Logitech Announces Third Quarter Results for FY 2013

  Logitech Announces Third Quarter Results for FY 2013

                    New CEO Outlines Strategic Priorities

Business Wire

NEWARK, Calif. & MORGES, Switzerland -- January 23, 2013

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

Sales for Q3 FY 2013 were $615 million, down 14 percent from $715 million in
Q3 FY 2012, with no material impact from exchange rates. The company posted an
operating loss of $180 million, which included a non-cash goodwill impairment
charge, estimated to be $211 million, announced on January 22, 2013. Net loss
for Q3 FY 2013 was $195 million ($1.24 per share) compared to net income of
$55 million ($0.32 per share) in Q3 FY 2012. Gross margin for the quarter was
34.2 percent, compared to 36.2 percent in the same quarter one year ago.
Excluding the aforementioned Q3 FY 2013 impairment charge, Q3 FY 2013 non-GAAP
operating income would have been $31 million and non-GAAP net income would
have been $16 million.

Logitech’s retail sales for Q3 FY 2013 decreased by 14 percent year over year,
down 8 percent in the Americas, 11 percent in Asia and 20 percent in EMEA.
Year over year, OEM sales decreased by 23 percent and sales for the LifeSize
division decreased by 4 percent.

“As we articulated when we started the third quarter, continued weakness in
the global PC market was the primary factor in our disappointing Q3 results,”
said Bracken P. Darrell, Logitech president and chief executive officer.
“These results are unacceptable and we are taking decisive action as an
outcome of my strategic review. I was pleased with the continued strong demand
for our Ultrathin Keyboard Cover in Q3. We plan to expand our presence in the
growing tablet accessories category with the launch of a number of exciting
new products later this quarter.

“We are taking immediate actions to shape a faster and more profitable
Logitech,” continued Mr. Darrell. “We are developing more mobility-related
products, leveraging the powerful growth of tablets and smartphones. We intend
to sustain our leadership in PC platform-related products where we have
engineering, distribution and scale advantages. Our goal with PC-platform
products is to maximize profitability, while investing selectively in growing
categories. We have also identified a number of product categories that no
longer fit with our current strategic direction. As a result, we have
initiated the process to divest our remote controls and digital video security
categories, and we plan to discontinue other non-strategic products, such as
speaker docks and console gaming peripherals, by the end of Calendar Year
2013.”

Mr. Darrell concluded, “As we execute our plans over the coming quarters, we
will reduce costs significantly across the company beyond the $80M annual cost
savings (FY 2014 over FY 2012) resulting from the restructuring we announced
last April. My goal is to get Logitech back to sustained profitability as
quickly as possible. This requires unwavering focus on developing great
products both for large and for fast-growing markets, removing unnecessary
costs and a commitment to move at least as fast as the markets in which we
participate.”

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 Q3 FY 2013 on Thursday, Jan. 24, 2013 at 8:30 a.m. Eastern Standard Time
and 14:30 Central European 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: demand for our products, expansion of our presence and growth in
the tablet and smartphones accessories category, new product launches, our
plans to divest or discontinue non-strategic products, our focus, and our
ability to be faster and more profitable, to achieve sustained profitability,
to sustain our leadership and advantages in PC platform-related products, and
to reduce costs. 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; if our products
and marketing strategies fail to separate our products from competitors’
products; if the restructuring fails to produce the intended performance and
cost savings results or is not implemented in the contemplated timeframe. 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 September 30, 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 December 31,
CONSOLIDATED STATEMENTS OF OPERATIONS              2012          2011
                                                                   
Net sales                                           $ 614,500      $ 714,596
Cost of goods sold                                   404,402      455,922 
Gross profit                                         210,098      258,674 
% of net sales                                        34.2     %     36.2    %
                                                                   
Operating expenses:
Marketing and selling                                 112,698        116,313
Research and development                              40,393         41,911
General and administrative                            26,382         30,673
Goodwill impairment                                   211,000        -
Restructuring charges (credits), net                 (358     )    -       
Total operating expenses                             390,115      188,897 
                                                                   
