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Logitech Continues Strong Growth with Best Quarter Ever

Jan 19, 2004

  • Third Quarter Sales Up 16 Percent at $410 Million
  • Operating Income Up 29 Percent at $65 Million
  • Net Income Up 65 Percent at $67 Million

FREMONT, Calif., Jan. 19, 2004 and ROMANEL-SUR-MORGES, Switzerland, Jan. 20, 2004 - Logitech International (Nasdaq: LOGI) (Switzerland: LOGN) today announced the best quarterly financial performance in the Company's history. For Logitech's third fiscal quarter, ended December 31, 2003, sales were $410 million, up 16 percent from $352 million for the same quarter one year ago. Gross margin was 34.3 percent, up from 31.5 percent in Q2 of this fiscal year, and up from 33.3 percent in the same quarter last year. Operating income was $65.3 million, up 29 percent from $50.8 million last year. Net income for the quarter was $66.8 million ($1.35 per share), up from $40.4 million ($0.80 per share) in the prior year. Excluding a one-time favorable impact of $13.4 million from the previously announced release of a valuation allowance on specific deferred tax assets, net income was $53.5 million ($1.09 per share), an increase of 32 percent over last year.

Logitech's OEM sales continued their strong growth, up 39 percent year over year, fueled by sales to Sony of products such as the EyeToy ™ camera for the Sony ® PlayStation ® 2. Retail sales were up 12 percent from last year, driven by compelling product line-ups in each of Logitech's product categories. Logitech saw particularly robust retail sales of webcams, PC speakers, cordless desktops and gaming controllers.

"This outstanding performance during our most pivotal fiscal quarter builds on a record second quarter, and increases our confidence that Logitech will achieve the financial goals we set for ourselves at the beginning of the fiscal year," said Guerrino De Luca, Logitech president and chief executive officer. "In addition to our strong sales growth and record profitability, we are particularly pleased by the solid sequential and year-over-year improvement in gross margin. We are pursuing the right growth strategy - our efforts to reduce product costs and increase operating efficiencies are clearly paying off, even as we continue to invest in a range of demand-generating activities."

Highlights of Logitech's third quarter include:

  • Record retail sales for Logitech's cordless desktop products - up 37 percent from the same quarter last year
  • Record growth for console gaming products - sales were up 174 percent from the same quarter last year and unit shipments totaled 2.5 million, nearly twice the unit shipments for any prior quarter
  • Continued retail sales growth for webcams, up 26 percent from last year
  • Retail sales growth for Logitech-branded multimedia speakers of 75 percent over last year
  • Cash flow from operations was $44 million, an increase of $11 million compared with the same quarter last year
  • Introduction of two critically acclaimed video products - the Logitech reg; QuickCam reg; Orbit webcam and the Logitech Pocket Digital ™ 130 camera
  • Introduction of the Logitech diNovo Media Desktop ™ , an award-winning, high-style product that redefines the concept of a wireless keyboard and mouse with an innovative new design and with delivery on the promise of Bluetooth ® technology to provide wireless interoperability between a PC and mobile phones, PDAs and other devices

For the fiscal year 2004, ending March 31, 2004, the Company reaffirmed its target for 15 percent growth in operating income, over FY 2003, and now expects higher sales growth than originally anticipated. Net sales should exceed $1.24 billion, approximately 13 percent growth over FY 2003.

Logitech also confirmed its sustained growth prospects by providing preliminary targets of 10 percent growth in revenue and 15 percent growth in operating income, for the fiscal year 2005, ending March 31, 2005, compared to the current fiscal year.

To discuss its earnings results for Q3 of fiscal 2004, and its outlook for the full fiscal year ending March 31, 2004, and for the following fiscal year, Logitech will conduct a teleconference on January 20, 2004, at 5:00 a.m. Pacific Standard Time/ 8:00 a.m. Eastern Standard Time/ 14:00 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

Founded in 1981, 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 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 Fiscal 2005 and the statements of Mr. De Luca regarding Fiscal 2004 financial goals and Logitech's growth strategy. 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, 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
December 31

CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share / ADS) - Unaudited

2003

2002




Net sales

$  409,557

$ 351,756

Cost of goods sold

269,082

234,744

Gross profit

140,475

117,012

     % of net sales

34.3%

33.3%




Operating expenses:



     Marketing and selling

47,751

41,271

     Research and development

15,582

14,220

     General and administration

11,800

10,750

Total operating expenses

75,133

66,241

 



Operating income

65,342

50,771




Interest expense, net

(316)

(239)

Other income, net

1,786

8




Income before income taxes

66,812

50,540

Provision for income taxes

12

10,108




Net income

$  66,800

$  40,432




Shares used to compute net income per share and ADS:

 

 

     Basic

44,879,489

46,045,955

     Diluted

49,764,195

51,168,419

Net income per share and ADS:

 

 

     Basic

$1.49

$0.88

     Diluted

$1.35

$0.80


LOGITECH INTERNATIONAL S.A.



