LOGITECH INTERNATIONAL SA - Shareholder.com

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Table of Contents LOGITECH INTERNATIONAL S.A. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) During fiscal years 2007, 2006 and 2005, 3,327,825, 1,615,556 and 4,039,772 share equivalents attributable to outstanding stock options were excluded from the calculation of diluted net income per share because the exercise prices of these options were greater than the average market price of the Company’s shares, and therefore their inclusion would have been anti-dilutive. Statement of Financial Accounting Standards No. 128, “Earnings per Share,” requires that employee equity share options, non-vested shares and similar equity instruments granted by the Company are treated as potential shares in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money options which is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount that the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares. During the fiscal year ended March 31, 2007, the number of in-the-money employee stock options treated as potential shares in computing diluted earnings per share was approximately 18,035,229 shares or 9.9% of the basic weighted average shares outstanding based on the Company’s average share price of $23.44. The following table illustrates the dilution effect of stock options granted and exercised: Year ended March 31 2007 2006 2005 Shares outstanding 182,635,345 181,361,200 177,007,784 Stock options granted 2,555,200 3,451,470 5,186,920 Stock options canceled, forfeited, or expired (688,242 ) (1,264,618 ) (631,276 ) Net options granted 1,866,958 2,186,852 4,555,644 Grant dilution (1) 1.0 % 1.2 % 2.6 % Stock options exercised 4,599,180 6,476,232 7,314,712 Exercise dilution (2) 2.5 % 3.6 % 4.1 % (1) The percentage of grant dilution is computed based on net options granted as a percentage of shares outstanding. (2) The percentage of exercise dilution is computed based on options exercised as a percentage of shares outstanding. Note 4 — Share-Based Compensation Plan Descriptions As of March 31, 2007, the Company offers the 2006 Employee Share Purchase Plan (Non-U.S.), the 1996 Employee Share Purchase Plan (U.S.), and the 2006 Stock Incentive Plan, which replaces the 1996 Stock Plan. Shares issued to employees as a result of purchases or exercises under these plans are generally issued from shares held in treasury. Effective June 15, 2006, Logitech’s Board of Directors approved the splitting of the Company’s Employee Share Purchase Plan into two separate plans, one for employees in the United States and one for employees outside the United States. As a result, the Board adopted the 2006 Employee Share Purchase Plan (Non-U.S.) (“2006 ESPP”) and renamed the 1996 Employee Share Purchase Plan as the 1996 Employee Share Purchase Plan (U.S.) (“1996 ESPP”). Under both plans, eligible employees may purchase shares at the lower of 85% of the fair market value at the beginning or the end of each six-month offering period. Subject to continued participation in F-15
Table of Contents LOGITECH INTERNATIONAL S.A. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) these plans, purchase agreements are automatically executed at the end of each offering period. A total of 12,000,000 shares have been reserved for issuance under both the 1996 and 2006 ESPP plans. As of March 31, 2007, a total of 1,479,217 shares were available for issuance under these plans. On June 16, 2006, Logitech’s shareholders approved adoption of the 2006 Stock Incentive Plan (the “2006 Plan”) with an expiration date of June 16, 2016. The Plan replaces the 1996 Stock Plan (“1996 Plan”). The 2006 Plan provides for the grant to eligible employees and nonemployee directors of stock options, stock appreciation rights, restricted stock and restricted stock units, which are bookkeeping entries reflecting the equivalent of shares. Stock options granted under the 2006 Plan generally will vest over four years, will have terms not exceeding ten years and will be issued at exercise prices not less than the fair market value on the date of grant. Awards under the 2006 Plan may be conditioned on continued employment, the passage of time or the satisfaction of performance vesting criteria. An aggregate of 14,000,000 shares is reserved for issuance under the 2006 Plan. As of March 31, 2007, a total of 12,006,900 shares were available for issuance under this plan. Under the 1996 Plan, the Company granted options for shares. Options issued under the 1996 Plan generally vest over four years and remain outstanding for periods not to exceed ten years. Options were granted at exercise prices of at least 100% of the fair market value of the shares on the date of grant. The Company made no grants of restricted shares, stock appreciation rights or stock units under the 1996 Plan. No further awards will be granted under the 1996 Plan. Under the 1988 Stock Option Plan, options to purchase shares were granted to employees and consultants at exercise prices ranging from zero to amounts in excess of the fair market value of the shares on the date of grant. The terms and conditions with respect to options granted were determined by the Board of Directors who administered this plan. Options generally vested over four years and remained outstanding for periods not exceeding ten years. Further grants may not be made under this plan and as of March 31, 2007, there were no options outstanding under this plan. Impact of SFAS 123R Adoption Effective April 1, 2006, the Company adopted SFAS 123R using the modified prospective method, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made to employees and directors, including stock options and share purchases under the 2006 ESPP and 1996 ESPP. The following table summarizes the share-based compensation expense and related tax benefit recognized in accordance with SFAS 123R for fiscal year 2007 (in thousands). In accordance with APB 25 and related previous accounting standards, no share-based compensation expense was recognized for fiscal years 2006 and 2005. Year Ended March 31, 2007 Cost of goods sold $ 2,077 Share – based compensation expense included in gross profit 2,077 Operating expenses: Marketing and selling 7,167 Research and development 3,151 General and administrative 7,069 Share-based compensation expense included in operating expenses 17,387 Total share-based compensation expense related to employee stock options and employee stock purchases 19,464 Tax benefit 4,526 Share-based compensation expense related to employee stock options and employee stock purchases, net of tax $ 14,938 F-16
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Table of Contents Part I TABLE OF C
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Page 65 and 66: Table of Contents ITEM 17. FINANCIA
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Page 71 and 72: Table of Contents LOGITECH INTERNAT
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Page 115 and 116: (4) Mr. Okamoto will retire from th
Page 117 and 118: Compensation Committee The Compensa
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Page 121 and 122: eight years at Weiser Lock, a divis
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LOGITECH INTERNATIONAL S.A. Consoli
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I, Mark J. Hawkins, certify that: C
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