UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
 
Date of Report: January 20, 2016
 (Date of earliest event reported)
 
LOGITECH INTERNATIONAL S.A.
(Exact name of registrant as specified in its charter)
 
Commission File Number: 0-29174
 

Canton of Vaud, Switzerland
(State or other jurisdiction
of incorporation or organization)
 
None
(I.R.S. Employer
Identification No.)
 

Logitech International S.A.
Apples, Switzerland
c/o Logitech Inc.
7700 Gateway Boulevard
Newark, California 94560
(Address of principal executive offices and zip code)
 

(510) 795-8500
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 




ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
On January 20, 2016, Logitech International S.A. (“Logitech”) issued a press release regarding its financial results for the quarter ended December 31, 2015.  A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
 
The information in Item 2.02 and Item 9.01 of this Current Report, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
 
d)                                Exhibits.
 
The following exhibit is furnished with this report on Form 8-K:
 
99.1                      Press release issued on January 20, 2016 including financial results for the quarter ended December 31, 2015.

2



 
 SIGNATURES
 
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized.
 
 

 
 
Logitech International S.A.
 
 
 
 
 
 
 
 
/s/ Bracken P. Darrell
 
 
 
 
 
Bracken P. Darrell
 
 
President and Chief Executive Officer
 
 
 
 
 
 
 
 
/s/ Vincent Pilette
 
 
 
 
 
Vincent Pilette
 
 
Chief Financial Officer
January 20, 2016
 
 
 
 
 
 
 
 
 
 
























3


EXHIBIT INDEX
 
99.1                      Press release issued on January 20, 2016 including financial results for the quarter ended December 31, 2015.
 




4




Exhibit 99.1



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

Logitech Delivers Better-Than-Expected Q3 Results and
Raises FY 2016 Outlook

Retail Sales Grow 9 Percent in Constant Currency

NEWARK, Calif. - Jan. 20, 2016 and LAUSANNE, Switzerland, Jan. 21, 2016 - Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results from continuing operations for the third quarter of Fiscal Year 2016.
•
Q3 sales were $621 million, up 3 percent compared to Q3 of the prior year. Q3 retail sales (total sales excluding OEM) were $595 million and grew 9 percent in constant currency.
•
Q3 GAAP operating income was $69 million. Q3 GAAP earnings per share (EPS) were $0.41, compared to $0.40 in the same quarter a year ago.
•
Q3 non-GAAP operating income was $74 million, with non-GAAP EPS of $0.41, compared to $0.43 in the same quarter a year ago.
•
Cash flow from operations in the quarter, including Lifesize, was $166 million.
“We delivered a strong performance in Q3, evident across the business,” said Bracken P. Darrell, Logitech president and chief executive officer. “In this milestone quarter for the company, a new Logitech emerged as we completed the exit of our OEM business and separated Lifesize. Logitech’s future business remains - and the future looks bright. We grew 9 percent in constant currency and our operating income and operating cash flow were strong. Combined, the Gaming, Mobile Speakers and Video Collaboration categories grew 34 percent in constant currency and each of them reached record high sales for a quarter. I’m delighted to raise our outlook as we enter the last quarter of the year.”
Outlook
Logitech increased its profitability outlook for Fiscal Year 2016 to approximately $170 million in non-GAAP operating income from $150 million, which included Lifesize. The Company also increased its outlook for retail sales to 7 to 9 percent growth in constant currency, up from 7 percent.
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 Q3 FY 2016 on Jan. 21, 2016 at 8:30 a.m. Eastern Standard Time and 2:30 p.m. Central European Time. A live webcast of the call will be available on the Logitech corporate website at http://ir.logitech.com.
Continuing Operations
Logitech separated its Lifesize division from the Company on Dec. 28, 2015. The Company’s third quarter of Fiscal Year 2016 ended on Dec. 25, 2015, even though, for purposes of presentation, the Company has indicated its third quarter periods as ending on Dec. 31. Except as otherwise noted, all of the results reported in this press release for both the third quarter of Fiscal Year 2016 and the third quarter of Fiscal Year 2015, 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. Logitech’s previous outlook of $150 million in non-GAAP operating income included outlook for Lifesize results. Logitech’s new outlook does not include outlook for Lifesize results. 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 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 2016.
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: Logitech’s future and outlook for Fiscal Year 2016 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 September 30, 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.

