Logitech Announces Fourth Quarter and Full-Year Financial Results for FY 2013

Wed Apr 24, 2013 10:00pm EDT

* Reuters is not responsible for the content in this press release.

Logitech Announces Fourth Quarter and Full-Year Financial Results for FY 2013

Improved Profitability Expected for FY 2014

Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the fourth quarter and full year of Fiscal Year 2013.

Sales for Q4 FY 2013 were $469 million, down 12 percent from $532 million in Q4 FY 2012. Excluding the unfavorable impact of exchange rates, sales were down by 11 percent compared to the prior year. The Company posted an operating loss for the fourth quarter of $37 million compared to operating income of $24 million in the same quarter a year ago. The operating loss included $16 million in restructuring charges and $6 million related to the impairment of goodwill and other assets. The net loss for Q4 FY 2013 was $36 million ($0.23 per share) compared to net income of $28 million ($0.17 per share) in the prior year. Gross margin for Q4 FY 2013 was 33.5 percent, down from 36.4 percent a year ago.

Logitech’s retail sales for Q4 FY 2013 decreased by 10 percent year over year, up 2 percent in Asia, down 2 percent in the Americas and down 25 percent in EMEA. OEM sales decreased by 21 percent and sales for the LifeSize division decreased by 19 percent.

For the full 2013 fiscal year, ending March 31, 2013, sales were $2.1 billion, compared to $2.3 billion in FY 2012. The Company posted an operating loss of $252 million. Excluding impairment and restructuring charges, FY 2013 non-GAAP operating income would have been $8 million. The net loss for the full fiscal year was $228 million ($1.44 per share) compared to net income of $71 million ($0.41 per share) in FY 2012. Gross margin for FY 2013 was 33.7 percent compared to 33.5 percent in FY 2012.

“Regionally, with the exception of EMEA, our retail business has begun to stabilize,” said Bracken P. Darrell, Logitech president and chief executive officer. “In Europe, the combination of the difficult macro-economic environment and the very slow PC market stalled our business in Q4. For the rest of our retail business (Americas and Asia), sales of our mice and keyboards grew 6 percent, much better than the market for PCs, which was down globally nearly 14 percent year over year. I was also pleased with the strong momentum of our tablets accessories during the fourth quarter. We recently launched a version of our best-selling Ultrathin Keyboard Cover for the iPad mini as well as a range of new tablet folios.”

“In closing FY 2013, I believe we have taken appropriate actions to effect a turnaround,” said Mr. Darrell. “We have narrowed our strategic focus; restructured the company, including our LifeSize division; and prioritized our resources to create great new products for tablets. While the PC market continues to weigh upon parts of our business, and the ongoing economic uncertainty in much of Europe shows no signs of improvement, our product portfolio and indications of stabilization in the Americas and Asia, combined with the cost savings resulting from our FY 2013 restructuring initiatives, position us for improved profitability in FY 2014.”

Outlook

For Fiscal Year 2014, ending March 31, 2014, Logitech currently 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 Q4 FY 2013 on Thursday, April 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: improved profitability, the stabilization and turnaround of our business, momentum of our tablets accessories, new product development, and 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 Quarterly Report on Form 10-Q for the fiscal quarter ended December 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 March 31,
CONSOLIDATED STATEMENTS OF OPERATIONS   2013   2012
 
Net sales $ 469,087 $ 531,962
Cost of goods sold   312,129     338,075  
Gross profit   156,958     193,887  
% of net sales 33.5 % 36.4 %
 
Operating expenses:
Marketing and selling 107,480 100,302
Research and development 36,582 40,948
General and administrative 28,982 28,896
Impairment of goodwill and other assets 5,688 -
Restructuring charges   15,506     -  
Total operating expenses   194,238     170,146  
 
Operating income (loss) (37,280 ) 23,741
 
Interest income, net 255 466
Other income, net   2,139     6,481  
 
Income (loss) before income taxes (34,886 ) 30,688
Provision for income taxes   1,028     2,402  
 
Net income (loss) $ (35,914 ) $ 28,286  
 
Shares used to compute net income (loss) per share:
Basic 158,716 169,387
Diluted 158,716 170,401
Net income (loss) per share:
Basic $ (0.23 ) $ 0.17
Diluted $ (0.23 ) $ 0.17
 
 
LOGITECH INTERNATIONAL S.A.
   
