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Logitech Delivers Record Q2 Retail Revenue, Up 14%


    Logitech International (SIX:LOGN) (NASDAQ:LOGI) today announced financial results for the second quarter of Fiscal Year 2017.

    • Q2 sales were $564 million, up 9 percent compared to Q2 of the prior year. Q2 retail sales grew 14 percent, reaching a record level for Q2.
    • Q2 GAAP operating income was $53 million compared to $37 million a year ago. Q2 GAAP earnings per share (EPS) from continuing operations were $0.28 compared to $0.18 a year ago.
    • Q2 non-GAAP operating income was $65 million compared to $47 million a year ago, with non-GAAP EPS of $0.35 compared to $0.25 a year ago.
    • Q2 cash flow from operations was $74 million compared to $11 million a year ago.

    “We’ve delivered an outstanding quarter – the highest Q2 retail sales in Logitech’s history – and a first half ahead of expectations,” said Bracken Darrell, Logitech president and chief executive officer. “Once more this quarter shows our strategy clearly: new product launches that again demonstrate the power of our innovation engine, ongoing operational excellence, and profitable growth across all our regions and in almost all our market opportunities. As we enter the second half of the year and our biggest quarter, we’ve got momentum, a winning product portfolio and a terrific team.”

    Outlook

    Logitech’s Fiscal Year 2017 outlook is 8 to 10 percent retail sales growth in constant currency and $195 million to $205 million in non-GAAP operating income.

    Prepared Remarks Available Online

    Logitech has made its prepared written remarks for the financial results teleconference available online on the Logitech corporate website at http://ir.logitech.com.

    Financial Results Teleconference and Webcast

    Logitech will hold a financial results teleconference to discuss the results for Q2 FY 2017 on Weds., October 26, 2016 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.

    Continued Operations

    Logitech separated its Lifesize division from the Company on Dec. 28, 2015. Except as otherwise noted, all the results reported in this press release as well as comparisons between periods are focused on results from continuing operations and do not address the performance of Lifesize, which is now reported in the Company’s financial statements under discontinued operations or total Logitech including discontinued operations. For more information on the impact of the Lifesize separation on Logitech’s historical results, please refer to the Financial Reporting section of Logitech’s Financial History, available on the Logitech corporate website at http://ir.logitech.com.

    Use of Non-GAAP Financial Information and Constant Currency

    To facilitate comparisons to Logitech’s historical results, Logitech has included non-GAAP adjusted measures, which exclude share-based compensation expense, amortization of intangible assets, purchase accounting effect on inventory, acquisition-related costs, restructuring charges (credits), gain (loss) on equity-method investment, investigation and related expenses, non-GAAP income tax adjustment, and other items detailed under “Supplemental Financial Information” after the tables below. Logitech also presents percentage sales growth in constant currency 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, used together with the GAAP financial 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 2017.

    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: our strategy, new product launches, product portfolio, innovation, operations, profitability, growth, momentum, and outlook for Fiscal Year 2017 operating income and sales growth as well as the size of our fiscal third quarter. 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 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 product categories, 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, 2016 and our Quarterly Report on Form 10-Q for fiscal quarter ended June 30, 2016, 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.

