Logitech 2008 Annual Report Download - page 24

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of
Operations 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 in our Annual Report on Form 10-K for the fiscal year 2008 filed
with the SEC, and below under the heading “Additional Financial Disclosures - Quantitative and
Qualitative Disclosure about Market Risk.”
References in this Annual Report to the “Company,” “Logitech,” “we,” “our,” and “us” refer to
Logitech International S.A. and its consolidated subsidiaries.
Overview
Logitech is a world leader in peripherals for personal computers and other digital platforms, developing
and marketing innovative products in PC navigation, Internet communications, digital music, home-
entertainment control, video security, interactive gaming and wireless devices. For the PC, our products
include mice, trackballs, keyboards, gaming controllers, multimedia speakers, headsets, webcams, and
3D control devices. For digital music devices, our products include speakers and headphones. For gaming
consoles, we offer a range of controllers and other accessories. In addition, we offer wireless music solutions
for the home, advanced remote controls for home entertainment systems and a PC-based video security
solution for a home or small business.
We sell our products to a network of distributors and resellers (“retail”) and to original equipment
manufacturers (“OEMs”). Our worldwide retail network includes wholesale distributors, consumer
electronics retailers, mass merchandisers, specialty electronics stores, computer and telecommunications
stores, value-added resellers and online merchants. Our sales to our retail channels comprise the large
majority of our revenues.
We have historically targeted peripherals for the PC platform, a market that is dynamically changing as
a result of consu mer t rends towa rd notebooks and other mobile devices. We remain focused on st rengthening
our leadership in the PC peripherals market through the introduction of products that support the continued
growth of the notebook market segment. We have also expanded into peripherals for other platforms,
including video game consoles, mobile phones, home entertainment systems and mobile entertainment and
digital music systems.
Logitech’s markets are extremely competitive and are characterized by short product life cycles,
rapidly changing technology, evolving customer demands, and aggressive promotional and pricing practices.
In order to remain competitive, we believe continued investment in product research and development is
critical to driving innovation with new and improved products and technologies. We are committed to
identifying and meeting customer needs for personal peripheral devices and believe innovation and product
quality are important to gaining market acceptance and strengthening market leadership.
Over the last several years, Logitech has expanded and improved its supply chain operations, invested
in product development and marketing, delivered innovative new products and pursued new market
opportunities. We have significantly broadened our product offerings and the markets in which we sell.
Our expansion has been primarily organic, but we have also grown as a result of a limited number of
acquisitions that expanded our business into new product categories.
In fiscal year 2008, revenues increased 15% to $2.4 billion, with significant growth in most product
categories, reflecting the strength and breadth of our product portfolio. Mice, keyboards and desktops,
Harmony remote controls and OEM sales were key growth categories, while video declined compared