Logitech 2004 Annual Report Download - page 113

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On June 8, 2001, Logitech sold CHF 170,000,000 ($95,625,000 based on exchange rates at date of issuance)
aggregate principal amount of its 1% convertible bonds, which mature in 2006. The net proceeds of the
convertible bond offering were used to refinance debt associated with the Company’s acquisition of Labtec in
March 2001. The Company registered the convertible bonds for resale with the Swiss Exchange. The convertible
bonds were issued in denominations of CHF 5,000 at par value, with interest at 1.00% payable annually, and
final redemption in June 2006 at 105%, representing a yield to maturity of 1.96%.
The convertible bonds are convertible at any time into Logitech registered shares at the conversion price of
CHF 62.4 ($48.9 based on exchange rates at March 31, 2004) per share. The Company may redeem the bonds on
notice if the closing price of its registered shares is at least 150% of the conversion price on 20 consecutive
trading days or if 95% of the bonds have been converted. The Company accounts for the redemption premium
over the term of the loan by recording interest expense and increasing the carrying value of the loan. As of
March 31, 2004, the carrying amount of the convertible bonds was CHF 174,779,000 ($137,008,000) and the fair
value based upon quoted market value was CHF 198,900,000 ($155,916,000).
Note 8 — Shareholders’ Equity:
In June 2002, the Company’s shareholders renewed the approval of 10 million authorized registered shares
for use in acquisitions, mergers and other transactions, valid through June 27, 2004. The Company expects to
seek approval from its shareholders at its June 2004 Annual General Meeting to renew the authorization for an
additional two years. Also in June 2002, the shareholders approved an increase of 6 million shares in the
conditionally authorized share capital.
Additionally, the Company has conditionally authorized shares totaling 15,165,465 to cover option rights
granted or other equity rights that may be granted to employees, officers and directors of Logitech under its 1988
Stock Option Plan, the 1996 Stock Plan and the 1996 Employee Share Purchase Plan. The conditional share
capital increase does not have an expiration date. The Company has also conditionally authorized shares totaling
2,725,000 to cover conversion rights granted in connection with the issue of the Company’s convertible bonds.
The conditional share capital increase does not have an expiration date.
In June 2001, the Company’s shareholders approved a ten-for-one share split for shares traded on the Swiss
Exchange, which took effect on August 2, 2001 and was distributed to stockholders of record as of August 1,
2001. ADSs traded on Nasdaq were not affected. As a result, the ratio of ten ADSs to one registered share
changed to a new ratio of one ADS to one registered share.
Pursuant to Swiss corporate law, Logitech International S.A. may only pay dividends in Swiss francs. The
payment of dividends is limited to certain amounts of unappropriated retained earnings ($201.4 million at
March 31, 2004) and is subject to shareholder approval. The Company does not intend to pay any cash dividends.
Under Swiss corporate law, a minimum of 5% of the Company’s annual net income must be retained in a
legal reserve until this reserve equals 20% of the Company’s issued and outstanding aggregate par value share
capital. These legal reserves represent an appropriation of retained earnings that are not available for distribution
and totaled $7.6 million at March 31, 2004. Certain other countries in which the Company operates have similar
laws.
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