PRODUCTS Logitech's Senseware product lines include control devices and imaging solutions. Senseware products are designed as integrated hardware and software solutions to provide a seamless interface between man and machine. Approximately 80% of the Company's net sales for fiscal 1997 were derived from the sale of control devices. Control devices are expected to continue to account for the majority of net sales for the foreseeable future. To date, sales of the Company's imaging solution products have been relatively limited and have not yet achieved significant market acceptance. Many of the announced competitors for one or more of these products have stronger brand names, more extensive retail channel coverage, deeper consumer knowledge and experience, and greater resources. Net sales and gross margins of the Company's imaging solution products may be less predictable or less favorable than its experience with control devices. In addition, the Company has limited experience in the design, development, manufacture, marketing and support of these products. These products are based on different technologies and additional manufacturing processes, and there can be no assurance that the Company will be successful in this new market. The Company's products include: Control Devices From its roots in computer mice, the Company's control devices have expanded to include a wide range of products such as trackballs and touchpads, joysticks, 3D game controllers and remote controls. The Company shipped its one hundred millionth mouse in April 1996. The Company's control device product families are summarized below. o Mice. Logitech offers many varieties of mice, sold through both OEM and retail channels. For example, the MouseMan retail mouse is designed with curves, slopes and buttons to better fit the user's hand while the MouseMan Cordless also incorporates a radio link to transmit data to the host computer. All retail models are bundled with MouseWare software, enabling users to program mouse buttons for specific tasks and to personalize other mouse operations. The MouseMan 96 mouse is also bundled with Hyperjump, a software tool optimized for operations within Windows 95 (e.g. scrolling, closing, resizing). In addition to retail mouse models, the Company also sells mice, such as the S34 mouse, designed specifically for OEM customers. o Trackballs. Logitech's trackballs are designed as standalone retail products and as components intended to be integrated by OEMs into notebook computers or desktop keyboards. The Company's retail trackballs are available in a variety of form factors with mechanical or optical sensors and corded or cordless versions. For example, TrackMan Marble incorporates a patented optical sensing technology for reliable operation without having to regularly clean grease or dust buildups. The new SurfMan is a cordless, handheld trackball device engineered for surfing the World Wide Web with added software features to use web browsers more effectively. o 6DOF Controller. The Company's Magellan 6DOF controller is used primarily for three-dimensional computer-aided design applications and permits rotation around any of three axes for six degrees of freedom. In addition, with the increased processing power of today's PCs, a number of game developers are developing games which require up to six degrees of freedom to play. The Company intends to extend the functionality of its Magellan 6DOF controller to accommodate these new game applications as well as emerging Internet applications. o Touchpads. Logitech's touchpads, introduced in the summer of 1996, are designed to be integrated by OEMs into notebook computers and desktop keyboards. The Company's touchpad incorporates proprietary technology that allows the user to control the cursor through finger movement on the touchpad and the replication of mouse button functions with the use of an additional finger. o Joysticks. Logitech offers WingMan, WingMan Extreme, and WingMan Extreme Digital joysticks for air combat, adventure, flight simulator, racing and other games. Each has a distinctive industrial design with a sculpted grip to fit the user's hand. o 3D Game Controllers. Logitech's WingMan Warrior 3D game controller, introduced in September 1996, is the first of a new category of twohanded entertainment devices designed for 3D action games like Doom and 7

The location of the Company's Fremont facilities allows the Company access to Silicon Valley's talent pool, particularly important in the development of software and imaging technologies. In addition, this location in the midst of the world's leading technology market enables the Company to compile market intelligence to define and position products and develop key strategic alliances. Logitech's Swiss engineering center provides the Company with advanced power management, sensing, encoding and RF expertise. In addition, the Swiss center is a convenient point for gaining access to leading European technologies. Logitech has been successful in recruiting and retaining top engineering graduates from leading Swiss universities because it is one of the few computer technology companies in Switzerland. It has also been able to obtain Swiss government grants for certain research and development projects. Through its facilities in Taiwan, the Company has established access to key Asian markets, engineering resources and high-tech manufacturing. Taiwan is a world leader in the manufacture of semiconductors, notebook computers, scanners, monitors and related products, and possesses a concentration of firms that specialize in advanced plastic injection molding and tooling. Moreover, Logitech expects the common language of Taiwan and China to facilitate the transfers of products from its launch site in Taiwan to its high volume manufacturing site in China. The Company is continually developing new products and enhancements to existing products. Across all product lines, the Company is devoting significant research and development resources to extending its cordless and USB capabilities. Within the control device product line, development efforts are directed at enhancements in the functionality of such products, including an integrated roller mechanism for use with Office 97, 3D mice and 6DOF game controllers. In the imaging solution product line, the Company is working on smaller form factor, higher image quality, improved GUIs and increased speed for its scanners. Logitech is currently working on a second generation version of its digital camera with USB connectivity to capitalize on both OEM and retail opportunities created by the convergence of computing and communications. The development of new, technologically-advanced products and enhancements is a complex and uncertain process requiring high levels of innovation as well as the anticipation of technology and market trends. There can be no assurance that the Company will be able to identify, develop, manufacture, market, sell, or support new products and enhancements successfully, that new products or enhancements will achieve market acceptance, or that the Company will be able to respond effectively to technology changes, emerging industry standards or product announcements by competitors. Failure by the Company to anticipate or respond adequately to changing market conditions, or significant delays in product development or introduction, could have a material adverse effect on the Company's business, financial condition and results of operations. The Company's research and development expenses for fiscal years 1997, 1996 and 1995 were $26.5 million, $20.7 million, and $18.7 million, respectively. The Company expects to continue to devote significant resources to research and development to sustain its competitive position. MARKETING, SALES AND DISTRIBUTION The primary end-user markets for Logitech mice, trackballs and other pointing devices and personal scanners are consumer, small office and home office ("SoHo"), and, through its OEM customers, corporate. The primary end-user market for Logitech entertainment devices, such as joysticks and gamepads, is consumers. The Company expects the primary end-user markets for its digital video cameras to develop initially among SoHo users and corporate buyers and eventually among consumers. Logitech's primary end-user markets are in North America, Europe and Asia. However, it also markets its products in Australia, Latin America and other regions. Logitech builds awareness of its products and brand through targeted advertising, public relations efforts, in-store promotions and merchandising, a World Wide Web site, and other efforts. It also develops knowledge of its end-users through customer feedback and market research, including focus groups, product registrations, end-user questionnaires, multi-client surveys, and other techniques. Manufacturers of PCs and other products also receive customer feedback and perform end-user market research, which sometimes result in specific requests to the Company for specific products, features or enhancements. Logitech sells through many distribution channels, including OEMs, distributors, and regional and national retail chains. In addition, the Company supports retail channels with distribution centers located in the United States, Europe and Asia. These centers perform final configuration of products and product localization with local 10

Europe, and 2,381 were in Asia. None of the Company's U.S. employees is represented by a labor union or subject to a collective bargaining agreement. Certain foreign countries, such as China, provide by law for employee rights which include requirements similar to collective bargaining agreements. The Company believes that its employee relations are good. The Company's success depends to a significant degree on the continued contributions of the Company's management and other key design, development, manufacturing, marketing and sales personnel. The loss of any of such personnel could have a material adverse effect on the Company's business, financial condition and results of operations. Certain of the Company's senior management and other key personnel have recently joined the Company. The Company's success will depend in part on successful assimilation of these and other new employees. Assimilation and retention of personnel may be made more difficult by the fact that the Company's management and other key personnel are dispersed throughout various locations worldwide, thus requiring the coordination of organizations separated by geography and time zone and the integration of personnel with disparate business backgrounds, cultures and languages. In addition, the Company believes that its future success will depend on its ability to attract and retain highly skilled managerial, engineering, operations, marketing and sales personnel, competition for whom is intense. There can be no assurance that the Company will be successful in attracting and retaining such personnel, and the failure to attract and retain key personnel could have a material adverse effect on the Company's business, financial condition, and results of operations. COMPETITION The Company's business is characterized by intense competition, a trend of declining average selling prices and performance enhancements of competing products. The Company expects that competition will continue to be intense and may increase from current or future competitors. Logitech believes that the principal competitive factors include the price, performance, user-centric design, ease-of-use, quality and timeliness of products, as well as the responsiveness, capacity, technical abilities, established customer relationships, retail shelf space, advertising and promotion programs, and brands of manufacturers. In sales of control devices, the Company competes primarily with Alps, Kensington/Advanced Gravis, KYE/Mouse Systems, Microsoft, Mitsumi, Primax and Synaptics. In sales of imaging solutions, competitors include Connectix, Hewlett-Packard, Microtek, Mustek, Philips, Plustek, Sharp, Storm Technology, Umax and Visioneer. Many of the Company's current and potential competitors have longer operating histories and significantly greater financial, technical, sales, marketing and other resources, as well as greater name recognition and larger customer bases, than the Company. In this regard, Microsoft is the Company's chief competitor in the market for control devices. Microsoft is also a leading producer of operating systems and applications with which the Company's control devices are designed to operate. As a result of its position, Microsoft may be able to make improvements in the functionality of its control devices to correspond with ongoing modifications and enhancements to its operating systems and software applications in advance of the Company. In certain instances, this ability may provide Microsoft with significant lead time advantages for product development. In addition, Microsoft may be able to offer pricing advantages on bundled hardware and software products that the Company is not able to offer. Certain of the Company's competitors may also have patents or intellectual property rights which provide them with an advantage. As a result, these competitors may be able to respond more effectively to new or emerging technologies and changes in customer requirements. Consequently, the Company expects to continue to experience increased competition and significant price reductions, which could result in decreased gross margin, loss of market share and lack of acceptance of the Company's products. In the event of significant price competition in the market for the Company's products, the Company would be required to decrease costs at least proportionately to any price decreases in order to maintain its existing margin levels and would be at a significant disadvantage compared to competitors with substantially greater resources, which could more readily withstand an extended period of downward pricing pressure. There can be no assurance that the Company will be able to compete successfully in the future or that competition will not have a material adverse effect on the Company's business, financial condition and results of operations. 13

