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Logitech Q2 Delivers Best Retail Sales Growth Since 2010


    Logitech International (SIX:LOGN) (Nasdaq:LOGI) today announced financial results for the second quarter of Fiscal Year 2016.

    • Q2 sales were $540 million, up 2 percent compared to Q2 of the prior year. Q2 retail sales (total sales excluding OEM and Lifesize) were $496 million and grew 12 percent in constant currency.
    • Q2 GAAP operating income was $26 million. Q2 GAAP earnings per share (EPS) were $0.11, compared to $0.22 in the same quarter a year ago.
    • Q2 non-GAAP operating income was $42 million, with non-GAAP EPS of $0.22, compared to $0.31 in the same quarter a year ago.

    “I’m excited by our performance this quarter. We delivered our best retail sales growth in almost five years, exceeding expectations,” said Bracken P. Darrell, Logitech president and chief executive officer. “Our growth was broad-based across categories and regions. In constant currency, Americas grew 9 percent, EMEA grew 7 percent and Asia Pacific grew 26 percent. In our Growth category, Gaming, Video Collaboration and Mobile Speakers each grew more than 50 percent. Our reinvigorated innovation engine and commitment to design are delivering powerfully and we have strong momentum heading into the holiday peak season.”

    Outlook

    Logitech confirmed its FY 2016 outlook of $150 million in non-GAAP operating income and 7 percent growth for retail sales in constant currency.

    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.

    Financial Results Teleconference and Webcast

    Logitech will hold a financial results teleconference to discuss the results for Q2 FY 2016 on Oct. 22, 2015 at 8:30 a.m. Eastern Daylight Time and 2:30 p.m. Central European Summer Time. A live webcast of the call will be available on the Logitech corporate website at http://ir.logitech.com.

    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), benefit from (provision for) income taxes, one-time special charges and other items detailed under “Supplemental Financial Information” after the tables below. Logitech also presents percentage sales growth in constant currency, a non-GAAP measure, to show performance unaffected by fluctuations in currency exchange rates. Percentage sales growth in constant currency is calculated by translating prior period sales in each local currency at the current period’s average exchange rate for that currency and comparing that to current period sales. Logitech believes this information will help investors to evaluate its current period performance and trends in its business. With respect to the Company’s outlook for non-GAAP operating income, most of these excluded amounts pertain to events that have not yet occurred and are not currently possible to estimate with a reasonable degree of accuracy. Therefore, no reconciliation to the GAAP amounts has been provided for Fiscal Year 2016.

    About Logitech

    Logitech designs products that have an everyday place in people´s lives, connecting them to the digital experiences they care about. Over 30 years ago Logitech started connecting people through computers, and now it’s designing products that bring people together through music, gaming, video and computing. 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). Find Logitech at www.logitech.com, the company blog or @Logitech.

    This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation statements regarding: Logitech’s momentum, results from its innovation engine and design commitment, and Fiscal Year 2016 operating income and sales growth. 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 or our growth opportunities are more limited than we expect; if sales of PC peripherals 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 we do not fully realize our goals to lower our costs and improve our operating leverage; 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 Annual Report on Form 10-K for the fiscal year ended March 31, 2015 and our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2015, 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.

    Note that unless noted otherwise, comparisons are year over year.

    2015 Logitech, Logicool, Logi and other Logitech marks are owned by Logitech and may be registered. All other trademarks are the property of their respective owners. For more information about Logitech and its products, visit the company’s website at www.logitech.com.

                              LOGITECH INTERNATIONAL S.A.                        

    (In thousands, except per share amounts) - Unaudited

                                                            Three Months Ended     Six Months Ended       September 30     September 30 GAAP CONSOLIDATED STATEMENTS OF OPERATIONS     2015     2014     2015     2014                           Net sales     $ 539,862       $ 530,311       $ 1,010,182       $ 1,012,514   Cost of goods sold       353,851         325,533         652,442         625,984   Gross profit       186,011         204,778         357,740         386,530   % of net sales       34.5 %       38.6 %       35.4 %       38.2 %                           Operating expenses:                         Marketing and selling       89,877         95,862         177,304         186,908   Research and development       34,898         32,325         68,731         63,641   General and administrative       26,851         34,470         57,355         71,149   Restructuring charges, net       8,696         —         21,691         —   Total operating expenses       160,322         162,657         325,081         321,698   Operating income       25,689         42,121         32,659         64,832   Interest income, net       192         355         456         613   Other expense, net       (780 )       (885 )       (1,901 )       (1,083 ) Income before income taxes       25,101         41,591         31,214         64,362   Provision for income taxes       7,004         5,501         5,680         8,596   Net income     $ 18,097       $ 36,090       $ 25,534       $ 55,766                             Net income per share:                         Basic     $ 0.11       $ 0.22       $ 0.16       $ 0.34   Diluted     $ 0.11       $ 0.22       $ 0.15       $ 0.34  

