Logitech Delivers Record Q1 Sales and Profit; Sales up 18%, Net Income up 35%
Logitech International (SWX:LOGN) (Nasdaq:LOGI) today
announced record Q1 sales and profit, posting its thirty-first
consecutive quarter of double-digit revenue growth. Sales for the
first quarter of Fiscal Year 2007, ended June 30, 2006, were $393
million, up 18 percent from $335 million for the same quarter one year
ago.
Beginning with Q1 FY 2007, in accordance with U.S. Generally
Accepted Accounting Principles (GAAP), Logitech has adopted Statement
of Financial Accounting Standards No.123R (SFAS 123R). The Company's
GAAP results now include the costs of stock-based compensation. A
reconciliation between GAAP and non-GAAP results is provided in a
table as part of the attached financial statements.
For Q1, GAAP operating income was $23.8 million, including $5.1
million in costs for stock-based compensation. GAAP net income for Q1,
including $4.2 million in costs for stock-based compensation (net of
related tax benefit), was $30.1 million ($0.16 per share). Net income
during the first quarter also included a gain of $6.6 million on the
sale of shares of Anoto Group AB.
Non-GAAP operating income, which excludes stock-based
compensation, was $28.9 million, up 15 percent from last year's
operating income of $25.2 million. Non-GAAP net income for Q1 was
$34.4 million ($0.18 per share), up 53 percent compared with net
income of $22.4 million ($0.12 per share) in the prior year. Non-GAAP
gross margin was 30.9 percent, compared to 32.1 percent for the same
quarter last year.
Logitech's retail sales for the quarter grew by 20 percent, with
growth in all regions, led by 30 percent growth in the Americas.
Retail sales were driven by continued strong growth in video products
(up 56 percent), remote controls (up 122 percent) and audio products
(up 23 percent). Retail sales of cordless products increased by 18
percent, with growth in both cordless mice and cordless desktops. The
Company's OEM sales grew by 4 percent.
"With our solid performance in Q1, Logitech is on track to achieve
our financial goals for FY 2007," said Guerrino De Luca, the Company's
president and chief executive officer. "We saw continued strong retail
sales growth in Q1 -- including our projected return to growth in the
cordless category. As we anticipated, gross margin for the quarter was
below our long-term target range of 32-34 percent; we expect to see
substantial sequential and year-over-year improvement in gross margin
in Q2 as we roll out a range of exciting new products, many with
margins higher than those of the products being replaced. A new lineup
of webcams, announced earlier this week, should sustain our leadership
in video communications, and during the next few months, we'll
announce the rest of our portfolio for this holiday season, including
a breakthrough in high-performance mice and a range of products for
VoIP and notebook users."
Outlook
Logitech confirmed its targets for the current fiscal year, ending
March 31, 2007. The Company expects sales and non-GAAP operating
income to grow 15 percent, year over year. Gross margin is expected to
be at the low end of the Company's long-term targeted range of 32-34
percent, but slightly higher compared with FY 2006, due to anticipated
upside in the second half of FY 2007 following new-product
introductions. Non-GAAP operating income excludes the cost of
stock-based compensation. The net cost of stock-based compensation for
FY 2007, reflected in net income, is expected to be between $16 and
$19 million.
Earnings Teleconference
Logitech will hold an earnings teleconference on July 20, 2006 at
14:00 Central European Summer Time/8:00 a.m. Eastern Daylight
Time/5:00 a.m. Pacific Daylight Time to discuss these results as well
as guidance for Fiscal Year 2007. 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
Founded in 1981, Logitech designs, manufactures and markets
personal peripherals that enable people to effectively work, play, and
communicate in the digital world. Logitech International is a Swiss
public company traded on the SWX Swiss Exchange (LOGN) and in the U.S.
on the Nasdaq Global Select Market (LOGI).
This press release contains forward-looking statements regarding
expected gross margin improvement in Q2 FY 2007, expected timing of
new product introductions and the margins for such products, and
expected sales, operating income and gross margin for Fiscal Year
2007. 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 our
ability to introduce higher-margin products in the balance of Fiscal
Year 2007 in a timely manner and market reaction to those products;
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 ability to match production to demand and to
coordinate the worldwide manufacturing and distribution of our
products in a timely and cost-effective manner; our ability to
successfully implement a significant upgrade to our enterprise
resource planning software system in Q2 FY 2007; the sales mix between
our lower- and higher-margin products; consumer demand for our
products and our ability to accurately forecast it; 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 available at
www.sec.gov. Logitech does not undertake to update any forward-looking
statements.
Logitech, the Logitech logo 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 Web site at www.logitech.com.
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LOGITECH INTERNATIONAL S.A.
(In thousands, except per share / ADS) - Unaudited
Quarter Ended June 30
CONSOLIDATED STATEMENTS OF INCOME 2006 2005
----------------------------------------------------------------------
Net sales $393,282 $334,702
Cost of goods sold 272,370 227,330
----------------------
Gross profit 120,912 107,372
----------------------
% of net sales 30.7% 32.1%
Operating expenses:
Marketing and selling 50,848 46,293
Research and development 25,645 21,018
General and administration 20,628 14,834
----------------------
Total operating expenses 97,121 82,145
----------------------
Operating income 23,791 25,227
Interest income, net 1,546 585
Other income, net 8,731 234
----------------------
Income before income taxes 34,068 26,046
Provision for income taxes 3,921 3,649
----------------------
Net income $ 30,147 $ 22,397
======================
Shares used to compute net income per share and
ADS:
Basic 182,648 176,914
Diluted 190,646 197,813
Net income per share and ADS:
Basic $ 0.17 $ 0.13
Diluted $ 0.16 $ 0.12
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 June 30, 2006 included share-
based compensation expense under SFAS 123R of $4.2 million, net of
tax, related to employee stock options and employee stock purchases.