distributors and resellers may give higher priority, including greater retail shelf space, to products of other suppliers, and may reduce their efforts in selling the Company's products. The loss of one or more of the Company's OEM customers, distributors or major resellers could have a material adverse effect on the Company's business, financial condition and results of operations. PRODUCT RETURN RISKS Like other manufacturers of consumer products, the Company is exposed to the risk of product returns, either through the exercise by customers of contractual return rights or as a result of the Company's assistance in balancing inventories. In addition the Company offers price protection to its distributors and retailers. A portion of the Company's net sales may result in increased inventory at its distributors and resellers. As a result, historical net sales may not be indicative of future net sales. Overstocking by Logitech's distributors and retailers may lead to higher than normal returns. The short product life cycles of certain of the Company's products and the difficulty in predicting future sales increase the risk that new product introductions, price reductions or other factors affecting the computer industry would result in significant product returns. Although Logitech believes that it has provided adequate allowances for projected returns, from time to time it has experienced return levels in excess of its accruals and no assurance can be given that such accruals will be sufficient for actual returns in future periods. In addition, there can be no assurance that the accruals for price protection will be sufficient, or that any future price changes will not have a material adverse effect on the Company's results of operations. See "Management's Discussion and Analysis of Financial Conditions and Results of Operations" and "Description of Business - Customer Service and Technical Support". PROPRIETARY RIGHTS The Company's future success depends in part on its proprietary technology, technical know-how and other intellectual property. The Company relies on a combination of patent, trade secret, copyright, trademark and other intellectual property laws, and confidentiality procedures and contractual provisions such as nondisclosure agreements and licenses, to protect its intellectual property. The Company holds various United States patents, together with corresponding patents from other countries relating to certain of the same inventions. The Company also has various United States patent applications pending, together with corresponding applications from other countries relating to certain of the same inventions. Despite these patents and patent applications, there can be no assurance that any patent owned by the Company will not be invalidated, deemed unenforceable, circumvented or challenged, that the rights granted thereunder will provide competitive advantages to the Company, or that any of the Company's pending or future patent applications will be issued with claims of the scope sought by the Company. In addition, there can be no assurance that other intellectual property laws, or the Company's confidentiality procedures and contractual provisions, will adequately protect the Company's intellectual property. There can also be no assurance that the Company's competitors will not independently develop similar technology, duplicate the Company's products, or design around the Company's patents or other intellectual property rights. In addition, unauthorized parties may attempt to copy aspects of the Company's products or to obtain and use information that the Company regards as proprietary. Any of these events could have a material adverse effect on the Company's business, financial condition and results of operations. See "Legal Proceedings." The Company also relies on certain technologies that it obtains from others. The Company may find it necessary or desirable in the future to obtain licenses or other rights relating to one or more of its products or to current or future technologies. There is no assurance that such licenses or other rights will be available on commercially reasonable terms, or at all. RAPID TECHNOLOGICAL CHANGE The market for the Company's products is characterized by rapidly changing technology and frequent new product introductions. The Company's success will depend to a substantial degree on its ability to develop and introduce in a timely manner new products and enhancements that meet changing customer requirements and emerging industry standards. The development of new, technologically-advanced products and enhancements is a complex and uncertain process requiring high levels of innovation as well as the anticipation of technology and 15

HIGH ---Fiscal 1997: Fourth quarter (March 27 to March 31). $ 16.25 LOW ---$ 16.19
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS As a Swiss corporation, the Company will be subject to certain requirements not generally applicable to corporations organized in United States jurisdictions. Among other things, the issuance of capital stock by the Company generally must be submitted for approval at a general meeting of shareholders. In addition, the issuance of capital stock is generally subject to shareholder preemptive rights, except to the extent that such preemptive rights have been excluded or limited by the shareholders. U.S. securities laws may restrict the ability of U.S. persons who hold ADSs to participate in certain rights offerings or share or warrant dividend alternatives which the Company may undertake in the future in the event the Company is unable or chooses not to register such securities under the U.S. securities laws and is unable to rely on an exemption from registration under such laws. While the Company is not currently planning any such transaction, the Company may take such actions in the future and there can be no assurance that it will be feasible to include U.S. persons in any such transaction. If the Company issues any such securities in the future, such securities may be issued to the Depositary, which may sell such securities for the benefit of the holders of the ADSs. There can be no assurance as to the value, if any, the Depositary would receive upon the sale of such securities. DIVIDEND POLICY Under Swiss law, a corporation pays dividends upon a vote of its shareholders. This vote typically follows the recommendation of the corporation's board of directors. Although the Company has paid dividends in the past, its board of directors has announced its intention not to recommend to shareholders any payment of cash dividends in the future in order to retain any future earnings for use in the operation and expansion of the Company's business. ITEM 7. TAXATION The following is a summary of certain Swiss tax matters that may be relevant with respect to the acquisition, ownership and disposition of registered shares or ADSs (which are evidenced by ADRs). This summary addresses laws in Switzerland as in effect on the date hereof, as well as the 1951 Convention between the United States of America and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income (the "Treaty"), both of which are subject to change (or changes in interpretation), possibly with retroactive effect. For purposes of the Treaty and the Internal Revenue Code of 1986, as amended (the "Code"), United States Holders of ADSs are treated as the owners of the registered shares corresponding to such ADSs. Accordingly, the Swiss tax consequences discussed below also generally apply to United States Holders of registered shares. SWISS TAXATION Gain on Sale Under present Swiss law, a holder of registered shares or ADSs who (i) is a non-resident of Switzerland, (ii) during the taxable year has not engaged in a trade or business through a permanent establishment within Switzerland and (iii) is not subject to taxation by Switzerland for any other reason will be exempted from any Swiss federal, cantonal or municipal income or other tax on gains realized during the year on the sale of registered shares or ADSs. 20

