Case 3.3 Logitech International S.A.

Logitech International S.A. Consolidated Statements of Operations (In thousands, except per share amounts) Year ended March 31,
	2013	2012	2011
Net sales	$ 2,099,883	$ 2,316,203	$ 2,362,886
Cost of goods sold	1,392,581	1,539,614	1,526,380
Gross profit	707,302	776,589	836,506
Operating expenses:
Marketing and selling	431,598	423,854	420,580
Research and development	153,922	162,331	156,390
General and administrative	113,824	118,423	116,880
Impairment of goodwill and other assets	216,688
Restructuring charges	43,704
Total operating expenses	959,736	704,608	693,850
Operating income (loss)	(252,434)	71,981	142,656
Interest income, net	907	2,674	2,316
Other income (expense), net	(2,198)	16,622	3,476
Income (loss) before income taxes	(253,725)	91,277	148,448
Provision for (benefit from) income taxes	(25,588)	19,819	19,988
Net income (loss)	$(228,137)	$71,458	$128,460
Net income (loss) per share:
Basic	$ (1.44)	$0.41	$0.73
Diluted	$ (1.44)	$0.41	$0.72
Shares used to compute net income (loss) per share:
Basic	158,468	174,648	176,928
Diluted	158,468	175,591	178,790
Cash dividends per share	$ 0.85	$	$

Required:

Using the Consolidated Statements of Operations and the excerpts from the Logitech International S.A. Form 10-K, analyze the profitability of Logitech. Your analysis should include the following calculations for all three years:

A. Common-size income statements.

B. Effective tax rates.

C. Growth rates of sales and total operating costs.

Your written analysis and interpretation should include explanations for why trends have occurred.