Logitech's Q3 2012 report confirms Revue is sold out, Harmony remote refresh 'in the coming months'

Logitech's Q3 earnings for the 2012 fiscal year don't have many surprises since the company already revealed it was dropping out of the Google TV team. In prepared remarks, company management confirmed it is completely sold out of new units, closing the door on any users still trying to nab a $99 Revue (who shouldn't be too heartbroken, since Vizio is promising a second gen unit is on the way at the same price). There is promise however, if you're looking for a new Harmony remote model, while interim CEO Guerrino De Luca says the company is late in providing a successor to the best selling Harmony One and other models, resulting in a 30 percent drop in sales, it plans to strengthen the lineup "in the coming months." In other segments, it's seeing growth in those iPad accessory keyboards, for more details check the press release embedded after the break or in the PDFs linked below.

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Logitech Announces Third Quarter Results for FY 2012

FREMONT, Calif. & MORGES, Switzerland--(BUSINESS WIRE)--Logitech International (SIX:LOGN) (Nasdaq:LOGI) today announced financial results for the third quarter of Fiscal Year 2012.

"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."

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.