Logitech 2008 Annual Report Download - page 95

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F-25
LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair value of employee stock options granted and shares purchased under the Company’s employee
purchase plans was estimated using the Black-Scholes-Merton option-pricing valuation model applying the
following assumptions and values:
Year ended March 31,
2008 2007 2006 2008 2007 2006
Purchase Plans Stock Option Plans
Dividend yield ............. 0% 0% 0% 0% 0% 0%
Expected life .............. 6 months 6 months 6 months 3.8 years 3.9 years 3.7 years
Expected volatility ......... 38% 33% 26% 33% 40% 47%
Risk-free interest rate ....... 4.23% 4.98% 3.67% 4.01% 4.75% 4.16%
The dividend yield assumption is based on the Company’s history and future expectations of dividend
payouts. The Company has not paid dividends since 1996.
The expected option life represents the weighted-average period the stock options or purchase offerings
are expected to remain outstanding. The expected life is based on historical settlement rates, which the
Company believes are most representative of future exercise and post-vesting termination behaviors.
Expected share price volatility is based on historical volatility using daily prices over the term
of past options or purchase offerings. The Company considers historical share price volatility as most
representative of future stock option volatility. The risk-free interest rate assumptions are based upon the
implied yield of U.S. Treasury zero-coupon issues appropriate for the term of the Company’s stock options
or purchase offerings.
SFAS 123R requires the Company to estimate forfeitures at the time of grant and to revise those
estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses
historical data to estimate pre-vesting option forfeitures and records share-based compensation expense
only for those awards that are expected to vest. For purposes of calculating pro forma information under
SFAS 123 for periods prior to April 1, 2006, forfeitures were recognized as they occurred.
The following table represents the weighted average grant-date fair values of options granted and the
expected forfeiture rates:
Year ended March 31,
2008 2007 2006 2008 2007 2006
Purchase Plans Stock Option Plans
Weighted average grant-date
fair value of options granted ............. $7.63 $ 5.87 $ 4.21 $ 9.14 $ 8.11 $ 7.47
Expected forfeitures ...................... 0% 0% 0% 7% 8% 0%