EX-99.1 2 ex99_1.htm FORM 8-K EXHIBIT 99.1 ex99_1.htm
Exhibit 99.1
 
For Immediate Release
 
 
Logitech Logo
 
Editorial Contacts:
Joe Greenhalgh, Vice President, Investor Relations – USA (510) 713-4430
Nancy Morrison, Vice President, Corporate Communications – USA (510) 713-4948
Laura Scorza, Sr. Public Relations Manager – Europe +41-(0) 21-863-5336


Logitech Announces Second Quarter Financial Results for FY 2011

Company Delivers Strong Growth in Revenue and Profitability;
Increases Outlook for Full Year

 
FREMONT, Calif., Oct. 27, 2010 and MORGES, Switzerland, Oct. 28, 2010 — Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the second quarter of Fiscal Year 2011.
 
Sales for Q2 FY 2011 were $582 million, up 17 percent from $498 million in the same quarter last year. Excluding the unfavorable impact of exchange rate changes, sales increased by 21 percent. Operating income was $51 million, an increase of 87 percent compared to $27 million in the same quarter a year ago. Net income for Q2 was $41 million ($0.23 per share) compared to $21 million ($0.11 per share) in Q2 of FY 2010. Gross margin for Q2 FY 2011 was 37.3 percent, up from 30.5 percent one year ago and the Company’s highest-ever quarterly gross margin.
 
Logitech’s retail sales for Q2 FY 2011 grew by 11 percent year over year, with an increase in Asia of 38 percent, an increase in the Americas of 19 percent, and a decrease in EMEA of 3 percent.  OEM sales increased by 10 percent. The LifeSize division,which was not included in the previous year’s results, contributed 6 percentage points to the Company’s Q2 FY 2011 sales growth compared to the prior year.
 
“We’re very pleased with our strong performance in Q2,” stated Gerald P. Quindlen, Logitech president and chief executive officer. “We delivered double-digit growth in both sales and operating income, and we continued the momentum in our LifeSize division. We also achieved the highest quarterly gross margin in our history, primarily due to favorable product mix shifts and supply chain efficiency improvements.
 
“As a result of our very strong gross margin performance in the first half of FY 2011, we have raised our operating income outlook for the full fiscal year. In addition, we have raised our sales outlook for the full fiscal year to include our initial estimate of sales for our line of products for Google TV. We’re very encouraged both by early indicators of enthusiasm for our Logitech Revue with Google TV and associated peripherals and the opportunity for developing another long-term growth driver for our business.”
 
Outlook
For Fiscal Year 2011, ending March 31, 2011, Logitech has raised its sales outlook from the previous range of $2.3 to $2.35 billion to the new range of $2.35 to $2.4 billion. The target for operating income has been raised from the previous range of $160 to $170 million to the new range of $170 to $180 million. Expected gross margin has increased to approximately 36 percent from the previous range of 34 to 35 percent. The expected tax rate continues to be approximately 16 percent.
 
Earnings Teleconference and Webcast
Logitech will hold an earnings teleconference on Thursday, Oct. 28, 2010 at 8:30 a.m. Eastern Daylight Time and 14:30 Central European Summer Time. A live webcast of the call, along with presentation slides, will be available on the Logitech corporate Web site at http://ir.logitech.com.
 
About Logitech
 
Logitech is a world leader in products that connect people to the digital experiences they care about. Spanning multiple computing, communication and entertainment platforms, Logitech’s combined hardware and software enable or enhance digital navigation, music and video entertainment, gaming, social networking, audio and video communication over the Internet, video security and home-entertainment control. Founded in 1981, Logitech International is a Swiss public company listed on the SIX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI).
 
# # #

This press release contains forward-looking statements, including the statements regarding anticipated sales, operating income, gross margin and tax rate for FY 2011, and Logitech’s products for Google TV being a potential long-term growth driver. The forward-looking statements in this release involve risks and uncertainties that could cause Logitech’s actual results to differ materially from that anticipated in these forward-looking statements. Factors that could cause actual results to differ materially include: the demand of our customers and our consumers 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; if consumer reaction to and demand for Google TV and our products for it are less positive than we expect; the sales mix among our lower- and higher-margin products and our geographic sales mix; if our product introductions and marketing activities do not result in the sales and profitability growth we expect, or when we expect it; if we fail to take advantage of long-term trends in the consumer electronics and personal computers industries, including the growth of mobile computing devices such as smartphones and tablets; if there is a deterioration of business and economic conditions or significant fluctuations in currency exchange rates; competition in the video conferencing and communications industry, including from companies with significantly greater resources, sales and marketing organizations, installed base and name recognition; as well as those additional factors set forth in Logitech’s periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2010, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, 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 Switzerland 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 September 30,
 
