UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
 
Date of Report: April 23, 2012
(Date of earliest event reported)
 
LOGITECH INTERNATIONAL S.A.
(Exact name of registrant as specified in its charter)
 
Commission File Number: 0-29174

Canton of Vaud, Switzerland
(State or other jurisdiction
of incorporation or organization)	 	None
(I.R.S. Employer
Identification No.)	

Logitech International S.A.
Apples, Switzerland
c/o Logitech Inc.
7600 Gateway Boulevard
Newark, California 94560
(Address of principal executive offices and zip code)	
 
(510) 795-8500
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
On April 25, 2012, Logitech International S.A. (“Logitech”) issued a press release regarding its financial results for the quarter and year ended March 31, 2012.  A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
 
The information in Item 2.02 and Item 9.01 of this Current Report, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
 
ITEM 2.05. COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
 
On April 23, 2012, the board of directors of Logitech International S.A. (“Logitech”) approved a restructuring expected to result in a reduction of approximately $80 million in annual operating expenses.  The restructuring includes the elimination of a layer of executive management, a re-alignment of reporting assignments for the sales regions, product groups and marketing groups, and a workforce reduction.  The restructuring is part of Logitech’s efforts to simplify its product portfolio, business and organization in pursuit of improved performance.
 
Logitech expects that it will recognize restructuring charges to its financial results, consisting primarily of severance, other one-time termination benefits, and other restructuring charges.  Logitech expects that a significant majority of these charges will be recognized during the first quarter of fiscal year 2013.  The remaining balance of the charges is expected to be recognized during fiscal year 2013.  Logitech’s estimate of the amount or range of amounts of these charges, and the amount or range of amounts of the charges that will result in future cash expenditures, will be disclosed in subsequent filings with the Securities and Exchange Commission within four business days after Logitech makes a determination of such an estimate or range of estimates.
 
The foregoing contains forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include the timing and elements of the restructuring, the timing and form of related charges, the expected annual operating expense reduction and Logitech’s ability to achieve improved performance.  Statements regarding future events are based on Logitech’s current expectations and are subject to associated risks and uncertainties related to the completion of the restructuring in the manner anticipated by Logitech.  These forward-looking statements may differ materially from actual future events or results due to a variety of factors, including:  Logitech’s ability to implement the workforce reductions in various geographies; possible changes in the size, timing and components of the restructuring or the expected costs and charges associated with the restructuring; and risks associated with Logitech’s ability to achieve planned expense reductions and improved performance.  Please see the “Risk Factors” section of Logitech’s filings with the Securities and Exchange Commission, including its most recent quarterly report on Form 10-Q, for other factors that could cause Logitech’s results to vary from expectations.  Logitech undertakes no obligation to revise or update publicly any forward-looking statements.
 
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
 
d)          Exhibits.
 
The following exhibit is furnished with this report on Form 8-K:
 
99.1      Press release issued on April 25, 2012 including financial results for the quarter and year ended March 31, 2012.
 
2 

 
SIGNATURES
 
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized.

 	Logitech International S.A.	

 	/s/ Guerrino De Luca	
 	 	
 	Guerrino De Luca	
 	Chairman and Chief Executive Officer	

 	/s/ Erik K. Bardman	
 	 	
 	Erik K. Bardman	
 	Senior Vice President of Finance and	
 	Chief Financial Officer	

April 26, 2012	
 
3 

Exhibit 99.1

 
For Immediate Release
 
Editorial Contacts:
Joe Greenhalgh, Vice President, Investor Relations — USA (510) 713-4430
Nancy Morrison, Vice President, Corporate Communications — USA (510) 713-4948
 
Logitech Announces Fourth Quarter and Full-Year Financial Results for FY 2012
 
New President Initiates Transformation to Simpler, Faster, More Consumer-Centric Company, Including Restructuring
 
NEWARK, Calif. — April 25, 2012 and MORGES, Switzerland, April 26, 2012 — Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the fourth quarter and full year of Fiscal Year 2012.
 
Sales for Q4 FY 2012 were $532 million, down 3 percent from $548 million in Q4 FY 2011. Excluding the unfavorable impact of exchange rates, sales decreased by 2 percent compared to the prior year.  Operating income was $24 million compared to $4 million in the same quarter a year ago. Net income for Q4 FY 2012 was $28 million ($0.17 per share) compared to net income of $3 million ($0.02 per share) in Q4 of FY 2011. Gross margin for the quarter was 36.4 percent compared to 32.8 percent in the same quarter one year ago.
 
