Logitech Announces Third Quarter Results for FY 2012

Published on Wednesday, 25 January 2012 22:04 Written by TradersHuddle Staff

FREMONT, Calif. & MORGES, Switzerland-( Business Wire )-

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

Sales for Q3 FY 2012 were $715 million, down 5 percent from $754 million in Q3 FY 2011. Changes in exchange rates did not have an impact on sales compared to the prior year. Operating income was $70 million, down 8 percent from $76 million in the same quarter a year ago. Net income for Q3 FY 2012 was $55 million ($0.32 per share) compared to net income of $65 million ($0.36 per share) in Q3 of FY 2011. Gross margin for the quarter was 36.2 percent compared to 36.0 percent one year ago.

Logitech’s retail sales for Q3 FY 2012 decreased by 4 percent, with an increase in Asia of 13 percent, a decrease in EMEA of 5 percent and a decrease in the Americas of 8 percent. OEM sales decreased by 24 percent. Sales for the LifeSize division grew 6 percent.

“Our Q3 FY 2012 sales performance across most of our business is consistent with the findings from the assessment of our business that we completed earlier this fiscal year,” said Guerrino De Luca, Logitech chairman and acting chief executive officer. “Large categories such as cordless mice and cordless keyboards, including those for tablets, achieved strong year-over-year sales growth, despite the product gaps that exist across many of our retail categories. I am pleased with our improved execution in EMEA and with the progress of our new product initiatives, both of which we expect to benefit from in Fiscal Year 2013.

“Since we last provided our outlook for Fiscal Year 2012 at the end of October, several factors have changed. Most significantly, the Euro has weakened considerably during the last three months. In addition, webcams and remotes continue to be impacted more than expected by product portfolio and market weakness. Consequently, we have lowered our outlook for FY 12 sales and operating income.

“I am very pleased with our strong cash generation in Q3,” continued De Luca. “Our cash flow from operations for the quarter was $153 million and we ended with $523 million in cash. We can repurchase up to $177 million of our shares under our existing share repurchase program, with all regulatory approvals in place to begin repurchases on our second trading line.”

Outlook

For Fiscal Year 2012, ending March 31, 2012, the Company now expects sales of approximately $2.3 billion and operating income of approximately $60 million. The gross margin for the full year continues to be estimated to reach approximately 33 percent. Full-year outlook factors in the operating loss and very low gross margin previously reported for Q1.

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 Q3 and the Company’s outlook on Thursday, Jan. 26, 2012 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.

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, the impact of improved EMEA execution and product initiatives on FY 2013 performance, and future share repurchases. 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 do not result in the sales improvement in EMEA we expect; in digital music, if we are not able to identify product development, marketing, and organizational skill gaps, and resolve them, or if we fail to introduce differentiated product and marketing strategies to separate ourselves from competitors; 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 Reports on Form 10-Q for the fiscal quarters ended June 30, 2011 and September 30, 2011 and the Quarterly Report on Form 10-Q we intend to file for the fiscal quarter ended December 31, 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 December 31,
CONSOLIDATED STATEMENTS OF OPERATIONS		2011				2010
Net sales		$	714,596			$	754,054
Cost of goods sold			455,922				482,881
Gross profit			258,674				271,173
% of net sales			36.2	%			36.0	%
Operating expenses:
Marketing and selling			116,313				124,914
Research and development			41,911				38,955
General and administrative			30,673				31,264
Total operating expenses			188,897				195,133
Operating income			69,777				76,040
Interest income, net			917				539
Other income, net			6,713				795
Income before income taxes			77,407				77,374
Provision for income taxes			22,074				12,372
Net income		$	55,333			$	65,002
Shares used to compute net income per share:
Basic			173,003				177,233
Diluted			173,656				179,703
Net income per share:
Basic		$	0.32			$	0.37
Diluted		$	0.32			$	0.36

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
		Nine Months Ended December 31,
CONSOLIDATED STATEMENTS OF OPERATIONS		2011				2010
Net sales		$	1,784,241			$	1,815,268
Cost of goods sold			1,201,539				1,158,132
Gross profit			582,702				657,136
% of net sales			32.7	%			36.2	%
Operating expenses:
Marketing and selling			323,552				313,803
Research and development			121,383				118,271
General and administrative			89,527				86,044
Total operating expenses			534,462				518,118
Operating income			48,240				139,018
Interest income, net			2,208				1,695
Other income, net			10,141				797
Income before income taxes			60,589				141,510
Provision for income taxes			17,417				15,826
Net income		$	43,172			$	125,684
Shares used to compute net income per share:
Basic			176,414				176,329
Diluted			177,201				178,306
Net income per share:
Basic		$	0.24			$	0.71
Diluted		$	0.24			$	0.70

LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
CONSOLIDATED BALANCE SHEETS		December 31, 2011			March 31, 2011			December 31, 2010
Current assets
Cash and cash equivalents		$	523,333		$	477,931		$	460,726
Accounts receivable			318,678			258,294			336,098
Inventories			295,749			280,814			300,630
Other current assets			73,498			59,347			58,469
Total current assets			1,211,258			1,076,386			1,155,923
Property, plant and equipment			78,055			84,160			85,833
Intangible assets
Goodwill			560,106			547,184			553,794
Other intangible assets			59,743			74,616			81,251
Other assets			81,524			79,210			71,212
Total assets		$	1,990,686		$	1,861,556		$	1,948,013
Current liabilities
Accounts payable		$	377,132		$	298,160		$	386,485
Accrued liabilities			213,092			172,560			213,170
Total current liabilities			590,224			470,720			599,655
Other liabilities			195,956			185,835			168,913
Total liabilities			786,180			656,555			768,568
Shareholders' equity			1,204,506			1,205,001			1,179,445
Total liabilities and shareholders' equity		$	1,990,686		$	1,861,556		$	1,948,013

LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
		Nine Months Ended December 31,
CONSOLIDATED STATEMENTS OF CASH FLOWS		2011				2010
Cash flows from operating activities:
Net income		$	43,172			$	125,684
Non-cash items included in net income:
Depreciation			35,201				35,665
Amortization of other intangible assets			20,209				21,165
Inventory valuation adjustment			34,074				-
Share-based compensation expense			23,380				23,976
Gain on sales of available-for-sale investments			(6,118	)			-
Gain on disposal of property and plant			(4,904	)			(838	)
Excess tax benefits from share-based compensation			(33	)			(2,735	)
Gain on cash surrender value of life insurance policies			-				(901	)
Deferred income taxes and other			(998	)			(1,665	)
Changes in assets and liabilities:
Accounts receivable			(63,092	)			(132,480	)
Inventories			(35,720	)			(82,636	)
Other assets			(11,853	)			5,145
Accounts payable			81,973				128,586
Accrued liabilities			38,877				34,453
Net cash provided by operating activities			154,168				153,419
Cash flows from investing activities:
Acquisitions and investments, net of cash acquired			(18,814	)			(7,300	)
Purchases of property, plant and equipment			(31,417	)			(31,835	)
Proceeds from sale of property and plant			4,904				2,688
Purchases of trading investments			(5,577	)			(12,554	)
Proceeds from sales of trading investments			5,520				194
Proceeds from sales of available-for-sale investments			6,550				-
Proceeds from cash surrender of life insurance policies			-				11,313
Net cash used in investing activities			(38,834	)			(37,494	)
Cash flows from financing activities:
Purchases of treasury shares			(73,134	)			-
Proceeds from sale of shares upon exercise of options and purchase rights			9,852				28,368
Tax withholdings related to net share settlements of restricted stock units			(890	)			(223	)
Excess tax benefits from share-based compensation			33				2,735
Net cash provided by (used in) financing activities			(64,139	)			30,880
Effect of exchange rate changes on cash and cash equivalents			(5,793	)			(6,023	)
Net increase in cash and cash equivalents			45,402				140,782
Cash and cash equivalents at beginning of period			477,931				319,944
Cash and cash equivalents at end of period		$	523,333			$	460,726

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
		Quarter Ended							Nine Months Ended
		December 31,							December 31,
SUPPLEMENTAL FINANCIAL INFORMATION		2011			2010				2011				2010
Depreciation		$	10,608		$	12,322			$	35,201			$	35,665
Amortization of other intangible assets			6,653			7,138				20,209				21,165
Operating income			69,777			76,040				48,240				139,018
Operating income before depreciation and amortization			87,038			95,500				103,650				195,848
Capital expenditures			10,497			6,416				31,417				31,835
Net sales by channel:
Retail		$	630,873		$	658,392			$	1,527,385			$	1,541,978
OEM			45,527			59,563				144,966				178,749
LifeSize			38,196			36,099				111,890				94,541
Total net sales		$	714,596		$	754,054			$	1,784,241			$	1,815,268
Net retail sales by product family:
Retail - Pointing Devices		$	191,491		$	186,507			$	471,938			$	472,224
Retail - Keyboards & Desktops			135,484			113,143				339,405				282,931
Retail - Audio			158,429			155,238				370,809				370,848
Retail - Video			58,306			77,445				165,574				193,294
Retail - Digital Home			46,581			79,757				87,348				141,144
Retail - Gaming			40,582			46,302				92,311				81,537
Total net retail sales		$	630,873		$	658,392			$	1,527,385			$	1,541,978
		Quarter Ended							Nine Months Ended
		December 31,							December 31,
Share-based Compensation Expense		2011			2010				2011				2010
Cost of goods sold		$	948		$	1,000			$	3,058			$	2,910
Marketing and selling			2,380			2,115				9,345				8,283
Research and development			1,802			1,842				5,364				5,394
General and administrative			1,797			2,299				5,613				7,389
Income tax provision (benefit)			70			(1,189	)			(4,595	)			(5,526	)
Total share-based compensation expense after income taxes		$	6,997		$	6,067			$	18,785			$	18,450
Share-based compensation expense net of tax, per share (diluted)		$	0.04		$	0.03			$	0.11			$	0.10

Constant dollar sales (sales excluding impact of exchange rate changes)

We refer to our net sales excluding the impact of foreign currency exchange rates as constant dollar sales. Constant dollar sales are a non-GAAP financial measure, which is information derived from consolidated financial information but not presented in our financial statements prepared in accordance with U.S. GAAP. Our management uses these non-GAAP measures in its financial and operational decision-making, and believes these non-GAAP measures, when considered in conjunction with the corresponding GAAP measures, facilitate a better understanding of changes in net sales. Constant dollar sales are calculated by translating prior period sales in each local currency at the current period's average exchange rate for that currency.

Logitech InternationalJoe Greenhalgh, 510-713-4430Vice President, Investor Relations – USANancy Morrison, 510-713-4948Vice President, Corporate Communications – USALaura Scorza, +41-(0) 21-863-5336Sr. Public Relations Manager – Europe