    2016 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 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (A)   2016   2015   2016   2015                   Net sales   $ 564,304     $ 518,494     $ 1,044,168     $ 966,180   Cost of goods sold   356,268     345,977     665,893     635,730   Amortization of intangible assets and purchase accounting effect on inventory   1,163     —     2,776     —   Gross profit   206,873     172,517     375,499     330,450   Operating expenses:                 Marketing and selling   93,792     78,833     177,664     154,629   Research and development   32,632     28,725     64,583     56,727   General and administrative   25,216     25,074     50,956     53,886   Amortization of intangible assets and acquisition-related costs   1,748     168     3,041     336   Restructuring charges (credits), net   74     3,146     (11 )   14,684   Total operating expenses   153,462     135,946     296,233     280,262   Operating income   53,411     36,571     79,266     50,188   Interest income (expense), net   (90 )   189     61     444   Other expense, net   (683 )   (737 )   (1,691 )   (1,756 ) Income before income taxes   52,638     36,023     77,636     48,876   Provision for income taxes   5,593     5,571     8,650     5,564   Net income from continuing operations   47,045     30,452     68,986     43,312   Loss from discontinued operations, net of taxes   —     (12,355 )   —     (17,778 ) Net income   $ 47,045     $ 18,097     $ 68,986     $ 25,534                     Net income (loss) per share - basic:                 Continuing operations   $ 0.29     $ 0.19     $ 0.43     $ 0.26   Discontinued operations   —     (0.08 )   —     (0.10 ) Net income per share - basic   $ 0.29     $ 0.11     $ 0.43     $ 0.16                     Net income (loss) per share - diluted:                 Continuing operations   $ 0.28     $ 0.18     $ 0.42     $ 0.26   Discontinued operations   —     (0.07 )   —     (0.11 ) Net income per share - diluted   $ 0.28     $ 0.11     $ 0.42     $ 0.15                     Weighted average shares used to compute net income (loss) per share:                 Basic   162,222     163,515     162,176     163,957   Diluted   165,549     165,841     164,926     166,352                     Cash dividend per share   $ 0.57     $ 0.53     $ 0.57     $ 0.53             LOGITECH INTERNATIONAL S.A.         (In thousands) - unaudited                       September 30,   March 31, CONDENSED CONSOLIDATED BALANCE SHEETS (A)   2016   2016           Current assets:         Cash and cash equivalents   $ 395,201     $ 519,195   Accounts receivable, net     240,606       142,778   Inventories     268,110       228,786   Other current assets     40,201       35,488   Total current assets   $ 944,118     $ 926,247   Non-current assets:         Property, plant and equipment, net     84,797       92,860   Goodwill     249,765       218,224   Other intangible assets     53,063       —   Other assets     84,517       86,816   Total assets   $ 1,416,260     $ 1,324,147             Current liabilities:         Accounts payable   $ 333,543     $ 241,166   Accrued and other current liabilities     213,910       173,764   Total current liabilities   $ 547,453     $ 414,930   Non-current liabilities:         Income taxes payable   $ 60,360     $ 59,734   Other non-current liabilities     92,413       89,535   Total liabilities   $ 700,226     $ 564,199             Shareholders’ equity:         Registered shares, CHF 0.25 par value:     30,148       30,148   Issued and authorized shares —173,106 at September 30 and March 31, 2016         Conditionally authorized shares — 50,000 at September 30 and March 31, 2016         Additional paid-in capital     8,851       6,616   Less shares in treasury, at cost — 11,009 at September 30, 2016 and 10,697 at March 31, 2016     (152,070 )     (128,407 ) Retained earnings     937,220       963,576   Accumulated other comprehensive loss     (108,115 )     (111,985 ) Total shareholders’ equity     716,034       759,948   Total liabilities and shareholders’ equity   $ 1,416,260     $ 1,324,147                     LOGITECH INTERNATIONAL S.A.                 (In thousands) - unaudited                     Three Months Ended   Six Months Ended     September 30,   September 30, CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (A)   2016   2015   2016   2015                   Cash flows from operating activities:                 Net income   $ 47,045     $ 18,097     $ 68,986     $ 25,534   Non-cash items included in net income:                 Depreciation   10,511     11,721     23,616     22,237   Amortization of intangible assets   2,159     494     3,867     1,226   Loss (gain) on equity-method investment   (171 )   77     (172 )   180   Share-based compensation expense   8,450     6,508     16,967     13,257   Excess tax benefits from share-based compensation   (850 )   (498 )   (4,130 )   (1,163 ) Deferred income taxes   663     7,684     (385 )   952   Changes in operating assets and liabilities, net of acquisitions:                 Accounts receivable, net   (48,340 )   (54,195 )   (97,001 )   (95,403 ) Inventories   (18,310 )   (1,278 )   (28,317 )   (55,442 ) Other assets   (3,567 )   (6,128 )   (4,738 )   (8,511 ) Accounts payable   40,907     15,820     83,676     50,361   Accrued and other liabilities   35,522     12,435     25,387     31,910   Net cash provided by (used in) operating activities   74,019     10,737     87,756     (14,862 ) Cash flows from investing activities:                 Purchases of property, plant and equipment   (6,623 )   (15,987 )   (14,758 )   (31,277 ) Investment in privately held companies   (160 )   (240 )   (480 )   (480 ) Acquisitions, net of cash acquired   (13,000 )   —     (66,987 )   —   Release of restricted cash   —     —     715     —   Purchase of trading investments   (1,042 )   (1,746 )   (5,271 )   (2,649 ) Proceeds from sales of trading investments   1,065     2,015     5,296     2,855   Net cash used in investing activities   (19,760 )   (15,958 )   (81,485 )   (31,551 ) Cash flows from financing activities:                 Payment of cash dividends   (93,093 )   (85,915 )   (93,093 )   (85,915 ) Purchases of treasury shares   (18,472 )   (39,988 )   (42,894 )   (48,802 ) Proceeds from sales of shares upon exercise of options and purchase rights   13,885     7,037     14,484