Logitech Announces Second Quarter Results for FY 2013

  Logitech Announces Second Quarter Results for FY 2013

Business Wire

NEWARK, Calif. & MORGES, Switzerland -- October 25, 2012

Logitech International (SIX: LOGN) (NASDAQ: LOGI) today announced financial
results for the second quarter of Fiscal Year 2013.

Sales for Q2 FY 2013 were $548 million, down 7 percent from $589 million in Q2
FY 2012. Excluding the unfavorable impact of exchange rates, sales were down 4
percent compared to the same quarter in the prior year. Operating income was
$24 million, up 3 percent from operating income of $23 million in the same
quarter a year ago. Net income for Q2 FY 2013 was $55 million ($0.35 per
share) compared to net income of $17 million ($0.10 per share) in Q2 FY 2012.
Net income for Q2 FY 2013 includes a net tax benefit of $32 million from the
closure of an income tax audit. Gross margin for the quarter was 35.8 percent,
compared to 33.7 percent in the same quarter one year ago.

Logitech’s retail sales for Q2 FY 2013 decreased by 5 percent year over year,
down 3 percent in EMEA, 6 percent in the Americas and 7 percent in Asia. OEM
sales decreased by 27 percent. Sales for the LifeSize division decreased by 7
percent.

"In Q2, the PC market weakened more significantly than anticipated, in advance
of the launch of Windows 8,” said Guerrino De Luca, Logitech chairman and
chief executive officer. “This factor, as well as a general slowdown in
emerging markets, negatively impacted our Q2 sales. Despite this environment,
we executed effectively during the quarter, improving our gross margin and
operating results. We also recently launched compelling new products for
tablets, smartphones, the digital home, Macs and Windows 8 PCs in time for the
holiday season.

“Looking ahead, given the uncertainty in the PC market, we are now planning
for continued strong headwinds in all of our PC-related categories for the
remainder of the fiscal year. We expect this weakness to more than offset the
positive impact of our new product launches, and consequently, we now
anticipate our sales and operating income for the second half of FY 2013 will
be below that of the second half of the prior fiscal year. In addition to
managing our spending in line with the current environment, we are also in the
process of reassessing the strategy within each of our PC-related product
categories to deliver improved performance.”

Prepared Remarks Available Online

Logitech has made its prepared written remarks for the financial results
teleconference available online on the Logitech corporate Web site at
http://ir.logitech.com. The remarks are posted in the Calendar section on the
Investor home page.

Financial Results Teleconference and Webcast

Logitech will hold a financial results teleconference to discuss the results
for Q2 FY 2013 on Thursday, Oct. 25, 2012 at 8:30 a.m. Eastern Daylight Time
and 14:30 Central European Summer Time. A live webcast of the call will be
available on the Logitech corporate website at http://ir.logitech.com.

About Logitech

Logitech is a world leader in products that connect people to the digital
experiences they care about. Spanning multiple computing, communication and
entertainment platforms, Logitech’s combined hardware and software enable or
enhance digital navigation, music and video entertainment, gaming, social
networking, audio and video communication over the Internet, video security
and home-entertainment control. 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).

This press release contains forward-looking statements within the meaning of
the federal securities laws, including, without limitation, statements
regarding: our outlook for the remainder of FY 2013, year-over-year financial
performance for the second half of FY 2013, our strategy within our product
categories, and our ability to deliver improved financial performance. 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 in our new product
categories and sales in emerging market geographies; if sales of PC
peripherals in mature markets 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 there is a deterioration of business and economic conditions in one or more
of our sales regions or operating segments, or significant fluctuations in
exchange rates; if the restructuring fails to produce the intended performance
and cost savings results or is not implemented in the contemplated timeframe;
if the reassessment of strategy within the PC-related product categories fails
to deliver improved financial performance. 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 Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2012 and our Annual Report on Form 10-K for the fiscal year ended March
31, 2012, available atwww.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.

