Logitech 2001 Annual Report Download

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LOGITECH ANNUAL REPORT 2001

Table of contents

  • Page 1
    L O G I T E C H A N N UA L R E P O R T 2 0 01

  • Page 2
    ... QuickCam® Software Development Kit establishes vision as technology platform • GT Force, the first force feedback steering wheel for • Cordless keyboard sales pass the • Logitech • two million PlayStation® 2 debuts at Tokyo Game Show mark ranks #9 in Bloomberg's Global 100 Hot Stocks...

  • Page 3
    ... TrackMan® FX offers cordless freedom, optical precision, unique design • Bluetooth prototypes unveiled at Fall Comdex • Logitech and easyEverything team up in New York Q4 • Logitech acquires • Labtec capture the action Partnership with VM Labs announced; development underway for...

  • Page 4
    ... computing platforms. This year, we introduced 25 new retail products across all categories. We saw the sale of our 300 millionth mouse, as well as more than six million cordless products and more than four million Internet video cameras. In fact, for both cordless and video, we are the market...

  • Page 5
    ... of human interface devices with new ways to enrich Internet-based personal communication. In pursuit of our goal to expand into additional platforms and environments, we announced our first product for the popular PlayStation® 2, our GT Force steering wheel-the only force feedback steering wheel...

  • Page 6
    ... category-human interface devices-and establishing a commanding presence in the retail market as a leading provider of products that enrich the individual computing experience through innovative technology, award-winning design and powerful software. Today, with a strong and growing brand presence...

  • Page 7
    ... as video mail and online chat. Logitech's PC video cameras and speakers add the desired visual and audio dimensions to this multimedia environment. â- Cordless freedom: A broad choice of cordless mice, trackballs and keyboards frees the desktop from cable clutter, using reliable digital radio...

  • Page 8
    ... with reliable cordless solutions based on digital radio technology. Over the past year, the company has added even more cordless choices to its product line-up: Cordless TrackMan® Wheel and Cordless TrackMan® FX-the first cordless optical trackballs; new cordless keyboard and mouse "desktops" and...

  • Page 9
    ... year, Logitech's QuickCam® PC video cameras are bringing consumers closer to family and friends as they extend the information interface beyond the desktop and enable visual communication via the Internet. The addition of powerful Internet-enabled applications such as video mail, video chat and...

  • Page 10
    ... market-the world's first force feedback steering wheel for PlayStation® 2. Previewed at the Tokyo Game Show in September 2000, the Logitech wheel is designed for use with the top-selling Gran Turismo™ 3 A-spec racing game from Polyphony Digital. This exciting product positions the Logitech brand...

  • Page 11
    ...especially cordless mice and keyboards as well as PC video cameras. Beyond the traditional retail shelves, the Logitech brand is expanding in the virtual world of e-commerce. Today, the company markets its products via the Internet in the U.S. and Europe, either directly or through well-known online...

  • Page 12
    ... microphone lines, its market-leading line of PC speakers and its personal audio products for MP3 players and other portable audio devices, represent an ideal complement to Logitech's broad range of human interface devices, both in the PC arena and on next-generation computing platforms. The Labtec...

  • Page 13
    ... Officer, Phonak Hearing Systems (to be presented to the shareholders at the Annual General Meeting in June 2001) Vice President, Regional Sales and Marketing, Europe, Middle East and Africa Vice President, Worldwide Marketing Haruo Takizawa Vice President, General Manager, Logicool, Japan...

  • Page 14
    ... Kaiser Drive Fremont, CA 94555 Europe Headquarters Logitech Europe S.A. Moulin du Choc D CH-1122 Romanel-sur-Morges Switzerland Far East, Operational Headquarters Logitech Far East Ltd. #2 Creation Road IV Science-Based Industrial Park Hsinchu, Taiwan, R.O.C. Japan Headquarters Logicool Co. Ltd...

  • Page 15
    ...'s Discussion and Analysis of Financial Condition and Results of Operations Logitech International S.A. Consolidated Financial Statements Notes to Consolidated Financial Statements Report of the Group Auditors Logitech International S.A., Apples Financial Statements Notes to Financial Statements...

