UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On December 28, 2015, Logitech International S.A. (the "Company"), and Lifesize, Inc., a wholly owned subsidiary of the Company (“Lifesize”) which holds the assets of the Company’s video conferencing reportable segment, entered into a stock purchase agreement (the “Stock Purchase Agreement”) with entities affiliated with three venture capital investment firms - Redpoint Ventures, Sutter Hill Ventures and Meritech Capital Partners (the "Venture Investors"). Pursuant to the terms of the Stock Purchase Agreement, the Company sold 2,500,000 shares of Series B Preferred Stock of Lifesize to the Venture Investors for cash proceeds of $2,500,000 and retained 12,000,000 non-voting shares of Series A Preferred Stock of Lifesize. The shares of Series A Preferred Stock of Lifesize retained by the Company represent 37.5% of the shares outstanding immediately after the closing of the transactions contemplated by the Stock Purchase Agreement (the “Closing”). Lifesize also issued 17,500,000 shares of Series B Preferred Stock to the Venture Investors for cash proceeds of $17,500,000. The shares of Series B Preferred Stock held by the Venture Investors represent 62.5% of the shares outstanding immediately after the Closing. In addition, Lifesize has reserved 8,000,000 shares of common stock for issuance pursuant to a stock plan to be adopted by Lifesize following the Closing (the “Employee Pool”), none of which are issued or outstanding at the Closing.
The following Unaudited Pro Forma Condensed Consolidated Financial Statements have been derived by the application of adjustments to the Company's historical consolidated financial statements. The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the fiscal years ended March 31, 2015, 2014, and 2013 and six months ended September 30, 2015 are presented as if the divestment of the Lifesize video conferencing reportable segment had occurred on April 1, 2012, the beginning of the earliest period presented. The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2015 is presented as if the divestment of Lifesize had occurred on September 30, 2015. The pro forma adjustments related to the divestment of the Lifesize video conferencing reportable segments do not reflect the final purchase price or final asset and liability balances of the Lifesize video conferencing reportable segments and are based on available information and assumptions that management believes are (1) directly attributable to the disposal; (2) factually supportable and (3) with respect to the statement of operations, expected to have a continuing impact on the consolidated results, as described in the accompanying notes. The pro forma adjustments may differ from those that will be calculated to report discontinued operations in future filings. The Unaudited Pro Forma Condensed Consolidated Financial Statements are being provided for informational purposes only and are not necessarily indicative of the results of operations or financial position that would have resulted if the disposition had actually occurred on the dates indicated and are not intended to project the Company's results of operations or financial position for any future period.
The following is a brief description of the amounts recorded under each of the column headings in the Unaudited Pro Forma Condensed Consolidated Financial Statements and the accompanying notes, which should be read in conjunction with the historical consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the fiscal years ended March 31, 2015, 2014, and 2013 and the Company’s Quarterly Report on Form 10-Q for the six months ended September 30, 2015.
As previously reported
This column reflects our historical audited operating results for the years ended March 31, 2015, 2014 and 2013 and the historical unaudited operating results and financial condition as of and for the six months ended September 30, 2015 prior to any adjustment for the divestment of the Lifesize video conferencing reportable segment described above.
Pro Forma Adjustments
This column reflects the elimination of the historical operating results of the Lifesize video conferencing reportable segment for the years ended December 31, 2015, 2014 and 2013 and the six months ended September 30, 2015 at the amounts that have been reflected in our consolidated statements of operations for those periods. The pro forma adjustments column on the unaudited pro forma consolidated balance sheet as of September 30, 2015 reflects the value of the assets and liabilities included in the Lifesize video conferencing reportable segment as of that date.
