UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
 
Date of Report: October 25, 2016
 (Date of earliest event reported)
 
LOGITECH INTERNATIONAL S.A.
(Exact name of registrant as specified in its charter)
 
Commission File Number: 0-29174

	
			
Canton of Vaud, Switzerland
(State or other jurisdiction
of incorporation or organization)	 	None
(I.R.S. Employer
Identification No.)	

	
	
Logitech International S.A.
Apples, 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)	
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
On October 25, 2016 , Logitech International S.A. (“Logitech”) issued a press release regarding its financial results for the quarter ended September 30, 2016 .  A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
 
The information in Item 2.02 and Item 9.01 of this Current Report, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
 
d)                                Exhibits.
 
The following exhibit is furnished with this report on Form 8-K:
 
99.1                      Press release issued on October 25, 2016 including financial results for the quarter ended September 30, 2016 .

 
 SIGNATURES
 
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized.

	
			
 	 	Logitech International S.A.	

 	 	/s/ Bracken Darrell	
 	 	 	
 	 	Bracken Darrell	
 	 	President and Chief Executive Officer	

 	 	/s/ Vincent Pilette	
 	 	 	
 	 	Vincent Pilette	
 	 	Chief Financial Officer	
October 25, 2016	 	 	

EXHIBIT INDEX
 
99.1                      Press release issued on October 25, 2016 including financial results for the quarter ended September 30, 2016 .

Exhibit 99.1

Editorial Contacts:
Ben Lu, Vice President, Investor Relations - USA (510) 713-5568
Krista Todd, Vice President, External Communications - USA (510) 713-5834
Ben Starkie, Corporate Communications - Europe +41 (0) 79-292-3499

Logitech Delivers Record Q2 Retail Revenue, Up 14%
NEWARK, Calif. - October 25, 2016 and LAUSANNE, Switzerland, October 26, 2016 - Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the second quarter of Fiscal Year 2017.
		
•	Q2 sales were $564 million, up 9 percent compared to Q2 of the prior year. Q2 retail sales grew 14 percent, reaching a record level for Q2.	
		
•	Q2 GAAP operating income was $53 million compared to $37 million a year ago. Q2 GAAP earnings per share (EPS) from continuing operations were $0.28 compared to $0.18 a year ago.	
		
•	Q2 non-GAAP operating income was $65 million compared to $47 million a year ago, with non-GAAP EPS of $0.35 compared to $0.25 a year ago.	
		
•	Q2 cash flow from operations was $74 million compared to $11 million a year ago.	
“We’ve delivered an outstanding quarter - the highest Q2 retail sales in Logitech’s history - and a first half ahead of expectations,” said Bracken Darrell, Logitech president and chief executive officer. “Once more this quarter shows our strategy clearly: new product launches that again demonstrate the power of our innovation engine, ongoing operational excellence, and profitable growth across all our regions and in almost all our market opportunities. As we enter the second half of the year and our biggest quarter, we’ve got momentum, a winning product portfolio and a terrific team.”
Outlook
Logitech’s Fiscal Year 2017 outlook is 8 to 10 percent retail sales growth in constant currency and $195 million to $205 million in non-GAAP operating income.