CONSOLIDATED STATEMENTS OF INCOME
 
2010
   
2009
 
             
Net sales
  $ 581,884     $ 498,093  
Cost of goods sold
    364,950       346,305  
Gross profit
    216,934       151,788  
% of net sales
    37.3 %     30.5 %
                 
Operating expenses:
               
Marketing and selling
    97,412       68,835  
Research and development
    40,927       31,825  
General and administrative
    27,420       23,739  
Restructuring charges
    -       45  
Total operating expenses
    165,759       124,444  
                 
Operating income
    51,175       27,344  
                 
Interest income, net
    635       639  
Other expense, net
    (1,794 )     (1,438 )
                 
Income before income taxes
    50,016       26,545  
Provision for income taxes
    8,856       5,802  
                 
Net income
  $ 41,160     $ 20,743  
                 
Shares used to compute net income per share:
               
Basic
    176,359       178,395  
Diluted
    177,971       180,989  
Net income per share:
               
Basic
  $ 0.23     $ 0.12  
Diluted
  $ 0.23     $ 0.11  

 

 

 
 

 
 

 
 
 
LOGITECH INTERNATIONAL S.A.
 
             
(In thousands, except per share amounts) - Unaudited
           
             
             
   
Six Months Ended September 30,
 
CONSOLIDATED STATEMENTS OF INCOME
 
2010
   
2009
 
             
Net sales
  $ 1,061,214     $ 824,203  
Cost of goods sold
    675,251       594,593  
Gross profit
    385,963       229,610  
% of net sales
    36.4 %     27.9 %
                 
Operating expenses:
               
Marketing and selling
    188,889       127,773  
Research and development
    79,316       63,185  
General and administrative
    54,780       44,920  
Restructuring charges
    -       1,494  
Total operating expenses
    322,985       237,372  
                 
Operating income (loss)
    62,978       (7,762 )
                 
Interest income, net
    1,156       1,231  
Other income (expense), net
    2       (636 )
                 
Income (loss) before income taxes
    64,136       (7,167 )
Provision for income taxes
    3,454       9,455  
                 
Net income (loss)
  $ 60,682     $ (16,622 )
                 
Shares used to compute net income per share:
               
Basic
    175,921       179,058  
Diluted
    177,588       179,058  
Net income (loss) per share:
               
Basic
  $ 0.34     $ (0.09 )
Diluted
  $ 0.34     $ (0.09 )

 

 

 
 

 
 

 

 
LOGITECH INTERNATIONAL S.A.
       
                   
(In thousands) - Unaudited
                 
                   
                   
CONSOLIDATED BALANCE SHEETS
 
September 30, 2010
   
March 31, 2010
   
September 30, 2009
 
                   
Current assets
                 
Cash and cash equivalents
  $ 307,679     $ 319,944     $ 524,844  
Accounts receivable
    304,998       195,247       259,776  
Inventories
    343,021       219,593       239,904  
Other current assets
    63,482       58,877       60,104  
Total current assets
    1,019,180       793,661       1,084,628  
Property, plant and equipment
    91,122       91,229       97,664  
Intangible assets
                       
Goodwill
    553,794       553,462       243,108  
Other intangible assets
    88,389       95,396       27,505  
Other assets
    66,877       65,930       49,092  
Total assets
    1,819,362       1,599,678       1,501,997  
                         
Current liabilities
                       
Accounts payable
    370,033       257,955       291,661  
Accrued liabilities
    198,727       182,336       154,529  
Total current liabilities
    568,760       440,291       446,190  
Other liabilities
    160,521       159,672       142,370  
Total liabilities
    729,281       599,963       588,560  
                         
Shareholders' equity
    1,090,081       999,715       913,437  
                         
Total liabilities and shareholders' equity
  $ 1,819,362     $ 1,599,678     $ 1,501,997  

 

 


 

 

 
 

 


 

 
LOGITECH INTERNATIONAL S.A.
       
