13:53 uur 28-04-2016

Logitech Delivers Best Annual Retail Sales Growth in Five Years

NEWARK, Calif. & LAUSANNE, Switzerland–(BUSINESS WIRE)– Logitech International (SIX:LOGN) (Nasdaq:LOGI) today announced financial results for the fourth quarter and full year of Fiscal Year 2016.

Q4 closed a strong fiscal year with sales for the quarter reaching $431 million. Q4 retail sales (total sales excluding OEM and Lifesize) grew 6 percent in constant currency, GAAP operating income was $10 million and non-GAAP operating income was $22 million.

For the full Fiscal Year 2016, ended March 31, 2016:

  • Sales were $2.02 billion, up 1 percent compared to the previous fiscal year. Full-year retail sales were $1.95 billion and grew 9 percent in constant currency.
  • GAAP operating income was $129 million, with GAAP earnings per share (EPS) of $0.77, compared to $0.89 a year ago.
  • Non-GAAP operating income was $179 million, with non-GAAP EPS of $0.98, down from $1.10 a year ago.
  • Cash flow from operations was $183 million, and the Company returned $156 million to shareholders in the form of dividends and share repurchases.

“In FY 2016, we delivered our best annual retail sales growth in five years and better-than-expected profitability,” said Bracken Darrell, Logitech president and chief executive officer. “Sales in our Gaming category grew 23 percent, Mobile Speakers grew 37 percent and Video Collaboration grew 51 percent, all in constant currency. Together, our Mice and Keyboard categories also grew 6 percent in constant currency. This demonstrates our ability to innovate across a diverse portfolio – strong innovation that, when combined with disciplined cost management, drives profitable growth.

“Looking forward to Fiscal Year 2017, we now have a strong foundation upon which to build. We will continue to develop our balanced portfolio of businesses and brands to address a number of big and growing markets – Gaming, Home, Music, Video Collaboration and Creativity & Productivity. We look forward to delivering another year of fantastic new products and are optimistic for the solid growth and profitability they will generate.”

Outlook

Logitech confirmed its FY 2017 outlook of $185 million to $200 million in non-GAAP operating income and constant currency retail sales growth in the mid-single digits.

Prepared Remarks Available Online

Logitech has made its prepared written remarks for the financial results teleconference available online on the Logitech corporate website at http://ir.logitech.com.

Financial Results Teleconference and Webcast

Logitech will hold a financial results teleconference to discuss the results for Q4 and full-year FY 2016 on Thurs., April 28, 2016 at 8:30 a.m. Eastern Daylight Time and 2:30 p.m. Central European Summer Time. A live webcast of the call will be available on the Logitech corporate website at http://ir.logitech.com.

Continued Operations

Logitech separated its Lifesize division from the Company on Dec. 28, 2015. Except as otherwise noted, all of the results reported in this press release as well as comparisons between periods are focused on results from continuing operations and do not address the performance of Lifesize, which is now reported in the Company’s financial statements under discontinued operations or total Logitech including discontinued operations. For more information on the impact of the Lifesize separation on Logitech’s historical results, please refer to the Financial Reporting section of Logitech’s Financial History, 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), 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 also presents percentage sales growth in constant currency, a non-GAAP measure, to show performance unaffected by fluctuations in currency exchange rates. Percentage sales growth in constant currency is calculated by translating prior period sales in each local currency at the current period’s average exchange rate for that currency and comparing that to current period sales. Logitech believes this information, used together with the GAAP financial 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 the GAAP amounts has been provided for Fiscal Year 2017.

About Logitech

Logitech designs products that have an everyday place in people’s lives, connecting them to the digital experiences they care about. Over 30 years ago Logitech started connecting people through computers, and now it’s designing products that bring people together through music, gaming, video and computing. 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). Find Logitech at  www.logitech.com, the  company blog or  @Logitech.