Prepared Remarks Available Online
Logitech has made its prepared written remarks for the financial results teleconference available online on the Logitech corporate website at http://ir.logitech.com .
Financial Results Teleconference and Webcast
Logitech will hold a financial results teleconference to discuss the results for Q2 FY 2017 on Weds., October 26, 2016 at 8:30 a.m. Eastern Daylight Time and 2:30 p.m. Central European Summer Time. A live webcast of the call will be available on the Logitech corporate website at http://ir.logitech.com .
Continued Operations
Logitech separated its Lifesize division from the Company on Dec. 28, 2015. Except as otherwise noted, all the results reported in this press release as well as comparisons between periods are focused on results from continuing operations and do not address the performance of Lifesize, which is now reported in the Company’s financial statements under discontinued operations or total Logitech including discontinued operations. For more information on the impact of the Lifesize separation on Logitech’s historical results, please refer to the Financial Reporting section of Logitech’s Financial History, available on the Logitech corporate website at http://ir.logitech.com .
Use of Non-GAAP Financial Information and Constant Currency
To facilitate comparisons to Logitech’s historical results, Logitech has included non-GAAP adjusted measures, which exclude share-based compensation expense, amortization of intangible assets, purchase accounting effect on inventory, acquisition-related costs, restructuring charges (credits), gain (loss) on equity-method investment, investigation and related expenses, non-GAAP income tax adjustment, and other items detailed under “Supplemental Financial Information” after the tables below. Logitech also presents percentage sales growth in constant currency to show performance unaffected by fluctuations in currency exchange rates. Percentage sales growth in constant currency 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. Logitech believes this information, used together with the GAAP financial information, will help investors to evaluate its current period performance and trends in its business. With respect to the Company’s outlook for non-GAAP operating income, most of

these excluded amounts pertain to events that have not yet occurred and are not currently possible to estimate with a reasonable degree of accuracy. Therefore, no reconciliation to the GAAP amounts has been provided for Fiscal Year 2017.
About Logitech
Logitech designs products that have an everyday place in people's lives, connecting them to the digital experiences they care about. Over 30 years ago Logitech started connecting people through computers, and now it’s designing products that bring people together through music, gaming, video and computing. Founded in 1981, Logitech International is a Swiss public company listed on the SIX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI). Find Logitech at www.logitech.com , the company blog or @Logitech .
     # # #
This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation statements regarding: our strategy, new product launches, product portfolio, innovation, operations, profitability, growth, momentum, and outlook for Fiscal Year 2017 operating income and sales growth as well as the size of our fiscal third quarter. The forward-looking statements in this release involve risks and uncertainties that could cause Logitech’s actual results and events to differ materially from those anticipated in these forward-looking statements, including, without limitation: if our product offerings, marketing activities and investment prioritization decisions do not result in the sales, profitability or profitability growth we expect, or when we expect it; the demand of our customers and our consumers for our products and our ability to accurately forecast it; if we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories; if we do not successfully execute on our growth opportunities or our growth opportunities are more limited than we expect; if sales of PC peripherals are less than we expect; the effect of pricing, product, marketing and other initiatives by our competitors, and our reaction to them, on our sales, gross margins and profitability; if our products and marketing strategies fail to separate our products from competitors’ products; if we do not fully realize our goals to lower our costs and improve our operating leverage; if there is a deterioration of business and economic conditions in one or more of our sales regions or product categories, or significant fluctuations in exchange rates. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in Logitech’s periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2016 and our Quarterly Report on Form 10-Q for fiscal quarter ended June 30, 2016, available at www.sec.gov , under the caption Risk Factors and elsewhere. Logitech does not undertake any obligation to update any forward-looking statements to reflect new information or events or circumstances occurring after the date of this press release.
Note that unless noted otherwise, comparisons are year over year.
2016 Logitech, Logicool, Logi and other Logitech marks are owned by Logitech and may be registered. All other trademarks are the property of their respective owners. For more information about Logitech and its products, visit the company’s website at www.logitech.com .
 
(LOGIIR)

	
																	
LOGITECH INTERNATIONAL S.A.	 	 	 	 	 	 	 	 	
(In thousands, except per share amounts) - unaudited	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	Six Months Ended	
 	 	September 30,	 	September 30,	
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (A)  	 	2016	 	2015	 	2016	 	2015	
 	 	 	 	 	 	 	 	 	
