Logitech Announces First Quarter Financial Results for FY 2011

FREMONT, Calif. & ROMANEL-SUR-MORGES, Switzerland--(BUSINESS WIRE)--Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the first quarter of Fiscal Year 2011.

“Logitech’s Fiscal Year 2011 is off to a strong start”

Sales for Q1 FY 2011 were $479 million, up 47 percent from $326 million in the same quarter last year. Excluding the unfavorable impact of exchange rate changes, sales increased by 50 percent. Operating income was $12 million, compared to an operating loss of $35 million in the same quarter a year ago. Net income for Q1 was $20 million ($0.11 per share) compared to a net loss one year ago of $37 million ($0.21 per share). Gross margin for Q1 FY 2011 was 35.3 percent, up from 23.9 percent in Q1 FY 2010.

Logitech’s retail sales for Q1 FY 2011 increased by 39 percent year over year, with sales up by 66 percent in the Americas, 24 percent in Asia and 21 percent in EMEA. OEM sales increased by 38 percent.

“Logitech’s Fiscal Year 2011 is off to a strong start,” stated Gerald P. Quindlen, Logitech president and chief executive officer. “We exceeded our sales and profitability targets and achieved our best-ever Q1 gross margin. And we had robust growth in most of our retail product categories, led by Harmony remotes and pointing devices. Based on our strong Q1 performance and improving consumer demand for our products, we are increasingly optimistic about our full-year performance for Fiscal Year 2011 and have raised our outlook accordingly. Furthermore, we are enthusiastic about the pending launch of Logitech products for Google TV and the potential for further upside to our FY11 sales outlook.”

Outlook

For Fiscal Year 2011, ending March 31, 2011, Logitech has raised its sales outlook from approximately $2.3 billion to the range of $2.3 to $2.35 billion. The target for operating income has been raised from approximately $156 million to a range of $160 to $170 million. Expected gross margin has increased from approximately 34 percent to the range of 34 to 35 percent. The tax rate, formerly expected to be approximately 18 percent, is now expected to be approximately 16 percent.

Earnings Teleconference and Webcast

Logitech will hold an earnings teleconference on Thursday, July 29, 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, the potential for future upside to Logitech’s FY 11 sales outlook, and the launch of products for Google TV. 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: our inability to predict the strength of the improvement in our business, operating results and financial condition; the demand of our customers and our consumers for our products and our ability to accurately forecast it; consumer reaction to our new 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; if we fail to take advantage of long-term trends in the consumer electronics and personal computers industries; if we fail to successfully innovate in our current and emerging product categories and identify new feature or product opportunities; the sales mix among our lower- and higher-margin products and our geographic sales mix; if we fail to execute upon our long-term strategic plans and opportunities; Google TV and our products for the new platform being released in a timely fashion, and U.S. consumer reaction to and demand for Google TV and our products for it; our product introductions and marketing activities not resulting in the product or category growth we expect, or when we expect it; 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 subsequent Quarterly Reports on Form 10-Q 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.

(LOGI – IR)

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
			Quarter Ended June 30,
CONSOLIDATED STATEMENTS OF OPERATIONS				2010				2009
Net sales			$	479,330			$	326,110
Cost of goods sold				310,301				248,288
Gross profit				169,029				77,822
	% of net sales			35.3	%			23.9	%
Operating expenses:
	Marketing and selling			91,477				58,938
	Research and development			38,389				31,360
	General and administrative			27,360				21,181
	Restructuring charges			-				1,449
Total operating expenses				157,226				112,928
Operating income (loss)				11,803				(35,106	)
Interest income, net				521				592
Other income, net				1,796				802
Income (loss) before income taxes				14,120				(33,712	)
Provision (benefit) for income taxes				(5,402	)			3,653
Net income (loss)			$	19,522			$	(37,365	)
Shares used to compute net income per share:
		Basic		175,492				179,751
		Diluted		177,358				179,751
Net income (loss) per share:
		Basic	$	0.11			$	(0.21	)
		Diluted	$	0.11			$	(0.21	)

LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
CONSOLIDATED BALANCE SHEETS			June 30, 2010			March 31, 2010			June 30, 2009
Current assets
	Cash and cash equivalents		$	317,315		$	319,944		$	567,417
	Accounts receivable			213,567			195,247			168,768
	Inventories			279,800			219,593			235,509
	Other current assets			63,031			58,877			54,054
	Total current assets			873,713			793,661			1,025,748
Property, plant and equipment				87,692			91,229			101,203
Intangible assets
	Goodwill			553,462			553,462			242,874
	Other intangible assets			88,486			95,396			29,776
Other assets				68,137			65,930			47,280
Total assets			$	1,671,490		$	1,599,678		$	1,446,881
Current liabilities
	Accounts payable		$	316,881		$	257,955		$	204,497
	Accrued liabilities			175,090			182,336			133,388
	Total current liabilities			491,971			440,291			337,885
Other liabilities				152,049			159,672			137,773
Total liabilities				644,020			599,963			475,658
Shareholders' equity				1,027,470			999,715			971,223
Total liabilities and shareholders' equity			$	1,671,490		$	1,599,678		$	1,446,881

LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
				Three Months Ended June 30,
CONSOLIDATED STATEMENTS OF CASH FLOWS					2010				2009
Cash flows from operating activities:
Net income (loss)				$	19,522			$	(37,365	)
Non-cash items included in net income (loss):
Depreciation					12,338				11,477
Amortization of other intangible assets					6,911				2,333
Share-based compensation expense					8,462				5,409
Gain on disposal of fixed assets					(838	)			-
Excess tax benefits from share-based compensation					(421	)			(288	)
Loss (gain) on cash surrender value of life insurance policies					(440	)			384
Deferred income taxes and other					(292	)			(568	)
Changes in assets and liabilities:
Accounts receivable					(18,404	)			46,433
Inventories					(66,019	)			317
Other assets					(4,945	)			1,142
Accounts payable					60,525				45,066
Accrued liabilities					(10,297	)			1,195
Net cash provided by operating activities					6,102				75,535
Cash flows from investing activities:
Purchases of property, plant and equipment					(11,918	)			(7,702	)
Proceeds from sale of property, plant and equipment					2,688				-
Net cash used in investing activities					(9,230	)			(7,702	)
Cash flows from financing activities:
Proceeds from sale of shares upon exercise of options and purchase rights					5,122				4,399
Excess tax benefits from share-based compensation					421				288
Net cash provided by financing activities					5,543				4,687
Effect of exchange rate changes on cash and cash equivalents					(5,044	)			2,138
Net increase (decrease) in cash and cash equivalents					(2,629	)			74,658
Cash and cash equivalents at beginning of period					319,944				492,759
Cash and cash equivalents at end of period				$	317,315			$	567,417

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
			Quarter Ended June 30,
SUPPLEMENTAL FINANCIAL INFORMATION				2010			2009
Depreciation			$	12,338		$	11,477
Amortization of other intangibles				6,911			2,333
Operating income (loss)				11,803			(35,106	)
Operating income (loss) before depreciation and amortization				31,052			(21,296	)
Capital expenditures				(11,918	)		(7,702	)
Net sales by channel:
	Retail		$	393,867		$	283,766
	OEM			58,335			42,344
	LifeSize			27,128			-
		Total net sales	$	479,330		$	326,110
Net retail sales by product family:
	Retail - Pointing Devices		$	131,846		$	90,236
	Retail - Keyboards & Desktops			76,166			58,009
	Retail - Audio			95,646			72,120
	Retail - Video			47,057			42,814
	Retail - Gaming			14,566			17,149
	Retail - Remotes			28,586			3,438
		Total net retail sales	$	393,867		$	283,766
			Quarter Ended June 30,
Share-based Compensation Expense				2010			2009
Cost of goods sold			$	991		$	798
Marketing and selling				3,077			1,759
Research and development				1,776			842
General and administration				2,618			2,010
Income tax benefit				(1,895	)		(384	)
Total share-based compensation expense after income taxes			$	6,567		$	5,025
Share-based compensation expense net of tax, per share (diluted)			$	0.04		$	0.03
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.