LOGITECH INTERNATIONAL SA (Form: 10-Q, Received: 11/04/2008 14:58:04)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended September 30, 2008

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 0-29174

LOGITECH INTERNATIONAL S.A.

(Exact name of registrant as specified in its charter)

Canton of Vaud, Switzerland

None

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

Logitech International S.A.

Apples, Switzerland

c/o Logitech Inc.

6505 Kaiser Drive

Fremont, California 94555

(Address of principal executive offices and zip code)

(510) 795-8500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer x		Accelerated filer ¨		Non-accelerated filer ¨ (Do not check if a smaller reporting company)		Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨ No x

As of October 1, 2008, there were 178,448,329 shares of the Registrant’s share capital outstanding.

TABLE OF CONTENTS


		Page

Part I	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

Item 4.	Controls and Procedures	44

Part II	OTHER INFORMATION

Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 4.	Submission of matters to a vote of security holders	52

Item 6.	Exhibit Index	54

Signatures		55

Exhibits

In this document, unless otherwise indicated, references to the “Company” or “Logitech” are to Logitech International S.A., its consolidated subsidiaries and predecessor entities. Unless otherwise specified, all references to U.S. dollar, dollar or $ are to the United States dollar, the legal currency of the United States of America. All references to CHF are to the Swiss franc, the legal currency of Switzerland.

Logitech, the Logitech logo, and the Logitech products referred to herein are either the trademarks or the registered trademarks of Logitech. All other trademarks are the property of their respective owners.

PART I – FINANCIAL INFORMATION

ITEM 1.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Financial Statement Description		Page

• Condensed Consolidated Statements of Income for the three and six months ended September 30, 2008 and 2007		4

• Condensed Consolidated Balance Sheets as of September 30, 2008 and March 31, 2008		5

• Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2008 and 2007		6

• Condensed Consolidated Statements of Changes in Shareholders’ Equity for the six months ended September 30, 2008 and 2007		7

• Notes to Condensed Consolidated Financial Statements		8

LOGITECH INTERNATIONAL S.A.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)


	Three months ended September 30,						Six months ended September 30,
	2008			2007			2008			2007
	(Unaudited)
Net sales	$	664,707		$	595,490		$	1,173,418		$	1,025,027
Cost of goods sold		436,633			379,536			771,772			664,287

Gross profit		228,074			215,954			401,646			360,740
Operating expenses:
Marketing and selling		84,740			76,463			162,020			141,250
Research and development		33,351			30,939			66,610			59,704
General and administrative		29,620			28,149			62,929			55,471

Total operating expenses		147,711			135,551			291,559			256,425
Operating income		80,363			80,403			110,087			104,315
Interest income, net		2,775			3,925			5,327			7,463
Other expense, net		(853	)		(65,023	)		(292	)		(63,704	)

Income before income taxes		82,285			19,305			115,122			48,074
Provision for income taxes		9,974			7,743			13,505			10,958

Net income	$	72,311		$	11,562		$	101,617		$	37,116

Net income per share:
Basic	$	0.41		$	0.06		$	0.57		$	0.20
Diluted	$	0.39		$	0.06		$	0.55		$	0.20
Shares used to compute net income per share:
Basic		178,630			181,459			178,835			181,630
Diluted		183,509			188,293			184,154			188,699

The accompanying notes are an integral part of these condensed consolidated financial statements.

LOGITECH INTERNATIONAL S.A.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	September 30, 2008			March 31, 2008
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	455,231		$	482,352
Short-term investments		3,418			3,940
Accounts receivable		467,499			373,619
Inventories		323,673			245,737
Other current assets		68,138			60,668

Total current assets		1,317,959			1,166,316
Property, plant and equipment		105,244			104,461
Goodwill		218,776			194,383
Other intangible assets		31,460			21,730
Other assets		39,072			40,042

Total assets	$	1,712,511		$	1,526,932

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	404,356		$	287,001
Accrued liabilities		168,627			156,094

Total current liabilities		572,983			443,095
Other liabilities		126,345			123,793

Total liabilities		699,328			566,888

Commitments and contingencies
Shareholders’ equity:
Shares, par value CHF 0.25 - 191,606,620 issued and authorized and 50,000,000 conditionally authorized at September 30, 2008; 231,606,620 authorized, 60,661,860 conditionally authorized and 191,606,620 issued at March 31, 2008		33,370			33,370
Additional paid-in capital		49,797			49,821
Less shares in treasury, at cost, 13,158,291 at September 30, 2008 and 12,431,093 at March 31, 2008		(373,580	)		(338,293	)
Retained earnings		1,336,246			1,234,629
Accumulated other comprehensive loss		(32,650	)		(19,483	)

Total shareholders’ equity		1,013,183			960,044

Total liabilities and shareholders’ equity	$	1,712,511		$	1,526,932

The accompanying notes are an integral part of these condensed consolidated financial statements.

LOGITECH INTERNATIONAL S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Six months ended September 30,
	2008			2007
	(Unaudited)
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		979			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		(99,553	)		(103,992	)
Inventories		(83,760	)		(40,810	)
Other assets		(13,611	)		(4,938	)
Accounts payable		118,930			120,026
Accrued liabilities		23,359			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

Supplemental cash flow information:
Interest paid	$	138		$	7
Income taxes paid	$	6,548		$	4,403

The accompanying notes are an integral part of these condensed consolidated financial statements.

LOGITECH INTERNATIONAL S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Registered shares			Additional paid-in capital			Treasury shares					Retained earnings		Accumulated other comprehensive loss			Total
	Shares	Amount		Additional paid-in capital			Shares		Amount			Retained earnings		Accumulated other comprehensive loss			Total
March 31, 2007	191,606	$	33,370	$	72,779		9,364		$	(217,073	)	$	995,606	$	(40,158	)	$	844,524
Net income	—		—		—		—			—			37,116		—			37,116
Cumulative translation adjustment	—		—		—		—			—			—		13,968			13,968
Minimum pension liability adjustment	—		—		—		—			—			—		306			306
Deferred hedging losses	—		—		—		—			—			—		(2,365	)		(2,365	)

Total comprehensive income																		49,025

Adjustment for the adoption of FASB
Interpretation No. 48 (FIN 48)	—		—		—		—			—			8,314		—			8,314
Tax benefit from exercise of stock options	—		—		5,453		—			—			—		—			5,453
Purchase of treasury shares	—		—				3,466			(93,562	)							(93,562	)
Sale of shares upon exercise of options and purchase rights	—		—		(27,256	)	(2,510	)		52,580			—		—			25,324
Share-based compensation expense related to employee stock options and stock purchase plan	—		—		9,893		—			—			—		—			9,893

September 30, 2007	191,606	$	33,370	$	60,869		10,320		$	(258,055	)	$	1,041,036	$	(28,249	)	$	848,971


March 31, 2008	191,606	$	33,370	$	49,821		12,431		$	(338,293	)	$	1,234,629	$	(19,483	)	$	960,044
Net income	—		—		—		—			—			101,617		—			101,617
Cumulative translation adjustment	—		—		—		—			—			—		(13,772	)		(13,772	)
Minimum pension liability adjustment	—		—		—		—			—			—		148			148
Unrealized gain on investment	—		—		—		—			—			—		457			457

Total comprehensive income																		88,450

Tax benefit from exercise of stock options	—		—		6,527		—			—			—		—			6,527
Purchase of treasury shares	—		—				2,603			(76,017	)							(76,017	)
Sale of shares upon exercise of options and purchase rights	—		—		(18,375	)	(1,876	)		40,730			—		—			22,355
Share-based compensation expense related to employee stock options and stock purchase plan	—		—		11,824		—			—			—		—			11,824

September 30, 2008	191,606	$	33,370	$	49,797		13,158		$	(373,580	)	$	1,336,246	$	(32,650	)	$	1,013,183

The accompanying notes are an integral part of these condensed consolidated financial statements.

LOGITECH INTERNATIONAL S.A.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — The Company

Logitech International S.A. is a global leader in peripherals for personal computers and other digital platforms, developing and marketing innovative products in PC navigation, Internet communications, digital music, home-entertainment control, interactive gaming and wireless devices. For the PC, the Company’s products include mice, trackballs, keyboards, gaming controllers, multimedia speakers, headsets, webcams and 3D control devices. For digital music devices, the Company’s products include speakers and headphones. For gaming consoles, the Company offers a range of controllers and other accessories. In addition, Logitech offers wireless music solutions for the home, advanced remote controls for home entertainment systems and a PC-based video security solution for a home or small business. The Company generates revenues from sales of its products to a worldwide network of retail distributors and resellers and to original equipment manufacturers (“OEMs”). The Company’s sales to its retail channels comprise the large majority of its revenues.

Logitech was founded in Switzerland in 1981, and Logitech International S.A. has been the parent holding company of Logitech since 1988. Logitech International S.A. is a Swiss holding company with its registered office in Apples, Switzerland, which conducts its business through subsidiaries in the Americas, Europe, Middle East, Africa and Asia Pacific. Shares of Logitech International S.A. are listed on both the Nasdaq Global Select Market, under the trading symbol LOGI, and the SIX Swiss Exchange, under the trading symbol LOGN.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements include the accounts of Logitech and its subsidiaries. All intercompany balances and transactions have been eliminated. The condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and therefore do not include all the information required for non-condensed financial statements. They should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2008 included in its Annual Report on Form 10-K. Certain prior year financial statement amounts have been reclassified to conform to the current year presentation with no impact on previously reported net income.

In the opinion of management, these financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented. Operating results for the three and six months ended September 30, 2008 are not necessarily indicative of the results that may be expected for the year ending March 31, 2009 or any future periods.

Fiscal Year

The Company’s fiscal year ends on March 31. Interim quarters are thirteen-week periods, each ending on a Friday. For purposes of presentation, the Company has indicated its quarterly periods as ending on the month end.

Changes in Significant Accounting Policies

Effective April 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), which defines fair value, establishes a fair value hierarchy and requires expanded disclosures about fair value measurements. The impact of adopting SFAS 157 was not material to our consolidated financial statements.

The Company also adopted Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Liabilities – including an amendment of FASB Statement No. 115 (“SFAS 159”) as of April 1, 2008. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. The Company did not elect the fair value option for any financial assets and liabilities existing at April 1, 2008 which had not previously been carried at fair value. Therefore, the adoption of SFAS 159 has not impacted our consolidated financial statements. Any future transacted financial assets or liabilities will be evaluated for the fair value election as prescribed by SFAS 159.

There have been no other substantial changes in our significant accounting policies during the three and six months ended September 30, 2008 compared with the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2008.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect reported amounts of assets, liabilities, net sales and expenses, and the disclosure of contingent assets and liabilities. Although these estimates are based on management’s best knowledge of current events and actions that may impact the Company in the future, actual results could differ from those estimates.

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations (“SFAS 141R”). SFAS 141R will significantly change the accounting for business combinations in a number of areas including the treatment of contingent consideration, contingencies, acquisition costs, in-process research and development and restructuring costs. SFAS 141R is effective for fiscal years beginning after December 15, 2008 and, as such, we will adopt this standard for any future acquisitions beginning in fiscal year 2010, except that resolution of certain tax contingencies and adjustments to valuation allowances related to business combinations, which previously were adjusted to goodwill, will be adjusted to income tax expense for all such adjustments after April 1, 2009, regardless of the date of the original business combination.

In February 2008, the FASB issued FASB Staff Position No. 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”). FSP 157-2 permits a one-year deferral in applying the measurement provisions of SFAS 157 to non-financial assets and non-financial liabilities that are not recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually). The Company will adopt FSP 157-2 in the first quarter of fiscal year 2010. We are currently evaluating the impact FSP 157-2 will have on the Company’s consolidated financial statements and disclosures.

In October 2008, the FASB issued FASB Staff Position No. 157-3, Determining the Fair Value of a Financial Asset when the Market for that Asset is not Active , (“FSP 157-3”). FSP 157-3 clarifies the application of SFAS 157 in an inactive market and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP 157-3 is effective immediately and was adopted by the Company as of October 1, 2008. The impact of adopting FSP 157-3 will not be material to the Company’s consolidated financial statements.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133 (“SFAS 161”). This Statement requires enhanced disclosures about an entity’s derivative and hedging activities. SFAS 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. We will adopt SFAS 161 in the first quarter of fiscal year 2010, and we are evaluating the disclosure impact.

