LOGITECH INTERNATIONAL SA - Shareholder.com

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Table of Contents Note 7 — Short-term Investments LOGITECH INTERNATIONAL S.A. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) During the second quarter of fiscal year 2007, the Company invested in U.S. Government Guaranteed Student Loan Issues, which are auction rate securities collateralized by student loans and guaranteed by the United States Department of Education. Although the student loans securitizing the auction rate securities have maturity dates greater than 15 years, these investments are considered highly liquid and typically reset every 28 days. These securities are classified as available-for-sale as of March 31, 2007 and are reported at fair value. As of March 31, 2007, the Company had not recognized any unrealized gains or losses for its auction rate securities. Note 8 — Investments In July 2003, the Company made a $15.1 million cash investment in Anoto Group AB (“Anoto”), a publicly traded Swedish technology company from which Logitech licenses its digital pen technology. The investment represented approximately 9.5% of Anoto’s outstanding shares as of March 31, 2006. During fiscal year 2007, the Company sold its Anoto investment and recognized a gain of $9.1 million, which was included in other income, net for fiscal year 2007. In connection with the investment, a Logitech executive was elected to the Anoto board of directors. The license agreement requires Logitech to pay a license fee for the rights to use the Anoto technology and a license fee on the sales value of digital pen solutions sold by Logitech. Also, the agreement includes non-recurring engineering (“NRE”) service fees primarily for specific development and maintenance of Anoto’s licensed technology. During fiscal years 2007 and 2006, expenses incurred for license fees to Anoto were $0.3 million and $0.5 million. Expenses incurred for license fees and NRE service fees to Anoto were $0.7 million in fiscal year 2005. Note 9 — Goodwill and Other Intangible Assets The following table summarizes the activity in the Company’s goodwill account during the year ended March 31, 2007 (in thousands): Balance as of March 31, 2006 $ 135,396 Additions 44,595 Balance as of March 31, 2007 $ 179,991 The increase in goodwill in fiscal year 2007 consists primarily of the estimated deferred payment of $33.7 million related to the acquisition of Intrigue Technologies. See Note 16 to the consolidated financial statements for further discussion of the estimated deferred payment. The remainder of the increase is related to the acquisition of Slim Devices which increased goodwill by $10.7 million and to a lesser extent foreign currency translation adjustments. The Company intends to fully integrate Slim Devices’ business into its existing operations, and discrete financial information for Slim Devices will not be maintained. Accordingly, the acquired goodwill will be evaluated for impairment at the total enterprise level. The Company performs its annual goodwill impairment test during its fiscal fourth quarter. While the Company has fully integrated all of its acquired companies, the Company continues to maintain discrete financial information for 3Dconnexion and, accordingly, determines impairment of the goodwill acquired with the 3Dconnexion acquisition at the entity level. All other acquired goodwill is evaluated for impairment at the total enterprise level. Based on impairment tests performed, there has been no impairment of the Company’s goodwill to date. F-21
Table of Contents LOGITECH INTERNATIONAL S.A. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The Company’s acquired other intangible assets subject to amortization were as follows (in thousands): For fiscal years 2007, 2006 and 2005, amortization expense for other intangible assets was $4.9 million, $4.6 million and $6.3 million. The Company expects that annual amortization expense for the fiscal years ending 2008, 2009, 2010, 2011 and 2012 will be $5.0 million, $4.0 million, $3.0 million, $3.0 million and $2.0 million; and $1.9 million in total thereafter. Note 10 — Financing Arrangements Gross Carrying Amount March 31, 2007 March 31, 2006 Accumulated Net Carrying Gross Carrying Accumulated Amortization Amount Amount Amortization Net Carrying Trademark/tradename $ 19,943 $ (14,902 ) $ 5,041 $ 16,897 $ (13,497 ) $ 3,400 Technology 34,423 (21,248 ) 13,175 25,423 (18,028 ) 7,395 Customer contracts 2,120 (1,416 ) 704 600 (220 ) 380 $ 56,486 $ (37,566 ) $ 18,920 $ 42,920 $ (31,745 ) $ 11,175 Short-term Credit Facilities The Company had several uncommitted, unsecured bank lines of credit aggregating $126.2 million at March 31, 2007. There are no financial covenants under these lines of credit with which the Company must comply. The Company had letters of credit and guarantees of $2.3 million and zero at March 31, 2007 and March 31, 2006, which reduce the amounts available under the lines of credit. Borrowings outstanding were $11.9 million and $14.1 million at March 31, 2007 and 2006. The borrowings under these agreements were denominated in Japanese yen at a weighted average annual interest rate of 1.7% at March 31, 2007 and 1.3% at March 31, 2006 and were due on demand. Long-term Debt The Company had CHF 170.0 million ($95.6 million based on exchange rates at date of issuance) aggregate principal amount of 1% convertible bonds which were called for early redemption in accordance with their terms. As of November 11, 2005, all outstanding bonds had been presented for conversion into 10,897,386 Logitech shares at the conversion price of CHF 15.60 per share ($11.86 based on exchange rates at November 11, 2005). The conversion was satisfied through delivery of treasury shares. Note 11 — Shareholders’ Equity Exchange of Nasdaq-Listed American Depositary Shares In September 2006, the Company announced its intent to exchange its Nasdaq-listed ADSs for Logitech shares and continue its Nasdaq listing with shares in lieu of ADSs, so that the same Logitech shares trade on the Nasdaq Global Select Market as well as on the SWX Swiss Exchange. The exchange took effect on October 23, 2006. On the effective date, the Logitech ADS program was terminated and one ADS was exchanged on a mandatory basis for one share. Since the exchange of the Nasdaq-listed ADSs for Logitech shares was a one-for-one exchange, there was no impact on financial statement or per share amounts. Stock Split In June 2006, the Company’s shareholders approved a two-for-one split of Logitech’s shares, which took effect on July 14, 2006. In June 2005, the Company’s shareholders also approved a two-for-one split of Logitech’s shares, which took effect on June 30, 2005. All references to share and per-share data for all periods presented herein have been adjusted to give effect to these stock splits. F-22 Amount
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Page 113 and 114: is responsible for leading the tran
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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Page 125 and 126: proceedings that may arise by reaso
Page 127 and 128: 5.7 Additional Fees and Remuneratio
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Page 135 and 136: I, Mark J. Hawkins, certify that: C
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