Net income for the three months ended June 30, 2005 does not include
the effect of share-based compensation expense, because Logitech
implemented SFAS 123R effective April 1, 2006.
LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
CONSOLIDATED BALANCE SHEETS June 30, March 31, June 30,
2006 2006 2005
----------------------------------------------------------------------
Current assets
Cash and cash equivalents $ 246,495 $ 245,014 $ 298,785
Accounts receivable 291,035 289,849 204,867
Inventories 217,599 196,864 189,305
Other current assets 49,021 34,479 52,198
----------- ----------- -----------
Total current assets 804,150 766,206 745,155
Investments 13,566 36,414 16,681
Property, plant and equipment 81,622 74,810 60,742
Intangible assets
Goodwill 136,648 135,396 133,950
Other intangible assets 10,223 11,175 14,656
Other assets 23,380 33,063 11,398
----------- ----------- -----------
Total assets $1,069,589 $1,057,064 $ 982,582
=========== =========== ===========
Current liabilities
Short-term debt $ 14,433 $ 14,071 $ 147,268
Accounts payable 190,483 181,290 153,529
Accrued liabilities 158,244 162,922 144,427
----------- ----------- -----------
Total current liabilities 363,160 358,283 445,224
Long-term debt - 4 49
Other liabilities 11,700 13,601 9,796
----------- ----------- -----------
Total liabilities 374,860 371,888 455,069
Shareholders' equity 694,729 685,176 527,513
----------- ----------- -----------
Total liabilities and
shareholders' equity $1,069,589 $1,057,064 $ 982,582
=========== =========== ===========
LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
Quarter Ended
June 30
SUPPLEMENTAL FINANCIAL INFORMATION 2006 2005
----------------------------------------------------------------------
Depreciation $ 7,501 $ 7,025
Amortization of other acquisition-related
intangibles 953 1,160
Operating income 23,791 25,227
Operating income before depreciation and
amortization 32,245 33,412
Capital expenditures 13,749 10,766
Net sales by channel:
Retail $341,116 $284,312
OEM 52,166 50,390
--------- ---------
Total net sales $393,282 $334,702
========= =========
Net sales by product family:
Retail - Cordless $ 88,984 $ 75,305
Retail - Corded 68,103 72,269
Retail - Video 75,658 48,484
Retail - Audio 67,318 54,797
Retail - Gaming 19,090 20,589
Retail - Other 21,963 12,868
OEM 52,166 50,390
--------- ---------
Total net sales $393,282 $334,702
========= =========
LOGITECH INTERNATIONAL S.A.
(In thousands, except per share / ADS) - Unaudited
Quarter Ended June 30
2006 2006 2006 2005
------------------------------- ---------
GAAP/NON-GAAP CONSOLIDATED GAAP Adjustments Non-GAAP GAAP
STATEMENTS OF INCOME (1) (2)
------------------------------------------------------------ ---------
Net sales $393,282 $393,282 $334,702
Cost of goods sold 272,370 (718) 271,652 227,330
------------------------------- ---------
Gross profit 120,912 718 121,630 107,372
------------------------------- ---------
% of net sales 30.7% 30.9% 32.1%
Operating expenses:
Marketing and selling 50,848 (1,134) 49,714 46,293
Research and development 25,645 (1,505) 24,140 21,018
General and administration 20,628 (1,770) 18,858 14,834
------------------------------- ---------
Total operating expenses 97,121 (4,409) 92,712 82,145
------------------------------- ---------
Operating income 23,791 5,127 28,918 25,227
Interest income, net 1,546 1,546 585
Other income, net 8,731 8,731 234
------------------------------- ---------
Income before income taxes 34,068 5,127 39,195 26,046
Provision for income taxes 3,921 918 4,839 3,649
------------------------------- ---------
Net income $ 30,147 $ 4,209 $ 34,356 $ 22,397
=============================== =========
Shares used to compute net
income per share and ADS:
Basic 182,648 182,648 176,914
Diluted 190,646 190,646 197,813
Net income per share and ADS:
Basic $ 0.17 $ 0.02 $ 0.19 $ 0.13
Diluted $ 0.16 $ 0.02 $ 0.18 $ 0.12
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.
(1) The adjustments between the GAAP and non-GAAP consolidated
statements of income for the three months ended June 30, 2006
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. The
consolidated statement of income for the three months ended June
30, 2005 does not include the effect of share-based compensation
expense, because Logitech implemented SFAS 123R effective April 1,
2006.
(2) The non-GAAP consolidated statement of income is not in accordance
with, or an alternative for, generally accepted accounting
principles and may be different from non-GAAP measures used by
other companies. Logitech's management believes these non-GAAP
measures, when shown in conjunction with the corresponding GAAP
measures, facilitate the comparison of results for current periods
with past periods.
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(LOGI - IR)