 

Nine Months Ended
December 31

CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share / ADS) - Unaudited

2003

2002




Net sales

$ 921,342

$ 798,584

Cost of goods sold

627,767

529,327

Gross profit

293,575

269,257

     % of net sales

31.9%

33.7%




Operating expenses:



     Marketing and selling

115,266

107,485

     Research and development

44,718

40,853

     General and administration

32,977

31,862

Total operating expenses

192,961

180,200

 



Operating income

100,614

89,057




Interest expense, net

(1,669)

(508)

Other income, net

1,493

1,716




Income before income taxes

100,438

90,265

Provision for income taxes

6,737

18,044




Net income

$  93,701

$  72,221




Shares used to compute net income per share and ADS:

 

 

     Basic

45,427,207

46,081,614

     Diluted

50,175,604

51,795,923

Net income per share and ADS:

 

 

     Basic

$2.06

$1.57

     Diluted

$1.91

$1.43


LOGITECH INTERNATIONAL S.A.

 

 

 





CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars) - Unaudited

December 31,
2003

March 31,
2003

December 31,
2002





Current assets

 

 

 

     Cash and cash equivalents

$ 234,778

$ 218,734

$ 169,499

     Accounts receivable

273,326

181,644

239,417

     Inventories

140,666

124,123

140,636

     Other current assets

51,266

38,762

38,344

     Total current assets

700,036

563,263

587,896

Investments

16,189

1,458

1,434

Property, plant and equipment

36,469

38,914

39,861

Intangible assets

 

 

 

     Goodwill

108,615

108,615

108,615

     Other intangible assets

13,838

17,523

18,679

Other assets

12,072

8,529

12,940

Total assets

$ 887,219

$ 738,302

$ 769,425





Current liabilities

 

 

 

     Short-term debt

$  10,499

$  10,102

$  10,161

     Accounts payable

179,642

129,326

164,103

     Accrued liabilites

122,558

98,134

108,779

     Total current liabilities

312,699

237,562

283,043

Long term debt

142,433

131,615

127,031

Other liabilities

3,535

3,563

3,540

Total liabilities

458,667

372,740

413,614





Shareholders' equity

428,552

365,562

355,811





Total liabilities and shareholders' equity

$ 887,219

$ 738,302

$ 769,425


LOGITECH INTERNATIONAL S.A.

 

 

   

 

 

   

(In thousands of U.S. dollars) - Unaudited

 

 

   

SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION

 

 

   

 

Quarter Ended
December 31

Nine Months Ended December 31

Income statement-related

2003

2002

2003

2002




   

Depreciation

$  7,733

$  8,273

$ 20,356 $ 20,162

Amortization of other acquisition-related intangibles

1,273

1,261

3,945 3,791

Operating income

65,342

50,771

100,614 89,057

Operating income before depreciation and amortization

74,348

60,305

124,915 113,010
Capital expenditures 5,916 9,019 17,720 24,493

 

 

 

   

A reconciliation between net income on a GAAP basis and non-GAAP basis is as follows:

 

 

   

 

 

 

   

GAAP net income

$  66,800

$  40,432

$ 93,701 $ 72,221

Less: Release tax valuation allowance (1)

13,350

-

13,350 -

Non-GAAP net income

$  53,450

$  40,432

$  80,351 $ 72,221

 

 

   
Shares used to compute net income per share and ADS:        

     Basic

44,879,489

46,045,955

45,427,207 46,081,614
     Diluted 49,764,195 51,168,419 50,175,604 51,795,923
Net income per share and ADS:        
     Basic $1.19 $0.88 $1.77 $1.57
     Diluted $1.09 $0.80 $1.64 $1.43
(1) During the quarter ending December 31, 2003, the Company released a valuation allowance on specific deferred tax assets that was no longer required. As a result, taxes and net income for the quarter ending December 31, 2003, included a one-time favorable impact of $13.4 million. In order to provide investors with information comparable to historically reported data, Logitech believes it is appropriate to provide net income and basic and diluted net income per share without the favorable impact of the release of the valuation allowance.
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