Logitech 2007 Annual Report Download - page 9

MILLIONS $ NET SALES
2,100
1,900
1,700
1,500
1,300
1,100
900
700
500
300
2,067
+15%
1,483
+17%
1,268
+15%
1,100
+17%
944
+28%
736
+24%
Logitech
PC Industry
Mobile Phone Industry
(Top 6)
SALES GROWTH
50%
40%
30%
20%
10%
0%
-10%
-20%
592
+32%
1,797
+21%
Source: Company reports
Ninth Consecutive Year of Double-Digit Growth in Sales
with Accelerating Profi t Growth*
Fiscal Year 2007 was the best in our history. At the start
of the year we set a goal to improve our profi tability and
we did, with our best gross, operating and net margins
ever. We also targeted an improvement in our cash fl ow
from operations and we doubled last year’s total.
In FY 2007 we exceeded $2 billion in sales for the fi rst
time in our history, with sales up by 15 percent year over
year to $2.07 billion. Net income grew by 35 percent to
a record high of $245 million. We also posted our 34th
consecutive quarter of double-digit sales growth, a streak
that began in December 1998. While sales in the PC in-
dustry grew by only 5 percent year over year in CY 2006,
the 16 percent growth of our retail sales (89 percent of
our FY 2007 sales) demonstrated once again that our
business is largely decoupled from PC industry growth
trends. We were able to grow our retail sales in the
Americas by 18 percent in FY 2007 despite widespread
concerns about the health of U.S. consumer spending. We
believe that the uniqueness of our business model, which
features consistently innovative retail offerings at very
affordable price points combined with wide distribution
and strong brand presence, has been a major factor in
our continued success.
A key driver in both our recent performance as well as
our outlook for continued growth is our ability to take
advantage of the opportunities related to four megatrends:
1.) Wireless Connectivity
Logitech has long been the leader in cordless mice and
keyboards. We estimate cordless penetration in the PC
installed base remains low at just 22 percent, providing
us with a signifi cant opportunity for continued growth.
Consumer interest in wireless devices has never been
greater and goes well beyond the desktop PC. Our
extensive experience in radio-frequency technology has
allowed us to expand our wireless offerings to game
controllers, headphones for the iPod® and, most recently,
wireless music distribution in the home.
2.) Internet Communication
The rapid adoption of broadband continued in FY 2007
as the number of broadband users grew to more than
290 million. The higher data-transmission speeds enable
and enhance communication applications such as Windows
Live™ Messenger and Skype™
. As an indication of the popu-
larity of these applications, there were more than
11 billion cumulative video sessions conducted on Windows
Live through January 2007. The combination of the
growing popularity of Internet communications, our
market-leading position in webcams and our competitive
strengths in PC audio peripherals leaves us uniquely
positioned to ride the wave of future growth.
3.) Digital Music
Digital music is everywhere, on the PC, on the iPod
and streamed wirelessly throughout the home. We’re
addressing the growing demand for end-to-end solutions
for digital music in the home by offering speakers for
listening to music on the PC and an expanded portfolio
of iPod speakers and headphones. Most recently we
strengthened our position in the emerging wireless music
category with our acquisition of Slim Devices.
* FY 2007 gross margin, operating expenses, operating income, operating margin, net income, tax rate, net margin and EPS are non-GAAP measures that exclude the costs of share-based compensation.
A reconciliation between GAAP and non-GAAP measures is provided at the end of this document.
FY 00 01 02 03 04 05 06 07 FY 00 01 02 03 04 05 06 07