<PAGE>
File Number: 0-29174
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1997
LOGITECH INTERNATIONAL S.A.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NOT APPLICABLE
(TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH)
CANTON OF VAUD, SWITZERLAND
(JURISDICTION OF INCORPORATION OR ORGANIZATION)
LOGITECH INTERNATIONAL S.A.
APPLES, SWITZERLAND
C/O LOGITECH INC.
6505 KAISER DRIVE
FREMONT, CALIFORNIA 94555
(510) 795-8500
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT FILES OR WILL FILE ANNUAL REPORTS
UNDER COVER FORM 20-F OR FORM 40-F.
X FORM 20-F FORM 40-F
INDICATE BY CHECK MARK WHETHER THE REGISTRANT BY FURNISHING THE INFORMATION
CONTAINED IN THIS FORM IS ALSO THEREBY FURNISHING THE INFORMATION TO THE
COMMISSION PURSUANT TO RULE 12g3-2(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934.
YES X NO
IF "YES" IS MARKED, INDICATE BELOW THE FILE NUMBER ASSIGNED TO THE REGISTRANT IN
CONNECTION WITH RULE 12g3-2(b).
NOT APPLICABLE
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LOGITECH INTERNATIONAL S.A.
FORM 6-K
TABLE OF CONTENTS
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Financial Information (unaudited):
Consolidated Balance Sheets at June 30, 1997 and March 31, 1997....................................... 3
Consolidated Statements of Income for the three months ended June 30, 1997 and 1996................... 4
Consolidated Statements of Cash Flows for the three months ended June 30, 1997 and 1996............... 5
Notes to Consolidated Financial Statements............................................................ 6
Management's Discussion and Analysis of Financial Condition and Results of Operations................... 8
Signatures.............................................................................................. 12
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2
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LOGITECH INTERNATIONAL S.A.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
- --------------------------------------------------------------------------
JUNE 30, MARCH 31,
1997 1997
----------- ---------
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents................ $ 30,858 $ 38,504
Accounts receivable...................... 60,234 71,634
Inventories.............................. 64,328 63,377
Other current assets..................... 5,591 9,253
-------- --------
Total current assets................ 161,011 182,768
Property, plant and equipment, net....... 32,534 32,135
Other assets............................. 5,399 1,520
-------- --------
Total assets $198,944 $216,423
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt........................... $ 5,004 $ 17,849
Current maturities of long-term debt...... 80 162
Accounts payable.......................... 38,982 44,406
Accrued liabilities....................... 32,158 38,690
-------- --------
Total current liabilities............ 76,224 101,107
Long-term debt, net of current maturities.. 3,209 3,188
Other liabilities........................... 532 437
-------- --------
Total liabilities.................... 79,965 104,732
-------- --------
Shareholders' equity:
Registered shares, par value CFH 20 -
2,101,688 authorized, 353,312
conditionally authorized, 2,001,688
issued and outstanding at June 30 and
March 31, 1997.......................... 28,738 28,738
Additional paid-in capital................ 75,360 73,430
Less registered shares in treasury, at
cost, 136,718 at June 30, 1997 and
182,839 at March 31, 1997................. (12,490) (16,813)
Retained earnings......................... 33,881 31,730
Cumulative translation adjustment......... (6,510) (5,394)
-------- --------
Total shareholders' equity........... 118,979 111,691
-------- --------
Total liabilities and shareholders'
equity............................... $198,944 $216,423
======== ========
The accompanying notes are an integral part of these financial statements.
3
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LOGITECH INTERNATIONAL S.A.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
- ------------------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30,
---------------------------
1997 1996
------------- ----------
(UNAUDITED)
Net sales............................... $ 90,158 $ 84,362
Cost of goods sold...................... 64,363 59,163
---------- ----------
Gross profit............................ 25,795 25,199
Operating expenses:
Marketing and selling................. 12,061 11,998
Research and development.............. 7,266 6,355
General and administrative............ 4,805 4,939
---------- ----------
Operating income........................ 1,663 1,907
Interest income (expense), net.......... 213 (293)
Other income (expense), net............. 655 1,273
---------- ----------
Income before income taxes.............. 2,531 2,887
Provision for income taxes.............. 381 445
---------- ----------
Net income.............................. $ 2,150 $ 2,442
========== ==========
Net income per share.................... $1.10 $1.38
Weighted average registered shares and
equivalents........................ 1,954,961 1,772,774
The accompanying notes are an integral part of these financial statements.
