Logitech 2004 Annual Report Download - page 92

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March 31, 2004, the notional amount of forward foreign exchange contracts outstanding for forecasted inventory
exposures was $10.4 million. These forward contracts generally mature within three months. Deferred realized
losses totaled $.4 million at March 31, 2004 and is expected to be classified to earnings when the hedged items
are settled. If the U.S. dollar had appreciated by 10% as compared to the hedged foreign currency, an unrealized
gain of $1.5 million in our forward foreign exchange contract portfolio would have occurred. If the U.S. dollar
had depreciated by 10% as compared to the hedged foreign currency, a $.6 million unrealized loss in our forward
foreign exchange contract portfolio would have occurred.
The Company also enters into forward exchange contracts to hedge against foreign currency exposures
inherent in forecasted sales denominated in non-functional currencies. These forward exchange generally mature
between one to two months, corresponding with the expected payment terms on the Company’s sales. The
notional amount of foreign exchange contracts outstanding as of March 31, 2004 was $3.5 million. Deferred
losses on the contracts recorded in accumulated other comprehensive loss were immaterial as of March 31, 2004,
as such the impact to the Company’s results of operations due to changes in exchange rates related to such
contracts would not be material.
Interest Rates
The interest rate on the Company’s long-term debt is fixed. A change in interest rates, therefore, has no
impact on interest expense or cash flows with respect to its long-term obligations.
Changes in interest rates could impact the Company’s anticipated interest income on its cash equivalents
and interest expense on variable rate short-term debt. The Company prepared sensitivity analyses of its interest
rate exposures to assess the impact of hypothetical changes in interest rates. Based on the results of these
analyses, a 100 basis point decrease or increase in interest rates from the March 31, 2004 and 2003 year-end rates
would not have a material effect on the Company’s results of operations or cash flows.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
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