Net sales	 	$	564,304		 	$	518,494		 	$	1,044,168		 	$	966,180		
Cost of goods sold	 	356,268		 	345,977		 	665,893		 	635,730		
Amortization of intangible assets and purchase accounting effect on inventory	 	1,163		 	—		 	2,776		 	—		
Gross profit	 	206,873		 	172,517		 	375,499		 	330,450		
Operating expenses:	 	 	 	 	 	 	 	 	
Marketing and selling	 	93,792		 	78,833		 	177,664		 	154,629		
Research and development	 	32,632		 	28,725		 	64,583		 	56,727		
General and administrative	 	25,216		 	25,074		 	50,956		 	53,886		
Amortization of intangible assets and acquisition-related costs	 	1,748		 	168		 	3,041		 	336		
Restructuring charges (credits), net	 	74		 	3,146		 	(11	)	 	14,684		
Total operating expenses	 	153,462		 	135,946		 	296,233		 	280,262		
Operating income	 	53,411		 	36,571		 	79,266		 	50,188		
Interest income (expense), net	 	(90	)	 	189		 	61		 	444		
Other expense, net	 	(683	)	 	(737	)	 	(1,691	)	 	(1,756	)	
Income before income taxes	 	52,638		 	36,023		 	77,636		 	48,876		
Provision for income taxes	 	5,593		 	5,571		 	8,650		 	5,564		
Net income from continuing operations	 	47,045		 	30,452		 	68,986		 	43,312		
Loss from discontinued operations, net of taxes	 	—		 	(12,355	)	 	—		 	(17,778	)	
Net income	 	$	47,045		 	$	18,097		 	$	68,986		 	$	25,534		
 	 	 	 	 	 	 	 	 	
Net income (loss) per share - basic:	 	 		 	 		 	 		 	 		
Continuing operations	 	$	0.29		 	$	0.19		 	$	0.43		 	$	0.26		
Discontinued operations	 	—		 	(0.08	)	 	—		 	(0.10	)	
Net income per share - basic	 	$	0.29		 	$	0.11		 	$	0.43		 	$	0.16		
 	 	 	 	 	 	 	 	 	
Net income (loss) per share - diluted:	 	 	 	 	 	 	 	 	
Continuing operations	 	$	0.28		 	$	0.18		 	$	0.42		 	$	0.26		
Discontinued operations	 	—		 	(0.07	)	 	—		 	(0.11	)	
Net income per share - diluted	 	$	0.28		 	$	0.11		 	$	0.42		 	$	0.15		
 	 	 	 	 	 	 	 	 	
Weighted average shares used to compute net income (loss) per share:	 	 		 	 		 	 		 	 		
Basic	 	162,222		 	163,515		 	162,176		 	163,957		
Diluted	 	165,549		 	165,841		 	164,926		 	166,352		
	 			 			 			 			
Cash dividend per share	 	$	0.57		 	$	0.53		 	$	0.57		 	$	0.53		

	
									
LOGITECH INTERNATIONAL S.A.	 	 	 	 	
(In thousands) - unaudited	 	 	 	 	
 	 	 	 	 	
 	 	September 30,	 	March 31,	
CONDENSED CONSOLIDATED BALANCE SHEETS  (A)	 	2016	 	2016	
 	 	 	 	 	
Current assets:	 	 	 	 	
Cash and cash equivalents	 	$	395,201		 	$	519,195		
Accounts receivable, net	 	240,606		 	142,778		
Inventories	 	268,110		 	228,786		
Other current assets	 	40,201		 	35,488		
Total current assets	 	944,118		 	926,247		
Non-current assets:	 	 		 	 		
Property, plant and equipment, net	 	84,797		 	92,860		
Goodwill	 	249,765		 	218,224		
Other intangible assets	 	53,063		 	—		
Other assets	 	84,517		 	86,816		
Total assets	 	$	1,416,260		 	$	1,324,147		
 	 	 		 	 		
