Press Releases

Logitech Delivers Best-Ever Q2 Sales and Profit

FREMONT, Calif., Oct. 18, 2006 and ROMANEL-SUR-MORGES, Switzerland, Oct. 19, 2006 — Logitech International (SWX: LOGN) (Nasdaq: LOGI) today announced record Q2 sales and profit, posting its thirty-second consecutive quarter of double-digit revenue growth. Sales for the second quarter of Fiscal Year 2007, ended September 30, 2006, were $502 million, up 19 percent from $422 million for the same quarter one year ago.

For Q2, GAAP operating income was $52 million, an increase of 36 percent over Q2 last year, and includes $5.2 million in costs for stock-based compensation. GAAP net income, including $4.1 million in costs for stock-based compensation (net of related tax benefit), was $49 million ($0.26 per share), up 36 percent year over year. GAAP gross margin was 34.5 percent.

Non-GAAP operating income, which excludes stock-based compensation, was $57 million, up 50 percent from last year´s operating income of $38.2 million. Non-GAAP net income for Q2 was $53 million ($0.28 per share), up 47 percent compared with net income of $36.2 million ($0.18 per share) in the prior year. Non-GAAP gross margin was 34.6 percent, compared to 31.4 percent for the same quarter last year and 30.9 percent in Q1 FY 2007 — a year-over-year and sequential improvement of more than 300 basis points. (See Note 1.)

Logitech´s retail sales for the quarter increased by 21 percent, growing by 23 percent in the Americas, 22 percent in EMEA, and 17 percent in Asia Pacific. Retail sales were driven by continued strong growth in video and audio products (up 43 percent and 21 percent respectively), and the sustained performance in cordless products (up 22 percent), primarily due to the market enthusiasm for the breakthrough MX™ Revolution and VX™ Revolution mice. The Company´s OEM sales grew by 3 percent.

“We are delighted by these outstanding results,” said Guerrino De Luca, Logitech president and chief executive officer. “One of the highlights of Q2 was delivering on our projected substantial year-over-year and sequential improvement in gross margin. Our ability to achieve one of the best gross-margin quarters in our history was driven by the introduction of stellar products, many of which — retail mice and keyboards in particular — deliver higher margins than the products they replaced. With strong demand from our channel partners for our new premium peripherals for the PC, a lineup of new video and audio devices for Internet communications, and a set of must-haves for digital music, Logitech is entering the holiday season with our strongest portfolio ever and a high degree of confidence.”

Outlook
Logitech increased its targets for the current fiscal year, ending March 31, 2007. The Company now expects sales to grow 17 percent (previously 15 percent), year over year, and non-GAAP operating income to increase by 20-25 percent (previously 15 percent) compared with last year. Gross margin is expected to be above the mid-point of the Company´s long-term range of 32-34 percent; the Company had expected gross margin to be at the low end of the range. Non-GAAP operating income excludes the costs of stock-based compensation. The Company continues to expect the net costs of stock-based compensation for FY 2007, reflected in net income, to be between $16 and $19 million.

Acquisition of Slim Devices
In a separate announcement, Logitech today disclosed the acquisition of Slim Devices, for a cash payment of $20 million, plus a possible performance-based payment tied to certain revenue targets. Slim Devices is a privately held, Mountain View, Calif. company that specializes in network-based audio systems for digital music. The impact of the acquisition on FY 2007 is expected to be immaterial.

According to De Luca, “The acquisition of Slim Devices builds on our foundation of innovation in digital music to address an emerging market, with solutions for people who want to listen to and control their digital music and Internet radio, anywhere in the home. While this acquisition is not expected to have a material impact on the results for this fiscal year, we believe the long-term potential to be very promising.”

Effective Date of Logitech ADR-for-Share Exchange
Logitech also announced that it expects its previously announced ADR-for-share exchange to be effective on Monday, October 23, 2006. The last day of trading of Logitech ADRs will be Friday, October 20, 2006, and the first day of trading of Logitech shares on the Nasdaq Global Select Market is expected to be Monday, October 23, 2006. Logitech ADRs held in brokerage or bank accounts will be automatically exchanged for Logitech shares on, or soon after, the effective date, without any action by beneficial owners.

Earnings Teleconference
Logitech will hold an earnings teleconference on Oct. 19, 2006 at 14:00 Central European Time/8:00 a.m. Eastern Daylight Time/5:00 a.m. Pacific Daylight Time to discuss these results as well as guidance for Fiscal Year 2007. 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. Please visit the Web site at least 10 minutes early to register for the teleconference webcast.

About Logitech
Founded in 1981, Logitech designs, manufactures and markets personal peripherals that enable people to effectively work, play, and communicate in the digital world. Logitech International is a Swiss public company traded on the SWX Swiss Exchange (LOGN) and in the U.S. on the Nasdaq Global Select Market (LOGI).

Note 1. A reconciliation between non-GAAP operating income, net income, and gross margin, and GAAP operating income, net income, and gross margin is set forth in the second supplemental schedule of the attached tables along with additional information regarding the use of these non-GAAP measures.

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This press release contains forward-looking statements, including the statements regarding expected sales, operating income and gross margin for Fiscal Year 2007. These forward-looking statements involve risks and uncertainties that could cause Logitech´s actual performance to differ materially from that anticipated in these forward-looking statements. Factors that could cause actual results to differ materially include consumer demand for our products, particularly our newly introduced products, and our ability to accurately forecast it; the effect of pricing, product, marketing and other initiatives by our competitors, and our reaction to them, on our sales, gross margins and profitability; our ability to match production to demand and to coordinate the worldwide manufacturing and distribution of our products in a timely and cost-effective manner; the sales mix among our lower- and higher-margin products; as well as those additional factors set forth in our periodic filings with the Securities and Exchange Commission, including our annual report on Form 20-F for the Fiscal Year ended March 31, 2006 and our quarterly reports on Form 6-K available at www.sec.gov. Logitech does not undertake to update any forward-looking statements.

Logitech, the Logitech logo and other Logitech marks are owned by Logitech and may be registered. 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.