    Weighted average shares used to compute net income per share:

                            Basic       163,515         163,230         163,957         163,121   Diluted       165,841         166,065         166,352         165,949                             Cash dividends per share       0.53         —         0.53         —                                             LOGITECH INTERNATIONAL S.A.             (In thousands)                                 September 30    

       March 31,   

    CONSOLIDATED BALANCE SHEETS     2015     2015       (Unaudited)       Current assets:             Cash and cash equivalents     $ 365,774       $ 537,038 Accounts receivable, net       274,730         179,823 Inventories       328,054         270,730 Other current assets       73,504         64,429 Total current assets       1,042,062         1,052,020 Non-current assets:             Property, plant and equipment, net       108,184         91,593 Goodwill       218,207         218,213 Other intangible assets       666         1,866 Other assets       60,656         62,988 Total assets     $ 1,429,775       $ 1,426,680               Current liabilities:             Accounts payable     $ 356,686       $ 299,995 Accrued and other current liabilities       231,688         194,912 Total current liabilities       588,374         494,907 Non-current liabilities:       172,428         173,639 Total liabilities       760,802         668,546               Total shareholders´ equity       668,973         758,134               Total liabilities and shareholders´ equity     $ 1,429,775       $ 1,426,680                     LOGITECH INTERNATIONAL S.A.                         (In thousands) - Unaudited                                                         Three Months Ended     Six Months Ended       September 30     September 30 CONSOLIDATED STATEMENTS OF CASH FLOWS     2015     2014     2015     2014                           Operating activities:                         Net income     $ 18,097       $ 36,090       $ 25,534       $ 55,766  

    Adjustments to reconcile net income to net cash provided by operating activities:

                            Depreciation       11,721         9,741         22,237         19,692   Amortization of other intangible assets       494         2,576         1,226         5,358   Share-based compensation expense       6,508         6,061         13,257         12,999   Impairment of investments       77         105         180         105   Gain on disposal of property, plant and equipment       —         (32 )       —         (10 ) Excess tax benefits from share-based compensation       (498 )       (285 )       (1,163 )       (666 ) Deferred income taxes       7,684         (526 )       952         (2,358 ) Changes in operating assets and liabilities, net of acquisitions:                         Accounts receivable, net       (54,195 )       (36,898 )       (95,403 )       (73,561 ) Inventories       (1,278 )       (8,521 )       (55,442 )       (26,984 ) Other assets       (6,128 )       (3,577 )       (8,511 )       (5,640 ) Accounts payable       15,820         19,337         50,361         60,112   Accrued and other liabilities       12,435         8,875         31,910         15,891   Net cash provided by (used in) operating activities       10,737         32,946         (14,862 )       60,704                             Investing activities:                         Purchases of property, plant and equipment       (15,987 )       (13,721 )       (31,277 )       (24,964 ) Investment in privately held companies       (240 )       (1,500 )       (480 )       (2,550 ) Purchase of trading investments       (1,746 )       (1,776 )       (2,649 )       (2,230 ) Proceeds from sales of trading investments       2,015         2,039         2,855         2,545   Net cash used in investing activities       (15,958 )       (14,958 )       (31,551 )       (27,199 )                           Financing activities:                         Payment of cash dividends       (85,915 )       —         (85,915 )       —   Contingent consideration related to prior acquisition       —         —         —         (100 ) Purchases of treasury shares       (39,988 )       —         (48,802 )       —   Repurchase of ESPP awards       —         (1,078 )       —         (1,078 ) Proceeds from sales of shares upon exercise of options and purchase rights       7,037         959         11,103         1,533   Tax withholdings related to net share settlements of restricted stock units       (2,206 )       (628 )       (3,502 )       (1,323 ) Excess tax benefits from share-based compensation       498         285         1,163         666   Net cash used in financing activities       (120,574 )       (462 )       (125,953 )