Joe Greenhalgh - VP, Investor Relations Bracken P. Darrell - President and CEO Vincent Pilette - CFO.

Felix Remmers - Credit Suisse Tavis McCourt - Raymond James & Associates, Inc. Alexander Peterc - Exane BNP Paribas Youssef Essaegh - Barclays Andreas Muller - Zurcher Kantonalbank Paul Coster - JPMorgan Andrew Humphrey - Morgan Stanley.

Good day and welcome to the Logitech Third Quarter Financial Results Conference Call. At this time all participants are in a listen-only mode. We will be conducting a question-and-answer session and instructions will follow at that time.

This call is being recorded for replay purposes and may not be reproduced in whole or in part without written authorization from Logitech. I would like to introduce your host for today's call, Mr. Joe Greenhalgh, Vice President of Investor Relations and Corporate Treasurer at Logitech. Please go ahead. .

Welcome to the Logitech conference call to discuss the company’s financial results for the third quarter ended December 31, 2014. The press release, our prepared remarks and slides as well as a live webcast of this call are all available online at logitech.com.

As noted in our press release we published our prepared remarks on our website in advance of this call. Those remarks are intended to serve in place of extended formal comments today and they will not be read on this call.

During the course of this call we may make forward-looking statements, including forward-looking statements with respect to future operating results that are being made under the Safe Harbor of the Securities Litigation Reform Act of 1995.

The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated in the statement.

Factors that could cause actual results to differ materially include those set forth in Logitech’s Annual Report on Form 10-K dated November 13, 2013, and subsequent filings, which are available online on the SEC EDGAR database and in the final paragraphs of the press release and prepared remarks from Logitech reporting third quarter financial results for fiscal 2015.

The forward-looking statements made during this call represent management’s outlook only as of today and the company undertakes no obligation to update or revise any forward-looking statements as a result of new developments or otherwise. Please note that today’s call will include results reported on both a GAAP and a non-GAAP basis.

Non-GAAP reporting is provided to help you better understand our business. However, non-GAAP financial results are not meant to be considered in isolation or as a substitute for or superior to GAAP results.

Non-GAAP measures have inherent limitations and should be used only in conjunction with Logitech’s consolidated financial statements prepared in accordance with GAAP. Our press release includes a table detailing the non-GAAP measures, together with the corresponding GAAP numbers and a reconciliation to GAAP.

This information is also posted on our Investor Relations website. The slides that accompany this call include both GAAP and non-GAAP measures and are also available on our Investor Relations website. We encourage listeners to review these items. This call is being recorded and will be available for replay in Logitech website.

Joining us today are Bracken Darrell, President and Chief Executive Officer; and Vincent Pilette, Chief Financial Officer. I’d now like to turn the call over to Bracken..

Thanks, Joe and thanks to all of you for joining us. I am very pleased with our Q3 performance. Despite much more significant currency headwinds than expected we grew our sales ahead of expectations. We've grown retail sales for seven consecutive quarters. More important is our growth in retail, excluding categories we exited last year.

That's how I assess our real growth power for the future. If you look at our sales this quarter in those terms, in constant currency, we grew 7% overall and a full 11% in the Americas.

Our profitability continues to improve, creating more capacity to invest and drive more growth ahead and our cash generation is excellent, with cash flow from operations up by 86% over the last 12 months compared to the prior year. Let's now look a little deeper into our Q3 performance and then I'll come back to discuss our outlook.

Let me start by looking at our categories within our growth portfolio. Our PC gaming category delivered a strong quarter with sales up by 21%. But our growth was constrained by decline in sales with legacy steering wheels, our sales of gaming headsets, mice and keyboards all grew faster than the overall PC gaming category.

In fact our PC gaming sales, excluding wheels and game pads grew 40% in constant currency. Our gaming portfolio has never been stronger and we continue to design great products.

As one indication of the strength of our innovation of the category, earlier this month we were honored to receive 2015 CES Innovation Awards for three of our newest gaming products. The Proteus Core Tunable Gaming Mouse, the Hyperion Fury Ultra-Fast Gaming Mouse and the Orion Spark RGB Mechanical Keyboard.

All three of those products made strong contributions to our growth in Q3. In mobile speakers we delivered another quarter of very strong growth. Our success in this category continues to be led by UE Boom.

