Logitech 2013 Annual Report Download - page 118

provide up to an aggregate of $150.0 million in additional commitments, for a total of $400.0 million of unsecured
revolving credit. The credit facility may be used for working capital, general corporate purposes, and acquisitions.
There were no outstanding borrowings under the credit facility at March 31, 2013.
The credit facility matures on October 31, 2016. We may prepay the loans under the credit facility in whole
or in part at any time without premium or penalty. Borrowings under the credit facility will accrue interest at a per
annum rate based on LIBOR (London Interbank Offered Rate), or EURIBOR (Euro Interbank Offered Rate) in
the case of loans denominated in euros, plus a variable margin determined quarterly based on the ratio of senior
debt to earnings before interest, taxes, depreciation and amortization for the preceding four-quarter period, plus,
if applicable, an additional rate per annum intended to compensate the lenders for the cost of compliance with
regulatory reserve requirements and other banking regulations. We also pay a quarterly commitment fee of 40%
of the applicable margin on the available commitment. In connection with entering into the credit facility, we
incurred non-recurring fees totaling $1.5 million, which are amortized on a straight-line basis over the term of the
credit facility.
The facility agreement contains representations and covenants, including threshold financial covenants, and
events of default customary in Swiss credit markets. Affirmative covenants include covenants regarding reporting
requirements, maintenance of insurance, maintenance of properties and compliance with applicable laws and
regulations, and financial covenants that require the maintenance of net senior debt, interest cover and adjusted
equity ratios determined in accordance with the terms of the facility. Negative covenants limit the ability of the
Company and its subsidiaries, among other things, to grant liens, make investments, incur debt, make restricted
payments, enter into a merger or acquisition, or sell, transfer or dispose of assets, in each case subject to certain
exceptions. As of March 31, 2013, we were not in compliance with the interest cover ratio of this facility. This
situation resulted from the significant operating loss incurred during fiscal year 2013. We believe that this is only
a short-term situation. Until we are in compliance with all covenants, including the interest cover ratio, this facility
is not available for our use.
This facility stipulates that, upon an uncured event of default under the facility, the lenders may declare
all or a portion of the outstanding obligations payable by us to be immediately due and payable, terminate their
commitments and exercise other rights and remedies provided for under the facility. The events of default under
the facility include, among other things, payment defaults, covenant defaults, inaccuracy of representations and
warranties, cross defaults with certain other indebtedness, bankruptcy and insolvency events and events that have
a material adverse effect (as defined in the facility). Upon a change of control of the Company, lenders whose
commitments aggregate more than two-thirds of the total commitments under the facility may terminate the
commitments and declare all outstanding obligations to be due and payable.
We have credit lines with several European and Asian banks totaling $55.8 million as of March 31, 2013. As
is common for businesses in European and Asian countries, these credit lines are uncommitted and unsecured.
Despite the lack of formal commitments from the banks, we believe that these lines of credit will continue to be
made available because of our long-standing relationships with these banks and our current financial condition. At
March 31, 2013, there were no outstanding borrowings under these lines of credit. There are no financial covenants
or cross default provisions under these facilities. The Company also has credit lines related to corporate credit cards
totaling $17.3 million as of March 31, 2013. The outstanding borrowings under these credit lines are recorded in
other current liabilities. There are no financial covenants or cross default provisions under these credit lines.
The Company has financed its operating and capital requirements primarily through cash flow from operations
and, to a lesser extent, from capital markets and bank borrowings. Our normal liquidity for the next 12 months
and our longer-term capital resource requirements are provided from three sources: cash flow generated from
operations, cash and cash equivalents on hand, and borrowings, as needed, under our credit facilities. Based upon
our available cash balances, credit lines and credit facility, and the trend of our historical cash flow generation, we
believe we have sufficient liquidity to fund operations for at least the next 12 months.
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