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 the beliefs of our management as of the date of filing of this Quarterly Report on Form 10-Q. -Q. These forward-looking statements include, among other things, statements relating 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 marketing 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;
•Our expectations regarding our restructuring efforts, including the timing
thereof;
•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 unaudited interim consolidated financial statements and accompanying notes.

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Overview of Our Company

Logitech is a world leader in designing, manufacturing and marketing products
that help connect people to digital and cloud experiences. Over 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 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 and other factors 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 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 depends on the supply
chain, including freight, to receive components, transport finished goods and
deliver our products across the world.

More recently, we have also been impacted by adverse macroeconomic and
geopolitical conditions. These conditions include but are not limited to
inflation, foreign currency fluctuations, slow down of economic activity around
the globe, in part due to rising interest rates, and lower consumer spending. In
addition, 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.

While global supply chain challenges improved during the second quarter of
fiscal 2023, including logistics costs, shipping lead times, and component
availability, if macroeconomic and geopolitical conditions and COVID-19 related
factors do not improve or worsen, our results of operations may be adversely
impacted.

For additional information, see "Liquidity and Capital Resources" below and 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 trade
regulations, adverse tax consequences and pressure to move or diversify our
manufacturing locations," "If we do not accurately forecast market demand for
our products, our business and operating results could be adversely affected,"
"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" and "If we do not successfully coordinate the worldwide
manufacturing and distribution of our products, we could lose sales."

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Summary of Financial Results

Our total sales for each of the three and six months ended September 30, 2022
decreased 12% compared to the same periods of the prior fiscal year, driven by a
decline in sales for all of our product categories other than Video
Collaboration.

Sales for the three months ended September 30, 2022 decreased 26%, 9%, and 2% in
the EMEA, Americas and the Asia Pacific regions, respectively, compared to the
same period of the prior fiscal year. Sales for the six months ended
September 30, 2022, increased 3% in the Asia Pacific region, and decreased 22%
and 14% in the EMEA and Americas regions, respectively, compared to the same
period of the prior fiscal year.

Gross margin was 38.2% and 38.9% for the three and six months ended
September 30, 2022respectively, and decreased by 330 basis points and 350 basis points, respectively, compared to the same periods last year, mainly due to higher material costs and the unfavorable effects of changes in foreign exchange rates .

Operating expenses for the three months ended September 30, 2022 were $311.4
million, or 27.1% of sales, compared to $362.8 million, or 27.8% of sales, in
the same period of the prior fiscal year. Operating expenses for the six months
ended September 30, 2022 were $655.5 million, or 28.4% of sales, compared to
$728.6 million or 27.8% of sales, in the same period of the prior fiscal year.

Net profit for the three and six months ended September 30, 2022 has been $82.1 million and $182.9 millionrespectively, compared to the same periods of the previous year of $139.5 millionand $326.3 millionrespectively.

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.
We believe that innovative personal workspace peripherals, such as our mice and
keyboards, can refresh the design of personal workspaces and help improve the
productivity and engagement of remote work and learning, thus providing growth
opportunities. Hybrid work culture is also expanding the number of new
workspaces to which we can attach our personal workspace 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 hybrid work 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 our peripherals and
accessories.

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 drive commercial and consumer adoption of video
conferencing. 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 development of select
business-specific products (both hardware and software), targeted product
marketing and sales channel development. We believe the continued digitization
of learning and hybrid learning environments is a future growth opportunity.
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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 leading to a decline in our Mobile Speakers
category sales in the past few years. In addition, we will continue developing
true wireless audio products as growth in this category of the wireless audio
market continues to be strong.

Commercial seasonality and product launches

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 WE

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 six months ended September 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.

Adoption of new accounting standards

See Note 1 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for recent accounting pronouncements taken.

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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.

