Logitech Announces Third Quarter Results for FY 2013 New CEO Outlines Strategic Priorities Business Wire NEWARK, Calif. & MORGES, Switzerland -- January 23, 2013 Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the third quarter of Fiscal Year 2013. Sales for Q3 FY 2013 were $615 million, down 14 percent from $715 million in Q3 FY 2012, with no material impact from exchange rates. The company posted an operating loss of $180 million, which included a non-cash goodwill impairment charge, estimated to be $211 million, announced on January 22, 2013. Net loss for Q3 FY 2013 was $195 million ($1.24 per share) compared to net income of $55 million ($0.32 per share) in Q3 FY 2012. Gross margin for the quarter was 34.2 percent, compared to 36.2 percent in the same quarter one year ago. Excluding the aforementioned Q3 FY 2013 impairment charge, Q3 FY 2013 non-GAAP operating income would have been $31 million and non-GAAP net income would have been $16 million. Logitech’s retail sales for Q3 FY 2013 decreased by 14 percent year over year, down 8 percent in the Americas, 11 percent in Asia and 20 percent in EMEA. Year over year, OEM sales decreased by 23 percent and sales for the LifeSize division decreased by 4 percent. “As we articulated when we started the third quarter, continued weakness in the global PC market was the primary factor in our disappointing Q3 results,” said Bracken P. Darrell, Logitech president and chief executive officer. “These results are unacceptable and we are taking decisive action as an outcome of my strategic review. I was pleased with the continued strong demand for our Ultrathin Keyboard Cover in Q3. We plan to expand our presence in the growing tablet accessories category with the launch of a number of exciting new products later this quarter. “We are taking immediate actions to shape a faster and more profitable Logitech,” continued Mr. Darrell. “We are developing more mobility-related products, leveraging the powerful growth of tablets and smartphones. We intend to sustain our leadership in PC platform-related products where we have engineering, distribution and scale advantages. Our goal with PC-platform products is to maximize profitability, while investing selectively in growing categories. We have also identified a number of product categories that no longer fit with our current strategic direction. As a result, we have initiated the process to divest our remote controls and digital video security categories, and we plan to discontinue other non-strategic products, such as speaker docks and console gaming peripherals, by the end of Calendar Year 2013.” Mr. Darrell concluded, “As we execute our plans over the coming quarters, we will reduce costs significantly across the company beyond the $80M annual cost savings (FY 2014 over FY 2012) resulting from the restructuring we announced last April. My goal is to get Logitech back to sustained profitability as quickly as possible. This requires unwavering focus on developing great products both for large and for fast-growing markets, removing unnecessary costs and a commitment to move at least as fast as the markets in which we participate.” 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 Q3 FY 2013 on Thursday, Jan. 24, 2013 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. 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: demand for our products, expansion of our presence and growth in the tablet and smartphones accessories category, new product launches, our plans to divest or discontinue non-strategic products, our focus, and our ability to be faster and more profitable, to achieve sustained profitability, to sustain our leadership and advantages in PC platform-related products, and to reduce costs. 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; if our products and marketing strategies fail to separate our products from competitors’ products; if the restructuring fails to produce the intended performance and cost savings results or is not implemented in the contemplated timeframe. 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 September 30, 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 December 31, CONSOLIDATED STATEMENTS OF OPERATIONS 2012 2011 Net sales $ 614,500 $ 714,596 Cost of goods sold 404,402 455,922 Gross profit 210,098 258,674 % of net sales 34.2 % 36.2 % Operating expenses: Marketing and selling 112,698 116,313 Research and development 40,393 41,911 General and administrative 26,382 30,673 Goodwill impairment 211,000 - Restructuring charges (credits), net (358 ) - Total operating expenses 390,115 188,897 Operating income (loss) (180,017 ) 69,777 Interest income, net 114 917 Other income (expense), net (3,670 ) 6,713 Income (loss) before income taxes (183,573 ) 77,407 Provision for income taxes 11,370 22,074 Net income (loss) $ (194,943 ) $ 55,333 Shares used to compute