This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation statements regarding: innovation, portfolio diversity, business and brand development, cost management, growth, profitability, market growth, new products, and outlook for Fiscal Year 2017 operating income and sales growth. 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 or our growth opportunities are more limited than we expect; if sales of PC peripherals 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 product categories, 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 Annual Report on Form 10-K for the fiscal year ended March 31, 2015 and our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2015, 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.

2016 Logitech, Logicool, Logi and other Logitech marks are owned by Logitech and may be registered. All other trademarks are the property of their respective owners. For more information about Logitech and its products, visit the company’s website at www.logitech.com.

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) – Unaudited
Three Months Ended Fiscal Years Ended
March 31 March 31
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS 2016 2015 2016 2015
Net sales $ 430,841 $ 442,283 $ 2,018,100 $ 2,004,908
Cost of goods sold 288,741 300,609 1,337,053 1,299,451
Gross profit 142,100 141,674 681,047 705,457
Operating expenses:
Marketing and selling 77,091 75,646 319,015 321,749
Research and development 27,288 28,297 113,624 108,306
General and administrative 23,582 29,233 101,548 125,995
Restructuring charges (credits), net 3,784 (4,742 ) 17,802 (4,777 )
Total operating expenses 131,745 128,434 551,989 551,273
Operating income 10,355 13,240 129,058 154,184
Interest income, net 241 373 790 1,197
Other income (expense), net 2,518 1,404 1,624 (2,298 )
Income from continuing operations before income taxes 13,114 15,017 131,472 153,083
Provision for (benefit from) income taxes (3,896 ) (3,801 ) 3,110 4,654
Net income from continuing operations 17,010 18,818 128,362 148,429
Gain (loss) from discontinued operations, net of taxes 11,687 (128,085 ) (9,045 ) (139,146 )
Net income (loss) $ 28,697 $ (109,267 ) $ 119,317 $ 9,283
Net income (loss) per share – basic:
Continuing operations $ 0.10 $ 0.11 $ 0.79 $ 0.91
Discontinued operations $ 0.08 $ (0.77 ) $ (0.06 ) $ (0.85 )
Net income (loss) per share – basic $ 0.18 $ (0.66 ) $ 0.73 $ 0.06
Net income (loss) per share – diluted:
Continuing operations $ 0.10 $ 0.11 $ 0.77 $ 0.89
Discontinued operations $ 0.07 $ (0.77 ) $ (0.05 ) $ (0.83 )
Net income (loss) per share – diluted $ 0.17 $ (0.66 ) $ 0.72 $ 0.06
Weighted average shares used to compute net income (loss) per share:
Basic 162,671 164,319 163,296 163,536
Diluted 165,365 166,424 165,792 166,174
Cash dividends per share $ — $ — $ 0.53 $ 0.27
LOGITECH INTERNATIONAL S.A.
(In thousands) – Unaudited
March 31 March 31
CONSOLIDATED BALANCE SHEETS 2016 2015
Current assets:
Cash and cash equivalents $ 519,195 $ 533,380
Accounts receivable, net 142,778 167,196
Inventories 228,786 255,980
Other current assets 35,488 63,362
Current assets of discontinued operations — 32,102
Total current assets 926,247 1,052,020
Non-current assets:
Property, plant and equipment, net 92,860 86,478
Goodwill 218,224 218,213
Other assets 86,816 62,333
Long-term assets of discontinued operations — 7,636
Total assets $ 1,324,147 $ 1,426,680
Current liabilities:
Accounts payable $ 241,166 $ 292,797
Accrued and other current liabilities 173,764 163,344
Current liabilities of discontinued operations — 38,766
Total current liabilities 414,930 494,907
Non-current liabilities:
Income taxes payable 59,734 72,107
Other non-current liabilities 89,535 91,195
