Revenue Up 18 Percent
Operating Income Up 13 Percent
Company Expects To Exceed Original FY 2005 Goals
FREMONT, Calif., Jan. 19, 2005 and ROMANEL-SUR-MORGES, Switzerland, Jan. 20, 2005- Logitech International (SWX: LOGN) (Nasdaq: LOGI) today reported record Q3 results, fueled by robust retail sales. For its third fiscal quarter, ended December 31, 2004, sales were $484 million, up 18 percent from $410 million in the same quarter a year ago. Gross margin was 34.8 percent, up from 34.3 percent last year, even with significant freight costs incurred to fulfill higher-than-expected retail demand. Operating income was $73.6 million, up 13 percent from $65.3 million last year. Net income for the quarter was $64.2 million ($1.32 per share), compared with $66.8 million ($1.35 per share) in Q3 of FY 2004, which included a one-time favorable impact of $13.4 million ($.26 per share) from the release of a valuation allowance on specific deferred tax assets. Excluding this amount, net income growth was 20 percent.
Logitech's retail sales in Q3 increased by 30 percent over the same quarter last year, driven by strong demand across all of the Company's key product categories. Logitech's OEM sales, which represented 10 percent of Q3 sales, were down by 34 percent over last year.
Highlights for Logitech's third fiscal quarter of 2005 include:
- Retail sales of cordless mice increased by 97 percent over the same quarter last year, led by the overwhelmingly popular Logitech® MX? Laser Cordless Mouse as well as the portfolio of Logitech cordless mice designed for notebook users.
- Retail sales of gaming products were up by 84 percent, led by stellar demand for Logitech's cordless controllers for the Sony® Playstation®2 and Microsoft® Xbox® consoles.
- An important webcam milestone was reached - users of MSN have logged more than two billion video instant messaging sessions using Webcam for MSN Messenger in just eighteen months of service.
- Cash flow from operations was $63 million, up by $19 million when compared to the same quarter last year.
"Logitech's Q3 retail sales were spectacular, and exceeded our expectations, with 35 percent growth in North America and 32 percent growth in Europe," said Guerrino De Luca, Logitech's president and chief executive officer. "Our retail sales growth in the all-important holiday season is a testament to the strength of our product portfolio, the multiple growth engines of our business, and the attractiveness to the customer of our innovation, design and quality.
"Based on the results of Q3, and entering Q4 with a retail-order backlog significantly higher than that of a year earlier, we now expect our sales growth for FY 2005 to be approximately 15 percent, exceeding the earlier stated target of 11 percent," continued De Luca. "And, even as we continue to invest for the future, we expect that FY 2005 operating income growth will exceed our stated target of 15 percent over the prior year. For FY 2006, our goal is to deliver growth similar to that currently expected for FY 2005," said De Luca.
