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Logitech Announces Second Quarter Results for FY 2012


    Logitech International (SIX:LOGN) (Nasdaq:LOGI) today announced financial results for the second quarter of Fiscal Year 2012.

    Sales for Q2 FY 2012 were $589 million, up 1 percent from $582 million in Q2 FY 2011. Excluding the favorable impact of exchange rate changes, sales declined by 2 percent year over year. Operating income was $23 million compared to $51 million in the same quarter a year ago. Net income for Q2 FY 2012 was $17 million ($0.10 per share) compared to net income of $41 million ($0.23 per share) in Q2 of FY 2011. Gross margin for the quarter was 33.7 percent, down from 37.3 percent one year ago.

    Logitech´s retail sales for Q2 FY 2012 increased by 2 percent, with an increase in Asia of 22 percent, and a decrease in the Americas and EMEA of 1 percent. OEM sales decreased by 17 percent. Sales for the LifeSize division grew 19 percent.

    "Our Q2 results are consistent with our expectations and the full-year outlook we presented on September 22," said Guerrino De Luca, Logitech chairman of the board and acting president and chief executive officer. "As we focus on reinvigorating our product offerings and executing in sales and marketing, we expect our initiatives will begin to contribute to improved performance as we move through the second half of FY 2012."

    Share Repurchase Program

    Logitech has applied for an amendment of its $250 million buyback program to enable the future repurchase of shares for cancellation. The amendment is subject to the approval of the Swiss regulatory authorities. The Company has approximately $177 million remaining under the program after repurchasing approximately 7.6 million shares for a total of $73 million during Q2 FY 2012.

    Outlook

    For Fiscal Year 2012, ending March 31, 2012, the Company continues to expect sales of approximately $2.4 billion and operating income of approximately $90 million. The gross margin for the full year, which factors in the very low margin previously reported for Q1, is estimated to reach approximately 33 percent. Gross margin in both Q3 and Q4 is expected to be well above the full year average.

    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 and the Company´s outlook on Thursday, Oct. 27, 2011 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, including the statements regarding anticipated sales, operating income and gross margin for FY 2012, gross margin for the second half of FY 2012, and the impact of our product offering and sales and marketing initiatives on future performance. The forward-looking statements in this release involve risks and uncertainties that could cause Logitech´s actual results to differ materially from that anticipated in these forward-looking statements. Factors that could cause actual results to differ materially include: the demand of our customers and our consumers for our products and our ability to accurately forecast it; if our investment prioritization decisions do not result in the sales or profitability growth we expect, or when we expect it; the effect of pricing, product, marketing and other initiatives by our competitors, and our reaction to them, on our sales, gross margins and profitability; the sales mix among our lower- and higher-margin products and our geographic sales mix; if our product offerings and marketing activities do not result in the sales and profitability growth we expect, or when we expect it; if we fail to take advantage of trends in the consumer electronics and personal computers industries, including the growth of mobile computing devices such as smartphones and tablets with touch interfaces, or if significant demand for peripherals to use with tablets and other mobile devices with touch interfaces does not develop; 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 currency exchange rates; if the sales growth in emerging markets for our PC peripherals and other products does not increase as much as we expect; if our operational changes in our EMEA sales region are not completed when we expect, or do not result in the sales improvement in EMEA we expect; the adverse conclusion of one or more ongoing tax audits in various jurisdictions and a material assessment by a governing tax authority that adversely affects our profitability; competition in the video conferencing and communications industry, including from companies with significantly greater resources, sales and marketing organizations, installed base and name recognition; as well as those additional factors set forth in Logitech´s periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2011 our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011, and the Quarterly Report on Form 10-Q we intend to file for the fiscal quarter ended September 30, 2011, available at www.sec.gov. Logitech does not undertake to update any forward-looking statements, which speak as of their respective dates.

    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.

    (LOGI - IR)

    LOGITECH INTERNATIONAL S.A.

    (In thousands, except per share amounts) - Unaudited

                  Quarter Ended September 30, CONSOLIDATED STATEMENTS OF OPERATIONS   2011   2010           Net sales   $ 589,204     $ 581,884   Cost of goods sold     390,783       364,950   Gross profit     198,421       216,934   % of net sales     33.7 %     37.3 %           Operating expenses:         Marketing and selling     107,446       97,412   Research and development     39,491       40,927   General and administrative     27,989       27,420   Total operating expenses     174,926       165,759             Operating income     23,495       51,175             Interest income, net     601       635   Other expense, net     (1,763 )     (1,794 )           Income before income taxes     22,333       50,016   Provision for income taxes     4,888       8,856             Net income   $ 17,445     $ 41,160             Shares used to compute net income per share:         Basic     176,878       176,359   Diluted     177,277       177,958   Net income per share:         Basic   $ 0.10     $ 0.23   Diluted   $ 0.10     $ 0.23                    

    LOGITECH INTERNATIONAL S.A.