Long-term liabilities of discontinued operations — 10,337
Total liabilities 564,199 668,546
Shareholders’ equity:
Registered shares, CHF 0.25 par value: 30,148 30,148
Issued and authorized shares—173,106 at March 31, 2016 and 2015
Conditionally authorized shares—50,000 at March 31, 2016 and 2015
Additional paid-in capital 6,616 —
Less shares in treasury, at cost—10,697 at March 31, 2016 and 8,625 at March 31, 2015 (128,407 ) (88,951 )
Retained earnings 963,576 930,174
Accumulated other comprehensive loss (111,985 ) (113,237 )
Total shareholders’ equity 759,948 758,134
Total liabilities and shareholders’ equity $ 1,324,147 $ 1,426,680
LOGITECH INTERNATIONAL S.A.
(In thousands) – Unaudited
Three Months Ended Fiscal Years Ended
March 31 March 31
CONSOLIDATED STATEMENTS OF CASH FLOWS * 2016 2015 2016 2015
Operating activities:
Net income (loss) $ 28,697 $ (109,267 ) $ 119,317 $ 9,283
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation 14,224 11,745 51,108 41,304
Amortization of other intangible assets 349 737 1,885 8,361
Share-based compensation expense 7,476 5,779 27,351 25,825
Impairment of goodwill and other assets — 122,734 — 122,734
Investment impairment — 39 — 2,298
Gain on equity method investments (645 ) — (469 ) —
Gain on disposal of property, plant and equipment — — — (44 )
Net gain on divestiture of discontinued operations (13,684 ) — (13,684 ) —
Excess tax benefits from share-based compensation — (298 ) (2,084 ) (2,831 )
Deferred income taxes 3,690 5,391 6,604 2,240
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net 141,327 123,008 25,513 (8,018 )
Inventories 13,900 (30,339 ) 31,966 (60,510 )
Other assets 7,354 2,308 (1,975 ) (4,284 )
Accounts payable (126,867 ) (50,897 ) (58,104 ) 60,413
Accrued and other liabilities (43,561 ) (39,366 ) (4,317 ) (18,139 )
Net cash provided by operating activities 32,260 41,574 183,111 178,632
Investing activities:
Purchases of property, plant and equipment (6,172 ) (10,476 ) (56,615 ) (45,253 )
Investment in privately held companies (320 ) — (2,419 ) (2,550 )
Payments for divestiture of discontinued operations (1,395 ) — (1,395 ) —
Acquisitions, net of cash acquired — (926 ) — (926 )
Changes in restricted cash and cash equivalents, net (715 ) — (715 ) —
Purchase of trading investments (5,224 ) (1,571 ) (9,619 ) (5,034 )
Proceeds from sales of trading investments 5,405 1,618 10,073 5,474
Net cash used in investing activities (8,421 ) (11,355 ) (60,690 ) (48,289 )
Financing activities:
Payment of cash dividends — — (85,915 ) (43,767 )
Contingent consideration related to prior acquisition — — — (100 )
Purchases of treasury shares (21,556 ) (1,663 ) (70,358 ) (1,663 )
Repurchase of ESPP awards — — — (1,078 )
Proceeds from sales of shares upon exercise of options and purchase rights 7,205 1,672 19,767 4,138
Tax withholdings related to net share settlements of restricted stock units (1,890 ) (1,759 ) (7,247 ) (9,215 )
Excess tax benefits from share-based compensation — 298 2,084 2,831
Net cash used in financing activities (16,241 ) (1,452 ) (141,669 ) (48,854 )
Effect of exchange rate changes on cash and cash equivalents 2,610 (8,342 ) 1,405 (13,863 )
Net increase (decrease) in cash and cash equivalents 10,208 20,425 (17,843 ) 67,626
Cash and cash equivalents, beginning of the period 508,987 516,613 537,038 469,412
Cash and cash equivalents, end of the period $ 519,195 $ 537,038 $ 519,195 $ 537,038

__________________

* Statements of consolidated cash flows include discontinued operations.
LOGITECH INTERNATIONAL S.A.
(In thousands) – Unaudited
NET SALES Three Months Ended Fiscal Years Ended
March 31 March 31
SUPPLEMENTAL FINANCIAL INFORMATION 2016 2015

