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DYMO Professional GBT Overview

DYMO Professional GBT Overview. April 22, 2008. Douglas Waldal, Global Director Specialty Printing & Labeling, Technology GBU. DYMO Professional GBT Overview Category Review Financial Performance Key Completions Industry Landscape Category Overview Regional Sales by Category

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DYMO Professional GBT Overview

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  1. DYMO Professional GBT Overview April 22, 2008 Douglas Waldal, Global Director Specialty Printing & Labeling, Technology GBU

  2. DYMO Professional GBT Overview Category Review Financial Performance Key Completions Industry Landscape Category Overview Regional Sales by Category Competitive Review The Drivers Patent Protection Expiring Consumer Insights Platforms for Growth Develop New Product Pipeline Best Cost Initiatives Strategy Summary Agenda

  3. Global Business Team

  4. Why DYMO Professional? 87% of DYMO’s OI High Tape to Tool Ratio (5:1) Large Installed Base Large $570M Office Market Used in Various Verticals

  5. Professional Label MakersCategory Overview Existing Business Strategic Entry Business Future Strategic Business Non Strategic Business Portable Professional Label Makers $570M Category Hand Held Printers Desktop Printers Consumables Alternative Solutions Mkt Size $20M $84M $466M 53.5% 8.2% 16.9% Mkt Share Office Office Pre-printed Labels $20M $84M $2.5M 53.5% 8.2% 9% Sheet Labels Healthcare Healthcare Hand Written Retail Retail Product Category $50MM

  6. Overview – Professional • 2007 net sales $97.2M, 69.7% GM • Served: $570M Global Office Market, 16% share • Core Growth • Well Distributed in Office Market • New Product Launches • Approved $300k in capital • Deliver $9.84M sales at 20.1% GM ($1.98M)

  7. Professional - Global Financials 2008 Estimate ($ Millions) Net Sales: + 7.3% Over Last Year Gross Margin Dollars: + 9.9% Over Last Year Operating Income: + 8.2% Over Last Year

  8. Where We Play – Category/Geography Consumables Represent over 80% of Net Sales at 80% GM 2007 Actual $570 Million Global Market $466M 16.9%Share $84M 8.2%Share Bulk Transport Desktop Utility Refuse Market Size $20M 53.5%Share Consumables Market Share Hand Held Rollouts Indoor Utility

  9. Sales / Margin Walk Business is Flat without Currency Gains GBT Net Sales GBT Margin Dollars Million $’s Million $’s

  10. Professional Label MakersProduct Road Summary Need Product Road GBT New Product Vitality (Printers) GBT Global Market Share Based on $570M Market

  11. Key GBT Completions YTD Sales since Launch of $1.73M New OPP Range of Label Makers • LabelManager 120P launched in Q1, 2008 • LabelManager 220P launched in Q4, 2007 • LabelManager 210D launched in Q1, 2008 LM120P 2010 Sales $9.84M 20.1% GM LM220P LM210D

  12. Key GBT Completions YTD Sales since Launch of $480K LabelManager 120P • Improved navigation • Less buttons equals less confusion • Smart keys for most popular features

  13. Key GBT Completions YTD Sales since Launch of $551K LabelManager 220P • Industry first: PDA style keyboard • Increased display size with WYSIWYG • Quick access buttons for punctuation, diacriticals, symbols

  14. Key GBT Completions YTD Sales since Launch of $699K LabelManager 210D • More intuitive, user friendly interface • Increased display size with WYSIWYG • Extended storage options

  15. Pull Through Marketing • Marketing Campaign in Germany, France and Benelux Promotion Targeted Advertising 360 Marketing POP Display New Products

  16. Pull Through Marketing • Merchandising Tools Movie about Dymo Range Counter Stand Pop-up Display Display

  17. Pull Through Marketing • Banners on Internet Websites • Targeted Advertising & PR

  18. Pull Through Marketing • Advertising & Collateral Flyers Targeted Advertising LM range brochures/booklets/ leaflets

  19. Pull Through Marketing • Internet Website Web Banners Customizable E-mailing Promotional Landing Page www.dymo.com/lmpromotion

  20. Industry Landscape

  21. DYMO ProfessionalIndustry Size and Growth by Geography & Category Market Size DYMO Share $20M 53.5% MS $84M 8.2% MS $466M 16.9% MS $0.5M 50% Share $0.5M 12% Share $9M 5% Share LA $1M 5% Share APAC $34M 65% Share $157M 4%Share EMEA $143M 41% Share $12M 74% Share $16M 27% Share $6.5M 16% Share $34M 12% Share $157M 8% Share NA Consumables 2.0% CAGR Handheld Printers 1.0% CAGR Desktop Printers 1.0% CAGR

  22. Top Global Competitors (served markets) Competitors Millions Trend Comments • Global Brand • Easy to use • Focus on labeling $93.3 • Brand/Market leader • Strong distribution relationship • Feature rich Brother $326.6 • #1 in Japan • Focus on labeling • Little technology ownership $137.8 King Jim • Well known consumer brand • Price player • Lack Office distribution Casio $12

  23. Competitive Profile: Brother General Comments • Based in Japan • 22,107 Employees Worldwide • $3.4 Billion In Global Sales • Brother Operates In 39 Countries Strengths • #1 or #2 share in all global regions • Highly regarded brand • Strong distribution relationships • Strong IP protection • Frequent product updates, broad portfolio of products Weaknesses • Marketing historically has been price driven rather than solution driven • Expiring patents on their main USP (laminated labels) • Very focused on price-off promotions