Sales References

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 for each of the three and six months ended September 30, 2022
decreased 12%, compared to the same periods of the prior fiscal year, which was
primarily driven by a decline in sales for all of our product categories other
than Video Collaboration. Our sales for the three and six month periods were
also negatively impacted from lower demand and unfavorable changes in currency
exchange rates. If currency exchange rates had been constant in the three and
six months ended September 30, 2022 and 2021, our constant dollar sales
reduction rates would have been 7% and 8%, respectively.

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, Australian Dollar, Canadian Dollar, Japanese Yen, Pound
Sterling and New Taiwan Dollar. During the three months ended September 30,
2022, approximately 50% of our sales were denominated in currencies other than
the U.S. Dollar.

Sales by Region

The following table presents the change in sales by region for the three and six
months ended September 30, 2022, compared with the three and six months ended
September 30, 2021:

                                                                Sales Growth Rate                                  Constant Dollar
                                                                                                                  Sales Growth Rate
                                                   Three Months Ended        Six Months Ended        Three Months Ended        Six Months Ended
                                                   September 30, 2022       September 30, 2022       September 30, 2022       September 30, 2022
Americas                                                        (9) %                   (14) %                    (9) %                   (14) %
EMEA                                                           (26) %                   (22) %                   (16) %                   (14) %
Asia Pacific                                                    (2) %                     3  %                     4  %                     8  %



Americas:

The decline in sales in the Americas region for the three-month period shown above was mainly due to lower sales of PC webcams, games, tablets and other accessories. The decline in sales in the Americas
region for the six-month periods shown above was primarily driven by lower sales of gaming, audio and PC laptops and webcams.

EMEA:

The decline in sales in our EMEA region for the three and six month periods is mainly due to the decline in sales of all our product categories except for video collaboration.

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Asia Pacific:

The drop in sales in our Asia Pacific region for the three-month period presented above was mainly driven by lower sales of PC Webcams, Keyboards & Combos and Tablet & Other Accessories, partially offset by higher sales of Games. The increase in sales for the six-month period is mainly attributable to an increase in sales of gaming and clocking devices, partially offset by a decrease in sales of other product categories.

Sales by product categories

Sales by product category for the three and six months ended September 30, 2022 and 2021 were as follows (in thousands of dollars):

                                                              Three Months Ended                                              Six Months Ended
                                                                September 30,                                                  September 30,
                                                2022                 2021                Change                2022                 2021                Change
Pointing Devices                           $   185,200          $   189,014                   (2) %       $   368,483          $   371,892                   (1) %
Keyboards & Combos                             200,853              236,272                  (15)             428,573              454,629                   (6)
PC Webcams                                      60,166               94,471                  (36)             119,552              204,389                  (42)
Tablet & Other Accessories                      54,203               80,801                  (33)             120,788              160,073                  (25)
Gaming (1)                                     297,676              330,777                  (10)             580,482              666,174                  (13)
Video Collaboration                            236,180              231,653                    2              482,422              466,538                    3
Mobile Speakers                                 39,195               39,492                   (1)              61,505               67,976                  (10)
Audio & Wearables                               73,271               98,078                  (25)             142,717              214,685                  (34)
Other (2)                                        2,207                5,709                  (61)               4,294               11,969                  (64)

Total Sales                                $ 1,148,951          $ 1,306,267                  (12) %       $ 2,308,816          $ 2,618,325                  (12) %

(1) Games include streaming services revenue generated by Streamlabs. (2) Other includes Smart Home.

Creativity and Productivity Market:

Pointing devices

Our Pointing Devices category includes mice for PC and Mac, including trackballs, touchpads and presentation tools.

Pointing device sales were flat for the three and six months ended
September 30, 2022compared to the same periods of the previous year.

Keyboards and combos

Our Keyboards & Combo category includes PC keyboards, keyboard/mouse combo products, and living room keyboards.