In April 2008, the FASB issued FASB Staff Position No. 142-3, Determination of the Useful Life of Intangible Assets (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). The objective of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company will adopt FSP 142-3 in the first quarter of fiscal year 2010 and is currently evaluating the potential impact that the adoption of FSP 142-3 may have on its consolidated financial statements.

In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”). SFAS 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. GAAP for nongovernmental entities. SFAS 162 is effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles . The Company is currently evaluating the impact, if any, of SFAS 162 on its consolidated financial statements.

Note 3 — Net Income per Share

The computations of basic and diluted net income per share for the Company were as follows (in thousands except per share amounts):


	Three months ended September 30,				Six months ended September 30,
	2008		2007		2008		2007
Net income	$	72,311	$	11,562	$	101,617	$	37,116
Weighted average shares - basic		178,630		181,459		178,835		181,630
Effect of potentially dilutive stock options and stock purchase plan		4,879		6,834		5,319		7,069

Weighted average shares - diluted		183,509		188,293		184,154		188,699

Net income per share - basic	$	0.41	$	0.06	$	0.57	$	0.20
Net income per share - diluted	$	0.39	$	0.06	$	0.55	$	0.20

Share equivalents attributable to outstanding stock options of 4,997,925 and 1,608,700 for the three months ended September 30, 2008 and 2007, and 4,635,060 and 2,695,900 for the six months ended September 30, 2008 and 2007, were excluded from the calculation of diluted net income per share because the exercise prices of these options were greater than the average market price of the Company’s shares, and therefore their inclusion would have been anti-dilutive.

Employee equity share options, non-vested shares and similar equity instruments granted by the Company are treated as potential shares in computing diluted net income per share. Diluted shares outstanding include the dilutive effect of in-the-money options which is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount that the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are assumed to be used to

repurchase shares. The following table presents the effect of in-the-money employee stock options treated as potential shares in computing diluted earnings per share (in thousands except per share amounts):


	Three months ended September 30,						Six months ended September 30,
	2008			2007			2008			2007
In-the-money employee stock options treated as potential shares		11,943			15,933			12,635			15,485
Percentage of basic weighted average shares outstanding		6.7	%		8.8	%		7.1	%		8.5	%
Average share price	$	25.77		$	27.22		$	27.63		$	27.05

The following table illustrates the dilution effect of stock options granted and exercised (in thousands):


	Three months ended September 30,				Six months ended September 30,
	2008		2007		2008		2007
Basic weighted average shares outstanding as of September 30	178,630		181,459		178,835		181,630
Stock options granted	146		89		452		698
Stock options canceled, forfeited, or expired	(101	)	(191	)	(276	)	(239	)

Net options granted	45		(102	)	176		459
Grant dilution ⁽¹⁾	0.0	%	-0.1	%	0.1	%	0.3	%
Stock options exercised	492		1,054		1,544		2,319
Exercise dilution ⁽²⁾	0.3	%	0.6	%	0.9	%	1.3	%

(1)	The percentage of grant dilution is computed based on net options granted as a percentage of basic weighted average shares outstanding.

(2)	The percentage of exercise dilution is computed based on options exercised as a percentage of weighted average shares outstanding.

Note 4 — Fair Value Measurements

As described in Note 2, the Company adopted SFAS 157 affective April 1, 2008. SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. SFAS 157 establishes the following three-level fair value hierarchy that prioritizes the inputs used to measure fair value:

•

Level 1 – Quoted prices in active markets for identical assets or liabilities.

•

Level 2 – Observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following table presents the Company’s financial assets and liabilities that were accounted for at fair value as of September 30, 2008, classified by the level within the fair value hierarchy (in thousands):


	Level 1		Level 2		Level 3
Cash and cash equivalents	$	455,231	$	—	$	—
Short-term investments		—		—		3,418
Foreign exchange derivative assets		220

Total assets at fair value	$	455,451	$	—	$	3,418

Foreign exchange derivative liabilities	$	488	$	—	$	—

Total liabilities at fair value	$	488	$	—	$	—

Notes 5 and 14 describe the inputs and valuation techniques used to determine fair value.

Note 5 — Cash and Cash Equivalents and Short-term Investments

Cash and cash equivalents consist of bank demand deposits and time deposits. The time deposits have terms of less than 40 days. Cash and cash equivalents are carried at cost, which is equivalent to fair value.

The Company’s short-term investments portfolio as of September 30, 2008 and March 31, 2008 consisted of auction rate securities collateralized by residential and commercial mortgages. The short-term investments are classified as available-for-sale and reported at estimated fair value. Auction rate securities generally have maturity dates greater than 10 years, with interest rates that typically reset through an auction every 28 days. All our short-term investments as of September 30, 2008 have maturity dates in excess of 10 years. Since August 2007, auctions for these investments have failed. Consequently, the investments are not currently liquid and the Company will not be able to realize the proceeds, if any, from these investments until a future auction of these investments is successful or a buyer is found outside of the auction process.

The fair value of our short-term investments is determined by estimating the values of the underlying collateral using published mortgage indices or interest rate spreads for comparably-rated collateral and applying discounted cash flow or option pricing methods to the estimated collateral value. The mortgage indices and spreads are adjusted for factors such as the issuance date of the auction rate security and the rating of the underlying assets. In addition, inputs to the valuation methods include factors such as the timing and amount of cash flow streams, the default risk underlying the collateral, discount rates, and overall capital market liquidity. Under SFAS 157, such adjustments indicate the inputs fall within Level 3 of the fair value hierarchy.

The following table presents the change in fair value of the Company’s short-term investments during the six months ended September 30, 2008:


Balance as of March 31, 2008	$	3,940
Unrealized loss		(576	)

Balance as of June 30, 2008		3,364
Unrealized loss		(403	)
Unrealized gain		457

Balance as of September 30, 2008	$	3,418

The par value of our short-term investments portfolio at September 30, 2008 and March 31, 2008 was $47.5 million. The unrealized loss recorded in other income, net during the three and six months ended September 30, 2008 related to the other-than-temporary decline in the estimated fair value of these investments due to continuing declines in the residential mortgage markets. During the three months ended September 30, 2008, the Company recorded an unrealized gain of $0.5 million in accumulated other comprehensive loss, due to an increase in the fair value of certain short-term investments. As of March 31, 2008, the Company had not recognized any unrealized gains or losses related to its short-term investments in other comprehensive income.

Note 6 — Acquisitions

In August 2008, the Company acquired the Ultimate Ears companies (“Ultimate Ears”), a privately held group of companies that offers a range of earphones for portable-music enthusiasts as well as a line of custom-fit in-ear monitors for music professionals. The acquisition is part of the Company’s strategy to expand its portfolio of digital audio products, providing more options for portable music listening.

Total consideration paid was $34.3 million, which includes $0.5 million in transaction costs. Under the terms of the purchase agreement, the Company acquired all of the outstanding equity interests of Ultimate Ears for $33.8 million, including a $6.9 million holdback provision relating to potential indemnification claims, of which $1.8 million has been recorded as a liability in the accompanying consolidated financial statements and $5.1 million has been held in escrow. The holdback provision has been included as part of the purchase price allocation below.

The acquisition has been accounted for using the purchase method of accounting. Accordingly, the total consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Fair values were determined by Company management based on information available at the date of acquisition. The results of operations of Ultimate Ears were included in Logitech’s consolidated financial statements from the date of acquisition, and were not material to the Company’s reported results.

The preliminary allocation of total consideration, including transaction costs, to the assets acquired and liabilities assumed based on the estimated fair value of Ultimate Ears was as follows (in thousands):


	August 19, 2008			Estimated Life
Tangible assets acquired	$	4,182
Intangible assets acquired
Existing technology		5,900		4 years
Patents and core technology		1,900		4 years
Trademark/trade name		2,900		5 years
Customer relationships and other		2,500		5 years
Goodwill		24,393		—

		41,775
Liabilities assumed		(2,236	)
Deferred tax liability, net		(5,235	)

Total consideration	$	34,304

The existing technology of Ultimate Ears relates to the technical components used in the in-ear monitors and earplugs. The value of the technology was determined based on the present value of estimated expected cash flows attributable to the technology. The patents and core technology represent awarded patents, filed patent applications and core architectures used in Ultimate Ears’ current and planned future products. Trademark/trade name relates to the Ultimate Ears brand names. The value of the patents, core technology and trademark/trade name was estimated by capitalizing the estimated profits saved as a result of acquiring or licensing the asset. Customer relationships and other relates to Ultimate Ears’ existing customer base, valued based on projected discounted cash flows generated from customers in place. The intangible assets acquired are amortized on a straight-line basis over their estimated useful lives. The goodwill associated with the acquisition is not subject to amortization and is not expected to be deductible for income tax purposes. The deferred tax liability relates to the acquired intangible assets which are also not expected to be deductible for income tax purposes.

Note 7 — Balance Sheet Components

The following provides the components of certain balance sheet amounts (in thousands):


	September 30, 2008			March 31, 2008
Accounts receivable:
Accounts receivable	$	602,423		$	504,406
Allowance for doubtful accounts		(2,809	)		(2,497	)
Allowance for returns		(21,705	)		(21,099	)
Cooperative marketing arrangements		(46,078	)		(41,516	)
Customer incentive programs		(53,328	)		(49,341	)
Price protection		(11,004	)		(16,334	)

	$	467,499		$	373,619

Inventories:
Raw materials	$	64,527		$	46,315
Work-in-process		—			13
Finished goods		259,146			199,409

	$	323,673		$	245,737

Other current assets:
Tax and VAT refund receivables	$	29,276		$	23,882
Deferred taxes		19,136			18,961
Prepaid expenses and other		19,726			17,825

	$	68,138		$	60,668

Property, plant and equipment:
Plant and buildings	$	31,783		$	33,815
Equipment		126,846			123,104
Computer equipment		45,549			47,027
Computer software		56,292			51,552

		260,470			255,498
Less: accumulated depreciation		(175,810	)		(167,153	)

		84,660			88,345
Construction-in-progress		17,465			12,866
Land		3,119			3,250

	$	105,244		$	104,461

Other assets:
Deferred taxes	$	19,324		$	22,618
Cash surrender value of life insurance contracts		13,134			12,793
Deposits and other		6,614			4,631

	$	39,072		$	40,042

Accrued liabilities:
Accrued marketing expenses	$	30,207		$	30,764
Accrued personnel expenses		48,009			52,895
Income taxes payable - current		13,196			15,051
Accrued freight and duty		18,180			13,969
Other accrued liabilities		59,035			43,415

	$	168,627		$	156,094

Long-term liabilities:
Income taxes payable - non-current	$	99,188		$	95,013
Obligation for management deferred compensation		14,069			14,934
Other long-term liabilities		13,088			13,846

	$	126,345		$	123,793

Note 8 — Goodwill and Other Intangible Assets

The following table summarizes the activity in the Company’s goodwill account during the six months ended September 30, 2008 (in thousands):


Balance as of March 31, 2008	$	194,383
Additions		24,393

Balance as of September 30, 2008	$	218,776

Additions to goodwill were related to our acquisition of Ultimate Ears during the three months ended September 30, 2008. The Company intends to fully integrate Ultimate Ears’ business into its existing operations, and discrete financial information for Ultimate Ears will not be maintained. Accordingly, the acquired goodwill will be evaluated for impairment at the total enterprise level. The Company performs its annual goodwill impairment test during its fourth fiscal quarter or more frequently if events or circumstances indicate that an impairment may have occurred.

The Company’s acquired other intangible assets subject to amortization were as follows (in thousands):


	September 30, 2008							March 31, 2008
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trademark/tradename	$	24,223	$	(17,820	)	$	6,403	$	21,385	$	(16,896	)	$	4,489
Technology		45,323		(23,178	)		22,145		37,523		(20,911	)		16,612
Customer contracts		4,818		(1,906	)		2,912		2,318		(1,689	)		629

	$	74,364	$	(42,904	)	$	31,460	$	61,226	$	(39,496	)	$	21,730

During the six months ended September 30, 2008, changes in the gross carrying value of other intangible assets related to our acquisition of Ultimate Ears and foreign currency translation adjustments.

