Logitech International (SIX:LOGN)(Nasdaq:LOGI) today announced
preliminary unaudited and unreviewed financial results for the first
quarter of Fiscal Year 2015.
-
Q1 sales were $484 million, up 1 percent over the prior year, with
retail sales up 3 percent.
-
Q1 GAAP operating income was $25 million, with GAAP earnings per share
(EPS) of $0.13, compared to $0.01 in the same quarter a year ago.
-
Q1 non-GAAP operating income was $44 million, with non-GAAP EPS of
$0.23, compared to $0.07 a year ago.
-
Q1 cash flow from operations was approximately $28 million.
“We have started the new fiscal year with a strong Q1 performance,
delivering sales growth, year-over-year improvement in profitability and
improved cash generation,” said Bracken Darrell, Logitech president and
chief executive officer. “Q1 sales in our Growth category – which
includes PC Gaming, Tablet and Other Accessories, and Mobile Speakers –
were up 17 percent, with Mobile Speakers sales more than doubling over
last year. As planned, our cost reduction actions continue to drive
increased operating leverage. As we proceed through Fiscal Year 2015, we
will continue to focus both on accelerating sales growth and on
achieving our improved outlook for profitability.”
Outlook
For Fiscal Year 2015, Logitech confirmed its outlook of $2.16 billion in
sales and raised its outlook for non-GAAP operating income from $145
million to approximately $170 million.
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
preliminary results for Q1 FY 2015 on July 24, 2014 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.
Update on Audit Committee Investigation
As previously disclosed, Logitech’s Audit Committee, with the assistance
of independent advisors, is conducting an independent investigation of
certain accounting matters related to the Company’s previously issued
financial statements. Related to the Audit Committee’s investigation,
the Company is performing additional work associated with its Fiscal
Year 2014 Annual Report on Form 10-K, which might result in adjustments
to the previously issued financial statements. The Audit Committee has
not reached any conclusion because the investigation is ongoing.
In addition, preliminary financial information for the first quarter of
Fiscal Year 2015 was compiled by the Company and has not yet been
reviewed by the Company’s independent registered public accounting firm.
The financial information for the first quarter of Fiscal Year 2015 may
be subject to adjustment. This depends on the outcome of the Audit
Committee’s investigation as well as changes in reserves and estimates
resulting from subsequent events and other information available through
the filing date of the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2014.
Accordingly, the preliminary results for the first quarter of Fiscal
Year 2015 and the results for the corresponding period of Fiscal Year
2014 contained in this press release may be subject to potentially
material adjustment. Until the investigation and related additional work
are complete, Logitech will be unable to file its Annual Report on Form
10-K for the year ended March 31, 2014 and also expects to delay the
filing of its Quarterly Report on Form 10-Q for the quarter ended June
30, 2014. Complete financial information for the first quarter of Fiscal
Year 2015, including balance sheet and cash flow statement, will be
provided when the Company files its Quarterly Report on Form 10-Q.
Also related to the investigation, Logitech has asked the SIX Swiss
Exchange for an extension to the July 31, 2014 filing deadline for the
Company’s annual report, and the Company expects to postpone the Annual
General Meeting, which would have been held in September 2014.
Logitech continues to devote significant resources to complete and file
all required periodic reports with the SEC and SIX Swiss Exchange as
soon as possible following completion of the investigation.
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 the Company’s 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 Fiscal Year 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 preliminary first quarter financial
results, the Company’s ability to increase operating leverage,
accelerate sales growth and achieve its outlook for profitability, 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: the results of the Audit
Committee’s investigation and the completion of the additional work
related to the Company’s Fiscal Year 2014 Annual Report on Form 10-K;
any adjustments resulting from the review of the preliminary financial
results for the first quarter of Fiscal Year 2015 by the Company’s
independent auditors or from the review of subsequent events, including
reserves and estimates, through the dates of filing the Fiscal Year 2014
Annual Report on Form 10-K and the Fiscal Year 2015 First Quarter
Quarterly Report on Form 10-Q; 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 or our
growth opportunities are more limited than we expect; 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 we do not fully realize our goals to
lower our costs and improve our operating leverage; 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; the effect of changes to our effective income tax 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.
