2007 ANNUAL REPORT Fiscal Year 2003 2004 2005 2006 2007 (U.S
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2007 ANNUAL REPORT Fiscal Year 2003 2004 2005 2006 2007 (U.S. dollars in thousands, except per share amounts) Total Revenues $ 1,100,288 $ 1,268,470 $ 1,482,626 $ 1,796,715 $ 2,066,569 Gross Margin 33.1% 32.2% 34.0% 32.0% 34.3% FY07 Non-GAAP Gross Margin 34.4% Operating Income $ 123,882 $ 145,554 $ 171,674 $ 198,911 $ 230,862 FY07 Non-GAAP Operating Income $ 250,326 Operating Margin 11.3% 11.5% 11.6% 11.1% 11.2% FY07 Non-GAAP Operating Margin 12.1% Net Income $ 98,843 $ 132,153 $ 149,266 $ 181,105 $ 229,848 FY07 Non-GAAP Net Income $ 244,786 Earnings per diluted share $ 0.49 $ 0.67 $ 0.77 $ 0.92 $ 1.20 FY07 Non-GAAP Earnings per diluted share $ 1.27 Diluted number of shares (in millions) 205,638 200,639 198,250 198,770 190,991 Cash Flow from Operations $ 145,108 $ 166,460 $ 213,674 $ 152,217 $ 305,681 Capital Expenditures $ 28,657 $ 24,718 $ 40,541 $ 54,102 $ 47,246 Cash & Cash Equivalents net of Short-Term Debt $ 208,632 $ 280,624 $ 331,402 $ 230,943 $ 398,966 Shareholders’ Equity $ 365,562 $ 457,080 $ 526,149 $ 685,176 $ 844,525 Fiscal Year-end Market Capitalization (in billions) $ 1.40 $ 2.17 $ 2.92 $ 3.80 $ 5.32 NOTE: The Fiscal Year 2007 Non-GAAP gross margin, operating income, operating margin, net income and earnings per diluted share fi gures exclude the cost or net cost of share- based compensation in Fiscal Year 2007, the fi rst year we refl ected this expense in our fi nancial results. A reconciliation between these fi gures and the most directly comparable Fiscal Year 2007 GAAP fi gures is presented at the end of this Financial Review. We sometimes use information derived from consolidated fi nancial information but not presented in our fi nancial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered “non-GAAP fi nancial measures” under the U.S. Securities and Exchange Commission rules. The adjustments between the GAAP and non-GAAP fi nancial measures presented above consist of share-based compensation expense for employee stock options and employee stock purchases, and the related income tax effect, as recognized in accordance with SFAS 123R. Because we implemented SFAS 123R effective April 1, 2006, our fi nancial results prior to this time do not include the effect of share-based compensation expense. Our management uses these non-GAAP measures in its fi nancial and operational decision-making. Our management believes these non-GAAP measures, when considered in conjunction with the corresponding GAAP measures, facilitate the comparison by our investors of results for periods subsequent to our adoption of SFAS 123R, with corresponding prior periods for which SFAS 123R was not effective. FINANCIAL REVIEW 2,067 230.9 340 229.8 1,797 198.9 181.1 1,483 171.7 243 149.3 1,268 145.6 132.2 1,100 186 123.9 944 98.8 144 142 97.2 140 736 121 75.0 592 100 98 91 90 88 54.7 81 45.1 68 57 41.0 39 40 30.0 36 33 33 34 23 FY 00 01 02 03 04 05 06 07 FY 00 01 02 03 04 05 06 07 FY 00 01 02 03 04 05 06 07 NET SALES INCOME SHARE PERFORMANCE (in millions of us dollars) (in millions of us dollars) (based on an initial investment of 100) Operating Income Logitech Net Income Swiss Performance Index Nasdaq 100 LETTER TO OUR SHAREHOLDERS ENGLISH FY 2007 was a banner year for Logitech and our best year ever. In a truly fi tting way to celebrate our 25th anniver- sary, we achieved several important milestones. It was our ninth consecutive year of record sales, capped by our 34th straight quarter of double-digit sales growth. We exceeded $2 billion in annual sales. We shipped more than 150 million products and introduced many new award-winning peripherals. We generated the largest cash fl ow from operations in our history: $306 million, more than double that of last year. And, we became part of the Nasdaq 100 index, ranking Logitech among the largest publicly traded technology companies in the world. Over the past decade, while growing consistently, we Our financial resources will be used to invest in this have strived to develop into a larger company that growth, to pay for complementary acquisitions to broaden can deliver and support sustained growth well into the our portfolio, and to continue our share buyback program future. Our executive team is now stronger than ever, as an effi cient way to return value to you. with a blend of experience and passion that can lead As we broaden our product portfolio and pursue new us in the next phase of our growth. The depth and breadth market opportunities, it is more critical than ever to keep of this team is one of our most cherished assurances for the people who buy and use our products at the center the future of