Change

 2016 2015

Change
Net sales by channel:
Retail $ 430,841 $ 416,144 4 % $ 1,947,059 $ 1,887,446 3 %
OEM — 26,139 (100 ) 71,041 117,462 (40 )
Total net sales $ 430,841 $ 442,283 (3 ) $ 2,018,100 $ 2,004,908 1
Net retail sales by product category:
Mobile Speakers $ 23,543 $ 38,406 (39 ) $ 229,718 $ 178,038 29
Gaming 56,102 47,341 19 245,101 211,911 16
Video Collaboration 21,862 16,248 35 89,322 62,215 44
Tablet & Other Accessories 30,664 26,021 18 103,886 140,994 (26 )
Pointing Devices 111,179 104,686 6 492,543 487,210 1
Keyboards & Combos 105,732 100,900 5 430,190 426,117 1
Audio-PC & Wearables 46,672 51,015 (9 ) 196,013 213,496 (8 )
PC Webcams 23,952 19,225 25 98,641 96,680 2
Home Control 10,527 11,836 (11 ) 59,075 68,060 (13 )
Other (*) 608 466 30 2,570 2,725 (6 )
Total net retail sales $ 430,841 $ 416,144 4 $ 1,947,059 $ 1,887,446 3

__________________

* Other category Includes products that we currently intend to transition out of, or have already transitioned out of, because they are no longer strategic to our business.
LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) – Unaudited
GAAP TO NON GAAP RECONCILIATION (A) Three Months Ended Fiscal Years Ended
March 31 March 31
SUPPLEMENTAL FINANCIAL INFORMATION 2016 2015 2016 2015
Gross profit – GAAP $ 142,100 $ 141,674 $ 681,047 $ 705,457
Share-based compensation expense 692 749 2,340 2,474
Gross profit – Non-GAAP $ 142,792 $ 142,423 $ 683,387 $ 707,931
Gross margin – GAAP 33.0 % 32.0 % 33.7 % 35.2 %
Gross margin – Non-GAAP 33.1 % 32.2 % 33.9 % 35.3 %
Operating expenses – GAAP $ 131,745 $ 128,434 $ 551,989 $ 551,273
Less: Share-based compensation expense 7,036 4,713 24,672 21,717
Less: Amortization of other intangible assets 1 166 448 763
Less: Restructuring charges (credits), net 3,784 (4,742 ) 17,802 (4,777 )
Less: One time special charge 555 4,213 4,676 23,737
Operating expenses – Non-GAAP $ 120,369 $ 124,084 $ 504,391 $ 509,833
% of net sales – GAAP 30.6 % 29.0 % 27.4 % 27.5 %
% of net sales – Non – GAAP 27.9 % 28.1 % 25.0 % 25.4 %
Operating income – GAAP $ 10,355 $ 13,240 $ 129,058 $ 154,184
Share-based compensation expense 7,728 5,462 27,012 24,191
Amortization of other intangible assets 1 166 448 763
Restructuring charges (credits), net 3,784 (4,742 ) 17,802 (4,777 )
One time special charge 555 4,213 4,676 23,737
Operating income – Non – GAAP $ 22,423 $ 18,339 $ 178,996 $ 198,098
% of net sales – GAAP 2.4 % 3.0 % 6.4 % 7.7 %
% of net sales – Non – GAAP 5.2 % 4.1 % 8.9 % 9.9 %
Net income from continuing operations – GAAP $ 17,010 $ 18,818 $ 128,362 $ 148,429
Share-based compensation expense 7,728 5,462 27,012 24,191
Amortization of other intangible assets 1 166 448 763
Restructuring charges (credits), net 3,784 (4,742 ) 17,802 (4,777 )
One time special charge 555 4,213 4,676 23,737
Investment impairment (645 ) 39 (469 ) 2,298
Provision for income taxes (5,452 ) (5,534 ) (15,413 ) (12,468 )