Building on the momentum we've created with UE Boom we're further strengthening our portfolio to take advantage of the growing opportunity in mobile speakers. Earlier this month we announced the UE MEGABOOM, our next generation mobile wireless speaker that delivers more power, more 360 degree sound and more bass and waterproof acoustic skin.

It’s simply awesome. Our innovation in this category goes beyond hardware though and as we designed our UE products to receive updates for new features via the app. The most recent example is our announcement of the world's first multi-speaker pairing of more than 10 speakers.

We’re building an innovative and flexible platform with our UE speakers that enables easy delivery of exciting new features through our growing user community. Our tablet and other accessories category was weak. As we've seen throughout fiscal 2015 sales continue to be negatively impacted by the market for the new iPad platform.

We also had business impact as we have phased in our new products for the new iPad. Let's move to the Profit Maximization category which is primarily composed of PC peripherals.

Excluding our video collaboration offerings which I'll get to shortly our sales in the Profit Maximization category declined by 1% similar to the declines we have seen reported for new PC global shipments. Within our Profit Max category sales in our PC keyboards and desktops grew by 5%, outpacing the market for PC shipments.

One of the key contributors to this growth was our new Bluetooth multi-device keyboard, K480, the first desktop keyboard designed for use with up to three devices on any major operating system and by the way my keyboard right now, and a winner of 2015 CES Innovation Award. We are pleased so far with this new innovation.

We delivered 22% sales growth in our retail video category, driven primarily by sales of our video collaboration offerings, which doubled compared to the prior year.

The video collaboration product growth born originally out of our consumer webcams demonstrates clearly how we continue to innovate inside our Profit Maximization category to create segments that can outgrow the PC platform.

Before handing over to Vincent, I want to say that our ability to improve our profitability despite the impact of currency headwinds illustrates our improved operational execution. Vincent now has further detail on the quarter. .

Thank you Bracken and good morning everyone. In Q3 we delivered better than expected results despite the significant headwinds from the stronger U.S. dollar. It was our seventh consecutive quarter of sales growth for our strategic retail business and our 7th consecutive quarter of double-digit operating profit growth.

Let me start by focusing on how the recent volatility in currency exchange rate is impacting our business. In October we confirmed our fiscal 2015 sales outlook of $2.16 billion, assuming a euro to U.S. dollar exchange rate of about 1.3 for the second half of the fiscal year.

The rapid depreciation of the euro as well as other currencies has shift close to $50 million from our second half revenue outlook in U.S. dollars. For Q3 specifically the year-over-year U.S. dollar appreciation created about $20 million negative sales impact in U.S. dollars or the equivalent of three percentage points of growth.

We look at constant currency sales growth as one of the key indicators of our performance and that is why we have provided you with more constant currency information today. While the U.S.

dollar appreciation impacts our gross margin our cost reduction initiatives have enabled us to deliver strong gross margin improvement, up 210 basis points year-over-year in Q3 with rate improvement in almost all of our profit maximization categories as well as our music category as it scales up.

Disciplined cost management and operational execution will continue to play a key role in our transformation. However we are not planning on sustaining this level of gross margin improvement over an extended period of time, should the euro continue to weaken.

Consistent with the plans we shared with you during the last earnings cycle Q3 was the first quarter in the last seven quarters that we have allowed our non-GAAP operating expenses to increase compared to the prior year.

The 4% increase reflects investments in sales, marketing and products marketing to drive short-term and long-term sales growth in mobile speakers, PC gaming and the rollout of Lifesize cloud.

Those investments as well as other seed investments for which we have virtually no revenue today were partially offset by continued savings in our infrastructure. We will continue to demonstrate disciplined spend management while investing selectively to drive future growth.

Q3 was another quarter of strong cash generation driven by the improvement we have made managing our working capital. Our cash flow from operation for the quarter was $76 million driven by a cash conversion cycle of just 20 days, the second best in our history.

Over the last 12 months we generated cash flow from operations of $232 million, up by 86% compared to the prior 12 months period. Our strong cash position enables us to drive healthy capital allocation strategy focused on business investments and small acquisition, as a priority annual dividends and opportunistic share buybacks.

Finally I received questions from many of you about the impact on our business from last week’s rapid and steep appreciation of the Swiss franc. Let me share with you three data points to put this in perspective. First our sales in Switzerland represent about 2% of our total sales.

Second our operating expenses for our headquarter in Switzerland represent about 10% of our total operating expense. And third we hold very little of our cash in Swiss franc.

