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Logitech Delivers Better-Than-Expected Q3 FY 2014 Results, Raises Full-Year Outlook


    Logitech International (SIX:LOGN)(Nasdaq:LOGI) today announced financial results for the third quarter of Fiscal Year 2014, with better-than-expected total sales of $628 million, up 2 percent compared to the third quarter of the prior year. Q3 GAAP operating income was $53 million, with GAAP earnings per share (EPS) of $0.30 compared to a loss a year ago. Q3 non-GAAP operating income was $67 million, with non-GAAP EPS of $0.35, up 84 percent year over year. Cash flow from operations for Q3 was $94 million.

    Retail sales for Q3 were up 4 percent year over year. Combined, Logitech’s retail growth categories delivered 62 percent growth compared to the prior year.

    • Tablet Accessories sales grew 95%
    • Audio – Wearables and Wireless sales grew 79%
    • PC Gaming sales grew 25%

    “We’re pleased by our solid Q3 performance, with both sales and profit growth,” said Bracken P. Darrell, Logitech president and chief executive officer. “We’re encouraged by the robust sales in our growth categories, as well as the success of our ongoing initiatives to improve profitability, which includes the earlier-than-expected return to profitability of LifeSize. We still have more work ahead, but our turnaround is on track as we continue to build a faster and more profitable Logitech.”

    Outlook

    Based on its Q3 performance, Logitech has raised its full-year outlook for Fiscal Year 2014. The Company now expects sales of just under $2.1 billion, compared to the previously expected $2.0 billion, and non-GAAP operating income in the range of $120 million to $125 million, compared to the previously expected $100 million.

    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, in the Calendar section.

    Financial Results Teleconference and Webcast

    Logitech will hold a financial results teleconference to discuss the results for Q3 FY 2014 on Thurs., Jan. 23, 2014 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.

    Logitech also will hold its Analyst and Investor Day on Thurs., March 6, 2014 in New York City.

    Use of Non-GAAP Financial Information

    To facilitate comparisons to Logitech’s historical results, Logitech has included non-GAAP adjusted measures, which exclude share-based compensation expense, amortization of other intangible assets, restructuring charges (credits), other restructuring-related charges, investment impairment (recovery) and other items detailed under “Supplemental Financial Information” after the tables below. Logitech believes this information will help investors to evaluate its current period performance and trends in its business.

    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: the Company’s turnaround, growth categories, sales, profit growth and profitability, as well as Fiscal Year 2014 revenue and operating income. 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. 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, 2013 and our Amended Annual Report on Form 10-K/A for the fiscal year ended March 31, 2013, 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                                     Three Months Ended     Nine Months Ended         December 31,     December 31, CONSOLIDATED STATEMENTS OF OPERATIONS       2013     2012     2013     2012               (revised) (A)           (revised) (A)                             Net sales       $ 627,890       $ 614,500       $ 1,637,786       $ 1,630,797   Cost of goods sold         414,528         404,695         1,072,656         1,079,872   Gross profit         213,362         209,805         565,130         550,925   % of net sales         34.0 %       34.1 %       34.5 %       33.8 %                             Operating expenses:                           Marketing and selling         93,624         112,698         287,969         324,117   Research and development         34,103         40,488         107,927         117,625  

