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Logitech Posts Seventh Consecutive Record Year With Best-Ever Fourth Quarter, Exceeds Targets

FREMONT, Calif., April 18, 2005 and ROMANEL-SUR-MORGES, Switzerland, April 19, 2005 - Logitech International (SWX: LOGN) (Nasdaq: LOGI) today announced it has completed its best-ever fourth quarter and posted its seventh consecutive year of record sales and profitability, exceeding its increased targets.

Sales for the fiscal year, ended March 31, 2005, were $1.48 billion, up 17 percent from $1.27 billion in Fiscal Year 2004. Gross margin for FY 2005 was 34 percent, compared with 32.2 percent last year. Operating income was $172 million, an increase of 18 percent over $146 million in the prior year. Net income was $149 million ($3.07 per share), up 13 percent from $132 million ($2.69 per share) last year, 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, net income growth was 26 percent. Cash flow from operations was $203.5 million, up from $166 million one year ago.

For Logitech's fourth fiscal quarter, sales were $403 million, up 16 percent from $347 million for the same quarter one year ago, due to higher-than-expected demand in key product categories. Gross margin was 33.6 percent, up from 33.2 percent last year. Operating income was $47 million, up 4 percent from $44.9 million last year, as the Company continued to execute its stated FY 05 strategy to invest for future growth. Net income for the quarter was $40.2 million ($0.83 per share), up 5 percent from $38.5 million ($0.78 per share) in the prior year. Cash flow from operations reached a record high for a single quarter at $109 million, up from $82 million one year ago.

Logitech's retail sales for Q4 grew by 25 percent year over year, with sales up in the Americas by 34 percent and in Europe by 23 percent. Asia also contributed to the growth, with sales up 8 percent. Retail sales were driven by high demand for console gaming peripherals (up 271 percent), speakers (up 102 percent) and cordless mice (up 34 percent).

Logitech's OEM sales declined by 23 percent for the quarter. This reflects the lack of sales to Sony of products for the PlayStation®2, which were exceptional during the prior year. Sales during Q4 of OEM mice were up by 15 percent, fueled by significant growth in cordless mice.

"We are extremely pleased with the Company's performance in FY 05, and with its record-breaking performance in each of the four quarters," said Guerrino De Luca, Logitech's president and chief executive officer. "This year, we invested significantly for future growth - and our results strongly indicate that these investments are starting to pay off. At the same time, we exceeded our targets for both revenue and operating income, and improved our gross margin. Our ability to deliver a record operating margin of 11.6 percent - even while making significant investments to drive future growth - is a testament to the strength of our business model and our execution."

Highlights for Logitech's Fiscal Year 2005

Outlook

"We look to the future with optimism," continued De Luca. "We have broadened our portfolio with personal peripherals for popular platforms, such as the PSP?, the iPod® and other MP3 players, and home-entertainment systems. We expect sales of our personal peripherals to be boosted by new applications, such as the Video Conversation feature of the recently launched MSN® Messenger 7.0, which is powered by Logitech technology. And we have continued confidence in the long-term growth potential of cordless peripherals, such as mice, keyboards, gaming controllers and headsets."

Logitech provided targets for the current fiscal year, ending March 31, 2006, of year-over-year sales growth of 15 percent and operating income growth of 15 percent.

Management Team Update

Logitech also announced that Marcel Stolk, senior vice president of worldwide sales and marketing plans to leave the Company in June 2005, to pursue personal and business interests nearer to his home and family in the Netherlands. Mr. Stolk has been with Logitech for more than 14 years, and assumed his current position in 2001. He has been instrumental in Logitech's sustained growth over the past several years. Mr. Stolk will leave behind a strong sales and marketing management team, well prepared to continue Logitech's momentum. Mr. Stolk will assist with the management transition once his successor is named. Earnings Teleconference

Logitech will hold an earnings teleconference on April 19, 2005 at 14:00 Central European Summer Time/8:00 a.m. Eastern Daylight Time/5:00 a.m. Pacific Daylight Time to discuss these results as well as guidance for Fiscal Year 2006. 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.

Investor Meeting in London

Logitech will hold an investor meeting in London on May 5, 2005 at 09:45 British Summer Time/4:45 a.m. Eastern Daylight Time/1:45 a.m. Pacific Daylight Time. A live video webcast and replay of the meeting will be available on the Logitech corporate Web site at www.logitech.com/investors.

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. Logitech International is a Swiss public company traded on the SWX Swiss 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 the effect of current investments on future growth, the strength of our profitability and investment strategy, business model and sales and marketing management; expected operational date for our new factory, peripherals sales growth expectations, as well as sales and operating income 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 introduce successful products in a timely manner, the effect of pricing, product, marketing and other initiatives by our competitors, and our reaction to such initiatives, 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 new factory in China being significantly delayed or our operations in China being adversely impacted by strains on Chinese energy, transportation, or other infrastructures, 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 December 31, 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
March 31
CONSOLIDATED STATEMENTS OF INCOME
2005
2004
     
Net sales
$ 402,648
$ 347,128
Cost of goods sold

  267,524
231,781
Gross profit
135,124
115,347
               % of net sales
33.6%
33.2%
 
Operating expenses:
          Marketing and selling
51,531
41,527
          Research and development
20,558
16,571
          General and administration
16,085
12,309
Total operating expenses
88,174
70,407
 
Operating income
46,950
44,940
 
Interest income (expense), net
423
(189)
Other income (expense), net
(40) 
480 
 
Income before income taxes
47,333
45,231
Provision for income taxes
7,100
6,779
 


Net income
$ 40,233
$ 38,452
 
Shares used to compute net income per share and ADS:
          Basic
44,226
45,117
          Diluted
49,533
50,404
Net income per share and ADS:
          Basic
$0.91
$0.85
          Diluted
$0.83
$0.78



LOGITECH INTERNATIONAL S.A.
 