For the three months ended September 30, 2008 and 2007, amortization expense for other intangible assets was $1.9 million and $1.2 million. For the six months ended September 30, 2008 and 2007, amortization expense for other intangible assets was $3.5 million and $2.4 million. The Company expects that amortization expense for the six-month period ending March 31, 2009 will be $3.6 million, and annual amortization expense for fiscal years 2010, 2011, 2012 and 2013 will be $7.6 million, $7.4 million, $6.6 million and $4.3 million; and $2.0 million in total thereafter.

Note 9 — Financing Arrangements

The Company had several uncommitted, unsecured bank lines of credit aggregating $126.6 million at September 30, 2008. There are no financial covenants under these lines of credit with which the Company must comply. At September 30, 2008, the Company had no outstanding borrowings under these lines of credit.

Note 10 — Shareholders’ Equity

Share Capital

The Company’s nominal share capital is CHF 47,901,655, consisting of 191,606,620 shares with a par value of CHF 0.25 each, all of which were issued and 13,158,291 of which were held in treasury as of September 30, 2008.

Pursuant to the Company’s Articles of Incorporation, the Board of Directors was previously authorized to increase the share capital of the Company through the issuance of up to 40,000,000 shares. This authorization expired in July 2008.

In September 2008, the Company’s shareholders approved an amendment to the Company’s Articles of Incorporation which decreased the conditional capital reserved for potential issuance on the exercise of rights granted under the Company’s employee equity incentive plans from 60,661,860 shares to 25,000,000 shares. The Board of Directors determined that the reduced amount of conditional capital was adequate to cover employee equity incentives without impacting the ability of the Company to maintain employee equity incentive plans.

In September 2008, the shareholders also approved the creation of conditional capital representing the issuance of up to 25,000,000 shares to cover any conversion rights under a future convertible bond issuance. The Company has no present intention to issue convertible bonds. However, this conditional capital was created in order to provide financing flexibility for future expansion, investments or acquisitions.

Share Repurchases

During the three and six months ended September 30, 2008 and 2007, the Company had the following approved share buyback programs in place (in thousands):


Date of Announcement	Approved Buyback Amount		Expiration Date	Completion Date	Amount Remaining
June 2007	$	250,000	June 2010	—	$	128,871
May 2006	$	250,000	June 2009	February 2008	$	—

In addition, in September 2008, the Company’s Board of Directors approved a new share buyback program, which authorizes the Company to invest up to $250 million to purchase its own shares. The September 2008 program is subject to the approval of the Swiss Takeover Board and will begin after the Company completes its current share buyback program of $250 million.

During the three and six months ended September 30, 2008 and 2007, the Company repurchased shares under its share buyback programs as follows (in thousands):


	Three months ended September 30, (1)						Six months ended September 30, (1)
Date of Announcement	2008			2007			2008			2007
Date of Announcement	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
June 2007	1,051	$	27,000	—	$	—	2,603	$	76,017	—	$	—
May 2006	—		—	1,526	$	41,559				3,466	$	93,562

	1,051	$	27,000	1,526	$	41,559	2,603	$	76,017	3,466	$	93,562

⁽¹⁾	Represents the amount in U.S. dollars, calculated based on exchange rates on the repurchase dates.

Note 11 — Comprehensive Income

Comprehensive income is defined as the total change in shareholders’ equity during the period other than from transactions with shareholders. Comprehensive income consists of net income and other comprehensive income, a component of shareholders’ equity.

Comprehensive income for the three and six months ended September 30, 2008 and 2007 was as follows (in thousands):


	Three months ended September 30,						Six months ended September 30,
	2008			2007			2008			2007
Net income	$	72,311		$	11,562		$	101,617		$	37,116
Other comprehensive income (loss):
Cumulative translation adjustment		(12,389	)		9,442			(13,772	)		13,968
Minimum pension liability adjustment		44			—			148			306
Unrealized gain on investment		457			—			457			—
Deferred realized hedging gains (losses)		—			(1,537	)		—			(2,365	)

Comprehensive income	$	60,423		$	19,467		$	88,450		$	49,025

The components of accumulated other comprehensive loss were as follows (in thousands):


	September 30, 2008			March 31, 2008
Cumulative translation adjustment	$	(24,188	)	$	(10,416	)
Unrealized gain on investment		457			—
Pension liability adjustments		(8,919	)		(9,067	)

	$	(32,650	)	$	(19,483	)

Note 12 — Employee Benefit Plans

Employee Share Purchase Plans and Stock Option Plans

As of September 30, 2008, the Company offers the 2006 Employee Share Purchase Plan (Non-U.S.) (“2006 ESPP”), the 1996 Employee Share Purchase Plan (U.S.) (“1996 ESPP”), and the 2006 Stock Incentive Plan. Shares issued to employees as a result of purchases or exercises under these plans are generally issued from shares held in treasury.

The Company follows the accounting provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-based Payment (“SFAS 123R”), for share-based awards granted to employees and directors including stock options and share purchases under the 2006 ESPP and 1996 ESPP. The following table summarizes the share-based compensation expense and related tax benefit recognized in accordance with SFAS 123R for the three and six months ended September 30, 2008 and 2007 (in thousands).


	Three months ended September 30,				Six months ended September 30,
	2008		2007		2008		2007
Cost of goods sold	$	669	$	636	$	1,400	$	1,340

Share-based compensation expense included in gross profit		669		636		1,400		1,340

Operating expenses:
Marketing and selling		1,989		1,699		3,838		3,645
Research and development		1,147		741		2,109		1,507
General and administrative		2,018		1,415		4,364		3,443

Share-based compensation expense included in operating expenses		5,154		3,855		10,311		8,595

Total share-based compensation expense related to employee stock options and employee stock purchases		5,823		4,491		11,711		9,935
Tax benefit		1,241		1,662		2,198		2,631

Share-based compensation expense related to employee stock options and employee stock purchases, net of tax	$	4,582	$	2,829	$	9,513	$	7,304

Share-based compensation expense per share:
Basic	$	0.03	$	0.02	$	0.05	$	0.04
Diluted	$	0.02	$	0.02	$	0.05	$	0.04

As of September 30, 2008 and 2007, $0.8 million and $0.7 million of share-based compensation cost was capitalized to inventory. As of September 30, 2008, total compensation cost related to non-vested stock options not yet recognized was $37.7 million, which is expected to be recognized over the next 34 months on a weighted-average basis.

The fair value of employee stock options granted and shares purchased under the Company’s employee purchase plans was estimated using the Black-Scholes-Merton option-pricing valuation model applying the following assumptions:


	Three Months Ended September 30,								Six Months Ended September 30,
	2008		2007		2008		2007		2008		2007		2008		2007
	Purchase Plans				Stock Option Plans				Purchase Plans				Stock Option Plans
Dividend yield	0	%	0	%	0	%	0	%	0	%	0	%	0	%	0	%
Expected life	6 months		6 months		3.7 years		3.7 years		6 months		6 months		3.7 years		3.7 years
Expected volatility	41	%	33	%	35	%	30	%	45	%	33	%	34	%	35	%
Risk-free interest rate	1.96	%	4.97	%	2.97	%	4.84	%	2.38	%	4.97	%	2.31	%	4.46	%

The dividend yield assumption is based on the Company’s history and future expectations of dividend payouts. The Company has not paid dividends since 1996.

The expected option life represents the weighted-average period the stock options or purchase offerings are expected to remain outstanding. The expected life is based on historical settlement rates, which the Company believes are most representative of future exercise and post-vesting termination behaviors.

Expected share price volatility is based on historical volatility using daily prices over the term of past options or purchase offerings. The Company considers historical share price volatility as most representative of future stock option volatility. The risk-free interest rate assumptions are based upon the implied yield of U.S. Treasury zero-coupon issues appropriate for the term of the Company’s stock options or purchase offerings.

The following table represents the expected forfeiture rates and the weighted average grant-date fair values of options granted:


	Three Months Ended September 30,												Six Months Ended September 30,
	2008			2007			2008			2007			2008			2007			2008			2007
	Purchase Plans						Stock Option Plans						Purchase Plans						Stock Option Plans
Expected forfeitures		0	%		0	%		7	%		7	%		0	%		0	%		7	%		7	%
Weighted average grant-date fair value of options granted	$	7.01		$	7.01		$	7.39		$	8.16		$	7.94		$	7.01		$	7.87		$	9.28

The Company uses historical data to estimate pre-vesting option forfeitures and records share-based compensation expense only for those awards that are expected to vest.

A summary of activity under the stock option plans is as follows (exercise prices are weighted averages):


	Three Months ended September 30,								Six Months ended September 30,
	2008				2007				2008				2007
	Number		Exercise Price		Number		Exercise Price		Number		Exercise Price		Number		Exercise Price
Outstanding, beginning of year	17,032,530		$	18	18,172,071		$	13	17,952,376		$	17	18,875,722		$	12
Granted	145,500		$	25	89,000		$	27	452,000		$	28	698,000		$	28
Exercised	(492,052	)	$	9	(1,053,894	)	$	9	(1,543,650	)	$	10	(2,319,159	)	$	9
Cancelled or expired	(101,125	)	$	26	(191,248	)	$	19	(275,873	)	$	24	(238,634	)	$	19

Outstanding, end of year	16,584,853		$	18	17,015,929		$	13	16,584,853		$	18	17,015,929		$	13

Exercisable, end of year	10,356,802		$	12	11,056,631		$	10	10,356,802		$	12	11,056,631		$	10

The total pretax intrinsic value of options exercised during the three months ended September 30, 2008 and 2007 was $7.8 million and $20.4 million and the tax benefit realized for the tax deduction from options exercised during those periods was $2.6 million and $4.8 million. The total pretax intrinsic value of options exercised during the six months ended September 30, 2008 and 2007 was $29.2 million and $42.4 million and the tax benefit realized for the tax deduction from options exercised during those periods was $7.8 million and $10.4 million.

Defined Contribution Plans

Certain of the Company’s subsidiaries have defined contribution employee benefit plans covering all or a portion of their employees. Contributions to these plans are discretionary for certain plans and are based on specified or statutory requirements for others. The charges to expense for these plans for the three months ended September 30, 2008 and 2007 were $2.0 million and $2.3 million and during the six months ended September 30, 2008 and 2007 were $4.3 million and $4.0 million.

Defined Benefit Plans

Certain of the Company’s subsidiaries sponsor defined benefit pension plans covering substantially all of their employees. Retirement benefits are provided based on employees’ years of service and earnings, or in accordance with applicable employee benefit regulations. The Company’s practice is to fund amounts sufficient to meet the requirements set forth in the applicable employee benefit and tax regulations.

The net periodic benefit cost for the three and six months ended September 30, 2008 and 2007 was as follows (in thousands):


	Three months ended September 30,						Six months ended September 30,
	2008			2007			2008			2007
Service cost	$	614		$	519		$	1,248		$	1,029
Interest cost		373			236			758			468
Expected return on plan assets		(383	)		(291	)		(779	)		(577	)
Amortization of net transition obligation		1			1			2			2
Recognized net actuarial loss		112			34			227			69

Net periodic benefit cost	$	717		$	499		$	1,456		$	991

Note 13 — Income Taxes

The Company is incorporated in Switzerland but operates in various countries with differing tax laws and rates. Further, a portion of the Company’s income before taxes and the provision for income taxes are generated outside of Switzerland. For the three months ended September 30, 2008 and 2007, the income tax provision was $10.0 million and $7.7 million based on effective income tax rates of 12.1% and 40.1%. For the six months ended September 30, 2008 and 2007, the income tax provision was $13.5 million and $11.0 million based on effective income tax rates of 11.7% and 22.8%. The decrease in the income tax rate for the three and six months ended September 30, 2008 was primarily due to the higher other-than-temporary decline in the estimated fair value of the Company’s short-time investment recorded in the second quarter of fiscal year 2008, and changes in the Company’s geographic mix of pre-tax income.

On October 3, 2008, The Emergency Economic Stabilization Act of 2008 , which contains the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 , was signed into law by the U.S. Government. Under the Act, the research tax credit was retroactively extended for amounts paid or incurred after December 31, 2007 and before January 1, 2010. The Company is currently in the process of analyzing the impact of the new law and will recognize the benefit, if any, in the third quarter of the current fiscal year.

As of September 30, 2008 and March 31, 2008, the total amount of unrecognized tax benefits under FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 (“FIN 48”) was $105.7 million and $101.5 million, of which $93.4 million and $89.1 million would affect the effective tax rate if recognized.

