Logitech Delivers Tenth Consecutive Record Year with Strongest Q4 Ever

Logitech International (SWX:LOGN) (Nasdaq:LOGI) today announced record Q4 sales and profits, delivering its tenth consecutive year of double-digit revenue growth and reaching its full year revenue and profitability goals. For the fourth quarter of Fiscal Year 2008, ended March 31, 2008, sales were $601 million, up 17 percent from $513 million in the same quarter last year. Operating income was $66.1 million, up 20 percent from $55.3 million for the same quarter a year ago. Net income was $60.3 million ($0.32 per share), up from $56.2 million ($0.29 per share) in the prior year. Gross margin was 35.6 percent, compared to 34.5 percent in Q4 of FY 2007. Logitech’s retail sales for Q4 grew by 15 percent year over year, increasing by 13 percent in EMEA, 8 percent in the Americas, and 58 percent in Asia Pacific. Across Logitech sales regions, retail growth was fueled by strong sales of cordless mice (up 58 percent) and speakers (up 24 percent). Retail video sales grew by 9 percent. OEM sales grew by 34 percent, driven primarily by strong demand for microphones for console gaming. For the full fiscal year, sales were $2.4 billion, up 15 percent from $2.1 billion in FY 2007. Operating income was $287 million, up 24 percent from $231 million a year ago. Net income was $231 million ($1.23 per share) compared to $230 million ($1.20 per share) in the prior year. Gross margin for the fiscal year was 35.8 percent, compared to 34.3 percent in FY 2007. "We are very pleased with our Q4 performance, including our return to growth in the video category,” said Gerald P. Quindlen, Logitech president and chief executive officer. "Our revenue growth of 17 percent underscores the strength of our product portfolio and our geographic diversity, both key factors in our ability to deliver consistent growth over the last decade. The strong momentum we carry into the new fiscal year, combined with a solid balance sheet, position us to continue delivering double-digit growth in sales and profitability.” Outlook For Fiscal Year 2009, ending March 31, 2009, the Company confirmed its financial targets of 15 percent growth in both sales and operating income. FY 2009 gross margin is expected to be above the high end of the Company’s long-term target range of 32-34 percent. The Company’s tax rate for the year is expected to be approximately 12 percent. Earnings Teleconference Logitech will hold an earnings teleconference on April 22, 2008 at 13:30 Central European Summer Time/7:30 a.m. Eastern Daylight Time/4:30 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. Please visit the Web site at least 10 minutes early to register for the teleconference webcast. Investor Meeting Logitech will hold an investor meeting in New York on May 22, 2008 at 8:30 a.m. Eastern Daylight Time/16:30 Central European Summer Time. A live video webcast and replay of the meeting 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 traded on the SWX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI). This press release contains forward-looking statements, including the statements regarding expected sales and operating income growth, gross margin and effective tax rate for Fiscal Year 2009. 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 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 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 continue to implement our plan to control operating expenses while growing sales; 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 20-F for the fiscal year ended March 31, 2007 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 registered in the United States 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 March 31, CONSOLIDATED STATEMENTS OF INCOME     2008       2007     Net sales $ 601,234 $ 512,734 Cost of goods sold   387,290       335,743   Gross profit   213,944       176,991   % of net sales 35.6 % 34.5 %   Operating expenses: Marketing and selling 84,689 66,475 Research and development 33,462 28,432 General and administrative   29,654       26,786   Total operating expenses   147,805       121,693     Operating income 66,139 55,298   Interest income, net 3,744 3,212 Other income, net   (1,852 )     3,531     Income before income taxes 68,031 62,041 Provision for income taxes   7,693       5,848     Net income $ 60,338     $ 56,193       Shares used to compute net income per share: Basic 180,636 182,738 Diluted 186,299 191,091 Net income per share: Basic $ 0.33 $ 0.31 Diluted $ 0.32 $ 0.29     Other income, net for the quarter ended March 31, 2008 includes an impairment loss of $6.9 million related to the decline in the fair value of short-term investments. LOGITECH INTERNATIONAL S.A.         (In thousands, except per share amounts) - Unaudited     Twelve Months Ended March 31, CONSOLIDATED STATEMENTS OF INCOME   2008   2007   Net sales $ 2,370,496 $ 2,066,569 Cost of goods sold   1,521,378       1,357,044   Gross profit   849,118       709,525   % of net sales 35.8 % 34.3 %   Operating expenses: Marketing and selling 324,451 272,264 Research and development 124,544 108,256 General and administrative   113,443       98,143   Total operating expenses   562,438       478,663     Operating income 286,680 230,862   Interest income, net 15,508 8,733 Other income (expense), net   (39,374 )     15,962     Income before income taxes 262,814 255,557 Provision for income taxes   31,788       25,709     Net income $ 231,026     $ 229,848       Shares used to compute net income per share: Basic 181,362 182,635 Diluted 187,942 190,991 Net income per share: Basic $ 1.27 $ 1.26 Diluted $ 1.23 $ 1.20     Other income (expense), net for the twelve months ended March 31, 2008 includes an impairment loss of $79.8 million related to the decline in fair value of short-term investments, and a net realized gain of $27.8 million on the sales of short-term investments. LOGITECH INTERNATIONAL S.A.       (In thousands) - Unaudited     CONSOLIDATED BALANCE SHEETS   March 31, 2008   March 31, 2007     Current assets Cash and cash equivalents $ 482,352 $ 196,197 Short term investments 3,940 214,625 Accounts receivable 373,619 310,377 Inventories 245,737 217,964 Other current assets   60,668   68,257 Total current assets 1,166,316 1,007,420 Property, plant and equipment 104,461 87,054 Intangible assets Goodwill 194,383 179,991 Other intangible assets 21,730 18,920 Other assets   40,042   34,078 Total assets $ 1,526,932 $ 1,327,463   Current liabilities Short-term debt $ - $ 11,856 Accounts payable 287,001 218,129 Accrued liabilities   168,403   235,080 Total current liabilities 455,404 465,065 Other liabilities   111,484   17,874 Total liabilities 566,888 482,939   Shareholders' equity 960,044 844,524     Total liabilities and shareholders' equity $ 1,526,932 $ 1,327,463 LOGITECH INTERNATIONAL S.A.       (In thousands) - Unaudited   SUPPLEMENTAL FINANCIAL INFORMATION Quarter Ended Twelve Months Ended Reconciliation of GAAP to non-GAAP Financial Measures   March 31 2008   March 31 2008   GAAP net income $ 60,338 $ 231,026 Adjustments: Impairment loss on short-term investments 6,900 79,823 Realized gain on sale of short-term investments - (33,712 ) Realized loss on sale of short-term investments   -   5,951     6,900   52,062     Non-GAAP net income $ 67,238 $ 283,088     GAAP net income per share: Basic $ 0.33 $ 1.27 Diluted $ 0.32 $ 1.23   Impairment loss on short-term investments, net of realized gain per share Basic $ 0.04 $ 0.29 Diluted $ 0.04 $ 0.28     Non-GAAP net income per share: Basic $ 0.37 $ 1.56 Diluted $ 0.36 $ 1.51     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 (Expense) of the impairment loss related to other-than-temporary declines in fair value of short-term investments during the three and twelve months ended March 31, 2008, and the realized gain/loss on sales of short-term investments during the twelve months ended March 31, 2008. 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) - Unaudited   Quarter Ended Twelve Months Ended March 31 March 31 SUPPLEMENTAL FINANCIAL INFORMATION     2008       2007       2008       2007     Depreciation $ 10,801 $ 8,944 $ 43,831 $ 35,239 Amortization of other acquisition-related intangibles 1,736 1,591 5,391 4,876 Operating income 66,139 55,298 286,680 230,862 Operating income before depreciation and amortization 78,676 65,833 335,902 270,977 Capital expenditures 16,611 10,605 57,900 47,246     Net sales by channel: Retail $ 527,001 $ 457,205 $ 2,067,288 $ 1,844,395 OEM   74,233     55,529     303,208     222,174   Total net sales $ 601,234   $ 512,734   $ 2,370,496   $ 2,066,569       Net sales by product family: Retail - Pointing Devices $ 167,838 $ 121,632 $ 622,074 $ 508,449 Retail - Keyboards & Desktops 117,255 110,411 458,434 372,266 Retail - Audio 113,785 98,553 478,455 408,314 Retail - Video 59,981 54,980 238,728 314,514 Retail - Gaming 32,865 40,176 146,016 149,113 Retail - Remotes 35,277 31,453 123,581 91,739 OEM   74,233     55,529     303,208     222,174   Total net sales $ 601,234   $ 512,734   $ 2,370,496   $ 2,066,569       Stock-based Compensation Expense for Quarter EndedMarch 31   Twelve Months EndedMarch 31   Employee Stock Options and Employee Stock Purchases   2008 2007 2008 2007   Cost of goods sold $ 704 $ - $ 2,706 $ 2,077 Marketing and selling 1,908 1,772 7,696 7,167 Research and development 1,051 824 3,505 3,151 General and administration 2,118 1,874 7,132 7,069 Income tax benefit   (1,546 )   (2,215 )   (4,773 )   (4,526 )   Total stock-based compensation expense after income taxes $ 4,235   $ 2,255   $ 16,266   $ 14,938     Stock-based compensation expense for employee stock options and employee stock purchases, net of tax, per share (diluted) $ 0.02 $ 0.01 $ 0.09 $ 0.07