Logitech 2006 Annual Report Download - page 139

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On June 8, 2001, Logitech sold CHF 170.0 million ($95.6 million based on exchange rates at date of
issuance) aggregate principal amount of its 1% convertible bonds. 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
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%. At March 31,
2005, the carrying amount of the convertible bonds, including the accrued redemption premium, was CHF
176.5 million ($147.7 million based on exchange rates at March 31, 2005).
On August 31, 2005, the Company exercised its right to call the convertible bonds for early redemption in
accordance with their terms. As of November 11, 2005, all outstanding bonds had been presented for conversion
into 5,448,693 Logitech registered shares at the conversion price of CHF 31.20 per share ($23.72 based on
exchange rates at November 11, 2005). The conversion was satisfied through delivery of treasury shares.
Note 8 — Shareholders’ Equity:
In June 2004, the Company’s shareholders renewed the approval of 20 million authorized registered shares
for use in acquisitions, mergers and other transactions, valid through June 24, 2006. Shareholders of the
Company will be requested at the 2006 Annual General Meeting to extend this authorization until June 2008.
In addition, the Company has conditionally authorized shares totaling 30,330,930 to cover option rights
granted or other equity rights that may be granted to employees, officers and directors of Logitech under its
employee equity incentive plans. The conditional share capital increase does not have an expiration date.
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 ($269.7 million at
March 31, 2006) and is subject to shareholder approval. The Company will recommend to its shareholders that
no cash dividends be paid in 2006.
Under Swiss corporate law, a minimum of 5% of the Company’s annual net income must be retained in a
legal reserve until this legal reserve equals 20% of the Company’s issued and outstanding aggregate par value per
share capital. These legal reserves represent an appropriation of retained earnings that are not available for
distribution and totaled $7.3 million at March 31, 2006.
Additionally, under Swiss corporate law, the Company is required to establish a reserve equal to the amount
of treasury shares repurchased at year-end. The reserve for treasury shares, which is not available for distribution,
totaled $182.9 million at March 31, 2006.
In June 2005, the Company announced the approval by its board of directors of a new buyback program of
up to CHF 300.0 million (approximately $235.0 million based on exchange rates at the date of announcement).
The program expires at the Company’s 2008 Annual General Meeting at the latest. Under this program, the
Company repurchased 4.2 million shares for $174.6 million during the year ended March 31, 2006. The approved
amount remaining under this program at March 31, 2006 is CHF 76.1 million ($58.3 million based on exchange
rate at March 31, 2006).
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