  24. Competitive Profile: King Jim General Comments • Based in Japan • 542 Employees Worldwide • $262 Million In Global Sales • King Jim Operates In 6 Countries (APAC only) Weaknesses • Flat sales over last 3 years • Little technology ownership. Appears to rely on Seiko/Epson for design and manufacturing • Patent loss to Brother may have resulted in ongoing royalty payments • APAC only focus Strengths • #1 share in Japan • Company focus on labeling • Strong Office distribution • Excellent product performance/quality

  25. Industry Landscape – Key Takeaways Office Market Mature Brother Dominant in NA 77% DYMO Sales in Europe 80% of Volume from Tapes

  26. The Drivers

  27. The Drivers Patent Protection Expiring on D1 Cassettes Consumer Insights are Unknown Roadmap is Empty Flat Growth 2003-2008

  28. The DriversD1 Cassette Patent Expiring Protect the Core D1 Cassette Patent Expires in 2014 • Modify current D1 cassette to extend patent until 2017 • Develop new replacement D1 cassette with IP protection Current D1 Cassette New Replacement D1 Cassette Concept Only

  29. The DriversD1 Cassette Patent Expiring Guide Pins on Printer Guide Path on Cassette Reduce Risk by Extending Patent Modify Current D1 Cassette to Extend Patent • Leverage existing LetraTag patent • Modify D1 cassettes (add guide path) • Modify D1 printers (add guide pins to cutting mechanism) Issues • New D1 modified cassettes will work in “old” printers • New printers will no longer work with “old” D1 cassettes Next Steps • Launch modified D1 cassettes first • Launch new printers that use modified D1 cassettes, once old D1 cassettes flushed out LetraTag Cutting Alignment Patent (PA-97/32)

  30. The DriversD1 Cassette Patent Expiring New IP Offers Sustainable Competitive Advantage Develop New D1 Replacement Cassette with IP Protection • New patentable D1 cassette protects the future • Could take up to three years to define and develop Next Steps • Assign project team • Add to PDR • Research • Determine required resources, capital and timing • Provide update at next GBT meeting

  31. The DriversConsumer Insights Unknown Ease of Use Drives Higher Tape Usage No Active Projects on New Product Road Map • Hired one of the best firms that focuses on usability and user-friendliness • Ease of use #1 attribute for purchasing label makers • User interface one of the key drivers behind ease of use • Ease of use drives higher tape usage

  32. The DriversConsumer Insights Unknown Four Concepts Chosen for Usability Testing Design and Test Concepts for New User Interface • Four concepts chosen, based on suitability for a label maker • Usability tests to identify: • most intuitive • user friendly • desirable to use Modified Touch Screen w/Sliding Keyboard MTS w/Dynamic Hard Buttons MTS w/Jog Dial Full Touch Screen

  33. The DriversConsumer Insights Unknown Focus Groups in Atlanta, Chicago, Paris and Munich Plan/Next Steps • User Interface Design (Start in May) • Mock-up user interface concepts • Develop prototypes • End User/Usability Testing (Start in July) • Recruit for advisory councils • In-depth interviews and observations • Deep dives on key applications/needs • Survey with registration database • Focus groups in four locations: Atlanta, Chicago, Paris and Munich • Pre and post questionnaires • Read out/conclusions • Provide update at next GBT meeting

  34. The DriversConsumer Insights Unknown Targeted Functionality Drives Higher Tape Usage Consumer Insights Drive Functionality • Filing #1 application • Many frustrations exist when using a label maker for filing • Need deep dive to better understand end user needs • Opportunity to change the game by making top applications easier • Add targeted functionality into label makers • Insertable Dividers • 3 Tab • 5 Tab • 8 Tab • Hanging File Folders • Letter • Legal • File Folders • Letter • Legal

  35. Platform for Growth

  36. DYMO ProfessionalNew Product Road Map Need Product Pipeline

  37. Overall Strategic Focus Areas • Core of the Core Growth • New products with proprietary & innovative features • Develop new Professional label delivery system • Focus on Small & Medium size Business (SMB) 1 • Near Neighbor Category Expansion • Industrial Platform 2 • Global Expansion • Emerging Markets 3 • NWL OPEX • Global best cost • Sustainable competitive advantage 4

  38. Best Cost Analysis – Tape Cassettes NWL OPEX DYMO D1 Brother TZ231

  39. Best Cost Analysis – Label Makers NWL OPEX LM210D PT-1280

  40. Best Cost Analysis – Label Makers NWL OPEX LM220P PT-1010

  41. VA/VE Initiatives • Packaging Project $264K NWL OPEX 2008 Initiatives Estimated Savings $264K

  42. Manufacturing Initiatives • New Coilers for Dolmen Machines $135K • D1-24mm with Refurbished Coilers $ 31K NWL OPEX 2007 Initiatives – Q3/Q4 Estimated Savings $166K

  43. Manufacturing Initiatives • Automation • Injection Molds $72K • Torque Control • Dolmen Machines $153K • New D1 Packaging Machines $233K NWL OPEX 2008 Initiatives Estimated Savings $458K

  44. Sourcing Initiatives • Negotiation Printers • AML $225K • Honor Tone $ 27K • Negotiation Print Heads • Kyocera $ 13K • Negotiation MCU’s • Samsung $ 40K NWL OPEX 2007 Initiatives – Q3/Q4 Estimated Savings $305K

  45. Sourcing Initiatives • Negotiation Printers • AML $440K • Honor Tone $198K • Negotiation Print Heads • Kyocera $ 13K • Negotiation MCU’s • Samsung $ 25K • Spoerle $ 34K NWL OPEX 2008 Initiatives Estimated Savings $710K

  46. Why DYMO Professional? 87% of DYMO’s OI High Tape to Tool Ratio (5:1) Large Installed Base Large $570M Office Market Used in Various Verticals

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