Logitech Announces Second Quarter Results for FY 2013 Business Wire NEWARK, Calif. & MORGES, Switzerland -- October 25, 2012 Logitech International (SIX: LOGN) (NASDAQ: LOGI) today announced financial results for the second quarter of Fiscal Year 2013. Sales for Q2 FY 2013 were $548 million, down 7 percent from $589 million in Q2 FY 2012. Excluding the unfavorable impact of exchange rates, sales were down 4 percent compared to the same quarter in the prior year. Operating income was $24 million, up 3 percent from operating income of $23 million in the same quarter a year ago. Net income for Q2 FY 2013 was $55 million ($0.35 per share) compared to net income of $17 million ($0.10 per share) in Q2 FY 2012. Net income for Q2 FY 2013 includes a net tax benefit of $32 million from the closure of an income tax audit. Gross margin for the quarter was 35.8 percent, compared to 33.7 percent in the same quarter one year ago. Logitech’s retail sales for Q2 FY 2013 decreased by 5 percent year over year, down 3 percent in EMEA, 6 percent in the Americas and 7 percent in Asia. OEM sales decreased by 27 percent. Sales for the LifeSize division decreased by 7 percent. "In Q2, the PC market weakened more significantly than anticipated, in advance of the launch of Windows 8,” said Guerrino De Luca, Logitech chairman and chief executive officer. “This factor, as well as a general slowdown in emerging markets, negatively impacted our Q2 sales. Despite this environment, we executed effectively during the quarter, improving our gross margin and operating results. We also recently launched compelling new products for tablets, smartphones, the digital home, Macs and Windows 8 PCs in time for the holiday season. “Looking ahead, given the uncertainty in the PC market, we are now planning for continued strong headwinds in all of our PC-related categories for the remainder of the fiscal year. We expect this weakness to more than offset the positive impact of our new product launches, and consequently, we now anticipate our sales and operating income for the second half of FY 2013 will be below that of the second half of the prior fiscal year. In addition to managing our spending in line with the current environment, we are also in the process of reassessing the strategy within each of our PC-related product categories to deliver improved performance.” 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 results for Q2 FY 2013 on Thursday, Oct. 25, 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 within the meaning of the federal securities laws, including, without limitation, statements regarding: our outlook for the remainder of FY 2013, year-over-year financial performance for the second half of FY 2013, our strategy within our product categories, and our ability to deliver improved financial performance. 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; if the restructuring fails to produce the intended performance and cost savings results or is not implemented in the contemplated timeframe; if the reassessment of strategy within the PC-related product categories fails to deliver improved financial performance. 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, 2012 and our Annual Report on Form 10-K for the fiscal year ended March 31, 2012, available atwww.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 Quarter Ended September 30, CONSOLIDATED STATEMENTS OF OPERATIONS 2012 2011 Net sales $ 547,693 $ 589,204 Cost of goods sold 351,698 390,783 Gross profit 195,995 198,421 % of net sales 35.8 % 33.7 % Operating expenses: Marketing and selling 110,522 107,446 Research and development 38,019 39,491 General and administrative 25,980 27,989 Restructuring charges (credits), net (2,671 ) - Total operating expenses 171,850 174,926 Operating income 24,145 23,495 Interest income, net 153 601 Other expense, net (509 ) (1,763 ) Income before income taxes 23,789 22,333 Provision for (benefit from) income taxes (31,076 ) 4,888 Net income $ 54,865 $ 17,445 Shares used to compute net income per share: Basic 156,736 176,878 Diluted 157,932 177,277 Net income per share: Basic $ 0.35 $ 0.10 Diluted $ 0.35 $ 0.10 LOGITECH INTERNATIONAL S.A. (In thousands, except per share amounts) - Unaudited Six Months Ended September 30, CONSOLIDATED STATEMENTS OF OPERATIONS 2012 2011 Net sales $ 1,016,297 $ 1,069,645 Cost of goods sold 676,050 745,617 Gross profit 340,247 324,028 % of net sales 33.5 % 30.3 % Operating expenses: Marketing and selling 211,419 207,239 Research and development 76,947 79,472 General and administrative 58,460 58,854 Restructuring charges 28,556 - Total operating expenses 375,382 345,565 Operating loss (35,135 ) (21,537 ) Interest income, net 537 1,291 Other income (expense), net (668 ) 3,428 Loss before income taxes (35,266 ) (16,818 ) Benefit from income taxes (37,986 ) (4,657 ) Net income (loss) $ 2,720 $ (12,161 ) Shares used to compute net income (loss) per share: Basic 158,723 178,111 Diluted 159,853 178,111 Net income (loss) per share: Basic $ 0.02 $ (0.07 ) Diluted $ 0.02 $ (0.07 ) LOGITECH INTERNATIONAL S.A. (In thousands) CONSOLIDATED BALANCE September 30, March 31, 2012 September 30, SHEETS 2012 2011 (Unaudited) (Audited) (Unaudited) Current assets Cash and cash equivalents $ 237,033 $ 478,370 $ 379,450 Accounts receivable 284,451 223,104 294,691 Inventories 321,307 297,072 325,053 Other current assets 69,016 65,990 85,004 Total current assets 911,807 1,064,536 1,084,198 Non-Current assets Property, plant and 93,854 94,884 78,416 equipment Goodwill 561,080 560,523 560,343 Other intangible assets 41,108 53,518 66,693 Other assets 84,563 83,033 74,053 Total assets $ 1,692,412 $ 1,856,494 $ 1,863,703 Current liabilities Accounts payable $ 368,509 $ 301,111 $ 342,070 Accrued liabilities 190,234 186,680 187,017 Total current liabilities 558,743 487,791 529,087 Non-current liabilities 187,372 218,462 185,277 Total liabilities 746,115 706,253 714,364 Shareholders' equity 946,297 1,150,241 1,149,339 Total liabilities and $ 1,692,412 $ 1,856,494 $ 1,863,703 shareholders' equity LOGITECH INTERNATIONAL S.A. (In thousands) - Unaudited Three Months Ended September 30, CONSOLIDATED STATEMENTS OF CASH FLOWS 2012 2011 Cash flows from operating activities: Net income $ 54,865 $ 17,445 Non-cash items included in net income: Depreciation 11,155 11,421 Amortization of other intangible assets 6,025 6,926 Share-based compensation expense 7,266 6,738 Excess tax benefits from share-based (17 ) (6 ) compensation Deferred income taxes and other (2,751 ) 5,147 Changes in assets and liabilities, net of acquisitions: Accounts receivable (64,849 ) (55,614 ) Inventories (42,178 ) (4,806 ) Other assets (7,372 ) (871 ) Accounts payable 106,283 15,742 Accrued liabilities (52,276 ) (4,232 ) Net cash provided by (used in) operating 16,151 (2,110 ) activities Cash flows from investing activities: Purchases of property, plant and equipment (10,901 ) (10,360 ) Acquisitions, net of cash acquired - (18,814 ) Investment in privately-held company (3,970 ) - Purchases of trading investments (251 ) (991 ) Proceeds from sales of trading investments 253 1,022 Net cash used in investing activities (14,869 ) (29,143 ) Cash flows from financing activities: Payment of cash dividends (133,462 ) - Purchases of treasury shares - (73,134 ) Proceeds from sale of shares upon exercise 8,604 9,157 of options and purchase rights Tax withholdings related to net share (465 ) (9 ) settlements of restricted stock units Excess tax benefits from share-based 17 6 compensation Net cash used in financing activities (125,306 ) (63,980 ) Effect of exchange rate changes on cash and 320 (1,684 ) cash equivalents Net decrease in cash and cash equivalents (123,704 ) (96,917 ) Cash and cash equivalents at beginning of 360,737 476,367 period Cash and cash equivalents at end of period $ 237,033 $ 379,450 LOGITECH INTERNATIONAL S.A. (In thousands) - Unaudited Six Months Ended September 30, CONSOLIDATED STATEMENTS OF CASH FLOWS 2012 2011 Cash flows from operating activities: Net income (loss) $ 2,720 $ (12,161 ) Non-cash items included in net income (loss): Depreciation 22,307 24,593 Amortization of other intangible assets 12,257 13,556 Inventory valuation adjustment - 34,074 Share-based compensation expense 13,437 16,453 