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8-K - 8-K - LOGITECH INTERNATIONAL S.A.a14-11005_18k.htm

Exhibit 99.1

 

For Immediate 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’s Q4 FY 2014 Sales, Profit and Cash from Operations Exceed Expectations

 

Strong FY 2014 Puts Logitech Ahead of Turnaround Plan

 

NEWARK, Calif. April 23, 2014 and LAUSANNE, Switzerland, April 24, 2014 — Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the fourth quarter and full year of Fiscal Year 2014.  Q4 FY 2014 sales were $485 million, up 3 percent over the prior year.

 

·                  Q4 GAAP operating income was $7 million, with GAAP earnings per share (EPS) of $0.07, compared to a loss a year ago.

 

·                  Q4 non-GAAP operating income was $23 million, with non-GAAP EPS of $0.14, compared to $0.01 in the same quarter a year ago.

 

For the full 2014 fiscal year ended March 31, 2014, sales were $2.12 billion, up 1 percent year over year — the Company’s first year of sales growth since FY 2011.

 



 

·                  FY 2014 GAAP operating income was $77 million, with GAAP EPS of $0.46, compared to an operating loss in the prior year.

 

·                  FY 2014 non-GAAP operating income more than doubled to $140 million, with non-GAAP EPS of $0.76, up from $0.31 a year ago.

 

·                  Cash flow from operations on a trailing twelve-month basis was $202 million, up 72 percent.

 

“Our Q4 performance was strong, with sales, profit and cash generation better than expected,” said Bracken Darrell, Logitech president and chief executive officer. “Q4 sales in our Growth category — PC Gaming, Tablet and Other Accessories, and Mobile Speakers — were up nearly 50 percent.

 

At the start of our fiscal year we said we would deliver strong sales in our Growth category, reduce operating expenses and improve profitability. We delivered on our commitments across the board, concluding FY 2014 ahead of our turnaround plan.”

 

Outlook

 

Logitech confirmed its current FY 2015 outlook of $2.16 billion in sales and $145 million in non-GAAP operating income.

 

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, in the Calendar section.

 

Financial Results Teleconference and Webcast

 

Logitech will hold a financial results teleconference to discuss the results for Q4 and full-year FY 2014 on Thurs., April 24, 2014 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.

 



 

Use of Non-GAAP Financial Information

 

To facilitate comparisons to Logitech’s historical results, Logitech has included non-GAAP adjusted measures, which exclude share-based compensation expense, amortization of other intangible assets, restructuring charges (credits), other restructuring-related charges, investment impairment (recovery), benefit from (provision for) income taxes and other items detailed under “Supplemental Financial Information” after the tables below. Logitech believes this information will help investors to evaluate its current period performance and trends in its business. With respect to our outlook for non-GAAP operating income, most of these excluded amounts pertain to events that have not yet occurred and are not currently possible to estimate with a reasonable degree of accuracy. Therefore, no reconciliation to GAAP amount has been provided for FY 2015.

 

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 and growth categories, as well as Fiscal Year 2015 revenue and operating income. 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, 2013 and our Amended Annual Report on Form 10-K/A 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.

 

Note that unless noted otherwise, comparisons are year over year.

 



 

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

 

 

 

Three Months Ended

 

Fiscal Years Ended

 

 

 

March 31,

 

March 31,

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

(A)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

485,259

 

$

469,086

 

$

2,123,045

 

$

2,099,883

 

Cost of goods sold

 

320,298

 

309,854

 

1,392,954

 

1,389,726

 

Gross profit

 

164,961

 

159,232

 

730,091

 

710,157

 

% of net sales

 

34.0

%

33.9

%

34.4

%

33.8

%

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Marketing and selling

 

92,081

 

107,481

 

380,050

 

431,598

 

Research and development

 

30,893

 

36,582

 

138,820

 

154,207

 

General and administrative

 

29,885

 

28,982

 

119,988

 

113,824

 

Goodwill impairment

 

 

5,688

 

 

216,688

 

Restructuring charges, net

 

5,385

 

15,506

 

14,006

 

43,704

 

Total operating expenses

 

158,244

 

194,239

 

652,864

 