(LOGIIR)







LOGITECH INTERNATIONAL S.A.
 
 
 
 
 
 
 
 
(In thousands, except per share amounts) - Unaudited
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
December 31
 
December 31
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net sales
 
$
621,079

 
$
604,322

 
$
1,587,259

 
$
1,562,625

Cost of goods sold
 
412,582

 
391,715

 
1,048,312

 
998,842

Gross profit
 
208,497

 
212,607

 
538,947

 
563,783

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
Marketing and selling
 
87,295

 
87,486

 
241,924

 
246,103

Research and development
 
29,273

 
27,397

 
86,336

 
80,009

General and administrative
 
24,080

 
28,172

 
77,966

 
96,762

Restructuring charges (credits), net
 
(666
)
 
—

 
14,018

 
(35
)
Total operating expenses
 
139,982

 
143,055

 
420,244

 
422,839

Operating income
 
68,515

 
69,552

 
118,703

 
140,944

Interest income, net
 
105

 
224

 
549

 
824

Other income (expense), net
 
862

 
(2,688
)
 
(894
)
 
(3,702
)
Income from continuing operations before income taxes
 
69,482

 
67,088

 
118,358

 
138,066

Provision for income taxes
 
1,442

 
670

 
7,006

 
8,455

Net income from continuing operations
 
68,040

 
66,418

 
111,352

 
129,611

Loss from discontinued operations, net of taxes
 
(2,954
)
 
(3,634
)
 
(20,732
)
 
(11,061
)
Net income
 
$
65,086

 
$
62,784

 
$
90,620

 
$
118,550


 

 

 

 

Net income (loss) per share - basic:
 
 

 
 

 
 

 
 

Continuing operations
 
$
0.42

 
$
0.41

 
$
0.68

 
$
0.79

Discontinued operations
 
$
(0.02
)
 
$
(0.03
)
 
$
(0.13
)
 
$
(0.06
)
Net income per share - basic
 
$
0.40

 
$
0.38

 
$
0.55

 
$
0.73


 


 


 


 


Net income (loss) per share - diluted:
 


 


 


 


Continuing operations
 
$
0.41

 
$
0.40

 
$
0.67

 
$
0.78

Discontinued operations
 
$
(0.02
)
 
$
(0.02
)
 
$
(0.12
)
 
$
(0.07
)
Net income per share - diluted
 
$
0.39

 
$
0.38

 
$
0.55

 
$
0.71


 


 


 


 


Weighted average shares used to compute net income (loss) per share:
 
 

 
 

 
 

 
 

Basic
 
162,669

 
163,533

 
163,521

 
163,261

Diluted
 
165,168

 
166,321

 
165,951

 
166,076


 


 


 


 


Cash dividends per share
 
$
—

 
$
0.27

 
$
0.53

 
$
0.27






LOGITECH INTERNATIONAL S.A.
 
 
 
 
(In thousands) - Unaudited
 
 
 
 

 
 
 
 
 
 
December 31
 
March 31,
CONSOLIDATED BALANCE SHEETS
 
2015
 
2015
 
 

 
 
Current assets:
 
 
 
 
    Cash and cash equivalents
 
$
505,082

 
$
533,380

    Accounts receivable, net
 
284,089

 
167,196

    Inventories
 
239,962

 
255,980

    Other current assets
 
71,661

 
63,362

    Current assets held for sale
 
28,969

 
32,102

        Total current assets
 
1,129,763

 
1,052,020

Non-current assets:
 
 
 
 
    Property, plant and equipment, net
 
99,145

 
86,478

    Goodwill
 
218,198

 
218,213

    Other assets
 
57,271

 
62,333

    Long-term assets held for sale
 
5,506

 
7,636

Total assets
 
$
1,509,883

 
$
1,426,680

 
 
 
 
 
Current liabilities:
 
 
 
 
    Accounts payable
 
$
363,781

 
$
292,797

    Accrued and other current liabilities
 
211,219

 
163,344

    Current liabilities held for sale
 
34,642

 
38,766

        Total current liabilities
 
609,642

 
494,907

Non-current liabilities:
 


 


    Income taxes payable
 
67,885

 
72,107

    Other non-current liabilities
 
85,347

 
91,195

    Long-term liabilities held for sale
 
10,063

 
10,337

Total liabilities
 
772,937

 
668,546

 
 
 
 
 
Total shareholders' equity
 
736,946

 
758,134

 
 
 
 
 
Total liabilities and shareholders' equity
 
$
1,509,883

 
$
1,426,680






LOGITECH INTERNATIONAL S.A.
 
