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Logitech Announces Q1 Earnings

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.

Logitechs 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 Companys 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 Logitechs 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 companys Web site at www.logitech.com.

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
Quarter Ended June 30,
CONSOLIDATED STATEMENTS OF INCOME20072006
Net sales $ 429,537 $ 393,282
Cost of goods sold 284,751 272,370
Gross profit144,786120,912
% of net sales33.7%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 expenses120,87497,121
Operating income23,91223,791
Interest income, net 3,538 1,546
Other income, net 1,319 8,731
Income before income taxes28,76934,068
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,
2007

March 31,
2007

June 30,
2006

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 INFORMATION20072006
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 20072006
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:

Logitech International
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)

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