LOGITECH INTERNATIONAL S.A.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousand dollars, except per share amount)
(unaudited)
|
| | | | | | | | | | | | |
| | | Six Months Ended September 30, 2015 |
| | As Previously Reported | | Pro Forma Adjustments | | Pro Forma |
| Net sales | | $ | 1,010,182 |
| | $ | (44,002 | ) | (a) | $ | 966,180 |
|
| Cost of goods sold | | 652,442 |
| | (16,712 | ) | (a) | 635,730 |
|
| Gross profit | | 357,740 |
| | (27,290 | ) | | 330,450 |
|
| Operating expenses: | | |
| | |
| | |
|
| Marketing and selling | | 177,304 |
| | (22,676 | ) | (a) | 154,628 |
|
| Research and development | | 68,731 |
| | (11,668 | ) | (a) | 57,063 |
|
| General and administrative | | 57,355 |
| | (3,469 | ) | (a) | 53,886 |
|
| Restructuring charges, net | | 21,691 |
| | (7,006 | ) | (a) | 14,685 |
|
| Total operating expenses | | 325,081 |
| | (44,819 | ) | | 280,262 |
|
| Operating income | | 32,659 |
| | 17,529 |
| | 50,188 |
|
| Interest income, net | | 456 |
| | (12 | ) | (a) | 444 |
|
| Other expense, net | | (1,901 | ) | | 146 |
| (a) | (1,755 | ) |
| Income (loss) before income taxes | | 31,214 |
| | 17,663 |
| | 48,877 |
|
| Provision for income taxes | | 5,680 |
| | (34 | ) | (b) | 5,646 |
|
| Net income (loss) | | 25,534 |
| | 17,697 |
| | 43,231 |
|
| | | | | | | |
| Net income (loss) per share: | | |
| | |
| | |
|
| Basic | | $ | 0.16 |
| | | | $ | 0.26 |
|
| Diluted | | $ | 0.15 |
| | | | $ | 0.26 |
|
| | | | | | | |
| Shares used to compute net income (loss) per share : | | |
| | |
| | |
|
| Basic | | 163,957 |
| |
|
| | 163,957 |
|
| Diluted | | 166,352 |
| |
|
| | 166,352 |
|
| | | | | | | |
| Cash dividends per share | | $ | 0.53 |
| |
|
| | $ | 0.53 |
|
See accompanying notes to the unaudited pro forma condensed consolidated financial statements
LOGITECH INTERNATIONAL S.A.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousand dollars, except per share amount)
(unaudited)
|
| | | | | | | | | | | | |
| | | Year Ended March 31, 2015 |
| | | As Previously Reported | | Pro Forma Adjustments | | Pro Forma |
| Net sales | | $ | 2,113,947 |
| | $ | (109,039 | ) | (a) | $ | 2,004,908 |
|
| Cost of goods sold | | 1,339,750 |
| | (40,299 | ) | (a) | 1,299,451 |
|
| Gross profit | | 774,197 |
| | (68,740 | ) | | 705,457 |
|
| Operating expenses: | | |
| | |
| | |
|
| Marketing and selling | | 378,593 |
| | (56,844 | ) | (a) | 321,749 |
|
| Research and development | | 131,012 |
| | (22,706 | ) | (a) | 108,306 |
|
| General and administrative | | 131,446 |
| | (5,451 | ) | (a) | 125,995 |
|
| Impairment of goodwill and other assets | | 122,734 |
| | (122,734 | ) | (a) | — |
|
| Restructuring credits, net | | (4,888 | ) | | 111 |
| (a) | (4,777 | ) |
| Total operating expenses | | 758,897 |
| | (207,624 | ) | | 551,273 |
|
| Operating income (loss) | | 15,300 |
| | 138,884 |
| | 154,184 |
|
| Interest income, net | | 1,225 |
| | (28 | ) | (a) | 1,197 |
|
| Other expense, net | | (2,752 | ) | | 454 |
| (a) | (2,298 | ) |
| Income (loss) before income taxes | | 13,773 |
| | 139,310 |
| | 153,083 |
|
| Provision for (benefit from) income taxes | | 4,490 |
| | 164 |
| (b) | 4,654 |
|
| Net income (loss) | | 9,283 |
| | 139,146 |
| | 148,429 |
|
| | | | | | | |
| Net income (loss) per share: | | |
| | |
| | |
|
| Basic | | $ | 0.06 |
| | | | $ | 0.91 |
|
| Diluted | | $ | 0.06 |
| | | | $ | 0.89 |
|
| | | | | | | |
| Shares used to compute net income (loss) per share : | | |
| | |
| | |
|
| Basic | | 163,536 |
| |
| | 163,536 |
|
| Diluted | | 166,174 |
| |
|
| | 166,174 |
|
| | | | | | | |
| Cash dividends per share | | $ | 0.27 |
| |
|
| | $ | 0.27 |
|
See accompanying notes to the unaudited pro forma condensed consolidated financial statements
LOGITECH INTERNATIONAL S.A.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousand dollars, except per share amount)
(unaudited)
|
| | | | | | | | | | | | |
| | | Year Ended March 31, 2014 |
| | | As Previously Reported | | Pro Forma Adjustments | | Pro Forma |
| Net sales | | $ | 2,128,713 |
| | $ | (120,685 | ) | (a) | $ | 2,008,028 |
|
| Cost of goods sold | | 1,400,844 |
| | (54,355 | ) | (a) | 1,346,489 |
|
| Gross profit | | 727,869 |
