Logitech 2006 Annual Report Download - page 102

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control 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 compared with the prior year.
General and Administrative
General and administrative expense increased in fiscal year 2005 primarily as a result of higher personnel
costs due to increased headcount to support the growth of the Company’s business. Also, costs incurred for
Sarbanes-Oxley consultation and implementation, investments to upgrade business applications and information
technology systems, and legal costs related to patent infringement claims inherited with the Company’s
acquisition of Intrigue contributed to higher general and administrative spending in fiscal year 2005. 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 compared with the prior
year.
Interest Income (Expense), Net
Interest income and expense for fiscal years 2005 and 2004 were as follows (in thousands):
2005 2004 Change %
Interest income .................................. $3,771 $2,278 66%
Interest expense ................................. (3,630) (4,136) (12)%
Interest income (expense), net ...................... $ 141 $(1,858) (108)%
Interest income was higher in fiscal year 2005 due to higher invested cash balances and higher returns
earned on invested amounts. Interest expense was lower in fiscal year 2005 primarily due to the Company
incurring a $.8 million financing charge in fiscal year 2004 in connection with the sale of a portion of a VAT
receivable to a bank.
Other Income, Net
Other income and expense for fiscal years 2005 and 2004 were as follows (in thousands):
2005 2004 Change %
Foreign currency exchange gains, net . . $3,522 $2,966 19 %
Write-off of investments ............ — (515) (100)%
Other,net ........................ 269 (478) 156 %
Otherincome,net.................. $3,791 $1,973 92%
The increase in other income, net in fiscal year 2005 was primarily due to increased favorable fluctuations
in exchange rates. Also, the Company incurred losses in fiscal year 2004 totaling $1.0 million for the write-down
of an investment and the provision for a potentially non-recoverable insurance loss.
Provision for Income Taxes
The provision for income taxes and effective tax rate for fiscal years 2005 and 2004 were as follows (in
thousands):
2005 2004
Provision for income taxes .................. $26,340 $13,516
Effective income tax rate ................... 15% 9%
44