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Logitech Posts Record Second Quarter Results

Oct 21, 2003

Revenue $294 million; Operating Income $27.4 million; EPS $.44

FREMONT, Calif. and ROMANEL-SUR-MORGES, Switzerland - Oct. 21, 2003 - Logitech International (Nasdaq:LOGI) (Switzerland: LOGN) today announced that sales for its second fiscal quarter of 2004, ended September 30, 2003, were $294 million, up 17 percent from $252 million in the same quarter last year. Operating income was $27.4 million, up from $25.7 million last year. Net income for the quarter was $21.2 million ($0.44 per share), up slightly from $21 million ($0.42 per share) in Q2, 2003. Gross margin rebounded in the second quarter to 31.5 percent, compared with 27.8 percent during this year's first fiscal quarter -- an improvement of 370 basis points.

Q2, 2004 was Logitech's strongest-ever second quarter, with revenue and operating income exceeding its expectations. The strong Q2 revenue results were largely due to robust OEM sales, which were up by 45 percent over Q2 of the prior year. Retail sales of Logitech products also grew - up 11 percent over the same quarter last year. The sequential improvement in gross margin was a significant factor for the higher-than-expected operating income.

"We're very pleased with our performance for the second quarter," said Guerrino De Luca, Logitech's president and chief executive officer. "Our record sales, solid profitability and improved margins for Q2 clearly indicate that our growth initiatives and product-cost improvements are working.

"Our OEM revenue was the highest ever, driven by sales to Sony of the EyeToy™ Camera and the USB Headset for the Sony® PlayStation® 2, and by the appeal of our products that enable personal computer producers and marketers to differentiate their systems with innovative, high-quality interface products.

"For key Logitech retail products -- such as cordless mice, gaming peripherals for consoles and PCs, PC speakers and headsets, and webcams -- we were able to deliver significant growth, and defend or gain market share in a vibrant and extremely competitive market."

Highlights of Logitech's second quarter include:

  • Record performance for Logitech's console-gaming peripherals, representing the Company's highest level of sales and unit shipments - sales for these products more than tripled compared to the same quarter last year
  • Retail sales of Logitech-branded speakers more than doubled over Q2 of last year
  • Retail sales of webcams increased by 36 percent over Q2 of last year
  • Cash flow from operations was $31 million for Q2, 2004, up $20 million compared with the same quarter a year ago
  • Celebration of a key milestone - shipment of the Company's 500 millionth mouse
  • Successful launch of the Company's first-ever television advertising campaign, which is integrated with print and Web advertising
  • Introduction of innovative keyboard and mouse products with a wireless hub for Bluetooth® connectivity - the products provide interoperability between a desktop PC and Bluetooth mobile phones, PDAs, headsets and printers
  • Introduction of compelling new retail products, including cordless mice, PC speakers, cordless headsets and gaming peripherals for PCs and consoles

For the fiscal year 2004, ending March 31, 2004, the Company reaffirmed its targets for 10 percent growth in revenue and 15 percent growth in operating income, over FY 2003.

"Logitech's stated sales and operating income goals for our full fiscal year are unchanged," Mr. De Luca said. "In the face of intense competition, our Q2 performance is yet another example of the ability of Logitech's people to fight and win. Our priority is to continue to drive growth and market share, while balancing profitability and gross margin. Based on the momentum we see now from initiatives begun in the first half of the fiscal year, we believe our operating income growth goal of 15 percent, while ambitious, is attainable."

Logitech also announced that its board of directors has approved a new Share Buyback Program, which allows the Company to spend up to 40 million Swiss francs (approximately U.S. $30 million) on the purchase of Logitech shares, over the next twelve months.

To discuss its earnings results for Q2 of fiscal 2004 and its outlook for the full fiscal year ending March 31, 2004, Logitech will conduct a teleconference today at 9:00 a.m. PDT/12:00 p.m. EDT/18:00 Central European Time. A live webcast of the teleconference will be accessible at http://www.logitech.com. A replay of this teleconference will be made available on the Logitech Web site. Please visit the Web site at least 10 minutes early to register for the teleconference webcast.

About Logitech

Logitech designs, manufactures and markets personal interface products that enable people to effectively work, play, and communicate in the digital world. With corporate headquarters through its U.S. subsidiary in Fremont, California, and regional headquarters through local subsidiaries in Switzerland, Taiwan and Hong Kong, Logitech International is a Swiss public company traded in Switzerland on the Swiss Stock Exchange (LOGN) and in the U.S. on the Nasdaq National Market System (LOGI). The company has manufacturing facilities in Asia and offices in major cities in North America, Europe and Asia Pacific.

This press release contains forward-looking statements, including the statements regarding Logitech's expected revenue and operating income for fiscal 2004 and the effectiveness of the Company's growth initiatives and product-cost improvements. 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 Logitech's ability to continue to implement product cost improvements, the sales mix of our higher and lower margin retail and OEM products, an increase in the amount or frequency of price reductions and promotions in response to competition, the timing of new product introductions by Logitech and its competitors and their acceptance by the market, our ability to match production to demand and coordinate the worldwide manufacturing and distribution of our products in a timely and cost-effective manner, general economic and political conditions, the effect of fluctuations in exchange rates, as well as generally those additional factors set forth in our Annual Report on Form 20-F for the fiscal year ended March 31, 2003, and subsequent filings, available from the SEC's Edgar database at www.sec.gov and upon request from Logitech by calling (510) 713-4220. 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.

