Logitech 2006 Annual Report Download - page 86

Principal Markets
The Company operates as one business segment, which is the design, development, production, marketing
and support of personal peripherals.
Net sales to unaffiliated customers by geographic region were as follows (in thousands):
Year ended March 31,
2006 2005 2004
Europe ......................................... $ 887,736 $ 733,667 $ 592,067
North America ................................... 617,942 503,356 454,587
Asia Pacific ..................................... 291,037 245,603 221,816
Total net sales ............................... $1,796,715 $1,482,626 $1,268,470
Customer Service and Technical Support
The Company maintains customer service and technical support operations in the United States, Canada,
Europe, Asia and Australia. Customer service and technical personnel provide support services to retail
purchasers of products through telephone, email, facsimile and the Logitech Web site. This site is designed to
expedite overall response time while minimizing the resources required for effective customer support. In
general, OEMs provide customer service and technical support for their products, including components
purchased from suppliers such as Logitech. The Company provides a warranty on its branded products from one
to five years.
Manufacturing
The Company’s manufacturing operations consist principally of final assembly and testing. Logitech’s high-
volume manufacturing is located in Suzhou, China. Logitech expanded its Suzhou operations with the
construction of a new factory to provide for additional production capacity to meet future demand. The new
facility has 30% greater capacity than the Company’s first factory with the potential to double beyond that.
Operations were moved to the new facility in the summer of 2005. The Suzhou facilities are designed to allow
production growth as well as flexibility in responding to changing demands for the Company’s products. The
Company continues to focus on improving the efficiency at the Suzhou facilities, including the implementation
of total quality management and total employee involvement programs.
New product launches, process engineering, commodities management, logistics, quality assurance,
operations management and management of Logitech’s contract manufacturers occur in Hsinchu, Taiwan,
Suzhou, China and Hong Kong, China. Certain components are manufactured to the Company’s specifications by
vendors in Asia, the United States and Europe. Logitech also uses contract manufacturers to supplement internal
capacity and to reduce volatility in production volumes. In addition, some products, including most keyboards,
certain gaming devices and audio products, are manufactured by third-party suppliers to the Company’s
specifications. Retail product localization with local language manuals, packaging, software CDs and power
plugs is performed at distribution centers in North America, Europe and Asia Pacific.
Competition
Logitech’s industry is intensely competitive. It is characterized by short product life cycle, continual
performance enhancements, and rapid adoption of technological and product advancements by competitors in our
retail market and a trend of declining average selling prices in the OEM market. Logitech continues to experience
aggressive price competition and other promotional activities from its primary competitors and from less-
established brands, and the Company from time to time adjusts prices or increases other promotional activities to
improve its competitive position. The Company may also encounter more competition if any of its competitors
decides to enter other markets in which the Company currently operates.
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