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Logitech Delivers Better-Than-Expected Results in Q2 FY 2015

 
Audit Committee’s Independent Investigation Now Closed, Filings to Follow


NEWARK, Calif. Oct. 22, 2014 and LAUSANNE, Switzerland, Oct. 23, 2014 — Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced preliminary unaudited and unreviewed financial results for the second quarter of Fiscal Year 2015.

  • Q2 sales were $530 million, essentially flat compared to the prior year, with retail sales up 2 percent.
  • Q2 GAAP operating income was $42 million, with GAAP earnings per share (EPS) of $0.22, compared to $0.09 in the same quarter a year ago.
  • Q2 non-GAAP operating income was $59 million, with non-GAAP EPS of $0.31, compared to $0.20 a year ago.
  • Q2 cash flow from operations was approximately $33 million, doubling year-over-year and the highest Q2 in the last five years.

“Our performance in Q2 shows continued progress toward our full-year objectives, with growth in retail sales, better-than-expected profitability and improved cash generation,” said Bracken P. Darrell, Logitech president and chief executive officer. “Sales in our Growth category – PC Gaming, Mobile Speakers and Tablet and Other Accessories – grew by double digits for the sixth quarter in a row, increasing 27 percent year-over-year in Q2. It was our sixth consecutive quarter in which Mobile Speakers sales more than doubled. We’ve entered the second half of the year with a robust product portfolio and a pipeline of compelling new products set to launch in the coming quarters. This is our strategy of delivering fewer and bigger products in action.”

Outlook
Logitech confirmed its outlook for Fiscal Year 2015 of approximately $2.16 billion in sales, assuming relatively stable currency exchange rates, and approximately $170 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.

Financial Results Teleconference and Webcast
Logitech will hold a financial results teleconference to discuss the preliminary results for Q2 FY 2015 on Oct. 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.

Audit Committee Investigation Closed
As previously disclosed, Logitech’s Audit Committee, with the assistance of independent advisors, was conducting an independent investigation of certain accounting matters related to the Company’s previously issued financial statements. The investigation is now closed.

With the investigation closed, Logitech is performing the necessary work to complete and file its Annual Report for FY 2014, Annual Report on Form 10-K for FY 2014 and Quarterly Reports on Form 10-Q for Q1 and Q2 FY 2015. The Company intends to file these reports as soon as possible to regain compliance with Nasdaq and SIX Swiss Exchange listing requirements.

Last month, Logitech announced the restatement of its financial statements for Fiscal Years 2011 and 2012 and for the first quarter of Fiscal Year 2012, related to inventory valuation reserves for the Company’s discontinued Revue product. In connection with the restatement, there will be other immaterial corrections to the financial statements for Fiscal Years 2010 and 2013, as well as the first and second quarters of Fiscal Year 2014. None of these other corrections are material to the respective years or to the interim period. 

Preliminary financial information for the second 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. Accordingly, the preliminary results for the first and second quarters 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.

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, one-time special charges 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 Fiscal Year 2015 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 the GAAP amount has been provided.

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).

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This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding: the Company’s product portfolio, new products, timing of new product launches, strategy and Fiscal Year 2015 revenue and operating income; currency exchange rates; the timing of filing periodic reports with the Securities and Exchange Commission and the SIX Swiss Exchange to regain compliance with the Company’s listing requirements; and the impact and materiality of the restatement on and other corrections to the Company’s financial statements. 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, Fiscal Year 2014 Annual Report on Form 10-K, and Fiscal Year 2015 First and Second Quarter Quarterly Reports on Form 10-Q; any adjustments resulting from the review of the preliminary financial results for the first and second 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 and Second Quarter Quarterly Reports on Form 10-Q; if there is a delay in completing the Fiscal Year 2014 audit of financial statements and internal controls or the First and Second Quarter of Fiscal Year 2015 accounting reviews; 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.


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