Annual Report 2005/06 THE WORLD OF SOUND - Sonova

Notes to the Financial Statements1. GeneralThe financial statements of Phonak Holding AG are prepared in accordance with the principles of Swiss corporate law.2. Disclosures required by Swiss corporate law2.1 Sureties, guarantees and pledges given on behalf of third parties1,000 CHFGuarantees given to banks in respect of credit arrangementsof foreign subsidiary companiesGuarantees given in respect of rental obligationsand bank debts of Group companies31.3.20062,13421,54031.3.20051,925127,6502.2 Conditional and authorized capital1,000 CHFConditional capital at year-endAuthorized capital at year-end31.3.200641216531.3.2005264During the Annual General Shareholder’s Meeting on July 7, 2005 the conditional share capital of CHF 264,270 (5,285,400 shares)has been increased by CHF 165,056 (3,301,120 shares) to CHF 429,326 (8,586,520 shares). As of March 31, 2006, 8,247,995 (previousyear 5,285,400) shares thereof have not yet been issued. These shares are reserved for use in the key employees share option plans(Key People Program and Executive Equity Award Plan).The Annual General Shareholders’ Meeting held on July 7, 2005, approved the creation of authorized share capital of 3,301,120registered shares with a par value of CHF 0.05 per share. The Board of Directors is authorized to exclude subscription rights of shareholdersand to allocate them to third parties if the new shares are to be used for the acquisition of companies, parts of companies,equity stakes or the financing of such transactions. The authorized share capital of 3,301,120 registered shares created on July 7, 2005,has not yet been used. The authorization granted to the Board of Directors to augment the company’s share capital with the authorizedshare capital created expires on July 6, 2007.94 Financial Statements of Phonak Holding AG