Results In Line With Outlook, Company Expects Return to Profitability in Q2
FREMONT, Calif. & ROMANEL-SUR-MORGES, Switzerland--(BUSINESS WIRE)--Logitech International (SIX:LOGN) (Nasdaq:LOGI) today announced financial results for the first quarter of Fiscal Year 2010.
Sales for Q1 were $328 million, a decrease of 36 percent compared to $509 million in the same quarter last year. Excluding the unfavorable impact of exchange rate changes, sales decreased by 33 percent.
The Company posted an operating loss of $33 million, compared to operating income of $30 million in the same quarter a year ago. The net loss for Q1 was $36 million ($0.20 per share) compared to net income of $29 million ($0.16 per share) in Q1 FY 2009. During the quarter, Logitech recorded pre-tax restructuring charges of $1.4 million ($1.1 million after tax or $0.01 per share). Gross margin for Q1 was 24.4 percent compared to 34.1 percent in Q1 FY 2009.
Logitech’s retail sales for Q1 FY 2010 declined by 35 percent year over year, with sales down by 39 percent in EMEA, 37 percent in the Americas, and 22 percent in Asia. OEM sales were down by 39 percent.
“Our results were consistent with the outlook we shared at the start of the quarter,” stated Gerald P. Quindlen, Logitech president and chief executive officer, “with slightly higher sales and a lower operating loss than anticipated. During Q1, we made substantial progress in helping our channel partners reset to their new, lower levels of weeks of supply. While there is still more progress to be made, we continue to expect this reset to be completed by the end of the second quarter, which will benefit both our sales and our profitability in the second half of the fiscal year. We ended Q1 with a cash balance of $567 million, an increase of more than $80 million over the same period last year – due to our sustained focus on working capital management.
“We expect a return to profitability in Q2 as well as a return to earnings growth for the second half of FY 2010, due to the combined impact of the conclusion of our channel partners’ reset, our ongoing cost-reduction measures and the introductions during Q2 of most of our new products for the FY 2010 holiday season. Designed for today’s more discerning consumers, our new lineup of products is expected to stimulate demand and reduce promotional pressures during the second half of the fiscal year.”
Outlook
For the second quarter of FY 2010, Logitech expects sales within the range of $465 million to $485 million, gross margin within the range of 27 percent to 29 percent, and operating income of up to $10 million.
Earnings Teleconference and Webcast
Logitech will hold an earnings teleconference on Thursday, July 23, 2009 at 8:30 a.m. Eastern Daylight Time and 14:30 Central European Summer Time. A live webcast of the call, along with presentation slides, will be available on the Logitech corporate Web site at http://ir.logitech.com.
About Logitech
Logitech is a world leader in personal peripherals, driving innovation in PC navigation, Internet communications, digital music, home-entertainment control, gaming and wireless devices. 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, including the statements regarding a return to profitability in Q2 FY 2010 and earnings growth for the second half of FY 2010, the expected timing of the channel reset and its impact on sales and profitability in the second half of FY 2010, the impact of Logitech’s new product lineup on demand and promotional pressures during the second half of FY 2010, and anticipated sales, operating income and gross margin for Q2 FY 2010. The forward-looking statements in this release involve risks and uncertainties that could cause Logitech’s actual results to differ materially from that anticipated in these forward-looking statements. Factors that could cause actual results to differ materially include: our inability to predict the depth and length of the deterioration of general economic conditions and its impact on our business, operating results and financial condition; the demand of our customers and our consumers for our products and our ability to accurately forecast it; consumer reaction to our new product lineup; 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 we fail to take advantage of long-term trends in the consumer electronics and personal computers industries; if we fail to successfully innovate in our current and emerging product categories and identify new feature or product opportunities; the sales mix among our lower- and higher-margin products and our geographic sales mix; as well as those additional factors set forth in our periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2009, available at www.sec.gov. Logitech does not undertake to update any forward-looking statements.
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.