4
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LOGITECH INTERNATIONAL S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
- ------------------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30,
---------------------------
1997 1996
------------ ----------
(UNAUDITED)
Cash flows from operating activities:
Net income............................ $ 2,150 $ 2,442
Non-cash items included in net
income:
Depreciation and amortization...... 3,093 2,692
Loss on disposal of property,
plant and equipment............... -- 233
Write-down of investments.......... (27) 690
Stock compensation expense......... 79 316
Deferred income taxes.............. (605) (507)
Changes in current assets and
liabilities:
Accounts receivable................ 11,360 11,090
Inventories........................ (1,363) 4,236
Other current assets............... 968 (2,170)
Accounts payable................... (6,084) (3,333)
Accrued liabilities................ (6,748) (228)
-------- --------
Net cash provided by operating
activities..................... 2,823 15,461
-------- --------
Cash flows from investing activities:
Additions to property, plant and
equipment......................... (3,723) (2,746)
Other investing activities......... 62 50
-------- --------
Net cash used in
investing activities........... (3,661) (2,696)
-------- --------
Cash flows from financing activities:
Decrease in short-term debt........ (12,927) (8,732)
Repayment of long-term debt........ -- (346)
Purchase of treasury shares........ -- (1,105)
Proceeds from sale of treasury
shares............................ 6,174 970
-------- --------
Net cash used in
financing activities........... (6,753) (9,213)
-------- --------
Effect of exchange rate changes on cash
and cash equivalents................... (55) (225)
-------- --------
Net increase (decrease) in cash and
cash equivalents....................... (7,646) 3,327
Cash and cash equivalents at beginning
of period.............................. 38,504 28,564
-------- --------
Cash and cash equivalents at end of
period................................. $ 30,858 $ 31,891
======== ========
Supplemental cash flow information:
Interest paid...................... $ 128 $ 508
Income taxes paid.................. $ 879 $ 708
The accompanying notes are an integral part of these financial statements.
5
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LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- THE COMPANY:
Logitech International S.A. (the "Company") designs, manufactures and markets
Senseware peripherals, products that serve as primary physical interfaces
between users and their personal computers and other multimedia devices.
Senseware peripherals include: professional pointing devices such as 2D, 3D,
and cordless mice; trackballs and touchpads; control devices for entertainment
such as joysticks, gamepads, and 3D game controllers; and imaging devices such
as personal color scanners and digital video cameras. The Company sells its
products to both original equipment manufacturers ("OEMs") and to a network of
retail distributors and retailers.
NOTE 2 -- INTERIM FINANCIAL DATA:
The accompanying consolidated financial statements should be read in
conjunction with the Company's 1997 Annual Report on Form 20-F as filed with the
Securities and Exchange Commission. In the opinion of management, the
accompanying financial information includes all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the financial
position, results of operations and cash flows for the interim periods. The
results of operations and cash flows for the interim periods presented are not
necessarily indicative of the results of any future period.
The Company reports quarterly results on thirteen-week periods, each ending on
a Friday. For purposes of presentation, the Company has indicated its quarterly
periods as ending on the month end.
NOTE 3 -- INITIAL PUBLIC OFFERING IN THE U.S.:
On March 27, 1997, the Company sold 200,000 registered shares from treasury in
a U.S. initial public offering in the form of 2,000,000 American Depositary
Shares ("ADS"). Total proceeds from the offering amounted to $32.0 million, or
$16 per ADS. Underwriting discounts and commissions, share issue and other
taxes and other offering expenses amounted to $5.2 million, which resulted in
net proceeds to the Company of $26.8 million. On April 25, 1997, the Company
sold an additional 30,000 registered shares from treasury under an option
granted to the underwriters to cover over-allotments. Such sale generated net
proceeds of $4.5 million.
