Logitech International (LOGI) 8-K Logitech Posts Q2 Results

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 Posts Q2 Results

FREMONT, Calif., Oct. 20, 2008 and ROMANEL-SUR-MORGES, Switzerland, Oct. 21, 2008 — Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the second quarter of Fiscal Year 2009. Sales for Q2 were a record $665 million, up 12 percent from $595 million in the same quarter last year. Operating income was $80 million, essentially unchanged from the same quarter a year ago. Net income was $72 million ($0.39 per share) compared to Q2 FY 2008 net income of $12 million ($0.06 per share), which included an impairment loss of $67.4 million ($0.36 per share) on the value of short-term investments. Gross margin for the second quarter was 34.3 percent compared to 36.3 percent in Q2 FY 2008.

Logitech’s retail sales for Q2 grew by 5 percent year over year, increasing by 35 percent in Asia and 8 percent in EMEA and decreasing by 11 percent in the Americas. Harmony^® remotes (up 17%) and pointing devices (up 16%) were the best-performing categories in retail and video sales grew for the third consecutive quarter (up 9%). OEM sales grew by 56 percent, reflecting exceptionally strong demand for microphones for console gaming.

“We are pleased to deliver double-digit revenue growth in what has become an increasingly challenging environment,” said Gerald P. Quindlen, Logitech president and chief executive officer. “The strong growth in Asia and OEM, as well as in pointing devices and Harmony remotes, underscores the resilience of our geographic and category diversification. The decline in our gross margin was primarily due to the combination of higher input costs and the mix between retail and OEM sales.

“Given the pervasive economic uncertainty, both in North America and Europe, we are tempering our outlook for growth for Fiscal 2009. We remain bullish on the opportunities across all our product categories and we believe we are well positioned to return to annual growth in the mid-teens when conditions improve.”

Outlook

For Fiscal Year 2009, ending March 31, 2009 the Company now expects growth of 6-8 percent in sales and 3-5 percent in operating income, revised from the original target of 15 percent growth for both. The Company continues to expect FY 2009 gross margin to be above its long-term target range of 32-34 percent. Logitech expects its effective tax rate for the year to be approximately 12 percent.

Earnings Teleconference

Logitech will hold an earnings teleconference on Oct. 21, 2008 at 14:30 Central European Summer Time/8:30 a.m. Eastern Daylight Time/5:30 a.m. Pacific Daylight Time to discuss these results as well as the Company’s outlook.A live webcast and replay of the teleconference, including 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).

# # #

This press release contains forward-looking statements, including the statements regarding revised expected sales and operating income growth, gross margin and effective tax rate for Fiscal Year 2009, and an expected return to mid-teens annual growth when conditions improve. The forward-looking statements in this release involve risks and uncertainties that could cause Logitech’s actual performance and results to differ materially from that anticipated in these forward-looking statements. Factors that could cause actual results to differ materially include the depth and length of the current deterioration of general economic conditions, which could lead to significantly reduced consumer demand for our products, the financial distress or bankruptcy of a number of our suppliers and customers, and other adverse consequences, which could significantly harm our operating results; if we fail to successfully innovate in our current and emerging product categories and identify new feature or product opportunities; consumer demand for our products, particularly our newly introduced products, and our ability to accurately forecast it; if we fail to introduce new products in a timely manner at the product cost we expect; the effect of pricing, product, marketing and other initiatives by our competitors, and our reaction to them, on our sales, gross margins and profitability; the sales mix among our lower- and higher-margin products and our geographic sales mix; as well as those additional factors set forth in our periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2008 and our 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 September 30,
CONSOLIDATED STATEMENTS OF INCOME	2008			2007
Net sales	$	664,707		$	595,490
Cost of goods sold		436,633			379,536
Gross profit		228,074			215,954
% of net sales		34.3	%		36.3	%
Operating expenses:
Marketing and selling		84,740			76,463
Research and development		33,351			30,939
General and administrative		29,620			28,149
Total operating expenses		147,711			135,551
Operating income		80,363			80,403
Interest income, net		2,775			3,925
Other income, net		(853	)		(65,023	)
Income before income taxes		82,285			19,305
Provision for income taxes		9,974			7,743
Net income	$	72,311		$	11,562
Shares used to compute net income per share:
Basic		178,630			181,459
Diluted		183,509			188,293
Net income per share:
Basic	$	0.41		$	0.06
Diluted	$	0.39		$	0.06

LOGITECH INTERNATIONAL S.A.