While extreme volatility like we saw last week can always present some near-term challenges the appreciation of the Swiss Franc should not have any material impact on our long-term financial model. And on that note I will turn you back to Bracken..

Thanks Vincent. Looking at the remainder of the year despite significant currency headwinds we are increasing our outlook for non-GAAP operating income for fiscal 2015 by $15 million to approximately $185 million.

This is the second time this fiscal year that we have increased our profit outlook and that’s in spite of the fact that we are adjusting our outlook for fiscal 2015 sales from $2.16 billion to approximately $2.1l billion to reflect the U.S. dollar’s appreciation versus various currencies. I am very pleased with our progress and momentum as a business.

We are building the foundation to deliver more and more great products. While we now have, I believe, a powerful product portfolio you can expect us to launch more unique, beautifully designed products in the coming quarters. We are gaining share in most of our categories.

Sales of our PC peripherals were stable and margins are improving due to our cost reduction initiatives. We are positioned for continued growth in our growth businesses and we are quietly developing additional engines for new growth.

We look forward to sharing more on our opportunities and growth plans during our upcoming Analyst Investor Day, which will be held on March 11 in Zurich. And with that Vince and I are available now to take your questions. Please follow the instructions of the operator. .

Thank you. [Operator Instructions]. Our first question comes from Felix Remmers with Credit Suisse. Your line is open. .

Yes, hi everyone. Two questions from my side. First, are you now allowed to buyback shares? That would be the first question, and the second question is regarding how tablet accessories, here it seems to me that that you're underperforming your peers, if I look at comments from the expert sample [ph].

And I was wondering what do you plan to do to put this category back into growth mode here?.

Yeah, I'll go and answer both. Yes, we are in a position now to do a share buyback and now I'll let Vincent add anything he wants to on that one first. .

No, buyback is open and as we mentioned we will buyback on an opportunistic basis. .

And as for our performance in tablet accessories we certainly had an extremely year last year. And we hit some market share points as we exited the quarter in Q3 last year. I think we actually hit 60 share in the U.S.

This year, at least one of our competitors has actually put themselves back in position by getting a key merchandising improvement, that really put them on more of an equal footing. So I would say we're back to more of kind of where we ought to be from a market share standpoint on that point. That said I think we can do a lot better going forward.

I'm optimistic about how we can perform in this category.

Anything else?.

So maybe one follow-up now looking bit more forward.

So you're comfortable that this category will at some point, let's say next year, next fiscal year grow again?.

That's really hard to say. This is a category very dependent on the core iPad platform and the Samsung tablet platform. What I would say is we're in a great position to grow with in at least with and above the category.

If the category grows I expect we will have a really good performance, if the category is flat or down we'll have less of a good performance. We're not reliant on this category to drive our growth initiative and to turn this company back into growth business. .

Okay, thanks. That's from my side. .

Thank you Felix. .

Our next question comes from Tavis McCourt with Raymond James. Your line is open. .

Hey, thanks for taking my questions and nice quarter with the tough FX headwinds. Vincent you gave us the foreign currency impact on fiscal Q3. I was wondering if you can give us an estimate of what it maybe on a year-over-year basis in fiscal Q4.

And then Bracken on the UE Boom which continues to impress, just wondering if you have any market share data you can share with us. This is a category it seems like there is a lot of different brands doing well right now.

At some point there will be some consolidations though, I don't think in the past you mentioned you'd like to get this to be a top three brand in a number of geographies to be sustainable and just kind of an update on that progress will great. .

I make it very simple for Q4. The year-over-year impact on our sales due to the U.S. dollar appreciation is about $30 million, Tavis..

And Tavis I'll give you a few facts on our music business in general. If you look in the U.S. the final market share data, I don't think is out yet. But I believe we will end back and among the top four, up versus a year ago by at least a half a point.

If you look around the world, I think I've got this right, I think we are the number one speaker brand in Australia, we are the number one brand in New Zealand, we’re probably although we don't have market share data on it, probably the number one brand in Switzerland.

And we're seeing market share improvements in most of our geographies around the world. So we're making very good progress. And I'm optimistic ahead for the music speaker business. .

Thanks very much. .

Thank you. .

Our next question comes from Alexander Peterc with Exane. Your line is open. .

Yes hi, and good morning to you. Thanks for taking my question. I would just like to clarify a little bit further on FX, first on gross margin.