The Company recognizes interest and penalties related to unrecognized tax positions in income tax expense. As of September 30, 2008 and March 31, 2008, the Company had approximately $9.7 million and $8.8 million of accrued interest and penalties related to uncertain tax positions.

The Company files Swiss and foreign tax returns. For all these tax returns, the Company is generally not subject to tax examinations for years prior to 1999.

Although timing of the resolution or closure on audits is highly uncertain, the Company does not believe it is reasonably possible that the unrecognized tax benefits would materially change in the next 12 months.

Note 14 — Derivative Financial Instruments – Foreign Exchange Hedging

The Company enters into foreign exchange forward contracts to reduce the short-term effects of foreign currency fluctuations on certain foreign currency receivables or payables and to provide against exposure to changes in foreign currency exchange rates related to its subsidiaries’ forecasted inventory purchases. These forward contracts generally mature within one to three months. The Company may also enter into foreign exchange swap contracts to economically extend the terms of its foreign exchange forward contracts.

The gains or losses on foreign exchange forward contracts are recognized in earnings based on the change in fair value. These gains or losses offset the transaction losses or gains recognized in earnings on the foreign currency receivables or payables or the forecasted inventory purchases. Prior to the third quarter of fiscal year 2008, forward contracts related to forecasted inventory purchases were accounted for as cash flow hedges and gains or losses on the contracts were deferred as a component of accumulated other comprehensive loss until the inventory purchases were sold, at which time the gains or losses were reclassified to cost of goods sold.

The notional amounts of foreign exchange forward contracts outstanding at September 30, 2008 and 2007 relating to foreign currency receivables or payables were $15.0 million and $8.2 million. There were no outstanding forward contracts related to forecasted inventory purchases at September 30, 2008. The notional amount of such forward contracts outstanding at September 30, 2007 was $48.6 million. The notional amounts of foreign exchange swap contracts outstanding at September 30, 2008 and 2007 were $19.1 million and $20.4 million. The notional amount represents the future cash flows under contracts to purchase foreign currencies.

The fair value of our foreign exchange forward contracts and foreign exchange swap contracts is determined based on quoted foreign exchange forward rates. Under SFAS 157, quoted foreign exchange forward rates are observable inputs that are classified as Level 1 within the fair value hierarchy. Fair value of our foreign exchange derivative assets as of September 30, 2008 was $0.2 million. Fair value of our foreign exchange derivative liabilities as of September 30, 2008 was $0.5 million.

Net gains recognized into cost of goods sold during the three and six months ended September 30, 2008 were $1.3 million and $1.1 million. Net losses recognized into cost of goods sold during the three and six months ended September 30, 2007 were $0.3 million and $0.3 million. Unrealized net losses on forward contracts outstanding at September 30, 2008 were $0.3 million.

Note 15 — Commitments and Contingencies

At September 30, 2008, fixed purchase commitments for capital expenditures amounted to $18.8 million, and primarily related to commitments for manufacturing equipment, tooling, computer software and computer hardware. Also, the Company has commitments for inventory purchases made in the normal course of business to original design manufacturers, contract manufacturers and other suppliers. At September 30, 2008, fixed purchase commitments for inventory amounted to $256.0 million, which are expected to be fulfilled by March 31, 2009. The Company also had other commitments totaling $45.4 million for consulting services, marketing arrangements, advertising and other services. Although open purchase orders are considered enforceable and legally binding, the terms generally allow the Company the option to reschedule and adjust its requirements based on the business needs prior to delivery of goods or performance of services.

The Company has guaranteed the purchase obligations of some of its contract manufacturers and original design manufacturers to certain component suppliers. These guarantees generally have a term of one year and are automatically extended for one or more years as long as a liability exists. The amount of the purchase obligations of these manufacturers varies over time, and therefore the amounts subject to Logitech’s guarantees similarly vary. At September 30, 2008, the amount of outstanding guaranteed purchase obligations was approximately $1.9 million. The maximum potential future payments under two of the three guarantee arrangements is limited to $2.8 million. The other guarantee is limited to purchases of specified components from the named supplier. The Company does not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under these guarantee arrangements.

Logitech International S.A., the parent holding company, has guaranteed certain contingent liabilities of various subsidiaries related to specific transactions occurring in the normal course of business. The maximum amount of the guarantees was $2.3 million as of September 30, 2008. As of September 30, 2008, no amounts were outstanding under these guarantees.

Logitech indemnifies some of its suppliers and customers for losses arising from matters such as intellectual property rights and product safety defects, subject to certain restrictions. The scope of these indemnities varies, but in some instances, includes indemnification for damages and expenses, including reasonable attorneys’ fees. In addition, the Company has entered into indemnification agreements with its officers and directors, and the bylaws of our subsidiaries contain similar indemnification obligations to our agents. No amounts have been accrued for indemnification provisions at September 30, 2008. The Company does not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under its indemnification arrangements.

In December 2006, the Company acquired Slim Devices, Inc., a privately held company specializing in network-based audio systems for digital music. The purchase agreement provides for a possible performance-based payment, payable in the first calendar quarter of 2010. The performance-based payment is based on net revenues from the sale of products and services in calendar year 2009 derived from Slim Devices’ technology. The maximum performance-based payment is $89.5 million, and no payment is due if the applicable net revenues total $40 million or less. The total performance-based payment, if any, will be recorded in goodwill and will not be known until the end of calendar year 2009.

In November 2007, the Company acquired WiLife, Inc., a privately held company that manufactures PC-based video cameras for self-monitoring a home or a small business. The purchase agreement provides for a possible performance-based payment, payable in the first calendar quarter of 2011. The performance-based payment is based on net revenues attributed to WiLife during calendar year 2010. No payment is due if the applicable net revenues total $40 million or less. The maximum performance-based payment is $64.0 million. The total performance-based payment amount, if any, will be recorded in goodwill and will not be known until the end of calendar year 2010.

The Company is involved in a number of lawsuits and claims relating to commercial matters that arise in the normal course of business. The Company believes these lawsuits and claims are without merit and intends to vigorously defend against them. However, there can be no assurances that its defenses will be successful, or that any judgment or settlement in any of these lawsuits would not have a material adverse impact on the Company’s business, financial condition, results of operations or cash flows. The Company’s accruals for lawsuits and claims as of September 30, 2008 were not material.

Note 16 — Segment Information

The Company operates in one operating segment, which is the design, manufacturing and marketing of personal peripherals for personal computers and other digital platforms. Geographic net sales information in the table below is based on the location of the selling entity. Long-lived assets, primarily fixed assets, are reported below based on the location of the asset.

Retail and OEM net sales to unaffiliated customers by geographic region were as follows (in thousands):


	Three months ended September 30,				Six months ended September 30,
	2008		2007		2008		2007
EMEA	$	309,815	$	280,616	$	512,878	$	459,749
Americas		233,818		222,889		436,767		396,664
Asia Pacific		121,074		91,985		223,773		168,614

Total net sales	$	664,707	$	595,490	$	1,173,418	$	1,025,027

No single country other than the United States represented more than 10% of the Company’s total consolidated net sales for the three and six months ended September 30, 2008 and 2007. One customer group represented 15% of net sales in the three and six months ended September 30, 2008. The same customer group represented 17% and 16% of net sales in the three and six months ended September 30, 2007.

Net sales by product family were as follows (in thousands):


	Three months ended September 30,				Six months ended September 30,
	2008		2007		2008		2007
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

Long-lived assets by geographic region were as follows (in thousands):


	September 30, 2008		March 31, 2008
EMEA	$	17,248	$	20,386
Americas		40,712		36,122
Asia Pacific		51,179		50,330

Total long-lived assets	$	109,139	$	106,838

Long-lived assets in China, the United States and Switzerland each represented more than 10% of the Company’s total consolidated long-lived assets at September 30, 2008 and March 31, 2008.

Note 17 — Subsequent Event

On November 3, 2008, Logitech acquired SightSpeed Inc. (“SightSpeed”), a Berkeley, California-based privately held company, for approximately $30 million in cash. SightSpeed is an award-winning provider of high-quality Internet video communication services.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with the interim unaudited Condensed Consolidated Financial Statements and related notes.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include, among other things, statements regarding current and future general economic conditions, consumer demands for our products, our current or future revenue mix, potential promotional actions, the financial condition of our suppliers and customers, or our anticipated costs and expenses. Forward-looking statements also include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. These forward looking statements involve risks and uncertainties that could cause our actual results to differ materially from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in Part II, Item 1A of this quarterly report on Form 10-Q. You should carefully review the risks described in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q or Current Reports on Form 8-K that we file in fiscal year 2009 and our fiscal year 2008 Form 10-K, which was filed on May 30, 2008, in which we discuss our business in greater detail. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Overview of Our Company

Logitech is a global leader in peripherals for personal computers and other digital platforms. We develop and market innovative products in PC navigation, Internet communications, digital music, home-entertainment control, video security, interactive gaming and wireless devices.

For the PC, our products include mice, trackballs, keyboards, gaming controllers, multimedia speakers, headsets, webcams, and 3D control devices. For digital music devices, our products include speakers and headphones. For gaming consoles, we offer a range of controllers and other accessories. In addition, we offer wireless music solutions for the home, advanced remote controls for home entertainment systems and a PC-based video security solution for a home or small business.

We sell our products to a network of distributors and resellers (“retail”) and to original equipment manufacturers (“OEMs”). Our worldwide retail network includes wholesale distributors, consumer electronics retailers, mass merchandisers, specialty electronics stores, computer and telecommunications stores, value-added resellers and online merchants. Our sales to our retail channels were 83.8% and 86.6% of our net sales for the six months ended September 30, 2008 and 2007. The large majority of our revenues are derived from sales of our products for use by consumers, with sales of our products for use by businesses amounting to a small part of our revenues.

Our markets are extremely competitive and are characterized by short product life cycles, rapidly changing technology, evolving customer demands, and aggressive promotional and pricing practices. In order to remain competitive, we believe continued investment in product research and development is critical to driving innovation with new and improved products and technologies. We are committed to identifying and meeting current and future customer trends with an innovative product portfolio, as well as increasing the value of the Logitech brand from a competitive, channel partner and consumer experience perspective. We believe innovation and product quality are important to gaining market acceptance and strengthening market leadership.

Over the last several years, we have expanded and improved our supply chain operations, invested in product development and marketing, delivered innovative new products and pursued new market opportunities. We have significantly broadened our product offerings and the markets in which we sell. Our product expansion has been primarily organic, but we have also grown as a result of a limited number of acquisitions that expanded our business into new product categories. We are developing new opportunities in emerging markets, while leveraging the growth remaining in our mature markets.

Summary of Financial Results

During the three months ended September 30, 2008, our net sales increased 12% to $664.7 million, with growth of 32% in the Asia Pacific region, 10% in the Europe, Middle East and Africa (“EMEA”) region and 5% in the Americas, reflecting the slowing economic conditions in the United States. For the six months ended September 30, 2008, net sales increased 14% to $1,173.4 million, with growth of 33% in Asia Pacific, 12% in EMEA and 10% in the Americas. Net sales of all product lines except audio increased during the six months ended September 30, 2008, although sales of keyboards and desktops, as well as audio products, declined in the quarter ended September 30, 2008 compared with the prior year. Our gross margin in the three and six months ended September 30, 2008 decreased to 34.3% and 34.2% as compared with 36.3% and 35.2% in the prior fiscal year, due to a higher proportion of OEM sales in 2008 and increased labor and material input costs. Net income for the six months ended September 30, 2008 increased to $101.6 million compared with $37.1 million in the prior fiscal year, which included an unrealized loss of $67.4 million related to an other-than-temporary decline in the estimated fair value of our short-term investments.

Trends in Our Business

We have a large and varied portfolio of product lines, grouped in several product families. We believe that increases or decreases in the retail sales level of a product family are primarily the result of the innovation we have designed into the product, customer acceptance of the product line, the popularity of the digital platforms the product line relates to, and the price points at which products are available. Historically, sales of individual product lines rise and fall over time, and we expect these types of trends to continue.

