Logitech International (LOGI) 8-K Logitech Announces Financial Results for Q3 FY 2010

Exhibit 99.1

For Immediate Release

Editorial Contacts:

Joe Greenhalgh, Vice President, Investor Relations – USA (510) 713-4430

Nancy Morrison, Vice President, Corporate Communications – USA (510) 713-4948

Ben Starkie, Public Relations Manager – Europe +41-(0) 21-863-5195

Logitech Announces Financial Results for Q3 FY 2010

Company Returns to Double-Digit Profit Growth

FREMONT, Calif., Jan. 20, 2010 and ROMANEL-SUR-MORGES, Switzerland, Jan. 21, 2010 — Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the third quarter of Fiscal Year 2010.

Sales for Q3 were $617 million, a decrease of 2 percent compared to $627 million in the same quarter last year. Excluding the favorable impact of exchange rate changes, sales decreased by 7 percent.

Operating income for Q3 grew by 37 percent, to $58 million, compared to $43 million in the same quarter a year ago. Operating income for Q3 FY 2010 includes the impact of $5.8 million in one-time transaction costs related to the Company’s acquisition of LifeSize Communications in December 2009. Net income for the quarter was $57 million ($0.32 per share) compared to net income of $40 million ($0.22 per share) in Q3 FY 2009. Gross margin for the third quarter was 33.9 percent compared to 29.9 percent in Q3 FY 2009.

Logitech’s retail sales for Q3 were up 3 percent year over year, with sales up by 8 percent in the Americas and 6 percent in EMEA and down 17 percent in Asia. OEM sales were down by 38 percent.

“Q3 marks a turning point in our plan to emerge stronger from the economic downturn,” said Gerald P. Quindlen, Logitech president and chief executive officer. “There were many highlights in the quarter, starting with improved sell-through in all of our retail regions, driven by the success of our new products across multiple categories.

“We are also very pleased with our return to year-over-year profitability growth in Q3, driven by the substantial improvement in gross margin, as well as with our outstanding working capital management, which yielded cash flow from operations of $166 million. For the current quarter, we anticipate accelerating sales momentum, resulting in our return to double-digit sales growth, as well as a substantial improvement in profitability compared to Q4 FY 2009.”

Outlook

For the fourth quarter of FY 2010, Logitech expects sales within the range of $500 million to $515 million, gross margin of approximately 34 percent, and operating income in the range of $15 million to $20 million, which includes the impact of amortization of the intangible assets of LifeSize Communications, which will recur in future periods.

Earnings Teleconference and Webcast

Logitech will hold an earnings teleconference on Thursday, Jan. 21, 2010 at 8:30 a.m. Eastern Standard Time and 14:30 Central European Time. A live webcast of the call, along with presentation slides, will be available on the Logitech corporate Web site at http://ir.logitech.com.

About Logitech

Logitech is a world leader in personal peripherals, driving innovation in PC navigation, Internet communications, digital music, home-entertainment control, gaming and wireless devices. Founded in 1981, Logitech International is a Swiss public company listed on the SIX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI).

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This press release contains forward-looking statements, including the statements regarding anticipated sales, operating income and gross margin for Q4 FY 2010, Q3 FY 2010 marking a turning point, and anticipated accelerating sales momentum and a return to double-digit sales growth in Q4 FY 2010. The forward-looking statements in this release involve risks and uncertainties that could cause Logitech’s actual results to differ materially from that anticipated in these forward-looking statements. Factors that could cause actual results to differ materially include: our inability to predict the timing and strength of the improvement in our business, operating results and financial condition; the demand of our customers and our consumers for our products and our ability to accurately forecast it; consumer reaction to our new products; the effect of pricing, product, marketing and other initiatives by our competitors, and our reaction to them, on our sales, gross margins and profitability; if we fail to take advantage of long-term trends in the consumer electronics and personal computers industries; if we fail to successfully innovate in our current and emerging product categories and identify new feature or product opportunities; the sales mix among our lower- and higher-margin products and our geographic sales mix; the retention of employees of LifeSize and the ability of Logitech to successfully integrate LifeSize’s market opportunities, technology, personnel and operations and to achieve anticipated results; competition in the video conferencing and communications industry, including from companies with greater resources, installed base and name recognition; as well as those additional factors set forth in Logitech’s periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2009, and our subsequent Quarterly Reports on Form 10-Q available at www.sec.gov. Logitech does not undertake to update any forward-looking statements.

