Logitech Delivers Ninth Consecutive Record Year
Logitech International (SWX:LOGN) (Nasdaq:LOGI) today announced it
has posted its ninth consecutive year of record sales and profits. The
Company closed the fiscal year with a record fourth quarter - its 34th
consecutive quarter of double-digit revenue growth - and achieved its
upwardly revised full-year goal for operating income while falling
short of its increased target for year-over-year sales growth, due to
a year-over-year decline in Q4 webcam sales.
Results for Full Fiscal Year
Sales for the fiscal year, ended March 31, 2007 were $2.1 billion,
up 15 percent from $1.8 billion in FY 2006. GAAP operating income was
$231 million and includes $19.5 million in costs for stock-based
compensation. GAAP net income, including $14.9 million in costs for
stock-based compensation (net of related tax benefit), was $230
million ($1.20 per share). GAAP gross margin was 34.3 percent.
Non-GAAP operating income for the fiscal year, which excludes
stock-based compensation, was $250 million, up 26 percent from last
year's operating income of $199 million. Non-GAAP net income for FY
2007 was $245 million ($1.27 per share), up 35 percent compared with
net income of $181 million ($0.92 per share) in the prior year.
Non-GAAP gross margin was 34.4 percent, compared to 32 percent in the
prior year, an increase of 240 basis points. (See Note 1.)
Results for Fourth Quarter
For Logitech's fourth fiscal quarter, sales were $513 million, up
10 percent from $466 million in the same quarter last year. GAAP
operating income was $55.3 million and includes $4.5 million in costs
for stock-based compensation. GAAP net income, including $2.3 million
in costs for stock-based compensation (net of related tax benefit),
was $56.2 million ($0.29 per share). GAAP gross margin was 34.5
percent.
Non-GAAP operating income, which excludes stock-based
compensation, was $59.8 million, up 9 percent from last year's
operating income of $54.8 million. Non-GAAP net income for Q4 was
$58.4 million ($0.30 per share), up 14 percent compared with net
income of $51 million ($0.26 per share) in the prior year. Non-GAAP
gross margin was 34.5 percent, compared to 31.9 percent for the same
quarter last year. (See Note 1.)
Logitech's retail sales for Q4 grew by 9 percent year over year,
increasing in the Americas by 12 percent and EMEA by 9 percent, and
decreasing in Asia Pacific by 4 percent. Retail sales were driven by
strong growth in cordless desktops and keyboards (up 30 percent),
gaming (up 35 percent) and remote controls (up 78 percent); retail
sales for Q4 were negatively impacted by a 32 percent year-over-year
decline in webcams. OEM sales grew by 16 percent, driven by demand for
desktops and keyboards.
"As we continued to focus on improving our webcam market position,
an unexpected category slowdown led to a Q4 decline in webcam sales,
which caused us to miss our 17 percent revenue growth target for the
full fiscal year," said Guerrino De Luca, Logitech president and chief
executive officer. "We are confident that, over the next few quarters,
we can reignite webcam market growth by targeting our marketing
activities toward growing the overall category. We plan to leverage
partnerships to broaden consumer awareness and increase in-store
activities.
"I am pleased with our solid performance in FY 2007. The
resilience of our broad product portfolio and consistent execution
allowed us to achieve record-setting cash generation and 26 percent
growth in operating income, in line with our upwardly revised growth
goal. And our gross margin for Q4 and for the full fiscal year was
well above our long-term target range of 32-34 percent, reflecting
strong execution and a solid business model."
Highlights for Logitech's Fiscal Year 2007
-- More than 150 million products shipped.
-- Retail sales of cordless mice grew 25 percent, driven by
demand for the Logitech(R) MX(TM) Revolution and Logitech(R)
VX Revolution(TM) cordless laser mice.
-- Retail sales of iPod(R)/MP3 speakers more than doubled year
over year.
-- Retail sales of Harmony remote controls increased by 60
percent compared to last year.
-- Retail sales of PC gaming products increased by 63 percent
compared to last year.
-- Cash flow from operations doubled year over year, to $306
million.
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 April 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.
Investor Meeting
Logitech will hold an investor meeting in London on May 10, 2007
at 10:00 British Summer Time/5:00 a.m. Eastern Daylight Time/2:00 a.m.
Pacific Daylight Time. A live video webcast and replay of the meeting
will be available on the Logitech corporate Web site at
http://ir.logitech.com.
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).