(LOGI – IR)
| LOGITECH INTERNATIONAL S.A. |
| | | | | |
| (In thousands, except per share amounts) - Unaudited |
| | | | | |
| | | Quarter Ended June 30, |
| CONSOLIDATED STATEMENTS OF OPERATIONS | | 2009 | | | 2008 | |
| | | | | |
| Net sales | | $ | 327,929 | | | $ | 508,711 | |
| Cost of goods sold | | | 247,889 | | | | 335,139 | |
| Gross profit | | | 80,040 | | | | 173,572 | |
| % of net sales | | | 24.4 | % | | | 34.1 | % |
| | | | | |
| Operating expenses: | | | | |
| Marketing and selling | | | 58,938 | | | | 77,280 | |
| Research and development | | | 31,360 | | | | 33,259 | |
| General and administrative | | | 21,181 | | | | 33,309 | |
| Restructuring charges | | | 1,449 | | | | - | |
| Total operating expenses | | | 112,928 | | | | 143,848 | |
| | | | | |
| Operating income (loss) | | | (32,888 | ) | | | 29,724 | |
| | | | | |
| Interest income, net | | | 592 | | | | 2,552 | |
| Other income (expense), net | | | (38 | ) | | | 561 | |
| | | | | |
| Income (loss) before income taxes | | | (32,334 | ) | | | 32,837 | |
| Provision (benefit) for income taxes | | | 3,653 | | | | 3,531 | |
| | | | | |
| Net income (loss) | | $ | (35,987 | ) | | $ | 29,306 | |
| | | | | |
| | | | | |
| Shares used to compute net income (loss) per share: | | | | |
| Basic | | | 179,751 | | | | 179,046 | |
| Diluted | | | 179,751 | | | | 184,692 | |
| Net income (loss) per share: | | | | |
| Basic | | | ($0.20 | ) | | $ | 0.16 | |
| Diluted | | | ($0.20 | ) | | $ | 0.16 | |
| | | | | | | |
| LOGITECH INTERNATIONAL S.A. |
| | | | | | | |
| (In thousands) - Unaudited |
| | | | | | | |
| CONSOLIDATED BALANCE SHEETS | | June 30, 2009 | | March 31, 2009 | | June 30, 2008 |
| | | | | | | |
| Current assets | | | | | | |
| Cash and cash equivalents | | $ | 567,417 | | $ | 492,759 | | $ | 481,020 |
| Short term investments | | | - | | | 1,637 | | | 3,364 |
| Accounts receivable | | | 169,747 | | | 213,929 | | | 338,493 |
| Inventories | | | 235,509 | | | 233,467 | | | 274,460 |
| Other current assets | | | 54,054 | | | 56,884 | | | 62,572 |
| Total current assets | | | 1,026,727 | | | 998,676 | | | 1,159,909 |
| Property, plant and equipment | | | 101,203 | | | 104,132 | | | 103,964 |
| Intangible assets | | | | | | |
| Goodwill | | | 242,874 | | | 242,909 | | | 194,383 |
| Other intangible assets | | | 29,776 | | | 32,109 | | | 20,125 |
| Other assets | | | 47,280 | | | 43,704 | | | 42,760 |
| Total assets | | $ | 1,447,860 | | $ | 1,421,530 | | $ | 1,521,141 |
| | | | | | | |
| Current liabilities | | | | | | |
| Accounts payable | | $ | 204,497 | | $ | 157,798 | | $ | 299,701 |
| Accrued liabilities | | | 132,989 | | | 131,496 | | | 137,907 |
| Total current liabilities | | | 337,486 | | | 289,294 | | | 437,608 |
| Other liabilities | | | 137,773 | | | 134,528 | | | 125,421 |
| Total liabilities | | | 475,259 | | | 423,822 | | | 563,029 |
| | | | | | | |
| Shareholders' equity | | | 972,601 | | | 997,708 | | | 958,112 |
| | | | | | | |
| Total liabilities and shareholders' equity | | $ | 1,447,860 | | $ | 1,421,530 | | $ | 1,521,141 |
| | | | | | | | | | |
| LOGITECH INTERNATIONAL S.A. |
| | | | | |
| (In thousands) - Unaudited |
| | | | | |
| | | Quarter Ended June 30, |
| CONSOLIDATED STATEMENTS OF CASH FLOWS | | 2009 | | 2008 |
| | | | | |
| Cash flows from operating activities: | | | | |
| Net income (loss) | | $ | (35,987 | ) | | $ | 29,306 | |