Sales of Keyboards & Combos decreased 15% for the three months ended
September 30, 2022 compared to the same period of the prior fiscal year,
primarily driven by the decrease in sales of our cordless combos and corded PC
keyboards. Sales of Keyboards & Combos decreased 6% for the six months ended
September 30, 2022, compared to the same period of the prior fiscal year,
primarily driven by the decrease in sales of our cordless combos and corded PC
keyboards, partially offset by the increase in sales of our cordless PC
keyboards.

PC webcams

Our PC Webcams category includes PC webcams aimed primarily at consumers, including streaming cameras.

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Sales of PC Webcams decreased 36% and 42% for the three and six months ended
September 30, 2022, respectively, compared to the same periods of the prior
fiscal year, primarily driven by the decrease in sales of our HD Pro Webcam
C920, 1080p Pro Stream Webcam, and Webcam C260.

Tablet and other accessories

Our Tablet Accessories & Others category primarily includes tablet keyboards.

Sales of Tablet & Other Accessories products decreased 33% and 25% for the three
and six months ended September 30, 2022, respectively, compared to the same
periods 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.

Games market:

Games

Our Gaming category includes gaming mice, keyboards, headsets, gamepads, steering wheels, simulation controllers, console gaming headsets, console gaming controllers, and Streamlabs services.

Sales of Gaming decreased 10% and 13% for the three and six months ended
September 30, 2022, respectively, compared to the same periods of the prior
fiscal year, primarily driven by the decrease in sales of most of the gaming
sub-categories, partially offset by an increase in sales of our gaming steering
wheels.

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 2% and 3% for the three and six
months ended September 30, 2022, respectively, compared to the same periods of
the prior fiscal year, primarily due to an increase in sales of conference room
cameras, headsets, and docks, 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 remained flat for the three months ended September 30,
2022, compared to the same period of the prior fiscal year. Sales of Mobile
Speakers decreased 10% for the six months ended September 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 the sales of our
Ultimate Ears Wonderboom 3 mini speakers, introduced in the second quarter of
fiscal year 2023, and an increase in sales of our Hyperboom mobile speakers.

Audio and Laptops

Our Audio and Wearables category includes PC speakers, PC headsets, in-ear headphones, premium wireless audio wearables, and studio-grade Blue Microphones for professionals and consumers.

Audio & Wearables sales were down 25% and 34% for the three and six months ended September 30, 2022respectively, compared to the same periods of the previous year, mainly due to lower sales of almost all sub-categories.

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Gross Profit

Gross profit for the three and six months ended September 30, 2022 and 2021 was as follows (in thousands of dollars):

                               Three Months Ended                               Six Months Ended
                                 September 30,                                   September 30,
                       2022              2021          Change          2022              2021          Change
Net sales         $ 1,148,951       $ 1,306,267         (12) %    $ 2,308,816       $ 2,618,325         (12) %

Gross profit      $   438,780       $   542,163         (19) %    $   898,383       $ 1,111,089         (19) %
Gross margin             38.2  %           41.5  %                       38.9  %           42.4  %



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,
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 for the three and six months ended September 30, 2022 decreased by
330 basis points and 350 basis points, respectively, compared to the same
periods of the prior fiscal year, primarily due to higher material costs and
unfavorable impacts from changes in currency exchange rates.

Functionnary costs

Operating expenses for the three and six months ended September 30, 2022 and 2021 were as follows (in thousands of dollars):

                                                                        Three Months Ended                     Six Months Ended
                                                                           September 30,                         September 30,
                                                                      2022               2021               2022               2021
Marketing and selling                                             $ 202,091          $ 256,627          $ 431,469          $ 508,941
% of sales                                                             17.6  %            19.6  %            18.7  %            19.4  %
Research and development                                             69,009             68,661            144,526            137,907
% of sales                                                              6.0  %             5.3  %             6.3  %             5.3  %
General and administrative                                           26,589             33,271             62,449             73,813
% of sales                                                              2.3  %             2.5  %             2.7  %             2.8  %
Amortization of intangible assets and acquisition-related
costs                                                                 2,873              5,107              6,242             10,324
% of sales                                                              0.3  %             0.4  %             0.3  %             0.4  %

