☰

Logitech Announces Better-Than-Expected Q2 FY 2014 Results


    Logitech International (SIX:LOGN) (Nasdaq:LOGI) today announced financial results for the second quarter of Fiscal Year 2014, with better-than-expected revenue of $532 million, down 3 percent compared to second quarter of the prior year.

    • Q2 GAAP operating income was $17 million, and GAAP EPS was $0.09
    • Q2 non-GAAP operating income was $37 million, and non-GAAP EPS was $0.20
    • Year-to-date GAAP operating income was $17 million, and GAAP EPS was $0.10
    • Year-to-date non-GAAP operating income was $49 million, and non-GAAP EPS was $0.26

    “We’re making progress toward building a faster and more profitable Logitech,” said Bracken P. Darrell, Logitech president and chief executive officer. “In spite of headwinds from weak market conditions in Europe and a decline in the global PC market, we significantly improved operating profitability in the first half of Fiscal Year 2014.

    “Our growth categories performed well during the first half. Combined, tablet accessories, gaming and wireless speakers grew about 36 percent year over year. Although we have more work in front of us, I am confident that we are on track with our turnaround strategy.”

    Outlook

    For the full Fiscal Year 2014, Logitech continues to expect revenue of approximately $2 billion and GAAP operating income of approximately $50 million, compared to an operating loss in Fiscal Year 2013. The outlook for GAAP operating income now includes year-to-date charges of $13 million, related to restructuring, that were not anticipated when the Company originally provided the outlook in April 2013.

    The current outlook for non-GAAP full Fiscal Year 2014 operating income is $100 million, an increase of $13 million compared to the previously expected non-GAAP operating income.

    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, in the Calendar section.

    Financial Results Teleconference and Webcast

    Logitech will hold a financial results teleconference to discuss the results for Q2 FY 2014 on Thurs., Oct. 24, 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.

    Use of Non-GAAP Financial Information

    To facilitate comparisons to Logitech’s historical results, Logitech has included non-GAAP adjusted measures, which exclude share-based compensation expense, amortization of other intangible assets, restructuring charges (credits), other restructuring-related charges, investment impairment (recovery) and other items detailed under “Supplemental Financial Information” after the tables below. Logitech believes this information will help investors to evaluate its current period performance and trends in its business.