| Non-cash items included in net income: | | | | |
| Depreciation | | | 11,477 | | | | 10,595 | |
| Amortization of other intangible assets | | | 2,333 | | | | 1,605 | |
| Share-based compensation expense related to options, restricted stock units and purchase rights | | | 5,409 | | | | 5,888 | |
| Write-down of investments | | | - | | | | 575 | |
| Excess tax benefits from share-based compensation | | | (288 | ) | | | (4,085 | ) |
| Loss (gain) on cash surrender value of life insurance policies | | | 384 | | | | 313 | |
| Deferred income taxes and other | | | (568 | ) | | | (174 | ) |
| Changes in assets and liabilities, net of acquisitions: | | | | |
| Accounts receivable | | | 45,454 | | | | 34,068 | |
| Inventories | | | 317 | | | | (28,971 | ) |
| Other assets | | | 1,142 | | | | (4,488 | ) |
| Accounts payable | | | 45,066 | | | | 12,820 | |
| Accrued liabilities | | | 796 | | | | (13,845 | ) |
| Net cash provided by operating activities | | | 75,535 | | | | 43,607 | |
| | | | | |
| Cash flows from investing activities: | | | | |
| Purchases of property, plant and equipment | | | (7,702 | ) | | | (10,628 | ) |
| Premiums paid on cash surrender value life insurance policies | | | - | | | | (55 | ) |
| Net cash used in investing activities | | | (7,702 | ) | | | (10,683 | ) |
| | | | | |
| Cash flows from financing activities: | | | | |
| Purchases of treasury shares | | | - | | | | (49,017 | ) |
| Proceeds from sale of shares upon exercise of options and purchase rights | | | 4,399 | | | | 10,900 | |
| Excess tax benefits from share-based compensation | | | 288 | | | | 4,085 | |
| Net cash provided by (used in) financing activities | | | 4,687 | | | | (34,032 | ) |
| | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | 2,138 | | | | (224 | ) |
| Net increase (decrease) in cash and cash equivalents | | | 74,658 | | | | (1,332 | ) |
| Cash and cash equivalents at beginning of period | | | 492,759 | | | | 482,352 | |
| Cash and cash equivalents at end of period | | $ | 567,417 | | | $ | 481,020 | |
| | | | | |
| LOGITECH INTERNATIONAL S.A. |
| | | | | |
| (In thousands, except per share amounts) - Unaudited |
| | | | | |
| SUPPLEMENTAL FINANCIAL INFORMATION | | Quarter Ended |
| | | June 30, |
| Reconciliation of GAAP to non-GAAP Financial Measures | | 2009 | | 2008 |
| | | | | |
| GAAP measures: | | | | |
| GAAP operating income (loss) | | $ | (32,888 | ) | | $ | 29,724 |
| GAAP income (loss) before income taxes | | $ | (32,334 | ) | | $ | 32,837 |
| GAAP net income (loss) | | $ | (35,987 | ) | | $ | 29,306 |
| | | | | |
| Adjustments to GAAP measures: | | | | |
| Restructuring: | | | | |
| Restructuring charges | | $ | 1,449 | | | $ | - |
| Income tax benefit related to restructuring | | | (310 | ) | | | - |
| Restructuring charges, net of tax | | $ | 1,139 | | | $ | - |
| | | | | |
| Short-term investments: | | | | |
| Impairment loss on short-term investments | | $ | - | | | $ | 576 |
| Net loss (gain) related to short-term investments | | $ | - | | | $ | 576 |
| | | | | |
| Non-GAAP measures: | | | | |
| Non-GAAP operating income (loss) | | $ | (31,439 | ) | | $ | 29,724 |
| Non-GAAP income (loss) before income taxes | | $ | (30,885 | ) | | $ | 33,413 |
| Non-GAAP net income (loss) | | $ | (34,848 | ) | | $ | 29,882 |
| | | | | |
| Per Share Data: | | | | |
| GAAP net income (loss): | | | | |
| Basic | | $ | (0.20 | ) | | $ | 0.16 |
| Diluted | | $ | (0.20 | ) | | $ | 0.16 |
