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Sales for Q2 were $498 million, a decrease of 25 percent compared to $665 million in the same quarter last year. Excluding the unfavorable impact of exchange rate changes, sales decreased by 24 percent.
Operating income for Q2 was $27 million, compared to $80 million in the same quarter a year ago. Net income for the quarter was $21 million ($0.11 per share) compared to net income of $72 million ($0.39 per share) in Q2 FY 2009. Gross margin for the second quarter was 30.5 percent compared to 34.3 percent in Q2 FY 2009.
Logitech's retail sales for Q2 declined by 19 percent year over year, with sales down by 5 percent in the Americas, 24 percent in EMEA, and 28 percent in Asia. OEM sales were down by 54 percent.
"Our Q2 results demonstrate that we continue to deliver on our plan to navigate the downturn," said Gerald P. Quindlen, Logitech president and chief executive officer. "I was pleased that we delivered the predicted return to profitability, driven by a substantial improvement in gross margin compared to Q1 and our ongoing diligence in controlling expenses. Our sales and profitability both benefited from better-than-expected sell-through of our products in the Americas and EMEA.
"Our sustained focus on working capital management resulted in cash flow from operations of $133 million for the first half of the fiscal year. This represents an improvement of 59 percent compared to the first half of the prior year, in spite of dramatically worse economic conditions.
"We've entered the second half of Fiscal Year 2010 well positioned for continued improvements in our operating performance. In both EMEA and the Americas, the reset of our channel partners' weeks of supply is essentially complete. Our new products are being well received by customers and will be well represented on retail shelves for the holiday season. Even assuming no improvement in consumer spending, we anticipate a return to year-over-year profit growth starting in Q3."
Outlook
For the third quarter of FY 2010, Logitech expects sales within the range of $575 million to $595 million, gross margin of approximately 31 percent, and operating income in the range of $45 million to $50 million.
Earnings Teleconference and Webcast
Logitech will hold an earnings teleconference on Thursday, Oct. 22, 2009 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 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 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 and gross margin for Q3 FY 2010, a return to profit growth in Q3 FY 2010, and the Company being positioned for continued improvement in operating performance. 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 timing and 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 product lineup; 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; as well as those additional factors set forth in our periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2009, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, 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 September 30,
CONSOLIDATED STATEMENTS OF OPERATIONS 2009 2008
Net sales $ 498,093 $ 664,707
Cost of goods sold 346,305 436,633
Gross profit 151,788 228,074
% of net sales 30.5 % 34.3 %
Operating expenses:
Marketing and selling 68,835 84,740
Research and development 31,825 33,351
General and administrative 23,739 29,620
Restructuring charges 45 -
Total operating expenses 124,444 147,711
Operating income 27,344 80,363
Interest income, net 639 2,775
Other income (expense), net (1,438 ) (853 )
Income before income taxes 26,545 82,285
Provision (benefit) for income taxes 5,802 9,974
Net income $ 20,743 $ 72,311
Shares used to compute net income per share:
Basic 178,395 178,630
Diluted 180,989 183,509
Net income per share:
Basic $ 0.12 $ 0.41
Diluted $ 0.11 $ 0.39
LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
Six Months Ended September 30,
CONSOLIDATED STATEMENTS OF OPERATIONS 2009 2008
Net sales $ 824,203 $ 1,173,418
Cost of goods sold 594,593 771,772
Gross profit 229,610 401,646
% of net sales 27.9 % 34.2 %
Operating expenses:
Marketing and selling 127,773 162,020
Research and development 63,185 66,610
General and administrative 44,920 62,929
Restructuring charges 1,494
Total operating expenses 237,372 291,559
Operating income (loss) (7,762 ) 110,087
Interest income, net 1,231 5,327
Other income (expense), net (636 ) (292 )
Income (loss) before income taxes (7,167 ) 115,122
Provision (benefit) for income taxes 9,455 13,505
Net income (loss) $ (16,622 ) $ 101,617
Shares used to compute net income (loss) per share:
Basic 179,058 178,835
Diluted 179,058 184,154
Net income (loss) per share:
Basic ($0.09 ) $ 0.57
Diluted ($0.09 ) $ 0.55