Note 1. A reconciliation between non-GAAP operating income, net
income, and gross margin, and GAAP operating income, net income, and
gross margin is set forth in the second supplemental schedule of the
attached tables along with additional information regarding the use of
these non-GAAP measures.
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
webcam market 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
webcam market growth we expect, or when we expect it; 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, 2006
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.
(LOGI - IR)
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LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
Quarter Ended March 31,
CONSOLIDATED STATEMENTS OF INCOME 2007 2006
----------------------------------------------------------------------
Net sales $ 512,734 $ 466,056
Cost of goods sold 335,743 317,187
-----------------------
Gross profit 176,991 148,869
-----------------------
% of net sales 34.5% 31.9%
Operating expenses:
Marketing and selling 66,475 52,031
Research and development 28,432 23,064
General and administrative 26,786 19,003
-----------------------
Total operating expenses 121,693 94,098
-----------------------
Operating income 55,298 54,771
Interest income, net 3,212 1,131
Other income, net 3,531 2,807
-----------------------
Income before income taxes 62,041 58,709
Provision for income taxes 5,848 7,586
-----------------------
Net income $ 56,193 $ 51,123
=======================
Shares used to compute net income per share:
Basic 182,738 185,365
Diluted 191,091 196,114
Net income per share:
Basic $ 0.31 $ 0.28
Diluted $ 0.29 $ 0.26
Note:
Share and per-share data for all periods presented have been adjusted
to give effect to the two-for-one stock split that took effect on
July 14, 2006.
Net income for the three months ended March 31, 2007 included share-
based compensation expense under SFAS 123R of $2.3 million, net of
tax, or $0.01 per diluted share, related to employee stock options
and employee stock purchases. Net income for the three months ended
March 31, 2006 does not include the effect of share-based
compensation expense, because Logitech implemented SFAS 123R
effective April 1, 2006.
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 March 31, 2007.
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LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
Twelve Months Ended March 31,
CONSOLIDATED STATEMENTS OF INCOME 2007 2006
----------------------------------------------------------------------
Net sales $ 2,066,569 $ 1,796,715
Cost of goods sold 1,357,044 1,222,605
-----------------------------
Gross profit 709,525 574,110
-----------------------------
% of net sales 34.3% 32.0%
Operating expenses:
Marketing and selling 272,264 221,504
Research and development 108,256 87,953
General and administrative 98,143 65,742
-----------------------------
Total operating expenses 478,663 375,199
-----------------------------
Operating income 230,862 198,911
Interest income, net 8,733 3,591
Other income, net 15,962 7,352
-----------------------------
Income before income taxes 255,557 209,854
Provision for income taxes 25,709 28,749
-----------------------------
Net income $ 229,848 $ 181,105
=============================
Shares used to compute net income per share:
Basic 182,635 181,361
Diluted 190,991 198,769
Net income per share:
Basic $ 1.26 $ 1.00
Diluted $ 1.20 $ 0.92
Note:
Share and per-share data for all periods presented have been adjusted
to give effect to the two-for-one stock split that took effect on
July 14, 2006.
Net income for the twelve months ended March 31, 2007 included share-
based compensation expense under SFAS 123R of $14.9 million, net of
tax, or $0.07 per diluted share, related to employee stock options
and employee stock purchases. Net income for the twelve months ended
March 31, 2006 does not include the effect of share-based
compensation expense, because Logitech implemented SFAS 123R
effective April 1, 2006.
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 twelve months ended March 31, 2007.
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LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
March 31, March 31, March 31,
CONSOLIDATED BALANCE SHEETS 2007 2006 2005
----------------------------------------------------------------------
Current assets
Cash and cash equivalents $ 196,197 $ 245,014 $ 341,277
Short term investments 214,625 - -
Accounts receivable 310,377 289,849 229,234
Inventories 217,964 196,864 175,986
Other current assets 68,257 34,479 34,326
------------ ----------- ------------
Total current assets 1,007,420 766,206 780,823
Investments 14 36,414 16,793
Property, plant and equipment 87,054 74,810 52,656
Intangible assets
Goodwill 179,991 135,396 134,286
Other intangible assets 18,920 11,175 15,816
Other assets 34,064 33,063 27,323
------------ ----------- ------------
Total assets $ 1,327,463 $1,057,064 $ 1,027,697
============ =========== ============
Current liabilities
Short-term debt $ 11,856 $ 14,071 $ 9,875
Accounts payable 218,129 181,290 177,748
Accrued liabilities 235,079 162,922 156,575
------------ ----------- ------------
Total current liabilities 465,064 358,283 344,198
Long-term debt - 4 147,788
Other liabilities 17,874 13,601 9,562
------------ ----------- ------------
Total liabilities 482,938 371,888 501,548
Shareholders' equity 844,525 685,176 526,149
------------ ----------- ------------
Total liabilities and
shareholders' equity $ 1,327,463 $1,057,064 $ 1,027,697
============ =========== ============
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LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
Quarter Ended Twelve Months Ended
March 31 March 31
SUPPLEMENTAL FINANCIAL
INFORMATION 2007 2006 2007 2006
----------------------------------------------------------------------
Depreciation $ 8,944 $ 6,405 $ 35,239 $ 29,880
Amortization of other
acquisition-related
intangibles 1,591 1,160 4,876 4,641
Operating income 55,298 54,771 230,862 198,911
Operating income before
depreciation and
amortization 65,833 62,336 270,977 233,432
Capital expenditures 10,605 16,485 47,246 54,102
Net sales by channel:
Retail $ 457,205 $ 418,388 $ 1,844,395 $ 1,588,033
OEM 55,529 47,668 222,174 208,682
---------- ---------- ------------ ------------
Total net sales $ 512,734 $ 466,056 $ 2,066,569 $ 1,796,715
========== ========== ============ ============
Net sales by product
family:
Retail - Cordless $ 140,110 $ 114,652 $ 525,885 $ 448,358
Retail - Corded 85,271 81,569 332,129 314,695
Retail - Video 54,974 81,102 313,932 273,340
Retail - Audio 97,329 87,496 404,069 334,496
Retail - Gaming 38,827 28,808 145,784 136,944
Retail - Other 40,694 24,761 122,596 80,200
OEM 55,529 47,668 222,174 208,682
---------- ---------- ------------ ------------
Total net sales $ 512,734 $ 466,056 $ 2,066,569 $ 1,796,715
========== ========== ============ ============
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LOGITECH INTERNATIONAL S.A.
(In thousands, except per share) - Unaudited
SUPPLEMENTAL FINANCIAL INFORMATION
Quarter Ended Twelve Months Ended
Reconciliation of GAAP to non- March 31 March 31
GAAP Financial Measures 2007 2007
----------------------------------------------------------------------
GAAP gross margin 34.5% 34.3%
Adjustments:
Effect of stock-based
compensation 0.0% 0.1%
----------------- -------------------
Non-GAAP gross margin 34.5% 34.4%
================= ===================
GAAP operating income $ 55,298 $ 230,862
Adjustments:
Effect of stock-based
compensation 4,470 19,464
----------------- -------------------
Non-GAAP operating income $ 59,768 $ 250,326
================= ===================
GAAP net income $ 56,193 $ 229,848
Adjustments:
Effect of stock-based
compensation 2,255 14,938
----------------- -------------------
Non-GAAP net income $ 58,448 $ 244,786
================= ===================
Stock-based Compensation Expense Quarter Ended Twelve Months Ended
for Employee Stock Options and March 31 March 31
Employee Stock Purchases 2007 2007
----------------------------------------------------------------------
Cost of goods sold $ - $ 2,077
Marketing and selling 1,772 7,167
Research and development 824 3,151
General and administration 1,874 7,069
Income tax benefit (2,215) (4,526)
----------------- -------------------
Total stock-based compensation
expense after income taxes $ 2,255 $ 14,938
================= ===================
Stock-based compensation expense
for employee stock options and
employee stock purchases, net of
tax, per share (diluted) $ 0.01 $ 0.07
We sometimes use information derived from consolidated financial
information but not presented in our financial statements prepared in
accordance with U.S. generally accepted accounting principles (GAAP).
Certain of these data are considered "non-GAAP financial measures"
under the U.S. Securities and Exchange Commission rules. The
adjustments between the GAAP and non-GAAP financial measures
presented above consist of share-based compensation expense for
employee stock options and employee stock purchases, and the related
income tax effect, as recognized in accordance with SFAS 123R.
Because we implemented SFAS 123R effective April 1, 2006, our
financial results for the three and twelve months ended March 31,
2006 do not include the effect of share-based compensation expense
and are presented in the accompanying earnings release only on a GAAP
basis. Our management uses these non-GAAP measures in its financial
and operational decision-making. Our management believes these non-
GAAP measures, when considered in conjunction with the corresponding
GAAP measures, facilitate the comparison by our investors of results
for periods subsequent to our adoption of SFAS 123R, with
corresponding prior periods for which SFAS 123R was not effective.
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