AVERAGE(1) ---------Chf 1.471 1.418 1.464 1.314 1.170 1.296 HIGH ---Chf 1.344 1.225 1.391 1.133 1.117 1.192 LOW --Chf 1.590 1.548 1.531 1.458 1.232 1.489 PERIOD END ---------Chf 1.502 1.490 1.410 1.133 1.189 1.438
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
1992.. 1993.. 1994.. 1995.. 1996.. 1997..
(1) Represents the average of the Noon Buying Rates on the last day of each month during the relevant period. 23
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and related notes thereto contained in Item 18 of this Form 20-F. The following discussion contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Predictions of future events are inherently uncertain. Actual events could differ materially from those predicted in the forward looking statements as a result of the risks set forth in the following discussion and the risks discussed above under the caption "Description of Business" in Item 1 of this Form 20-F, including those under the heading "Additional Risk Factors That Could Affect Operating Results." Additional information relating to the risks in the Company's business is contained in "Description of Business" in Item 1 above. OVERVIEW The Company was founded in Switzerland in 1981 and operated through a variety of related corporate entities until 1988. At that time, in connection with the Company's initial public offering in Switzerland, it was reorganized as a Swiss holding company, Logitech International S.A. The Company's operational headquarters are located in Fremont, California, with engineering centers in Fremont, Romanel-sur-Morges, Switzerland and Taiwan. Manufacturing operations are located in China and Taiwan with distribution facilities in the United States, Europe and Asia. The Company's net sales are primarily derived from sales of two product lines, control devices and imaging solutions, and to a lesser extent from the sale of other products. Control devices include mice, trackballs, six degrees of freedom ("6DOF") controllers, touchpads, joysticks, gamepads, 3D game controllers and remote controls. In each of fiscal 1997, 1996 and 1995, net sales of control devices accounted for a substantial majority of the Company's total net sales. Imaging solutions include color personal scanners and color digital video cameras and have accounted for an increasing proportion of the Company's net sales since fiscal 1995. Other products include partner products, as well as product lines that are being phased out for strategic purposes. The Company recognizes revenue upon product shipment, less amounts for estimated returns and price protection. Amounts provided for returns and price protection are estimated based upon historical experience and the Company's assessment of inventory in the retail channel. Although the Company believes that it has provided adequate amounts for projected returns, from time to time it has experienced return levels in excess of amounts provided and no assurance can be given that such amounts will be sufficient for actual returns in future periods. In addition, the Company continuously introduces product upgrades, enhancements and improved packaging, and thus may experience higher rates of returns of its older products. The following tables set forth net sales for each of the Company's product lines and net sales for each product line as a percentage of total net sales:

U.S. dollars. Therefore, the restatement of the consolidated financial statements into U.S. dollars for periods through March 31, 1996 resulted in debt denominated in Swiss francs which was not hedged and, when remeasured into the appropriate functional currency for U.S. GAAP purposes, resulted in the Company recording exchange losses, primarily during fiscal 1995. INITIAL PUBLIC OFFERING IN THE U.S. On March 27, 1997, the Company sold 200,000 registered shares from treasury in a U.S. initial public offering in the form of 2,000,000 American Depository Shares ("ADS"), with net proceeds to the Company of $26.8 million. On April 25, 1997, the Company sold an additional 30,000 shares from treasury under an option granted to the underwriters to cover over-allotments, generating net proceeds of $4.5 million. RESULTS OF OPERATIONS The following table sets forth certain consolidated financial statement amounts as a percentage of net sales for the periods indicated:
YEAR ENDED MARCH 31, --------------------------1995 ---------------100.0% 100.0% 100.0% 70.3 73.0 75.0 ---------------29.7 27.0 25.0 13.3 6.4 4.9 ------5.1 (0.2) 0.6 -----5.5 (0.4) -----5.1% ====== 12.9 5.8 5.5 ------2.8 (0.7) 0.5 -----2.6 (0.3) -----2.3% ====== 13.6 6.2 5.8 2.9 -----(3.5) (0.4) (2.1) -----(6.0) (0.4) -----(6.4)% ======
Net sales.. Cost of goods sold.. Gross profit.. Operating expenses: Marketing and selling.. Research and development. General and administrative.. Restructuring and other.. Operating income (loss).. Interest income (expense), net. Other income (expense), net.. Income (loss) before income taxes.. Provision for income taxes.. Net income (loss)..
YEAR ENDED MARCH 31, 1997 COMPARED TO YEAR ENDED MARCH 31, 1996 Net Sales Net sales for the year ended March 31, 1997 increased 17% to $413.7 million from $355.0 million in the year ended March 31, 1996. This increase was primarily due to growth in sales of color sheetfed scanners and retail sales of control devices. These increases were partially offset by a decrease in retail sales of handheld scanners and OEM sales of trackballs due to a market shift to touchpads. The Company anticipates slower revenue growth from color sheetfed scanners due to increased competition and pricing pressure. Gross Profit Gross profit consists of net sales, less cost of goods sold which consists of materials, direct labor and related overhead costs, costs of manufacturing facilities, costs of purchasing finished products from outside suppliers, distribution costs and inventory write-offs. Gross profit for the year ended March 31, 1997 increased 28% to $122.9 million, or 29.7% of net sales, compared to $95.8 million, or 27.0% of net sales, in the year ended March 31, 1996. 26

YEAR ENDED MARCH 31, 1996 COMPARED TO YEAR ENDED MARCH 31, 1995 Net Sales Net sales for fiscal 1996 increased 17% to $355.0 million from $302.8 million for fiscal 1995. This increase was due primarily to strong unit volume sales of control devices into the OEM channel and the impact of new retail products sold into both the control device and imaging solution retail markets. These products included the PageScan Color scanner, the WingMan and WingMan Extreme joysticks and the TrackMan Marble pointing device. These increases in net sales were partially offset by price reductions in control devices and the phase out of non-strategic product lines. Gross Profit Gross profit for fiscal 1996 increased 26% to $95.8 million, or 27.0% of net sales, from $75.7 million, or 25.0% of net sales, in fiscal 1995. This increase was primarily due to reductions in component costs and other manufacturing efficiencies associated with higher volume production and, to a lesser extent, the elimination of certain lower-margin products. This increase was partially offset by lower average selling prices. Marketing and Selling Marketing and selling expense for fiscal 1996 increased 11% to $45.7 million, or 12.9% of net sales, from $41.3 million, or 13.6% of net sales, in fiscal 1995. This increase was primarily due to costs associated with the Company's introduction and support of new retail products in both the control devices and imaging solutions retail markets. In addition, foreign currency translations also contributed to the increase due to a weaker U.S. dollar during fiscal 1996. Research and Development Research and development expense for fiscal 1996 increased 11% to $20.7 million, or 5.8% of net sales, from $18.7 million, or 6.2% of net sales, in fiscal 1995. This increase was primarily due to increased personnel and related indirect costs for accelerated development of the Company's color sheetfed scanner and video products. In addition, foreign currency translations also contributed to the increase due to a weaker U.S. dollar during fiscal 1996. These increases were partially offset by the elimination of research and development efforts related to the phase-out of non-strategic product lines. General and Administrative General and administrative expense for fiscal 1996 increased 12% to $19.6 million, or 5.5% of net sales, from $17.4 million, or 5.8% of net sales, in fiscal 1995. This increase was primarily due to severance, hiring and relocation costs and, to a lesser extent, inflation and foreign currency translations due to a weaker U.S. dollar during fiscal 1996. Restructuring and Other During fiscal 1995, the Company recorded a restructuring charge of $8.9 million. The restructuring charge included $3.2 million in connection with discontinuing certain manufacturing activities in the U.S. and Ireland, $1.9 million relating to the write-off of assets associated with product lines to be phased out, and $3.8 million for a reduction in global work force. The charge associated with the work force reduction primarily represents severance associated with personnel reductions of approximately 500 positions, the majority of which were manufacturing. Substantially all amounts associated with discontinuing certain manufacturing activities and product lines were incurred by March 31, 1995. Approximately 60% of the planned work force reduction was completed at March 31, 1995, with the remainder of the reductions completed by December 31, 1995. See Note 9 of Notes to Consolidated Financial Statements. 28