Would your gross margin have been better under the old exchange rate, or do you have any headwind there and what is the impact on the OpEx from say 10% move of the euro versus dollar? And then the second question would be you’ve gone on -- just wanted to understand you had last year I think you remember that you had a fiscal Q4 which was particularly weak because you were transitioning the Ultrathin it would seem, correct me if I'm wrong.

So do you have at last, you have like an easy comps base going into fiscal Q4 this year. So should we assume from that that the declines we’ve seen in this category over the past four quarters would be softening, at least if not going back into growth in the current quarter. I just wanted to understand the comps here, not exactly guidance.

And then finally are we gaining anything on smartphones yet. There’s no case plus for the iPhone 6 or 6 plus as far as I understand so are you looking at this category still or trying to approach the smartphone category in different way? Thanks. .

Hey Alex, let me just take currency first and I’ll pass it to Bracken. So on currency when you have short term volatility we do have some natural protection. We may have good [ph] inventory, a while ago, we have some hedging in place and so in the very short-term like Q3 the flow through from the top line impact is somewhat minimal.

It’s not zero but it’s somewhat minimal and manageable. As you move forward and if the U.S. dollar appreciation is maintained you’re going to have an impact on the gross margin. Analyst day in March we are going to quantity what it means for FY’16 when it comes to OpEx about 10% of our OpEx is in Euro about 10% is in Swiss Franc.

When the Swiss Franc was pegged to the Euro that was 20% of our OpEx which was helping with a natural hedge. We’re going to lose that with now the Swiss Franc a floating or disconnected from the Euro and again we’re going to assess and adjust to see what it means for FY’16..

Okay and Alex on your two questions on category, so on tablets it’s -- yeah we do have a weaker comp versus a year ago in Q4. It’s hard for me to say whether that’s going to result in a better trend line. The tablet category has been down here, tablet accessory category has been down here too. And we’ve no reason to think that’s going to stop.

On smartphones we have, I think I told you all before, we have a several seeds, I think we said six or seven right now that we’re in development in the backroom. This was one of those early, would have been included in what we really earlier called seed. We’re still experimenting there.

We’ve got a lot of smartphone initiatives though including our music business which is really a smartphone business. It’s a connected business and we have others that are in development.

So without getting too much more specific on what we’re working on ahead, I would just say yeah, you can certainly expect more from us in the future connecting or taking advantage of the huge smartphone market. .

Great, thanks a lot. .

Thanks Alex. .

Our next question comes from Yusuf Essaegh with Barclays. Your line is open. .

Sorry, hi thanks for letting me ask questions.

So FX was clearly a hit, but overall if you look at the growth categories and you compare them to the kind of growth that we have in the profit max categories and even without the affection part reality is still a little bit behind and you saw this is from Euro [inaudible] right than in the public market output has changed significantly since you started working on this kind of product and I was wondering -- this is probably a more of a question for the Capital Markets Day but in parallel you can maybe help us understand how you see OpEx supporting eventually a little bit more of a change of product strategy that would help you to be back on track on the kind of growth that you’ve been guiding for recently?.

Yeah thank Youssef, yeah, we’ll certainly answer that at cap -- in the Markets Day that I hope you will all be at in Zurich. But let me just give you a couple of things, couple of ways I think about that right now. First, if you looked at our growth businesses excluding tablet accessories we will be up about 40%.

So it’s pretty good story and if you likewise, as you said tablet accessories is going through a change and I don’t know whether it’s a permanent change or temporary change. We are optimistic about it but you never know.

The great news is that we have more growth businesses than you see on the surface because if you look back in what we call PC peripherals you actually got growth stories within there, including video collaboration which doubled year-over-year.

So we have plenty of growth, I think we have plenty of growth engines to help there with or without the tablet accessories business.

As to the investment of OpEx to drive those growth categories and I don’t want to disclose too much ahead of our Capital Markets day as you called it or our Analyst and Investor Day as we do but we’ve certainly been very aggressive about moving, especially R&D resources out of PC peripherals and into the growth businesses and I'll dimensionalize that when we're together but it's been significant and will continue to be.

.

Thank you. Sir, can I ask another quick one on the balance sheet. So as you pointed out you have now a record level of cash and you described your share buyback as being opportunistic.

So I am just wondering what your plan is, are you thinking about holding a balance sheet like it is today or are you thinking about maybe restructuring it somehow and do a special dividend, anything of that kind please?.