Logitech’s retail sales for Q4 FY 2012 decreased year over year by 2 percent, with an increase in EMEA of 13 percent, an increase in Asia of 12 percent, and a decrease in the Americas of 17 percent. OEM sales decreased by 9 percent. Sales for the LifeSize division decreased by 10 percent.
 
For the full fiscal year, sales were $2.32 billion, compared to $2.36 billion in FY 2011. Operating income was $72 million, down 50 percent from $143 million a year ago. Net income for the full fiscal year was $71 million ($0.41 per share), down 44 percent from $128 million ($0.72 per share) in FY 2011. Gross margin for FY 2012 was 33.5 percent compared to 35.4 percent in FY 2011.
 
“I look forward to leading Logitech to improved performance,” said Bracken Darrell, Logitech president. “To get back to sustained, profitable growth, we need to be simpler, faster and more consumer-centric. Some of this transformation has already begun, with the management team’s work to reinvigorate the product portfolio. We now need to simplify the organization through restructuring. With board approval, I have eliminated a layer of business and sales executive management; the leaders of our business groups and sales regions now report directly to me. In addition, we will consolidate brand management

 
and product portfolio management under the leadership of the business groups, and streamline most other functions. I expect most of this restructuring to be completed by the end of the current quarter, freeing up resources to pursue our growth opportunities. The restructuring should result in a reduction of approximately $80 million in annual operating costs.”
 
“I believe the organizational streamlining that Bracken is driving is a decisive step for Logitech’s future,” said Guerrino De Luca, Logitech chairman and chief executive officer. “Looking ahead, I am also excited about what I believe is a strong lineup of new products with a much clearer value proposition to consumers. We expect that increasingly differentiated products will provide strong up-sell opportunities across all of our businesses. The majority of these new products will launch in Q2.”
 
The company expects to benefit from a stronger product portfolio, the simplification of the organization and processes, and cost savings from the restructuring, resulting in improved financial performance in the second half of Fiscal 2013.
 
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 Q4 and full-year results for FY 2012 and its restructuring and simplification plans on Thursday, April 26, 2012 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, including the statements regarding performance, sustainable and profitable growth, organizational structure, the timing of completing the restructuring, the availability of resources to pursue growth opportunities, the reduction in annual operating costs and the amount of those cost savings available in Fiscal Year 2013, the lineup of new products, the timing of their launches and their value propositions, up-sell opportunities and financial performance in the second half of Fiscal Year 2013. The forward-looking statements in this release involve risks and uncertainties that could cause Logitech’s actual results to differ materially from those 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
 
2 

 
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 we expect, or when we expect it; if we fail to successfully develop and market products for 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; in digital music, if we fail to introduce differentiated product and marketing strategies to separate ourselves from competitors; competition in the video conferencing and communications industry, including from companies with significantly greater resources, sales and marketing organizations, installed base and name recognition; if the restructuring fails to produce the intended performance and cost savings results or is not implemented in the contemplated timeframe; 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 and our Quarterly Report on Form 10-Q 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.
 
(LOGIIR)
 
3 

 
LOGITECH INTERNATIONAL S.A.
 
(In thousands, except per share amounts) - Unaudited

 	 	Quarter Ended March 31,	 	
CONSOLIDATED STATEMENTS OF OPERATIONS	 	2012	 	2011	 	
 	 	 	 	 	 	
Net sales	 	$	531,962	 	$	547,618	 	
Cost of goods sold	 	338,075	 	368,248	 	
Gross profit	 	193,887	 	179,370	 	
% of net sales	 	36.4	%	32.8	%	
 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	
Marketing and selling	 	100,302	 	106,777	 	
Research and development	 	40,948	 	38,119	 	
General and administrative	 	28,896	 	30,836	 	
Total operating expenses	 	170,146	 	175,732	 	
 	 	 	 	 	 	
Operating income	 	23,741	 	3,638	 	
 	 	 	 	 	 	
Interest income, net	 	466	 	621	 	
Other income, net	 	6,481	 	2,679	 	
 	 	 	 	 	 	
Income before income taxes	 	30,688	 	6,938	 	
Provision for income taxes	 	2,402	 	4,162	 	
 	 	 	 	 	 	
Net income	 	$	28,286	 	$	2,776	 	
 	 	 	 	 	 	
Shares used to compute net income per share:	 	 	 	 	 	
Basic	 	169,387	 	178,562	 	
Diluted	 	170,401	 	180,423	 	
Net income per share:	 	 	 	 	 	
Basic	 	$	0.17	 	$	0.02	 	
Diluted	 	$	0.17	 	$	0.02	 	
 
4 

 
LOGITECH INTERNATIONAL S.A.
 
