Logitech 2004 Annual Report Download - page 67

Download and view the complete annual report

Please find page 67 of the 2004 Logitech annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 135

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135

Logitech’s worldwide operations headquarters are in a Company-owned 112,000 square foot facility in
Hsinchu, Taiwan, and includes mechanical engineering, new product launches, process engineering, commodities
management, logistics, quality assurance, and administration. Personnel in Hsinchu manage distribution of
product throughout Asia through the use of externally administered warehouses in Taiwan, China and Singapore.
Logitech’s high volume manufacturing is located in Suzhou, China, in a Company-owned 253,700 square foot
building and a leased 91,500 square foot building. The lease on the building expires in July 2008. The Company
is currently expanding its Suzhou operations with the construction of a new factory to provide for additional
productive capacity to meet future demand. The completed new site would include approximately 600,000 square
feet of factory space and include dormitory space to house the Company’s workforce. The facility will initially
have 30% greater capacity than the Company’s existing operations as well as the potential to double beyond that.
The Company expects construction of the new site to be completed and operations to commence in the summer
of 2005.
In addition to its distribution centers in Asia, Logitech has major distribution centers in Memphis,
Tennessee and Venray, Netherlands. The Memphis facility is contracted with a warehouse management company
that leases and manages the distribution center for Logitech. The Memphis warehouse facility is 474,400 square
feet, and the arrangement with the management company is through August 2005. The Venray facility is
Logitech’s main distribution location in Europe and is contracted with a warehouse management company that
leases and manages the distribution center for Logitech. The Venray warehouse is approximately 263,000 square
feet and the arrangement with the management company is through December 2006. The Company recently
transitioned to its Venray distribution center from its facility in Tilburg. Logitech also contracts with various
distribution services throughout the world for additional warehouses in which the Company stores inventory.
Logitech believes that the Company’s manufacturing and distribution facilities are adequate for its ongoing
needs and continues to evaluate the need for additional facilities to meet anticipated future requirements.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
This Annual Report on Form 20-F to shareholders contains forward-looking statements that involve risks
and uncertainties. The Company’s actual results could differ materially from those anticipated in these
statements as a result of certain factors, including those set forth above in Item 3D “Risk Factors,” and below in
Item 11 “Quantitative and Qualitative Disclosure About Market Risk.”
Overview
Logitech is a leading global technology company and earns revenues and profits from the sale of personal
interface products that serve as the primary physical interface between people and their personal computers and
other digital platforms. The Company offers a broad range of products including input and pointing devices such
as corded and cordless mice, trackballs, and keyboards; interactive gaming devices for entertainment such as
joysticks, gamepads, and racing systems; web cameras; speakers, headsets and microphones; 3D controllers and
with its recent acquisition of Intrigue Technologies, advanced remote controls. The Company sells its products
through two primary channels, original equipment manufacturers (“OEMs”) and a network of retail distributors
and resellers (“retail”).
The past several years have been challenging for the PC industry and the global economy in general.
Confronted with a sluggish technology market, weak consumer confidence and economic uncertainty, the
Company continued to demonstrate success.
During fiscal year 2002, the Company grew year over year revenues by 28% and generated net income of
$75 million. Logitech’s retail sales in fiscal year 2002 accounted for 84% of total revenues as consumers
upgraded and expanded their existing systems to take advantage of new technologies such as cordless
connectivity and new applications such as video instant messaging. As a result, the Company sold more than
29