Logitech will hold an earnings teleconference on January 20, 2005 at 8:00 a.m. Eastern Standard Time/14:00 Central European Time to discuss these results. In addition, a live webcast and replay of the teleconference, including presentation slides, will be available on the Logitech corporate Web site at www.logitech.com/investors. 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 peripherals that enable people to effectively work, play, and communicate in the digital world. 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 sales and operating income growth for Fiscal Year 2005 and growth for Fiscal Year 2006. 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 our ability to timely introduce successful products, the effect of pricing, product, marketing and other initiatives by our competitors and our reaction to them on our sales, gross margins and profitability, our ability to match production to demand and to coordinate the worldwide manufacturing and distribution of our products in a timely and cost-effective manner, our increased investment in product development, sales, marketing and infrastructure not producing the expected future returns, general economic and political conditions, the effect of fluctuations in exchange rates, as well as generally those additional factors set forth in our periodic filings with the SEC, available at www.sec.gov, including our Report on Form 6-K for the quarter ended September 30, 2004. 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. |
| |
| (In thousands, except per share / ADS) - Unaudited |
| |
| |
Quarter Ended
December 31 |
| CONSOLIDATED STATEMENTS OF INCOME |
2004 |
2003 |
| |
|
|
| Net sales |
$ 483,816 |
$ 409,557 |
| Cost of goods sold |
315,488 |
269,082 |
| Gross profit |
168,328 |
140,475 |
| % of net sales |
34.8% |
34.3% |
| |
|
|
| Operating expenses: |
|
|
| Marketing and selling |
61,020 |
47,751 |
| Research and development |
19,160 |
15,582 |
| General and administration |
14,547 |
11,800 |
| Total operating expenses |
94,727 |
75,133 |
| |
|
|
| Operating income |
73,601 |
65,342 |
| |
|
|
| Interest income (expense), net |
233 |
(316) |
| Other income, net |
1,682 |
1,786 |
| |
|
|
| Income before income taxes |
75,516 |
66,812 |
| Provision for income taxes |
11,327 |
12 |
| |
|
|
| Net income |
$ 64,189 |
$ 66,800 |
| |
|
|
| Shares used to compute net income per share and ADS: |
|
|
| Basic |
43,829 |
44,879 |
| Diluted |
49,176 |
49,764 |
| Net income per share and ADS: |
|
|
| Basic |
$1.46 |
$1.49 |
| Diluted |
$1.32 |
$1.35 |
| LOGITECH INTERNATIONAL S.A. |
| |
| (In thousands, except per share / ADS) - Unaudited |
| |
| |
Nine Months Ended
December 31 |
| CONSOLIDATED STATEMENTS OF INCOME |
2004 |
2003 |
| |
|
|
| Net sales |
$ 1,079,978 |
$ 921,342 |
| Cost of goods sold |
711,515 |
627,767 |
| Gross profit |
368,463 |
293,575 |
|
% of net sales |
34.1% |
31.9% |
| |
|
|
| Operating expenses: |
|
|
|
Marketing and selling |
149,822 |
115,266 |
|
Research and development |
53,342 |
44,718 |
|
General and administration |
40,575 |
32,977 |
| Total operating expenses |
243,739 |
192,961 |
| |
|
|
| Operating income |
124,724 |
100,614 |
| |
|
|
| Interest expense, net |
(282) |
(1,669) |
| Other income, net |
3,831 |
1,493 |
| |
|
|
| Income before income taxes |
128,273 |
100,438 |
| Provision for income taxes |
19,240 |
6,737 |
| |
|
|
| Net income |
$ 109,033 |
$ 93,701 |
| |
|
|
| |
|
|
| Shares used to compute net income per share and ADS: |
|
|
|
Basic |
44,260 |
45,427 |
|
Diluted |
49,518 |
50,176 |
| Net income per share and ADS: |
|
|
|
Basic |
$2.46 |
$2.06 |
|
Diluted |
$2.25 |
$1.91 |