    (In thousands, except per share amounts) - Unaudited

                  Six Months Ended September 30, CONSOLIDATED STATEMENTS OF OPERATIONS   2011   2010           Net sales   $ 1,069,645     $ 1,061,214   Cost of goods sold     745,617       675,251   Gross profit     324,028       385,963   % of net sales     30.3 %     36.4 %           Operating expenses:         Marketing and selling     207,239       188,889   Research and development     79,472       79,316   General and administrative     58,854       54,780   Total operating expenses     345,565       322,985             Operating income (loss)     (21,537 )     62,978             Interest income, net     1,291       1,156   Other income, net     3,428       2             Income (loss) before income taxes     (16,818 )     64,136   Provision (benefit) for income taxes     (4,657 )     3,454             Net income (loss)   $ (12,161 )   $ 60,682             Shares used to compute net income (loss) per share:         Basic     178,111       175,921   Diluted     178,111       177,588   Net income (loss) per share:         Basic   $ (0.07 )   $ 0.34   Diluted   $ (0.07 )   $ 0.34                    

    LOGITECH INTERNATIONAL S.A.

    (In thousands) - Unaudited

                  CONSOLIDATED BALANCE SHEETS   September 30, 2011   March 31, 2011   September 30, 2010               Current assets             Cash and cash equivalents   $ 379,450   $ 477,931   $ 307,679 Accounts receivable     294,691     258,294     304,998 Inventories     325,053     280,814     343,021 Other current assets     85,004     59,347     63,482 Total current assets     1,084,198     1,076,386     1,019,180 Property, plant and equipment     78,416     84,160     91,122 Intangible assets             Goodwill     560,343     547,184     553,794 Other intangible assets     66,693     74,616     88,389 Other assets     74,053     79,210     66,877 Total assets   $ 1,863,703   $ 1,861,556   $ 1,819,362               Current liabilities             Accounts payable   $ 342,070   $ 298,160   $ 370,033 Accrued liabilities     187,017     172,560     198,727 Total current liabilities     529,087     470,720     568,760 Other liabilities     185,277     185,835     160,521 Total liabilities     714,364     656,555     729,281               Shareholders´ equity     1,149,339     1,205,001     1,090,081               Total liabilities and shareholders´ equity   $ 1,863,703   $ 1,861,556   $ 1,819,362                    

    LOGITECH INTERNATIONAL S.A.

    (In thousands) - Unaudited

                  Six Months Ended September 30, CONSOLIDATED STATEMENTS OF CASH FLOWS   2011   2010           Cash flows from operating activities:         Net income (loss)   $ (12,161 )   $ 60,682   Non-cash items included in net income (loss):         Depreciation     24,593       23,343   Amortization of other intangible assets     13,556       14,027   Inventory valuation adjustment     34,074       -   Share-based compensation expense     16,453       16,720   Gain on disposal of property and plant     (4,904 )     (838 ) Excess tax benefits from share-based compensation     (30 )     (676 ) Loss on cash surrender value of life insurance policies     -       169   Deferred income taxes and other     (8,554 )     1,995   Changes in assets and liabilities:         Accounts receivable     (36,517 )     (99,615 ) Inventories     (59,589 )     (129,497 ) Other assets     (6,886 )     (5,511 ) Accounts payable     45,088       110,775   Accrued liabilities     (3,489 )     13,316   Net cash provided by operating activities     1,634       4,890             Cash flows from investing activities:         Acquisitions and investments, net of cash acquired     (18,814 )     (7,300 ) Purchases of property, plant and equipment     (20,921 )     (25,419 ) Proceeds from sale of property and plant     4,904       2,688   Purchases of trading investments     (4,536 )     -   Proceeds from sales of trading investments     4,522       -   Net cash used in investing activities     (34,845 )     (30,031 )           Cash flows from financing activities:         Purchases of treasury shares     (73,134 )     -   Proceeds from sale of shares upon exercise of options and purchase rights     9,764       16,570   Tax withholdings related to net share settlements of restricted stock units     (185 )     (223 ) Excess tax benefits from share-based compensation     30       676   Net cash provided by (used in) financing activities     (63,525 )     17,023             Effect of exchange rate changes on cash and cash equivalents     (1,745 )     (4,147 ) Net decrease in cash and cash equivalents     (98,481 )     (12,265 ) Cash and cash equivalents at beginning of period     477,931       319,944   Cash and cash equivalents at end of period   $ 379,450     $ 307,679                    

    LOGITECH INTERNATIONAL S.A.

    (In thousands, except per share amounts) - Unaudited

                          Quarter Ended
    September 30,   Six Months Ended
    September 30, SUPPLEMENTAL FINANCIAL INFORMATION   2011   2010   2011   2010                   Depreciation   $ 11,421     $ 11,005     $ 24,593     $ 23,343   Amortization of other intangible assets     6,926       7,116       13,556       14,027   Operating income (loss)     23,495       51,175       (21,537 )     62,978   Operating income before depreciation and amortization     41,842       69,296       16,612       100,348   Capital expenditures     10,360       13,501       20,921       25,419                                       Net sales by channel:                 Retail   $ 501,735     $ 489,721     $ 896,511     $ 883,587   OEM     50,261       60,850       99,439       119,186   LifeSize     37,208       31,313       73,695       58,441   Total net sales   $ 589,204     $ 581,884     $ 1,069,645     $ 1,061,214                 -                         Net retail sales by product family:                 Retail - Pointing Devices   $ 148,386     $ 153,870     $ 280,448     $ 285,716   Retail - Keyboards & Desktops     109,325       94,507       203,921       169,788