LOGITECH INTERNATIONAL S.A. (In thousands) - Unaudited CONSOLIDATED BALANCE SHEETS September 30, 2009 March 31, 2009 September 30, 2008 Current assets Cash and cash equivalents $ 524,844 $ 492,759 $ 455,231 Short term investments - 1,637 3,418 Accounts receivable 259,776 213,929 467,499 Inventories 239,904 233,467 323,673 Other current assets 60,104 56,884 68,138 Total current assets 1,084,628 998,676 1,317,959 Property, plant and equipment 97,664 104,132 105,244 Intangible assets Goodwill 243,108 242,909 218,776 Other intangible assets 27,505 32,109 31,460 Other assets 49,092 43,704 39,072 Total assets $ 1,501,997 $ 1,421,530 $ 1,712,511 Current liabilities Accounts payable $ 291,661 $ 157,798 $ 404,356 Accrued liabilities 154,529 131,496 168,627 Total current liabilities 446,190 289,294 572,983 Other liabilities 142,370 134,528 126,345 Total liabilities 588,560 423,822 699,328 Shareholders' equity 913,437 997,708 1,013,183 Total liabilities and shareholders' equity $ 1,501,997 $ 1,421,530 $ 1,712,511
LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
Six Months Ended September 30,
CONSOLIDATED STATEMENTS OF CASH FLOWS 2009 2008
Cash flows from operating activities:
Net income (loss) $ (16,622 ) $ 101,617
Non-cash items included in net income:
Depreciation 26,057 22,501
Amortization of other intangible assets 4,603 3,470
Share-based compensation expense related to options, restricted 11,166 11,710
stock units and purchase rights
Write-down of investments - 979
Excess tax benefits from share-based compensation (1,346 ) (6,032 )
Loss (gain) on cash surrender value of life insurance policies (402 ) 363
Deferred income taxes and other (274 ) 3,434
Changes in assets and liabilities:
Accounts receivable (39,896 ) (99,553 )
Inventories (1,011 ) (83,760 )
Other assets (8,585 ) (13,611 )
Accounts payable 130,803 118,930
Accrued liabilities 28,407 23,359
Net cash provided by operating activities 132,900 83,407
Cash flows from investing activities:
Purchases of property, plant and equipment (18,144 ) (25,047 )
Acquisitions and investments, net of cash acquired (200 )
Proceeds from cash surrender of life insurance policies 813
Acquisitions and investments, net of cash acquired (31,832 )
Premiums paid on cash surrender value life insurance policies (427 )
Net cash used in investing activities (17,531 ) (57,306 )
Cash flows from financing activities:
Purchases of treasury shares (101,267 ) (76,017 )
Proceeds from sale of shares upon exercise of options and purchase 12,972 22,355
rights
Excess tax benefits from share-based compensation 1,346 6,032
Net cash used in financing activities (86,949 ) (47,630 )
Effect of exchange rate changes on cash and cash equivalents 3,665 (5,592 )
Net increase (decrease) in cash and cash equivalents 32,085 (27,121 )
Cash and cash equivalents at beginning of period 492,759 482,352
Cash and cash equivalents at end of period $ 524,844 $ 455,231
LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
Quarter Ended Six Months Ended
September 30, September 30,
SUPPLEMENTAL FINANCIAL INFORMATION 2009 2008 2009 2008
Depreciation $ 14,580 $ 11,906 $ 26,057 $ 22,501
Amortization of other acquisition-related intangibles 2,270 1,865 4,603 3,470
Operating income 27,344 80,363 (7,762 ) 110,087
Operating income before depreciation and amortization 44,194 94,134 22,898 136,058
Capital expenditures 10,442 14,419 18,144 25,047
Net sales by channel:
Retail $ 442,702 $ 544,216 $ 726,468 $ 983,384
OEM 55,391 120,491 97,735 190,034
Total net sales $ 498,093 $ 664,707 $ 824,203 $ 1,173,418
Net sales by product family:
Retail - Pointing Devices $ 130,611 $ 178,089 $ 220,847 $ 324,446
Retail - Keyboards & Desktops 79,906 111,073 137,915 206,029
Retail - Audio 121,001 116,812 193,121 200,030
Retail - Video 58,263 70,288 101,077 127,477
Retail - Gaming 28,493 39,030 45,642 69,539
Retail - Remotes 24,428 28,924 27,866 55,863
OEM 55,391 120,491 97,735 190,034
Total net sales $ 498,093 $ 664,707 $ 824,203 $ 1,173,418
Quarter Ended Six Months Ended
Stock-based Compensation Expense for September 30, September 30,
Employee Stock Options and Employee Stock Purchases 2009 2008 2009 2008
Cost of goods sold $ 628 $ 669 $ 1,426 $ 1,400
Marketing and selling 2,154 1,989 3,913 3,838
Research and development 1,068 1,147 1,909 2,109
General and administration 1,908 2,018 3,917 4,364
Income tax benefit (449 ) (1,241 ) (833 ) (2,198 )
Total stock-based compensation expense after income taxes $ 5,309 $ 4,582 $ 10,332 $ 9,513
Stock-based compensation expense for employee stock options and $ 0.03 $ 0.02 $ 0.06 $ 0.05
employee stock purchases, net of tax, per share (diluted)
SOURCE: Logitech International
Logitech International Joe Greenhalgh, 510-713-4430 Vice President, Investor Relations -- USA Nancy Morrison, 510-713-4948 Vice President, Corporate Communications -- USA Ben Starkie, +41-(0) 21-863-5195 Public Relations Manager -- Europe
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