Net income from continuing operations – Non – GAAP

 $ 22,981 $ 18,422 $ 162,418 $ 182,173

Net income from continuing operations per share:
Diluted – GAAP $ 0.10 $ 0.11 $ 0.77 $ 0.89
Diluted – Non – GAAP $ 0.14 $ 0.11 $ 0.98 $ 1.10
Shares used to compute net income per share:
Diluted – GAAP and Non – GAAP 165,365 166,424 165,792 166,174
LOGITECH INTERNATIONAL S.A.
(In thousands) – Unaudited
SHARE-BASED COMPENSATION EXPENSE Three Months Ended Fiscal Years Ended
March 31 March 31
SUPPLEMENTAL FINANCIAL INFORMATION 2016 2015 2016 2015
Share-based Compensation Expense
Cost of goods sold $ 692 $ 749 $ 2,340 $ 2,474
Marketing and selling 2,728 1,911 9,273 8,570
Research and Development 872 601 3,046 2,381
General and administrative 3,436 2,201 12,353 10,766
Restructuring — — 7 —
Income tax benefit (2,354 ) (529 ) (6,297 ) (4,814 )

Total share-based compensation expense, net of income taxes

 $ 5,374 $ 4,933 $ 20,722 $ 19,377
__________________

(A) 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 quarter and year ended March 31, 2016, 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 charges (credits). 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. 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.

Investment impairment (recovery). We incur investment impairment and recovery, primarily related to our investments in various privately-held companies. The investment impairment or recovery varies depending on the operational and financial performance of the privately-held companies we invested in. 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 operations.

One-time special charges: costs related to investigations and related expenses, and business acquisitions. These expenses are forensic accounting, audit, consulting and legal fees related to the Audit Committee’s investigation and the formal investigation by and settlement with the Securities and Exchange Commission (SEC), together with accruals based on settlement with the SEC, and related to business acquisitions. We believe that providing the non-GAAP measures excluding these charges, as well as the GAAP measures, assists our investors because such charges are one-time in nature and not reflective of our ongoing operations.

Other charges. We provided non-GAAP measures excluding the effect of certain charges and income that are not reflective of our ongoing operations.

In addition, Logitech presents percentage sales growth in constant currency, a non-GAAP measure, to show performance unaffected by fluctuations in currency exchange rates. Percentage sales growth in constant currency is calculated by translating prior period sales in each local currency at the current period’s average exchange rate for that currency and comparing that to current period sales. Sales for the three months ended March 31, 2016 compared to sales for the three months ended March 31, 2015 decreased 1 percent in constant currency and decreased 3 percent in U.S. Dollars. Retail sales for the three months ended March 31, 2016 compared to retail sales for the three months ended March 31, 2015 grew 6 percent in constant currency and grew 4 percent in U.S. Dollars. Retail sales for the year ended March 31, 2016 compared to retail sales for year ended March 31, 2015 grew 9 percent in constant currency and grew 3 percent in U.S. Dollars. Sales in our Gaming, Mobile Speakers and Video Collaboration category for the year ended March 31, 2016 compared to the sales for those categories for the year ended March 31, 2015 grew 23 percent, 37 percent and 51 percent, respectively, in constant currency and grew 16 percent, 29 percent and 44 percent, respectively, in U.S. Dollars. Sales for the combined Mice and Keyboard categories for the year ended March 31, 2016 compared to sales for those combined categories for the year ended March 31, 2015 grew 6 percent in constant currency and grew 1 percent in U.S. Dollars.

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.

(LOGIIR)

Contacts

Logitech International
Joe Greenhalgh
Vice President, Investor Relations – USA
510-713-4430
or
Krista Todd
Vice President, External Communications – USA
510-713-5834
or
Ben Starkie
Corporate Communications – Europe
+41-(0) 79-292-3499

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