(In thousands, except per share amounts) - Unaudited

	Six Months Ended September 30,
CONSOLIDATED STATEMENTS OF INCOME	2008			2007
Net sales	$	1,173,418		$	1,025,027
Cost of goods sold		771,772			664,287
Gross profit		401,646			360,740
% of net sales		34.2	%		35.2	%
Operating expenses:
Marketing and selling		162,020			141,250
Research and development		66,610			59,704
General and administrative		62,929			55,471
Total operating expenses		291,559			256,425
Operating income		110,087			104,315
Interest income, net		5,327			7,463
Other income, net		(292	)		(63,704	)
Income before income taxes		115,122			48,074
Provision for income taxes		13,505			10,958
Net income	$	101,617		$	37,116
Shares used to compute net income per share:
Basic		178,835			181,630
Diluted		184,154			188,699
Net income per share:
Basic	$	0.57		$	0.20
Diluted	$	0.55		$	0.20

LOGITECH INTERNATIONAL S.A.

(In thousands) - Unaudited

CONSOLIDATED BALANCE SHEETS	September 30, 2008		March 31, 2008		September 30, 2007
Current assets
Cash and cash equivalents	$	455,231	$	482,352	$	265,388
Short term investments		3,418		3,940		101,181
Accounts receivable		467,499		373,619		425,052
Inventories		323,673		245,737		263,396
Other current assets		68,138		60,668		62,437
Total current assets		1,317,959		1,166,316		1,117,454
Property, plant and equipment		105,244		104,461		97,414
Intangible assets
Goodwill		218,776		194,383		186,577
Other intangible assets		31,460		21,730		16,484
Other assets		39,072		40,042		32,946
Total assets	$	1,712,511	$	1,526,932	$	1,450,875
Current liabilities
Accounts payable	$	404,356	$	287,001	$	340,786
Accrued liabilities		168,627		156,094		161,613
Total current liabilities		572,983		443,095		502,399
Other liabilities		126,345		123,793		99,505
Total liabilities		699,328		566,888		601,904
Shareholders’ equity		1,013,183		960,044		848,971
Total liabilities and shareholders’ equity	$	1,712,511	$	1,526,932	$	1,450,875

LOGITECH INTERNATIONAL S.A.

(In thousands) - Unaudited

	Six Months Ended September 30,
CONSOLIDATED STATEMENTS OF CASH FLOWS	2008			2007
Cash flows from operating activities:
Net income	$	101,617		$	37,116
Non-cash items included in net income:
Depreciation		22,501			20,002
Amortization of other intangible assets		3,470			2,437
Share-based compensation expense related to options and purchase rights		11,710			9,935
Write-down of investments		978			67,419
Excess tax benefits from share-based compensation		(6,032	)		(8,285	)
Loss (gain) on cash surrender value of life insurance policies		363			(567	)
Deferred income taxes and other		3,434			(824	)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable		(98,604	)		(103,992	)
Inventories		(82,846	)		(40,810	)
Other assets		(15,298	)		(4,938	)
Accounts payable		120,004			120,026
Accrued liabilities		22,110			15,297
Net cash provided by operating activities		83,407			112,816
Cash flows from investing activities:
Purchases of property, plant and equipment		(25,047	)		(29,917	)
Purchases of short-term investments		—			(379,793	)
Sales of short-term investments		—			425,879
Proceeds from sale of investment		—			11,308
Acquisitions, net of cash acquired		(31,832	)		—
Premiums paid on cash surrender value life insurance policies		(427	)		(238	)
Net cash provided by (used in) investing activities		(57,306	)		27,239
Cash flows from financing activities:
Repayment of short-term debt		—			(11,739	)
Purchases of treasury shares		(76,017	)		(93,562	)
Proceeds from sale of shares upon exercise of options and purchase rights		22,355			25,324
Excess tax benefits from share-based compensation		6,032			8,285
Net cash used in financing activities		(47,630	)		(71,692	)
Effect of exchange rate changes on cash and cash equivalents		(5,592	)		828
Net increase (decrease) in cash and cash equivalents		(27,121	)		69,191
Cash and cash equivalents at beginning of period		482,352			196,197
Cash and cash equivalents at end of period	$	455,231		$	265,388

LOGITECH INTERNATIONAL S.A.