Logitech, the Logitech logo, and other Logitech marks are registered in
Switzerland and other countries. All other trademarks are the property of
their respective owners. For more information about Logitech and its products,
visit the company’s Web site at www.logitech.com.

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
                                                            
                                               Quarter Ended September 30,
CONSOLIDATED STATEMENTS OF OPERATIONS         2012           2011
                                                               
Net sales                                      $  547,693      $ 589,204
Cost of goods sold                               351,698      390,783 
Gross profit                                     195,995      198,421 
% of net sales                                    35.8     %     33.7    %
                                                               
Operating expenses:
Marketing and selling                             110,522        107,446
Research and development                          38,019         39,491
General and administrative                        25,980         27,989
Restructuring charges (credits), net             (2,671   )    -       
Total operating expenses                         171,850      174,926 
                                                               
Operating income                                  24,145         23,495
                                                               
Interest income, net                              153            601
Other expense, net                               (509     )    (1,763  )
                                                               
Income before income taxes                        23,789         22,333
Provision for (benefit from) income taxes        (31,076  )    4,888   
                                                               
Net income                                     $  54,865      $ 17,445  
                                                               
Shares used to compute net income per share:
Basic                                             156,736        176,878
Diluted                                           157,932        177,277
Net income per share:
Basic                                          $  0.35         $ 0.10
Diluted                                        $  0.35         $ 0.10
                                                                         

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
                                                              
                                                Six Months Ended September 30,
CONSOLIDATED STATEMENTS OF OPERATIONS          2012            2011
                                                                 
Net sales                                       $  1,016,297     $ 1,069,645
Cost of goods sold                                676,050       745,617   
Gross profit                                      340,247       324,028   
% of net sales                                     33.5      %     30.3      %
                                                                 
Operating expenses:
Marketing and selling                              211,419         207,239
Research and development                           76,947          79,472
General and administrative                         58,460          58,854
Restructuring charges                             28,556        -         
Total operating expenses                          375,382       345,565   
                                                                 
Operating loss                                     (35,135   )     (21,537   )
                                                                 
Interest income, net                               537             1,291
Other income (expense), net                       (668      )    3,428     
                                                                 
Loss before income taxes                           (35,266   )     (16,818   )
Benefit from income taxes                         (37,986   )    (4,657    )
                                                                 
Net income (loss)                               $  2,720        $ (12,161   )
                                                                 
Shares used to compute net income (loss) per
share:
Basic                                              158,723         178,111
Diluted                                            159,853         178,111
Net income (loss) per share:
Basic                                           $  0.02          $ (0.07     )
Diluted                                         $  0.02          $ (0.07     )
                                                                             

LOGITECH INTERNATIONAL                                     
S.A.
(In thousands)
                                                                 
CONSOLIDATED BALANCE       September 30,   March 31, 2012   September 30,
SHEETS                      2012                                 2011
                            (Unaudited)       (Audited)          (Unaudited)
Current assets
Cash and cash equivalents   $  237,033        $   478,370        $  379,450
Accounts receivable            284,451            223,104           294,691
Inventories                    321,307            297,072           325,053
Other current assets          69,016            65,990           85,004
Total current assets           911,807            1,064,536         1,084,198
Non-Current assets
Property, plant and            93,854             94,884            78,416
equipment
Goodwill                       561,080            560,523           560,343
Other intangible assets        41,108             53,518            66,693
Other assets                  84,563            83,033           74,053
Total assets                $  1,692,412      $   1,856,494      $  1,863,703
                                                                 
Current liabilities
Accounts payable            $  368,509        $   301,111        $  342,070
Accrued liabilities           190,234           186,680          187,017
Total current liabilities      558,743            487,791           529,087
Non-current liabilities       187,372           218,462          185,277
Total liabilities              746,115            706,253           714,364
                                                                 
Shareholders' equity           946,297            1,150,241         1,149,339
                                                               
Total liabilities and       $  1,692,412      $   1,856,494      $  1,863,703
shareholders' equity
                                                                 

LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
                                                             
                                              Three Months Ended September 30,
CONSOLIDATED STATEMENTS OF CASH FLOWS        2012               2011
                                                                 
Cash flows from operating activities:
Net income                                    $  54,865          $  17,445
Non-cash items included in net income:
Depreciation                                     11,155             11,421
Amortization of other intangible assets          6,025              6,926
Share-based compensation expense                 7,266              6,738
Excess tax benefits from share-based             (17       )        (6       )
compensation
Deferred income taxes and other                  (2,751    )        5,147
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable                              (64,849   )        (55,614  )
Inventories                                      (42,178   )        (4,806   )
Other assets                                     (7,372    )        (871     )
Accounts payable                                 106,283            15,742
Accrued liabilities                             (52,276   )       (4,232   )
Net cash provided by (used in) operating        16,151           (2,110   )
activities
                                                                 
Cash flows from investing activities:
Purchases of property, plant and equipment       (10,901   )        (10,360  )
Acquisitions, net of cash acquired               -                  (18,814  )
Investment in privately-held company             (3,970    )        -
Purchases of trading investments                 (251      )        (991     )
Proceeds from sales of trading investments      253              1,022    
Net cash used in investing activities           (14,869   )       (29,143  )
                                                                 
Cash flows from financing activities:
Payment of cash dividends                        (133,462  )        -
Purchases of treasury shares                     -                  (73,134  )
Proceeds from sale of shares upon exercise       8,604              9,157
of options and purchase rights
Tax withholdings related to net share            (465      )        (9       )
settlements of restricted stock units
Excess tax benefits from share-based            17               6        
compensation
Net cash used in financing activities           (125,306  )       (63,980  )
                                                                 
Effect of exchange rate changes on cash and     320              (1,684   )
cash equivalents
Net decrease in cash and cash equivalents        (123,704  )        (96,917  )
Cash and cash equivalents at beginning of       360,737          476,367  
period
Cash and cash equivalents at end of period    $  237,033        $  379,450  
                                                                 

LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
                                                               
                                                Six Months Ended September 30,
CONSOLIDATED STATEMENTS OF CASH FLOWS          2012               2011
                                                                   
Cash flows from operating activities:
Net income (loss)                               $  2,720           $ (12,161 )
Non-cash items included in net income (loss):
Depreciation                                       22,307            24,593
Amortization of other intangible assets            12,257            13,556
Inventory valuation adjustment                     -                 34,074
Share-based compensation expense                   13,437            16,453
Gain on disposal of property and plant             -                 (4,904  )
Gain on sale of investments                        (831      )       -
Excess tax benefits from share-based               (22       )       (30     )
compensation
Deferred income taxes and other                    (3,806    )       (8,554  )
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable                                (58,272   )       (36,517 )
Inventories                                        (30,733   )       (59,589 )
Other assets                                       (7,339    )       (6,886  )
Accounts payable                                   68,875            45,088
Accrued liabilities                               (9,498    )      (3,489  )
Net cash provided by operating activities         9,095           1,634   
                                                                   
Cash flows from investing activities:
Purchases of property, plant and equipment         (30,522   )       (20,921 )
Acquisitions, net of cash acquired                 -                 (18,814 )
Investment in privately-held company               (3,970    )       -
Proceeds from sale of property and plant           -                 4,904
Proceeds from sale of available-for-sale           917               -
securities
Purchases of trading investments                   (1,648    )       (4,536  )
Proceeds from sales of trading investments        1,638           4,522   
Net cash used in investing activities             (33,585   )      (34,845 )
                                                                   
Cash flows from financing activities:
Payment of cash dividends                          (133,462  )       -
Purchases of treasury shares                       (89,955   )       (73,134 )
Proceeds from sale of shares upon exercise of      9,008             9,764
options and purchase rights
Tax withholdings related to net share              (635      )       (185    )
settlements of restricted stock units
Excess tax benefits from share-based              22              30      
compensation
Net cash used in financing activities             (215,022  )      (63,525 )
                                                                   
