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Logitech?s Q4 FY 2014 Sales, Profit and Cash from Operations Exceed Expectations


    Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the fourth quarter and full year of Fiscal Year 2014. Q4 FY 2014 sales were $485 million, up 3 percent over the prior year.

    • Q4 GAAP operating income was $7 million, with GAAP earnings per share (EPS) of $0.07, compared to a loss a year ago.
    • Q4 non-GAAP operating income was $23 million, with non-GAAP EPS of $0.14, compared to $0.01 in the same quarter a year ago.

    For the full 2014 fiscal year, ended March 31, 2014, sales were $2.12 billion, up 1 percent year over year – the Company’s first year of sales growth since FY 2011.

    • FY 2014 GAAP operating income was $77 million, with GAAP EPS of $0.46, compared to an operating loss in the prior year.
    • FY 2014 non-GAAP operating income more than doubled to $140 million, with non-GAAP EPS of $0.76, up from $0.31 a year ago.
    • Cash flow from operations on a trailing twelve-month basis was $202 million, up 72 percent.

    “Our Q4 performance was strong, with sales, profit and cash generation better than expected,” said Bracken Darrell, Logitech president and chief executive officer. “Q4 sales in our Growth category – PC Gaming, Tablet and Other Accessories, and Mobile Speakers – were up nearly 50 percent.

    “At the start of our fiscal year we said we would deliver strong sales in our Growth category, reduce operating expenses and improve profitability. We delivered on our commitments across the board, concluding FY 2014 ahead of our turnaround plan.”

    Outlook

    Logitech confirmed its current FY 2015 outlook of $2.16 billion in sales and $145 million in 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 Q4 and full-year FY 2014 on Thurs., April 24, 2014 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.

    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), benefit from (provision for) income taxes 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. With respect to our outlook for non-GAAP operating income, most of these excluded amounts pertain to events that have not yet occurred and are not currently possible to estimate with a reasonable degree of accuracy. Therefore, no reconciliation to GAAP amount has been provided for FY 2015.

    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 and growth categories, as well as Fiscal Year 2015 revenue and operating income. 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 December 31, 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.

    Note that unless noted otherwise, comparisons are year over year.

    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     Fiscal Years Ended       March 31,     March 31, CONSOLIDATED STATEMENTS OF OPERATIONS     2014     2013     2014     2013             (A)                                       Net sales     $ 485,259       $ 469,086       $ 2,123,045       $ 2,099,883   Cost of goods sold       320,298         309,854         1,392,954         1,389,726   Gross profit       164,961         159,232         730,091         710,157   % of net sales       34.0 %       33.9 %       34.4 %       33.8 %                           Operating expenses:                         Marketing and selling       92,081         107,481         380,050         431,598   Research and development       30,893         36,582         138,820         154,207   General and administrative       29,885         28,982         119,988         113,824   Goodwill impairment       -         5,688         -         216,688   Restructuring charges, net       5,385         15,506         14,006         43,704   Total operating expenses       158,244         194,239         652,864         960,021                             Operating income (loss)       6,717         (35,007 )       77,227         (249,864 )                           Interest income (expense), net       465         256         (397 )       907   Other income (expense), net       625         2,140         1,986         (2,198 )                           Income (loss) before income taxes       7,807         (32,611 )       78,816         (251,155 ) Provision for (benefit from) income taxes       (3,777 )       1,028         3,288         (25,588 )                           Net income (loss)     $ 11,584       $ (33,639 )     $ 75,528       $ (225,567 )                           Net income (loss) per share:                         Basic     $ 0.07       $ (0.21 )     $ 0.47       $ (1.42 ) Diluted     $ 0.07       $ (0.21 )     $ 0.46       $ (1.42 ) Shares used to compute net income (loss) per share :                         Basic       162,255         158,716         160,619         158,468   Diluted       165,766         158,716         162,526         158,468                                               LOGITECH INTERNATIONAL S.A.   (In thousands) - Unaudited                     March 31,     March 31, CONSOLIDATED BALANCE SHEETS     2014     2013               Current assets:             Cash and cash equivalents     $ 469,412     $ 333,824 Accounts receivable, net       177,671       179,565 Inventories       229,871       261,083 Other current assets       58,247       58,103 Assets held for sale       -       10,960 Total current assets       935,201       843,535 Non-current assets:             Property, plant and equipment, net       83,990       87,649 Goodwill       345,010       341,357 Other intangible assets       10,529       26,024 Other assets       73,964       75,098 Total assets     $ 1,448,694     $ 1,373,663               Current liabilities:             Accounts payable     $ 245,572     $ 265,995 Accrued and other current liabilities       218,139       192,774 Liabilities held for sale       -       3,202 Total current liabilities       463,711       461,971 Non-current liabilities:       189,439       195,882 Total liabilities       653,150       657,853               Total shareholders´ equity       795,544       715,810               Total liabilities and shareholders´ equity     $ 1,448,694     $ 1,373,663                     LOGITECH INTERNATIONAL S.A.   (In thousands) - Unaudited         Three Months Ended     Fiscal Years Ended       March 31,     March 31, CONSOLIDATED STATEMENTS OF CASH FLOWS     2014     2013     2014     2013            

    (A)

                Operating activities:                         Net income (loss)     $ 11,584       $ (33,639 )     $ 75,528       $ (225,567 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities:                   Depreciation       14,978         10,558         43,734         44,419   Amortization of other intangible assets       2,781         5,159         17,771         23,571   Share-based compensation expense       8,134         6,539         25,546         25,198   Goodwill impairment       -         5,688         -         216,688   Impairment of investment       56         -         624         3,600   Loss on disposal of property, plant and equipment       533         -         4,411         -   Gain on sale of securities       -         -         -         (831 ) Excess tax benefits from share-based compensation       (1,674 )       -         (2,246 )       (26 ) Deferred income taxes and other       (815 )       2,154         (4,374 )       11,552   Changes in operating assets and liabilities, net of acquisitions:                         Accounts receivable, net       134,998         86,238         4,733         44,667   Inventories       27,361         23,602         42,013         23,954   Other assets       2,227         1,012         (741 )       (1,420 ) Accounts payable       (83,182 )       (75,962 )       (20,251 )       (34,069 ) Accrued and other liabilities       (23,007 )       (18,555 )       15,111         (14,594 ) Net cash provided by operating activities       93,974         12,794         201,859         117,142                             Investing activities:                         Purchases of property, plant and equipment       (11,000 )       (7,208 )       (43,096 )       (49,240 ) Purchase of strategic investment       (300 )       (450 )       (300 )       (4,420 ) Acquisitions, net of cash acquired       -         -         (650 )       -   Proceeds from sales of available-for-sale securities       -         -         -         917   Proceeds from return of investment from strategic investments       -         -         261         -   Purchases of trading investments for deferred compensation plan       (619 )       (1,902 )       (8,450 )       (4,196 ) Proceeds from sales of trading investments for deferred compensation plan       683         2,154         8,994         4,463   Net cash used in investing activities       (11,236 )       (7,406 )       (43,241 )       (52,476 )                           Financing activities:                         Payment of cash dividends       -         -         (36,123 )       (133,462 ) Purchases of treasury shares       -         -         -         (87,812 ) Proceeds from sales of shares upon exercise of options and purchase rights       8,457         7,139         16,922         15,982   Tax withholdings related to net share settlements of restricted stock units       (2,789 )       (380 )       (5,726 )       (2,375 ) Excess tax benefits from share-based compensation       1,674         -         2,246