|
LOGITECH INTERNATIONAL S.A.
|
|
|
|
|
|
|
|
The following financial statements and supplemental information
may be subject to potentially material adjustment.
|
|
|
|
|
|
|
|
(In thousands, except per share amounts) -Unaudited
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
2014 (1)(2)
|
|
|
2013 (1)
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
483,722
|
|
|
|
$
|
477,924
|
|
Cost of goods sold
|
|
|
|
299,565
|
|
|
|
|
309,569
|
|
Gross profit
|
|
|
|
184,157
|
|
|
|
|
168,355
|
|
% of net sales
|
|
|
|
38.1
|
%
|
|
|
|
35.2
|
%
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
Marketing and selling
|
|
|
|
90,955
|
|
|
|
|
100,635
|
|
Research and development
|
|
|
|
31,081
|
|
|
|
|
36,191
|
|
General and administrative
|
|
|
|
36,654
|
|
|
|
|
29,148
|
|
Restructuring charges, net
|
|
|
|
-
|
|
|
|
|
2,334
|
|
Total operating expenses
|
|
|
|
158,690
|
|
|
|
|
168,308
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
25,467
|
|
|
|
|
47
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
|
258
|
|
|
|
|
(23
|
)
|
Other income (expense), net
|
|
|
|
(223
|
)
|
|
|
|
217
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
25,502
|
|
|
|
|
241
|
|
Provision for (benefit from) income taxes
|
|
|
|
3,470
|
|
|
|
|
(802
|
)
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
22,032
|
|
|
|
$
|
1,043
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.14
|
|
|
|
$
|
0.01
|
|
Diluted
|
|
|
$
|
0.13
|
|
|
|
$
|
0.01
|
|
Shares used to compute net income per share :
|
|
|
|
|
|
|
Basic
|
|
|
|
163,012
|
|
|
|
|
159,298
|
|
Diluted
|
|
|
|
165,833
|
|
|
|
|
160,281
|
|
|
|
|
|
|
|
|
|
|
|
|
LOGITECH INTERNATIONAL S.A.
|
|
|
|
|
|
|
|
The following financial statements and supplemental information
may be subject to potentially material adjustment.
|
|
|
|
|
|
|
|
(In thousands, except per share amounts) - Unaudited
|
|
|
|
|
|
|
|
NET RETAIL SALES BY PRODUCT CATEGORY
|
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
SUPPLEMENTAL FINANCIAL INFORMATION
|
|
|
2014 (1)(2)
|
|
|
2013 (1)
|
|
|
|
|
|
|
|
Net retail sales by product category (*):
|
|
|
|
|
|
|
PC Gaming
|
|
|
$
|
46,892
|
|
|
|
$
|
40,213
|
|
Tablet & Other Accessories
|
|
|
|
32,808
|
|
|
|
|
38,559
|
|
Mobile Speakers
|
|
|
|
28,942
|
|
|
|
|
13,867
|
|
Growth
|
|
|
|
108,642
|
|
|
|
|
92,639
|
|
Pointing Devices
|
|
|
|
113,245
|
|
|
|
|
114,651
|
|
PC Keyboards & Desktops
|
|
|
|
106,100
|
|
|
|
|
98,013
|
|
Audio-PC &Wearables
|
|
|
|
49,653
|
|
|
|
|
55,538
|
|
Video
|
|
|
|
34,050
|
|
|
|
|
30,940
|
|
Remotes
|
|
|
|
12,431
|
|
|
|
|
14,574
|
|
Profit Maximization
|
|
|
|
315,479
|
|
|
|
|
313,716
|
|
Other
|
|
|
|
1,299
|
|
|
|
|
6,882
|
|
Non-Strategic
|
|
|
|
1,299
|
|
|
|
|
6,882
|
|
Total net retail sales
|
|
|
$
|
425,420
|
|
|
|
$
|
413,237
|
|
|
|
|
|
|
|
|
Net sales by channel:
|
|
|
|
|
|
|
Retail
|
|
|
$
|
425,420
|
|
|
|
$
|
413,237
|
|
OEM
|
|
|
|
32,545
|
|
|
|
|
34,513
|
|
Video conferencing
|
|
|
|
25,757
|
|
|
|
|
30,174
|
|
Total net sales
|
|
|
$
|
483,722
|
|
|
|
$
|
477,924
|
|
__________________
|
|
|
|
|
|
|
* Certain products within the retail product categories 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.
