Logitech International (Nasdaq:LOGI) (SWX:LOGN) today announced its financial results for the first quarter of Fiscal Year 2008. Sales for Q1 were $430 million, up 9 percent from $393 million in the same quarter last year. GAAP operating income was $24 million, up 1 percent from $23.8 million for the same quarter a year ago. GAAP net income was $25.6 million ($0.14 per share), compared to $30.1 million ($0.16 per share) in Q1 of FY 2007, which included an after-tax gain of $5.8 million ($0.03 per share) from the sale of shares of Anoto Group AB. Excluding this gain in the prior year, net income increased by 5 percent. Gross margin was 33.7 percent, a year-over-year improvement of 300 basis points compared to 30.7 percent in Q1 of FY 2007.
Logitech’s retail sales for Q1 grew by 8 percent year over year, increasing in the Americas and Asia Pacific by 17 and 13 percent, respectively, and decreasing in EMEA by 1 percent. OEM sales grew 16 percent.
With double-digit growth in most categories (led by audio at 39 percent and keyboards at 21 percent), retail sales were constrained by a year-over-year decline of 38 percent in the video category, due primarily to a 62 percent decline in EMEA. Retail sales of webcams in the Americas declined only slightly year over year, and grew 46 percent sequentially, compared with Q4 of FY 2007.
“Our performance in Q1 was negatively impacted by a steep decline in webcam sales, particularly in EMEA, where the market was slower than expected,” said Guerrino De Luca, Logitech president and chief executive officer. “We have seen significant improvement in webcams in the Americas, we are working through the issue in EMEA, and we expect the video business to return to double-digit growth by Q4 of this fiscal year.
“Retail sales grew 21 percent for the quarter, excluding video, demonstrating the overall resilience of the portfolio. With a strong balance sheet, a full complement of innovative products being introduced this summer, and our plan to more closely align operating expense growth with gross profit growth, we expect to achieve our FY 2008 goals.”
Outlook
The Company confirmed its financial goals of 15 percent growth in sales and operating income for Fiscal Year 2008, ending March 31, 2008. FY 2008 gross margin is expected to be at the high end of the Company’s long-term target range of 32-34 percent. Logitech expects its effective tax rate for the year to be approximately 12 percent.
Earnings Teleconference
Logitech will hold an earnings teleconference on July 19, 2007 at 14:00 Central European Time/8:00 a.m. Eastern Daylight Time/5:00 a.m. Pacific Daylight Time to discuss these results as well as targets for Fiscal Year 2008. A live webcast and replay of the teleconference, including presentation slides, will be available on the Logitech corporate Web site at http://ir.logitech.com. Please visit the Web site at least 10 minutes early to register for the teleconference webcast.
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 traded on the SWX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI).
This press release contains forward-looking statements, including the statements regarding expected sales and operating income growth, gross margin and effective tax rate for Fiscal Year 2008, and future video business growth and the timing for that growth. These forward-looking statements involve risks and uncertainties that could cause Logitech’s actual performance to differ materially from that anticipated in these forward-looking statements. Factors that could cause actual results to differ materially include if we fail to successfully innovate in our current and emerging product categories and identify new feature or product opportunities; consumer demand for our products and our ability to accurately forecast it; the effect of pricing, product, marketing and other initiatives by our competitors, and our reaction to them, on our sales, gross margins and profitability; our webcam marketing activities not resulting in the video business growth we expect, or when we expect it; our ability to implement our plan to control operating expenses while growing sales; 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 20-F for the Fiscal Year ended March 31, 2007 and our quarterly reports on Form 6-K 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 the United States 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. | ||||||||||
(In thousands, except per share amounts) - Unaudited | ||||||||||
Quarter Ended June 30, | ||||||||||
CONSOLIDATED STATEMENTS OF INCOME | 2007 | 2006 | ||||||||
Net sales | $ | 429,537 | $ | 393,282 | ||||||
Cost of goods sold | 284,751 | 272,370 | ||||||||
Gross profit | 144,786 | 120,912 | ||||||||