Most of our revenue comes from sales to our retail channels, which resell to consumers. As a result, our customers’ demand for our products depends on their reactions to current economic conditions, as well as trends in consumer confidence and consumer spending. In recent years, we have grown our total Company sales despite economic downturns in specific countries or regions. However, in the fiscal quarter ended September 30, 2008, our U.S. customers decreased their inventory purchases below our expectations, in reaction to the general slowdown in U.S. consumer demand. We believe it is likely that this decline in demand will continue in the U.S., and may expand to affect European and possibly Asia Pacific consumers. Therefore we have decreased our targets for growth in sales and operating income for fiscal year 2009 from the targets we had established prior to the quarter ended September 30, 2008.

Trends in our OEM sales are closely related to trends in the OEM customers’ products with which they are sold. Recently, our OEM sales have been growing faster than our retail sales, due to the sales of microphones for use with particular game titles for gaming consoles. These sales are tied to the title distributor agreeing to distribute our microphone with their game, and to the popularity of the particular game title. We believe future OEM growth depends on the development and popularity of new titles or products, and the manufacturers’ decision to combine our products with theirs, none of which is assured to occur. Our OEM sales of computer mice, which have historically comprised most of our OEM sales, have been growing more slowly in recent years. We believe this trend is due to the growing popularity of notebook and smaller form factor PCs, which manufacturers typically do not sell with mice. Consequently, we expect the trend of slowing OEM mice sales to continue.

Retail seasonality has traditionally characterized our business, and we expect will continue to do so. Our sales are typically highest during our third fiscal quarter (October to December), due primarily to the increased demand for our products during the year-end holiday buying season, and lowest in the first fiscal quarter (April to June), before new products are introduced. Therefore quarterly sales and financial performance trends are most meaningful when compared with the same quarter of the preceding year,

rather than the sequential quarter. In addition, a significant portion of our quarterly retail sales has historically occurred in the last month of the quarter. This lack of sales linearity increases the difficulty of predicting quarterly revenue and profits, and adjusting operating expenses and production quickly to align with sales volumes. We are working with our customers to improve forecasts of consumer and product demand in order to increase sales linearity throughout each quarter.

Although our financial results are reported in U.S. dollars, more than half of our sales are made in currencies other than the U.S. dollar, such as the Euro, Chinese renminbi yuan and Japanese yen. Our product costs are primarily in Chinese yuan and U.S. dollars, and our operating expenses are incurred in over 30 different currencies. Our pricing strategy generally includes, among other factors, raising or lowering selling prices in other currencies to avoid disparity with U.S. dollar prices and to respond to currency-driven competitive pricing actions. Although over time we attempt to adjust prices to reflect currency movements, our financial results could be significantly affected in the short term by fluctuations in foreign exchange rates.

Our gross margins vary with the mix of products sold, competitive activity, product life cycle, new product introductions, unit volumes, commodity and supply chain costs, geographic sales mix, and the complexity and functionality of new product introductions. Changes in consumer demand affect the need for us to undertake promotional efforts, such as cooperative marketing arrangements, customer incentive programs or price protection, which alters our product gross margins. In addition, our suppliers’ reactions to current uncertain economic conditions could result in supply shortages or price increases that negatively impact our gross margins. In recent years, we have managed our commodity and supply chain costs and our promotional efforts to maintain or improve our gross margins. We believe a significant global economic slowdown would make improving or maintaining our current gross margin levels difficult to sustain.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) requires the Company to make judgments, estimates and assumptions that affect reported amounts of assets, liabilities, net sales and expenses, and the disclosure of contingent assets and liabilities.

We consider an accounting estimate critical if it: (i) requires management to make judgments and estimates about matters that are inherently uncertain; and (ii) is important to an understanding of Logitech’s financial condition and operating results.

We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Although these estimates are based on management’s best knowledge of current events and actions that may impact the Company in the future, actual results could differ from those estimates. Management has discussed the development, selection and disclosure of these critical accounting estimates with the Audit Committee of the Board of Directors.

There have been no significant changes during the three and six months ended September 30, 2008 to the nature of the critical accounting estimates disclosed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended March 31, 2008.

Recent Accounting Pronouncements

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations (“SFAS 141R”). SFAS 141R will significantly change the accounting for business combinations in a number of areas including the treatment of contingent consideration, contingencies, acquisition costs, in-process research and development and restructuring costs. SFAS 141R is effective for fiscal years beginning after December 15, 2008 and, as such, we will

adopt this standard for any future acquisitions beginning in fiscal year 2010, except that resolution of certain tax contingencies and adjustments to valuation allowances related to business combinations, which previously were adjusted to goodwill, will be adjusted to income tax expense for all such adjustments after April 1, 2009, regardless of the date of the original business combination.

In February 2008, the FASB issued FASB Staff Position No. 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”). FSP 157-2 permits a one-year deferral in applying the measurement provisions of Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”) to non-financial assets and non-financial liabilities that are not recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually). We will adopt FSP 157-2 in the first quarter of fiscal year 2010. We are currently evaluating the impact FSP 157-2 will have on the Company’s consolidated financial statements and disclosures.

In April 2008, the FASB issued FASB Staff Position No. 142-3, Determination of the Useful Life of Intangible Assets (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). The objective of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We will adopt FSP 142-3 in the first quarter of fiscal year 2010 and we are currently evaluating the potential impact that the adoption of FSP 142-3 may have on our consolidated financial statements.

In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”). SFAS 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. GAAP for nongovernmental entities. SFAS 162 is effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles . We are currently evaluating the impact, if any, of SFAS 162 on our consolidated financial statements.

Results of Operations

Three Months Ended September 30, 2008 Compared with Three Months Ended September 30, 2007

Net Sales

Net sales by channel and product family for the three months ended September 30, 2008 and 2007 were as follows (in thousands):


	Three Months Ended September 30,
	2008		2007		Change %
Net sales by channel:
Retail	$	544,216	$	518,441	5	%
OEM		120,491		77,049	56	%

Total net sales	$	664,707	$	595,490	12	%

Net sales by product family:
Retail - Pointing Devices	$	180,466	$	155,490	16	%
Retail - Keyboards & Desktops		108,694		114,500	(5	%)
Retail - Audio		116,812		123,628	(6	%)
Retail - Video		70,290		64,469	9	%
Retail - Gaming		39,030		35,726	9	%
Retail - Remotes		28,924		24,628	17	%
OEM		120,491		77,049	56	%

Total net sales	$	664,707	$	595,490	12	%

Logitech’s pointing devices product family includes our mice, trackballs and other pointing devices. Keyboards and desktops include cordless and corded keyboards and desktops. Audio includes speakers and headset products for the PC, the home, and mobile entertainment platforms and wireless music systems; video is comprised of PC webcams and WiLife video security monitoring systems; gaming includes console and PC gaming peripherals; and remotes is comprised of our advanced remote controls.

Retail sales growth for the quarter ended September 30, 2008 was primarily driven by strong contributions from pointing devices and video. OEM sales were higher as a result of increased sales of our microphones for singing games. Sales growth benefited from favorable foreign currency exchange rate fluctuations, and was constrained by the challenging retail environment as compared with the prior fiscal year.

Approximately 54% of the Company’s sales were denominated in currencies other than the U.S. dollar in the three months ended September 30, 2008. If foreign currency exchange rates in the three months ended September 30, 2008 had been the same as in the three months ended September 30, 2007, our total sales increase would have been 9%. However the benefit does not consider the impact that currency fluctuations had on our pricing strategy, which may result in selling prices in one currency being raised or lowered over time to avoid disparity with U.S. dollar prices and to respond to currency-driven competitive pricing actions.

Retail Pointing Devices. Retail sales of our pointing devices increased 16% and units increased 21% in the three months ended September 30, 2008 as compared with the same period in the prior fiscal year. The growth was primarily attributable to sales of our cordless mice, with sales increasing by 25% and units by 26%. The primary growth drivers were our V220 Cordless Optical Mouse for notebooks, V450 Cordless Laser Mouse for notebooks and our new V550 Nano Cordless Mouse. The LX8 Cordless Laser Mouse and the MX 1100 Cordless Laser Mouse also made a strong contribution during the quarter. Sales of corded mice increased 14% and units increased 21% primarily due to an increase in sales of our notebook mice.

Retail Keyboards and Desktops. Sales of keyboards and desktops decreased 5% and units decreased 1% during the quarter ended September 30, 2008 as compared with the same quarter last year. Cordless desktop sales decreased 14% with units decreasing 7%, primarily due to lower sales of our Cordless Desktop Wave as compared with the prior year. However, this decrease was partially offset by increased sales of our Cordless Desktop MX 5500 and our Cordless Desktop EX 100. Cordless keyboard sales increased 58% compared with the prior year, primarily due to increased sales of diNovo Mini, our cordless mini-keyboard optimized for controlling PC entertainment.

Retail Audio. Retail audio sales declined 6% with units remaining flat, primarily due to lower PC and iPod speaker sales. PC speaker sales decreased 15% during the quarter ended September 30, 2008, as compared with the same quarter in the prior fiscal year, primarily attributable to weakness in our product line due to product transitions, as well as softness in the Americas region. Sales of our iPod speakers decreased 6% primarily due to lower sales of our PureFi Anywhere speakers as compared with the prior year. PC headset sales grew 11%, driven by our new ClearChat PC Wireless headset. Our ClearChat Pro and ClearChat Comfort USB headsets also contributed to the growth in headset sales during the quarter. Sales of our Streaming Media Systems more than doubled compared with the prior year, with the introduction of Squeezebox Boom, our all-in-one network music player which was launched during the quarter.

Retail Video. Video sales increased 9% and units increased 3% during the quarter compared with last year, primarily attributable to sales of our WiLife video monitoring products. Sales of our high-end webcam, the QuickCam Pro 9000, as well as two of our webcams from our lower-price segment, the QuickCam Connect for Skype and Communicate MP, increased during the quarter, but were partially offset by a decline in sales of our QuickCam Communicate STX webcam.

Retail Gaming. Retail sales of our gaming products increased 9% while units decreased 8% in the three months ended September 30, 2008 as compared with the same period in the prior fiscal year. PC gaming sales increased 2% primarily due to higher sales of our G15 gaming keyboard as compared with the prior year. Console gaming sales increased 40% primarily attributable to a strong demand for our steering wheels, led by our new GT Driving Force Wheel which started shipping in the quarter ended June 30, 2008.

Retail Remotes. Retail remote sales increased 17% with units increasing 49% during the quarter ended September 30, 2008 as compared with the prior year, primarily driven by continued strong demand for our Harmony One remote control.

Retail Regional Performance. Sales in our Asia Pacific and EMEA regions increased 35% and 8%, with units increasing 17% and 13% during the quarter as compared with the prior year. Sales in our Americas region declined 11% and units declined 4%. Our Asia Pacific region achieved double-digit growth in all product lines, led by remotes, pointing devices and audio products. Sales growth in the EMEA region was driven primarily by growth in our remotes, pointing devices and video product lines. The decline in sales in the Americas was primarily attributable to lower demand for our audio products, keyboards and desktops, partially offset by an increase in sales of our gaming peripherals as compared with the prior year. The disparity between sales growth and unit growth was primarily due to product mix and foreign currency fluctuations in the Asia Pacific and EMEA regions.

OEM. Sales of OEM products increased 56% and units increased 31% during the quarter as compared with the same period last year, primarily due to the continued success of our microphones for singing games for Playstation 3, Wii and Xbox 360. Sales of embedded video modules for notebooks also made a strong contribution to our growth in OEM.

Gross Profit

Gross profit for the three months ended September 30, 2008 and 2007 was as follows (in thousands):


	Three Months Ended September 30,
	2008			2007			Change
Net sales	$	664,707		$	595,490		12	%
Cost of goods sold		436,633			379,536		15	%

Gross profit	$	228,074		$	215,954		6	%

Gross margin		34.3	%		36.3	%

Gross profit consists of net sales, less cost of goods sold which includes materials, direct labor and related overhead costs, costs of manufacturing facilities, costs of purchasing components from outside suppliers, distribution costs and write-down of inventories.

Gross profit increased 6% in dollars but declined as a percentage of revenue in the three months ended September 30, 2008 compared with the same period in the prior fiscal year. The decline was primarily due to a combination of higher labor and material input costs, higher freight costs and an increase of OEM in the product mix.