Change in fair value of contingent consideration for
business acquisition                                                      -               (925)                 -             (2,399)
% of sales                                                                 N/A            (0.1) %                N/A            (0.1) %
Restructuring charges, net                                           10,817                 11             10,817                 11
% of sales                                                              0.9  %               -  %             0.5  %               -  %
Total operating expenses                                          $ 311,379          $ 362,752          $ 655,503          $ 728,597
% of sales                                                             27.1  %            27.8  %            28.4  %            27.8  %


The decrease in total operating expenses during the three and six months ended
September 30, 2022, compared to the same periods 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 restructuring
expenses.

Marketing and sales

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.

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During the three and six months ended September 30, 2022, marketing and selling
expenses decreased $54.5 million and $77.5 million, respectively, compared to
the same periods of the prior fiscal year, primarily driven by lower third-party
marketing and advertising spend.

Research and development

Research and development expenses include personnel costs and related overhead for contractors and outside consultants, supplies and materials, equipment depreciation and facility costs, all associated with the design and development of new products and improvement of existing products.

During the three months ended September 30, 2022, research and development
expenses remained flat, compared to the same period of the prior fiscal year.
During the six months ended September 30, 2022, research and development
expenses increased $6.6 million, compared to the same period of the prior fiscal
year, primarily driven by higher outsourcing expenses, and higher travel and
entertainment expenses.

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.

During the three and six months ended September 30, 2022, general and
administrative expenses decreased $6.7 million and $11.4 million, respectively,
compared to the same periods 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 and six months ended September 30, 2022, amortization of
intangible assets and acquisition-related costs decreased $2.2 million and $4.1
million, respectively, compared to the same periods 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.

Restructuring Charges, Net

During the second quarter of fiscal year 2023, we initiated a restructuring plan
to realign our business group and engineering structure with our go-to-market
strategy to more effectively compete within the enterprise market and to better
serve end-users. As a result, we recorded pre-tax restructuring charges of $10.8
million, related to employee severance and other termination benefits, for the
three and six months ended September 30, 2022. We expect to substantially
complete this restructuring within the next twelve months.

interest income

Interest income for the quarters and half-years ended September 30, 2022 and 2021 was as follows (in thousands):

                                       Three Months Ended               Six Months Ended
                                         September 30,                    September 30,
                                        2022             2021            2022           2021
            Interest income      $     3,459            $ 201      $    4,908          $ 517


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 and six months ended September 30, 2022 interest income
increased $3.3 million and $4.4 million, respectively, compared to the same
periods of the prior fiscal year, primarily driven by the increase in interest
rates.


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Other Income (Expense), Net

Other income (expenses), net for the quarters and six months ended September 30, 2022 and 2021 was as follows (in thousands of dollars):

                                                                 Three Months Ended                    Six Months Ended
                                                                    September 30,                        September 30,
                                                               2022               2021               2022              2021

Investment income (expenses) related to the deferred compensation plan

                                          $     (762)         $    (73)         $  (4,148)         $ 1,095
Currency exchange gain (loss), net                             (2,052)           (4,979)            (5,012)             738
Loss on investments, net                                      (22,934)           (2,032)           (11,577)            (961)
Other                                                             351               381                964              860
Total                                                      $  (25,397)         $ (6,703)         $ (19,773)         $ 1,732



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 and six months ended September 30, 2022 compared to the same periods 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 September 30, 2022 was
primarily due to the weakening of the Australian Dollar, and the Brazilian Real
against the U.S. Dollar offset by gains in the Swiss Franc. The loss for the
three months ended September 30, 2021 was primarily due to the weakening of the
Brazilian Real against the U.S. Dollar. The loss for the six months ended
September 30, 2022 was primarily due to the weakening of the Brazilian Real,
Australian Dollar, and the Japanese Yen, offset by the gain from the weakening
of the Chinese Renminbi against the U.S Dollar. The gain for the six months
ended September 30, 2021 was primarily due to the strengthening of the Brazilian
Real offset by the loss from the strengthening of the Chinese Renminbi against
the U.S Dollar.