(In thousands, except per share amounts) - Unaudited
 
Twelve Months Ended March 31,
CONSOLIDATED STATEMENTS OF OPERATIONS   2013   2012
 
Net sales $ 2,099,883 $ 2,316,203
Cost of goods sold   1,392,581     1,539,614  
Gross profit   707,302     776,589  
% of net sales 33.7 % 33.5 %
 
Operating expenses:
Marketing and selling 431,598 423,854
Research and development 153,922 162,331
General and administrative 113,824 118,423
Impairment of goodwill and other assets 216,688 -
Restructuring charges   43,704     -  
Total operating expenses   959,736     704,608  
 
Operating income (loss) (252,434 ) 71,981
 
Interest income, net 907 2,674
Other income (expense), net   (2,198 )   16,622  
 
Income (loss) before income taxes (253,725 ) 91,277
Provision for (benefit from) income taxes   (25,588 )   19,819  
 
Net income (loss) $ (228,137 ) $ 71,458  
 
Shares used to compute net income (loss) per share:
Basic 158,468 174,648
Diluted 158,468 175,591
Net income (loss) per share:
Basic $ (1.44 ) $ 0.41
Diluted $ (1.44 ) $ 0.41
 
 
LOGITECH INTERNATIONAL S.A.
   
(In thousands) - Unaudited
 
CONSOLIDATED BALANCE SHEETS   March 31, 2013   March 31, 2012
 
Current assets
Cash and cash equivalents $ 333,824 $ 478,370
Accounts receivable 179,565 223,104
Inventories 261,083 297,072
Other current assets 57,036 65,990
Assets held for sale   13,002   -
Total current assets 844,510 1,064,536
Non-Current assets
Property, plant and equipment 87,649 94,884
Goodwill 340,132 560,523
Other intangible assets 26,024 53,518
Other assets   75,796   83,033
Total assets $ 1,374,111 $ 1,856,494
 
Current liabilities
Accounts payable $ 265,995 $ 301,111
Accrued liabilities 185,848 186,680
Liabilities held for sale   1,342   -
Total current liabilities 453,185 487,791
Non-current liabilities   187,222   218,462
Total liabilities 640,407 706,253
 
Shareholders' equity 733,704 1,150,241
   
Total liabilities and shareholders' equity $ 1,374,111 $ 1,856,494
 
 
LOGITECH INTERNATIONAL S.A.
   
(In thousands) - Unaudited
 
Three Months Ended March 31,
CONSOLIDATED STATEMENTS OF CASH FLOWS   2013 2012
 
Cash flows from operating activities:
Net income (loss) $ (35,914 ) $ 28,286
Non-cash items included in net income (loss):
Depreciation 10,558 10,767
Amortization of other intangible assets 5,159 6,325
Impairment of goodwill and other assets 5,688 -
Investment impairment - -
Inventory valuation adjustment 4,970 -
Share-based compensation expense 6,539 8,149
Gain on disposal of property and plant - (4,063 )
Loss on sale of investments - 9
Excess tax benefits from share-based compensation - (4 )
Deferred income taxes and other 2,154 1,135
Changes in assets and liabilities, net of acquisitions:
Accounts receivable 86,238 92,371
Inventories 18,632 (901 )
Other assets 1,012 7,232
Accounts payable (75,962 ) (78,351 )
Accrued liabilities   (16,280 )   (28,981 )
Net cash provided by operating activities   12,794     41,974  
 
Cash flows from investing activities:
Purchases of property, plant and equipment (7,208 ) (16,390 )
Investment in privately-held company (450 ) -
Proceeds from sale of property and plant - 4,063
Purchases of trading investments (1,902 ) (1,928 )
Proceeds from sales of trading investments   2,154     1,879  
Net cash used in investing activities   (7,406 )   (12,376 )
 
Cash flows from financing activities:
Payment of cash dividends - -
Purchases of treasury shares - (82,902 )
Proceeds from sale of shares upon exercise of options and purchase rights 7,139 7,739
Tax withholdings related to net share settlements of restricted stock units (380 ) (76 )
Excess tax benefits from share-based compensation   -     4  
Net cash provided by (used) in financing activities   6,759     (75,235 )
 
Effect of exchange rate changes on cash and cash equivalents   (322 )   674  
Net increase (decrease) in cash and cash equivalents 11,825 (44,963 )
Cash and cash equivalents at beginning of period   321,999     523,333  
Cash and cash equivalents at end of period $ 333,824   $ 478,370  
 
 
LOGITECH INTERNATIONAL S.A.
   