| LOGITECH INTERNATIONAL S.A. |
| |
| (In thousands) - Unaudited |
| |
| CONSOLIDATED BALANCE SHEETS |
December 31,
2004 |
March 31,
2004 |
December 31,
2003 |
| |
|
|
|
| Current assets |
|
|
|
| Cash and cash equivalents |
$ 245,967 |
$ 294,753 |
$ 234,778 |
|
Accounts receivable |
295,816 |
206,187 |
273,326 |
|
Inventories |
186,003 |
135,561 |
140,666 |
|
Other current assets |
46,229 |
45,304 |
51,266 |
|
Total current assets |
774,015 |
681,805 |
700,036 |
| Investments |
16,715 |
16,172 |
16,189 |
| Property, plant and equipment |
47,674 |
37,308 |
36,469 |
| Intangible assets |
|
|
|
|
Goodwill |
134,807 |
108,615 |
108,615 |
|
Other intangible assets |
17,504 |
12,543 |
13,838 |
| Other assets |
3,275 |
9,473 |
12,072 |
| Total assets |
$ 993,990 |
$ 865,916 |
$ 887,219 |
| |
|
|
|
| Current liabilities |
|
|
|
|
Short-term debt |
$ 10,283 |
$ 14,129 |
$ 10,499 |
|
Accounts payable |
189,063 |
143,016 |
179,642 |
|
Accrued liabilities |
157,362 |
113,752 |
122,558 |
|
Total current liabilities |
356,708 |
270,897 |
312,699 |
| Long-term debt |
155,485 |
137,008 |
142,433 |
| Other liabilities |
876 |
931 |
3,535 |
| Total liabilities |
513,069 |
408,836 |
458,667 |
| |
|
|
|
| Shareholders' equity |
480,921 |
457,080 |
428,552 |
| |
|
|
|
| Total liabilities and shareholders' equity |
$ 993,990 |
$ 865,916 |
$ 887,219 |
| LOGITECH INTERNATIONAL S.A. |
| |
| (In thousands) - Unaudited |
| |
| |
Quarter Ended
December 31 |
Nine Months Ended
December 31 |
| SUPPLEMENTAL FINANCIAL INFORMATION |
2004 |
2003 |
2004 |
2003 |
| |
|
|
|
|
| Depreciation |
$6,702 |
$7,733 |
$18,858 |
$20,356 |
| Amortization of other acquisition-related intangibles |
1,654 |
1,273 |
4,635 |
3,945 |
| Operating income |
73,601 |
65,342 |
124,724 |
100,614 |
| Operating income before depreciation and amortization |
81,957 |
74,348 |
148,217 |
124,915 |
| Capital expenditures |
9,194 |
5,916 |
27,522 |
17,720 |
| |
|
|
|
|
| Net sales by channel: |
|
|
|
|
|
Retail |
$ 433,840 |
$ 333,997 |
$ 942,235 |
$ 738,300 |
|
OEM |
49,976 |
75,560 |
137,743 |
183,042 |
|
Total net sales |
$ 483,816 |
$ 409,557 |
$ 1,079,978 |
$ 921,342 |
| |
|
|
|
|
| Net sales by product family: |
|
|
|
|
|
Retail - Cordless |
$ 158,625 |
$ 113,106 |
$ 336,275 |
$ 241,554 |
|
Retail - Corded |
91,000 |
82,573 |
220,201 |
219,051 |
|
Retail - Video |
57,309 |
53,600 |
151,188 |
112,022 |
|
Retail - Audio |
51,405 |
42,937 |
106,011 |
90,668 |
|
Retail - Gaming |
66,639 |
36,233 |
107,823 |
60,669 |
|
Retail - Other |
8,862 |
5,548 |
20,737 |
14,336 |
|
OEM |
49,976 |
75,560 |
137,743 |
183,042 |
|
Total net sales |
$ 483,816 |
$ 409,557 |
$1,079,978 |
$ 921,342 |
| |
|
|
|
|
| A reconciliation between net income on a GAAP basis and non-GAAP basis is as follows: |
| |
|
|
|
|
| GAAP net income |
$64,189 |
$66,800 |
$109,033 |
$93,701 |
| Less: Release tax valuation allowance (1) |
- |
13,350 |
- |
13,350 |
| Non-GAAP net income |
$64,189 |
$53,450 |
$109,033 |
$80,351 |
| |
|
|
|
|
| Shares used to compute net income per share and ADS: |
|
|
|
|
|
Basic |
43,829 |
44,879 |
44,260 |
45,427 |
|
Diluted |
49,176 |
49,764 |
49,518 |
50,176 |
| Non-GAAP net income per share and ADS: |
|
|
|
|
|
Basic |
$1.46 |
$1.19 |
$2.46 |
$1.77 |
|
Diluted |
$1.32 |
$1.09 |
$2.25 |
$1.64 |
| |
|
|
|
|
| (1) During the quarter ended December 31, 2003, the Company released a valuation allowance on specific deferred tax assets that was no longer required. As a result, the income tax provision and net income for the quarter ended 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 net income per share excluding the favorable impact of the release of the valuation allowance. |