Marc M. Chatel has held various management positions with the Company since August 1988, including Vice President, General Manager, European Area and Worldwide Retail Sales and Marketing. In April 1997, Mr. Chatel was named Sr. Vice President, General Manager, European Area and Worldwide Sales and Marketing. From February 1979 to July 1988, Mr. Chatel held various sales and marketing positions with E.I. Du Pont de Nemours & Co. Mr. Chatel holds a degree in mechanics from the Ecole Polytechnique Federale, Lausanne, Switzerland. Rory Dooley has held various positions with the Company since July 1984, including Vice President, Control Devices Division and Special Projects. In April 1997, Mr. Dooley was named Sr. Vice President, Business Divisions. Mr. Dooley holds a BS in engineering and a BA in mathematics from the University of Dublin, Trinity College, Ireland. Mr. Dooley has stated his intention to resign from the Company in June 1997 to continue his education. Patrick W. Brubeck has held various executive positions with the Company since June 1993, including Vice President, Worldwide Quality and Human Resources, and General Manager, Americas Area. In April 1997, Mr. Brubeck was named Vice President, Information and Quality Systems. From August 1990 to June 1993, Mr. Brubeck was Vice President, Total Quality for Silicon Valley Group, Lithography. From April 1979 to August 1990, Mr. Brubeck held various positions with Advanced Micro Devices, including Director of Corporate Quality Assurance from April 1989. Mr. Brubeck holds a BS in electrical engineering from the University of California at Los Angeles. Vladimir M. Langer has been Vice President, Worldwide OEM Sales and Marketing of the Company since April 1996. From January 1992 to April 1996, Mr. Langer was Vice President for Sales and Marketing for Integral Peripherals HDD. Mr. Langer holds a BS in mechanical engineering from Charles University, Prague, Czech Republic. Dominique Pitteloud has held various position with the Company since November 1985, including Vice President, Imaging Solutions Division. In April 1997, Mr. Pitteloud was named Vice President, Scanner Division. Mr. Pitteloud holds a BS in electrical engineering from Yverdon University, Switzerland, and an MBA from Santa Clara University. Stephanie Schweighofer-Jones has been Vice President, Corporate Marketing Communications of the Company since July 1996. Prior to that time, Ms. Schweighofer-Jones held various positions with Bull HN Information Systems from October 1989 to June 1996, including Director of Strategic Communications from January 1995. Ms. Schweighofer-Jones holds a BA in French literature from Wells College. Margaret J. Wynne has been Vice President, General Counsel and Business Development of the Company since April 1994. Prior to that time, Ms. Wynne was Director of Legal Affairs from July 1992 to April 1994. From September 1990 to June 1992, Ms. Wynne was an Associate Professor at Golden Gate University School of Law. Ms. Wynne joined Pillsbury, Madison & Sutro as an associate in September 1982 becoming a member of the firm in January 1990. Ms. Wynne holds a BA in French from San Francisco State University and a JD from Hastings College of the Law of the University of California. Kwong Soon Chay was elected a director of Logitech International S.A. in June 1997. Since July 1996, Mr. Chay has been Managing Director of IntreSource Systems Pte, Ltd. Before IntreSource, Mr. Chay held various executive positions with Creative Technology Ltd. during the period of 1986 to June 1996, including President/COO from 1992. Mr. Chay holds a degree in Physics from University of Singapore. Pier Carlo Falotti has been a director of Logitech International S.A. since June 1996. Since September 1996, Mr. Falotti has been Senior Vice President for Europe, Middle East and Africa of Oracle Corporation. From February 1994 until September 1996, Mr. Falotti was Executive Vice President of International Operations for AT&T, where he also served as President and Chief Executive Officer for Europe, the Middle East and Africa. From 1992 to 1994, Mr. Falotti was President and Chief Executive Officer of The Ask Group, Inc. From 1969 to 1992, Mr. Falotti was with Digital Equipment Corporation, serving as President and Chief Executive Officer of 31

Digital Europe, Middle East and Africa from 1983. Mr. Falotti holds a degree in electrical engineering from the Institute Avogadro, Torino, Italy. Jean-Louis Gassee has been a director of Logitech International S.A. since June 1993. Since October 1990, Mr. Gassee has been Chief Executive Officer of Be Inc. Before founding Be, Mr. Gassee held various executive positions with Apple Computer during the period December 1980 to September 1990, including President of the Apple Products Division. Mr. Gassee holds a science degree from the Universite de Paris. INDEMNIFICATION OF OFFICERS AND DIRECTORS The Company has entered into agreements to indemnify its directors and officers. Certain of these agreements are between the respective officer or director and Logitech International S.A., and cover claims brought under U.S. laws to the fullest extent permitted by Swiss law. In addition, Logitech Inc. has entered into separate indemnification agreements with the Company's executive officers and directors. The agreements with Logitech Inc. are broader in certain respects than those entered into with Logitech International S.A. These agreements, among other things, indemnify directors and officers for certain expenses (including attorneys fees), judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of the Company, arising out of such person's services as a director or officer of the Company. The Company believes that these provisions and agreements are necessary to attract and retain qualified directors and officers. At present, there is no pending litigation or proceeding involving any director, officer, employee or agent of the Company as to which indemnification will be required or permitted. The Company is not aware of any threatened litigation or proceeding that might result in a claim for such indemnification. BOARD COMPOSITION The Company's Articles of Incorporation set the minimum number of directors at three. The Company presently has five directors. Directors are elected by the shareholders at a shareholders meeting for a term of three years. Executive officers are appointed by the Board of Directors to serve on such terms and conditions and with such restrictions as the Board of Directors establishes. The Board has established an Audit Committee and a Compensation Committee. The Audit Committee oversees actions taken by the Company's independent accountants, recommends the engagement of accountants and reviews the Company's internal audits. The Compensation Committee approves the compensation of executives of the Company and makes recommendations to the Board of Directors with respect to standards for setting compensation levels for other employees. ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS In the fiscal year ended March 31, 1997, the Company's four non-employee directors during that year were paid an aggregate of $62,000 (translated at the Noon Buying Rate on March 31, 1997). In addition, each of the Company's non-employee directors were eligible to receive 240 registered shares as partial compensation for service on the Board of Directors. Directors who are also employees of the Company do not receive any additional compensation for their service on the Board of Directors. Directors are reimbursed for certain expenses in connection with attendance at Board and Committee meetings. The Company paid an aggregate of $2,503,122, denominated in U.S. dollars and in Swiss francs and Taiwanese dollars (translated at the Noon Buying Rate on March 31, 1997), to eleven executive officers for services rendered in all capacities to the Company in the fiscal year ended March 31, 1997. A portion of the compensation paid to the executive officers in fiscal 1997 was pursuant to certain annual performance-based bonus arrangements. 32

LOGITECH INTERNATIONAL S.A. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Income Taxes The Company provides for income taxes using the liability method, which requires that deferred tax assets and liabilities be recognized for the expected future tax consequences of temporary differences arising between the bases of assets and liabilities for financial reporting and income tax purposes. In estimating future tax consequences, expected future events are taken into consideration except for potential tax law or tax rate changes. Derivative Financial Instruments The Company does not currently enter into foreign currency exchange contracts to hedge against the effects of changes in foreign currency exchange rates on its net investment in foreign subsidiaries and net exposures from assets and liabilities denominated in foreign currencies, although it may elect to do so in the future. Before April 1, 1996 when the Company was actively hedging in material amounts, gains and losses on foreign currency exchange contracts which hedged foreign subsidiary investments were recorded in the cumulative translation adjustment component of shareholders' equity. Gains and losses on foreign currency exchange contracts which hedged net exposures from assets and liabilities denominated in foreign currencies were recorded in other income (expense), net. Fair Value of Financial Instruments For certain of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, short-term debt and current maturities of long-term debt, carrying value approximates fair value due to their short maturities. The carrying values of long-term debt do not materially differ from their estimated fair values based upon quoted market prices for the same or similar instruments. Net Income (Loss) Per Share Net income (loss) per share is computed using the weighted average number of outstanding registered shares (net of shares held in treasury) and, if dilutive, weighted average registered share equivalents. Registered share equivalents include registered shares issuable upon conversion of convertible bonds (using the if-converted method) and from the exercise of stock options (using the treasury stock method). Pursuant to the requirements of the Securities and Exchange Commission, treasury stock sold and registered share equivalents relating to stock options granted during the twelve months preceding the commencement of the U.S. public offering and through the effective date (March 27, 1997) have been included in the calculation of net income (loss) per share (using the treasury stock method and the public offering price) as if they were outstanding for all periods presented through December 31, 1996. F-9

OPTIONS OUTSTANDING ---------------------NUMBER OF PRICE SHARES PER SHARE ----------------102,836 $0-158 67,230 0-139 (4,039) 0-120 (10,733) 0-162 ------155,294 0-200 67,850 0-103 (14,510) 0-95 (54,017) 0-95 ------154,617 0-101 167,(77,105) 84 (22,537) 88 ------222,=======
Balance, April 1, 1994... Granted... Exercised... Canceled and expired.. Balance, March 31, 1995.. Granted... Exercised... Canceled and expired.. Balance, March 31, 1996.. Granted... Exercised... Canceled and expired.. Balance, March 31, 1997..
The Company had approximately 184,000 conditional shares available for the future grant of stock options and had reserved approximately 153,000 treasury shares and 69,000 conditional shares for the future exercise of stock options outstanding at March 31, 1997. The following table summarizes information regarding stock options outstanding at March 31, 1997 (translated into U.S. dollars based upon specific Swiss franc prices):
RANGE OF EXERCISE PRICES ----------------------------------------------------0 - 77 - 99 - 183 OPTIONS OUTSTANDING Number outstanding. Weighted-average remaining contractual life (years).. Weighted-average exercise price.. OPTIONS EXERCISABLE Number exercisable. Weighted-average exercise price.. 2,714 $ 41 40,871 $ 76 9,327 $ 88 10,293 $ 89 3,133 $ 90 ------66,338 ======= 4,540 6.9 $ 43 72,179 7.6 $ 76 56,739 9.1 $ 88 43,037 9.2 $ 89 45,575 9.4 $101 ------222,070 =======
In June 1996, the shareholders approved the 1996 Stock Plan (the "1996 Option Plan"). Under the 1996 Option Plan, stock options for registered shares may be granted to employees at exercise prices of not less than 100% of the fair market value of the registered shares on the date of grant. The 1996 Option Plan became effective upon the closing of the U.S. public offering. A total of 300,000 registered shares may be issued under the 1996 Option Plan. There were no options granted under the 1996 option plan during fiscal 1997. F-14
LOGITECH INTERNATIONAL S.A. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS) Pro Forma Stock Compensation Disclosure The Company applies the provisions of APB No. 25 and related interpretations in accounting for compensation expense under the Purchase Plans and the 1988 Option Plan. Had compensation expense under these plans been determined pursuant to SFAS No. 123, the Company's net income and net income per share for the years ended March 31, 1997 and 1996 would have been as follows:

THREE MONTHS ENDED, --------------------------------------------------------------------------------------MAR. 31, DEC. 31, SEPT. JUNE 30, MAR. 31, DEC. 31, SEPT. JUNE 30, 30, 30, ----------------------------------------------------Net sales. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Gross profit. 29.7 29.6 29.7 29.9 27.8 26.7 26.4 27.0 Operating expenses: Marketing and selling.. 13.3 12.0 13.9 14.2 13.6 12.5 12.5 13.0 Research and development. 7.1 5.2 6.1 7.5 6.7 5.0 6.0 5.7 General and 5.9 6.5 4.9 4.9 5.7 administrative. 4.9 4.2 5.2 --------------------------------Total. 25.3 21.4 25.2 27.6 26.8 22.4 23.4 24.4 Operating income. 4.4 8.2 4.5 2.3 1.0 4.3 3.0 2.6 Net income. 4.3% 8.2% 3.7% 2.9% 1.7% 3.3% 2.7% 1.3%
Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-7058) of Logitech International S.A. of our report dated April 30, 1997 appearing on page F-2 of this Annual Report on Form 20-F.
/s/ Price Waterhouse SA Price Waterhouse SA Lausanne, Switzerland

June 25, 1997

End of Filing 2005 | EDGAR Online, Inc.

Introduction

1.1 Terms of reference
Developments in image capture technology allow developers of multimedia applications to incorporate source material of varying physical characteristics. However the multimedia developer drawing up a specification for a capture system is faced with a bewildering choice of equipment for which there is little comparative information on the relationship between equipment specification and captured image quality. This report provides guidelines for decisions on the choice of appropriate capture pathways within the context of higher education. Source material may vary from original objects such as biological specimens through hard copy sources like manuscripts, books, maps, photographic sources such as transparencies and film, to electronic sources like videotapes or video discs. There are a number of devices which can be used to capture images of the source material, although not all images can be captured by each device. Six stages of image capture and processing were identified as follows: 1. 2. 3. 4. 5. 6. Selection of source material Initial capture (photographic or analogue) Secondary capture (digital) Manipulation in a photo re-touching software package (e.g. Adobe Photoshop) Compression Storage
Use of the term 'analogue' refers to electronic image capture where signal amplitudes are continuously variable. 'Digital' refers to signals recorded in bits, that are either 'on' or 'off'. The terms of reference for the project were to address the effects of various capture processes on image quality, stages 2 and 3 above. The project did not systematically address the effects of subsequent software manipulation, stage 4, or of compression after digitisation, stage 5, although both can affect the quality of the final displayed image. In specifying a capture system it is necessary to achieve sufficient image quality to meet the required teaching/learning need within defined budgetary constraints. Quality as far as image capture is concerned is monitored by assessing three distinct facets of each image:
Spatial resolution (sharpness) Colour (faithfulness to original) Contrast ratio (range of half tones). The acceptability of a captured image is determined by the combined effects of these three facets. As equipment choice is likely to be constrained by budget, the implications of two cost scenarios on the quality of image capture were assessed. The two systems were chosen as follows: Centralised Service Model: purchase of higher cost equipment justified by high throughput and intensive use. Departmental Model: in this scenario the facility is only likely to be used intermittently and consequently the purchase of high cost equipment is unlikely to be justified. In addition, these two budgetary scenarios were compared with results obtained from the use of the Kodak PhotoCD system, for which no investment in electronic capture equipment by the institution is required.

1.2 Aims and objectives.

The aims of the project were to evaluate a range of hardware and associated software options for the capture of images for two equipment cost scenarios as defined above, and to draw up guidelines for the selection of appropriate systems for image capture by developers of multimedia applications in higher education. The objectives were to identify: types of source material required as digitised images by developers of multimedia applications for higher education optimal pathways for capture of images bearing in mind feasibility, quality and cost the implications of two budgetary scenarios for hardware and associated software on the quality of the captured images.

2 Methodology

2.1 Comparative Pathways for Image Capture.
The project examined the effects on digitised image quality of capturing images using the capture routes shown in Figure 2.1. A representative subject for each type of source material was captured. Not all images can be captured using all the prescribed capture devices, e.g. the Canon Ion still video camera has an unsophisticated zoom lens unsuitable for connection to a microscope. Other mutually exclusive permutations of image and capture device are identified in later sections.
Figure 2.1 Capture options for various source materials and test charts

2.2 Image quality

2.21 Introduction
The quality of a digitised image is dependent on both the quality of the original source material and the adoption of a digitisation pathway which minimises quality loss. This study has worked with source material of as high a quality as practicable to effectively test the various capture routes. Quality judgements on the attributes of a particular capture path or piece of equipment were made by employing both quantitative and qualitative techniques. To isolate the effect of capture path on overall quality as defined in section 1.1, Spatial Resolution and Grey Scale test charts (standard throughout television broadcasting) were used for quantitative assessment of spatial resolution and contrast ratio respectively, while a qualitative assessment was made of the colour information in full colour images. It would have been preferable to undertake a quantitative analysis of degradation in colour information but the project did not have access to a Spectraradiometer or similar device to enable such a study. It is intended that quantitative colour assessment should be included as part of the on-going research programme.

2.22 Quantitative measurement of quality - test charts
The standard Spatial Resolution test chart, used in broadcasting to assess vertical and horizontal spatial resolution and system frequency response, carries over satisfactorily for use with computer display monitors. This chart enables assessment of spatial resolution through testing the systems ability to differentiate between distinct black straight lines against a light background. When the lines merge together indistinctly then resolution is said to have reached its limit. As can be seen from the diagram, spatial resolution between 200 and 800 TV Lines can be assessed at various points across the screen and in this case horizontal resolution was measured in units of 25 lines."TV lines" are a unit of measurement to establish the number of discreet picture elements (in this case lines) that can be resolved horizontally and vertically over the full screen. Although originally designed for use with video scanning systems the chart does provide a convenient means of comparing the spatial resolving power of the different systems used for capture. Where the lines converge moir patterning appears before resolution is measurably impaired. Moir is a rainbow-coloured patterning introduced when lines in television picture content are closer together than the monitor is able to display, and it is commonly seen in television presenters' striped shirts before they learn not to wear that style. Moir is not as apparent on a
computer monitor as it is on a video monitor because on the computer monitor colour information comes from digital red, green and blue (RGB) signals rather than being a part of the analogue coded Phase Alteration Line (PAL) video signal. For this reason moir is not always a relevant factor in comparisons and on this project was eliminated on the video monitor by turning down the colour to give a truer assessment of spatial resolution. The Grey Scale chart displays 9 half tone shades of grey between white and black - 11 shades in all. It is designed to assess whether the system can differentiate between steps all the way from black to white, but particularly at the extremes of the chart where contrast limitations are most apparent. This chart is also designed to test the ability of a colour capture device to show a grey image with no colour casts across the half tone range provided. A colour capture device utilises equal parts of the additive primary colours red, green and blue when reproducing a black, white and half tone image, and is effectively lined up to deliver good colour output when it displays an accurate and complete grey scale. For this reason broadcast television cameras are lined up initially on the Grey Scale chart and colour casts in particular half tones are revealed and eliminated. Depending on the number of half tones presented for grey scale resolution, it is reasonable to assume that those in between, and not specifically covered by the steps in the chart, would appear in any case.