NOTE 4 -- NET INCOME EARNINGS PER SHARE:
Net income per share is computed by dividing net income by the weighted
average number of outstanding registered shares and, if dilutive, weighted
average registered share equivalents. Registered share equivalents include
registered shares issuable upon the exercise of stock options (using the
treasury stock method). Pursuant to the requirements of the Securities and
Exchange Commission, treasury stock sold and registered share equivalents
relating to stock options granted during the twelve months preceding the
commencement of the U.S. public offering and through the effective date (March
27, 1997) have been included in the calculation of net income per share (using
the treasury stock method and the public offering price) as if they were
outstanding for all periods presented through December 31, 1996.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). This
statement is effective for the Company's fiscal quarter ending December 31,
1997. Under SFAS 128, primary earnings per share is replaced by basic earnings
per share and fully diluted earnings per share is replaced by diluted earnings
per share. SFAS 128 will require the retroactive restatement of all previously
reported amounts upon adoption. Had the Company adopted SFAS 128 for the periods
presented, basic and diluted earnings per share for the three months ended June
30, 1997 would have been $1.17 and $1.10, and for the three months ended June
30, 1996 would have been $1.49 and $1.38.
6
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NOTE 5 -- COMMITMENTS AND CONTINGENCIES:
In December 1996, the Company was advised of the intention to begin
implementing a value added tax ("VAT") on goods manufactured in certain parts of
China since July 1995, including where the Company's operations are located, and
intended for export. The Company has not previously paid any such VAT on its
exported Chinese manufactured products. The Company is in discussion with
Chinese officials and has been assured that, not withstanding statements made by
tax authorities, the VAT would not be applied to the Company. The Company
therefore believes this matter will not have a material adverse effect on the
Company's results of operations. Were the VAT to be applied to the Company, the
Company could incur a significant charge to operations, as well as an increase
in its cost of goods sold. As a result, the Company would seek to mitigate the
future effect by reorganizing its operations in China. There can be no
assurance that any application of the VAT to the Company would not have a
material adverse effect on the Company's current or future results of
operations, or that the Company's efforts to mitigate any impact of the VAT
would be successful.
The Company is involved in various legal actions and claims. In the opinion
of management, the future settlements of such actions and claims will not have a
material adverse effect on the Company's financial position or results of
operations.
7
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LOGITECH INTERNATIONAL S.A.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company's net sales are primarily derived from sales of two product lines,
control devices and imaging solutions, and to a lesser extent from the sale of
other products. Control devices include mice, trackballs, six degrees of
freedom ("6DOF") controllers, touchpads, joysticks, gamepads, 3D game
controllers and remote controls. In fiscal 1998 to date and in fiscal 1997, net
sales of control devices accounted for a substantial majority of the Company's
total net sales. Imaging solutions include color personal scanners and color
digital video cameras. Other products include partner products, as well as
product lines that are being phased out for strategic purposes.
The following tables set forth net sales for each of the Company's product
lines and net sales for each product line as a percentage of total net sales:
THREE MONTHS ENDED JUNE 30,
-----------------------------
1997 1996
----------- ----------
(IN THOUSANDS)
Net sales:
Control devices.............. $79,884 $65,361
Imaging solutions............ 9,641 18,949
Other........................ 633 52
----------- ----------
Total net sales................ $90,158 $84,362
=========== ==========
Net sales:
Control devices.............. 88% 77%
Imaging solutions............ 11% 22%
Other........................ 12% 1%
----------- ----------
Total net sales................ 100% 100%
=========== ==========
INITIAL PUBLIC OFFERING IN THE U.S.
On March 27, 1997, the Company sold 200,000 registered shares from treasury in
a U.S. initial public offering in the form of 2,000,000 American Depositary
Shares ("ADS"), with hich net proceeds to the Company of $26.8 million. On
April 25, 1997, the Company sold an additional 30,000 shares from treasury under
an option granted to the underwriters to cover over-allotments, generating net
proceeds of $4.5 million.
