Logitech Announces First Quarter Financial Results for FY 2014

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Logitech Announces First Quarter Financial Results for FY 2014

Company Significantly Improves Profitability

NEWARK, Calif. & MORGES, Switzerland--(BUSINESS WIRE)-- Logitech International (SIX: LOGN) (NAS: LOGI) today announced financial results for the first quarter of Fiscal Year 2014.


Sales for Q1 FY 2014 were $478 million, up 2 percent from $469 million in Q1 FY 2013, with exchange rates having no impact. Excluding those retail product categories that the Company is exiting (reported in the financial statements as "Retail - Other"), sales for Q1 FY 2014 were up 5 percent year over year. The Company posted a small operating profit compared to an operating loss of $59 million in the same quarter a year ago. Net income for Q1 FY 2014 was $ 1 million ($0.01 per share) compared to a net loss of $51 million ($0.32 per share) in the prior year. Gross margin for Q1 FY 2014 was 35.2 percent, up from 31.0 percent a year ago.

The Company's total retail sales for Q1 increased by 5 percent year over year, up 12 percent in the Americas and 4 percent in Asia, and down 3 percent in EMEA. Excluding "Retail - Other," Logitech's retail sales for Q1 FY 2014 increased by 8 percent over the prior year. OEM sales decreased by 6 percent and sales for the LifeSize division decreased by 18 percent.

"These results - sales growth and significant year-over-year profitability improvement - demonstrate our turnaround is on track," said Bracken P. Darrell, Logitech president and chief executive officer. "I'm happy to see double-digit sales growth in our Americas region. And I'm pleased with the performance in our growth categories: Combined, tablet accessories, PC gaming and wireless speakers grew about 90 percent year over year.

"Logitech continues to be focused on becoming faster and more profitable. We've shortened key product cycles and delivered early momentum for the product lines we launched into retail environments in Q1, including tablet accessories, PC gaming peripherals and our UE BOOM wireless speaker. There is more to come. I am excited about the potential within the business and remain committed to improving our profitability in FY 2014."

Outlook

Logitech confirmed its outlook for Fiscal Year 2014, ending March 31, 2014. The Company expects sales of approximately $2 billion, operating income of approximately $50 million and gross margin of approximately 34 percent.

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 Q1 FY 2014 on Thursday, July 25, 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.

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, focus, product launches, potential and profitability in Fiscal Year 2014, as well as Fiscal Year 2014 sales, operating income and gross margin. 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 Annual Report on Form 10-K 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
 
Quarter Ended June 30,
CONSOLIDATED STATEMENTS OF OPERATIONS  2013  2012
(Revised) Note 1
 
Net sales$477,924$468,604
Cost of goods sold 309,569  323,478 
Gross profit 168,355  145,126 
% of net sales35.2%31.0%
 
Operating expenses:
Marketing and selling100,635100,897
Research and development36,19139,023
General and administrative29,14832,480
Restructuring charges 2,334  31,227 
Total operating expenses 168,308  203,627 
 
Operating income (loss)47(58,501)
 
Interest income (expense), net(23)384
Other income (loss), net 217  (159)
 
Income (loss) before income taxes241(58,276)
Benefit from income taxes (802) (6,910)
 
Net income (loss)$1,043 $(51,366)
 
Shares used to compute net income (loss) per share:
Basic159,298160,733
Diluted160,281160,733
Net income (loss) per share:
Basic$0.01$(0.32)
Diluted$0.01$(0.32)
 
 
LOGITECH INTERNATIONAL S.A.
      
(In thousands) - Unaudited
 
CONSOLIDATED BALANCE SHEETS  June 30, 2013  March 31, 2013June 30, 2012
(Revised) Note 1(Revised) Note 1
Current assets
Cash and cash equivalents$318,857$333,824$360,737
Accounts receivable218,599179,565213,973
Inventories296,012261,083280,533
Other current assets65,19159,59672,364
Assets held for sale - 10,960 -
Total current assets898,659845,028927,607
Non-Current assets
Property, plant and equipment85,77887,64994,491
Goodwill343,078340,132558,211
Other intangible assets22,91926,02445,326
Other assets 70,805 73,563 73,213
Total assets$1,421,239$1,372,396$1,698,848
 
Current liabilities
Accounts payable$296,269$265,995$262,929
Accrued liabilities205,566193,378222,017
Liabilities held for sale - 1,342 -
Total current liabilities501,835460,715484,946
Non-current liabilities 199,164 195,727 228,462
Total liabilities700,999656,442713,408
 
Shareholders' equity720,240715,954985,440
   
Total liabilities and shareholders' equity$1,421,239$1,372,396$1,698,848
 
 
LOGITECH INTERNATIONAL S.A.
    
(In thousands) - Unaudited
 
Three Months Ended June 30,
CONSOLIDATED STATEMENTS OF CASH FLOWS  20132012
(Revised) Note 1
Cash flows from operating activities:
Net income (loss)$1,043$(51,366)
Non-cash items included in net income (loss):
Depreciation10,13911,152
Amortization of other intangible assets5,2646,398
Investment impairment370-
Share-based compensation expense4,3906,171
Loss on disposal of property and plant2,311-
Gain on sale of available-for-sale securities-(831)
Excess tax benefits from share-based compensation-(5)
Deferred income taxes(3,416)(1,024)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable(38,899)6,577
Inventories(28,052)11,445
Other assets(1,770)33
Accounts payable33,580(37,408)
Accrued liabilities 13,733  41,802 
Net cash used in operating activities (1,307) (7,056)
 
Cash flows from investing activities:
Purchases of property, plant and equipment(13,208)(19,621)
Acquisitions, net of cash acquired--
Acquisition of a privately-held company(650)-
Proceeds from sale of property and plant-917
Proceeds from sale of available-for-sale securities--
Purchases of trading investments(4,406)(1,397)
Proceeds from sales of trading investments 4,748  1,385 
Net cash used in investing activities (13,516) (18,716)
 
Cash flows from financing activities:
Purchases of treasury shares-(89,955)
Proceeds from sale of shares upon exercise of options and purchase rights12404
Tax withholdings related to net share settlements of restricted stock units(215)(170)
Excess tax benefits from share-based compensation -  5 
Net cash used in financing activities (203) (89,716)
 
Effect of exchange rate changes on cash and cash equivalents 59  (2,145)
Net decrease in cash and cash equivalents(14,967)(117,633)
Cash and cash equivalents at beginning of period 333,824  478,370 
Cash and cash equivalents at end of period$318,857 $360,737 
 
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LOGITECH INTERNATIONAL S.A.
  
(In thousands, except per share amounts) - Unaudited
 
Three Months Ended June 30,
SUPPLEMENTAL FINANCIAL INFORMATION 2013 2012
 
Depreciation$10,139$11,152
Amortization of other intangible assets5,2646,398
Capital expenditures13,20819,621