2.23 Qualitative measurement of quality - full colour images
Subjective assessments were made of the remaining 9 full colour images based on the criteria of sharpness (a less precise version of spatial resolution), colour (faithfulness to earliest available version) and contrast ratio (ability to resolve perceived range of light and dark shades). These assessments were qualitative and were scored on a scale of 1-5 as follows: 1 Excellent Good Satisfactory Poor Unacceptable
Assessments were made on the above technical criteria by two members of the project team working together. All the high budget and PhotoCD versions of an image were displayed on screen together when scoring the individual images, and all the low budget versions were also viewed simultaneously. Assessment was made without reference to educational effectiveness in any specific context. The assessment of the images in a specific educational context using students was not possible due to the time constraints of the project but this is part of on-going research.

2.3 Source material

The selection of types of original source material for image capture was made on the basis of the likely requirements of different university faculties.
The 9 image types were: Microscope Slide Low magnification microscope specimen Plant Soil Profile Landscape Portrait Skull Map Line Drawing The Microscope Slide was a biological thin section, mounted on glass, of the lactating mammary gland of a sheep, designed to be viewed through a high magnification microscope and in this case seen at 50x magnification. The magnification was the product of a 10x objective and 5x objective in the microscope and did not reflect displayed magnifications on 35mm film or video monitor. It required the resolution of a range of half tones stained magenta and some seemingly monochrome grey material. This slide demonstrated the effect of using a transmitted light source to illuminate an image; in this case at just over half power on its thyristor control, providing 'warm' illumination from the red end of the spectrum. For microscope work the same video rostrum camera head (a JVC TK-1280E, hereinafter designated Rostrum 2A), set to white balance automatically was used because of the need for a custom built adapter to interface the camera with the microscope. Usually a separate adapter is needed for each microscope used because the focal distance between the cameras charge coupled device (CCD) and the eyepiece in the microscope is crucial. Each adapter can cost up to 500. The magenta staining in the slide tested the video system because historically tube television cameras have had difficulty resolving magenta, which is in the area between red and blue, although it is now recognised that this is less of a problem with CCD than with Tube cameras.
The Low Magnification Microscope specimen was an apical dissection of a developing ear of barley, designed to be viewed at low magnification and in this instance seen at about 12.5x magnification through the microscope. This image was side lit with a fibre optic source used at just over half power, with a piece of aluminium foil presenting its matte side providing a fill light. The Plant was a flowering example of Charlock, captured with the sun high on a clear autumn day. Lighting conditions were ideal because a range of half tones and shadows had to be resolved. However it was difficult to isolate a single plant from its background because it was in a densely colonised field - a familiar problem for photographers in a biological context. It is recognised that in some circumstances it may be possible to remove the specimen for photography under studio conditions. On this occasion it made it difficult to separate the flower from its background in low resolution versions of the image. The Soil Profile was part of the side of a granite quarry below Bennachie - a hill in Aberdeenshire - regularly used for teaching purposes by soil scientists at Aberdeen University. The section exhibited shades of light pink; not what a photographic printer would expect to reproduce accurately without some reference. The image was purposely captured out of direct sunlight because sunlight and shadow can interfere with perception of subtle colour shadings associated with soil profiles. For this reason it was not considered appropriate to consider contrast ratio with this subject, and accordingly only colour and spatial resolution assessments appear in the results. The Landscape was a view looking north-west towards the hills from a point about two miles west of Tarland in Aberdeenshire. It showed a range of land uses from gorse and woodland alongside a burn, upwards through arable farmland to hill grazing, coniferous plantation and eventually heather moorland to the skyline. The sun was out and quite high, providing a range of half tones and possible shadow detail to test contrast. The head and shoulders Portrait required capture of the mixture of primary colours associated with flesh tones, which although not identical between faces is nevertheless familiar as a concept to most of us. The subject was captured against a textured monochrome grey wall to reveal small colour shifts not immediately apparent on the face. No fill light was used on the unlit side of the face to test the amount of shadow detail resolvable by different methods of capture. The Skull was chosen to exemplify capture of a three dimensional subject displayed under controlled studio lighting conditions. The subject was that of a male capercaillie which, although mainly monochrome, exhibited many shades of the colour associated with bone structure.

Panrix 486DX 66MHz 16Mb RAM computer 'Wizard' 9000VL 24 bit (true colour) video card SVGA monitor CD-ROM drive (multisession Photo CD compatible) 1Gb Read/Write Optical Disc Drive Video Monitor Kaiser RS1 rostrum copy stand Kaiser Tungsten copy lights (2 x 150w) Master light box
2474.00 295.00 900.00 200.00 1800.00 600.00 200.00 201.60 131.00
2.43 Capture devices specific to the central resource model
Rostrum camera 1 JVC KY-F30B 3x Charge Coupled Device (CCD) Rostrum Camera + 798mm zoom lens c/w macro and 6 diopter close up attachment Screen Machine II Video Capture Board Hewlett Packard Scanjet Iic Scanner Canon Ion 560 6240.00
Video capture board 1 Scanner 1 Still Video

725.00 1675.00 1000.00

2.44 Capture devices specific to the departmental resource model.
Rostrum camera 2 JVC TK-1280E 1xCCD Rostrum Camera+ 18-108mm zoom lens c/w macro and 3 diopter close up attachment JVC TK-1280E 1xCCD Rostrum Camera no lens, adapted to the microscope Videologic Captivator Video Capture Board Logitech Scanman Colour Scanner 1100.00
Rostrum camera 2A Video capture board 2 Scanner 2

900.00 300.00 306.00

Results
3.1 Quantitative results: test charts
The results of the quantitative assessment of the various image capture paths as measured by the Spatial Resolution and Grey Scale test charts are presented in Table 3.1. Path Resolution TV Lines 400 Grey Scale Half Tones 11
Maximum Test Chart Readings Chart - Rostrum 1 - Digitise 1 Chart - Rostrum 2 - Digitise 2 Chart - Scanner 1 Chart - Scanner 2 Chart - Slide - PhotoCD Chart - Neg - PhotoCD
Chart - Slide - Rostrum1 - Digitise 1 Chart - Slide - Rostrum2 - Digitise 2 Chart - Neg - Print - Rostrum1 - Digitise 1 Chart - Neg - Print - Rostrum2 - Digitise 2 Chart - Neg - Print - Scanner 1 Chart - Neg - Print - Scanner 2 Chart - Videotape frame - Digitise 1 Chart - Videotape frame - Digitise 2 Still Video - Board 1 - Digitise 1
Table 3.1 System Performance as measured by the Spatial Resolution and Grey Scale Test Charts Unfortunately it was not possible to observe the spatial resolution chart with the Canon Ion Still Video camera because at 12" x 9" the chart was too small to fill the frame at the minimum focusing distance - an essential requirement for accurate quantitative results. The PhotoCD results are considered first and then the different equipment systems are reviewed.
Spatial resolutions achieved by PhotoCD transfers are misleadingly low where the whole of the test chart is displayed on the screen at one time (for a description of the PhotoCD system, see Appendix). The image derived from the print was marginally better than that achieved from the 35mm slide, 400 and 375 lines respectively, but significantly lower than the maximum of 800 TV lines provided by the chart. However, when the originals were examined the photographic print (and therefore the negative) and slide both resolved all 800 lines, and when the PhotoCD image was examined at its higher (photographic) resolution all 800 lines were present. Thus the limiting factor when viewing the whole chart image was the spatial resolving power of the display monitor. PhotoCD images can be displayed in any one of 5 (sometimes 6) possible resolutions and if the whole image were to be viewed at the highest resolution at 1:1 magnification it would require an array of 16 (4 x 4) monitors to display it. Filling one screen with the complete image means that it is displayed at one sixteenth of its actual size, and at that size spatial resolution performance is limited by the resolution of the display monitor. However if the image is viewed at the PhotoCD photographic resolution (3072 x 2048 pixels) with only a small area of the actual image displayed on the monitor, maximum resolution is revealed. It was only when viewed at this higher resolution that the photographic versions (negative and slide) of the Spatial Resolution Chart revealed the maximum number of TV lines (800). PhotoCD versions of the Grey Scale Chart revealed the maximum number of half tones with no perceptible degradation. For the various high cost and low cost system permutations the best results were consistently recorded by the Scanner 1 system which achieved 425 TV lines when capturing the Chart directly or a photographic print of it. Direct capture of the chart using Rostrum Camera 1 was slightly less satisfactory with only 375 lines resolved, whilst capturing a 35mm slide or print of the chart with the same system reduced the resolution to 350 and 325 lines respectively. The low cost systems delivered poorer spatial resolution from three of the six capture combinations (Chart - Rostrum - Digitiser; Chart Neg. - Print - Rostrum - Digitiser; Chart - Scanner) and comparable results from the remainder (Chart - Slide - Rostrum - Digitiser; Chart - Neg. - Print Scanner and Chart - Videotape Frame - Digitiser). The use of videotape frame capture pathways resulted in a significant loss of quality as measured in terms of spatial resolution compared with the other methods of capture. The generally high results in Table 3.1 for the Grey Scale chart conceal the fact that while the number of half tones indicated were present as stated, they were often degraded. Progression along all capture paths did subjectively indicate a slowly worsening contrast ratio i.e. a loss of detail in either the very light or the very dark greys, or a loss of peak white or black. There were also cases where readings were less good at the top or bottom of a screen - an artefact not present in the original photographs of the

charts which were all taken out of doors under an evenly bright cloudy sky. The higher cost systems all scored the maximum 11 half tones except for the scanned image of a print of the chart (10 half tones) and the still video and videotape frame (9 half tones). The low cost system tended to deliver fewer or degraded half tones when compared with the corresponding higher cost system, although for certain combinations of equipment the results were again similar.
3.2 Qualitative results: full colour images