our company. And our employees around of our focus. Our ongoing goal is for all our customers to the globe are as passionate today about our products, be delighted by their experience with our products, customers and opportunities as was the enthusiastic team services and support. that pioneered the company more than 25 years ago. They are our most valuable asset and we cannot be more Logitech values the many loyal partners who contribute proud of what they have accomplished. across our business with great competence and fl exibility. We wish to express our appreciation to them, to all our As we continue to grow into a larger company, we’re working employees worldwide, and to the members of our Board of on the skills, processes and infrastructure needed to sustain Directors, who provide considered guidance and expertise. our growth. We are also keen to preserve our culture of per- We offer special thanks to Shin’ichi Okamoto, who is retiring sonal ownership and collaborative decision making, which from our Board after three years of service. are among the good traits of smaller companies. Our success in this important balance will ensure the longevity and the Finally, we would like to thank our shareholders for your uniqueness of your company. continued faith in us. FY 2007 has been an outstanding year for Logitech and we look forward to continued We are confi dent that the signifi cant progress we are success in the years to come. making toward management excellence and scalability will allow us to grow by taking advantage of the many opportunities ahead—both in our core business as well Sincerely, as in what we call the new consumer electronics for the digital home. In our core business, we are driving innovation in PC navigation, notebook peripherals, Internet communications, gaming and digital music. We are pursuing opportunities in the digital home by offering our Harmony remote controls GUERRINO DE LUCA DANIEL BOREL to tame the complexities of home-entertainment systems. President and Chairman of the Board And, with our October 2006 acquisition of Slim Devices, we Chief Executive Offi cer are offering people the ability to enjoy Internet-based radio and their own digital-music libraries anywhere in their home. In the following pages, you will fi nd a review of our product businesses. For each of them, we believe Logitech is poised for ongoing leadership and growth. FRANÇAIS L’année fi scale 2007 a été une année phare pour Logitech, la meilleure de son histoire. Alors que nous célébrions notre 25ème anniversaire, nous avons vécu quelques moments clé. Tout d’abord, nous avons enregistré notre neuvième année consécutive de chiffre d’affaires records, ainsi que notre 34e trimestre d’affi lée de croissance à deux chiffres de nos ventes. Nous avons dépassé le cap des USD 2 milliards de ventes annuelles, livrant plus de 150 millions de produits à travers le monde, dont de nombreux nouveaux périphériques primés par divers organismes. Nous avons généré le plus fort cash-fl ow opérationnel de notre histoire : USD 306 millions, plus du double de l’an dernier. Et enfi n, nous avons rejoint les plus grandes entreprises technologiques cotées en bourse en faisant notre entrée dans l’indice Nasdaq 100. Au cours des dix dernières années, et tout en croissant d’une Logitech est parfaitement placé pour poursuivre sa croissance façon continue, nous avons structuré la société, lui donnant et s’imposer en leader. la solidité nécessaire pour soutenir une croissance à long Quant à nos ressources fi nancières, elles seront utilisées terme. Passionnée et forte de son expérience, notre équipe pour soutenir notre croissance, pour fi nancer des acquisitions dirigeante est plus solide que jamais. La richesse et la diversité susceptibles d’élargir notre portefeuille de produits, et des ses talents sont notre meilleure garantie d’avenir. Nos pour nous permettre de poursuivre notre programme de employés à travers le monde font preuve du même enthou- rachat de titres, moyen privilégié de vous faire bénéfi cier siasme pour nos produits, nos clients et notre potentiel de de l’augmentation de valeur de notre société. croissance que l’équipe qui fonda l’entreprise, il y a plus d’un quart de siècle. Ils sont notre ressource la plus précieuse, et Alors que nous étoffons notre offre et pénétrons de nouveaux nous sommes fi ers de ce qu’ils ont accompli. marchés, nous sommes tout à fait conscients que nous devons nous préoccuper sans relâche de la satisfaction pleine et Alors que Logitech continue sa croissance, nous développons entière de nos clients, que ce soit par rapport à nos produits, les compétences, les processus et les infrastructures pour à nos services ou à notre support technique.