Logitech Announces Q1 Earnings
Company Confirms Financial Goals for Full Year
FREMONT, Calif., July 18, 2007 and ROMANEL-SUR-MORGES, Switzerland, July 19, 2007 — Logitech International (SWX: LOGN) (Nasdaq: LOGI) today announced its financial results for the first quarter of Fiscal Year 2008. Sales for Q1 were $430 million, up 9 percent from $393 million in the same quarter last year. GAAP operating income was $24 million, up 1 percent from $23.8 million for the same quarter a year ago. GAAP net income was $25.6 million ($0.14 per share), compared to $30.1 million ($0.16 per share) in Q1 of FY 2007, which included an after-tax gain of $5.8 million ($0.03 per share) from the sale of shares of Anoto Group AB. Excluding this gain in the prior year, net income increased by 5 percent. Gross margin was 33.7 percent, a year-over-year improvement of 300 basis points compared to 30.7 percent in Q1 of FY 2007.
Logitech’s retail sales for Q1 grew by 8 percent year over year, increasing in the Americas and Asia Pacific by 17 and 13 percent, respectively, and decreasing in EMEA by 1 percent. OEM sales grew 16 percent.
With double-digit growth in most categories (led by audio at 39 percent and keyboards at 21 percent), retail sales were constrained by a year-over-year decline of 38 percent in the video category, due primarily to a 62 percent decline in EMEA. Retail sales of webcams in the Americas declined only slightly year over year, and grew 46 percent sequentially, compared with Q4 of FY 2007.
“Our performance in Q1 was negatively impacted by a steep decline in webcam sales, particularly in EMEA, where the market was slower than expected,” said Guerrino De Luca, Logitech president and chief executive officer. “We have seen significant improvement in webcams in the Americas, we are working through the issue in EMEA, and we expect the video business to return to double-digit growth by Q4 of this fiscal year.
“Retail sales grew 21 percent for the quarter, excluding video, demonstrating the overall resilience of the portfolio. With a strong balance sheet, a full complement of innovative products being introduced this summer, and our plan to more closely align operating expense growth with gross profit growth, we expect to achieve our FY 2008 goals.”
The Company confirmed its financial goals of 15 percent growth in sales and operating income for Fiscal Year 2008, ending March 31, 2008. FY 2008 gross margin is expected to be at the high end of the Company’s long-term target range of 32-34 percent. Logitech expects its effective tax rate for the year to be approximately 12 percent.
Logitech will hold an earnings teleconference on July 19, 2007 at 14:00 Central European Time/8:00 a.m. Eastern Daylight Time/5:00 a.m. Pacific Daylight Time to discuss these results as well as targets for Fiscal Year 2008. A live webcast and replay of the teleconference, including presentation slides, will be available on the Logitech corporate Web site at http://ir.logitech.com. Please visit the Web site at least 10 minutes early to register for the teleconference webcast.
Logitech is a world leader in personal peripherals, driving innovation in PC navigation, Internet communications, digital music, home-entertainment control, gaming and wireless devices. Founded in 1981, Logitech International is a Swiss public company traded on the SWX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI).
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This press release contains forward-looking statements, including the statements regarding expected sales and operating income growth, gross margin and effective tax rate for Fiscal Year 2008, and future video business growth and the timing for that growth. 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 if we fail to successfully innovate in our current and emerging product categories and identify new feature or product opportunities; consumer demand for our products and our ability to accurately forecast it; 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 webcam marketing activities not resulting in the video business growth we expect, or when we expect it; our ability to implement our plan to control operating expenses while growing sales; the sales mix among our lower- and higher-margin products and our geographic sales mix; as well as those additional factors set forth in our periodic filings with the Securities and Exchange Commission, including our annual report on Form 20-F for the Fiscal Year ended March 31, 2007 and our quarterly reports on Form 6-K available at www.sec.gov. Logitech does not undertake to update any forward-looking statements.
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