Logitech 2007 Annual Report Download - page 93

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-Oxley-related 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):
2007 2006 Change %
Interest income .................................. $9,083 $ 5,512 65%
Interest expense .................................. (350) (1,921) (82)%
Interest income, net ............................... $8,733 $ 3,591 143%
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
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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