Logitech 2005 Annual Report Download - page 82

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Operating Expenses
Operating expenses for fiscal years 2004 and 2003 were as follows (in thousands):
2004 2003 Change %
Marketing and selling .......................... $156,793 $141,194 11%
% of net sales ............................ 12.4% 12.8%
Research and development ...................... 61,289 56,195 9%
% of net sales ............................ 4.8% 5.1%
General and administrative ...................... 45,286 43,233 5%
% of net sales ............................ 3.6% 3.9%
Total operating expenses ....................... $263,368 $240,622 9%
Marketing and Selling
The increase in marketing and selling expense correlated with the Company’s higher revenues in fiscal year
2004 compared to fiscal year 2003. Also, the Company’s marketing and advertising campaign in the United
States that featured television, print and web advertising to increase brand awareness and promote its cordless
products contributed to the higher absolute dollar increase. The impact of exchange rate changes on translation to
the Company’s U.S. dollar financial statements, particularly from the stronger Euro and Swiss franc relative to
the U.S. dollar, also contributed to the increase.
Research and Development
The increase in research and development expense in fiscal year 2004 was mainly due to increased
personnel to support ongoing investment in product development. Specifically, the Company increased research
and development spending for its cordless and audio product programs. The impact of exchange rate changes on
translation to the Company’s U.S. dollar financial statements, particularly from the stronger Swiss franc relative
to the U.S. dollar, also contributed to the increase.
General and Administrative
The increase in general and administrative expense in fiscal year 2004 compared to the prior year was
primarily due to higher personnel expenses to support the growth of Logitech’s business, partially offset by lower
discretionary spending. The impact of exchange rate changes on translation to the Company’s U.S. dollar
financial statements, particularly from the stronger Euro and Swiss franc relative to the U.S. dollar, also
contributed to the increase.
Interest Expense, Net
Interest income and expense for fiscal years 2004 and 2003 were as follows (in thousands):
2004 2003 Change %
Interest income .................................. $2,278 $2,411 (6)%
Interest expense ................................. (4,136) (3,607) 15 %
Interest expense, net .............................. $(1,858) $(1,196) 55 %
Interest expense, net was higher primarily as a result of the $.8 million financing charge in connection with
the sale of part of the Company’s China VAT receivables to a bank in July 2003.
44