Logitech Announces Third Quarter Results for FY 2013

Updated

Logitech Announces Third Quarter Results for FY 2013

New CEO Outlines Strategic Priorities

NEWARK, Calif. & MORGES, Switzerland--(BUSINESS WIRE)-- Logitech International (SIX: LOGN) (NAS: 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 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 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 SHEETS

December 31, 2012

March 31, 2012

December 31, 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 equipment

89,128

94,884

78,055

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 shareholders' equity

$

1,489,065

$

1,856,494

$

1,990,686

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 compensation

(4

)

(3

)

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 securities

-

6,550

Purchases of trading investments

(646

)

(1,041

)

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