Logitech Announces Second Quarter Results for FY 2013
Logitech Announces Second Quarter Results for FY 2013
NEWARK, Calif. & MORGES, Switzerland--(BUSINESS WIRE)-- Logitech International (SIX: LOGN) (NAS: 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 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 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 SHEETS | September 30, 2012 | March 31, 2012 | September 30, 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 equipment | 93,854 | 94,884 | 78,416 | ||||||||
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 shareholders' equity | $ | 1,692,412 | $ | 1,856,494 | $ | 1,863,703 | |||||
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 compensation | (17 | ) | (6 | ) | ||||
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 activities | 16,151 | (2,110 | ) | |||||
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 of options and purchase rights | 8,604 | 9,157 | ||||||
Tax withholdings related to net share settlements of restricted stock units | (465 | ) | (9 | ) | ||||
Excess tax benefits from share-based compensation | 17 | 6 | ||||||
Net cash used in financing act | ||||||||