(In thousands, except per share amounts) - Unaudited

 	 	Twelve Months Ended March 31,	 	
CONSOLIDATED STATEMENTS OF OPERATIONS	 	2012	 	2011	 	
 	 	 	 	 	 	
Net sales	 	$	2,316,203	 	$	2,362,886	 	
Cost of goods sold	 	1,539,614	 	1,526,380	 	
Gross profit	 	776,589	 	836,506	 	
% of net sales	 	33.5	%	35.4	%	
 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	
Marketing and selling	 	423,854	 	420,580	 	
Research and development	 	162,331	 	156,390	 	
General and administrative	 	118,423	 	116,880	 	
Total operating expenses	 	704,608	 	693,850	 	
 	 	 	 	 	 	
Operating income	 	71,981	 	142,656	 	
 	 	 	 	 	 	
Interest income, net	 	2,674	 	2,316	 	
Other income, net	 	16,622	 	3,476	 	
 	 	 	 	 	 	
Income before income taxes	 	91,277	 	148,448	 	
Provision for income taxes	 	19,819	 	19,988	 	
 	 	 	 	 	 	
Net income	 	$	71,458	 	$	128,460	 	
 	 	 	 	 	 	
Shares used to compute net income per share:	 	 	 	 	 	
Basic	 	174,648	 	176,928	 	
Diluted	 	175,591	 	178,790	 	
Net income per share:	 	 	 	 	 	
Basic	 	$	0.41	 	$	0.73	 	
Diluted	 	$	0.41	 	$	0.72	 	

 
LOGITECH INTERNATIONAL S.A.
 
(In thousands) - Unaudited

CONSOLIDATED BALANCE SHEETS	 	March 31, 2012	 	March 31, 2011	 	
 	 	 	 	 	 	
Current assets	 	 	 	 	 	
Cash and cash equivalents	 	$	478,370	 	$	477,931	 	
Accounts receivable	 	223,104	 	258,294	 	
Inventories	 	297,072	 	280,814	 	
Other current assets	 	65,990	 	59,347	 	
Total current assets	 	1,064,536	 	1,076,386	 	
Property, plant and equipment	 	86,773	 	84,160	 	
Intangible assets	 	 	 	 	 	
Goodwill	 	560,523	 	547,184	 	
Other intangible assets	 	53,518	 	74,616	 	
Other assets	 	83,033	 	79,210	 	
Total assets	 	$	1,848,383	 	$	1,861,556	 	
 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	
Accounts payable	 	$	301,111	 	$	298,160	 	
Accrued liabilities	 	178,569	 	172,560	 	
Total current liabilities	 	479,680	 	470,720	 	
Other liabilities	 	218,462	 	185,835	 	
Total liabilities	 	698,142	 	656,555	 	
 	 	 	 	 	 	
Shareholders’ equity	 	1,150,241	 	1,205,001	 	
 	 	 	 	 	 	
Total liabilities and shareholders’ equity	 	$	1,848,383	 	$	1,861,556	 	

 
LOGITECH INTERNATIONAL S.A.
 
(In thousands) - Unaudited

 	 	Twelve Months Ended March 31,	 	
CONSOLIDATED STATEMENTS OF CASH FLOWS	 	2012	 	2011	 	
 	 	 	 	 	 	
Cash flows from operating activities:	 	 	 	 	 	
Net income	 	$	71,458	 	$	128,460	 	
Non-cash items included in net income:	 	 	 	 	 	
Depreciation	 	45,968	 	48,191	 	
Amortization of other intangible assets	 	26,534	 	27,800	 	
Inventory valuation adjustment	 	34,074	 	—	 	
Share-based compensation expense	 	31,529	 	34,846	 	
Gain on sale of investments	 	(6,109	)	—	 	
Gain on disposal of fixed assets	 	(8,967	)	(838	)	
Excess tax benefits from share-based compensation	 	(37	)	(3,455	)	
Deferred income taxes and other	 	137	 	(9,350	)	
Changes in assets and liabilities:	 	 	 	 	 	
Accounts receivable	 	29,279	 	(54,684	)	
Inventories	 	(36,621	)	(60,482	)	
Other assets	 	(4,621	)	5,825	 	
Accounts payable	 	3,622	 	37,714	 	
Accrued liabilities	 	13,090	 	2,715	 	
Net cash provided by operating activities	 	199,336	 	156,742	 	
 	 	 	 	 	 	
