Press Release Details

Company Significantly Improves Profitability

NEWARK, Calif. & MORGES, Switzerland--(BUSINESS WIRE)--Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the first quarter of Fiscal Year 2014.

Sales for Q1 FY 2014 were $478 million, up 2 percent from $469 million in Q1 FY 2013, with exchange rates having no impact. Excluding those retail product categories that the Company is exiting (reported in the financial statements as “Retail – Other”), sales for Q1 FY 2014 were up 5 percent year over year. The Company posted a small operating profit compared to an operating loss of $59 million in the same quarter a year ago. Net income for Q1 FY 2014 was $ 1 million ($0.01 per share) compared to a net loss of $51 million ($0.32 per share) in the prior year. Gross margin for Q1 FY 2014 was 35.2 percent, up from 31.0 percent a year ago.

The Company’s total retail sales for Q1 increased by 5 percent year over year, up 12 percent in the Americas and 4 percent in Asia, and down 3 percent in EMEA. Excluding “Retail – Other,” Logitech’s retail sales for Q1 FY 2014 increased by 8 percent over the prior year. OEM sales decreased by 6 percent and sales for the LifeSize division decreased by 18 percent.

“These results – sales growth and significant year-over-year profitability improvement – demonstrate our turnaround is on track,” said Bracken P. Darrell, Logitech president and chief executive officer. “I’m happy to see double-digit sales growth in our Americas region. And I’m pleased with the performance in our growth categories: Combined, tablet accessories, PC gaming and wireless speakers grew about 90 percent year over year.

“Logitech continues to be focused on becoming faster and more profitable. We’ve shortened key product cycles and delivered early momentum for the product lines we launched into retail environments in Q1, including tablet accessories, PC gaming peripherals and our UE BOOM wireless speaker. There is more to come. I am excited about the potential within the business and remain committed to improving our profitability in FY 2014.”

Outlook

Logitech confirmed its outlook for Fiscal Year 2014, ending March 31, 2014. The Company expects sales of approximately $2 billion, operating income of approximately $50 million and gross margin of approximately 34 percent.

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 Q1 FY 2014 on Thursday, July 25, 2013 at 8:30 a.m. Eastern Daylight Time and 14:30 Central European Summer 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 within the meaning of the federal securities laws, including, without limitation, statements regarding: the Company’s turnaround, focus, product launches, potential and profitability in Fiscal Year 2014, as well as Fiscal Year 2014 sales, operating income and gross margin. 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 Annual Report on Form 10-K 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
			Quarter Ended June 30,
CONSOLIDATED STATEMENTS OF OPERATIONS			2013					2012
								(Revised) Note 1
Net sales			$	477,924				$	468,604
Cost of goods sold				309,569					323,478
Gross profit				168,355					145,126
% of net sales				35.2	%				31.0	%
Operating expenses:
Marketing and selling				100,635					100,897
Research and development				36,191					39,023
General and administrative				29,148					32,480
Restructuring charges				2,334					31,227
Total operating expenses				168,308					203,627
Operating income (loss)				47					(58,501	)
Interest income (expense), net				(23	)				384
Other income (loss), net				217					(159	)
Income (loss) before income taxes				241					(58,276	)
Benefit from income taxes				(802	)				(6,910	)
Net income (loss)			$	1,043				$	(51,366	)
Shares used to compute net income (loss) per share:
Basic				159,298					160,733
Diluted				160,281					160,733
Net income (loss) per share:
Basic			$	0.01				$	(0.32	)
Diluted			$	0.01				$	(0.32	)

LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
CONSOLIDATED BALANCE SHEETS			June 30, 2013				March 31, 2013				June 30, 2012
							(Revised) Note 1				(Revised) Note 1
Current assets
Cash and cash equivalents			$	318,857			$	333,824			$	360,737
Accounts receivable				218,599				179,565				213,973
Inventories				296,012				261,083				280,533
Other current assets				65,191				59,596				72,364
Assets held for sale				-				10,960				-
Total current assets				898,659				845,028				927,607
Non-Current assets
Property, plant and equipment				85,778				87,649				94,491
Goodwill				343,078				340,132				558,211
Other intangible assets				22,919				26,024				45,326
Other assets				70,805				73,563				73,213
Total assets			$	1,421,239			$	1,372,396			$	1,698,848
Current liabilities
Accounts payable			$	296,269			$	265,995			$	262,929
Accrued liabilities				205,566				193,378				222,017
Liabilities held for sale				-				1,342				-
Total current liabilities				501,835				460,715				484,946
Non-current liabilities				199,164				195,727				228,462
Total liabilities				700,999				656,442				713,408
Shareholders' equity				720,240				715,954				985,440
Total liabilities and shareholders' equity			$	1,421,239			$	1,372,396			$	1,698,848

LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
			Three Months Ended June 30,
CONSOLIDATED STATEMENTS OF CASH FLOWS			2013					2012
								(Revised) Note 1
Cash flows from operating activities:
Net income (loss)			$	1,043				$	(51,366	)
Non-cash items included in net income (loss):
Depreciation				10,139					11,152
Amortization of other intangible assets				5,264					6,398
Investment impairment				370					-
Share-based compensation expense				4,390					6,171
Loss on disposal of property and plant				2,311					-
Gain on sale of available-for-sale securities				-					(831	)
Excess tax benefits from share-based compensation				-					(5	)
Deferred income taxes				(3,416	)				(1,024	)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable				(38,899	)				6,577
Inventories				(28,052	)				11,445
Other assets				(1,770	)				33
Accounts payable				33,580					(37,408	)
Accrued liabilities				13,733					41,802
Net cash used in operating activities				(1,307	)				(7,056	)
Cash flows from investing activities:
Purchases of property, plant and equipment				(13,208	)				(19,621	)
Acquisitions, net of cash acquired				-					-
Acquisition of a privately-held company				(650	)				-
Proceeds from sale of property and plant				-					917
Proceeds from sale of available-for-sale securities				-					-
Purchases of trading investments				(4,406	)				(1,397	)
Proceeds from sales of trading investments				4,748					1,385
Net cash used in investing activities				(13,516	)				(18,716	)
Cash flows from financing activities:
Purchases of treasury shares				-					(89,955	)
Proceeds from sale of shares upon exercise of options and purchase rights				12					404
Tax withholdings related to net share settlements of restricted stock units				(215	)				(170	)
Excess tax benefits from share-based compensation				-					5
Net cash used in financing activities				(203	)				(89,716	)
Effect of exchange rate changes on cash and cash equivalents				59					(2,145	)
Net decrease in cash and cash equivalents				(14,967	)				(117,633	)
Cash and cash equivalents at beginning of period				333,824					478,370
Cash and cash equivalents at end of period			$	318,857				$	360,737

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
		Three Months Ended June 30,
SUPPLEMENTAL FINANCIAL INFORMATION		2013				2012
Depreciation		$	10,139			$	11,152
Amortization of other intangible assets			5,264				6,398
Capital expenditures			13,208				19,621
Restructuring charges			2,334				31,227
Total operating expenses - GAAP		$	168,308			$	203,627
Less: Restructuring charges			2,334				31,227
Total operating expenses before restructuring charges - Non-GAAP		$	165,974			$	172,400
Net sales by channel:
Retail		$	413,237			$	395,101
OEM			34,513				36,675
LifeSize			30,174				36,828
Total net sales		$	477,924			$	468,604
Net retail sales by product family(*):
Retail - Pointing Devices		$	114,651			$	115,830
Retail - Keyboards & Desktops			97,950				94,559
Retail - Tablet Accessories			38,559				15,886
Retail - Audio - PC			51,966				61,525
Retail - Audio - Wearables & Wireless			19,075				14,599
Retail - Video			35,258				37,159
Retail - PC Gaming			39,617				26,783
Retail - Remotes			14,574				13,732
Retail - Other			1,587				15,028
Total net retail sales		$	413,237			$	395,101
Total net retail sales - GAAP		$	413,237			$	395,101
Less: Retail - Other			1,587				15,028
Total net retail sales excluding Retail - Other category - Non-GAAP		$	411,650			$	380,073
Total net sales - GAAP		$	477,924			$	468,604
Less: Retail - Other			1,587				15,028
Total net sales excluding Retail - Other category - Non-GAAP		$	476,337			$	453,576
__________________
* Certain products within the retail product families as presented in prior years have been reclassified to conform to the current year presentation, with no impact on previously reported total net retail sales.
		Three Months Ended June 30,
Share-based Compensation Expense		2013				2012
Cost of goods sold		$	577			$	789
Marketing and selling			1,906				1,780
Research and development			1,094				1,825
General and administrative			813				1,777
Income tax benefit			(875	)			(1,376	)
Total share-based compensation expense after income taxes		$	3,515			$	4,795
__________________

Constant dollar sales (sales excluding impact of exchange rate changes), net sales excluding Retail – Other, net retail sales excluding Retail – Other, and Non-GAAP operating expense before restructuring charges.

We refer to our net sales excluding the impact of foreign currency exchange rates as constant dollar sales. We also report non-GAAP net sales and net retail sales excluding Retail – Other sales and non-GAAP operating expenses excluding the restructuring charges. Constant dollar sales, net sales excluding Retail – Other, net retail sales excluding Retail – Other and non-GAAP operating expenses are non-GAAP financial measures, which are 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 and operating expenses. 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. Non-GAAP net sales excluding Retail – Other, non-GAAP net retail sales excluding Retail – Other can be reconciled to GAAP net sales by adding the amount of Retail – Other sales. Non-GAAP operating expenses before restructuring charges can be reconciled to GAAP operating expenses by adding the amount of the restructuring charges.

Note 1

In the first quarter of fiscal year 2014, the Company identified errors related to the accounting for its product warranty liability and amortization expense relating to certain intangible assets which impacted prior reporting periods, starting prior to fiscal 2009. While these errors were not material to any previously issued annual or quarterly consolidated financial statements, management concluded that correcting the errors in the current quarter would be material to the current quarter's consolidated financial statements and to the expected results of operations for the year ended March 31, 2014. Accordingly, the Company will revise its prior period annual and quarterly consolidated financial statements to correct the errors in future SEC filings.

In this earnings release, the Company has revised the March 31, 2013 and June 30, 2012 consolidated balance sheets, and the consolidated statements of operations and cash flows for the quarter ended June 30, 2012 to record an additional warranty liability and amortization of certain intangible assets and the related tax effects. The impact of the revision was to reduce the previously reported net loss for the quarter ended June 30, 2012 by $0.8 million and reduce the previously reported retained earnings and shareholders' equity at March 31, 2013 and June 30, 2012 by $17.8 million and $18.5 million, respectively.

(LOGIIR)