8
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RESULTS OF OPERATIONS
The following table sets forth certain consolidated financial statement
amounts as a percentage of net sales for the periods indicated:
THREE MONTHS ENDED JUNE 30,
-----------------------------
1997 1996
----------- ----------
Net sales...................... 100.0% 100.0%
Cost of goods sold............. 71.4 70.1
------- -------
Gross profit................... 28.6 29.9
Operating expenses:
Marketing and selling........ 13.4 14.2
Research and development..... 8.1 7.5
General and administrative... 5.3 5.9
------- -------
Operating income............... 1.8 2.3
Interest income (expense), net. .2 (.4)
Other income, net.............. .8 1.5
------- -------
Income before income taxes..... 2.8 3.4
Provision for income taxes..... (.4) (.5)
------- -------
Net income..................... 2.4% 2.9%
======= =======
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1997 AND 1996
Net Sales
Net sales for the three months ended June 30, 1997 increased 7%. This increase
was due to continued strong sales of control devices, which grew by 22% compared
to the prior year. Control device sales into the OEM market increased during the
quarter, reflecting growth in the PC market and increased demand for the
Company's products from the majority of the leading PC vendors makers.
Scanner sales in 1997 were below the comparable quarter from last year.
Aggressive competition from low-end flatbed scanners which emerged in the
previous quarter caused prices of sheetfed scanners to drop, and also resulted
in slightly reduced unit sales. In addition, the move away from handheld
scanners continued. The combination of lower sheetfed prices, slightly reduced
volumes and lower handheld sales caused scanner revenue to decrease by over
50%. The Company expects this business to be characterized by very aggressive
price competition and an unsettled environment for the next several quarters.
Gross Profit
Gross profit consists of net sales, less cost of goods sold which consists of
materials, direct labor and related overhead costs, costs of manufacturing
facilities, costs of purchasing finished products from outside suppliers,
distribution costs and inventory write-offs. Gross profit increased 2% to $25.8
million, or 28.6% of net sales.
Gross profit as a percent of net sales declined slightly compared to the prior
year. This decrease resulted from the combination of three factors; the higher
proportion of lower margin OEM sales, a significant reduction in scanner gross
margins and the strengthening of the U.S. dollar. Despite these factors, the
Company was able to maintain overall gross profit at the current level due to
continuing success in achieving cost reductions in a number of areas, most
notably in its high volume manufacturing operation in Suzhou, China.
9
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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. This expense was
relatively flat compared to the prior year, growing by less than 1%. This
reflects increased spending to launch a new visual marketing strategy that
includes a refreshed logo, new packaging and other associated marketing
materials offset by a decline in sales expense resulting primarily
from lower retail sales volume. The Company's strategy in this area is to
continue to build brand equity thereby protecting one of its key corporate
assets.
Research and Development
Research and development expense consists of personnel and related overhead
costs, contractors and outside consultants, supplies and materials, equipment
depreciation and facilities costs. Research and development expense increased
14% to $7.3 million, or 8.1% of net sales. The vast majority of this increase
was in the control device area. This reflects the Company's ongoing commitment
to invest in developing future generations of products in this core business.
General and Administrative
General and administrative expense consists of personnel and related overhead
and facilities costs for the finance, information systems, executive, human
resources and legal functions. General and administrative expense decreased by
3% to $4.8 million, or 5.3% of net sales. This decrease resulted primarily
from a reduction in compensation expense associated with employee stock benefit
plans.
Interest Income (Expense)
Interest income for the most recent quarter was $0.2 million, compared to
expense of $0.3 million in the prior year. The improvement was the result of a
reduction in bank borrowings and an increase in interest bearing cash and cash
equivalents made possible by cash flow from operations and the proceeds from the
Company's U.S. initial public offering.
Other Income (Expense)
Other income decreased from $1.3 million in the prior year to $0.7 million.
This reduction was primarily due to significantly lower net foreign exchange
gains.
Provision for Income Taxes
The provision for income taxes consists of income and withholding taxes. The
amount recorded in each period reflects management's best estimate of the
effective tax rate for the fiscal year. Estimates are based on factors such as
management's expectations as to payments of withholding taxes on amounts
repatriated through dividends, the jurisdictions in which taxable income is
generated, changes in local tax laws and changes in valuation allowances based
upon the likelihood of recognizing deferred tax assets. The provision for income
taxes for the three months ended June 30, 1997 decreased slightly to $0.4
million, representing a 15.1% effective tax rate, from a 15.4% effective tax
rate for the three months ended June 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had cash and cash equivalents of $30.9
million. The Company also had credit lines with several European and Asian
banks totaling $48.5 million as of that date. As is common for business in
European countries, the Company's credit lines are uncommitted and unsecured.
