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Logitech Delivers Ninth Consecutive Record Year
FREMONT, Calif., April 18, 2007 and ROMANEL-SUR-MORGES, Switzerland, April 19, 2007 Logitech International (SWX: LOGN) (Nasdaq: LOGI) today announced it has posted its ninth consecutive year of record sales and profits. The Company closed the fiscal year with a record fourth quarter its 34th consecutive quarter of double-digit revenue growth and achieved its upwardly revised full-year goal for operating income while falling short of its increased target for year-over-year sales growth, due to a year-over-year decline in Q4 webcam sales.
Results for Full Fiscal Year
Sales for the fiscal year, ended March 31, 2007 were $2.1 billion, up 15 percent from $1.8 billion in FY 2006. GAAP operating income was $231 million and includes $19.5 million in costs for stock-based compensation. GAAP net income, including $14.9 million in costs for stock-based compensation (net of related tax benefit), was $230 million ($1.20 per share). GAAP gross margin was 34.3 percent.
Non-GAAP operating income for the fiscal year, which excludes stock-based compensation, was $250 million, up 26 percent from last year´s operating income of $199 million. Non-GAAP net income for FY 2007 was $245 million ($1.27 per share), up 35 percent compared with net income of $181 million ($0.92 per share) in the prior year. Non-GAAP gross margin was 34.4 percent, compared to 32 percent in the prior year, an increase of 240 basis points. (See Note 1.)
Results for Fourth Quarter
For Logitech´s fourth fiscal quarter, sales were $513 million, up 10 percent from $466 million in the same quarter last year. GAAP operating income was $55.3 million and includes $4.5 million in costs for stock-based compensation. GAAP net income, including $2.3 million in costs for stock-based compensation (net of related tax benefit), was $56.2 million ($0.29 per share). GAAP gross margin was 34.5 percent.
Non-GAAP operating income, which excludes stock-based compensation, was $59.8 million, up 9 percent from last year´s operating income of $54.8 million. Non-GAAP net income for Q4 was $58.4 million ($0.30 per share), up 14 percent compared with net income of $51 million ($0.26 per share) in the prior year. Non-GAAP gross margin was 34.5 percent, compared to 31.9 percent for the same quarter last year. (See Note 1.)
Logitech´s retail sales for Q4 grew by 9 percent year over year, increasing in the Americas by 12 percent and EMEA by 9 percent, and decreasing in Asia Pacific by 4 percent. Retail sales were driven by strong growth in cordless desktops and keyboards (up 30 percent), gaming (up 35 percent) and remote controls (up 78 percent); retail sales for Q4 were negatively impacted by a 32 percent year-over-year decline in webcams. OEM sales grew by 16 percent, driven by demand for desktops and keyboards.
As we continued to focus on improving our webcam market position, an unexpected category slowdown led to a Q4 decline in webcam sales, which caused us to miss our 17 percent revenue growth target for the full fiscal year, said Guerrino De Luca, Logitech president and chief executive officer. We are confident that, over the next few quarters, we can reignite webcam market growth by targeting our marketing activities toward growing the overall category. We plan to leverage partnerships to broaden consumer awareness and increase in-store activities.
I am pleased with our solid performance in FY 2007. The resilience of our broad product portfolio and consistent execution allowed us to achieve record-setting cash generation and 26 percent growth in operating income, in line with our upwardly revised growth goal. And our gross margin for Q4 and for the full fiscal year was well above our long-term target range of 32-34 percent, reflecting strong execution and a solid business model.
Highlights for Logitech´s Fiscal Year 2007
- More than 150 million products shipped.
- Retail sales of cordless mice grew 25 percent, driven by demand for the Logitech® MX Revolution and Logitech® VX Revolution cordless laser mice.
- Retail sales of iPod®/MP3 speakers more than doubled year over year.
- Retail sales of Harmony remote controls increased by 60 percent compared to last year.
- Retail sales of PC gaming products increased by 63 percent compared to last year.
- Cash flow from operations doubled year over year, to $306 million.
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 April 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 will hold an investor meeting in London on May 10, 2007 at 10:00 British Summer Time/5:00 a.m. Eastern Daylight Time/2:00 a.m. Pacific Daylight Time. A live video webcast and replay of the meeting will be available on the Logitech corporate Web site at http://ir.logitech.com.
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).
Note 1. A reconciliation between non-GAAP operating income, net income, and gross margin, and GAAP operating income, net income, and gross margin is set forth in the second supplemental schedule of the attached tables along with additional information regarding the use of these non-GAAP measures.
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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 webcam market 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 webcam market growth we expect, or when we expect it; 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, 2006 and our quarterly reports on Form 6-K available at www.sec.gov. Logitech does not undertake to update any forward-looking statements.