Case 3.3 Logitech International S.A. The following excerpts are from the Logitech International S.A. Form 10-K. LOGITECH INTERNATIONAL S.A. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Year ended March 31, 2013 2012 2011 $ 2,099,883 1,392,581 707,302 $ 2,316,203 1,539,614 776,589 $ 2,362,886 1,526,380 836,506 423,854 162,331 118,423 420,580 156,390 116,880 Net sales Cost of goods sold Gross profit Operating expenses: Marketing and selling Research and development General and administrative Impairment of goodwill and other assets Restructuring charges Total operating expenses Operating income (loss) Interest income, net Other income (expense), net Income (loss) before income taxes Provision for benefit from) income taxes Net income (loss) Net income (los) per share Basic Diluted Shares used to compute net income (loss) per share Basic Diluted Cash dividends 431,598 153,922 113,824 216,688 43,704 959,736 (252,434) 907 (2,198) (253,725) (25,588) $(228,137 704,608 71,981 2,674 16,622 91,277 19,819 71.458 693,850 142,656 2,316 3,476 148,448 19,988 $ 128,460 S (1.44) S S 5 5 0.41 0.41 $ $ 0.73 0.72 158,468 158,468 0.85 174,615 175,591 176,928 178,790 S S por share Question 1 (1 point) Gross profit margin for 2011 as a percentage rounded to one decimal point (Example 34.6%) was: Question 2 (1 point) Gross profit margin for 2012 as a percentage rounded to one decimal point (Example - 34.6%) was: A/ Question 3 (1 point) Gross profit margin for 2013 as a percentage rounded to one decimal point (Example - 34.6%) was Question 4 (1 point) Surved Operating Income (Loss) for 2011 as a percentage rounded to one decimal point including a 0 (Example - 34.0%) was: 6.0% A/ Question 5 (1 point) Operating Income (Loss) for 2012 as a percentage rounded to one decimal point (Example - 34.4%) was: A/ Question 6 (1 point) Operating Income (Loss) for 2013 as a percentage rounded to one decimal point including a 0 and with parentheses for negative amounts (Example - (34.0)%) was: Question / 11 point) Income (Loss) before Income Taxes for 2011 as a percentage rounded to one decimal point (Example-34.2%) was: A Question 8 (1 point) Income (Loss) before Income Taxes for 2012 as a percentage rounded to one decimal point (Example -34.2%) was: A/ Question 9 (1 point) Income (Loss) before Income Taxes for 2013 as a percentage rounded to one decimal point with parentheses for negative amount (Example - (34.2%) was: A/ Question 10 (1 point) Net Income (Loss) for 2011 as a percentage rounded to one decimal point (Example - 34.2%) was: A Question 11 (1 point) Net Income (Loss) for 2012 as a percentage rounded to one decimal point (Example - 34.2%) was: Question 12 (1 point) Net Income (Loss) for 2013 as a percentage rounded to one decimal point with parentheses for negative amount (Example - (34.2%) was: Question 13 (1 point) Effective tax rate for 2011 as a percentage rounded to one decimal point (Example 34.2%) was: Question 14 (1 point) Effective tax rate for 2012 as a percentage rounded to one decimal point (Example 34.2%) was: A/ Question 15 (1 point) Effective tax rate for 2013 as a percentage rounded to one decimal point (Example 34.2%) was: A Question 16 (1 point) Growth rate of sales from 2011 to 2012 as a percentage rounded to one decimal point with parentheses for negative amount (Example (34.2)%) was: Question 17 (1 point) Growth rate of sales from 2012 to 2013 as a percentage rounded to one decimal point with parentheses for negative amount (Example (34.2)%) was: Question 18 (1 point) Growth rate of operating costs from 2011 to 2012 as a percentage rounded to one decimal point (Example 34.2%) was: A Question 19 (1 point) Growth rate of operating costs from 2012 to 2013 as a percentage rounded to one decimal point (Example 34.2%) was: A/ Question 20 (1 point) Growth rate of operating costs plus COGS from 2011 to 2012 as a percentage rounded to one decimal point (Example 34.2%) was: Question 21 (1 point) Growth rate of operating costs plus COGS from 2012 to 2013 as a percentage rounded to one decimal point (Example 34.2%) was: A/ Question 22 (1 point) Which of the following statements is correct regarding Logitech International S.A.s net sales for the periods 2011 - 2013? Sales have been decreasing at an increasing rate over the three-year period from 2011 to 2013 Sales have been increasing at a flat rate over the three-year period from 2011 to 2013. Sales have been decreasing at a flat rate over the three-year period from 2011 to 2013 Sales have been increasing at an increasing rate over the three-year period from 2011 to 2013 Question 23 (1 point) Which of the following statements is true concerning the change in gross profit margin over the three years from 2011 to 2013? Gross profit margin declined in 2012, but increased slightly in 2013. Gross profit margin increased in 2012, but declined in 2013 Gross profit margin declined in both 2012 and 2013 from the previous year. Gross profit margin was stable in 2012, but declined in 2013. All the following statements are true regarding the operating expenses from 2011 to 2013 except: There were restructuring costs in 2013 related to the video conferencing area. Operating expenses have increased all three years with a 36% increase in 2013. There was a goodwill impairment charge in 2013 related to the video conferencing reporting unit. 2 Operating expenses have decreased all three years with a 1.1% decrease in 2012. 15 Question 25 (1 point) All of the following are true regarding the research and development costs from 2011 to 2012 except: 18 21 Research and development costs increased by 5% in fiscal 2013 compared to the prior fiscal year. 24 Research and development (R&D) expenses declined in 2013 as workforce reductions took place due to the restructuring plan. In 2012 R&D increased due to higher personnel-related expenses and increased investments in product development for pointing devices, audio and digital home The increases in R&D in 2012 were offset partly by decreased bonuses due to lower profitability levels: lower share-based compensation expense and cost containment efforts in consulting and outsourcing Question 26 (1 point) Given the change in net income (loss) from 2011 to 2013, which of the following would not be a good idea for Logitech: The firm needs to determine ways to maintain good control of operating expenses. Logitech paid a substantial dividend of $0.85 per share in 2013, while not paying dividends in prior years. The firm needs to determine ways to increase the volume of sales of its products