 
 
 
 
 
 
 
(In thousands) - Unaudited
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
December 31
 
December 31
CONSOLIDATED STATEMENTS OF CASH FLOWS *
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Operating activities:
 
 
 
 
 
 
 
 
Net income
 
$
65,086

 
$
62,784

 
$
90,620

 
$
118,550

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
Depreciation
 
14,647

 
9,867

 
36,884

 
29,559

Amortization of other intangible assets
 
310

 
2,266

 
1,536

 
7,624

Share-based compensation expense
 
6,618

 
7,047

 
19,875

 
20,046

Investment impairment (recovery)
 
(4
)
 
2,154

 
176

 
2,259

Gain on disposal of property, plant and equipment
 
—

 
(34
)
 
—

 
(44
)
Excess tax benefits from share-based compensation
 
(926
)
 
(1,867
)
 
(2,089
)
 
(2,533
)
Deferred income taxes
 
1,962

 
(793
)
 
2,914

 
(3,151
)
Changes in operating assets and liabilities, net of acquisitions:
 
 
 
 
 
 
 
 
Accounts receivable, net
 
(20,411
)
 
(57,465
)
 
(115,814
)
 
(131,026
)
Inventories
 
73,508

 
(3,187
)
 
18,066

 
(30,171
)
Other assets
 
(818
)
 
(952
)
 
(9,329
)
 
(6,592
)
Accounts payable
 
18,402

 
51,198

 
68,763

 
111,310

Accrued and other liabilities
 
7,334

 
5,336

 
39,244

 
21,227

Net cash provided by operating activities
 
165,708

 
76,354

 
150,846

 
137,058

 
 
 
 
 
 
 
 
 
Investing activities:
 
 
 
 
 
 
 
 
Purchases of property, plant and equipment
 
(19,166
)
 
(9,813
)
 
(50,443
)
 
(34,777
)
Investment in privately held companies
 
(1,619
)
 
—

 
(2,099
)
 
(2,550
)
Purchase of trading investments
 
(1,746
)
 
(1,233
)
 
(4,395
)
 
(3,463
)
Proceeds from sales of trading investments
 
1,813

 
1,311

 
4,668

 
3,856

            Net cash used in investing activities
 
(20,718
)
 
(9,735
)
 
(52,269
)
 
(36,934
)
 
 
 
 
 
 
 
 
 
Financing activities:
 
 
 
 
 
 
 
 
Payment of cash dividends
 
—

 
(43,767
)
 
(85,915
)
 
(43,767
)
Contingent consideration related to prior acquisition
 
—

 
—

 
—

 
(100
)
Purchases of treasury shares
 
—

 
—

 
(48,802
)
 
—

Repurchase of ESPP awards
 
—

 
—

 
—

 
(1,078
)
Proceeds from sales of shares upon exercise of options and purchase rights
 
1,459

 
933

 
12,562

 
2,466

Tax withholdings related to net share settlements of restricted stock units
 
(1,855
)
 
(6,133
)
 
(5,357
)
 
(7,456
)
Excess tax benefits from share-based compensation
 
926

 
1,867

 
2,089

 
2,533

            Net cash provided by (used in) financing activities
 
530

 
(47,100
)
 
(125,423
)
 
(47,402
)
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
 
(2,307
)
 
(3,128
)
 
(1,205
)
 
(5,521
)
Net increase (decrease) in cash and cash equivalents
 
143,213

 
16,391

 
(28,051
)
 
47,201

Cash and cash equivalents, beginning of the period
 
365,774

 
500,222

 
537,038

 
469,412

Cash and cash equivalents, end of the period
 
$
508,987

 
$
516,613

 
$
508,987

 
$
516,613

 
 
 
 
 
 
 
 
 
The following amounts reflected in the statements of cash flows are included in discontinued operations:
Depreciation
 
$
787

 
$
630

 
$
2,207

 
$
1,930

Amortization of other intangible assets
 
$
198

 
$
2,100

 
$
1,089

 
$
7,027

Cash and cash equivalents, beginning of the period
 
$
4,639

 
$
1,397

 
$
3,659

 
$
1,894

Cash and cash equivalents, end of the period
 
$
3,905

 
$
8,128

 
$
3,905

 
$
8,128

__________________
*Statements of cash flows include discontinued operations




LOGITECH INTERNATIONAL S.A.
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands) - Unaudited
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET SALES
 
