Logitech 2015 Annual Report Download - page 136

OEM
During fiscal year 2015, OEM sales and units sold decreased 17% and 25%, respectively, compared
to fiscal year 2014. This decrease was primarily due to weak mice sales which was expected as we
elected not to participate in lower margin opportunities with several customers. We plan to exit the OEM
business as we see limited opportunities for profitable growth.
During fiscal year 2014, OEM sales and units sold remained flat compared to fiscal year 2013.
Video Conferencing
During fiscal year 2015, video conferencing sales decreased 10% compared to fiscal year 2014. If
currency exchange rates had been constant in 2015 and 2014, our constant dollar video conferencing
net sales would have decreased 10%. Lifesize is in the process of transitioning its product portfolio to the
recently announced Lifesize Cloud, a software-as-a-service (SaaS) offering that provides an affordable,
simple and scalable video conferencing solution with little to no need for IT involvement. While sales
of the Cloud offering are growing rapidly, they are not yet large enough to offset the combination of
the short-term portfolio transition and soft market conditions for video conferencing infrastructure. We
recently decided to reorganize Lifesize with the goal of de-emphasizing Lifesize’s legacy offerings more
quickly to enable maximum traction with Lifesize Cloud. We plan to shrink our Lifesize business to grow
the Cloud opportunity faster.
During fiscal year 2014, video conferencing sales decreased 12% compared to fiscal year 2013. The
decrease was primarily due to a combination of a changing industry landscape caused by a shift to less
expensive, Cloud-based video conferencing solutions, an evolving Lifesize product line and challenges in
execution experienced in all geographic regions.
Gross Profit
Gross profit for fiscal years 2015, 2014 and 2013 was as follows (in thousands):
Years Ended March 31,
Change
2015 vs.
2014
2014 vs.
20132015 2014 2013
Net sales . . . . . . . . . . . . . . . . . . $2,113,947 $2,128,713 $2,099,277 (1)% 1%
Cost of goods sold . . . . . . . . . . . 1,339,750 1,400,844 1,389,643 (4) 1
Gross profit . . . . . . . . . . . . . . $ 774,197 $ 727,869 $ 709,634 6 3
Gross margin. . . . . . . . . . . . . 36.6% 34.2% 33.8%
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, shipping and handling cost, outside processing costs, write-down of
inventories and amortization of intangible assets.
The increase in gross margin during fiscal year 2015, compared to fiscal year 2014, primarily resulted
from a 0.5% improvement attributable to cost reduction initiatives across the Pointing Devices, Keyboards
& Combos and Mobile Speakers product categories, a 0.5% improvement attributable to exiting non-
strategic product categories, a 0.7% improvement attributable to the combination of a $5.8 million
reduction in amortization of other intangible assets and a $5.2 million prior year discontinued products
write off, and a 0.5% improvement attributable to lower inventory reserves in fiscal year 2015 that was
partially offset by a higher percentage of air shipments in fiscal 2015.
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Annual Report Fiscal Year 2015