Effect of exchange rate changes on cash and       (1,825    )      (1,745  )
cash equivalents
Net decrease in cash and cash equivalents          (241,337  )       (98,481 )
Cash and cash equivalents at beginning of         478,370         477,931 
period
Cash and cash equivalents at end of period      $  237,033        $ 379,450 
                                                                   

LOGITECH                                                    
INTERNATIONAL S.A.
(In thousands, except per share
amounts) - Unaudited
                                                                 
                     Quarter Ended               Six Months Ended
                     September 30,               September 30,
SUPPLEMENTAL
FINANCIAL           2012         2011          2012           2011
INFORMATION
                                                                 
Depreciation         $ 11,155      $ 11,421      $ 22,307        $ 24,593
Amortization of
other intangible       6,025         6,926         12,257          13,556
assets
Operating income       24,145        23,495        (35,135   )     (21,537   )
(loss)
Operating income
(loss) before          41,325        41,842        (571      )     16,612
depreciation and
amortization
Capital                10,901        10,360        30,522          20,921
expenditures
                                                                 
                                                                 
Net sales by
channel:
Retail               $ 476,479     $ 501,735     $ 871,580       $ 896,511
OEM                    36,718        50,261        73,393          99,439
LifeSize              34,496      37,208      71,324        73,695    
Total net sales      $ 547,693    $ 589,204    $ 1,016,297    $ 1,069,645 
                                                   -
                                                                 
Net retail sales
by product
family^(**):
Retail - Pointing    $ 122,490     $ 133,165     $ 238,217       $ 254,914
Devices
Retail - Keyboards     130,806       109,325       241,251         203,921
& Desktops
Retail - Audio         109,831       126,967       199,878         204,640
Retail - Video         47,352        57,276        84,232          106,862
Retail - Gaming        47,302        47,836        74,576          85,003
Retail - Digital      18,698      27,166      33,426        41,171    
Home
Total net retail     $ 476,479    $ 501,735    $ 871,580      $ 896,511   
sales
                                                                 
__________________
** Certain products within the retail product
families as presented in prior years have been
reclassified to conform to the current year
presentation, with no impact on previously
reported total net retail sales.
                                                                 
                     Quarter Ended               Six Months Ended
                     September 30,               September 30,
Share-based
Compensation        2012         2011          2012           2011
Expense ^ (*)
                                                                 
Cost of goods sold   $ 608         $ 950         $ 1,397         $ 2,110
Marketing and          2,644         3,448         4,424           6,965
selling
Research and           1,763         1,754         3,588           3,562
development
General and            2,251         586           4,028           3,816
administrative
Income tax benefit    (1,671  )    (2,276  )    (3,047    )    (4,665    )
Total share-based
compensation         $ 5,595      $ 4,462      $ 10,390       $ 11,788    
expense after
income taxes
                                                                 
__________________
* Share-based compensation expense for the
quarter ended September 30, 2012 and six
months ended September 30, 2012 includes a
reduction of $0.6m and $2.2m in expense
applicable to employees terminated as a result
of the restructuring plan announced in April
2012.
                                                                 
Constant dollar sales (sales excluding impact of exchange rate
changes)
We refer to our net sales excluding the impact of foreign
currency exchange rates as constant dollar sales. Constant
dollar sales are a non-GAAP financial measure, which is
information derived from consolidated financial information
but not presented in our financial statements prepared in
accordance with U.S. GAAP. Our management uses these non-GAAP
measures in its financial and operational decision-making, and
believes these non-GAAP measures, when considered in
conjunction with the corresponding GAAP measures, facilitate a
better understanding of changes in net sales. Constant dollar
sales are calculated by translating prior period sales in each
local currency at the current period's average exchange rate
for that currency.


(LOGIIR)

Contact:

Logitech International
Joe Greenhalgh
510-713-4430
Vice President, Investor Relations – USA
Nancy Morrison
510-713-4948
Vice President, Corporate Communications – USA
or
Cumulus Communications – Switzerland
Ben Starkie
+41 79 292 3499
 
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