Logitech, the Logitech logo, and other Logitech marks are registered in Switzerland and other countries. All other trademarks are the property of their respective owners. For more information about Logitech and its products, visit the company’s Web site at www.logitech.com.

(LOGI – IR)

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
	Quarter Ended December 31,
CONSOLIDATED STATEMENTS OF OPERATIONS	2009			2008
Net sales	$	617,101		$	627,466
Cost of goods sold		408,137			439,970
Gross profit		208,964			187,496
% of net sales		33.9	%		29.9	%
Operating expenses:
Marketing and selling		87,322			86,046
Research and development		32,931			32,401
General and administrative (1)		30,284			26,273
Total operating expenses		150,537			144,720
Operating income		58,427			42,776
Interest income, net		414			2,212
Other income, net		3,052			8,101
Income before income taxes		61,893			53,089
Provision for income taxes		4,807			12,596
Net income	$	57,086		$	40,493
Shares used to compute net income per share:
Basic		175,963			178,497
Diluted		178,403			181,145
Net income per share:
Basic	$	0.32		$	0.23
Diluted	$	0.32		$	0.22
(1) General and administrative expenses for the quarter ended December 31, 2009 include $5.8 million for transaction, due diligence and integration costs related to our acquisition of LifeSize Communications.

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
	Nine Months Ended December 31,
CONSOLIDATED STATEMENTS OF OPERATIONS	2009			2008
Net sales	$	1,441,304		$	1,800,884
Cost of goods sold		1,002,730			1,211,742
Gross profit		438,574			589,142
% of net sales		30.4	%		32.7	%
Operating expenses:
Marketing and selling		215,095			248,066
Research and development		96,116			99,011
General and administrative (1)		75,204			89,202
Restructuring charges		1,494			-
Total operating expenses		387,909			436,279
Operating income		50,665			152,863
Interest income, net		1,645			7,539
Other income, net		2,416			7,809
Income before income taxes		54,726			168,211
Provision for income taxes		14,262			26,101
Net income	$	40,464		$	142,110
Shares used to compute net income per share:
Basic		178,011			178,721
Diluted		180,301			183,484
Net income per share:
Basic	$	0.23		$	0.80
Diluted	$	0.22		$	0.77
(1) General and administrative expenses for the nine months ended December 31, 2009 include $5.8 million for transaction, due diligence and integration costs related to our acquisition of LifeSize Communications.

LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
CONSOLIDATED BALANCE SHEETS	December 31, 2009		March 31, 2009		December 31, 2008
Current assets
Cash and cash equivalents	$	281,052	$	492,759	$	480,176
Short term investments		-		1,637		2,176
Accounts receivable		248,625		213,929		374,968
Inventories		235,012		233,467		339,518
Other current assets		71,803		56,884		73,070
Total current assets		836,492		998,676		1,269,908
Property, plant and equipment		92,452		104,132		107,217
Intangible assets
Goodwill		547,816		242,909		247,171
Other intangible assets		102,307		32,109		34,467
Other assets		66,798		43,704		40,117
Total assets	$	1,645,865	$	1,421,530	$	1,698,880
Current liabilities
Accounts payable	$	316,651	$	157,798	$	360,891
Accrued liabilities		192,234		131,496		168,296
Total current liabilities		508,885		289,294		529,187
Other liabilities		155,811		134,528		127,533
Total liabilities		664,696		423,822		656,720
Shareholders' equity		981,169		997,708		1,042,160
Total liabilities and shareholders' equity	$	1,645,865	$	1,421,530	$	1,698,880