net income (loss) per share: Basic 157,706 173,003 Diluted 157,706 173,656 Net income (loss) per share: Basic $ (1.24 ) $ 0.32 Diluted $ (1.24 ) $ 0.32 LOGITECH INTERNATIONAL S.A. (In thousands, except per share amounts) - Unaudited Nine Months Ended December 31, CONSOLIDATED STATEMENTS OF OPERATIONS 2012 2011 Net sales $ 1,630,797 $ 1,784,241 Cost of goods sold 1,080,452 1,201,539 Gross profit 550,345 582,702 % of net sales 33.7 % 32.7 % Operating expenses: Marketing and selling 324,117 323,552 Research and development 117,340 121,383 General and administrative 84,842 89,527 Goodwill impairment 211,000 - Restructuring charges 28,198 - Total operating expenses 765,497 534,462 Operating income (loss) (215,152 ) 48,240 Interest income, net 651 2,208 Other income (expense), net (4,338 ) 10,141 Income (loss) before income taxes (218,839 ) 60,589 Provision for (benefit from) income taxes (26,616 ) 17,417 Net income (loss) $ (192,223 ) $ 43,172 Shares used to compute net income (loss) per share: Basic 158,383 176,414 Diluted 158,383 177,201 Net income (loss) per share: Basic $ (1.21 ) $ 0.24 Diluted $ (1.21 ) $ 0.24 LOGITECH INTERNATIONAL S.A. (In thousands) CONSOLIDATED BALANCE December 31, March 31, 2012 December 31, SHEETS 2012 2011 (Unaudited) (Unaudited) (Unaudited) Current assets Cash and cash equivalents $ 321,999 $ 478,370 $ 523,333 Accounts receivable 264,589 223,104 318,678 Inventories 277,477 297,072 295,749 Other current assets 59,808 65,990 73,498 Assets held for sale 17,697 - - Total current assets 941,570 1,064,536 1,211,258 Non-Current assets Property, plant and 89,128 94,884 78,055 equipment Goodwill 345,313 560,523 560,106 Other intangible assets 35,033 53,518 59,743 Other assets 78,021 83,033 81,524 Total assets $ 1,489,065 $ 1,856,494 $ 1,990,686 Current liabilities Accounts payable $ 339,283 $ 301,111 $ 377,132 Accrued liabilities 204,528 186,680 213,092 Liabilities held for sale 2,020 - - Total current liabilities 545,831 487,791 590,224 Non-current liabilities 186,663 218,462 195,956 Total liabilities 732,494 706,253 786,180 Shareholders' equity 756,571 1,150,241 1,204,506 Total liabilities and $ 1,489,065 $ 1,856,494 $ 1,990,686 shareholders' equity LOGITECH INTERNATIONAL S.A. (In thousands) - Unaudited Three Months Ended December 31, CONSOLIDATED STATEMENTS OF CASH FLOWS 2012 2011 Cash flows from operating activities: Net income (loss) $ (194,943 ) $ 55,333 Non-cash items included in net income (loss): Depreciation 11,554 10,608 Amortization of other intangible assets 5,657 6,653 Goodwill impairment 211,000 - Investment impairment 3,600 - Share-based compensation expense 5,222 6,927 Gain on sale of investments - (6,118 ) Excess tax benefits from share-based (4 ) (3 ) compensation Deferred income taxes and other 13,204 7,556 Changes in assets and liabilities, net of acquisitions: Accounts receivable 16,962 (26,575 ) Inventories 32,177 23,869 Other assets 5,138 (4,967 ) Accounts payable (29,202 ) 36,885 Accrued liabilities 14,736 42,366 Net cash provided by operating activities 95,101 152,534 Cash flows from investing activities: Purchases of property, plant and equipment (9,215 ) (10,496 ) Proceeds from sale of available-for-sale - 6,550 securities Purchases of trading investments (646 ) (1,041 ) Proceeds from sales of trading investments 671 998 Net cash used in investing activities (9,190 ) (3,989 ) Cash flows from financing activities: Payment of cash dividends - - Purchases of treasury shares - - Proceeds from sale of shares upon exercise (165 ) 88 of options and purchase rights Tax withholdings related to net share (1,360 ) (705 ) settlements of restricted stock units Excess tax benefits from share-based 4 3 compensation Net cash used in financing activities (1,521 ) (614 ) Effect of exchange rate changes on cash and 576 (4,048 ) cash equivalents Net increase in cash and cash equivalents 84,966 143,883 Cash and cash equivalents at beginning of 237,033 379,450 period Cash and cash equivalents at end of period $ 321,999 $ 523,333 LOGITECH INTERNATIONAL S.A. (In thousands) - Unaudited Nine Months Ended December 30, CONSOLIDATED STATEMENTS OF CASH FLOWS 2012 2011 Cash flows from operating activities: Net income (loss) $ (192,223 ) $ 43,172 Non-cash items included in net income (loss): Depreciation 33,861 35,201 Amortization of other intangible assets 17,914 20,209 Goodwill impairment 211,000 - Investment impairment 3,600 - Inventory valuation adjustment - 34,074 Share-based compensation expense 18,659 23,380 Gain on disposal of property and plant - (4,904 ) Gain on sale of investments (831 ) (6,118 ) Excess tax benefits from share-based (26 ) (33 ) compensation Deferred income taxes and other 9,398 (998 ) Changes in assets and liabilities, net of acquisitions: Accounts receivable (41,310 ) (63,092 ) Inventories 1,444 (35,720 ) Other assets (2,201 ) (11,853 ) Accounts payable 39,673 