Operating Expenses

Operating expenses for the three months ended September 30, 2008 and 2007 were as follows (in thousands):


	Three Months Ended September 30,
	2008			2007			Change
Marketing and selling	$	84,740		$	76,463		11	%
% of net sales		13	%		13	%
Research and development		33,351			30,939		8	%
% of net sales		5	%		5	%
General and administrative		29,620			28,149		5	%
% of net sales		4	%		5	%

Total operating expenses	$	147,711		$	135,551		9	%

Marketing and Selling

Marketing and selling expense consists of personnel and related overhead costs, corporate and product marketing, promotions, advertising, trade shows, customer and technical support and facilities costs.

Marketing and selling expenses increased 11% in the three months ended September 30, 2008 as compared with the same period in the prior fiscal year primarily due to increased personnel costs related to headcount additions during the last twelve months. Personnel costs increased 20% as compared with the quarter ended September 30, 2007 primarily due to the addition of the WiLife product marketing group, as well as the continued growth in the worldwide marketing groups and regional sales and marketing organizations. In addition, merchandising expenses and information technology costs also increased during the quarter as compared with the prior year. The impact of year-over-year exchange rate changes on translation of foreign currency marketing and selling expenses to our U.S. dollar financial statements, particularly from the stronger Swiss franc relative to the U.S. dollar, also contributed to the increase.

Research and Development

Research and development expense consists of personnel and related overhead costs, contractors and outside consultants, supplies and materials, equipment depreciation and facilities costs, all associated with the design and development of new products and enhancements of existing products.

The increase in research and development expense reflects our commitment to continued investment in research and development initiatives, particularly in our video, control devices and remotes product lines. Personnel costs increased 7% during the quarter ended September 30, 2008 as compared with the same quarter last year due to headcount additions in the last twelve months. An increase in information technology costs also contributed to the increase in research and development expense. The impact of year-over-year exchange rate changes on translation of foreign currency research and development expenses to our U.S. dollar financial statements, particularly from the stronger Swiss franc and Taiwanese dollar relative to the U.S. dollar, also contributed to the increase.

General and Administrative

General and administrative expense consists primarily of personnel and related overhead and facilities costs for the finance, information systems, executive, human resources and legal functions.

General and administrative expense increased 5% primarily as a result of an increase in personnel expenses. Personnel expenses increased 11% during the quarter due to salary increases and promotions during the fourth quarter of fiscal year 2008, as well as higher stock compensation expenses year over year. The impact of year-over-year exchange rate changes on translation of foreign currency general and administrative expenses to our U.S. dollar financial statements, particularly from the stronger Swiss franc and Euro relative to the U.S. dollar, also contributed to the increase. Due to the Company’s efforts to control the growth of general and administrative expenses, the percentage of general and administrative costs grew at a slower rate than the Company’s net sales grew.

Interest Income, Net

Interest income and expense for the three months ended September 30, 2008 and 2007 were as follows (in thousands):


	Three Months Ended September 30,
	2008			2007			Change
Interest income	$	2,777		$	3,940		(30	%)
Interest expense		(2	)		(15	)	87	%

Interest income, net	$	2,775		$	3,925		(29	%)

Interest income was lower for the three months ended September 30, 2008 despite higher invested balances due to significantly lower interest rates as compared with the prior year.

Other Expense, Net

Other income and expense for the three months ended September 30, 2008 and 2007 were as follows (in thousands):


	Three Months Ended September 30,
	2008			2007			Change
Foreign currency exchange gains (losses), net	$	(220	)	$	1,722		(113	%)
Write-down of investments		(403	)		(67,419	)	(99	%)
Other, net		(230	)		674		(134	%)

Other expense, net	$	(853	)	$	(65,023	)	(99	%)

During the quarter ended September 30, 2008 and 2007, we recorded an unrealized loss of $0.4 million and $67.4 million related to the other-than-temporary declines in the estimated fair value of our short-term investments. The decrease in foreign exchange gains during the three months ended September 30, 2008 was primarily due to a gain in the prior fiscal year on a closed Euro forward contract.

Provision for Income Taxes

The provision for income taxes and effective tax rate for the three months ended September 30, 2008 and 2007 were as follows (in thousands):


	Three Months Ended September 30,
	2008			2007
Provision for income taxes	$	9,974		$	7,743
Effective income tax rate		12.1	%		40.1	%

The provision for income taxes consists of income and withholding taxes. Logitech operates in multiple jurisdictions and its profits are taxed pursuant to tax laws of these jurisdictions. The Company’s effective income tax rate may be affected by changes in tax laws or interpretations of tax laws in any given jurisdiction, utilization of net operating loss and tax credit carryforwards, changes in geographical mix of income and expense, and changes in management’s assessment of matters such as the ability to realize deferred tax assets.

The provision for income taxes for the three months ended September 30, 2008 and 2007 included a $1.2 million and $1.7 million tax benefit related to share-based compensation expense.

The decrease in the effective tax rate to 12.1% in the second quarter of fiscal year 2009 compared with 40.1% in the same period in the prior fiscal year is primarily due to a higher other-than-temporary decline in the estimated fair value of our short-term investments in the prior year, and changes in the Company’s geographic mix of pre-tax income.

On October 3, 2008, The Emergency Economic Stabilization Act of 2008 , which contains the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 , was signed into law by the U.S. Government. Under the Act, the research tax credit was retroactively extended for amounts paid or incurred after December 31, 2007 and before January 1, 2010. We are currently in the process of analyzing the impact of the new law and will recognize the benefit, if any, in the third quarter of the current fiscal year.

Six Months Ended September 30, 2008 Compared with Six Months Ended September 30, 2007

Net Sales

Net sales by channel and product family for the six months ended September 30, 2008 and 2007 were as follows (in thousands):


	Six months ended September 30,
	2008		2007		Change %
Net sales by channel:
Retail	$	983,384	$	887,668	11	%
OEM		190,034		137,359	38	%

Total net sales	$	1,173,418	$	1,025,027	14	%

Net sales by product family:
Retail - Pointing Devices	$	327,845	$	265,143	24	%
Retail - Keyboards & Desktops		202,628		196,089	3	%
Retail - Audio		200,030		216,694	(8	%)
Retail - Video		127,478		111,744	14	%
Retail - Gaming		69,540		57,928	20	%
Retail - Remotes		55,863		40,070	39	%
OEM		190,034		137,359	38	%

Total net sales	$	1,173,418	$	1,025,027	14	%

Retail sales growth for the six months ended September 30, 2008 was primarily attributable to strong contributions from pointing devices, video products and remotes. OEM sales were higher as a result of continued demand for our microphones for singing games. We achieved strong sales growth in spite of a very challenging retail environment as compared with the prior fiscal year.

Approximately 52% of the Company’s sales were denominated in currencies other than the U.S. dollar in the six months ended September 30, 2008. Net sales growth benefited from favorable foreign currency exchange rate fluctuations during the six months ended September 30, 2008. If foreign currency exchange rates in the six months ended September 30, 2008 had been the same as in the six months ended June 30, 2007, our total sales increase would have been 11%. However the benefit does not consider the impact that currency fluctuations had on our pricing strategy, which may result in selling prices in one currency being raised or lowered over time to avoid disparity with U.S. dollar prices and to respond to currency-driven competitive pricing actions.

Retail Pointing Devices. Retail sales and units of our pointing devices increased 24% in the six months ended September 30, 2008 compared with the same period in the prior fiscal year. Sales of cordless mice increased 38% and units increased 39%, primarily driven by sales of our V220 Cordless Optical Mouse for notebooks, our VX Nano Cordless Laser Mouse for Notebooks and our V450 Nano Cordless Mouse for Notebooks. Sales of corded mice increased 14% and units increased 20% primarily due to an increase in sales of our notebook mice.

Retail Keyboards and Desktops. Sales of keyboards and desktops increased 3% and units increased 6% during the six months ended September 30, 2008 compared with the same period last year. The growth in sales was primarily driven by sales of our Cordless Desktop MX 5500 Revolution, our Cordless Desktop EX 100 and our cordless mini-keyboard, the diNovo Mini, partially offset by lower sales of two of our Cordless Desktops, the MX 3200 Laser and the MX 5000 Laser.

Retail Audio. Retail audio sales declined 8% with a 6% decrease in units. The decline was primarily due to lower PC speaker sales which decreased 17% during the six months ended September 30, 2008, compared with the same period in the prior fiscal year, primarily attributable to weakness in our product line due to product transitions. Sales of our iPod speakers increased 2% primarily due to strong contributions from our PureFi Anywhere and our PureFi Dream speakers. PC headset sales grew 12%, driven by our new ClearChat Pro and ClearChat Comfort USB headsets.

Retail Video. Video sales increased 14% and units increased 2% during the six months ended September 30, 2008 compared with last year, primarily attributable to sales of our WiLife video monitoring products. Sales of our high-end webcam, the QuickCam Pro 9000, as well as two of our webcams from our lower-price segment, the QuickCam Connect for Skype and Communicate MP, increased during the quarter, but were partially offset by a decline in sales of our QuickCam Communicate STX webcam.

Retail Gaming. Retail sales of our gaming peripherals increased 20% while units decreased 12% in the six months ended September 30, 2008 compared with the same period in the prior fiscal year. PC gaming sales increased 9% primarily due to sales of our G15 gaming keyboard and our G25 racing wheel. Console gaming sales increased 51% primarily attributable to strong demand for our new GT Driving Force Wheel which started shipping in the quarter ended June 30, 2008.

Retail Remotes. Retail remote sales increased 39% and units increased 60% during the six months ended September 30, 2008 compared with the same period in the prior year, primarily driven by strong sales of our new Harmony One remote control.

Retail Regional Performance. We achieved double-digit retail growth in our Asia Pacific and EMEA regions while sales in our Americas region remained flat during the six months ended September 30, 2008 compared with the same period last year. Sales in our Asia Pacific region increased 38% and units increased 20%, driven by double-digit growth in all product lines. Sales in the EMEA region increased 12% with units increasing 10%, led by solid contributions from sales of remotes and pointing devices. In the Americas region sales remained flat and units increased 3% compared with the prior year. Sales in the audio and keyboards and desktops product lines in the Americas region declined 22% and 10%, but this decline was partially offset by sales growth in our remotes, gaming and video product lines. The disparity between sales growth and unit growth in the Asia Pacific region was primarily due to product mix and foreign currency fluctuations.

OEM. Sales of OEM products increased 38% and units increased 22% during the six months ended September 30, 2008 compared with the same period last year, primarily due to the continued success of our microphones for singing games for Playstation 3, Wii and Xbox 360.

Gross Profit

Gross profit for the six months ended September 30, 2008 and 2007 was as follows (in thousands):


	Six months ended September 30,
	2008			2007			Change
Net sales	$	1,173,418		$	1,025,027		14	%
Cost of goods sold		771,772			664,287		16	%

Gross profit	$	401,646		$	360,740		11	%

Gross margin		34.2	%		35.2	%

Gross profit increased 11% in dollars but declined as a percentage of revenue primarily due to a combination of higher labor and material input costs, higher freight costs and an increase in OEM in the product mix in the six months ended September 30, 2008 compared with the same period last year.

Operating Expenses

Operating expenses for the six months ended September 30, 2008 and 2007 were as follows (in thousands):


	Six months ended September 30,
	2008			2007			Change
Marketing and selling	$	162,020		$	141,250		15	%
% of net sales		14	%		14	%
Research and development		66,610			59,704		12	%
% of net sales		6	%		6	%
General and administrative		62,929			55,471		13	%
% of net sales		5	%		5	%

Total operating expenses	$	291,559		$	256,425		14	%

Marketing and Selling

Marketing and selling expenses increased 15% in the six months ended September 30, 2008 compared with the same period in the prior fiscal year primarily due to increased personnel costs related to headcount additions during the last twelve months to support higher retail sales levels. Personnel costs increased 20% compared with the six months ended September 30, 2007 primarily due to the addition of the WiLife product marketing group, as well as the continued growth in the worldwide marketing groups and regional sales and marketing organizations. In addition, merchandising expenses and information technology costs also increased during the period compared with the prior year. The impact of year-over-year exchange rate changes on translation of foreign currency marketing and selling expenses to our U.S. dollar financial statements, particularly from the stronger Euro and Swiss franc relative to the U.S. dollar, also contributed to the increase.