Current liabilities:	 	 		 	 		
Accounts payable	 	$	333,543		 	$	241,166		
Accrued and other current liabilities	 	213,910		 	173,764		
Total current liabilities	 	547,453		 	414,930		
Non-current liabilities:	 	 		 	 		
Income taxes payable	 	60,360		 	59,734		
Other non-current liabilities	 	92,413		 	89,535		
Total liabilities	 	700,226		 	564,199		
 	 	 	 	 	
Shareholders’ equity:	 	 	 	 	
Registered shares, CHF 0.25 par value:	 	30,148		 	30,148		
Issued and authorized shares —173,106 at September 30 and March 31, 2016	 	 	 	 	
Conditionally authorized shares — 50,000 at September 30 and March 31, 2016	 	 	 	 	
Additional paid-in capital	 	8,851		 	6,616		
Less shares in treasury, at cost —   11,009 at September 30, 2016 and 10,697 at March 31, 2016	 	(152,070	)	 	(128,407	)	
Retained earnings	 	937,220		 	963,576		
Accumulated other comprehensive loss	 	(108,115	)	 	(111,985	)	
Total shareholders’ equity	 	716,034		 	759,948		
Total liabilities and shareholders’ equity	 	$	1,416,260		 	$	1,324,147		

	
																	
LOGITECH INTERNATIONAL S.A.	 	 	 	 	 	 	 	 	
(In thousands) - unaudited	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	Six Months Ended	
 	 	September 30,	 	September 30,	
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (A)	 	2016	 	2015	 	2016	 	2015	
 	 	 	 	 	 	 	 	 	
Cash flows from operating activities:	 	 		 	 		 	 	 	 	
Net income	 	$	47,045		 	$	18,097		 	$	68,986		 	$	25,534		
Non-cash items included in net income:	 	 	 	 	 	 	 	 	
Depreciation	 	10,511		 	11,721		 	23,616		 	22,237		
Amortization of intangible assets	 	2,159		 	494		 	3,867		 	1,226		
Loss (gain) on equity-method investment	 	(171	)	 	77		 	(172	)	 	180		
Share-based compensation expense	 	8,450		 	6,508		 	16,967		 	13,257		
Excess tax benefits from share-based compensation	 	(850	)	 	(498	)	 	(4,130	)	 	(1,163	)	
Deferred income taxes	 	663		 	7,684		 	(385	)	 	952		
Changes in operating assets and liabilities, net of acquisitions:	 	 	 	 	 	 	 	 	
Accounts receivable, net	 	(48,340	)	 	(54,195	)	 	(97,001	)	 	(95,403	)	
Inventories	 	(18,310	)	 	(1,278	)	 	(28,317	)	 	(55,442	)	
Other assets	 	(3,567	)	 	(6,128	)	 	(4,738	)	 	(8,511	)	
Accounts payable	 	40,907		 	15,820		 	83,676		 	50,361		
Accrued and other liabilities	 	35,522		 	12,435		 	25,387		 	31,910		
Net cash provided by (used in) operating activities	 	74,019		 	10,737		 	87,756		 	(14,862	)	
Cash flows from investing activities:	 	 		 	 		 	 	 	 	
Purchases of property, plant and equipment	 	(6,623	)	 	(15,987	)	 	(14,758	)	 	(31,277	)	
Investment in privately held companies	 	(160	)	 	(240	)	 	(480	)	 	(480	)	
Acquisitions, net of cash acquired	 	(13,000	)	 	—		 	(66,987	)	 	—		
Release of restricted cash	 	—		 	—		 	715		 	—		
Purchase of trading investments	 	(1,042	)	 	(1,746	)	 	(5,271	)	 	(2,649	)	
Proceeds from sales of trading investments	 	1,065		 	2,015		 	5,296		 	2,855		
Net cash used in investing activities	 	(19,760	)	 	(15,958	)	 	(81,485	)	 	(31,551	)	
Cash flows from financing activities:	 	 		 	 		 	 	 	 	
Payment of cash dividends	 	(93,093	)	 	(85,915	)	 	(93,093	)	 	(85,915	)	
Purchases of treasury shares	 	(18,472	)	 	(39,988	)	 	(42,894	)	 	(48,802	)	
Proceeds from sales of shares upon exercise of options and purchase rights	 	13,885		 	7,037		 	14,484		 	11,103		
Tax withholdings related to net share settlements of restricted stock units	 	(1,862	)	 	(2,206	)	 	(11,047	)	 	(3,502	)	
Excess tax benefits from share-based compensation	 	850		 	498		 	4,130		 	1,163		
Net cash used in financing activities	 	(98,692	)	 	(120,574	)	 	(128,420	)	 	(125,953	)	
Effect of exchange rate changes on cash and cash equivalents	 	(477	)	 	(659	)	 	(1,845	)	 	1,102		
Net decrease in cash and cash equivalents	 	(44,910	)	 	(126,454	)	 	(123,994	)	 	(171,264	)	
Cash and cash equivalents, beginning of the period	 	440,111		 	492,228		 	519,195		 	537,038		
Cash and cash equivalents, end of the period	 	$	395,201		 	$	365,774		 	$	395,201		 	$	365,774		
 	 	 	 	 	 	 	 	 	
