Logitech Announces Third Quarter Financial Results for FY 2011

FREMONT, Calif. & MORGES, Switzerland--([ BUSINESS WIRE ])--Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the third quarter of Fiscal Year 2011.

"A highlight of the quarter was the launch of Logitech Revue with Google TV and related peripherals. We are confident about the long-term potential of the Google TV platform and look forward to continued enhancements around the platform as we work with Google to push periodic over-the-air software updates."

Sales for Q3 FY 2011 were $754 million, up 22 percent from $617 million in the same quarter last year. Excluding the unfavorable impact of exchange rate changes, sales increased by 26 percent. Operating income was $76 million, an increase of 30 percent compared to $58 million in the same quarter a year ago. Net income for Q3 was $65 million ($0.36 per share) compared to $57 million ($0.32 per share) in Q3 of FY 2010. Gross margin for Q3 FY 2011 was 36.0 percent, up from 33.9 percent one year ago.

Logitecha�s retail sales for Q3 FY 2011 grew by 17 percent year over year, with an increase in Asia of 51 percent, an increase in the Americas of 31 percent, and a decrease in EMEA of 1 percent. OEM sales increased by 18 percent. The LifeSize division contributed 5 percentage points to the Companya�s Q3 FY 2011 sales growth compared to the prior year.

aWe are very pleased with our Q3 performance, which included our highest-ever quarterly sales and strong year-over-year growth in both sales and operating income,a said Gerald P. Quindlen, Logitech president and chief executive officer. aAll of our retail product categories contributed to our sales growth, with double-digit increases in remote controls, pointing devices, video and gaming. OEM sales made a very solid contribution, and the momentum continued for our LifeSize division, which delivered the highest-ever quarterly sales in its history.

aA highlight of the quarter was the launch of Logitech Revue with Google TV and related peripherals. We are confident about the long-term potential of the Google TV platform and look forward to continued enhancements around the platform as we work with Google to push periodic over-the-air software updates.a

Outlook

For Fiscal Year 2011, ending March 31, 2011, Logitech has increased its sales outlook from the previous range of $2.35 to $2.4 billion to the new range of $2.4 to $2.42 billion. The target for operating income for the full year remains in the range of $170 to $180 million. Expected gross margin continues to be approximately 36 percent. The expected tax rate has been lowered to approximately 14 percent.

Earnings Teleconference and Webcast

Logitech will hold an earnings teleconference on Thursday, Jan. 27, 2011 at 8:30 a.m. Eastern StandardTime and 14:30 Central European Time. A live webcast of the call, along with presentation slides, will be available on the Logitech corporate Web site 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, Logitecha�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, gross margin and tax rate for FY 2011, and the long-term potential and enhancements for the Google TV platform. The forward-looking statements in this release involve risks and uncertainties that could cause Logitecha�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; 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 consumer reaction to and demand for the Google TV platform and our products for it are less positive than we expect, or if Google fails to support or continue the Google TV platform; the sales mix among our lower- and higher-margin products and our geographic sales mix; if our product introductions 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, or if significant consumer demand for peripherals to use with tablets and other mobile devices does not develop; if there is a deterioration of business and economic conditions or significant fluctuations in currency exchange rates; 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, 2010, and our Quarterly Report on Form 10-Q for the quarters ended June 30, 2010 and September 30, 2010, available at [ www.sec.gov ]. Logitech does not undertake to update any forward-looking statements.

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 companya�s Web site at [ www.logitech.com ].

(LOGI a" IR)


LOGITECH INTERNATIONAL S.A.

(In thousands, except per share amounts) - Unaudited


			Quarter Ended December 31,
CONSOLIDATED STATEMENTS OF INCOME				2010			2009

Net sales			$	754,054		$	617,101
Cost of goods sold				482,881			408,137
Gross profit				271,173			208,964
	% of net sales			36.0	%		33.9	%

Operating expenses:
	Marketing and selling			124,914			87,322
	Research and development			38,955			32,931
	General and administrative			31,264			30,284
Total operating expenses				195,133			150,537

Operating income				76,040			58,427

Interest income, net				539			414
Other income, net				795			3,052

Income before income taxes				77,374			61,893
Provision for income taxes				12,372			4,807

Net income			$	65,002		$	57,086

Shares used to compute net income per share:
		Basic		177,233			175,426
		Diluted		179,703			177,668
Net income per share:
		Basic	$	0.37		$	0.33
		Diluted	$	0.36		$	0.32


LOGITECH INTERNATIONAL S.A.

(In thousands, except per share amounts) - Unaudited


			Nine Months Ended December 31,
CONSOLIDATED STATEMENTS OF INCOME				2010			2009

Net sales			$	1,815,268		$	1,441,304
Cost of goods sold				1,158,132			1,002,730
Gross profit				657,136			438,574
	% of net sales			36.2	%		30.4	%

Operating expenses:
	Marketing and selling			313,803			215,095
	Research and development			118,271			96,116
	General and administrative			86,044			75,204
	Restructuring charges			-			1,494
Total operating expenses				518,118			387,909

Operating income				139,018			50,665

Interest income, net				1,695			1,645
Other income, net				797			2,416

Income before income taxes				141,510			54,726
Provision for income taxes				15,826			14,262

Net income			$	125,684		$	40,464

Shares used to compute net income per share:
		Basic		176,329			177,829
		Diluted		178,306			179,866
Net income per share:
		Basic	$	0.71		$	0.23
		Diluted	$	0.70		$	0.22


LOGITECH INTERNATIONAL S.A.