Gain on disposal of property and plant - (4,904 ) Gain on sale of investments (831 ) - Excess tax benefits from share-based (22 ) (30 ) compensation Deferred income taxes and other (3,806 ) (8,554 ) Changes in assets and liabilities, net of acquisitions: Accounts receivable (58,272 ) (36,517 ) Inventories (30,733 ) (59,589 ) Other assets (7,339 ) (6,886 ) Accounts payable 68,875 45,088 Accrued liabilities (9,498 ) (3,489 ) Net cash provided by operating activities 9,095 1,634 Cash flows from investing activities: Purchases of property, plant and equipment (30,522 ) (20,921 ) Acquisitions, net of cash acquired - (18,814 ) Investment in privately-held company (3,970 ) - Proceeds from sale of property and plant - 4,904 Proceeds from sale of available-for-sale 917 - securities Purchases of trading investments (1,648 ) (4,536 ) Proceeds from sales of trading investments 1,638 4,522 Net cash used in investing activities (33,585 ) (34,845 ) Cash flows from financing activities: Payment of cash dividends (133,462 ) - Purchases of treasury shares (89,955 ) (73,134 ) Proceeds from sale of shares upon exercise of 9,008 9,764 options and purchase rights Tax withholdings related to net share (635 ) (185 ) settlements of restricted stock units Excess tax benefits from share-based 22 30 compensation Net cash used in financing activities (215,022 ) (63,525 ) Effect of exchange rate changes on cash and (1,825 ) (1,745 ) cash equivalents Net decrease in cash and cash equivalents (241,337 ) (98,481 ) Cash and cash equivalents at beginning of 478,370 477,931 period Cash and cash equivalents at end of period $ 237,033 $ 379,450 LOGITECH INTERNATIONAL S.A. (In thousands, except per share amounts) - Unaudited Quarter Ended Six Months Ended September 30, September 30, SUPPLEMENTAL FINANCIAL 2012 2011 2012 2011 INFORMATION Depreciation $ 11,155 $ 11,421 $ 22,307 $ 24,593 Amortization of other intangible 6,025 6,926 12,257 13,556 assets Operating income 24,145 23,495 (35,135 ) (21,537 ) (loss) Operating income (loss) before 41,325 41,842 (571 ) 16,612 depreciation and amortization Capital 10,901 10,360 30,522 20,921 expenditures Net sales by channel: Retail $ 476,479 $ 501,735 $ 871,580 $ 896,511 OEM 36,718 50,261 73,393 99,439 LifeSize 34,496 37,208 71,324 73,695 Total net sales $ 547,693 $ 589,204 $ 1,016,297 $ 1,069,645 - Net retail sales by product family^(**): Retail - Pointing $ 122,490 $ 133,165 $ 238,217 $ 254,914 Devices Retail - Keyboards 130,806 109,325 241,251 203,921 & Desktops Retail - Audio 109,831 126,967 199,878 204,640 Retail - Video 47,352 57,276 84,232 106,862 Retail - Gaming 47,302 47,836 74,576 85,003 Retail - Digital 18,698 27,166 33,426 41,171 Home Total net retail $ 476,479 $ 501,735 $ 871,580 $ 896,511 sales __________________ ** Certain products within the retail product families as presented in prior years have been reclassified to conform to the current year presentation, with no impact on previously reported total net retail sales. Quarter Ended Six Months Ended September 30, September 30, Share-based Compensation 2012 2011 2012 2011 Expense ^ (*) Cost of goods sold $ 608 $ 950 $ 1,397 $ 2,110 Marketing and 2,644 3,448 4,424 6,965 selling Research and 1,763 1,754 3,588 3,562 development General and 2,251 586 4,028 3,816 administrative Income tax benefit (1,671 ) (2,276 ) (3,047 ) (4,665 ) Total share-based compensation $ 5,595 $ 4,462 $ 10,390 $ 11,788 expense after income taxes __________________ * Share-based compensation expense for the quarter ended September 30, 2012 and six months ended September 30, 2012 includes a reduction of $0.6m and $2.2m in expense applicable to employees terminated as a result of the restructuring plan announced in April 2012. 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. (LOGIIR) Contact: Logitech International Joe Greenhalgh 510-713-4430 Vice President, Investor Relations – USA Nancy Morrison 510-713-4948 Vice President, Corporate Communications – USA or Cumulus Communications – Switzerland Ben Starkie +41 79 292 3499
Logitech Announces Second Quarter Results for FY 2013
Press spacebar to pause and continue. Press esc to stop.