| | | | | |
| Adjustments to GAAP net income (loss): | | | | |
| Basic | | $ | 0.01 | | | $ | 0.01 |
| Diluted | | $ | 0.01 | | | $ | - |
| | | | | |
| Non-GAAP net income (loss): | | | | |
| Basic | | $ | (0.19 | ) | | $ | 0.17 |
| Diluted | | $ | (0.19 | ) | | $ | 0.16 |
| | | | | |
| | | | | |
| We sometimes use information derived from consolidated financial information but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered "non-GAAP financial measures" under the U.S.Securities and Exchange Commission rules. The adjustments between the GAAP and non-GAAP financial measures presented above consist of (a) the impact on operating income (loss), income (loss) before income taxes, net income (loss) and net income (loss) per share of the restructuring charges recorded by the Company during the fiscal quarter ended June 30, 2009 and (b) the impact on Other Income of the impairment loss related to other-than-temporary declines in fair value of short-term investments during the quarter ended June 30, 2008. Our management uses these non-GAAP measures in its financial and operational decision-making. Our management believes these non-GAAP measures, when considered in conjunction with the corresponding GAAP measures, facilitate better comparison by our investors of our current period results with corresponding prior periods. |
| |
| LOGITECH INTERNATIONAL S.A. |
| | | | | |
| (In thousands, except per share amounts) - Unaudited |
| | | | | |
| | | Quarter Ended |
| | | June 30, |
| SUPPLEMENTAL FINANCIAL INFORMATION | | 2009 | | 2008 |
| | | | | |
| Depreciation | | $ | 11,477 | | | $ | 10,595 | |
| Amortization of other acquisition-related intangibles | | | 2,333 | | | | 1,605 | |
| Operating income (loss) | | | (32,888 | ) | | | 29,724 | |
| Operating income (loss) before depreciation and amortization | | | (19,078 | ) | | | 41,924 | |
| Capital expenditures | | | 7,702 | | | | 10,628 | |
| | | | | |
| | | | | |
| Net sales by channel: | | | | |
| Retail | | $ | 285,585 | | | $ | 439,168 | |
| OEM | | | 42,344 | | | | 69,543 | |
| Total net sales | | $ | 327,929 | | | $ | 508,711 | |
| | | | | |
| | | | | |
| Net sales by product family: | | | | |
| Retail - Pointing Devices | | $ | 92,055 | | | $ | 146,358 | |
| Retail - Keyboards & Desktops | | | 58,009 | | | | 94,955 | |
| Retail - Audio | | | 72,120 | | | | 83,218 | |
| Retail - Video | | | 42,814 | | | | 57,188 | |
| Retail - Gaming | | | 17,149 | | | | 30,510 | |
| Retail - Remotes | | | 3,438 | | | | 26,939 | |
| OEM | | | 42,344 | | | | 69,543 | |
| Total net sales | | $ | 327,929 | | | $ | 508,711 | |
| | | | | |
| | | | | |
| | | Quarter Ended |
| Stock-based Compensation Expense for Employee Stock Options, | | June 30, |
| Restricted Stock Units and Employee Stock Purchases | | 2009 | | 2008 |
| | | | | |
| Cost of goods sold | | | 798 | | | | 731 | |
| Marketing and selling | | | 1,759 | | | | 1,849 | |
| Research and development | | | 842 | | | | 962 | |
| General and administration | | | 2,010 | | | | 2,346 | |
| Income tax expense (benefit) | | | (384 | ) | | | (957 | ) |
| | | | | |
| Total stock-based compensation expense after income taxes | | $ | 5,025 | | | $ | 4,931 | |
| | | | | |
| Stock-based compensation expense for employee stock options, restricted stock units and employee stock purchases, net of tax, per share (diluted) | | $ | 0.03 | | | $ | 0.03 | |