(In thousands) - Unaudited


CONSOLIDATED BALANCE SHEETS		December 31, 2010		March 31, 2010		December 31, 2009

Current assets
	Cash and cash equivalents	$	460,726	$	319,944	$	281,052
	Accounts receivable		336,098		195,247		248,625
	Inventories		300,630		219,593		235,012
	Other current assets		58,469		58,877		71,803
	Total current assets		1,155,923		793,661		836,492
Property, plant and equipment			85,833		91,229		92,452
Intangible assets
	Goodwill		553,794		553,462		547,816
	Other intangible assets		81,251		95,396		102,307
Other assets			71,212		65,930		66,798
Total assets		$	1,948,013	$	1,599,678	$	1,645,865

Current liabilities
	Accounts payable	$	386,485	$	257,955	$	316,651
	Accrued liabilities		213,170		182,336		192,234
	Total current liabilities		599,655		440,291		508,885
Other liabilities			168,913		159,672		155,811
Total liabilities			768,568		599,963		664,696

Shareholders' equity			1,179,445		999,715		981,169

Total liabilities and shareholders' equity		$	1,948,013	$	1,599,678	$	1,645,865


LOGITECH INTERNATIONAL S.A.

(In thousands) - Unaudited

	Nine Months Ended December 31,
CONSOLIDATED STATEMENTS OF CASH FLOWS	2010	2009

Cash flows from operating activities:
Net income	$ 125,684	$ 40,464
Non-cash items included in net income:
Depreciation	35,665	41,852
Amortization of other intangible assets	21,165	7,602
Share-based compensation expense	23,976	17,249
Gain on disposal of fixed assets	(838)	-
Excess tax benefits from share-based compensation	(2,735)	(1,708)
Gain on cash surrender value of life insurance policies	(901)	(1,216)
Deferred income taxes and other	(1,856)	(23,414)
Changes in assets and liabilities:
Accounts receivable	(132,480)	(22,470)
Inventories	(82,636)	19,405
Other assets	5,145	12,314
Accounts payable	128,586	151,042
Accrued liabilities	34,453	58,230
Net cash provided by operating activities	153,228	299,350

Cash flows from investing activities:
Purchases of property, plant and equipment	(31,835)	(26,438)
Purchase of trading investments	(12,554)	-
Proceeds from cash surrender of life insurance policies	11,313	813
Acquisitions and investments, net of cash acquired	(7,300)	(388,807)
Proceeds from sale of property, plant and equipment	2,688	-
Other, net	194	-
Net cash used in investing activities	(37,494)	(414,432)

Cash flows from financing activities:
Repayment of short- and long-term debt	-	(13,601)
Purchases of treasury shares	-	(101,267)
Proceeds from sale of shares upon exercise of options and purchase rights	28,336	15,979
Excess tax benefits from share-based compensation	2,735	1,708
Net cash provided by (used in) financing activities	31,071	(97,181)

Effect of exchange rate changes on cash and cash equivalents	(6,023)	556
Net increase (decrease) in cash and cash equivalents	140,782	(211,707)
Cash and cash equivalents at beginning of period	319,944	492,759
Cash and cash equivalents at end of period	$ 460,726	$ 281,052


LOGITECH INTERNATIONAL S.A.

(In thousands, except per share amounts) - Unaudited

			Quarter Ended						Nine Months Ended
			December 31,						December 31,
SUPPLEMENTAL FINANCIAL INFORMATION				2010			2009			2010			2009

Depreciation			$	12,322		$	15,795		$	35,665		$	41,852
Amortization of other intangibles				7,138			2,999			21,165			7,602
Operating income				76,040			58,427			139,018			50,665
Operating income before depreciation and amortization				95,500			77,221			195,848			100,119
Capital expenditures				6,416			8,294			31,835			26,438


Net sales by channel:
	Retail		$	658,392		$	564,258		$	1,541,978		$	1,290,726
	OEM			59,563			50,502			178,749			148,237
	LifeSize (1)			36,099			2,341			94,541			2,341
		Total net sales	$	754,054		$	617,101		$	1,815,268		$	1,441,304


Net retail sales by product family:
	Retail - Pointing Devices		$	186,507		$	166,703		$	472,222		$	387,550
	Retail - Keyboards & Desktops			113,929			104,624			285,546			242,539
	Retail - Audio			155,239			147,945			370,848			341,066
	Retail - Video			77,445			67,321			193,293			168,398
	Retail - Gaming			46,634			36,359			81,460			82,001
	Retail - Digital Home			78,638			41,306			138,609			69,172
		Total net retail sales	$	658,392		$	564,258		$	1,541,978		$	1,290,726



			Quarter Ended						Nine Months Ended
			December 31,						December 31,
Share-based Compensation Expense				2010			2009			2010			2009

Cost of goods sold			$	1,000		$	709		$	2,910		$	2,135
Marketing and selling				2,115			2,018			8,283			5,931
Research and development				1,842			1,139			5,394			3,048
General and administrative				2,299			2,217			7,389			6,135
Income tax benefit				(1,189	)		(3,324	)		(5,526	)		(4,157	)
Total share-based compensation expense after income taxes			$	6,067		$	2,759		$	18,450		$	13,092

Share-based compensation expense net of tax, per share (diluted)			$	0.03		$	0.02		$	0.10		$	0.07

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.

(1) The acquisition of LifeSize was completed on December 11, 2009. The results of operations of LifeSize were included in Logitech's consolidated financial statements from the date of acquisition.

(2) Digital Home is a new product family combining Harmony Remotes, Logitech Revue with Google TV and peripherals associated with the Google TV platform.

Contributing Sources

Market Wire

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Logitech Announces Third Quarter Financial Results for FY 2011