(In thousands) - Unaudited
 
Twelve Months Ended March 31,
CONSOLIDATED STATEMENTS OF CASH FLOWS   2013 2012
 
Cash flows from operating activities:
Net income (loss) $ (228,137 ) $ 71,458
Non-cash items included in net income (loss):
Depreciation 44,419 45,968
Amortization of other intangible assets 23,073 26,534
Impairment of goodwill and other assets 216,688 -
Investment impairment 3,600 -
Inventory valuation adjustment 4,970 34,074
Share-based compensation expense 25,198 31,529
Gain on disposal of property and plant - (8,967 )
Gain on sale of investments (831 ) (6,109 )
Excess tax benefits from share-based compensation (26 ) (37 )
Deferred income taxes and other 11,552 137
Changes in assets and liabilities, net of acquisitions:
Accounts receivable 44,928 29,279
Inventories 20,076 (36,621 )
Other assets (1,189 ) (4,621 )
Accounts payable (36,289 ) 3,622
Accrued liabilities   (11,042 )   9,896  
Net cash provided by operating activities   116,990     196,142  
 
Cash flows from investing activities:
Purchases of property, plant and equipment (46,945 ) (47,807 )
Acquisitions, net of cash acquired - (18,814 )
Investment in privately-held companies (4,420 ) -
Proceeds from sale of property and plant - 8,967
Proceeds from sale of available-for-sale securities 917 6,550
Purchases of trading investments (4,196 ) (7,505 )
Proceeds from sales of trading investments   4,463     7,399  
Net cash used in investing activities   (50,181 )   (51,210 )
 
Cash flows from financing activities:
Payment of cash dividends (133,462 ) -
Purchases of treasury shares (89,955 ) (156,036 )
Proceeds from sale of shares upon exercise of options and purchase rights 15,982 17,591
Tax withholdings related to net share settlements of restricted stock units (2,375 ) (966 )
Excess tax benefits from share-based compensation   26     37  
Net cash used in financing activities   (209,784 )   (139,374 )
 
Effect of exchange rate changes on cash and cash equivalents   (1,571 )   (5,119 )
Net increase (decrease) in cash and cash equivalents (144,546 ) 439
Cash and cash equivalents at beginning of period   478,370     477,931  
Cash and cash equivalents at end of period $ 333,824   $ 478,370  
 
 
LOGITECH INTERNATIONAL S.A.
       
(In thousands, except per share amounts) - Unaudited
 
Quarter Ended Twelve Months Ended
March 31, March 31,
SUPPLEMENTAL FINANCIAL INFORMATION   2013   2012 2013   2012
 
Depreciation $ 10,558 $ 10,767 $ 44,419 $ 45,968
Amortization of other intangible assets 5,159 6,325 23,073 26,534
Capital expenditures 7,208 16,390 46,945 47,807
Impairment of goodwill and other assets 5,688 - 216,688 -
Restructuring charges 15,506 - 43,704 -
 
Total operating expenses - GAAP $ 194,238 $ 170,146 $ 959,736 $ 704,608
Less: Impairment of goodwill and other assets 5,688 - 216,688 -
Less: Restructuring charges   15,506     -     43,704     -  
Total operating expenses before impairment of goodwill and other assets and restructuring charges - Non-GAAP $ 173,044   $ 170,146   $ 699,344   $ 704,608  
 
Operating income (loss) - GAAP $ (37,280 ) $ 23,741 $ (252,434 ) $ 71,981
Less: Impairment of goodwill and other assets 5,688 - 216,688 -
Less: Restructuring charges   15,506     -     43,704     -  
Operating income (loss) before impairment of goodwill and other assets and restructuring charges - Non-GAAP $ (16,086 ) $ 23,741   $ 7,958   $ 71,981  
 