Research and Development

The increase in research and development expense of 12% was primarily related to our continued investment in research and development initiatives, particularly in the video, remotes and control devices product lines. The highest contributor to the increase in research and development expenses was personnel costs, increasing at 10%, primarily due to headcount additions during the last 12 months. Information technology costs also increased during the six months ended September 30, 2008 compared with the prior year. The impact of year-over-year exchange rate changes on translation of foreign currency research and development expenses to our U.S. dollar financial statements, particularly from the stronger Swiss franc and Taiwanese dollar relative to the U.S. dollar, also contributed to the increase.

General and Administrative

General and administrative expense increased 13% primarily as a result of an increase in personnel expenses, depreciation expense and hardware and software maintenance expenses. Personnel costs increased 15% during the six months ended September 30, 2008 due to salary increases and promotions during the fourth quarter of fiscal year 2008, as well as higher stock compensation expenses compared with the prior year. The impact of year-over-year exchange rate changes on translation of foreign currency general and administrative expenses to our U.S. dollar financial statements, particularly from the stronger Swiss franc and Euro relative to the U.S. dollar, also contributed to the increase.

Interest Income, Net

Interest income and expense for the six months ended September 30, 2008 and 2007 were as follows (in thousands):


	Six months ended September 30,
	2008			2007			Change
Interest income	$	5,457		$	7,548		(28	%)
Interest expense		(130	)		(85	)	(53	%)

Interest income, net	$	5,327		$	7,463		(29	%)

Interest income was lower for the six months ended September 30, 2008 despite higher invested balances due to significantly lower interest rates as compared with the prior year.

Other Expense, Net

Other income and expense for the six months ended September 30, 2008 and 2007 were as follows (in thousands):


	Six months ended September 30,
	2008			2007			Change
Foreign currency exchange gains, net	$	1,171		$	2,953		(60	%)
Write-down of investments		(979	)		(67,419	)	(99	%)
Other, net		(484	)		762		(164	%)

Other expense, net	$	(292	)	$	(63,704	)	(100	%)

During the six months ended September 30, 2008 and 2007, we recorded an unrealized loss of $1.0 million and $67.4 million related to an other-than-temporary decline in the estimated fair value of our short-term investments. The decrease in foreign exchange gains during the six months ended September 30, 2008 was primarily due to a gain in the prior fiscal year on a closed Euro forward contract.

Provision for Income Taxes

The provision for income taxes and effective tax rate for the six months ended September 30, 2008 and 2007 were as follows (in thousands):


	Six months ended September 30,
	2008			2007
Provision for income taxes	$	13,505		$	10,958
Effective income tax rate		11.7	%		22.8	%

The provision for income taxes for the six months ended September 30, 2008 and 2007 included a $2.2 million and $2.6 million tax benefit related to share-based compensation expense.

The decrease in the effective tax rate to 11.7% during the six months ended September 30, 2008 compared with 22.8% in the same period in the prior fiscal year is primarily due to a higher other-than-temporary decline in the estimated fair value of the Company’s short-time investments in the prior year, and changes in the Company’s geographic mix of pre-tax income.

On October 3, 2008, The Emergency Economic Stabilization Act of 2008 , which contains the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 , was signed into law by the U.S. Government. Under the Act, the research tax credit was retroactively extended for amounts paid or incurred after December 31, 2007 and before January 1, 2010. We are currently in the process of analyzing the impact of the new law and will recognize the benefit, if any, in the third quarter of the current fiscal year.

Liquidity and Capital Resources

Cash Balances, Available Borrowings, and Capital Resources

At September 30, 2008, net working capital was $745.0 million, compared with $723.2 million at March 31, 2008. The increase in working capital from March 31, 2008 was primarily due to an increase in accounts receivable and inventories, partially offset by an increase in accounts payable.

During the six months ended September 30, 2008, operating activities generated cash of $83.4 million. Our largest source of operating cash flows was cash collections from our customers. We used $57.3 million in investing activities during the period, $31.8 million of which was paid for our acquisition of Ultimate Ears, net of cash acquired, and $25.0 million was for capital expenditures for manufacturing equipment, leasehold improvements, tooling costs and computer hardware and software purchases. Net cash used in financing activities was $47.6 million. We used $76.0 million during the six months ended September 30, 2008 to repurchase shares under our share buyback program while the exercise of stock options provided $22.4 million.

At September 30, 2008, we had cash and cash equivalents of $455.2 million and short-term investments of $3.4 million. Cash and cash equivalents are carried at cost, which is equivalent to fair value. Short-term investments are carried at fair value, determined by estimating the value of the underlying collateral using published mortgage indices or interest rate spreads for comparably rated collateral and applying discounted cash flow or option pricing methods to the estimated value. The Company considers the inputs used to measure the fair value of its short-term investments as Level 3 within the fair value hierarchy, as described in Note 4 of our consolidated financial statements. Due to continued disruptions in the U.S. credit market, we recorded a $1.0 million impairment loss related to the other-than-temporary decline in the fair value of our short-term investments during the six months ended September 30, 2008. Further changes in the fair value of our short-term investments would not materially affect our liquidity or capital resources.

The Company has credit lines with several European and Asian banks totaling $126.6 million as of September 30, 2008. As is common for businesses in European and Asian countries, these credit lines are uncommitted and unsecured. Despite the lack of formal commitments from the banks, we believe that these lines of credit will continue to be made available because of our long-standing relationships with these banks. At September 30, 2008, we had no outstanding borrowings under these lines of credit. There are no financial covenants under these facilities.

The Company has financed its operating and capital requirements primarily through cash flow from operations and, to a lesser extent, from capital markets and bank borrowings. Our normal short-term liquidity and long-term capital resource requirements are provided from three sources: cash flow generated from operations, cash and cash equivalents on hand, and borrowings, as needed, under our credit facilities.

Based upon our available cash balances and credit lines, and the trend of our historical cash flow generation, we believe we have sufficient liquidity to fund operations for the foreseeable future.

Cash Flow from Operating Activities

The following table presents selected financial information and statistics as of September 30, 2008 and 2007 (dollars in thousands):


	September 30,
	2008		2007
Accounts receivable, net	$	467,499	$	425,052
Inventories		323,673		263,396
Working capital		744,976		615,055
Days sales in accounts receivable (DSO) ⁽¹⁾		63 days		64 days
Inventory turnover (ITO) ⁽²⁾		5.4x		5.8x
Net cash provided by operating activities	$	83,407	$	112,816

⁽¹⁾	DSO is determined using ending accounts receivable as of the most recent quarter-end and net sales for the most recent quarter.

⁽²⁾	ITO is determined using ending inventories and annualized cost of goods sold (based on the most recent quarterly cost of goods sold).

Net cash provided by operating activities decreased to $83.4 million as compared with $112.8 million in the prior year, primarily due to higher ending inventory. DSO for the quarter improved by 1 day compared with the same period last year. Inventory turnover deteriorated compared with the prior year primarily due to slower sales than planned late in the quarter in the Americas region. Typical payment terms require customers to pay for product sales generally within 30 to 60 days; however, terms may vary by customer type, by country and by selling season. Extended payment terms are sometimes offered to a limited number of customers during the second and third fiscal quarters. The Company does not modify payment terms on existing receivables, but may offer discounts for early payment.

Cash Flow from Investing Activities

Cash flows from investing activities during the six months ended September 30, 2008 and 2007 were as follows (in thousands):


	Six months ended September 30,
	2008			2007
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

Our purchases of plant and equipment during the six months ended September 30, 2008 were principally for computer hardware and software purchases, machinery and equipment and normal expenditures for tooling. In August 2008, the Company acquired the Ultimate Ears companies for $31.8 million, net of cash acquired of $0.2 million and including $0.5 million in transaction costs.

Our purchases of plant and equipment during the six months ended September 30, 2007 were principally for machinery and equipment for two new production and manufacturing facilities, including the new surface mount technology factory in China, leasehold improvements for a new office facility in Switzerland, computer hardware and software purchases, and normal expenditures for tooling.

We no longer invest in the auction rate securities which generated the purchase and sale activity in the six months ended September 30, 2007. In April 2007, we received $11.3 million from the sale in March 2007 of our investment in Anoto Group AB.

Cash Flow from Financing Activities

The following tables present information on our cash flows from financing activities, including information on our share repurchases during the six months ended September 30, 2008 and 2007 (in thousands except per share amounts):


	Six months ended September 30,
	2008			2007
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	)


	Six months ended September 30,
	2008			2007
Number of shares repurchased		2,603			3,466
Value of shares repurchased	$	76,017		$	93,562
Average price per share	$	29.20		$	26.99

During the six months ended September 30, 2008, we repurchased 2.6 million shares for $76.0 million under the Company’s June 2007 buyback program. The sale of shares upon exercise of options pursuant to the Company’s stock plans realized $22.4 million. In addition, cash of $6.0 million was provided by tax benefits recognized on the exercise of share-based payment awards.

During the six months ended September 30, 2007, we repaid short-term debt borrowings of $11.7 million. We also repurchased 3.5 million shares for $93.6 million under the buyback program announced in May 2006. The sale of shares upon exercise of options pursuant to the Company’s stock plans realized $25.3 million during the first six months of fiscal year 2008. In addition, cash of $8.3 million was provided by tax benefits from the exercise of share-based payment awards.

Cash Outlook

We have financed our operations and capital requirements primarily through cash flow from operations and, to a lesser extent, capital markets and bank borrowings. Our working capital requirements and capital expenditures may increase to support future expansion of Logitech operations. Future acquisitions or expansion of our operations may be significant and may require the use of cash.

In June 2007, we announced the approval by our Board of Directors of a new share buyback program authorizing the repurchase of up to $250 million of our shares. The approved amount remaining under the June 2007 program at September 30, 2008 was $128.9 million. We plan to continue repurchasing shares under this program.

In September 2008, our Board of Directors approved a new share buyback program, which authorizes the Company to invest up to $250 million to purchase its own shares. The September 2008 program is subject to the approval of the Swiss Takeover Board and will begin after we complete our current share buyback program of $250 million.

In addition, on November 3, 2008 Logitech acquired SightSpeed Inc. (“SightSpeed”), a Berkeley, California-based privately held company, for approximately $30 million in cash.

We believe that our cash and cash equivalents, cash flow generated from operations, and available borrowings under our bank lines of credit will be sufficient to fund capital expenditures and working capital needs for the foreseeable future.

Contractual Obligations and Commitments

As of September 30, 2008, the Company’s outstanding contractual obligations and commitments included: (i) equipment financed under capital leases, (ii) facilities leased under operating lease commitments, (iii) purchase commitments and obligations and (iv) long-term liabilities for income taxes payable.

We expect to continue making capital expenditures in the future to support product development activities and ongoing and expanded operations. At September 30, 2008, fixed purchase commitments for capital expenditures amounted to $18.8 million, and primarily related to commitments for manufacturing equipment, tooling, computer software and computer hardware. We also have commitments for inventory purchases made in the normal course of business to original design manufacturers, contract manufacturers and other suppliers. At September 30, 2008, fixed purchase commitments for inventory amounted to $256.0 million, which are expected to be fulfilled by March 31, 2009. We also had other commitments of $45.4 million for consulting, marketing arrangements, advertising and other services. Although open purchase commitments are considered enforceable and legally binding, the terms generally allow us the option to reschedule and adjust our requirements based on business needs prior to the delivery of the purchases.

In December 2006, we acquired Slim Devices, Inc., a privately held company specializing in network-based audio systems for digital music. The purchase agreement provides for a possible performance-based payment, payable in the first calendar quarter of 2010. The performance-based payment is based on net revenues from the sale of products and services in calendar year 2009 derived from Slim Devices’ technology. The maximum performance-based payment is $89.5 million, and no payment is due if the applicable net revenues total $40 million or less. The total performance-based payment, if any, will be recorded in goodwill and will not be known until the end of calendar year 2009.

In November 2007, we acquired WiLife, Inc., a privately held company that manufactures PC-based video cameras for self-monitoring a home or a small business. The purchase agreement provides for a possible performance-based payment, payable in the first calendar quarter of 2011. The performance-based payment is based on net revenues attributed to WiLife during calendar year 2010. No payment is due if the applicable net revenues total $40 million or less. The maximum performance-based payment is $64.0 million. The total performance-based payment amount, if any, will be recorded in goodwill and will not be known until the end of calendar year 2010.