Despite the lack of formal commitments from its banks, the Company believes that
these lines of credit will continue to be made available because of its long-
standing relationships with these banks. As of June 30, 1997, there were $5.0
million of borrowings outstanding under these facilities.
The Company's operating activities generated cash of $2.8 million for the
three months ended June 30, 1997, primarily from net income adjusted for
depreciation, partially offset by an increase in the Company's working capital
requirements. Operating activities generated cash of $15.5 million for the
three months ended June 30, 1996, primarily from net income adjusted for
depreciation and reduced working capital requirements.
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The Company's investing activities used cash of $3.7 million and $2.7 million
for the three months ended June 30, 1997 and June 30, 1996, primarily for
capital expenditures.
Net cash used in financing activities for the three months ended June 30, 1997
was $6.8 million. This amount reflects cash proceeds of $4.5 million received
in April 1997 from the sale of additional registered shares under an option
granted to the underwriters of the initial public offering in the U.S. to cover
over-allotments. The Company had additional proceeds of $1.6 million from the
sale of treasury shares. These cash proceeds, along with part of the $26.8
million received in March 1997 from the U.S. initial public offering, were used
to pay down short-term debt by $12.9 million in the three months ended June 30,
1997. The net cash of $9.2 million used in the three months ended June 30, 1996
represents principally the pay down of short-term debt.
The Company believes that it will continue to make capital expenditures in the
future to support ongoing and expanded operations and that such expenditures may
be substantial. The Company believes that its cash and cash equivalents, cash
from operations, and available borrowings under its bank lines of credit will be
sufficient to fund capital expenditures and working capital needs for the
foreseeable future.
CERTAIN FACTORS AFFECTING OPERATING RESULTS
It is the Company's belief that this quarterly report on Form 6-K may contain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities and Exchange Act of 1934.
Predictions of future events are inherently uncertain. Actual events could
differ materially from those predicted in the forward-looking statements. Any
forward-looking statements in this document are intended to be subject to the
safe harbor protection provided by Sections 27A and 21E. Those statements
related to i) price competition and an unsettled environment in the scanner
market, ii) the Company's brand strategy and research and development strategy,
iii) bank credit line availability, iv) cash liquidity availability, and v) the
outcome of contingencies.
Factors that could affect the Company's operating results and financial
condition include (i) potential fluctuations in future operating results due to
product life cycles and seasonality, (ii) the concentration of the Company's
manufacturing operations in China and Taiwan which could be impacted by
political instability and strains on infrastructure, (iii) the outcome of the
potential Chinese VAT, (iv) the risk of margin declines due to an increasing
proportion of sales of lower margin products or to continued price pressure, (v)
the risks of transacting a substantial portion of business outside of the United
States, including tariffs and taxes, trade barriers, staffing, political risks,
and foreign currency fluctuations, (vi) intense competition, a trend of
declining average selling prices and performance enhancements of competing
products, (vii) the Company's ability to develop new, technologically-advanced
products and enhancements in a market characterized by rapidly changing
technology and frequent new product introductions, (viii) dependence on control
device products and the less favorable experience with imaging solution
products, (ix) potential fluctuations in the Company's effective tax rate, which
may be affected by changes in or interpretation of tax laws in the multiple
jurisdictions in which it operates, utilization of net operating losses and tax
credit carry forwards, changes in management's assessment of matters such as the
realizability of deferred tax assets.
For discussions identifying other factors that could cause actual results to
differ from those anticipated in the forward-looking statements, see
"Description of Business" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Form 20-F for the year
ended March 31, 1997. The Company cautions that the foregoing list of risk
factors is not exclusive.
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
Logitech International S.A.
By: /s/ Daniel Borel
--------------------------
Daniel Borel
Chief Executive Officer
By: /s/ Barry Zwarenstein
--------------------------
Barry Zwarenstein
Chief Finance Officer,
Chief Accounting Officer,
and U.S. Representative
August 15, 1997
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