960,021

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

6,717

 

(35,007

)

77,227

 

(249,864

)

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

465

 

256

 

(397

)

907

 

Other income (expense), net

 

625

 

2,140

 

1,986

 

(2,198

)

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

7,807

 

(32,611

)

78,816

 

(251,155

)

Provision for (benefit from) income taxes

 

(3,777

)

1,028

 

3,288

 

(25,588

)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

11,584

 

$

(33,639

)

$

75,528

 

$

(225,567

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

$

(0.21

)

$

0.47

 

$

(1.42

)

Diluted

 

$

0.07

 

$

(0.21

)

$

0.46

 

$

(1.42

)

Shares used to compute net income (loss) per share :

 

 

 

 

 

 

 

 

 

Basic

 

162,255

 

158,716

 

160,619

 

158,468

 

Diluted

 

165,766

 

158,716

 

162,526

 

158,468

 

 



 

LOGITECH INTERNATIONAL S.A.

 

(In thousands) - Unaudited

 

 

 

March 31,

 

March 31,

 

CONSOLIDATED BALANCE SHEETS

 

2014

 

2013

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

469,412

 

$

333,824

 

Accounts receivable, net

 

177,671

 

179,565

 

Inventories

 

229,871

 

261,083

 

Other current assets

 

58,247

 

58,103

 

Assets held for sale

 

 

10,960

 

Total current assets

 

935,201

 

843,535

 

Non-current assets:

 

 

 

 

 

Property, plant and equipment, net

 

83,990

 

87,649

 

Goodwill

 

345,010

 

341,357

 

Other intangible assets

 

10,529

 

26,024

 

Other assets

 

73,964

 

75,098

 

Total assets

 

$

1,448,694

 

$

1,373,663

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

245,572

 

$

265,995

 

Accrued and other current liabilities

 

218,139

 

192,774

 

Liabilities held for sale

 

 

3,202

 

Total current liabilities

 

463,711

 

461,971

 

Non-current liabilities:

 

189,439

 

195,882

 

Total liabilities

 

653,150

 

657,853

 

 

 

 

 

 

 

Total shareholders’ equity

 

795,544

 

715,810

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,448,694

 

$

1,373,663

 

 



 

LOGITECH INTERNATIONAL S.A.

 

(In thousands) - Unaudited

 

 

 

Three Months Ended

 

Fiscal Years Ended

 

 

 

March 31,

 

March 31,

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

(A)

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

11,584

 

$

(33,639

)

$

75,528

 

$

(225,567

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation

 

14,978

 

10,558

 

43,734

 

44,419

 

Amortization of other intangible assets

 

2,781

 

5,159

 

17,771

 

23,571

 

Share-based compensation expense

 

8,134

 

6,539

 

25,546

 

25,198

 

Goodwill impairment

 

 

5,688

 

 

216,688

 

Impairment of investment

 

56

 

 

624

 

3,600

 

Loss on disposal of property, plant and equipment

 

533

 

 

4,411

 

 

Gain on sale of securities

 

 

 

 

(831

)

Excess tax benefits from share-based compensation

 

(1,674

)

 

(2,246

)

(26

)

Deferred income taxes and other

 

(815

)

2,154

 

(4,374

)

11,552

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

134,998

 

86,238

 

4,733

 

44,667

 

Inventories

 

27,361

 

23,602

 

42,013

 

23,954

 

Other assets

 

2,227

 

1,012

 

(741

)

(1,420

)

Accounts payable

 

(83,182

)

(75,962

)

(20,251

)

(34,069

)

Accrued and other liabilities

 

(23,007

)

(18,555

)

15,111

 

(14,594

)

Net cash provided by operating activities

 

93,974

 

12,794

 

201,859

 

117,142

 

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(11,000

)

(7,208

)

(43,096

)

(49,240

)

Purchase of strategic investment

 

(300

)

(450

)

(300

)

(4,420

)

Acquisitions, net of cash acquired

 

 

 

(650

)

 

Proceeds from sales of available-for-sale securities

 

 

 

 

917

 

Proceeds from return of investment from strategic investments

 

 

 

261

 

 