  • Page 16

  • Page 17
    ...Logitech designs, manufactures and markets human interface devices and supporting software that serve as the primary physical interface between people and their personal computers and the internet. The Company's products include corded and cordless mice, trackballs and keyboards; joysticks, gamepads...

  • Page 18
    ... Net sales for the year ended March 31, 2001 increased 24% to $761.4 million. This growth was shared across all product categories, but primarily came from the Company's video and keyboard products, as well as increases from the Company's corded and cordless mice. The Euro's continued loss in value...

  • Page 19
    ... profit as a percentage of net sales) increased from 33.6% to 34.0%. The increase was primarily due to operational efficiencies achieved throughout the supply chain, combined with increased higher-margin internet video camera sales to OEM customers. Retail gross margin declined, reflecting a shift...

  • Page 20
    ... came from the Company's keyboard and video products, as well as increases in the Company's cordless mouse offerings. Retail sales grew by 43%. This growth was shared across all product categories. Retail sales of the Company's traditional pointing devices, which include mice and trackballs, grew by...

  • Page 21
    ... in new product areas, including retail keyboards, internet video cameras and cordless mice. Research and Development Excluding $1.4 million in development efforts relating to Spotlife Inc., Logitech's spin-off focused on enhancing video communications using the internet infrastructure, research and...

  • Page 22
    ...from the sale of availablefor-sale securities. Cash used in the year ended March 31, 2000 included $4.2 million of investments in affiliated companies, almost half of which was used to form Spotlife Inc., Logitech's spin-off focused on enhancing video communications using the Internet infrastructure...

  • Page 23
    ... sufficient to fund capital expenditures and working capital needs for the foreseeable future. Market Risk Market risk represents the potential for loss due to adverse changes in the fair value of financial instruments. As a global concern, the Company faces exposure to adverse movements in foreign...

  • Page 24
    ... in interest rates. Based on the results of these analyses, a 10% adverse change in interest rates from the fiscal 2001 and 2000 year end rates would not have a material adverse effect on the Company's results of operations, cash flows or financial condition for the next year. However, given the...

  • Page 25
    LOGITECH INTERNATIONAL S.A. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) March 31, 2001 ASSETS Current assets: Cash and cash equivalents ...Accounts receivable...Inventories ...Other current assets ...Total current assets...Investments ...Property, plant...10,100 939 ...

  • Page 26
    LOGITECH INTERNATIONAL S.A. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share amounts) Year ended March 31, 2001 Net sales ...Cost of goods sold ...Gross profit ...Operating expenses: Marketing and selling...Research and development...General and administrative...Purchased...

  • Page 27
    ... in-process research and development...Write-off of investments and note receivable...Loss (gain) on disposal of property, plant and equipment...Gain on sale of investments...Equity in net losses of affiliated companies ...Stock compensation expense ...Deferred income taxes...Changes in assets...

  • Page 28
    ... of registered shares upon exercise of options ...Issuance of registered shares for acquisition of Labtec...Issuance of registered shares at par value...Tax benefit from exercise of stock options...Purchase of treasury shares ...Sale of treasury shares upon exercise of options and purchase rights...

  • Page 29
    ... Logitech International S.A. designs, manufactures and markets human interface devices and supporting software that serve as the primary physical interface between people and their personal computers and the Internet. The Company's products include corded and cordless mice, trackballs, and keyboards...

  • Page 30
    ... value as a component of shareholders' equity. Property, Plant and Equipment Property, plant and equipment are stated at cost. Additions and improvements are capitalized, whereas maintenance and repairs are expensed as incurred. The Company capitalizes the cost of software developed for internal...

  • Page 31
    ...27, 2001, the Company acquired Labtec, Inc. a publicly-traded Vancouver, Washington-based provider of PC speakers, headsets and microphones, personal audio products for MP3 players and other portable audio devices, 3D input devices, and other peripherals and accessories for computing, communications...

  • Page 32
    ...in-process research and development ...Total net assets acquired (purchase price)... $ 42,877 2,944 3,879 4,151 2,977 88,947 (69,510) (3,250) 3,275 $ 76,290 The tangible assets acquired represent the estimated fair values of the net tangible assets of Labtec Inc. as of March 27, 2001. The values of...