| | (66,330 | ) | | 661,539 |
|
| Operating expenses: | | |
| | |
| | |
|
| Marketing and selling | | 379,747 |
| | (57,040 | ) | (a) | 322,707 |
|
| Research and development | | 139,385 |
| | (26,939 | ) | (a) | 112,446 |
|
| General and administrative | | 118,940 |
| | (6,251 | ) | (a) | 112,689 |
|
| Restructuring charges, net | | 13,811 |
| | (5,810 | ) | (a) | 8,001 |
|
| Total operating expenses | | 651,883 |
| | (96,040 | ) | | 555,843 |
|
| Operating income | | 75,986 |
| | 29,710 |
| | 105,696 |
|
| Interest income (expense), net | | (397 | ) | | (34 | ) | (a) | (431 | ) |
| Other income (expense), net | | 1,993 |
| | 46 |
| (a) | 2,039 |
|
| Income (loss) before income taxes | | 77,582 |
| | 29,722 |
| | 107,304 |
|
| Provision for income taxes | | 3,278 |
| | (1,965 | ) | (b) | 1,313 |
|
| Net income (loss) | | 74,304 |
| | 31,687 |
| | 105,991 |
|
| | | | | | | |
| Net income (loss) per share: | | |
| | |
| | |
|
| Basic | | $ | 0.46 |
| | | | $ | 0.66 |
|
| Diluted | | $ | 0.46 |
| | | | $ | 0.65 |
|
| | | | | | | |
| Shares used to compute net income (loss) per share : | | |
| | |
| | |
|
| Basic | | 160,619 |
| |
|
| | 160,619 |
|
| Diluted | | 162,526 |
| |
|
| | 162,526 |
|
| | | | | | | |
| Cash dividends per share | | $ | 0.22 |
| |
|
| | $ | 0.22 |
|
See accompanying notes to the unaudited pro forma condensed consolidated financial statements
LOGITECH INTERNATIONAL S.A.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousand dollars, except per share amount)
(unaudited)
|
| | | | | | | | | | | | |
| | | Year Ended March 31, 2013 |
| | | As Previously Reported | | Pro Forma Adjustments | | Pro Forma |
| Net sales | | $ | 2,099,277 |
| | $ | (137,040 | ) | (a) | $ | 1,962,237 |
|
| Cost of goods sold | | 1,389,643 |
| | (58,064 | ) | (a) | 1,331,579 |
|
| Gross profit | | 709,634 |
| | (78,976 | ) | | 630,658 |
|
| Operating expenses: | | |
| | |
| | |
|
| Marketing and selling | | 431,886 |
| | (71,641 | ) | (a) | 360,245 |
|
| Research and development | | 155,012 |
| | (31,148 | ) | (a) | 123,864 |
|
| General and administrative | | 114,381 |
| | (5,901 | ) | (a) | 108,480 |
|
| Impairment of goodwill and other assets | | 216,688 |
| | (214,500 | ) | (a) | 2,188 |
|
| Restructuring charges (credits), net | | 43,704 |
| | (4,249 | ) | (a) | 39,455 |
|
| Total operating expenses | | 961,671 |
| | (327,439 | ) | | 634,232 |
|
| Operating income | | (252,037 | ) | | 248,463 |
| | (3,574 | ) |
| Interest income (expense), net | | 907 |
| | (37 | ) | (a) | 870 |
|
| Other income (expense), net | | (2,198 | ) | | 59 |
| (a) | (2,139 | ) |
| Income (loss) before income taxes | | (253,328 | ) | | 248,485 |
| | (4,843 | ) |
| Provision for (benefit from) income taxes | | (25,810 | ) | | (566 | ) | (b) | (26,376 | ) |
| Net income (loss) | | (227,518 | ) | | 249,051 |
| | 21,533 |
|
| | | | | | | |
| Net income (loss) per share : | | |
| | |
| | |
|
| Basic | | $ | (1.44 | ) | | | | $ | 0.14 |
|
| Diluted | | $ | (1.44 | ) | | | | $ | 0.14 |
|
| | | | | | | |
| Shares used to compute net income (loss) per share : | | |
| | |
| | |
|
| Basic | | 158,468 |
| |
|
| | 158,468 |
|
| Diluted | | 158,468 |
| |
|
| | 159,445 |
|
| | | | | | | |
| Cash dividends per share | | $ | 0.85 |
| |
|
| | $ | 0.85 |
|
See accompanying notes to the unaudited pro forma condensed consolidated financial statements
LOGITECH INTERNATIONAL S.A.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands of dollars, except per share amount)
(unaudited)
|
| | | | | | | | | | | | |
| | | As of September 30, 2015 |
| | | As Previously Reported | | Pro Forma Adjustments | | Pro Forma |
| Assets | | | | | | |
| Current assets: | | |
| | |
| | |
| Cash and cash equivalents | | $ | 365,774 |
| | $ | (1,612 | ) | (c), (d) | $ | 364,162 |
|
| Accounts receivable, net | | 274,730 |
| | (10,116 | ) | (c) | 264,614 |
|
| Inventories | | 328,054 |
| | (15,350 | ) | (c) | 312,704 |
|
| Other current assets | | 73,504 |
| | (1,585 | ) | (c) | 71,919 |
|
| Total current assets | | 1,042,062 |
| | (28,663 | ) | | 1,013,399 |
|
| Non-current assets: | | |
| | |
| | |
| Property, plant and equipment, net | | 108,184 |
| | (4,308 | ) | (c) | 103,876 |