The following amounts reflected in the statements of cash flows are included in discontinued operations:	
Depreciation	 	$	—		 	$	715		 	$	—		 	$	1,420		
Amortization of other intangible assets	 	$	—		 	$	326		 	$	—		 	$	890		
Share-based compensation expense	 	$	—		 	$	202		 	$	—		 	$	428		
Purchases of property, plant and equipment	 	$	—		 	$	365		 	$	—		 	$	750		
Cash and cash equivalents, beginning of the period	 	$	—		 	$	1,911		 	$	—		 	$	3,659		
Cash and cash equivalents, end of the period	 	$	—		 	$	4,639		 	$	—		 	$	4,639		

	
																							
LOGITECH INTERNATIONAL S.A.	 	 	 	 	 	 	 	 	 	 	 	 	
(In thousands) - unaudited	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
NET SALES	 	Three Months Ended	 	Six Months Ended	
 	 	September 30,	 	September 30,	
SUPPLEMENTAL FINANCIAL INFORMATION	 	2016	 	2015	 	Change	 	2016	 	2015	 	Change	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales by channel:	 	 	 	 	 	 	 	 	 	 	 	 	
Retail	 	$	564,304		 	$	496,263		 	14	 %	 	$	1,044,168		 	$	921,651		 	13	 %	
OEM	 	—		 	22,231		 	(100	)	 	—		 	44,529		 	(100	)	
Total net sales	 	$	564,304		 	$	518,494		 	9		 	$	1,044,168		 	$	966,180		 	8		
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net retail sales by product category:	 	 	 	 	 	 	 	 	 	 	 	 	
Mobile Speakers	 	$	97,172		 	$	80,550		 	21	 %	 	$	154,468		 	$	121,094		 	28	 %	
Audio-PC & Wearables	 	62,254		 	46,342		 	34		 	118,833		 	92,041		 	29		
Gaming	 	79,193		 	67,624		 	17		 	135,693		 	111,294		 	22		
Video Collaboration	 	28,581		 	20,059		 	42		 	52,491		 	41,235		 	27		
Home Control	 	11,807		 	12,610		 	(6	)	 	22,974		 	22,864		 	—		
Pointing Devices	 	123,300		 	124,668		 	(1	)	 	240,083		 	241,653		 	(1	)	
Keyboards & Combos	 	116,516		 	102,098		 	14		 	234,535		 	207,927		 	13		
Tablet & Other Accessories	 	20,614		 	18,549		 	11		 	34,499		 	37,358		 	(8	)	
PC Webcams	 	24,307		 	23,360		 	4		 	49,569		 	45,041		 	10		
Other (1)	 	560		 	403		 	39		 	1,023		 	1,144		 	(11	)	
Total net retail sales	 	$	564,304		 	$	496,263		 	14		 	$	1,044,168		 	$	921,651		 	13		
__________________	 	 	 	 	 	 	 	 	 	 	 	 	

(1) Other category includes products that we currently intend to transition out of, or have already transitioned out of, because they are no longer strategic to our business.