  • Page 33
    ...Company acquired 10% of the then outstanding stock of Immersion Corporation, a developer of force feedback technology for PC peripherals and software applications. In November 1999, Immersion registered shares on the U.S. Nasdaq Stock Market in an initial public offering. In fiscal 2001, the Company...

  • Page 34
    ...the cost method of accounting for all other investments, all of which are less than 20% owned by Logitech. Note 6 - Sale of Product Line: In December 1997, the Company sold its scanner product line to Storm Technology Inc. for $5 million in cash, a $4 million convertible note, and a 10% common stock...

  • Page 35
    ... upon the exercise of stock options granted under the Company's stock option plans and the issuance of shares under the Company's employee share purchase plans. Pursuant to Swiss corporate law, Logitech International S.A. may only pay dividends in Swiss francs. The payment of dividends is limited...

  • Page 36
    ...of not less than 100% of the fair market value of the registered shares on the date of grant. A total of 1,200,000 registered shares may be issued under the 1996 Option Plan. Options generally vest over four years and remain outstanding for periods not exceeding ten years. The Company also maintains...

  • Page 37
    ... these amounts are not representative of the effects of computing stock option compensation expense using the fair value method for future periods. In 2001 and 1999, the Company granted 540 and 86,220 options with exercise prices less than the fair market value of the underlying stock at the date of...

  • Page 38
    ... ended March 31, 2001 2000 1999 Expected tax provision (benefit) at weighted average rate...Non-deductible purchased in-process research and development ...Increase (decrease) in valuation allowance ...Other ...Total provision for income taxes...Note 12 - Commitments and Contingencies: The Company...

  • Page 39
    ... 2000 and $.6 million in fiscal 2001. The Company believes the ultimate resolution of this matter will not have a material adverse effect on the Company's financial position, cash flows or results of operations. The Company is involved in a number of lawsuits relating to patent infringement and...

  • Page 40
    Note 14 - Geographic Information: The Company operates in one business segment, which is the design, development, production, marketing and support of computer interface devices. Geographic net sales information in the table below are based on the location of the selling entity. Long-lived assets, ...

  • Page 41
    ... to give effect to the stock split. The following table sets forth certain quarterly financial information as a percentage of net sales: Three months ended, Mar. 31, 2001 Net sales ...Gross profit...Operating expenses: Marketing and selling ...Research and development...General and administrative...

  • Page 42
    ... by the profession in Switzerland and those generally accepted in the United ...Logitech International S.A. and its subsidiaries at March 31, 2001 and 2000 and the results of operations and cash flows for the years ended March 31, 2001, 2000 and 1999 in accordance with accounting principles generally...

  • Page 43
    LOGITECH INTERNATIONAL S.A., APPLES BALANCE SHEET (In thousands of Swiss francs) March 31, 2001 ASSETS Current assets: Cash ...Short-term bank deposits ...Dividend receivable...Accrued interest and other receivables...Advances to group companies...Total current assets...Long-term assets: Intangible...

  • Page 44
    LOGITECH INTERNATIONAL S.A., APPLES STATEMENT OF INCOME (In thousands of Swiss francs) Year ended March 31, 2001 Dividend income......1,104 434 419 6,089 27,815 20,382 Administrative expenses ...Brand development expenses...Amortization of intangibles ...Interest paid to subsidiaries ...Bank interest...

  • Page 45
    ... International SA ("the Holding Company") pledged its share holding in Logitech Inc, as collateral for a bank loan obtained to finance the acquisition of Labtec. Note 2 - Investments: Principal operating subsidiaries include the following: Logitech Inc., Logitech Europe S.A., Logitech Far East...

  • Page 46
    LOGITECH INTERNATIONAL S.A., APPLES NOTES TO FINANCIAL STATEMENTS Note 6 - Movements on Retained Earnings: Year ended March 31, 2001 2000 (In thousands) Retained earnings at the beginning of the year...Net income for the year...Retained earnings at the disposal of the annual general meeting...CHF 61...

  • Page 47
    Report of the Statutory Auditors to the General Meeting of Logitech International S.A., Apples As statutory auditors, we have audited the accounting records and the financial statements (balance sheet, income statement and notes) of Logitech International S.A. for the year ended March 31, 2001. ...