Loss on investments, net, represents unrealized gain (loss) from the fair value
change of investment, gain (loss) on equity-method investments and impairment of
investments during the periods presented, as applicable. The loss for the three
and six months ended September 30, 2022 were primarily due to the impairment
charges related to one of our equity method investments. The loss for the six
months ended September 30, 2022 was partially offset by an unrealized gain
related to one of our equity investments without readily determinable fair value
resulting from observable price changes. See Note 6 to our condensed
consolidated financial statements for additional information.

Provision for income taxes

The provision for income taxes and effective income tax rates for the three and
six months ended September 30, 2022 and 2021 were as follows (Dollars in
thousands):

                                    Three Months Ended             Six Months Ended
                                      September 30,                 September 30,
                                   2022           2021           2022           2021
Provision for income taxes      $ 23,372       $ 33,453       $ 45,088       $ 58,444
Effective income tax rate           22.2  %        19.3  %        19.8  %        15.2  %



The change in the effective income tax rate for the three and six months ended
September 30, 2022 was primarily due to the mix of income and losses in the
various tax jurisdictions in which we operate. There was a discrete tax
provision of $0.2 million and a discrete tax benefit of $1.2 million from the
recognition of shortfalls and excess tax benefits, respectively, in the United
States in the three and six months ended September 30, 2022. In addition, there
were discrete tax benefits of $0.3 million and $1.5 million from the reversal of
uncertain tax positions from the expiration of statutes of limitations,
respectively, in the three and six month period ended September 30, 2022. The
change in the effective income tax rate for the three and six months ended
September 30, 2021 was primarily due to the mix of income and losses in the
various tax jurisdictions in which we operate. There were
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discrete tax benefits of $0.6 million and $14.3 million from the recognition of
excess tax benefits in the United States in the three and six months ended
September 30, 2021, respectively. Furthermore, there were discrete tax benefits
of $0.5 million and $1.5 million from the reversal of uncertain tax positions
from the expiration of statutes of limitations, respectively, in the three and
six month period ended September 30, 2021.

As of September 30, 2022 and March 31, 2022, the total amount of unrecognized
tax benefits due to uncertain tax positions was $174.9 million and $176.0
million, respectively, all of which would affect the effective income tax rate
if recognized.

Cash and capital resources

Cash balances, available borrowings and capital resources

As of September 30, 2022, we had cash and cash equivalents of $868.5 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 66% is held in Switzerland and 17% were held in China (including Hong
Kong). 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 September 30, 2022, our working capital was $1,448.0 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 payments of
cash dividends, 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 $176.0
million as of September 30, 2022. There are no financial covenants under these
lines of credit with which we must comply. As of September 30, 2022, we had
outstanding bank guarantees of $22.2 million under these lines of credit.

The following tables present selected financial information and statistics as of
and for the three months ended September 30, 2022 and 2021 (Dollars in
thousands):

                                  As of September 30,
                                  2022           2021
Accounts receivable, net      $  772,731      $ 728,074
Accounts payable              $  546,563      $ 660,720
Inventories                   $  879,979      $ 827,710



                                                                  Three Months Ended
                                                                    September 30,
                                                                2022              2021
     Days sales in accounts receivable ("DSO") (Days)(1)        61                50
     Days accounts payable outstanding ("DPO") (Days)(2)        69                78
     Inventory turnover ("ITO") (x)(3)                         3.2               3.7



(1) The DSO is determined on the basis of trade receivables, net for the last quarter and sales for the last quarter.