(In thousands, except per share / ADS) - Unaudited
 
 

Twelve Months Ended
March 31
CONSOLIDATED STATEMENTS OF INCOME
2005
2004
     
Net sales
$ 1,482,626
$  1,268,470
Cost of goods sold

979,039
859,548
Gross profit
503,587
408,922

               % of net sales

34.0%
32.2%
 
Operating expenses:

          Marketing and selling

201,353
156,793

          Research and development

73,900


61,289

          General and administration

56,660
45,286
Total operating expenses
331,913
263,368
 
Operating income
171,674
145,554
 
Interest income (expense), net
141
(1,858)
Other income, net
3,791
1,973
 
Income before income taxes
175,606
145,669
Provision for income taxes
26,340
13,516
 
Net income
$  149,266
$   132,153
 
 
Shares used to compute net income per share and ADS:

          Basic

44,252
45,346

          Diluted

49,562
50,160
Net income per share and ADS:

          Basic

$3.37
$2.91

          Diluted

$3.07
$2.69



LOGITECH INTERNATIONAL S.A.
 
(In thousands) - Unaudited
 
CONSOLIDATED BALANCE SHEETS
March 31,
2005


March 31,
2004
March 31,
2003
       
Current assets      
          Cash and cash equivalents
$  341,277
$  294,753
$  218,734

          Accounts receivable

229,234
206,187
181,644

          Inventories

175,986
135,561
124,123

          Other current assets

50,364
45,304
38,762

          Total current assets

796,861 


681,805 
563,263
Investments
16,793
16,172
1,458
Property, plant and equipment
52,656
37,308
38,914
Intangible assets

          Goodwill

134,286
108,615
108,615

          Other intangible assets

15,816
12,543
17,523
Other assets
2,460
9,473
8,529
Total assets
$  1,018,872  
$  865,916 


$  738,302
       
Current liabilities


          Short-term debt

$        9,875
$   14,129
$    10,102

          Accounts payable

177,748
143,016
129,326

          Accrued liabilities

156,575
113,752
98,134

          Total current liabilities

344,198


270,897
237,562
Long-term debt
147,788
137,008
131,615
Other liabilities
737
931
3,563
Total liabilities
492,723
408,836
372,740
       
Shareholders' equity
526,149
457,080
365,562
       
Total liabilities and shareholders' equity
$  1,018,872
$  865,916
$  738,302



LOGITECH INTERNATIONAL S.A.
 
 (In thousands, except per share / ADS) - Unaudited
 
 
Quarter Ended 
March 31
Twelve Months Ended
March 31
SUPPLEMENTAL FINANCIAL INFORMATION
2005
2004
2005
2004
         
Depreciation
$      7,183 
$      5,808 
$          26,041 
$    26,164 
Amortization of other acquisition-related intangibles

1,685 
1,295 
6,320 
5,240 
Operating income
46,950 
44,940 
171,674 
145,554 
Operating income before depreciation and amortization
55,818 
52,043 
204,035 
176,958 
Capital expenditures
13,019 
6,998 
40,541 
24,718 
 
Net sales by channel:        

          Retail

$  352,169 
$  281,990 
$   1,294,404 
$  1,020,290 

          OEM

50,479 
65,138 
188,222 
248,180 

               Total net sales

$  402,648  
$  347,128 
$  1,482,626 
$    1,268,470 
         
Net sales by product family:        

          Retail - Cordless



$  117,244 
$    99,528 
$    453,519 
$    341,082 

          Retail - Corded

76,145 
75,778 
296,346 
294,829 

          Retail - Video

50,438 


54,396 
201,626 
166,418 

          Retail - Audio

52,123 
27,973 
158,134 
118,641 

          Retail - Gaming



38,694 
22,203 
146,517 
82,872 


          Retail - Other

17,525 
2,112 
38,262 
16,448 

          OEM

50,479 
65,138 
188,222 


248,180 

               Total net sales

$  402,648 
$  347,128 
$ 1,482,626 
$  1,268,470 
         
A reconciliation between net income on a GAAP basis and non-GAAP basis is as follows:
         
GAAP net income
 
 
$  149,266 
$     132,153 
Less: Release tax valuation allowance (1)
 
-
13,350 
Non-GAAP net income
 
 
$  149,266 
$       118,803 
         
Shares used to compute net income per share and ADS:        

          Basic

 
 
44,252 
45,346 

          Diluted



 
 
49,562 
50,160 
Non-GAAP net income per share and ADS:        

          Basic

 
$3.37 
$2.62 

          Diluted

 
 
$3.07 
$2.37 
         
(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 year ended March 31, 2004, 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.

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