|
| Goodwill | | 218,207 |
| | — |
| (c) | 218,207 |
|
| Other intangible assets | | 666 |
| | (552 | ) | (c) | 114 |
|
| Other assets | | 60,656 |
| | 3,232 |
| (c), (e) | 63,888 |
|
| Total assets | | $ | 1,429,775 |
| | $ | (30,291 | ) | | $ | 1,399,484 |
|
| Liabilities and Shareholders’ Equity | | |
| | |
| | |
| Current liabilities: | | |
| | |
| | |
| Accounts payable | | $ | 356,686 |
| | $ | (4,662 | ) | (c) | $ | 352,024 |
|
| Accrued and other current liabilities | | 231,688 |
| | (35,266 | ) | (c), (f) | 196,422 |
|
| Total current liabilities | | 588,374 |
| | (39,928 | ) | | 548,446 |
|
| Non-current liabilities: | | |
| | |
| |
|
|
| Income taxes payable | | 74,374 |
| | — |
| | 74,374 |
|
| Other non-current liabilities | | 98,054 |
| | (12,253 | ) | (c) | 85,801 |
|
| Total liabilities | | 760,802 |
| | (52,181 | ) | | 708,621 |
|
| | | | | | |
|
| Shareholders’ equity: | | |
| |
|
| |
|
| Registered shares, CHF 0.25 par value: | | 30,148 |
| | | | 30,148 |
|
| Issued and authorized shares —173,106 at September 30, 2015 | | | | | | — |
|
| Conditionally authorized shares — 50,000 at September 30, 2015 | | | | | | — |
|
| Additional paid-in capital | | 1,633 |
| | — |
| | 1,633 |
|
| Less shares in treasury, at cost — 10,729 at September 30, 2015 | | (119,337 | ) | | | | (119,337 | ) |
| Retained earnings | | 869,793 |
| | 21,890 |
| (g) | 891,683 |
|
| Accumulated other comprehensive loss | | (113,264 | ) | | | | (113,264 | ) |
| Total shareholders’ equity | | 668,973 |
| | 21,890 |
| | 690,863 |
|
| Total liabilities and shareholders’ equity | | $ | 1,429,775 |
| | $ | (30,291 | ) | | $ | 1,399,484 |
|
See accompanying notes to the unaudited pro forma condensed consolidated financial statements
LOGITECH INTERNATIONAL S.A.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The pro forma adjustments may differ from those that will be calculated to report discontinued operations in future filings. The Unaudited Pro Forma Condensed Consolidated Financial Statements are being provided for informational purposes only and are not necessarily indicative of the results of operations or financial position that would have resulted if the disposition had actually occurred on the dates indicated and are not intended to project the Company's results of operations or financial position for any future period.
The unaudited proforma adjustments reflect the following assumptions:
| |
| (a) | Elimination of revenue, cost of goods sold, operating expenses, interest income (expense), net, and other income (expense), net attributable to the Lifesize video conferencing segment. |
| |
| (b) | Total provision for (benefit from) income taxes attributable to the Lifesize video conferencing segment is the difference between the previously reported amount and the tax effect of pre-tax income or loss of the Company without the Lifesize video conferencing segment, taking into consideration specific items that must be allocated without the Lifesize video conferencing segment. |
| |
| (c) | Elimination of the assets and liabilities related to the Lifesize video conferencing segment as if the divestment occurred on September 30, 2015. |
| |
| (d) | Reflects the cash proceeds of $2.5 million from selling 2,500,000 shares of Series B Preferred Stock of Lifesize to the Venture Investors upon the closing of the transaction. |
| |
| (e) | Reflects the preliminary fair value of $5.6 million of the non-voting shares of Series A Preferred Stock retained as an investment by the Company in Lifesize. As a result of the disposition, the Lifesize video conferencing segment is deconsolidated and the retained investment is recorded at fair value following Accounting Standard Codification Subtopic 810-10-40 ("ASC 810-10-40"). |
(f) To reflect the transaction cost, including legal costs and other consulting cost, of $0.8 million as if the divestment of the Lifesize video conferencing segment had occurred on September 30, 2015.
(g) To reflect the estimated after-tax gain, based on all the above assumptions, from the disposition of the Lifesize video conferencing reportable segment as if the it occurred on September 30, 2015.