% of net sales | 33.7 | % | 30.7 | % | ||||||
Operating expenses: | ||||||||||
Marketing and selling | 64,787 | 51,198 | ||||||||
Research and development | 28,765 | 24,928 | ||||||||
General and administrative | 27,322 | 20,995 | ||||||||
Total operating expenses | 120,874 | 97,121 | ||||||||
Operating income | 23,912 | 23,791 | ||||||||
Interest income, net | 3,538 | 1,546 | ||||||||
Other income, net | 1,319 | 8,731 | ||||||||
Income before income taxes | 28,769 | 34,068 | ||||||||
Provision for income taxes | 3,215 | 3,921 | ||||||||
Net income | $ | 25,554 | $ | 30,147 | ||||||
Shares used to compute net income per share: | ||||||||||
Basic | 181,802 | 182,648 | ||||||||
Diluted | 189,250 | 190,646 | ||||||||
Net income per share: | ||||||||||
Basic | $ | 0.14 | $ | 0.17 | ||||||
Diluted | $ | 0.14 | $ | 0.16 | ||||||
Note: | ||||||||||
Net income for the three months ended June 30, 2007 and 2006 included share-based compensation expense under SFAS 123R of $4.5 million, net of tax, or $0.02 per diluted share and $4.2 million, net of tax, or $0.02 per diluted share, related to employee stock options and employee stock purchases. | ||||||||||
Please refer to the supplemental schedule that summarizes the share-based compensation expense and related tax benefit recognized in accordance with SFAS 123R for the three months ended June 30, 2007. |
LOGITECH INTERNATIONAL S.A. | |||||||||||
(In thousands) - Unaudited | |||||||||||
CONSOLIDATED BALANCE SHEETS | June 30, | March 31, | June 30, | ||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 227,545 | $ | 196,197 | $ | 246,495 | |||||
Short term investments | 138,975 | 214,625 | - | ||||||||
Accounts receivable | 303,384 | 310,377 | 291,035 | ||||||||
Inventories | 231,817 | 217,964 | 217,599 | ||||||||
Other current assets | 60,168 | 68,257 | 49,021 | ||||||||
Total current assets | 961,889 | 1,007,420 | 804,150 | ||||||||
Investments | 14 | 14 | 13,566 | ||||||||
Property, plant and equipment | 97,985 | 87,054 | 81,622 | ||||||||
Intangible assets | |||||||||||
Goodwill | 182,255 | 179,991 | 136,648 | ||||||||
Other intangible assets | 17,702 | 18,920 | 10,223 | ||||||||
Other assets | 30,650 | 34,064 | 23,380 | ||||||||
Total assets | $ | 1,290,495 | $ | 1,327,463 | $ | 1,069,589 | |||||
Current liabilities | |||||||||||
Short-term debt | $ | - | $ | 11,856 | $ | 14,433 | |||||
Accounts payable | 210,987 | 218,129 | 190,483 | ||||||||
Accrued liabilities | 136,688 | 235,080 | 158,244 | ||||||||
Total current liabilities | 347,675 | 465,065 | 363,160 | ||||||||
Other liabilities | 93,445 | 17,874 | 11,700 | ||||||||
Total liabilities | 441,120 | 482,939 | 374,860 | ||||||||
Shareholders' equity | 849,375 | 844,524 | 694,729 | ||||||||
Total liabilities and shareholders' equity | $ | 1,290,495 | $ | 1,327,463 | $ | 1,069,589 |
LOGITECH INTERNATIONAL S.A. | |||||||||
(In thousands) - Unaudited | |||||||||
Quarter Ended | |||||||||
June 30 | |||||||||
SUPPLEMENTAL FINANCIAL INFORMATION | 2007 | 2006 | |||||||
Depreciation | $ | 8,826 | $ | 7,501 | |||||
Amortization of other acquisition-related intangibles | 1,218 | 953 | |||||||
Operating income | 23,912 | 23,791 | |||||||
Operating income before depreciation and amortization | 33,956 | 32,245 | |||||||
Capital expenditures | 19,972 | 13,749 | |||||||
Net sales by channel: | |||||||||
Retail | $ | 369,227 | $ | 341,116 | |||||
OEM | 60,310 | 52,166 | |||||||
Total net sales | $ | 429,537 | $ | 393,282 | |||||
Net sales by product family: | |||||||||
Retail - Pointing Devices | $ | 109,653 | $ | 96,023 | |||||
Retail - Keyboards & Desktops | 81,589 | 67,226 | |||||||
Retail - Video | 47,275 | 75,926 | |||||||
Retail - Audio | 93,066 | 66,905 | |||||||
Retail - Gaming | 22,202 | 19,517 | |||||||
Retail - Remotes | 15,442 | 15,519 | |||||||
OEM | 60,310 | 52,166 | |||||||
Total net sales | $ | 429,537 | $ | 393,282 | |||||
Quarter Ended | |||||||||
Stock-based Compensation Expense for | June 30 | ||||||||
Employee Stock Options and Employee Stock Purchases | 2007 | 2006 | |||||||
Cost of goods sold | $ | 704 | $ | 718 | |||||
Marketing and selling | 1,946 | 1,134 | |||||||
Research and development | 766 | 1,505 | |||||||
General and administration | 2,028 | 1,770 | |||||||
Income tax benefit | (969 | ) | (918 | ) | |||||
Total stock-based compensation expense after income taxes | $ | 4,475 | $ | 4,209 | |||||
Stock-based compensation expense for employee stock options and employee stock purchases, net of tax, per share (diluted) | $ | 0.02 | $ | 0.02 |
(LOGI – IR)
Contacts:
Joe Greenhalgh, 510-713-4430
(Vice
President, Investor Relations – USA)
Ben
Starkie, +41-0-21-863-5195
(Public Relations Manager –
Europe)
Nancy Morrison, 510-713-4948
(Director, Corporate
Communications – USA)