|
|
LOGITECH INTERNATIONAL S.A.
|
|
|
|
|
|
|
|
|
The following financial statements and supplemental information
may be subject to potentially material adjustment. Please see notes
below the tables.
|
|
|
|
|
|
|
|
|
(In thousands, except per share amounts) - Unaudited
|
|
|
|
|
|
|
|
|
GAAP TO NON GAAP RECONCILIATION (A):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
June 30,
|
SUPPLEMENTAL FINANCIAL INFORMATION
|
|
2014 (1)(2)
|
|
|
2013 (1)
|
|
|
|
|
|
|
|
|
Gross profit - GAAP
|
|
|
$
|
184,157
|
|
|
|
$
|
168,355
|
|
Share-based compensation expense
|
|
|
538
|
|
|
|
|
577
|
|
Amortization of other intangible assets
|
|
|
550
|
|
|
|
|
2,578
|
|
Gross profit - Non-GAAP
|
|
|
$
|
185,245
|
|
|
|
$
|
171,510
|
|
|
|
|
|
|
|
|
|
Gross margin - GAAP
|
|
|
|
38.1
|
%
|
|
|
|
35.2
|
%
|
Gross margin - Non-GAAP
|
|
|
|
38.3
|
%
|
|
|
|
35.9
|
%
|
|
|
|
|
|
|
|
|
Operating expenses - GAAP
|
|
|
$
|
158,690
|
|
|
|
$
|
168,308
|
|
Less: Share-based compensation expense
|
|
|
6,400
|
|
|
|
|
3,813
|
|
Amortization of other intangible assets
|
|
|
2,232
|
|
|
|
|
2,686
|
|
Restructuring charges, net
|
|
|
-
|
|
|
|
|
2,334
|
|
One time special charge
|
|
|
|
8,700
|
|
|
|
|
-
|
|
Operating expenses - Non-GAAP
|
|
$
|
141,358
|
|
|
|
$
|
159,475
|
|
|
|
|
|
|
|
|
|
% of net sales - GAAP
|
|
|
|
32.8
|
%
|
|
|
|
35.2
|
%
|
% of net sales - Non - GAAP
|
|
|
|
29.2
|
%
|
|
|
|
33.4
|
%
|
|
|
|
|
|
|
|
|
Operating expenses - GAAP
|
|
|
$
|
158,690
|
|
|
|
$
|
168,308
|
|
Less: Restructuring charges, net
|
|
|
-
|
|
|
|
|
2,334
|
|
Operating expenses excluding restructuring charges - Non-GAAP
|
|
$
|
158,690
|
|
|
|
$
|
165,974
|
|
|
|
|
|
|
|
|
|
Operating income - GAAP
|
|
|
$
|
25,467
|
|
|
|
$
|
47
|
|
Share-based compensation expense
|
|
|
6,938
|
|
|
|
|
4,390
|
|
Amortization of other intangible assets
|
|
|
2,782
|
|
|
|
|
5,264
|
|
Restructuring charges, net
|
|
|
|
-
|
|
|
|
|
2,334
|
|
One time special charge
|
|
|
|
8,700
|
|
|
|
|
-
|
|
Operating income - Non - GAAP
|
|
$
|
43,887
|
|
|
|
$
|
12,035
|
|
|
|
|
|
|
|
|
|
% of net sales - GAAP
|
|
|
|
5.3
|
%
|
|
|
|
0.0
|
%
|
% of net sales - Non - GAAP
|
|
|
|
9.1
|
%
|
|
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
Net income - GAAP
|
|
|
$
|
22,032
|
|
|
|
$
|
1,043
|
|
Share-based compensation expense
|
|
|
6,938
|
|
|
|
|
4,390
|
|
Amortization of other intangible assets
|
|
|
2,782
|
|
|
|
|
5,264
|
|
Restructuring charges, net
|
|
|
|
-
|
|
|
|
|
2,334
|
|
One time special charge
|
|
|
|
8,700
|
|
|
|
|
-
|
|
Investment impairment, net
|
|
|
|
-
|
|
|
|
|
370
|
|
Benefit from (provision for) income taxes
|
|
|
(2,204
|
)
|
|
|
|
(2,730
|
)
|
Net income - Non - GAAP
|
|
|
|
38,248
|
|
|
|
|
10,671
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
Diluted - GAAP
|
|
|
$
|
0.13
|
|
|
|
$
|
0.01
|
|
Diluted - Non - GAAP
|
|
|
$
|
0.23
|
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
Shares used to compute net income per share:
|
Diluted - GAAP
|
|
|
|
165,833
|
|
|
|
|
160,281
|
|
Diluted - Non-GAAP
|
|
|
|
165,833
|
|
|
|
|
160,281
|