LOGITECH INTERNATIONAL S.A.
(In thousands) - Unaudited
		Nine Months Ended December 31,
CONSOLIDATED STATEMENTS OF CASH FLOWS		2009		2008
Cash flows from operating activities:
Net income	$	40,464	$	142,110
Non-cash items included in net income:
Depreciation		41,852		33,850
Amortization of other intangible assets		7,602		5,808
Share-based compensation expense related to options, restricted stock units and purchase rights		17,249		17,952
Write-down of investments		-		1,764
Excess tax benefits from share-based compensation		(1,708)		(6,641)
Loss (gain) on cash surrender value of life insurance policies		(1,216)		1,440
In-process research and development		-		1,000
Deferred income taxes and other		(23,414)		(3,495)
Changes in assets and liabilities:
Accounts receivable		(22,470)		(10,916)
Inventories		19,405		(100,063)
Other assets		12,314		(7,058)
Accounts payable		151,042		75,945
Accrued liabilities		58,230		23,273
Net cash provided by operating activities		299,350		174,969
Cash flows from investing activities:
Purchases of property, plant and equipment		(26,438)		(38,631)
Proceeds from cash surrender of life insurance policies		813		-
Acquisitions and investments, net of cash acquired		(388,807)		(64,430)
Premiums paid on cash surrender value life insurance policies		-		(427)
Net cash used in investing activities		(414,432)		(103,488)
Cash flows from financing activities:
Repayment of short-term debt		(13,599)		-
Purchases of treasury shares		(101,267)		(78,870)
Proceeds from sale of shares upon exercise of options and purchase rights		15,977		23,496
Excess tax benefits from share-based compensation		1,708		6,641
Net cash used in financing activities		(97,181)		(48,733)
Effect of exchange rate changes on cash and cash equivalents		556		(24,924)
Net decrease in cash and cash equivalents		(211,707)		(2,176)
Cash and cash equivalents at beginning of period		492,759		482,352
Cash and cash equivalents at end of period	$	281,052	$	480,176

LOGITECH INTERNATIONAL S.A.
(In thousands, except per share amounts) - Unaudited
	Quarter Ended December 31,						Nine Months Ended December 31,
SUPPLEMENTAL FINANCIAL INFORMATION	2009			2008			2009			2008
Depreciation	$	15,795		$	11,349		$	41,852		$	33,850
Amortization of other acquisition-related intangibles		2,999			3,338			7,602			6,808
Operating income		58,427			42,776			50,665			152,863
Operating income before depreciation and amortization		77,221			57,463			100,119			193,521
Capital expenditures		8,294			13,584			26,438			38,631
Net sales by channel:
Retail	$	564,258		$	545,537		$	1,290,726		$	1,528,921
OEM		50,502			81,929			148,237			271,963
LifeSize		2,341			-			2,341			-
Total net sales	$	617,101		$	627,466		$	1,441,304		$	1,800,884
Net retail sales by product family:
Retail - Pointing Devices	$	166,703		$	149,058		$	387,550		$	473,503
Retail - Keyboards & Desktops		104,624			106,296			242,539			312,324
Retail - Audio		147,945			152,429			341,066			352,459
Retail - Video		67,321			71,153			168,398			198,631
Retail - Gaming		36,359			38,111			82,001			107,651
Retail - Remotes		41,306			28,490			69,172			84,353
Total net retail sales	$	564,258		$	545,537		$	1,290,726		$	1,528,921
	Quarter Ended December 31,						Nine Months Ended December 31,
Share-based Compensation Expense for Employee Stock Options, Restricted Stock Units and Employee Stock Purchases		2009			2008			2009			2008
Cost of goods sold	$	709		$	888		$	2,135		$	2,288
Marketing and selling		2,018			2,070			5,931			5,908
Research and development		1,139			1,157			3,048			3,266
General and administration		2,218			2,126			6,135			6,490
Income tax benefit		(3,324	)		(904	)		(4,157	)		(3,102	)
Total share-based compensation expense after income taxes	$	2,760		$	5,337		$	13,092		$	14,850
Share-based compensation expense for employee stock options, restricted stock units, employee stock purchases, net of tax, per share (diluted)	$	0.02		$	0.03		$	0.07		$	0.08