Logitech posts record Q2 results

Logitech has posted another record Q2, exceeding company targets. Sales reached $252 million, an increase of 16% over the same quarter last year. Operating income was $25.7 million, an increase of 37% over the second quarter of the previous year. Net income of $21 million ($0.42 per share) was 51% higher. Gross margin of 34.1% represented an improvement of 165 basis points over the same quarter last year. Earnings per share were 50% higher than the second quarter last year.

For the six-month period ended 30 September 2002, as compared to the same period last year, total revenue grew 15% to $447 million; operating income grew 42% to $38.3 million; and net income grew 57% to $31.8 million. Earnings per share were 50% higher.

"In a period of economic challenge, results like these are only possible through great products and great execution on the part of our employees," said Guerrino De Luca, president and chief executive officer. "We`re very pleased with this performance, and delighted with the continuing consumer demand for Logitech`s products across all categories as we enter the holiday selling season - particularly as the economy continues to struggle and overall consumer sentiment is weak."

Highlights of Logitech`s second quarter include:

* Introduction of 50 new retail products, including 35 in September - the largest new product wave ever, with every category impacted.

* Launch of the Logitech MX series of high performance mice. Powered by Logitech`s MX Optical Engine, the mice capture up to 4.7 megapixels of surface tracking information every second, more than any optical mouse to date.

* Growth in the company`s OEM business, countering the decline of new PC sales, due to increased breadth and diversity of OEM offerings.

* Increase of 41% in retail video sales.

* Increase of 34% in audio sales, confirming the prospects of this new market for Logitech.

* For the six-month period, $39 million in cash flow from operations.

* Strong balance sheet, with a $100 million increase in net cash compared with the prior year.

For the fiscal year ending 31 March 2003 the company now expects revenue of $1,070 million (an increase of 13% over Fiscal 2002), versus its original target of $1,100 million. In view of its success in cost management and ongoing healthy profit margins, the company reaffirms its original yearly operating income goal of $120 million (an increase of 23% compared with the prior year).

"Given the broader economic conditions, we believe it is prudent to rein in our revenue growth objectives and focus on increased profitability," said De Luca, in commenting on the revised guidance. "We have shown in the first two quarters of this financial year that our business model continues to generate strong growth in profits while building the company for the long-term. We are confident that we can continue on this path in the months ahead."

For the current quarter ending 31 December 2002, the company expects revenue to range between $330 million and $335 million (a 10% to 12% growth over the same period last year) and operating income to reach $48 million (an increase of 14% over the same period last year).

There will be an earnings teleconference today at 9am Pacific Daylight Time/12:00pm Eastern Daylight Time/18:00 Central European Time to discuss these results as well as guidance regarding revenues and operating income for the third quarter ending 31 December 2002, and guidance for the full fiscal year ending 31 March 2003. In addition, a live webcast of the teleconference will be accessible at http://www.logitech.com, as well as a replay of the teleconference, which will remain on the site through 1 November 2002.