    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, product launches and profitability, as well as Fiscal Year 2014 revenue, operating income and restructuring-related charges. 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 Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013 and our Amended Annual Report on Form 10-K/A 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               Three Months Ended September 30, CONSOLIDATED STATEMENTS OF OPERATIONS     2013       2012           As Revised (A)           Net sales   $ 531,972     $ 547,693   Cost of goods sold     348,559       351,919   Gross profit     183,413       195,774   % of net sales     34.5 %     35.7 %           Operating expenses:         Marketing and selling     93,710       110,522   Research and development     37,633       38,114   General and administrative     29,395       25,980   Restructuring charges (credits)     5,465       (2,671 ) Total operating expenses     166,203       171,945             Operating income     17,210       23,829             Interest income, net     183       153   Other income (loss), net     62       (509 )           Income before income taxes     17,455       23,473   Provision for (benefit from) income taxes     3,057       (31,076 )           Net income   $ 14,398     $ 54,549             Shares used to compute net income per share:         Basic     159,969       156,736   Diluted     161,177       157,932   Net income per share:         Basic   $ 0.09     $ 0.35   Diluted   $ 0.09     $ 0.35                       LOGITECH INTERNATIONAL S.A.           (In thousands, except per share amounts) - Unaudited               Six Months Ended September 30, CONSOLIDATED STATEMENTS OF OPERATIONS     2013       2012           As Revised (A)           Net sales   $ 1,009,896     $ 1,016,297   Cost of goods sold     658,128       675,177   Gross profit     351,768       341,120   % of net sales     34.8 %     33.6 %           Operating expenses:         Marketing and selling     194,345       211,419   Research and development     73,824       77,137   General and administrative     58,543       58,460   Restructuring charges     7,799       28,556   Total operating expenses     334,511       375,572             Operating income (loss)     17,257       (34,452 )           Interest income, net     160       537   Other income (loss), net     279       (668 )           Income (loss) before income taxes     17,696       (34,583 ) Provision for (benefit from) income taxes     2,255       (37,986 )           Net income   $ 15,441     $ 3,403             Shares used to compute net income per share:         Basic     159,637       158,723   Diluted     160,869       159,853   Net income per share:         Basic   $ 0.10     $ 0.02   Diluted   $ 0.10     $ 0.02               LOGITECH INTERNATIONAL S.A.               (In thousands) - Unaudited               CONSOLIDATED BALANCE SHEETS   September 30, 2013   March 31, 2013   September 30, 2012         As Revised (A) As Revised (A) Current assets             Cash and cash equivalents   $ 294,796   $ 333,824   $ 237,033 Accounts receivable     258,858     179,565     284,451 Inventories     292,777     261,083     321,307 Other current assets     65,808     58,103     70,730 Assets held for sale     -     10,960     - Total current assets     912,239     843,535     913,521 Non-Current assets             Property, plant and equipment, net     87,133     87,649     93,854 Goodwill     344,759     341,357     560,098 Other intangible assets     17,747     26,024     39,232 Other assets     71,817     75,098     83,303 Total assets   $ 1,433,695   $ 1,373,663   $ 1,690,008               Current liabilities             Accounts payable   $ 303,089   $ 265,995   $ 368,509 Accrued and other liabilities     219,646     192,774     199,941 Liabilities held for sale     -     3,202     - Total current liabilities     522,735     461,971     568,450 Non-current liabilities     202,556     195,882     197,249 Total liabilities     725,291     657,853     765,699               Shareholders´ equity     708,404     715,810     924,309               Total liabilities and shareholders´ equity   $ 1,433,695   $ 1,373,663   $ 1,690,008                 LOGITECH INTERNATIONAL S.A.           (In thousands) - Unaudited               Six Months Ended September 30, CONSOLIDATED STATEMENTS OF CASH FLOWS     2013       2012           As Revised (A) Cash flows from operating activities:         Net income   $ 15,441     $ 3,403   Non-cash items included in net income:         Depreciation     19,283       22,307   Amortization of other intangible assets     10,518       12,589   Investment impairment and loss     530       -   Share-based compensation expense     8,499       13,437   Loss on disposal of property, plant and equipment     2,456       -   Gain on sale of available-for-sale securities     -       (831 ) Excess tax benefits from share-based compensation     -       (22 ) Deferred income taxes and others     (3,902 )     (3,806 ) Changes in assets and liabilities, net of acquisitions:         Accounts receivable     (77,042 )     (58,533 ) Inventories     (21,350 )     (31,825 ) Other assets     (5,893 )     (7,570 ) Accounts payable     39,555       71,095   Accrued liabilities     26,091       (10,997 ) Net cash provided by operating activities     14,186       9,247             Cash flows from investing activities:         Purchases of property, plant and equipment     (23,063 )     (32,817 ) Acquisitions, net of cash acquired     (650 )     -   Investment in a privately-held company     -       (3,970 ) Proceeds from sale of available-for-sale securities     -       917   Purchases of trading investments for deferred compensation plan     (6,146 )     (1,648 ) Proceeds from sales of trading investments for deferred compensation plan     6,602       1,638   Net cash used in investing activities     (23,257 )     (35,880 )           Cash flows from financing activities:         Payment of cash dividends     (36,123 )     (133,462 ) Purchases of treasury shares     -       (87,812 ) Proceeds from sale of shares upon exercise of options and purchase rights     6,135       9,008   Tax withholdings related to net share settlements of restricted stock units     (453 )     (635 ) Excess tax benefits from share-based compensation     -       22   Net cash used in financing activities     (30,441 )     (212,879 )           Effect of exchange rate changes on cash and cash equivalents     484       (1,825 ) Net decrease in cash and cash equivalents     (39,028 )     (241,337 ) Cash and cash equivalents at beginning of period     333,824       478,370   Cash and cash equivalents at end of period   $ 294,796     $ 237,033               LOGITECH INTERNATIONAL S.A.           (In thousands) - Unaudited               Three Months Ended September 30, CONSOLIDATED STATEMENTS OF CASH FLOWS     2013       2012           As Revised (A) Cash flows from operating activities:         Net income   $ 14,398     $ 54,549   Non-cash items included in net income :         Depreciation     9,144       11,155   Amortization of other intangible assets     5,254       6,191   Investment impairment and loss     160       -   Share-based compensation expense     4,109       7,266   Loss on disposal of property and plant     145       -   Gain on sale of available-for-sale securities     -       (831 ) Excess tax benefits from share-based compensation     -       (17 ) Deferred income taxes and others     (486 )     (2,751 ) Changes in assets and liabilities, net of acquisitions:         Accounts receivable     (38,143 )     (64,849 ) Inventories     6,702       (42,178 ) Other assets     (4,123 )     (7,372 ) Accounts payable     5,975       106,283   Accrued liabilities     12,358       (52,126 ) Net provided by operating activities     15,493       15,320             Cash flows from investing activities: