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Logitech Announces Second Quarter Results for FY 2013


    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 at www.sec.gov., under the caption Risk Factors and elsewhere. Logitech does not undertake any obligation to update any forward-looking statements to reflect new information or events or circumstances occurring after the date of this press release.

    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 SHEETS   September 30, 2012     March 31, 2012     September 30, 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 equipment     93,854       94,884       78,416 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 shareholders´ equity   $ 1,692,412     $ 1,856,494     $ 1,863,703                   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 compensation     (17 )     (6 ) 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 activities     16,151       (2,110 )           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 of options and purchase rights     8,604       9,157   Tax withholdings related to net share settlements of restricted stock units     (465 )     (9 ) Excess tax benefits from share-based compensation     17       6   Net cash used in financing activities     (125,306 )     (63,980 )           Effect of exchange rate changes on cash and cash equivalents     320       (1,684 ) Net decrease in cash and cash equivalents     (123,704 )     (96,917 ) Cash and cash equivalents at beginning of period     360,737       476,367   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 compensation     (22 )     (30 ) 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 )