Purchases of trading investments for deferred compensation plan

 

(619

)

(1,902

)

(8,450

)

(4,196

)

Proceeds from sales of trading investments for deferred compensation plan

 

683

 

2,154

 

8,994

 

4,463

 

Net cash used in investing activities

 

(11,236

)

(7,406

)

(43,241

)

(52,476

)

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

 

Payment of cash dividends

 

 

 

(36,123

)

(133,462

)

Purchases of treasury shares

 

 

 

 

(87,812

)

Proceeds from sales of shares upon exercise of options and purchase rights

 

8,457

 

7,139

 

16,922

 

15,982

 

Tax withholdings related to net share settlements of restricted stock units

 

(2,789

)

(380

)

(5,726

)

(2,375

)

Excess tax benefits from share-based compensation

 

1,674

 

 

2,246

 

26

 

Net cash provided by (used in) financing activities

 

7,342

 

6,759

 

(22,681

)

(207,641

)

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(533

)

(322

)

(349

)

(1,571

)

Net increase (decrease) in cash and cash equivalents

 

89,547

 

11,825

 

135,588

 

(144,546

)

Cash and cash equivalents, beginning of the period

 

379,865

 

321,999

 

333,824

 

478,370

 

Cash and cash equivalents, end of the period

 

$

469,412

 

$

333,824

 

$

469,412

 

$

333,824

 

 



LOGITECH INTERNATIONAL S.A.

 

(In thousands, except per share amounts) - Unaudited

 

 

 

Three Months Ended

 

Fiscal Years Ended

 

 

 

March 31,

 

March 31,

 

SUPPLEMENTAL FINANCIAL INFORMATION (B)

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

(A)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit - GAAP

 

$

164,961

 

$

159,232

 

$

730,091

 

$

710,157

 

Share-based compensation expense

 

675

 

398

 

2,518

 

2,499

 

Amortization of other intangible assets

 

549

 

2,534

 

7,910

 

13,280

 

Restructuring-related charges

 

 

1,084

 

5,194

 

4,399

 

Gross profit - Non-GAAP

 

$

166,185

 

$

163,248

 

$

745,713

 

$

730,335

 

 

 

 

 

 

 

 

 

 

 

Gross margin - GAAP

 

34.0

%

33.9

%

34.4

%

33.8

%

Gross margin - Non-GAAP

 

34.2

%

34.8

%

35.1

%

34.8

%

 

 

 

 

 

 

 

 

 

 

Operating expenses - GAAP

 

$

158,244

 

$

194,239

 

$

652,864

 

$

960,021

 

Less: Share-based compensation expense

 

7,459

 

6,141

 

23,028

 

22,699

 

Amortization of other intangible assets

 

2,232

 

2,625

 

9,861

 

10,291

 

Goodwill impairment

 

 

5,688

 

 

216,688

 

Restructuring charges, net

 

5,385

 

15,506

 

14,006

 

43,704

 

Restructuring-related charges

 

 

997

 

 

2,943

 

Operating expenses - Non-GAAP

 

$

143,168

 

$

163,282

 

$

605,969

 

$

663,696

 

 

 

 

 

 

 

 

 

 

 

% of net sales - GAAP

 

32.6

%

41.4

%

30.8

%

45.7

%

% of net sales - Non - GAAP

 

29.5

%

34.8

%

28.5

%

31.6

%

 

 

 

 

 

 

 

 

 

 

Operating expenses - GAAP

 

$

158,244

 

$

194,239

 

$

652,864

 

$

960,021

 

Less: Restructuring charges, net

 

5,385

 

15,506

 

14,006

 

43,704

 

Operating expenses excluding restructuring charges - Non-GAAP

 

$

152,859

 

$

178,733

 

$

638,858

 

$

916,317

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) - GAAP

 

$

6,717

 

$

(35,007

)

$

77,227

 

$

(249,864

)

Share-based compensation expense

 

8,134

 

6,539

 

25,546

 

25,198

 

Amortization of other intangible assets

 

2,781

 

5,159

 

17,771

 

23,571

 

Goodwill Impairment

 

 

5,688

 

 

216,688

 

Restructuring charges, net

 