Cash flows from investing activities:	 	 	 	 	 	
Purchases of property, plant and equipment	 	(51,001	)	(43,039	)	
Acquisitions and investments, net of cash acquired	 	(18,814	)	(7,300	)	
Proceeds from sale of property, plant and equipment	 	8,967	 	2,688	 	
Proceeds from sale of available-for-sale securities	 	6,550	 	—	 	
Purchases of trading investments	 	(7,505	)	(19,075	)	
Sales of trading investments	 	7,399	 	6,470	 	
Proceeds from cash surrender of life insurance policies	 	—	 	11,313	 	
Proceeds from sale of business	 	—	 	9,087	 	
Premiums paid on cash surrender value of life insurance policies	 	—	 	(5	)	
Net cash used in investing activities	 	(54,404	)	(39,861	)	
 	 	 	 	 	 	
Cash flows from financing activities:	 	 	 	 	 	
Purchases of treasury shares	 	(156,036	)	—	 	
Proceeds from sale of shares upon exercise of options and purchase rights	 	17,591	 	43,001	 	
Tax withholdings related to net share settlements of restricted stock units	 	(966	)	(223	)	
Excess tax benefits from share-based compensation	 	37	 	3,455	 	
Net cash provided by (used in) financing activities	 	(139,374	)	46,233	 	
 	 	 	 	 	 	
Effect of exchange rate changes on cash and cash equivalents	 	(5,119	)	(5,127	)	
Net increase in cash and cash equivalents	 	439	 	157,987	 	
Cash and cash equivalents at beginning of period	 	477,931	 	319,944	 	
Cash and cash equivalents at end of period	 	$	478,370	 	$	477,931	 	

 
LOGITECH INTERNATIONAL S.A.
 
(In thousands, except per share amounts) - Unaudited

 	 	Quarter Ended	 	Twelve Months Ended	 	
 	 	March 31,	 	March 31,	 	
SUPPLEMENTAL FINANCIAL INFORMATION	 	2012	 	2011	 	2012	 	2011	 	
 	 	 	 	 	 	 	 	 	 	
Depreciation	 	$	10,767	 	$	12,526	 	$	45,968	 	$	48,191	 	
Amortization of other intangible assets	 	6,325	 	6,635	 	26,534	 	27,800	 	
Operating income	 	23,741	 	3,638	 	71,981	 	142,656	 	
Operating income before depreciation and amortization	 	40,833	 	22,799	 	144,483	 	218,647	 	
Capital expenditures	 	19,584	 	11,204	 	51,001	 	43,039	 	
 	 	 	 	 	 	 	 	 	 	
Net sales by channel:	 	 	 	 	 	 	 	 	 	
Retail	 	$	455,398	 	$	463,232	 	$	1,982,783	 	$	2,005,210	 	
OEM	 	40,993	 	45,026	 	185,959	 	223,775	 	
LifeSize	 	35,571	 	39,360	 	147,461	 	133,901	 	
Total net sales	 	$	531,962	 	$	547,618	 	$	2,316,203	 	$	2,362,886	 	
 	 	 	 	 	 	 	 	 	 	
Net retail sales by product family:	 	 	 	 	 	 	 	 	 	
Retail - Pointing Devices	 	$	147,567	 	$	146,181	 	$	619,505	 	$	618,404	 	
Retail - Keyboards & Desktops	 	108,586	 	104,037	 	447,991	 	386,968	 	
Retail - Audio	 	112,676	 	96,079	 	483,485	 	466,927	 	
Retail - Video	 	50,083	 	61,721	 	215,657	 	255,015	 	
Retail - Gaming	 	19,170	 	23,007	 	111,480	 	104,545	 	
Retail - Digital Home	 	17,316	 	32,207	 	104,665	 	173,351	 	
Total net retail sales	 	$	455,398	 	$	463,232	 	$	1,982,783	 	$	2,005,210	 	

 	 	Quarter Ended	 	Twelve Months Ended	 	
 	 	March 31,	 	March 31,	 	
Share-based Compensation Expense	 	2012	 	2011	 	2012	 	2011	 	
 	 	 	 	 	 	 	 	 	 	
Cost of goods sold	 	$	562	 	$	1,313	 	$	3,620	 	$	4,223	 	
Marketing and selling	 	3,371	 	3,747	 	12,716	 	12,030	 	
Research and development	 	1,823	 	2,436	 	7,187	 	7,829	 	
General and administrative	 	2,393	 	3,374	 	8,006	 	10,764	 	
Income tax benefit	 	(1,699	)	(2,752	)	(6,294	)	(8,279	)	
Total share-based compensation expense after income taxes	 	$	6,450	 	$	8,118	 	$	25,235	 	$	26,567	 	
 	 	 	 	 	 	 	 	 	 	
Share-based compensation expense net of tax, per share (diluted)	 	$	0.04	 	$	0.04	 	$	0.14	 	$	0.15	 	
 
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.