Logitech 2008 Annual Report Download - page 25

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with fiscal year 2007. We achieved strong gross margin improvements through our emphasis on product
innovation, supply chain efficiencies and controlling and reducing our product cost structure. Net income
was $231.0 million, which included an investment write-down of $79.8 million and a gain on sale of
investments of $27.7 million, compared with net income of $229.8 million in fiscal year 2007.
Our strategy for fiscal year 2009 remains to position Logitech as a premium supplier in our product
categories, offering affordable luxury to the consumer while continuing to compete aggressively in all
market segments, from the entry level through the high-end. Our focus will be on managing resources to
create an innovative product portfolio targeted at current and future consumer trends as well as increasing
the value of the Logitech brand from a competitive, channel partner and consumer experience perspective.
We intend to take advantage of the significant opportunities in emerging markets, while leveraging the
growth opportunities remaining in our mature markets.
In our pointing devices, keyboards and desktops product lines, we plan to continue our expansion
into the notebook arena. We also see significant opportunities for our mice and keyboards in the business
market. In the audio arena, we expect that our strong presence in the speaker category, combined with
our proposed new products, will allow us to continue to generate growth. We also plan to leverage the
opportunities provided by our streaming media product line. During fiscal year 2009, we plan to build on
the momentum achieved in our video product line in the fourth quarter of fiscal year 2008 and continue
our focus on in-store marketing, new products, and partnerships to generate a sustained return to growth.
We also expect our video security products to gain momentum throughout the next fiscal year. With the
introduction of new gaming products for popular console game titles like the Gran Turismo 5, we expect to
return to growth in the gaming product line as well. In our Harmony remote control product line, we will
continue to focus on improving every aspect of the user experience to increase our already high level of
customer satisfaction and expand the universe of Harmony users. To support our planned growth, we intend
to continue to scale our processes to handle the increased complexity of our product lines and improve the
product life cycle management process. We also plan to continue managing our operating expenses in line
with our gross profit growth for the year.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with generally accepted
accounting principles in the United States of America (“U.S. GAAP”) requires the Company to make
judgments, estimates and assumptions that affect reported amounts of assets, liabilities, net sales and
expenses, and the disclosure of contingent assets and liabilities.
We consider an accounting estimate critical if it: (i) requires management to make judgments and
estimates about matters that are inherently uncertain; and (ii) is important to an understanding of Logitech’s
financial condition and operating results.
We base our estimates on historical experience and on various other assumptions we believe to be
reasonable under the circumstances. Although these estimates are based on management’s best knowledge
of current events and actions that may impact the Company in the future, actual results could differ from
those estimates. Management has discussed the development, selection and disclosure of these critical
accounting estimates with the Audit Committee of the Board of Directors.
We believe the following accounting estimates are most critical to our business operations and to
an understanding of our financial condition and results of operations, and reflect the more significant
judgments and estimates used in the preparation of our consolidated financial statements.