    General and administrative

            31,560         26,382         90,103         84,842   Goodwill impairment         -         211,000         -         211,000   Restructuring charges (reversals), net         822         (358 )       8,621         28,198   Total operating expenses         160,109         390,210         494,620         765,782                               Operating income (loss)         53,253         (180,405 )       70,510         (214,857 )                             Interest income (expense), net         (1,022 )       114         (862 )       651   Other income (expense), net         1,082         (3,670 )       1,361         (4,338 )                             Income (loss) before income taxes         53,313         (183,961 )       71,009         (218,544 ) Provision for (benefit from) income taxes         4,810         11,370         7,065         (26,616 )                             Net income (loss)       $ 48,503       $ (195,331 )     $ 63,944       $ (191,928 )                             Net income (loss) per share:                           Basic       $ 0.30       $ (1.24 )     $ 0.40       $ (1.21 ) Diluted       $ 0.30       $ (1.24 )     $ 0.40       $ (1.21 ) Shares used to compute net income (loss) per share :                           Basic         160,871         157,706         160,051         158,383   Diluted         163,388         157,706         161,509         158,383                                                                     LOGITECH INTERNATIONAL S.A.                       (In thousands) - Unaudited                               December 31,     March 31,     December 31, CONSOLIDATED BALANCE SHEETS       2013     2013     2012               (A)     (revised) (A) Current assets:                     Cash and cash equivalents       $ 379,865     $ 333,824     $ 321,999 Accounts receivable, net         312,947       179,565       264,589 Inventories         257,998       261,083       277,477 Other current assets         60,979       58,103       61,600 Assets held for sale         -       10,960       15,655 Total current assets         1,011,789       843,535       941,320 Non-current assets:                     Property, plant and equipment, net         87,494       87,649       89,128 Goodwill         345,036       341,357       345,235 Other intangible assets         13,319       26,024       35,033 Other assets         71,322       75,098       76,719 Total assets       $ 1,528,960     $ 1,373,663     $ 1,487,435                       Current liabilities:                     Accounts payable       $ 328,757     $ 265,995     $ 339,283 Accrued and other current liabilities         234,297       192,774       217,095 Liabilities held for sale         -       3,202       3,725 Total current liabilities         563,054       461,971       560,103 Non-current liabilities:         200,797       195,882       195,687 Total liabilities         763,851       657,853       755,790                       Total shareholders´ equity         765,109       715,810       731,645                       Total liabilities and shareholders´ equity       $ 1,528,960     $ 1,373,663     $ 1,487,435                                                   LOGITECH INTERNATIONAL S.A.                             (In thousands) - Unaudited                                     Three Months Ended     Nine Months Ended         December 31,     December 31, CONSOLIDATED STATEMENTS OF CASH FLOWS       2013     2012     2013     2012               (revised) (A)           (revised) (A) Operating activities:                           Net income (loss)       $ 48,503       $ (195,331 )     $ 63,944       $ (191,928 ) Adjustments to reconcile net income (loss) to cash provided by operating activities:                     Depreciation         9,473         11,554         28,756         33,861   Amortization of other intangible assets         4,472         5,823         14,990         18,412   Share-based compensation expense         8,913         5,222         17,412         18,659   Goodwill impairment         -         211,000         -         211,000   Impairment of strategic investment         38         3,600         568         3,600   Loss on disposal of property, plant and equipment         1,422         -         3,878         -   Gain on sale of securities         -         -         -         (831 ) Excess tax benefits from share-based compensation         (572 )       (4 )       (572 )       (26 ) Deferred income taxes and other         343         13,204         (3,559 )       9,398   Changes in operating assets and liabilities, net of acquisitions:                           Accounts receivable, net         (53,223 )       16,962         (130,265 )       (41,571 ) Inventories         36,002         32,177         14,652         352   Other assets         2,925         5,138         (2,968 )       (2,432 ) Accounts payable         23,376         (29,202 )       62,931         41,893   Accrued and other liabilities         12,027         14,958         38,118         3,961   Net cash provided by operating activities         93,699         95,101         107,885         104,348                               Investing activities:                           Purchases of property, plant and equipment         (9,033 )       (9,215 )       (32,096 )       (42,032 ) Purchase of strategic investment         -         -         -         (3,970 ) Acquisitions, net of cash acquired         -         -         (650 )       -   Proceeds from sales of available-for-sale securities         -         -         -         917   Proceeds from return of investment in privately held companies         261         -         261         -   Purchases of trading investments for deferred compensation plan         (1,685 )       (646 )       (7,831 )