3.21 Introduction

Two members of the research team worked together to agree upon a score which, given the variations that can exist in 'normal' colour vision, reduced the possibility for bias. When scoring the different versions of an image as many examples as possible were compared at the same time (see section 2.23). It was noted that when viewed singly many versions were quite acceptable, particularly for colour, whereas when compared as a group their individual shortcomings became apparent. A future development of the on-going research project will be to assess the various versions of the images in an educational context to see at which point quality falls to an unacceptable level. Each image was rated on a five point scale (5 = Excellent) for sharpness (a subjective measurement of spatial resolution), colour (faithfulness to the original source material or analogue image of the source material when the original was not available) and contrast ratio (perceived range of half tones). An exception to this rule was the Soil Profile which was captured in lighting conditions deliberately designed to eliminate distracting contrast detail and therefore could not be rated for this attribute. The scores were then averaged and the results are presented in Table 3.2 of the qualitative scores for the 9 full colour images. Table 3.3 shows the breakdown of the individual scores. From left to right in each cell the figures indicate ratings for sharpness, colour and contrast ratio. The 35mm slides of the microscope slide did not achieve assessable quality and therefore there are no results present for this image in Tables 3.2 and 3.3.

Microscope Slide * 3.3 * * 2.3 2.3 2.3 2.3
Low Mag. Microscope 1.1.6 1.3.6
Source - Slide - PhotoCD Source - Slide - PhotoCD Source - Slide - Rostrum 1 - Digitise 1 Source - Slide - Rostrum 2 - Digitise 2 Source - Neg - Print - Rostrum 1 - Digitise 1 Source - Neg - Print - Rostrum 2 - Digitise 2 Source - Neg - Print - Scanner 1 Source - Neg - Print - Scanner 2 Source - Videoframe - Digitise 1 Source - Videoframe - Digitise 2 Source - Still Video - Digitise 1 Source - Rostrum 1 - Digitise 1 Source - Rostrum 2A - Digitise 1 Source - Scanner 1 Source - Scanner 2

4.6 4.6 2.2.3 2.1 1

Soil Profile ^ 3.2 1.5 2

Landscape

Portrait
Line Drawing 3 4.6 4.3 2.6 3.2.6 2
4.6 4.6 3.3.3 2.6 2.3 1.3 1.6 1.3 1.3

4 2.3 3.3 2.1.6 2.3

3.6 4.6 3.3 1.2.2

3.3 2.3 2.6 3.3 2.3 1.6

3 # 2.6 1.6

2.3 # 3 2

Table 3.2 Averaged qualitative scores for the 9 full colour images (^ average of 2 results, * images which failed to achieve assesable quality, # examples which were not technically possible)
Microscope Slide * 334 * * 313
Low Mag. Microscope 444 443
Soil Profile ^ n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Line Drawing 233 411

132 133

322 311

333 # 422 122

232 # 234 222

Table 3.3 Individual qualitative scores for the 9 full colour images (^ average of 2 results, * images which failed to achieve assesable quality, # examples which were not technically possible)
3.22 Comparison of capture systems
It can be seen from Table 3.2 that, with the exception of the Microscope images, all the PhotoCD transfers equalled or exceeded in quality the images captured by other systems. From Table 3.3 it is evident that in general terms PhotoCD scores for sharpness, colour and contrast ratio slightly exceeded the results from the scanners and rostrum cameras. In terms of contrast ratio, the PhotoCD system was able to capitalise fully on whatever information was present in images and particularly the extended shadow and highlight details afforded by negative versions, e.g. the landscape. The comparision of the results in Table 3.2 for the rostrum camera systems with those for the scanner systems did not conclusively indicate whether one system was preferable to the other, although the balance was in favour of the rostrum camera systems. While qualitative comparisons of sharpness in Table 3.3 were not as conclusive as the quantitative spatial resolution measurements in Table 3.1, there were examples which reflected the test chart results. The map, when captured by rostrum camera and scanner directly from a photographic print, came out sharper from the scanner than the rostrum camera. The map detail was specifically chosen for its ability to test spatial resolution with its sharp edged detail and lettering, whereas other images like the landscape had no such well-defined hard edge content. One strange result is worth noting individually. When the line drawing was captured directly by the scanners - a short and theoretically high quality path judging from the quantitative resolution chart result - the images were poor for sharpness and contrast ratio. On examination it was found that sharpness was there, but masked by the poor contrast. This was possibly caused by the extremely fine lines in the original artwork compared to the lines on the resolution chart. Traditionally television systems have had difficulty displaying very thin lines, which this subject had in abundance. When this particular image was looked at in Photoshop and its contrast greatly increased without changing the brightness, it was found that the lines were clearly there but that they would not appear without greatly exaggerating the contrast, and this severely compromised the content of the rest of the image. Quality of those images captured using an early example of new technology (still video camera), and older technology (single videotape frame) were particularly poor. The Canon Ion camera is an early attempt to capture still images directly onto floppy disc with no intervening hard copy photographic process involved. In theory this short processing path should lead to good results. In practice the technical shortcomings of this new camera have still to be overcome. Sharpness, colour and contrast ratio all leave a great deal to be desired in comparison with more established media even with general subjects which were not intended to be specifically challenging.

4 Discussion

4.1 Best capture method for the various categories of image
In pursuit of quality, represented by good spatial resolution, colour and contrast ratio, circumstances arose with the capture of particular image groups which would apply widely to the capture conditions surrounding any similar image. When considering the results the images divide naturally into 4 groups: 1. Microscope slide and low magnification microscope images (both captured using microscopes and artificial light). 2. Plant, soil profile, landscape and portrait (3 dimensional subjects captured using natural daylight) 3. Skull (3 dimensional subject captured under studio conditions using artificial light) 4. Map and line drawing (both flat art examples captured under studio conditions using artificial light) It is suggested that the four groups of images identified comprise most of the image types likely to be encountered in a higher education context.
4.11 High and low magnification microscope images
Photomicrography is a specialised branch of photography and familiarity with the operation of the chosen microscope, light source(s) and selection of lenses proved to be important as the camera which simply records what it sees through the component parts of the microscope. All adjustments (e.g. composition, focus and colour temperature) are made to the microscope and its light source. Capture devices are required to react to these conditions. Capturing the image of the source material with a colour slide or negative requires the photographer to wait until the film is developed for confirmation of success, and lack of experience can produce surprising results (see Table 3.2). In this project no suitable captured images were obtained using 35mm slide film. The most predictable and instantly accessible results were obtained when capturing with the Rostrum Camera 2A coupled to the microscope. The image can be viewed live on a video monitor in full colour and, provided relevant adjustments are available, the quality of the image displayed can be maximised before final capture. Success with this path is assured if there is confidence in the quality of image being displayed by the monitor. Slide film is not as tolerant of changes in colour temperature as the human eye or negative film, and if the microscope light source is an unknown quantity or the bulb is getting old results can be unpredictable. For this 20
reason results obtained using the video rostrum camera on the microscope were preferable to those on 35mm slide. Although the lighting was perfectly acceptable to the Rostrum Camera 2A this was no guarantee of correct colour temperature for 35mm colour slide film. As all adjustments to improve image quality are made to the microscope or its light source, skill in working with microscopes as well as photographic skills are required. Delly (Delly J.G. (1988) Photography throught the Microscope. Eastman Kodak Company (London) pp104) recommends not using negative film because of the difficulty of achieving faithful colour in a print if the technician does not have access to an original image for comparison, whereas slide film which only requires development and no manipulation should faithfully reproduce original colours provided correct filtration is established and used. However, in the results reported here greater success was achieved with the negative film. Delly also suggests that there is more control of contrast inherent in black and white film than in colour. This could help to explain why the lighting setup for the barley apical dissection, which yielded good texture and contrast in the video rostrum version, gave very poor texture and contrast on a 35mm slide, rendering it unusable. Again the colour temperature of the light source needed to be a known quantity when capturing on slide film because of that mediums lack of tolerance to fluctuations. Possibly because of the quality of the slide, or possibly because of the picture content (medium sized bright subject against a black background) the PhotoCD scanner 2000 for 35mm material would not focus on it and it had to be transferred using the larger format 4045 scanner, necessitating the purchase of another and more expensive Pro Photo CD Master Disc. It is not clear why the PhotoCD transfer from negative is so much worse than the rostrum transfer from the print which came from the same negative. Possibly it could be due to the fact that thePhotoCD operator who only has a very small preview window to work from on his monitor, making it difficult to see the detail required. This again indicates that the shortest number of copying stages does not necessarily mean the highest quality.

