LOGITECH INTERNATIONAL SA - Shareholder.com

Table of Contents
Eastern Europe and China. Costs also increased due to product design and marketing expenses for new product launches. In addition, personnel
costs included $7.2 million of share-based compensation cost resulting from the adoption of SFAS 123R on April 1, 2006. No share-based
compensation expense was recognized in fiscal year 2006. Operating expenses also increased as a result of exchange rate changes on
translation to the U.S. dollar financial statements, due to the weakening of the U.S. dollar relative to the Euro and Swiss franc.
Research and Development
Research and development expense consists of personnel and related overhead costs, contractors and outside consultants, supplies and
materials, equipment depreciation and facilities costs, all associated with the design and development of new products and enhancements of
existing products.
Headcount increases in product research and development related to the audio, video and remote control product lines were the primary
contributor to the increase in research and development costs. Personnel costs also increased due to $3.2 million of share-based compensation
cost resulting from the adoption of SFAS 123R. No share-based compensation expense was recognized in fiscal year 2006. The impact of
exchange rate changes on translation to the Company’s U.S. dollar financial statements was not material.
General and Administrative
General and administrative expense consists primarily of personnel and related overhead and facilities costs for the finance, information
systems, executive, human resources and legal functions.
General and administrative expense increased due to headcount additions to support business growth, costs incurred for Sarbanes-Oxleyrelated
activity, increased costs associated with our implementation of Oracle 11i enterprise resource planning software, and increased
occupancy costs related to infrastructure expansion. Personnel costs in fiscal year 2007 also include $7.1 million of share-based compensation
expense resulting from the adoption of SFAS 123R. No share-based compensation expense was recognized in fiscal year 2006. The impact of
exchange rates on translation to the Company’s U.S. dollar financial statements was not material.
Interest Income, Net
Interest income and expense for fiscal years 2007 and 2006 were as follows (in thousands):
Interest income increased over the prior year as a result of higher invested balances in cash and short-term investments, and higher returns
earned on invested amounts. Interest expense was lower compared with fiscal year 2006 because of the conversion of the Company’s
convertible bonds during the third quarter of fiscal year 2006.
Other Income, Net
2007 2006 Change %
Interest income $ 9,083 $ 5,512 65 %
Interest expense (350 ) (1,921 ) (82 )%
Interest income, net $ 8,733 $ 3,591 143 %
Other income and expense for fiscal years 2007 and 2006 were as follows (in thousands):
2007 2006 Change %
Foreign currency exchange gains, net $ 6,190 $ 7,580 (18 )%
Gain on sale of investments, net 9,048 560 1516 %
Write-off of investments — (1,168 ) (100 )%
Other, net 724 380 (91 )%
Other income, net $ 15,962 $ 7,352 117 %
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