Operating income (loss)                               (180,017 )     69,777
                                                                   
Interest income, net                                  114            917
Other income (expense), net                          (3,670   )    6,713   
                                                                   
Income (loss) before income taxes                     (183,573 )     77,407
Provision for income taxes                           11,370       22,074  
                                                                   
Net income (loss)                                   $ (194,943 )   $ 55,333  
                                                                   
Shares used to compute net income (loss) per
share:
Basic                                                 157,706        173,003
Diluted                                               157,706        173,656
Net income (loss) per share:
Basic                                               $ (1.24    )   $ 0.32
Diluted                                             $ (1.24    )   $ 0.32
                                                                             


LOGITECH INTERNATIONAL S.A.
                                                              
(In thousands, except per share amounts) - Unaudited
                                                                 
                                                                 
                                                Nine Months Ended December 31,
CONSOLIDATED STATEMENTS OF OPERATIONS          2012            2011
                                                                 
Net sales                                       $  1,630,797     $ 1,784,241
Cost of goods sold                                1,080,452     1,201,539 
Gross profit                                      550,345       582,702   
% of net sales                                     33.7      %     32.7      %
                                                                 
Operating expenses:
Marketing and selling                              324,117         323,552
Research and development                           117,340         121,383
General and administrative                         84,842          89,527
Goodwill impairment                                211,000         -
Restructuring charges                             28,198        -         
Total operating expenses                          765,497       534,462   
                                                                 
Operating income (loss)                            (215,152  )     48,240
                                                                 
Interest income, net                               651             2,208
Other income (expense), net                       (4,338    )    10,141    
                                                                 
Income (loss) before income taxes                  (218,839  )     60,589
Provision for (benefit from) income taxes         (26,616   )    17,417    
                                                                 
Net income (loss)                               $  (192,223  )   $ 43,172    
                                                                 
Shares used to compute net income (loss) per
share:
Basic                                              158,383         176,414
Diluted                                            158,383         177,201
Net income (loss) per share:
Basic                                           $  (1.21     )   $ 0.24
Diluted                                         $  (1.21     )   $ 0.24
                                                                             


LOGITECH INTERNATIONAL S.A.
                                                           
(In thousands)
                                                                 
                                                                 
CONSOLIDATED BALANCE       December 31,    March 31, 2012   December 31,
SHEETS                      2012                                 2011
                            (Unaudited)       (Unaudited)        (Unaudited)
Current assets
Cash and cash equivalents   $  321,999        $   478,370        $  523,333
Accounts receivable            264,589            223,104           318,678
Inventories                    277,477            297,072           295,749
Other current assets           59,808             65,990            73,498
Assets held for sale          17,697            -                -
Total current assets           941,570            1,064,536         1,211,258
Non-Current assets
Property, plant and            89,128             94,884            78,055
equipment
Goodwill                       345,313            560,523           560,106
Other intangible assets        35,033             53,518            59,743
Other assets                  78,021            83,033           81,524
Total assets                $  1,489,065      $   1,856,494      $  1,990,686
                                                                 
Current liabilities
Accounts payable            $  339,283        $   301,111        $  377,132
Accrued liabilities            204,528            186,680           213,092
Liabilities held for sale     2,020             -                -
Total current liabilities      545,831            487,791           590,224
Non-current liabilities       186,663           218,462          195,956
Total liabilities              732,494            706,253           786,180
                                                                 
Shareholders' equity           756,571            1,150,241         1,204,506
                                                               
Total liabilities and       $  1,489,065      $   1,856,494      $  1,990,686
shareholders' equity
                                                                    


LOGITECH INTERNATIONAL S.A.
                                                              
(In thousands) - Unaudited
                                                                  
                                                                  
                                               Three Months Ended December 31,
CONSOLIDATED STATEMENTS OF CASH FLOWS         2012               2011
                                                                  