|
|
|
|
|
|
|
|
|
|
LOGITECH INTERNATIONAL S.A.
|
|
|
|
|
|
|
|
|
The following financial statements and supplemental information
may be subject to potentially material adjustment.
|
|
|
|
|
|
|
|
|
(In thousands, except per share amounts) - Unaudited
|
|
|
|
|
|
|
|
|
SHARE BASED COMPENSATION EXPENSE
|
|
|
|
|
Three Months Ended
|
|
|
|
|
June 30,
|
SUPPLEMENTAL FINANCIAL INFORMATION
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
Share-based Compensation Expense
|
Cost of goods sold
|
|
|
$
|
538
|
|
|
|
$
|
577
|
|
Research and development
|
|
|
|
844
|
|
|
|
|
1,094
|
|
Marketing and selling
|
|
|
|
2,556
|
|
|
|
|
1,906
|
|
General and administrative
|
|
|
|
3,000
|
|
|
|
|
813
|
|
Income tax benefit
|
|
|
|
(1,184
|
)
|
|
|
|
(875
|
)
|
Total share-based compensation expense after income taxes
|
|
$
|
5,754
|
|
|
|
$
|
3,515
|
|
__________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) NOTE: Based on the Audit Committee’s investigation and
related additional work associated with the Company’s Fiscal Year
2014 Annual Report on Form 10-K, the preliminary results for the
first quarter of Fiscal Year 2015 and the results for the
corresponding period of Fiscal Year 2014 contained in these prepared
remarks may be subject to potentially material adjustment.
|
|
|
|
|
|
|
|
|
(2) NOTE: The financial information for the first quarter of
Fiscal Year 2015 is preliminary, was compiled by the Company and has
not yet been reviewed by the Company’s independent registered public
accounting firm. The financial information for the first quarter of
Fiscal Year 2015 may be subject to potentially material adjustment
depending on the outcome of the Audit Committee’s investigation as
well as changes in reserves and estimates resulting from subsequent
events and other information available through the filing date of
the Company’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2014.
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(A) Non-GAAP Financial Measures
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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.
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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 ended June 30, 2014,
we excluded items in the following general categories, each of which
are described below:
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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.
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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.
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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.
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Other charges. We provided non-GAAP measures excluding
the effect of certain charges and income that are not reflective of
our ongoing operations.
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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.
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(LOGIIR)
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