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:
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