Logitech Announces Record Q1 Financial Results

Logitech International (SWX:LOGN) (Nasdaq:LOGI) today announced financial results for the first quarter of Fiscal Year 2009. Sales for Q1 were $509 million, up 18 percent from $430 million in the same quarter last year. Operating income was $30 million, up 24 percent from $24 million for the same quarter a year ago. Net income was $29 million ($0.16 per share) compared to $26 million ($0.14 per share) in Q1 of FY 2008. Gross margin was 34.1 percent, compared to 33.7 percent in Q1 of FY 2008. Cash flow from operations was $44 million, up by more than three times compared to Q1 of FY 2008. Logitech’s retail sales for Q1 grew by 19 percent year over year, increasing by 20 percent in EMEA, 10 percent in the Americas and 41 percent in Asia. Retail sales growth was fueled by strong performance of Harmony® remotes (up 74%) and pointing devices (up 34%). Performance of the retail video business continued to rebound with sales up 21 percent. OEM sales grew by 15 percent, driven primarily by strong demand for microphones for console gaming. "We’re very pleased that Logitech’s Fiscal 2009 is off to a solid start in sales and profitability,” said Gerald P. Quindlen, president and chief executive officer. "With strong demand for our products, we delivered double digit revenue growth across all regions and accelerated momentum in the video category. As we proceed into Q2, we look forward to continued market momentum driven by new products that will be introduced over the next few months.” Outlook The Company confirmed its financial targets of 15 percent growth in both sales and operating income for Fiscal Year 2009, ending March 31, 2009. FY 2009 gross margin is expected to be above 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 22, 2008 at 14:30 Central European Summer Time/8:30 a.m. Eastern Daylight Time/5:30 a.m. Pacific Daylight Time to discuss these results as well as the Company’s outlook. 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 listed 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 2009, continued market momentum and the effect of new product introductions. The forward-looking statements in this release involve risks and uncertainties that could cause Logitech’s actual performance and results 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, particularly our newly introduced products, and our ability to accurately forecast it; if we fail to introduce new products in a timely manner at the product cost 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; 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 10-K for the fiscal year ended March 31, 2008, 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) LOGITECH INTERNATIONAL S.A.   (In thousands, except per share amounts) - Unaudited       Quarter Ended June 30, CONSOLIDATED STATEMENTS OF INCOME   2008   2007   Net sales $ 508,711 $ 429,537 Cost of goods sold   335,139     284,751 Gross profit   173,572     144,786 % of net sales 34.1% 33.7%   Operating expenses: Marketing and selling 77,280 64,787 Research and development 33,259 28,765 General and administrative   33,309     27,322 Total operating expenses   143,848     120,874   Operating income 29,724 23,912   Interest income, net 2,552 3,538 Other income, net   561     1,319   Income before income taxes 32,837 28,769 Provision for income taxes   3,531     3,215   Net income $ 29,306   $ 25,554     Shares used to compute net income per share: Basic 179,046 181,802 Diluted 184,692 189,250 Net income per share: Basic $0.16 $0.14 Diluted $0.16 $0.14   LOGITECH INTERNATIONAL S.A.   (In thousands) - Unaudited         CONSOLIDATED BALANCE SHEETS   June 30, 2008   March 31, 2008   June 30, 2007     Current assets Cash and cash equivalents $ 481,020 $ 482,352 $ 227,545 Short term investments 3,364 3,940 138,975 Accounts receivable 338,493 373,619 303,384 Inventories 274,460 245,737 231,817 Other current assets   62,572   60,668   60,168 Total current assets 1,159,909 1,166,316 961,889 Property, plant and equipment 103,964 104,461 97,985 Intangible assets Goodwill 194,383 194,383 182,255 Other intangible assets 20,125 21,730 17,702 Other assets   42,760   40,042   30,664 Total assets $ 1,521,141 $ 1,526,932 $ 1,290,495   Current liabilities Accounts payable $ 299,701 $ 287,001 $ 210,987 Accrued liabilities   137,907   156,094   136,688 Total current liabilities 437,608 443,095 347,675 Other liabilities   125,421   123,793   93,445 Total liabilities 563,029 566,888 441,120   Shareholders' equity 958,112 960,044 849,375       Total liabilities and shareholders' equity $ 1,521,141 $ 1,526,932 $ 1,290,495   LOGITECH INTERNATIONAL S.A.   (In thousands) - Unaudited   SUPPLEMENTAL FINANCIAL INFORMATION Quarter Ended June 30 Reconciliation of GAAP to non-GAAP Financial Measures   2008   GAAP net income $ 29,306 Adjustments: Impairment loss on short-term investments   575   Non-GAAP net income $ 29,881   GAAP net income per share: Basic $ 0.16 Diluted $ 0.16   Impairment loss on short-term investments Basic $ 0.01 Diluted $ 0.00     Non-GAAP net income per share: Basic $ 0.17 Diluted $ 0.16     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 the impact on Other Income of the impairment loss related to other-than-temporary declines in fair value of short-term investments during the three months ended June 30, 2008. 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 better comparison by our investors of our current period results with corresponding prior periods.   LOGITECH INTERNATIONAL S.A.   (In thousands) - Unaudited     Quarter Ended June 30 SUPPLEMENTAL FINANCIAL INFORMATION   2008   2007   Depreciation $ 10,595 $ 8,826 Amortization of other acquisition-related intangibles 1,605 1,218 Operating income 29,724 23,912 Operating income before depreciation and amortization 41,924 33,956 Capital expenditures 10,628 19,972     Net sales by channel: Retail $ 439,168 $ 369,227 OEM   69,543   60,310 Total net sales $ 508,711 $ 429,537     Net sales by product family: Retail - Pointing Devices $ 147,379 $ 109,653 Retail - Keyboards & Desktops 93,934 81,589 Retail - Audio 83,218 93,066 Retail - Video 57,188 47,275 Retail - Gaming 30,510 22,202 Retail - Remotes 26,939 15,442 OEM   69,543   60,310 Total net sales $ 508,711 $ 429,537     Quarter Ended Stock-based Compensation Expense for June 30 Employee Stock Options and Employee Stock Purchases   2008   2007   Cost of goods sold $ 731 $ 704 Marketing and selling 1,849 1,946 Research and development 962 766 General and administration 2,346 2,028 Income tax benefit   (957)   (969)   Total stock-based compensation expense after income taxes $ 4,931 $ 4,475   Stock-based compensation expense for employee stock options and employee stock purchases, net of tax, per share (diluted) $ 0.03 $ 0.02