Three Months Ended
 
Nine Months Ended
 
 
December 31
 
December 31
SUPPLEMENTAL FINANCIAL INFORMATION
 
2015
 
2014
 
Change
 
2015
 
2014
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales by channel:
 
 
 
 
 
 
 
 
 
 
 
 
    Retail
 
$
594,567

 
$
574,025

 
4
 %
 
$
1,516,218

 
$
1,471,301

 
3
 %
    OEM
 
26,512

 
30,297

 
(12
)
 
71,041

 
91,324

 
(22
)
        Total net sales
 
$
621,079

 
$
604,322

 
3

 
$
1,587,259

 
$
1,562,625

 
2

 
 
 
 
 
 
 
 
 
 
 
 
 
Net retail sales by product category(*):
 
 
 
 
 
 
 
 
 
 
 
 
    Mobile Speakers
 
$
85,081

 
$
62,264

 
37

 
$
206,175

 
$
139,631

 
48

    Gaming
 
77,706

 
70,188

 
11

 
189,000

 
164,570

 
15

    Video Collaboration
 
26,216

 
16,935

 
55

 
67,460

 
45,968

 
47

    Tablet & Other Accessories
 
35,873

 
55,100

 
(35
)
 
73,222

 
114,974

 
(36
)
        Growth
 
224,876

 
204,487

 
10

 
535,857

 
465,143

 
15

    Pointing Devices
 
139,711

 
141,789

 
(1
)
 
381,364

 
382,524

 
—

    Keyboards & Combos
 
116,531

 
114,051

 
2

 
324,458

 
325,217

 
—

    Audio-PC & Wearables
 
57,300

 
56,741

 
1

 
149,341

 
162,480

 
(8
)
    PC Webcams
 
29,648

 
31,709

 
(6
)
 
74,689

 
77,454

 
(4
)
    Home Control
 
25,684

 
25,116

 
2

 
48,548

 
56,224

 
(14
)
        Profit Maximization
 
368,874

 
369,406

 
—

 
978,400

 
1,003,899

 
(3
)
Retail Strategic Sales
 
593,750

 
573,893

 
3

 
1,514,257

 
1,469,042

 
3

Non-Strategic
 
817

 
132

 
519

 
1,961

 
2,259

 
(13
)
            Total net retail sales
 
$
594,567

 
$
574,025

 
4

 
$
1,516,218

 
$
1,471,301

 
3

__________________
 
 
 
 
 
 
 
 
 
 
 
 

* Certain products within the retail product categories as presented in prior periods have been reclassified to conform to the current periods' presentation, with no impact on previously reported total net retail sales.





LOGITECH INTERNATIONAL S.A.
 
 
 
 
 
 
 
 
(In thousands, except per share amounts) - Unaudited
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP TO NON GAAP RECONCILIATION (A)
 
Three Months Ended
 
Nine Months Ended
 
 
December 31
 
December 31
SUPPLEMENTAL FINANCIAL INFORMATION
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Gross profit - GAAP
 
$
208,497

 
$
212,607

 
$
538,947

 
$
563,783

Share-based compensation expense
 
464

 
560

 
1,648

 
1,725

Gross profit - Non-GAAP
 
$
208,961

 
$
213,167

 
$
540,595

 
$
565,508

 
 
 
 
 
 
 
 
 
Gross margin - GAAP
 
33.6
%
 
35.2
%
 
34.0
%
 
36.1
%
Gross margin - Non-GAAP
 
33.6
%
 
35.3
%
 
34.1
%
 
36.2
%
 
 
 
 
 
 
 
 
 
Operating expenses - GAAP
 
$
139,982

 
$
143,055

 
$
420,244

 
$
422,839

Less: Share-based compensation expense
 
5,998

 
5,837

 
17,636

 
17,004

Less: Amortization of other intangible assets
 
112

 
166

 
447

 
597

Less: Restructuring charges (credits), net
 
(666
)
 
—

 
14,018

 
(35
)
Less: One time special charge
 
(249
)
 
2,528

 
4,121

 
19,524

Operating expenses - Non-GAAP
 
$
134,787

 
$
134,524

 
$
384,022

 
$
385,749

 
 
 
 
 
 
 
 