5,385

 

15,506

 

14,006

 

43,704

 

Restructuring-related charges

 

 

2,081

 

5,194

 

7,342

 

Operating income (loss) - Non - GAAP

 

$

23,017

 

$

(34

)

$

139,744

 

$

66,639

 

 

 

 

 

 

 

 

 

 

 

% of net sales - GAAP

 

1.4

%

-7.5

%

3.6

%

-11.9

%

% of net sales - Non - GAAP

 

4.7

%

0.0

%

6.6

%

3.2

%

 

 

 

 

 

 

 

 

 

 

Net income (loss) - GAAP

 

$

11,584

 

$

(33,639

)

$

75,528

 

$

(225,567

)

Share-based compensation expense

 

8,134

 

6,539

 

25,546

 

25,198

 

Amortization of other intangible assets

 

2,781

 

5,159

 

17,771

 

23,571

 

Goodwill impairment

 

 

5,688

 

 

216,688

 

Restructuring charges, net

 

5,385

 

15,506

 

14,006

 

43,704

 

Restructuring-related charges

 

 

2,081

 

5,194

 

7,342

 

Investment impairment, net

 

56

 

 

203

 

3,600

 

Benefit from (provision for) income taxes

 

(5,216

)

381

 

(15,387

)

(44,510

)

Net income - Non - GAAP

 

22,724

 

1,715

 

122,861

 

50,026

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

Diluted - GAAP

 

$

0.07

 

$

(0.21

)

$

0.46

 

$

(1.42

)

Diluted - Non - GAAP

 

$

0.14

 

$

0.01

 

$

0.76

 

$

0.31

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute net income (loss) per share:

 

 

 

 

 

 

 

 

 

Diluted - GAAP

 

165,766

 

158,716

 

162,526

 

158,468

 

Diluted - Non-GAAP

 

165,766

 

159,565

 

162,526

 

159,445

 

 

 

 

 

 

 

 

 

 

 

Net sales by channel:

 

 

 

 

 

 

 

 

 

Retail

 

$

420,013

 

$

407,689

 

$

1,861,493

 

$

1,821,657

 

OEM

 

35,168

 

32,493

 

141,749

 

141,186

 

Video conferencing

 

30,078

 

28,904

 

119,803

 

137,040

 

Total net sales

 

$

485,259

 

$

469,086

 

$

2,123,045

 

$

2,099,883

 

 

 

 

 

 

 

 

 

 

 

Net retail sales by product family(*):

 

 

 

 

 

 

 

 

 

PC Gaming

 

$

44,796

 

$

24,096

 

$

186,441

 

$

144,512

 

Tablet & Other Accessories

 

22,692

 

30,766

 

172,955

 

119,856

 

Mobile Speakers

 

19,154

 

3,799

 

87,186

 

33,408

 

Growth

 

86,642

 

58,661

 

446,582

 

297,776

 

Pointing Devices

 

118,586

 

128,809

 

505,650

 

521,083

 

PC Keyboards & Desktops

 

102,230

 

105,176

 

414,185

 

399,144

 

Audio-PC &Wearables

 

59,849

 

61,064

 

254,931

 

292,245

 

Video

 

30,857

 

36,225

 

136,597

 

153,060

 

Remotes

 

13,124

 

11,382

 

67,075

 

71,641

 

Profit Maximization

 

324,646

 

342,656

 

1,378,438

 

1,437,173

 

Other

 

8,725

 

6,372

 

36,473

 

86,708

 

Non-Strategic

 

8,725

 

6,372

 

36,473

 

86,708

 

Total net retail sales

 

$

420,013

 

$

407,689

 

$

1,861,493

 

$

1,821,657

 

 


*

 

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.

