Logitech 2010 Annual Report Download - page 157

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145
ANNUAl REPORT
Research and Development
For a discussion of the Company’s research and development activities, patents and licenses, please refer to
Item 1 “Business”.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
Market risk represents the potential for loss due to adverse changes in the fair value of financial instruments.
As a global concern, the Company faces exposure to adverse movements in foreign currency exchange rates and
interest rates. These exposures may change over time as business practices evolve and could have a material adverse
impact on the Company’s financial results.
Foreign Currency Exchange Rates
The Company is exposed to foreign currency exchange rate risk as it transacts business in multiple foreign
currencies, including exposure related to anticipated sales, anticipated purchases and assets and liabilities
denominated in currencies other than the U.S. dollar. Logitech transacts business in over 30 currencies worldwide, of
which the most significant to operations are the Chinese renminbi (“CNY”), euro, British pound, Taiwanese dollar,
Japanese yen, Mexican peso and Swiss franc. The functional currency of the Company’s operations is primarily the
U.S. dollar. To a lesser extent, certain operations use the euro, Swiss franc, Japanese yen or the local currency of
the country as their functional currencies. Accordingly, unrealized foreign currency gains or losses resulting from
the translation of net assets or liabilities denominated in foreign currencies to the U.S. dollar are accumulated in the
cumulative translation adjustment component of other comprehensive income in shareholders’ equity.