             
(In thousands) - Unaudited
           
             
             
   
Six Months Ended September 30,
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
2010
   
2009
 
             
Cash flows from operating activities:
           
Net income (loss)
  $ 60,682     $ (16,622 )
Non-cash items included in net income (loss):
               
Depreciation
    23,343       26,057  
Amortization of other intangible assets
    14,027       4,603  
Share-based compensation expense
    16,720       11,166  
Gain on disposal of fixed assets
    (838 )     -  
Excess tax benefits from share-based compensation
    (676 )     (1,346 )
Loss (gain) on cash surrender value of life insurance policies
    169       (402 )
Deferred income taxes and other
    1,804       (274 )
Changes in assets and liabilities:
               
Accounts receivable
    (99,615 )     (39,896 )
Inventories
    (129,497 )     (1,011 )
Other assets
    (5,511 )     (8,585 )
Accounts payable
    110,775       130,803  
Accrued liabilities
    13,316       28,407  
Net cash provided by operating activities
    4,699       132,900  
                 
Cash flows from investing activities:
               
Purchases of property, plant and equipment
    (25,419 )     (18,144 )
Acquisitions and investments, net of cash acquired
    (7,300 )     (200 )
Proceeds from sale of property, plant and equipment
    2,688       -  
Proceeds from cash surrender of life insurance policies
    -       813  
Net cash used in investing activities
    (30,031 )     (17,531 )
                 
Cash flows from financing activities:
               
Purchases of treasury shares
    -       (101,267 )
Proceeds from sale of shares upon exercise of options and purchase rights
    16,538       12,972  
Excess tax benefits from share-based compensation
    676       1,346  
Net cash provided by (used in) financing activities
    17,214       (86,949 )
                 
Effect of exchange rate changes on cash and cash equivalents
    (4,147 )     3,665  
Net increase (decrease) in cash and cash equivalents
    (12,265 )     32,085  
Cash and cash equivalents at beginning of period
    319,944       492,759  
Cash and cash equivalents at end of period
  $ 307,679     $ 524,844  

 

 
 

 


 

 
LOGITECH INTERNATIONAL S.A.
                   
                           
(In thousands, except per share amounts) - Unaudited
                       
                           
     
Quarter Ended
   
Six Months Ended
 
     
September 30,
   
September 30,
 
SUPPLEMENTAL FINANCIAL INFORMATION
 
2010
   
2009
   
2010
   
2009
 
                           
Depreciation
  $ 11,005     $ 14,580     $ 23,343     $ 26,057  
Amortization of other  intangibles
    7,116       2,270       14,027       4,603  
Operating income (loss)
    51,175       27,344       62,978       (7,762 )
Operating income before depreciation and amortization
    69,296       44,194       100,348       22,898  
Capital expenditures
    13,501       10,442       25,419       18,144  
                                   
                                   
Net sales by channel:
                               
 
Retail
  $ 489,721     $ 442,702     $ 883,587     $ 726,468  
 
OEM
    60,850       55,391       119,186       97,735  
 
LifeSize
    31,313       -       58,441       -  
 
Total net sales
  $ 581,884     $ 498,093     $ 1,061,214     $ 824,203  
                                   
                                   
Net retail sales by product family:
                               
 
Retail - Pointing Devices
  $ 153,870     $ 130,611     $ 285,716     $ 220,847  
 
Retail - Keyboards & Desktops
    95,453       79,906       171,619       137,915  
 
Retail - Audio
    119,965       121,001       215,611       193,121  
 
Retail - Video
    68,794       58,263       115,850       101,077  
 
Retail - Gaming
    20,261       28,493       34,827       45,642  
 
Retail - Remotes
    31,378       24,428       59,964       27,866  
 
Total net retail sales
  $ 489,721     $ 442,702     $ 883,587     $ 726,468  
                                   
                                   
               
     
Quarter Ended
   
Six Months Ended
 
     
September 30,
   
September 30,
 
Share-based Compensation Expense
    2010       2009       2010       2009  
                                   
Cost of goods sold
  $ 919     $ 628     $ 1,910     $ 1,426  
Marketing and selling
    3,091       2,154       6,168       3,913  
Research and development
      1,776       1,068       3,552       1,909  
General and administration
      2,472       1,908       5,090       3,918  
Income tax benefit
    (2,442 )     (449 )     (4,337 )     (833 )
Total share-based compensation expense after income taxes
  $ 5,816     $ 5,309     $ 12,383     $ 10,333  
                                   
Share-based compensation expense net of tax, per share (diluted)
  $ 0.03     $ 0.03     $ 0.07     $ 0.06  
                                   
                                   
 
Constant dollar sales (sales excluding impact of exchange rate changes)
                               
We refer to our net sales excluding the impact of foreign currency exchange rates as constant dollar sales. Constant dollar sales are a non-GAAP financial measure, which is information derived from consolidated financial information but not presented in our financial statements prepared in accordance with U.S. GAAP. Our management uses these non-GAAP measures in its financial and operational decision-making, and believes these non-GAAP measures, when considered in conjunction with the corresponding GAAP measures, facilitate a better understanding of changes in net sales. Constant dollar sales are calculated by translating prior period sales in each local currency at the current period's average exchange rate for that currency.