2020 and 2019, 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 canton of Vaud enacted the Federal Act on Tax Reform and AHV Financing ("TRAF"), a major reform to better align the Swiss tax system with international tax standards, on March 10, 2020 that took effect as of January 1, 2020. The longstanding tax ruling from the canton of Vaud was applicable through December 31, 2019.

The income tax provision for the three months ended December 31, 2020 was $72.3 million based on an effective income tax rate of 15.9% of pre-tax income, compared to an income tax provision of $14.5 million based on an effective income tax rate of 11.0% of pre-tax income for the three months ended December 31, 2019. The income tax provision for the nine months ended December 31, 2020 was $142.6 million based on an effective income tax rate of 16.5% of pre-tax income, compared to an income tax provision of $18.4 million based on an effective income tax rate of 7.2% of pre-tax income for the nine months ended December 31, 2019.

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The change in the effective income tax rate for the three and nine months ended December 31, 2020, compared to the same periods ended December 31, 2019 was primarily due to the mix of income and losses in the various tax jurisdictions in which the Company operates. The Swiss income tax provision in the three and nine months ended December 31, 2020 represents the income tax provision at the full statutory income tax rate of 13.63%. In the same periods ended December 31, 2019 when TRAF was yet to be enacted at the federal and cantonal levels, the transition income tax provision reflects the application of the longstanding tax ruling through December 31, 2019. Furthermore, there was a discrete tax benefit of $1.7 million from adjusting deferred tax assets and liabilities in Switzerland in the nine months ended December 31, 2019. There were discrete tax benefits of $7.2 million and $2.9 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 nine-month period ended December 31, 2020, compared with $6.0 million and $2.7 million, respectively, in the nine-month period ended December 31, 2019.

As of December 31, 2020 and March 31, 2020, the total amount of unrecognized tax benefits due to uncertain tax positions was $158.8 million and $140.8 million, respectively, all of which would affect the effective income tax rate if recognized.

As of December 31, 2020 and March 31, 2020, the Company had $60.8 million and $40.8 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 December 31, 2020 and March 31, 2020, the Company had $4.7 million and $4.5 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 2021, 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 $4.4 million from the lapse of the statutes of limitations in various jurisdictions during the next twelve months.

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Note 5 — Balance Sheet Components

The following table presents the components of certain balance sheet asset amounts as of December 31 and March 31, 2020 (in thousands):


	December 31, 2020		March 31, 2020
Accounts receivable, net:
Accounts receivable	$	1,196,050	$	597,939
Allowance for doubtful accounts	(1,328)		(1,894)
Allowance for sales returns	(14,665)		(6,599)
Allowance for cooperative marketing arrangements	(53,387)		(38,794)
Allowance for customer incentive programs	(91,863)		(55,741)
Allowance for pricing programs	(139,870)		(100,168)
	$	894,937	$	394,743
Inventories:
Raw materials	$	94,748	$	56,052
Finished goods	382,054		173,197
	$	476,802	$	229,249
Other current assets:
Value-added tax receivables	$	60,746	$	33,616
Prepaid expenses and other assets	56,995		41,304
	$	117,741	$	74,920
Property, plant and equipment, net:
Property, plant and equipment at cost	$	392,478	$	346,506
Accumulated depreciation and amortization	(295,795)		(

10-Q	2020-12-31	Filed 2021-01-21
10-Q	2020-09-30	Filed 2020-10-22
10-Q	2020-06-30	Filed 2020-07-23
10-K	2020-03-31	Filed 2020-05-27
10-Q	2019-12-31	Filed 2020-01-23
10-Q	2019-09-30	Filed 2019-10-25
10-Q	2019-06-30	Filed 2019-07-25
10-K	2019-03-31	Filed 2019-05-17
10-Q	2018-12-31	Filed 2019-01-24
10-Q	2018-09-30	Filed 2018-10-25
10-Q	2018-06-29	Filed 2018-08-02
10-K	2018-03-31	Filed 2018-05-21
10-Q	2017-12-31	Filed 2018-01-25
10-Q	2017-09-30	Filed 2017-11-01
10-Q	2017-06-30	Filed 2017-07-27
10-K	2017-03-31	Filed 2017-05-26
10-Q	2016-12-31	Filed 2017-02-06
10-Q	2016-09-30	Filed 2016-10-27
10-Q	2016-06-30	Filed 2016-07-29
10-K	2016-03-31	Filed 2016-05-23
10-Q	2015-12-31	Filed 2016-01-22
10-Q	2015-09-30	Filed 2015-10-23
10-Q	2015-06-30	Filed 2015-07-24
10-K	2015-03-31	Filed 2015-06-05
10-Q	2014-12-31	Filed 2015-01-27
10-Q	2014-09-30	Filed 2014-11-26
10-Q	2014-06-30	Filed 2014-11-14
10-K	2014-03-31	Filed 2014-11-13
10-Q	2013-12-31	Filed 2014-01-30
10-Q	2013-09-30	Filed 2013-11-05
10-Q	2013-06-30	Filed 2013-08-07
10-K	2013-03-31	Filed 2013-05-30
10-Q	2012-12-31	Filed 2013-02-05
10-Q	2012-09-30	Filed 2012-11-06
10-Q	2012-06-30	Filed 2012-08-06
10-K	2012-03-31	Filed 2012-05-30
10-Q	2011-12-31	Filed 2012-02-06
10-Q	2011-09-30	Filed 2011-11-07
10-Q	2011-06-30	Filed 2011-08-08
10-K	2011-03-31	Filed 2011-05-27
10-Q	2010-12-31	Filed 2011-02-07
10-Q	2010-09-30	Filed 2010-11-08
10-Q	2010-06-30	Filed 2010-08-09
10-K	2010-03-31	Filed 2010-05-27
10-Q	2009-12-31	Filed 2010-02-02

8-K	2020-10-19
8-K	2020-09-09
8-K	2020-07-20
8-K	2020-07-01
8-K	2020-05-11
8-K	2020-03-25
8-K	2020-01-20
8-K	2019-10-21
8-K	2019-09-26
8-K	2019-09-04
8-K	2019-07-22
8-K	2019-07-22
8-K	2019-07-02
8-K	2019-06-25
8-K	2019-04-29
8-K	2019-03-26
8-K	2019-01-21
8-K	2018-10-22
8-K	2018-09-05
8-K	2018-07-29
8-K	2018-06-27
8-K	2018-05-02
8-K	2018-01-22

EX-3.1	exhibit31q3fy21ng.htm
EX-31.1	exhibit311q3fy21ng.htm
EX-31.2	exhibit312q3fy21ng.htm
EX-32.1	exhibit321q3fy21ng.htm

LOGI 10Q Quarterly Report

Logitech Earnings 2020-12-31