	
																	
LOGITECH INTERNATIONAL S.A.	 	 	 	 	 	 	 	 	
(In thousands, except per share amounts) - Unaudited	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
GAAP TO NON GAAP RECONCILIATION (A)(B)	 	Three Months Ended	 	Six Months Ended	
 	 	September 30,	 	September 30,	
SUPPLEMENTAL FINANCIAL INFORMATION	 	2016	 	2015	 	2016	 	2015	
 	 	 	 	 	 	 	 	 	
Gross profit - GAAP	 	$	206,873		 	$	172,517		 	$	375,499		 	$	330,450		
Share-based compensation expense	 	638		 	580		 	1,313		 	1,185		
Amortization of intangible assets and purchase accounting effect on inventory	 	1,163		 	—		 	2,776		 	—		
Gross profit - Non-GAAP	 	$	208,674		 	$	173,097		 	$	379,588		 	$	331,635		
 	 	 	 	 	 	 	 	 	
Gross margin - GAAP	 	36.7	%	 	33.3	%	 	36.0	%	 	34.2	%	
Gross margin - Non-GAAP	 	37.0	%	 	33.4	%	 	36.4	%	 	34.3	%	
 	 	 	 	 	 	 	 	 	
Operating expenses - GAAP	 	$	153,462		 	$	135,946		 	$	296,233		 	$	280,262		
Less: Share-based compensation expense	 	7,812		 	5,726		 	15,654		 	11,637		
Less: Amortization of intangible assets and acquisition-related costs	 	1,748		 	168		 	3,041		 	336		
Less: Restructuring charges (credits), net	 	74		 	3,146		 	(11	)	 	14,684		
Less: Investigation and related expenses	 	—		 	321		 	612		 	4,370		
Operating expenses - Non-GAAP	 	$	143,828		 	$	126,585		 	$	276,937		 	$	249,235		
 	 	 	 	 	 	 	 	 	
% of net sales - GAAP	 	27.2	%	 	26.2	%	 	28.4	%	 	29.0	%	
% of net sales - Non - GAAP	 	25.5	%	 	24.4	%	 	26.5	%	 	25.8	%	
 	 	 	 	 	 	 	 	 	
Operating income - GAAP	 	$	53,411		 	$	36,571		 	$	79,266		 	$	50,188		
Share-based compensation expense	 	8,450		 	6,306		 	16,967		 	12,822		
Amortization of intangible assets	 	2,159		 	168		 	3,867		 	336		
Purchase accounting effect on inventory	 	—		 	—		 	703		 	—		
Acquisition-related costs	 	752		 	—		 	1,247		 	—		
Restructuring charges (credits), net	 	74		 	3,146		 	(11	)	 	14,684		
Investigation and related expenses	 	—		 	321		 	612		 	4,370		
Operating income - Non - GAAP	 	$	64,846		 	$	46,512		 	$	102,651		 	$	82,400		
 	 	 	 	 	 	 	 	 	
% of net sales - GAAP	 	9.5	%	 	7.1	%	 	7.6	%	 	5.2	%	
% of net sales - Non - GAAP	 	11.5	%	 	9.0	%	 	9.8	%	 	8.5	%	
 	 	 	 	 	 	 	 	 	