Income (loss) before income taxes - GAAP $ (34,886 ) $ 30,688 $ (253,725 ) $ 91,277
Less: Impairment of goodwill and other assets 5,688 - 216,688 -
Less: Restructuring charges   15,506     -     43,704     -  
Income (loss) before income taxes and impairment of goodwill and other assets and restructuring charges - Non-GAAP $ (13,692 ) $ 30,688   $ 6,667   $ 91,277  
 
Net income (loss) - GAAP $ (35,914 ) $ 28,286 $ (228,137 ) $ 71,458
Less: Impairment of goodwill and other assets 5,688 - 216,688 -
Less: Restructuring charges   15,506     -     43,704     -  
Net income (loss) before impairment of goodwill and other assets and restructuring charges - Non-GAAP $ (14,720 ) $ 28,286   $ 32,255   $ 71,458  
 
Net sales by channel:
Retail $ 407,690 $ 455,398 $ 1,821,657 $ 1,982,783
OEM 32,493 40,993 141,186 185,959
LifeSize   28,904     35,571     137,040     147,461  
Total net sales $ 469,087   $ 531,962   $ 2,099,883   $ 2,316,203  
-
 
Net retail sales by product family(**):
Retail - Pointing Devices $ 128,809 $ 132,335 $ 521,083 $ 559,366
Retail - Keyboards & Desktops 105,596 101,458 407,896 404,298
Retail - Tablet Accessories 30,783 7,128 119,804 43,693
Retail - Audio - PC 57,039 70,964 271,197 309,896
Retail - Audio - Wearables & Wireless 8,542 14,069 65,826 53,140
Retail - Video 41,063 50,017 179,340 216,387
Retail - PC Gaming 23,618 41,109 142,184 170,948
Retail - Remotes 11,382 16,895 71,641 91,000
Retail - Other   858     21,423     42,686     134,055  
Total net retail sales $ 407,690   $ 455,398   $ 1,821,657   $ 1,982,783  

__________________

* * 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 Twelve Months Ended
March 31, March 31,
Share-based Compensation Expense (*)   2013 2012 2013 2012
 
Cost of goods sold $ 398 $ 562 $ 2,499 $ 3,620
Marketing and selling 2,447 3,371 7,825 12,716
Research and development 1,513 1,823 7,532 7,187
General and administrative 2,181 2,393 7,342 8,006
Income tax benefit   (1,266 )   (1,699 )   (5,356 )   (6,294 )
Total share-based compensation expense after income taxes $ 5,273   $ 6,450   $ 19,842   $ 25,235  
 
Share-based compensation expense net of tax, per share (diluted) $ 0.03 $ 0.04 $ 0.13 $ 0.14

__________________

* Share-based compensation expense for the quarter ended March 31, 2013 and twelve months ended March 31, 2013 includes a reduction of $0 and $2.2m in expense applicable to employees terminated as a result of the restructuring plans announced in April 2012 and March 2013.

 

Constant dollar sales (sales excluding impact of exchange rate changes) and Non-GAAP operating income (loss), income (loss) before income taxes and net income (loss) (excluding the FY 2013 impairment and restructuring charges)

We refer to our net sales excluding the impact of foreign currency exchange rates as constant dollar sales. We also report non-GAAP operating expenses, operating income (loss), income (loss) before income taxes and net income (loss) in this press release and related materials, excluding the FY 2013 impairment of goodwill and other assets and restructuring charges. Constant dollar sales and non-GAAP operating expenses, operating income (loss), income (loss) before income taxes 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 expenses, operating income (loss), income (loss) before income taxes 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 expenses, operating income (loss), income (loss) before income taxes and net income (loss) before impairment of goodwill and other assets and restructuring charges can be reconciled to GAAP operating expenses, operating income (loss), income (loss) before income taxes and net income (loss), respectively, by adding the amount of the impairment and restructuring charges.

 

(LOGIIR)

Logitech International
Joe Greenhalgh
Vice President, Investor Relations – USA
510-713-4430
or
Nancy Morrison
Vice President, Corporate Communications – USA
510-713-4948
or
Laura Scorza
Sr. Public Relations Manager – Europe
+41-(0) 21-863-5336