So at this point on the capital allocation strategy it's pretty clear. Our priority and where we spend most of our time is really as looking at business investment opportunities, including a small acquisition as you know. We have an annual dividend in place and we grew 25% this year.

As we continue to increase our performance we are going to continue to see growth in that dividend. And then on the buyback it will all depend on how big the opportunity is when I mentioned buyback opportunity. .

Thank you..

Thanks Youssef.

Anything else?.

Our next question comes from Andreas Muller with Zurcher Kantonalbank. Your line is open. .

Yes. Thank you very much for taking my question. Good afternoon.

I would like to know, could you please dissect the 2% gross margin increase into firstly cost reduction and economies of scale and secondly the exiting of the non-strategic products?.

Andreas, good afternoon to you. So on the gross margin 210 basis point up on a year-over-year basis, a lot is driven by cost reduction which are really -- meaning rate improvement within each of our categories.

And almost all of our profit maximization are improving the gross margin rate, consolidated components working on the manufacturing side is important. When you look at scale in the growth category it's mainly music.

We're scaling -- obviously we have an overhead and amortized a much bigger number but we also, with the MEGABOOM leveraging BOOM and MEGABOOM we're investing in automation, in our manufacturing which reduce labor cost and that's about two-thirds of our gross margin improvement.

When it comes to product mix, so for example we discontinued products last year. We had about $11 million of revenue of discontinued products in our revenue last year down to zero now. Last year we saw that a negative gross margin to get rid of those discontinued products and so the mix also is giving about a third of margin boost if you will. .

Okay. Thank you.

Second question on the PC market, how do you see the PC market in 2015 and do you see any opportunity out of Windows 10 on your PC gaming business?.

On PC gaming, so how do we see the PC market. We'll certainly give you our view point on that in Zurich. Overall I expect right now I would say our planning assumption is to continue to view PC market down mid-single digits, because that's a safe assumption for us and we really want to put more focus on creating new growth engines.

So we continue to plan that way. It could be better than that, last quarter was down to 6%. So it's really difficult for me to guide the PC makers where that would be. Our planning assumption will be that it'll be down mid-single digits, and we will update that at Zurich.

On Windows 10 and now I'll go beyond the PC, every update that comes through Windows is an opportunity to see re-stimulation in our keyboard and mouse and the various things around the PC. And what I see in Windows 10 looks really good. So we'll see. It's too early to say.

There have been lot of updates from Windows and some of them have been very successful in attracting users back or new users and some have not. So it's really hard for me to say but everything I hear about Windows 10 sounds very good. .

Okay.

If I can do a follow-up, how indicative is the year-on-year growth of 11% of the marketing and sales expense going forward? I mean were there some seasonal impacts as well that you pushed to a bit more or is that really sustainable kind of the increase going forward?.

I’ll answer a couple of different ways Andreas. So we invested this quarter, first quarter in seven quarters that we've increased our OpEx about 4% on a year-over-year basis. For those who have not looked at the breakdown we've really invested in sales and product marketing, while G&A is down 14% on a year-over-year basis.

So as I mentioned we will continue to drive infrastructure savings and then redirect that into investments. About two-thirds of that S&M investments was field investments, so helping the growth could be demo days and best buy for our music business as an example.

And about a third is for longer term product marketing as we invest into categories that don't have revenue yet but will deliver the long-term growth model. That's about the ratio.

When we move forward in Q4 as you seen our profit guidance we are very pleased to be able to raise our profit guidance for the year, but it does continue to plan on a moderate increase in our OpEx.

And then the second angle I would take is our long-term business model call for OpEx of about 25% of revenue for 10% operating profit and margins, and while we make good progress we are not there yet.

So you will continue to see some increase in OpEx in dollars to invest, but an overall long-term operating leverage as we continue to trend towards the long-term business model. .

Okay. Thank you very much. .

[Operator Instructions]. Our next question comes from Paul Coster with JPMorgan. Your line is open. .

Yes, thanks very much for taking my question. And by the way I love the K480 keyboard, I am using as well. .

Good to hear..

Are there any channel expansion opportunities left to the company, either by region or by vertical?.

Yes, and without getting into the excruciating detail I would say I'll give you one example. We continue to see Telco expansion opportunities, especially in our music business but beyond our music business as well.

But yeah, I think we've got channel opportunities expansion across multiple categories and we intend to get them over the next couple of years. .