Net income from continuing operations - GAAP	 	$	47,045		 	$	30,452		 	$	68,986		 	$	43,312		
Share-based compensation expense	 	8,450		 	6,306		 	16,967		 	12,822		
Amortization of intangible assets	 	2,159		 	168		 	3,867		 	336		
Purchase accounting effect on inventory	 	—		 	—		 	703		 	—		
Acquisition-related costs	 	752		 	—		 	1,247		 	—		
Restructuring charges (credits), net	 	74		 	3,146		 	(11	)	 	14,684		
Investigation and related expenses	 	—		 	321		 	612		 	4,370		
Loss (gain) on equity-method investment	 	(171	)	 	77		 	(172	)	 	180		
Non-GAAP income tax adjustment	 	(379	)	 	658		 	(1,054	)	 	(3,171	)	
Net income from continuing operations  - Non - GAAP	 	$	57,930		 	$	41,128		 	$	91,145		 	$	72,533		
 	 	 	 	 	 	 	 	 	
Net income from continuing operations  per share:	 	 	 	 	 	 	 	 	
Diluted - GAAP	 	$	0.28		 	$	0.18		 	$	0.42		 	$	0.26		
Diluted - Non - GAAP	 	$	0.35		 	$	0.25		 	$	0.55		 	$	0.44		
 	 	 	 	 	 	 	 	 	
Shares used to compute net income per share:	 	 	 	 	 	 	 	 	
Diluted - GAAP and Non - GAAP	 	165,549		 	165,841		 	164,926		 	166,352		

	
																	
LOGITECH INTERNATIONAL S.A.	 	 	 	 	 	 	 	 	
(In thousands) - unaudited	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
SHARE-BASED COMPENSATION EXPENSE	 	Three Months Ended	 	Six Months Ended	
 	 	September 30,	 	September 30,	
SUPPLEMENTAL FINANCIAL INFORMATION	 	2016	 	2015	 	2016	 	2015	
 	 	 	 	 	 	 	 	 	
Share-based Compensation Expense	 	 	 	 	 	 	 	 	
Cost of goods sold	 	$	638		 	$	580		 	$	1,313		 	$	1,185		
Marketing and selling	 	3,244		 	1,997		 	6,681		 	4,061		
Research and development	 	917		 	655		 	1,831		 	1,328		
General and administrative	 	3,651		 	3,074		 	7,142		 	6,248		
Restructuring	 	—		 	—		 	—		 	7		
Total share-based compensation expense	 	8,450		 	6,306		 	16,967		 	12,829		
Income tax benefit	 	(1,886	)	 	(1,160	)	 	(3,701	)	 	(2,497	)	
Total share-based compensation expense, net of income tax	 	$	6,564		 	$	5,146		 	$	13,266		 	$	10,332		

(A) Preliminary valuation from the business acquisitions

The preliminary purchase price allocations from the business acquisitions during the current periods are included in the tables. The fair value of identifiable intangible assets acquired was based on estimates and assumptions made by us at the time of acquisitions. As additional information becomes available, such as finalization of the estimated fair value of the assets acquired and liabilities assumed and the fair value of contingent consideration, we may revise our preliminary or interim purchase price allocations during the remainder of the measurement periods(which will not exceed 12 months from the acquisition dates). Any such revisions or changes may be material as we finalize the fair values of the tangible and intangible assets acquired and liabilities assumed, and may have a material impact over the results of operations.

(B) Non-GAAP Financial Measures

To supplement our condensed consolidated financial results prepared in accordance with GAAP, we use a number of financial measures, both GAAP and non-GAAP, in analyzing and assessing our overall business performance, for making operating decisions and for forecasting and planning future periods. We consider the use of non-GAAP financial measures helpful in assessing our current financial performance, ongoing operations and prospects for the future as well as understanding financial and business trends relating to our financial condition and results of operations.