 
% of net sales - GAAP
 
22.5
%
 
23.7
%
 
26.5
%
 
27.1
%
% of net sales - Non - GAAP
 
21.7
%
 
22.3
%
 
24.2
%
 
24.7
%
 
 
 
 
 
 
 
 
 
Operating income - GAAP
 
$
68,515

 
$
69,552

 
$
118,703

 
$
140,944

Share-based compensation expense
 
6,462

 
6,397

 
19,284

 
18,729

Amortization of other intangible assets
 
112

 
166

 
447

 
597

Restructuring charges (credits), net
 
(666
)
 
—

 
14,018

 
(35
)
One time special charge
 
(249
)
 
2,528

 
4,121

 
19,524

Operating income - Non - GAAP
 
$
74,174

 
$
78,643

 
$
156,573

 
$
179,759

 
 
 
 
 
 
 
 
 
% of net sales - GAAP
 
11.0
%
 
11.5
%
 
7.5
%
 
9.0
%
% of net sales - Non - GAAP
 
11.9
%
 
13.0
%
 
9.9
%
 
11.5
%
 
 
 
 
 
 
 
 
 
Net income from continuing operations
 
$
68,040

 
$
66,418

 
$
111,352

 
$
129,611

Share-based compensation expense
 
6,462

 
6,397

 
19,284

 
18,729

Amortization of other intangible assets
 
112

 
166

 
447

 
597

Restructuring charges (credits), net
 
(666
)
 
—

 
14,018

 
(35
)
One time special charge
 
(249
)
 
2,528

 
4,121

 
19,524

Investment impairment (recovery)
 
(4
)
 
2,154

 
176

 
2,259

Provision for income taxes
 
(6,709
)
 
(6,063
)
 
(9,961
)
 
(6,934
)
Net income from continuing operations
 - Non - GAAP
 
$
66,986

 
$
71,600

 
$
139,437

 
$
163,751

 
 
 
 
 
 
 
 
 
Net income from continuing operations
 per share:
 
 
 
 
 
 
 
 
Diluted - GAAP
 
$
0.41

 
$
0.40

 
$
0.67

 
$
0.78

Diluted - Non - GAAP
 
$
0.41

 
$
0.43

 
$
0.84

 
$
0.99

 
 
 
 
 
 
 
 
 
Shares used to compute net income per share:
 
 
 
 
 
 
 
 
Diluted - GAAP and Non - GAAP
 
165,168

 
166,321

 
165,951

 
166,076








LOGITECH INTERNATIONAL S.A.
 
 
 
 
 
 
 
 
(In thousands) - Unaudited
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SHARED BASED COMPENSATION EXPENSE
 
Three Months Ended
 
Nine Months Ended
 
 
December 31
 
December 31
SUPPLEMENTAL FINANCIAL INFORMATION
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Share-based Compensation Expense
 
 
 
 
 
 
 
 
    Cost of goods sold
 
$
464

 
$
560

 
$
1,648

 
$
1,725

    Marketing and selling
 
2,484

 
2,552

 
6,545

 
6,659

    Research and Development
 
846

 
765

 
2,174

 
1,780

    General and administrative
 
2,668

 
2,520

 
8,917

 
8,565

    Restructuring
 
—

 
—

 
7

 
—

    Income tax benefit
 
(1,446
)
 
(1,391
)
 
(2,479
)
 
(4,285
)
        Total share-based compensation expense, net of income taxes
 
$
5,016

 
$
5,006

 
$
16,812

 
$
14,444

__________________
 
 
 
 
 
 
 
 

(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 ended December 31, 2015, 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.  These expenses are forensic accounting, audit, consulting and legal fees related to the Audit Committee’s investigation and the ongoing formal investigation by and settlement discussion with the Securities and Exchange Commission (SEC), together with accruals based on settlement discussion with the SEC.  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 December 31, 2015 compared to sales for the three months ended December 31, 2014 grew 8 percent in constant currency and grew 3 percent in U.S. Dollars. Retail sales for the three months ended December 31, 2015 compared to retail sales for the three months ended December 31, 2014 grew 9 percent in constant currency and grew 4 percent in U.S. Dollars. Sales for the combined Gaming, Mobile Speakers and Video Collaboration categories for the three months ended December 31, 2015 compared to sales for those combined categories for the three months ended December 31, 2014 grew 34 percent in constant currency and grew 27 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.




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