Cash flows from operating activities:
Net income (loss)                              $  (194,943  )     $  55,333
Non-cash items included in net income
(loss):
Depreciation                                      11,554             10,608
Amortization of other intangible assets           5,657              6,653
Goodwill impairment                               211,000            -
Investment impairment                             3,600              -
Share-based compensation expense                  5,222              6,927
Gain on sale of investments                       -                  (6,118  )
Excess tax benefits from share-based              (4        )        (3      )
compensation
Deferred income taxes and other                   13,204             7,556
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable                               16,962             (26,575 )
Inventories                                       32,177             23,869
Other assets                                      5,138              (4,967  )
Accounts payable                                  (29,202   )        36,885
Accrued liabilities                              14,736           42,366  
Net cash provided by operating activities        95,101           152,534 
                                                                  
Cash flows from investing activities:
Purchases of property, plant and equipment        (9,215    )        (10,496 )
Proceeds from sale of available-for-sale          -                  6,550
securities
Purchases of trading investments                  (646      )        (1,041  )
Proceeds from sales of trading investments       671              998     
Net cash used in investing activities            (9,190    )       (3,989  )
                                                                  
Cash flows from financing activities:
Payment of cash dividends                         -                  -
Purchases of treasury shares                      -                  -
Proceeds from sale of shares upon exercise        (165      )        88
of options and purchase rights
Tax withholdings related to net share             (1,360    )        (705    )
settlements of restricted stock units
Excess tax benefits from share-based             4                3       
compensation
Net cash used in financing activities            (1,521    )       (614    )
                                                                  
Effect of exchange rate changes on cash and      576              (4,048  )
cash equivalents
Net increase in cash and cash equivalents         84,966             143,883
Cash and cash equivalents at beginning of        237,033          379,450 
period
Cash and cash equivalents at end of period     $  321,999        $  523,333 
                                                                             


LOGITECH INTERNATIONAL S.A.
                                                               
(In thousands) - Unaudited
                                                                   
                                                                   
                                                Nine Months Ended December 30,
CONSOLIDATED STATEMENTS OF CASH FLOWS          2012               2011
                                                                   
Cash flows from operating activities:
Net income (loss)                               $  (192,223  )     $ 43,172
Non-cash items included in net income (loss):
Depreciation                                       33,861            35,201
Amortization of other intangible assets            17,914            20,209
Goodwill impairment                                211,000           -
Investment impairment                              3,600             -
Inventory valuation adjustment                     -                 34,074
Share-based compensation expense                   18,659            23,380
Gain on disposal of property and plant             -                 (4,904  )
Gain on sale of investments                        (831      )       (6,118  )
Excess tax benefits from share-based               (26       )       (33     )
compensation
Deferred income taxes and other                    9,398             (998    )
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable                                (41,310   )       (63,092 )
Inventories                                        1,444             (35,720 )
Other assets                                       (2,201    )       (11,853 )
Accounts payable                                   39,673            81,973
Accrued liabilities                               5,238           38,877  
Net cash provided by operating activities         104,196         154,168 
                                                                   
Cash flows from investing activities:
Purchases of property, plant and equipment         (39,737   )       (31,417 )
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               6,550
securities
Purchases of trading investments                   (2,294    )       (5,577  )
Proceeds from sales of trading investments        2,309           5,520   
Net cash used in investing activities             (42,775   )      (38,834 )
                                                                   
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      8,843             9,852
options and purchase rights
Tax withholdings related to net share              (1,995    )       (890    )
settlements of restricted stock units
Excess tax benefits from share-based              26              33      
compensation
Net cash used in financing activities             (216,543  )      (64,139 )
                                                                   
Effect of exchange rate changes on cash and       (1,249    )      (5,793  )
cash equivalents
Net increase (decrease) in cash and cash           (156,371  )       45,402
equivalents
Cash and cash equivalents at beginning of         478,370         477,931 
period
Cash and cash equivalents at end of period      $  321,999        $ 523,333 
                                                                             


LOGITECH INTERNATIONAL S.A.
                                                            
(In thousands, except per share amounts) - Unaudited
                                                                 
                                                                 
                      Quarter Ended              Nine Months Ended
                      December 31,               December 31,
SUPPLEMENTAL
FINANCIAL            2012          2011        2012           2011
INFORMATION
                                                                 