While we use non-GAAP financial measures as a tool to enhance our understanding of certain aspects of our financial performance and to provide incremental insight into the underlying factors and trends affecting both our performance and our cash-generating potential, we do not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides useful supplemental data that, while not a substitute for GAAP financial measures, can offer insight in the review of our financial and operational performance and enables investors to more fully understand trends in our current and future performance. In assessing our business during the quarter ended June 30, 2016, we excluded items in the following general categories, each of which are described below:

Share-based compensation expenses . We believe that providing non-GAAP measures excluding share-based compensation expense, in addition to the GAAP measures, allows for a more transparent comparison of our financial results from period to period. We prepare and maintain our budgets and forecasts for future periods on a basis consistent with this non-GAAP financial measure. Further, companies use a variety of types of equity awards as well as a variety of methodologies, assumptions and estimates to determine share-based compensation expense. We believe that excluding share-based compensation expense enhances our ability and the ability of investors to understand the impact of non-cash share-based compensation on our operating results and to compare our results against the results of other companies.

Amortization of intangible assets. We incur intangible asset amortization expense, primarily in connection with our acquisitions of various businesses and technologies. The amortization of purchased intangibles varies depending on the level of acquisition activity. We exclude these various charges in budgeting, planning and forecasting future periods and we believe that providing the non-GAAP measures excluding these various non-cash charges, as well as the

GAAP measures, provides additional insight when comparing our operating expenses and financial results from period to period.

Purchase accounting effect on inventory. Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment excludes the expected profit margin component that is recorded under business combination accounting principles associated with our business acquisitions. We believe the adjustment is useful to investors because such charges are not reflective of our ongoing operations. 

Acquisition-related costs. We incurred expenses in connection with our acquisitions which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related costs include all incremental expenses incurred to effect a business combination. We believe that providing the non-GAAP measures excluding these costs, as well as the GAAP measures, assists our investors because such costs are not reflective of our ongoing operating results.

Restructuring charges (credits). These expenses are associated with re-aligning our business strategies based on current economic conditions. We have undertaken several restructuring plans in recent years. In connection with our restructuring initiatives, we incurred restructuring charges related to employee terminations, facility closures and early cancellation of certain contracts. We believe that providing the non-GAAP measures excluding these charges, as well as the GAAP measures, assists our investors because such charges (credits) are not reflective of our ongoing operating results in the current period.

Gain (loss) on equity-method investment. We recognized gain (loss) related our investments in various privately-held companies, which varies depending on the operational and financial performance of the privately-held companies in which we invested. We believe that providing the non-GAAP measures excluding these charges, as well as the GAAP measures, assists our investors because such charges are not reflective of our ongoing operations.

Investigation and related expenses.   These expenses are forensic accounting, audit, consulting and legal fees related to the Audit Committee’s investigation and the formal investigation by and settlement with the Securities and Exchange Commission (SEC), together with accruals based on settlement with the SEC. We believe that providing the non-GAAP measures excluding these charges, as well as the GAAP measures, assists our investors because such charges are not reflective of our ongoing operations.

Non-GAAP income tax adjustment.  Non-GAAP income tax adjustment primarily measures the income tax effect of non-GAAP adjustments excluded above and other events; the determination of which is based upon the nature of the underlying items, the mix of income and losses in jurisdictions and the relevant tax rates in which we operate. 

Each of the non-GAAP financial measures described above, and used in this press release, should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of each of these non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and may be reflected in the Company’s financial results for the foreseeable future. We compensate for these limitations by providing specific information in the reconciliation included in this press release regarding the GAAP amounts excluded from the non-GAAP financial measures. In addition, as noted above, we evaluate the non-GAAP financial measures together with the most directly comparable GAAP financial information.

Additional Supplemental Financial Information - Constant Currency

In addition, Logitech presents percentage sales growth in constant currency to show performance unaffected by fluctuations in currency exchange rates.  Percentage sales growth in constant currency 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. Sales for the three months ended September 30, 2016 compared to sales for the three months ended September 30, 2015 increased 9 percent in both constant currency and U.S. Dollars. Retail sales for the three months ended September 30, 2016 compared to retail sales for the three months ended September 30, 2015 grew 14 percent in both constant currency and U.S. Dollars.