from reversal film examples, but was treatable in negative examples. Slide versions of this subject exhibited a range of lighting variations from very warm colour temperature using anglepoise lamps with domestic 60 watt bulbs, through green from the Redheads with (alleged) neutral density filters on them, to bland overexposure and lack of modelling from the anglepoises with Photofloods. At the PhotoCD transfer stage the colour temperature latitude of the 35mm Ektar negative film stock proved predictably more flexible than the 35mm Kodachrome 64 reversal slide. Eventually the most flexible light source for modelling, as the image was not too large, turned out to be two anglepoise desk lamps with domestic 60 watt bulbs. The result of capture on the KY-F30B was the best version for contrast ratio, best equal for colour and an image which was superficially very good for resolution, but on comparison with the PhotoCD transfer of a 35mm negative it marginally lost out because its sharpness looked artificially enhanced - a not uncommon problem with electronically generated images. These two versions, the video rostrum camera and the PhotoCD of a negative, turned out to be significant because they illustrated the strengths of two good capture paths, at least for this class of image.
4.14 Map / line drawing images
These two images can be taken together because of their flat art similarities. Both were captured using the longer capture paths used for many of the other images, but in addition shortened paths were taken directly via rostrum camera and via scanner, bypassing the various photographic options. With the map, colour and resolution proved to be particularly taxing, given the nature of this particular example. All paths coped at least adequately with the subtle variations of colour required but overall results were variable, largely because of colour temperature problems mentioned in Section 4.13. Post digitisation processing through Photoshop could cope with minor variations, but major colour shifts made it difficult or impossible to recover original hues downstream. The immediacy of being able to look at the original and adjust the quality of the displayed image before capture is likely to be a preferred option in most cases. However, this measure of control provided by the rostrum camera was slightly tempered by its innate lack of spatial resolution power and a surprising lack of saturation in some colours, particularly blues. Scores were particularly close between pathways for this image class, but two capture devices were fundamentally unsuitable: the still video camera would not focus to fill the frame with a small map detail and would not have been able to resolve its fine detail anyway, and the names on the map would not have been legible at the selected magnification when recovered from the videotape.

Fortunately the high quality achieved by PhotoCD coupled with its ease of use makes it an ideal capture path for both experienced and inexperienced developers alike.
4.3 Critique of high and low budget equipment
4.31 Rostrum cameras plus their respective capture boards
Results from both rostrum cameras and their associated digitiser boards justified their selection. Control of composition, aperture, colour quality and contrast ratio were as expected at the camera end. With push button white balancing in the KY-F30B camera (camera 1) and simple but effective hue controls in the TK-1280E (camera 2) there was no need for extra colour correction, and enhancement would have been possible downstream using a software package. Experience showed that it was better to ignore the settings for saturation, contrast, brightness and red, blue and green offered by the Screen Machine II board. Standardisation on 51% for contrast, brightness, red, blue and green gave the benefits of a predictable starting point from which to set off into Photoshop. It was found necessary to increase saturation to 79% - again a standardised setting. These settings were achieved by trial and error since it was not possible to predict from the computer monitor screen what the outcome would be after digitisation. No such setting options were provided on the Captivator board. Instant access to results and no recurring costs per image complete the resources picture for rostrum camera operations. In Table 3.2 it can be seen that the results from Rostrum Camera 1 were not consistently better than those for Rostrum Camera 2 and consequently the large investment could not be justified on results alone. The benefits of Rostrum Camera 1 are ease of use, automatic line-up and controls designed for regular use compared with flimsy controls and time consuming set-up procedures with Rostrum Camera 2. Good results from Rostrum Camera 2 are heavily dependent on the skill and experience of the operator.

4.32 Scanners

The handheld Logitech Scanman was predictably more difficult to operate than the Hewlett Packard, requiring some dexterity and space to manoeuvre it. With some parts of images, particularly the black background to the dissection under the low powered microscope, the joins between scans were clearly visible. With some images, particularly the test charts, it either made a mess of stitching its passes together or was unable to find enough points of contact to do so.
5 Guidelines for Success in Image Capture
This project has demonstrated that it is important to attempt to maximise spatial resolution, colour quality and contrast ratio in image capture regardless of medium or system. Distinctions arise between media in the ways of achieving optimal quality in these areas, but as ideals to be aimed at they are standard to all media. The values obtained for these three criteria are the combined product of the effects imposed by the choice of equipment for capture and manipulation, and the expertise of the operator(s) involved. Three main skills areas are indicated for the capture of images: Photographic Electronic (Video) Computer The same skills are relevant for the post-digitisation manipulation of images and their incorporation into computer assisted learning software packages, although it has not been the remit of this report to consider that stage. On the basis of the results reported the following guidelines have been drawn up to assist staff capture high quality images for use in multimedia applications.
Selection of Source material
The first requirement is to select high quality source material for capture.
Capture Successful capture depends on the operator having good photographic skills and an awareness of lighting techniques.
Analogue Choices 1 (35mm Slide, 35mm Negative, Colour Print) In some photographic areas there is a trade-off between Slides which give faithful colour but no opportunity for manipulation of colour and contrast ratio until after digitisation Negatives plus prints which allow more control of colour and contrast ratio before and after digitisation, but require a reference (such as the Grey Scale chart or the original source material) for accurate reproduction
Analogue Choices 2 (Rostrum Camera, Still Video, Videotape frame) Beyond photography, choices for analogue capture require some familiarity with video operations. These considerations are not intended to put off inexperienced lecturers who wish to process images - rather they indicate that an operator who gains experience processing images regularly should produce higher quality routinely. Rostrum Camera Pros Immediate access to captured image. Easy to adjust the quality of the image at time of capture. High quality colour. Superior contrast ratio. No recurrent costs. Generally poorer resolution than scanner. Re-sizing may require recapture. Needs digitiser board to capture image. Speed of access. Portability Overall quality (resolution, colour, contrast ratio) poor compared with other media.

The low budget board used was a videologic captivator board which retails for around 300. No particular losses of quality were detected because of it, but it did not have the adjustment possiblities standard on the Screen Machine II board.
The low budget scanner was a Logitech Scanman Colour handheld model which was TWAIN compliant for use with Photoshop or a similar photoretouching package. Scanning was achieved, depending on the size of the original image, by moving the scanner across it in a number of parallel passes to be stitched together more or less seamlessly in the software. This stitching operation is automatic, but can be undertaken manually in the event of the software not being able to find enough common reference points.

PhotoCD

In addition to the observations on use of PhotoCD images in 3.1 and 4.3, the following is a technical description of the PhotoCD process from a Kodak Fact File. "PhotoCD images are created though the scanning of photographic film either positive or negative - to create a photographic quality digital image. The image file is compressed from its original file size (18Mb to 72Mb depending on film size, i.e. 35mm to 4x5 inches) down to approximately 5Mb to 18Mb, depending on film size, through a visually lossless compression routine. The resulting image file is converted to the Image Pac format where it is represented in five or six resolutions:Base/16 (thumbnail resolution) 128x128 pixels Base/4 256x384 pixels Base (TV resolution) 512x768 pixels (in reality 480x640 pixels) BaseX4 (HDTV) 1024x1536 pixels Basex16 (photographic) 2048x3072 pixels Basex64 (photographic) 4096x6144 pixels (Pro Master PhotoCD only)"