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8-K - 8-K - LOGITECH INTERNATIONAL S.A.a13-3518_18k.htm

Exhibit 99.1

 

 

For Immedate Release

 

Editorial Contacts:

Joe Greenhalgh, Vice President, Investor Relations — USA (510) 713-4430

Nancy Morrison, Vice President, Corporate Communications — USA (510) 713-4948

Laura Scorza, Sr. Public Relations Manager — Europe +41-(0) 21-863-5336

 

Logitech Announces Third Quarter Results for FY 2013

New CEO Outlines Strategic Priorities

 

NEWARK, Calif. Jan. 23, 2013 and MORGES, Switzerland, Jan. 24, 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.

 



 

Logitech Announces Q3 FY 2013 Results Page 2

 

“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.

 

(LOGIIR)

 



 

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

)

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 of options and purchase rights

 

(165

)

88

 

Tax withholdings related to net share settlements of restricted stock units

 

(1,360

)

(705

)

Excess tax benefits from share-based compensation

 

4

 

3

 

Net cash used in financing activities

 

(1,521

)

(614

)

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

576

 

(4,048

)

Net increase in cash and cash equivalents

 

84,966

 

143,883

 

Cash and cash equivalents at beginning of period

 

237,033

 

379,450

 

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 compensation

 

(26

)

(33

)

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 securities

 

917

 

6,550

 

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 options and purchase rights

 

8,843

 

9,852

 

Tax withholdings related to net share settlements of restricted stock units

 

(1,995

)

(890

)

Excess tax benefits from share-based compensation

 

26

 

33

 

Net cash used in financing activities

 

(216,543

)

(64,139

)

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(1,249

)

(5,793

)

Net increase (decrease) in cash and cash equivalents

 

(156,371

)

45,402

 

Cash and cash equivalents at beginning of period

 

478,370

 

477,931

 

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 INFORMATION

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

$

11,554

 

$

10,608

 

$

33,861

 

$

35,201

 

Amortization of other intangible assets

 

5,657

 

6,653

 

17,914

 

20,209

 

Goodwill impairment

 

211,000

 

 

211,000

 

 

Operating income (loss)

 

(180,017

)

69,777

 

(215,152

)

48,240

 

Operating income (loss) before depreciation and amortization

 

(162,806

)

87,038

 

(163,377

)

103,650

 

Operating income (loss) before goodwill impairment

 

30,983

 

69,777

 

(4,152

)

48,240

 

Income (loss) before income taxes

 

(183,573

)

77,407

 

(218,839

)

60,589

 

Income (loss) before income taxes and goodwill impairment

 

27,427

 

77,407

 

(7,839

)

60,589

 

Net income (loss)

 

(194,943

)

55,333

 

(192,223

)

43,172

 

Net income before goodwill impairment

 

16,057

 

55,333

 

18,777

 

43,172

 

Capital expenditures

 

9,215

 

10,497

 

39,737

 

31,417

 

 

 

 

 

 

 

 

 

 

 

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 Devices

 

$

153,921

 

$

171,920

 

$

392,274

 

$

427,031

 

Retail - Keyboards & Desktops

 

110,671

 

117,507

 

302,299

 

302,840

 

Retail - Tablet Accessories

 

39,398

 

17,976

 

89,021

 

36,565

 

Retail - Audio - PC

 

75,366

 

92,766

 

214,158

 

238,932

 

Retail - Audio - Wearables & Wireless

 

23,577

 

23,233

 

57,284

 

39,071

 

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 sales

 

$

542,388

 

$

630,873

 

$

1,413,968

 

$

1,527,385

 

 


* * 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 Expense *

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

$

704

 

$

948

 

$

2,101

 

$

3,058

 

Marketing and selling

 

953

 

2,380

 

5,377

 

9,345

 

Research and development

 

2,430

 

1,802

 

6,018

 

5,364

 

General and administrative

 

1,135

 

1,797

 

5,163

 

5,613

 

Income tax benefit

 

(1,043

)

70

 

(4,090

)

(4,595

)

Total share-based compensation expense after income taxes

 

$

4,179

 

$

6,997

 

$

14,569

 

$

18,785

 

 


* 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 can be reconciled to GAAP operating income (loss) by adding the amounts of depreciation and amortization of other intangible assets.