81,973 Accrued liabilities 5,238 38,877 Net cash provided by operating activities 104,196 154,168 Cash flows from investing activities: Purchases of property, plant and equipment (39,737 ) (31,417 ) 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 6,550 securities Purchases of trading investments (2,294 ) (5,577 ) Proceeds from sales of trading investments 2,309 5,520 Net cash used in investing activities (42,775 ) (38,834 ) 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 8,843 9,852 options and purchase rights Tax withholdings related to net share (1,995 ) (890 ) settlements of restricted stock units Excess tax benefits from share-based 26 33 compensation Net cash used in financing activities (216,543 ) (64,139 ) Effect of exchange rate changes on cash and (1,249 ) (5,793 ) cash equivalents Net increase (decrease) in cash and cash (156,371 ) 45,402 equivalents Cash and cash equivalents at beginning of 478,370 477,931 period Cash and cash equivalents at end of period $ 321,999 $ 523,333 LOGITECH INTERNATIONAL S.A. (In thousands, except per share amounts) - Unaudited Quarter Ended Nine Months Ended December 31, December 31, SUPPLEMENTAL FINANCIAL 2012 2011 2012 2011 INFORMATION Depreciation $ 11,554 $ 10,608 $ 33,861 $ 35,201 Amortization of other intangible 5,657 6,653 17,914 20,209 assets Goodwill impairment 211,000 - 211,000 - Operating income (180,017 ) 69,777 (215,152 ) 48,240 (loss) Operating income (loss) before (162,806 ) 87,038 (163,377 ) 103,650 depreciation and amortization Operating income (loss) before 30,983 69,777 (4,152 ) 48,240 goodwill impairment Income (loss) (183,573 ) 77,407 (218,839 ) 60,589 before income taxes Income (loss) before income taxes 27,427 77,407 (7,839 ) 60,589 and goodwill impairment Net income (loss) (194,943 ) 55,333 (192,223 ) 43,172 Net income before 16,057 55,333 18,777 43,172 goodwill impairment Capital 9,215 10,497 39,737 31,417 expenditures Net sales by channel: Retail $ 542,388 $ 630,873 $ 1,413,968 $ 1,527,385 OEM 35,300 45,527 108,693 144,966 LifeSize 36,812 38,196 108,136 111,890 Total net sales $ 614,500 $ 714,596 $ 1,630,797 $ 1,784,241 - Net retail sales by product family^(**): Retail - Pointing $ 153,921 $ 171,920 $ 392,274 $ 427,031 Devices Retail - Keyboards 110,671 117,507 302,299 302,840 & Desktops Retail - Tablet 39,398 17,976 89,021 36,565 Accessories Retail - Audio - PC 75,366 92,766 214,158 238,932 Retail - Audio - Wearables & 23,577 23,233 57,284 39,071 Wireless Retail - Video 51,664 58,343 138,276 166,370 Retail - PC Gaming 45,111 56,177 118,567 129,839 Retail - Remotes 30,094 39,706 60,260 74,105 Retail - Other 12,586 53,245 41,829 112,632 Total net retail $ 542,388 $ 630,873 $ 1,413,968 $ 1,527,385 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 Nine Months Ended December 31, December 31, Share-based Compensation 2012 2011 2012 2011 Expense ^ (*) Cost of goods sold $ 704 $ 948 $ 2,101 $ 3,058 Marketing and 953 2,380 5,377 9,345 selling Research and 2,430 1,802 6,018 5,364 development General and 1,135 1,797 5,163 5,613 administrative Income tax benefit (1,043 ) 70 (4,090 ) (4,595 ) Total share-based compensation $ 4,179 $ 6,997 $ 14,569 $ 18,785 expense after income taxes __________________ * Share-based compensation expense for the quarter ended December 31, 2012 and nine months ended December 31, 2012 includes a reduction of $0 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) and Non-GAAP operating and net income (excluding the Q3 FY 2013 impairment charge) We refer to our net sales excluding the impact of foreign currency exchange rates as constant dollar sales. We also report non-GAAP operating and net income (loss) in this press release, excluding the Q3 FY 2013 non-cash impairment charge, and non-GAAP operating income (loss) before depreciation and amortization. Constant dollar sales and non-GAAP operating and net income (loss) are non-GAAP financial measures, which are 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, operating income(loss)and net income(loss). 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. Non-GAAP operating income (loss) and non-GAAP net income (loss) before goodwill impairment can be reconciled to GAAP operating income (loss) and GAAP net income (loss), respectively, by adding the amount of the impairment charge.Non-GAAP operating income (loss) before depreciation and amortization canbereconciled to GAAP operating income (loss) by adding the amounts of depreciation and amortization of other intangible assets. (LOGIIR) Contact: Logitech International Joe Greenhalgh Vice President, Investor Relations – USA 510-713-4430 Nancy Morrison Vice President, Corporate Communications – USA 510-713-4948 or Laura Scorza Sr. Public Relations Manager – Europe +41-(0) 21-863-5336
Logitech Announces Third Quarter Results for FY 2013
Press spacebar to pause and continue. Press esc to stop.