Depreciation          $ 11,554       $ 10,608    $ 33,861        $ 35,201
Amortization of
other intangible        5,657          6,653       17,914          20,209
assets
Goodwill impairment     211,000        -           211,000         -
Operating income        (180,017 )     69,777      (215,152  )     48,240
(loss)
Operating income
(loss) before           (162,806 )     87,038      (163,377  )     103,650
depreciation and
amortization
Operating income
(loss) before           30,983         69,777      (4,152    )     48,240
goodwill impairment
Income (loss)           (183,573 )     77,407      (218,839  )     60,589
before income taxes
Income (loss)
before income taxes     27,427         77,407      (7,839    )     60,589
and goodwill
impairment
Net income (loss)       (194,943 )     55,333      (192,223  )     43,172
Net income before       16,057         55,333      18,777          43,172
goodwill impairment
Capital                 9,215          10,497      39,737          31,417
expenditures
                                                                 
                                                                 
Net sales by
channel:
Retail                $ 542,388      $ 630,873   $ 1,413,968     $ 1,527,385
OEM                     35,300         45,527      108,693         144,966
LifeSize               36,812       38,196     108,136       111,890   
Total net sales       $ 614,500     $ 714,596   $ 1,630,797    $ 1,784,241 
                                                   -
                                                                 
Net retail sales by
product
family^(**):
Retail - Pointing     $ 153,921      $ 171,920   $ 392,274       $ 427,031
Devices
Retail - Keyboards      110,671        117,507     302,299         302,840
& Desktops
Retail - Tablet         39,398         17,976      89,021          36,565
Accessories
Retail - Audio - PC     75,366         92,766      214,158         238,932
Retail - Audio -
Wearables &             23,577         23,233      57,284          39,071
Wireless
Retail - Video          51,664         58,343      138,276         166,370
Retail - PC Gaming      45,111         56,177      118,567         129,839
Retail - Remotes        30,094         39,706      60,260          74,105
Retail - Other         12,586       53,245     41,829        112,632   
Total net retail      $ 542,388     $ 630,873   $ 1,413,968    $ 1,527,385 
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              Nine Months Ended
                      December 31,               December 31,
Share-based
Compensation         2012           2011        2012            2011
Expense ^ (*)
                                                                 
Cost of goods sold    $ 704          $ 948       $ 2,101         $ 3,058
Marketing and           953            2,380       5,377           9,345
selling
Research and            2,430          1,802       6,018           5,364
development
General and             1,135          1,797       5,163           5,613
administrative
Income tax benefit     (1,043   )    70         (4,090    )    (4,595    )
Total share-based
compensation          $ 4,179       $ 6,997     $ 14,569       $ 18,785    
expense after
income taxes
                                                                             
__________________
* Share-based compensation expense for the quarter ended December 31, 2012 and
nine months ended December 31, 2012 includes a reduction of $0 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) and
Non-GAAP operating and net income (excluding the Q3 FY 2013 impairment charge)

We refer to our net sales excluding the impact of foreign currency exchange
rates as constant dollar sales. We also report non-GAAP operating and net
income (loss) in this press release, excluding the Q3 FY 2013 non-cash
impairment charge, and non-GAAP operating income (loss) before depreciation
and amortization. Constant dollar sales and non-GAAP operating and net income
(loss) are non-GAAP financial measures, which are 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, operating income(loss)and net income(loss). 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. Non-GAAP operating
income (loss) and non-GAAP net income (loss) before goodwill impairment can be
reconciled to GAAP operating income (loss) and GAAP net income (loss),
respectively, by adding the amount of the impairment charge.Non-GAAP
operating income (loss) before depreciation and amortization canbereconciled
to GAAP operating income (loss) by adding the amounts of depreciation and
amortization of other intangible assets.


(LOGIIR)

Contact:

Logitech International
Joe Greenhalgh
Vice President, Investor Relations – USA
510-713-4430
Nancy Morrison
Vice President, Corporate Communications – USA
510-713-4948
or
Laura Scorza
Sr. Public Relations Manager – Europe
+41-(0) 21-863-5336
 
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