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

Quarter Ended
September 30

CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share / ADS) - Unaudited

2004

2003

 

 

 

Net sales

$ 329,568

$ 293,593

Cost of goods sold

220,299

201,131

Gross profit

109,269

92,462

     % of net sales

33.2%

31.5%

 

 

 

Operating expenses:

 

 

     Marketing and selling

49,233

39,483

     Research and development

17,503

14,541

     General and administration

12,986

11,019

Total operating expenses

79,722

65,043

 

 

 

Operating income

29,547

27,419

 

 

 

Interest expense, net

(225)

(1,104)

Other income, net

1,253

190

 

 

 

Income before income taxes

30,575

26,505

Provision for income taxes

4,586

5,301

 

 

 

Net income

$  25,989

$  21,204

 

 

 

Shares used to compute net income per share and ADS:

 

 

     Basic

44,112

45,669

     Diluted

49,219

50,093

Net income per share and ADS:

 

 

     Basic

$0.59

$0.46

     Diluted

$0.54

$0.44


LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

Six Months Ended
September 30

CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share / ADS) - Unaudited

2004

2003

 

 

 

Net sales

$ 596,162

$ 511,785

Cost of goods sold

396,027

358,685

Gross profit

200,135

153,100

     % of net sales

33.6%

29.9%

 

 

 

Operating expenses:

 

 

     Marketing and selling

88,802

67,515

     Research and development

34,182

29,136

     General and administration

26,028

21,177

Total operating expenses

149,012

117,828

 

 

 

Operating income

51,123

35,272

 

 

 

Interest expense, net

(515)

(1,353)

Other income (expense), net

2,149

(293)

 

 

 

Income before income taxes

52,757

33,626

Provision for income taxes

7,913

6,725

 

 

 

Net income

$  44,844

$  26,901

 

 

 

Shares used to compute net income per share and ADS:

 

 

     Basic

44,474

45,706

     Diluted

49,647

50,411

Net income per share and ADS:

 

 

     Basic

$1.01

$0.59

     Diluted

$0.93

$0.56


LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEETS
(In thousands) - Unaudited

September 30,
2004

March 31,
2004

September 30,
2003

 

 

 

 

Current assets

 

 

 

     Cash and cash equivalents

$ 193,477

$ 294,753

$ 196,904

     Accounts receivable

214,858

206,187

216,766

     Inventories

194,665

135,561

133,388

     Other current assets

44,210

45,304

38,564

     Total current assets

647,210

681,805

585,622

Investments

16,754

16,172

16,137

Property, plant and equipment

43,661

37,308

37,842

Intangible assets

 

 

 

     Goodwill

133,630

108,615

108,615

     Other intangible assets

19,122

12,543

15,116

Other assets

3,554

9,473

7,595

Total assets

$ 863,931

$ 865,916

$ 770,927

 

 

 

 

Current liabilities

 

 

 

     Short-term debt

$    9,595

$  14,129

$  10,340

     Accounts payable

160,742

143,016

160,076

     Accrued liabilites

130,580

113,752

103,919

     Total current liabilities

300,917

270,897

274,335

Long-term debt

140,771

137,008

132,960

Other liabilities

883

931

3,539

Total liabilities

442,571

408,836

410,834

 

 

 

 

Shareholders' equity

421,360

457,080

360,093

 

 

 

 

Total liabilities and shareholders' equity

$ 863,931

$ 865,916

$ 770,927


LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

 

Quarter Ended
September 30

SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands) - Unaudited

2004

2003

 

 

 

Depreciation

$  6,240

$  6,762

Amortization of other acquisition-related intangibles

1,585

1,295

Operating income

29,547

27,419

Operating income before depreciation and amortization

37,372

35,476

Capital expenditures 7,737  5,031
     
Net sales by channel:    
     Retail $ 284,924 $ 234,478
     OEM 44,644 59,115
          Total net sales $ 329,568 $ 293,593
     
Net sales by product family:    
     Retail - Cordless $  100,970 $  73,091
     Retail - Corded 71,632 77,034
     Retail - Video 47,984 36,607
     Retail - Audio 33,107 28,224
     Retail - Gaming 24,935 16,261
     Retail - Other 6,296 3,261
     OEM 44,644 59,115
          Total net sales $ 329,568 $ 293,593

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

 

Six Months Ended
 September 30

SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands) - Unaudited

2004

2003

 

 

 

Depreciation

$  12,156

$  12,623

Amortization of other acquisition-related intangibles

2,981

2,672

Operating income

51,123

35,272

Operating income before depreciation and amortization

66,260

50,567

Capital expenditures 18,328 11,804
     
Net sales by channel:    
     Retail $ 508,395 $ 404,303
     OEM 87,767 107,482
          Total net sales $ 596,162 $ 511,785
     
Net sales by product family:    
     Retail - Cordless $  177,650 $  128,448
     Retail - Corded 129,201 136,478
     Retail - Video 93,879 58,422
     Retail - Audio 54,606 47,731
     Retail - Gaming 41,184 24,436
     Retail - Other 11,875 8,788
     OEM 87,767 107,482
          Total net sales $ 596,162 $ 511,785
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