LOGITECH INTERNATIONAL SA - Shareholder.com

Table of Contents
sales growth in audio, video and cordless products. In Asia Pacific, retail sales grew 6%, with the largest growth occurring in audio products.
The growth in Asia Pacific was constrained by weakness in Japan, where we are implementing a management transition.
OEM. OEM revenues increased 6% compared with fiscal year 2006 and represented 11% of total sales in fiscal year 2007, compared
with 12% in the prior fiscal year. OEM units decreased 1%, reflecting a change in product mix from mice to video. The decline in OEM mice
sales was more than offset by sales of embedded webcams and cordless desktops and keyboards.
Gross Profit
Gross profit for fiscal years 2007 and 2006 was as follows (in thousands):
Gross profit consists of net sales, less cost of goods sold which includes materials, direct labor and related overhead costs, costs of
manufacturing facilities, costs of purchasing components from outside suppliers, distribution costs and write-down of inventories.
The increase in gross profit and improvement in gross margin resulted from the net sales increase over the prior year combined with
improved product margins and reductions in distribution costs. The relative mix of product categories was consistent with the prior year. Due to
product innovation and cost improvements, margins on new products launched in fiscal year 2007 were generally higher than the products
replaced. In addition, distribution costs increased at a rate less than one-half the rate of net sales increase, due to the Company’s successful
supply chain improvements in fiscal year 2007.
Operating Expenses
2007 2006 Change %
Net sales $ 2,066,569 $ 1,796,715 15 %
Cost of goods sold 1,357,044 1,222,605 11 %
Gross profit $ 709,525 $ 574,110 24 %
Gross margin 34.3 % 32.0 %
Operating expenses for fiscal years 2007 and 2006 were as follows (in thousands):
2007 2006 Change %
Marketing and selling $ 272,264 $ 221,504 23 %
% of net sales 13.2 % 12.3 %
Research and development 108,256 87,953 23 %
% of net sales 5.2 % 4.9 %
General and administrative 98,143 65,742 49 %
% of net sales 4.7 % 3.7 %
Total operating expenses $ 478,663 $ 375,199 28 %
Marketing and Selling
Marketing and selling expense consists of personnel and related overhead costs, corporate and product marketing, promotions,
advertising, trade shows, customer and technical support and facilities costs.
Marketing and selling expense in fiscal year 2007 was higher than fiscal year 2006 primarily due to increased advertising and customer
marketing programs to stimulate sales and higher personnel costs from headcount growth in support of increased retail business, including our
continued expansion in Latin America,
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