By geography, is there anything you can sort of call out as major trends that you're able to observe through sales of your products. I'm thinking in particular different stream, perhaps mobile and the PC platforms by region. .

I'll give -- so first of all not all the data is in on the PC performance. But I'll give you a few things of PC versus mobile versus, overall the smartphone as we all know the smartphone continues to just grow unabated, which I'd say is very good for us because some of our growth categories are really connecting the PC, especially our music business.

And in terms of tablets we've talked a lot about those today. And in terms of the PC, obviously the PC market seems to have been a little stronger in the U.S. or weakened less in the U.S. than the other markets. But everywhere a little bit better. So beyond that I can't give any more great insights.

But I would say, I'm just overall I'm sort of optimistic in general about the industry of consumer electronics and where it's going, having just come back from CES, it just feels like our industry ought to be headed for another growth trend. It's going to pretty exciting and we certainly intend to be a big part of that. .

And the last question Bracken is if you sort of step back from things that you and Vincent have obviously, sort of the affected the very substantial transformation of this company already.

Where do we stand in terms of the big process, what have we done and what's next?.

Well, first of all it wasn't just me and Vincent. There are a lot of people who’ve really driven an enormous change in this company and I am really proud to proudly represent them, but we're just thrilled.

In terms of where we stand, Vincent and I and we'll talk about this in Zurich, Vincent and I kind of think of this as chapter one and chapter one is finished. And now we're onto chapter two. And chapter one was getting our profitability right and setting the table for becoming a growth company again. Chapter two will be becoming a growth company.

And so I'd say that's a pretty good description of where we are. We've really created a lot of the essence we need to generate growth long-term now and now it's about continuing to follow on and execute. .

Great, thanks. .

Thanks Paul. .

Our next question comes from Andrew Humphrey with Morgan Stanley. Your line is open..

Hi, thanks for taking my questions. Just a couple from me. One is on OpEx and this is another FX question. You mentioned that you have about 10% of OpEx in euros and 10% in the franc.

If you would say mark-to-market say this quarter’s OpEx at today's FX rate, what do you think the impact would be, I mean is it broadly neutral given one is significantly weaker and one is significantly stronger, should we see that move one way or the other? And my second question is around UE BOOM, clearly in tablet accessories you are seeing little disruption from product transitions and I think we have seen that in other categories in the past.

How do you anticipate things looking as far as the UE MEGABOOM is concerned, how are you managing that with your distributors? Do you anticipate those two products to be sitting alongside or I’d just like you to talk me through that dynamic..

So let me quickly answer the OpEx, you actually provided the answer. So because they are about the same size moving forward, if you look at next quarter for example the benefit on the euro will be canceled by the cost of the Swiss franc. In Q3 we obviously have the double benefit having the Swiss franc following the euro. So that’s to answer..

Okay and on the MEGABOOM versus BOOM, the wonderful thing about the BOOM that it has great sound of 360 orientation which means you can set it on a table and everybody hears the same thing. It’s very, very rugged and you can actually drop it in the water, take it in the shower. The MEGABOOM is all those things squared.

So everything there is just bigger, deeper sound, still 360, completely water proof. You can leave it in the water for 30 minutes and it’s fine and it’s super rugged. And so the difference between the two is one is just a much bigger version of the first.

We do expect them to be in distribution in most of the same places and to sit alongside each other..

Thanks very much. Actually if I could sneak one more in as well, I have, I was just looking through the presentation and clearly you had stronger sell-in than sell-through in a couple of markets, particularly Americas and Europe.

I know you have had that at times in Q3 before and is clearly a better situation than having stock outs in your strongest quarter.

But are there any particular areas where you have concerns there?.

Andrew, this is Vincent. So no, not really and what you refer to is the sell-in in U.S. dollars was up 2% on the retail for a sell-through about flat. When you look at it on the -- that’s the gross rate perspective. When you look at the channel inventory dollars on a year-over-year basis we are only up $3 million.

So I would call it roughly flat on a year-over-year basis and no particularly concerned from that perspective..

Okay, thanks very much..

Thank you. It appears there are no further questions at this time. I will turn the call back over to Mr. Darrell for closing remarks..

Well, let me first say I hope that we see many of you in Zurich and thanks a lot for joining us today. We are having a strong year and we really appreciate your following us as we turn Logitech back into a growth company. Thanks again, take care..

That concludes our conference call for today. You may all disconnect. And everyone have a great day..