(In thousands, except per share amounts) - Unaudited

SUPPLEMENTAL FINANCIAL INFORMATION	Quarter Ended September 30,				Six Months Ended September 30,
Reconciliation of GAAP to non-GAAP Financial Measures	2008		2007		2008		2007
GAAP net income	$	72,311	$	11,562	$	101,617	$	37,116
Adjustments:
Impairment loss on short-term investments		403		67,419		978		67,419
Non-GAAP net income	$	72,714	$	78,981	$	102,595	$	104,535
GAAP net income per share:
Basic	$	0.41	$	0.06	$	0.57	$	0.20
Diluted	$	0.39	$	0.06	$	0.55	$	0.20
Impairment loss on short-term investments, net of realized gain per share
Basic	$	0.00	$	0.38	$	0.01	$	0.38
Diluted	$	0.00	$	0.36	$	0.01	$	0.36
Non-GAAP net income per share:
Basic	$	0.41	$	0.44	$	0.58	$	0.58
Diluted	$	0.39	$	0.42	$	0.56	$	0.56

We sometimes use information derived from consolidated financial information but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered “non-GAAP financial measures” under the U.S.Securities and Exchange Commission rules. The adjustments between the GAAP and non-GAAP financial measures presented above consist of the impact on Other Income of the impairment loss related to other-than-temporary declines in fair value of short-term investments during the three and six months ended September 30, 2008 and 2007. Our management uses these non-GAAP measures in its financial and operational decision-making. Our management believes these non-GAAP measures, when considered in conjunction with the corresponding GAAP measures, facilitate better comparison by our investors of our current period results with corresponding prior periods.

LOGITECH INTERNATIONAL S.A.

(In thousands, except per share amounts) - Unaudited

	Quarter Ended September 30,						Six Months Ended September 30,
SUPPLEMENTAL FINANCIAL INFORMATION	2008			2007			2008			2007
Depreciation	$	11,906		$	11,176		$	22,501		$	20,002
Amortization of other acquisition-related intangibles		1,865			1,219			3,470			2,437
Operating income		80,363			80,403			110,087			104,315
Operating income before depreciation and amortization		94,134			92,798			136,058			126,754
Capital expenditures		14,419			9,945			25,047			29,917
Net sales by channel:
Retail	$	544,216		$	518,441		$	983,384		$	887,668
OEM		120,491			77,049			190,034			137,359
Total net sales	$	664,707		$	595,490		$	1,173,418		$	1,025,027
Net sales by product family:
Retail - Pointing Devices	$	180,466		$	155,490		$	327,845		$	265,143
Retail - Keyboards & Desktops		108,694			114,500			202,628			196,089
Retail - Audio		116,812			123,628			200,030			216,694
Retail - Video		70,290			64,469			127,478			111,744
Retail - Gaming		39,030			35,726			69,540			57,928
Retail - Remotes		28,924			24,628			55,863			40,070
OEM		120,491			77,049			190,034			137,359
Total net sales	$	664,707		$	595,490		$	1,173,418		$	1,025,027
	Quarter Ended						Six Months Ended
Stock-based Compensation Expense for	September 30,						September 30,
Employee Stock Options and Employee Stock Purchases	2008			2007			2008			2007
Cost of goods sold	$	669		$	636		$	1,400		$	1,340
Marketing and selling		1,989			1,699			3,838			3,645
Research and development		1,147			741			2,109			1,507
General and administration		2,018			1,415			4,364			3,443
Income tax benefit		(1,241	)		(1,662	)		(2,198	)		(2,631	)
Total stock-based compensation expense after income taxes	$	4,582		$	2,829		$	9,513		$	7,304
Stock-based compensation expense for employee stock options and employee stock purchases, net of tax, per share (diluted)	$	0.02		$	0.02		$	0.05		$	0.04