Company Delivers Strong Growth in Revenue and Profitability;
Increases Outlook for Full Year
FREMONT, Calif. & MORGES, Switzerland--(BUSINESS WIRE)--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.
| 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 income (expense), net | | | (1,794 | ) | | | (1,438 | ) |
| | | | | |
| Income before income taxes | | | 50,016 | | | | 26,545 | |
| Provision (benefit) 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 (benefit) 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. |
| | | | | | | | | |
(LOGI – IR)