 

Share-based Compensation Expense

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

$

675

 

$

398

 

$

2,518

 

$

2,499

 

Research and development

 

706

 

1,514

 

4,546

 

7,532

 

Marketing and selling

 

2,318

 

2,448

 

8,298

 

7,825

 

General and administrative

 

4,435

 

2,179

 

10,184

 

7,342

 

Income tax benefit

 

(2,559

)

(1,266

)

(4,902

)

(5,356

)

Total share-based compensation expense after income taxes

 

$

5,575

 

$

5,273

 

$

20,644

 

$

19,842

 

 



 

(A)       In the first quarter of fiscal year 2014, the Company identified errors related to the accounting for its product warranty liability, amortization expense of certain intangible assets and other out-of-period adjustments. The errors impacted prior reporting periods, starting prior to fiscal year 2009. While these errors are not material to any previously issued annual or quarterly consolidated financial statements, management concluded that correcting the cumulative errors and related tax effects, which amounted to $19.1 million, in the first quarter of fiscal year 2014 would be material to the consolidated financial statements for the first quarter of fiscal year 2014 and to the expected results of operations for the fiscal year ending March 31, 2014.  Accordingly, the Company revised its prior period annual and quarterly consolidated financial statements as reflected in this earnings release.

 

(B)       Non-GAAP Financial Measures

 

To supplement our condensed consolidated financial results prepared in accordance with GAAP, we use a number of financial measures, both GAAP and non-GAAP, in analyzing and assessing our overall business performance, for making operating decisions and for forecasting and planning future periods. We consider the use of non-GAAP financial measures helpful in assessing our current financial performance, ongoing operations and prospects for the future as well as understanding financial and business trends relating to our financial condition and results of operations.

 

While we use non-GAAP financial measures as a tool to enhance our understanding of certain aspects of our financial performance and to provide incremental insight into the underlying factors and trends affecting both our performance and our cash-generating potential, we do not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides useful supplemental data that, while not a substitute for GAAP financial measures, can offer insight in the review of our financial and operational performance and enables investors to more fully understand trends in our current and future performance. In assessing our business during the three months and fiscal years ended March 31, 2013 and 2014, we excluded items in the following general categories, each of which are described below:

 

Share-based compensation expenses. We believe that providing non-GAAP measures excluding share-based compensation expense, in addition to the GAAP measures, allows for a more transparent comparison of our financial results from period to period. We prepare and maintain our budgets and forecasts for future periods on a basis consistent with this non-GAAP financial measure. Further, companies use a variety of types of equity awards as well as a variety of methodologies, assumptions and estimates to determine share-based compensation expense. We believe that excluding share-based compensation expense enhances our ability and the ability of investors to understand the impact of non-cash share-based compensation on our operating results and to compare our results against the results of other companies.

 

Amortization of other intangible assets. We incur intangible asset amortization expense, primarily in connection with our acquisitions of various businesses and technologies. The amortization of purchased intangibles varies depending on the level of acquisition activity. We exclude these various charges in budgeting, planning and forecasting future periods and we believe that providing the non-GAAP measures excluding these various non-cash charges, as well as the GAAP measures, provides additional insight when comparing our operating expenses and financial results from period to period.

 

Restructuring and restructuring-related charges. These expenses are associated with re-aligning our business strategies based on current economic conditions. We have undertaken several restructurings in recent years. In connection with our restructuring initiatives, we incurred restructuring charges related to employee terminations, facility closures and early cancellation of certain contracts. Our restructuring initiatives also resulted in other costs related to restructurings not qualifying for inclusion in restructuring charges. We believe that providing the non-GAAP measures excluding these charges, as well as the GAAP measures, assists our investors because such charges are not reflective of our ongoing operating results in the current period.

 

Income taxes.  Our historical non-GAAP effective tax rates differ from our GAAP effective tax rates from period to period because non-GAAP income tax expense or benefit excludes the tax impact of certain GAAP financial measures for the reasons stated above.  We also exclude the tax impact of certain events that management believes are not indicative of our ongoing operating results.

 

Impairment of investment and goodwill. We provided non-GAAP measures excluding the impairment of investment and goodwill that are not reflective of our ongoing operations.

 

Each of the non-GAAP financial measures described above, and used in this press release, should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of each of these non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and may be reflected in the Company’s financial results for the foreseeable future. We compensate for these limitations by providing specific information in the reconciliation included in this press release regarding the GAAP amounts excluded from the non-GAAP financial measures. In addition, as noted above, we evaluate the non-GAAP financial measures together with the most directly comparable GAAP financial information.