(2) DPO is determined using accounts payable at the end of the last quarter and the cost of goods sold for the last quarter.

(3) ITO is determined from closing inventory and annualized cost of goods sold (based on the most recent quarterly cost of goods sold).

DSO for the three months ended September 30, 2022 increased by 11 days to 61
days, compared to 50 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.

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DPO for the three months ended September 30, 2022 decreased by 9 days, compared
to 78 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 September 30, 2022 decreased by 0.5, compared to
3.7 for the same period of the prior fiscal year, primarily due to lower demand
and higher inventory balance 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 (in thousands of dollars):

                                                                                  Six Months Ended
                                                                                    September 30,
                                                                              2022                2021
Net cash provided by (used in) operating activities                       $   37,256          $ (177,848)
Net cash used in investing activities                                        (53,561)            (63,208)
Net cash used in financing activities                                       (416,087)           (371,905)
Effect of exchange rate changes on cash and cash equivalents                 (27,823)                (70)
Net decrease in cash and cash equivalents                                 $ 

(460,215) $(613,031)


For the six months ended September 30, 2022, net cash provided by operating
activities was $37.3 million resulting from net income of $182.9 million, a
favorable impact from adding back non-cash expenses totaling $100.2 million, and
an unfavorable net change in operating assets and liabilities of $245.9 million.
Non-cash expenses were primarily related to depreciation and amortization,
share-based compensation expenses, and loss 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 and other
liabilities was primarily driven by payment of the fiscal year 2022 annual
bonus.

For the six months ended September 30, 2022, net cash used in investing
activities was $53.6 million, primarily due to $45.4 million of purchases of
property, plant, and equipment and $5.8 million payments for acquisitions, net
of cash acquired.

For the six months ended September 30, 2022, net cash used in financing
activities was $416.1 million, resulting from repurchases of our registered
shares of $237.6 million, payment of cash dividends of $158.7 million, and tax
withholdings related to net share settlements of restricted stock units of $26.7
million.

For the six months ended September 30, 2022, there was a $27.8 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, New
Taiwan Dollar and the Japanese Yen versus the U.S. Dollar by 12%, 11%, 6%, 14%,
10% and 16%, respectively. The loss from the effect of currency rate changes was
immaterial during the six months ended September 30, 2021.

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 fiscal year 2023, we paid a cash dividend of CHF 156.1 million (U.S. Dollar
amount of $158.7 million based on the exchange rate on the date of payment) out
of fiscal year 2022 retained earnings. In fiscal year 2022, we paid a cash
dividend of CHF 147.0 million (U.S. Dollar amount of $159.4 million) out of
fiscal year 2021 retained earnings.

In May 2020our Board of Directors has approved a share buyback program allowing us to invest up to $250.0 million to buy our own shares, after the expiry date of the 2017 share buyback program.

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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. In July 2022, our Board of Directors approved an increase of $500 million
to the 2020 share repurchase program to an aggregate amount of up to $1.5
billion. The Swiss Takeover Board approved this increase and it became effective
on August 19, 2022. As of September 30, 2022, $686.3 million was available for
repurchase under the 2020 repurchase program.

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 through July 27, 2023. 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.

Obligations of operating leases

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. During the six months ended September 30, 2022, our
operating lease obligations increased approximately $50.0 million, primarily
related to newly commenced operating leases for office spaces in the Americas
and EMEA regions. 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 2033.

Purchase commitments

As of September 30, 2022, we had non-cancelable purchase commitments of
$589.5 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 September 30, 2022,
the liability for these purchase commitments was $46.1 million and is recorded
in accrued and other current liabilities in the condensed consolidated balance
sheet.

We have firm purchase commitments of $20.0 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 details of our contractual obligations and commitments, see our Annual Report on Form 10-K for the year ended March 31, 2022.

Compensation

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 September 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.

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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 September 30, 2022.
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