At September 30, 2008, we had $99.2 million in non-current income taxes payable, including interest and penalties, related to our FIN 48 income tax liability. At this time, we cannot make a reasonably reliable estimate of the period in which a cash settlement will be made with the tax authorities.

For further detail about our contractual obligations and commitments, please refer to our Annual Report on Form 10-K for the fiscal year ended March 31, 2008.

Off-Balance Sheet Arrangements

The Company has not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the Company.

Guarantees

Company’s guarantees similarly varies. At September 30, 2008, the amount of outstanding guaranteed purchase obligations was approximately $1.9 million. The maximum potential future payments under two of the three guarantee arrangements is limited to $2.8 million in total. The other guarantee is limited to purchases of specified components from the named supplier. Logitech International S.A., the parent holding company, has guaranteed certain contingent liabilities of various subsidiaries related to specific transactions occurring in the normal course of business. The maximum amount of the guarantees was $2.3 million as of September 30, 2008. As of September 30, 2008, no amounts were outstanding under these guarantees. We do not believe, based on historical experience and information available as of the date of this report, that it is probable that any amounts will be required to be paid under any of the Company’s guarantee arrangements.

Indemnifications

The Company indemnifies certain of its suppliers and customers for losses arising from matters such as intellectual property rights and safety defects, subject to certain restrictions. The scope of these indemnities varies and may include indemnification for damages and expenses, including reasonable attorneys’ fees. In addition, we have entered into indemnification agreements with our officers and directors, and the bylaws of our subsidiaries contain similar indemnification obligations to our agents. No amounts have been accrued for indemnification provisions as of September 30, 2008. We do not believe, based on historical experience and information available as of the date of this report, that it is probable that any amounts will be required to be paid under these indemnification arrangements.

ITEM 3.

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Market risk represents the potential for loss due to adverse changes in the fair value of financial instruments. As a global concern, the Company faces exposure to adverse movements in foreign currency exchange rates and interest rates. These exposures may change over time as business practices evolve and could have a material adverse impact on the Company’s financial results.

Foreign Currency Exchange Rates

The Company is exposed to foreign currency exchange rate risk as it transacts business in multiple foreign currencies, including exposure related to anticipated sales, anticipated purchases and assets and liabilities denominated in currencies other than the U.S. dollar. Logitech transacts business in over 30 currencies worldwide, of which the most significant to operations are the Euro, Chinese renminbi (“CNY”), British pound sterling, Japanese yen, Taiwanese dollar and Mexican peso. The functional currency of the Company’s operations is primarily the U.S. dollar. To a lesser extent, certain operations use the Euro, Swiss franc, Japanese yen or the local currency of the country as their functional currencies. Accordingly, unrealized foreign currency gains or losses resulting from the translation of net assets or liabilities denominated in foreign currencies to the U.S. dollar are accumulated in the cumulative translation adjustment component of other comprehensive income in shareholders’ equity.

The table below provides information about the Company’s underlying transactions that are sensitive to foreign exchange rate changes, primarily assets and liabilities denominated in currencies other than the functional currency, where the net exposure is greater than $0.5 million at September 30, 2008. The table below represents the U.S. dollar impact on earnings of a 10% appreciation and a 10% depreciation of the functional currency as compared with the transaction currency (in thousands):


Functional Currency	Transaction Currency	Net Exposed Long (Short) Currency Position			FX Gain (Loss) From 10% Appreciation of Functional Currency			FX Gain (Loss) From 10% Depreciation of Functional Currency
U.S. dollar	Chinese renminbi	$	109,694		$	(9,972	)	$	12,188
Euro	British pound sterling		26,565			(2,415	)		2,952
Japanese yen	U.S. dollar		(19,068	)		1,733			(2,119	)
Taiwanese dollar	U.S. dollar		7,716			(701	)		857
Mexican peso	U.S. dollar		(7,027	)		639			(781	)
Euro	Swiss franc		(4,148	)		377			(461	)
U.S. dollar	Swiss franc		3,509			(319	)		390
Euro	Norwegian kroner		(1,219	)		111			(135	)
U.S. dollar	Canadian dollar		(1,149	)		104			(128	)
U.S. dollar	Euro		(1,038	)		94			(115	)
Euro	Danish krone		(743	)		68			(83	)
Euro	Utd. Arab Emir. Dirham		698			(63	)		78

		$	113,790		$	(10,344	)	$	12,643

Long currency positions represent net assets being held in the transaction currency while short currency positions represent net liabilities being held in the transaction currency.

The Company’s principal manufacturing operations are located in China, with much of its component and raw material costs transacted in CNY. However, the functional currency of its Chinese operating subsidiary is the U.S. dollar as its sales and trade receivables are transacted in U.S. dollars. To hedge against any potential significant appreciation of the CNY, the Company transferred a portion of its cash investments to CNY accounts. At September 30, 2008, net assets held in CNY totaled $109.7 million. The Company continues to evaluate the level of net assets held in CNY relative to component and raw material purchases and interest rates on cash equivalents.

From time to time, the Company enters into foreign exchange forward contracts to reduce the short-term effects of foreign currency fluctuations on certain foreign currency receivables or payables and to provide against exposure to changes in foreign currency exchange rates related to subsidiaries’ forecasted inventory purchases. These forward contracts generally mature within one to three months. The Company may also enter into foreign exchange swap contracts to economically extend the terms of its foreign exchange forward contracts. Gains or losses in fair value on forward contracts which offset translation losses or gains on foreign currency receivables or payables are recognized in earnings monthly and are included in other income (expense). Gains or losses in fair value on forward contracts related to forecasted inventory purchases are also recognized in earnings monthly and are included in cost of goods sold.

The notional amounts of foreign exchange forward contracts outstanding at September 30, 2008 were $15.0 million. The notional amounts of foreign exchange swap contracts outstanding at September 30, 2008 were $19.1 million. Unrealized net losses on the contracts at September 30, 2008 were $0.3 million.

If the U.S. dollar had appreciated by 10% compared with the foreign currencies in which we have forward or swap contracts, an unrealized gain of $1.8 million in our forward foreign exchange contract portfolio would have occurred. If the U.S. dollar had depreciated by 10% compared with the foreign currencies in which we have forward or swap contracts, a $2.2 million unrealized loss in our forward foreign exchange contract portfolio would have occurred.

Interest Rates

Changes in interest rates could impact the Company’s anticipated interest income on its cash equivalents and short-term investments and interest expense on variable rate short-term debt. The Company prepared sensitivity analyses of its interest rate exposures to assess the impact of hypothetical changes in interest rates. Based on the results of these analyses, a 100 basis point decrease or increase in interest rates from the September 30, 2008 and March 31, 2008 period end rates would not have a material effect on the Company’s results of operations or cash flows.

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Logitech’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Form 10-Q, have concluded that, as of such date, our disclosure controls and procedures are effective.

Disclosure controls are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Exchange Act, such as this Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls are also designed to reasonably assure that this information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended September 30, 2008, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

From time to time, we become involved in claims and legal proceedings which arise in the ordinary course of our business. We are currently subject to several such claims and a small number of legal proceedings. We presently do not believe that the resolution of these claims and legal proceedings will have a material impact on our results of operations or financial condition.

ITEM 1A.

RISK FACTORS

Adverse general economic conditions may significantly harm our operating results.

The current deterioration of general economic conditions could be considerably deeper and longer than we expect, and could lead to reduced consumer demand for our products. This could significantly harm our operating results.

Continuing adverse economic conditions may also have the following negative effects on our operating results:

•

We may receive returns from our retailers of products in excess of our historical experience rate. If product returns are significantly greater than we estimate, our net sales may be negatively impacted.

•

We could have excess levels of inventory, which could result in our taking additional reserves for excess and obsolete inventory, which would negatively impact our operating results.

•

Our retail and OEM customers may delay payment of receivables, which could negatively impact our cash flow and cause us to record additional reserves for accounts receivable.

•

If a number of our customers or suppliers experience financial distress or bankruptcy, our sales could be lower than we anticipate.

Our operating results are difficult to predict and fluctuations in results may cause volatility in the price of our shares.

Our revenues and profitability are difficult to predict due to the nature of the markets in which we compete and for many other reasons, including the following:

•

Our operating results are highly dependent on the volume and timing of orders received during the quarter, which are difficult to forecast. Customers generally order on an as-needed basis and we typically do not obtain firm, long-term purchase commitments from our customers. As a result, our revenues in any quarter depend primarily on orders booked and shipped in that quarter.

•

A significant portion of our quarterly retail sales typically occurs in the last month of each quarter, further increasing the difficulty in predicting quarterly revenues and profitability.

•

We must incur a large portion of our costs in advance of sales orders, because we must plan research and production, order components, buy tooling equipment, and enter into development, sales and marketing, and other operating commitments prior to obtaining firm commitments from our customers. This makes it difficult for us to adjust our costs during the quarter in response to a revenue shortfall, which could adversely affect our operating results.

•

Fluctuations in currency exchange rates can impact our revenues, expenses and profitability because we report our financial statements in U.S. dollars, whereas a significant portion of our revenues and expenses are in other currencies. We may seek to minimize the impact of currency fluctuations and currency-driven competitive pricing actions by lowering or raising selling prices in a currency in order to avoid disparity with U.S. dollar prices and to respond to such actions. These efforts may not be successful.

Because our operating results are difficult to predict, our results may be below the expectations of financial analysts and investors, which could cause the price of our shares to decline.

If we fail to successfully innovate in our current and emerging product categories, our business and operating results could suffer.

The personal peripherals industry is characterized by short product life cycles, frequent new product introductions, rapidly changing technology and evolving industry standards. As a result, we must continually innovate in our current and emerging product categories, introduce new products and technologies, and enhance existing products in order to remain competitive.

The success of our products depends on several factors, including our ability to:

•

identify new feature or product opportunities;

•

anticipate technology, market trends and consumer demands;

•

develop innovative and reliable new products and enhancements in a cost-effective and timely manner; and

•

distinguish our products from those of our competitors.

If we do not execute on these factors successfully, products that we introduce or technologies or standards that we adopt may not gain widespread commercial acceptance, and our business and operating results could suffer. In addition, if we do not continue to distinguish our products, particularly our retail products, through distinctive, technologically advanced features, designs, and services, as well as continue to build and strengthen our brand recognition and our access to distribution channels, our business could be harmed.

Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results.

Our gross margins can vary due to consumer demand, competition, product life cycle, new product introductions, unit volumes, commodity and supply chain costs, geographic sales mix, foreign currency exchange rates, and the complexity and functionality of new product innovations. In particular, if we are not able to introduce new products in a timely manner at the product cost we expect, or if consumer demand for our products is less than we anticipate, or if there are product pricing, marketing and other initiatives by our competitors to which we need to react that lower our margins, then our overall gross margin will be less than we project.

In addition, our gross margins may vary significantly by product line, sales geography and customer type, as well as within product lines. When the mix of products sold shifts from higher margin product lines to lower margin product lines, to lower margin sales geographies, or to lower-margin products within product lines, our overall gross margins and our profitability may be adversely affected.

The impact of these factors on gross margins can create unanticipated fluctuations in our operating results, which may cause volatility in the price of our shares.

If we do not compete effectively, demand for our products could decline and our business and operating results could be adversely affected.

Our industry is intensely competitive. It is characterized by short product life cycles, continual performance enhancements, and rapid adoption of technological and product advancements by competitors in our retail market, and price sensitivity in the OEM market. We continue to experience aggressive price competition and other promotional activities from our primary competitors and from less-established brands. From time to time we adjust prices or increase other promotional activities to improve our competitive position. We may also encounter more competition if any of our competitors decide to enter other markets in which we currently operate.

In addition, we have been expanding the categories of products we sell, and entering new markets, such as the market for programmable remote controls, streaming media devices and home or small business self-monitoring. As we do so, we are confronting new competitors, many of which have more experience in the categories or markets and have greater marketing resources and brand name recognition than we have. In addition, because of the continuing convergence of the markets for computing devices and consumer electronics, we expect greater competition in the future from well-established consumer electronics companies in our developing categories, as well as future ones we might enter. Many of these companies have greater financial, technical, sales, marketing and other resources than we have.

We expect continued competitive pressure in both our retail and OEM business, including in the terms and conditions that our competitors offer customers, which may be more favorable than our terms and conditions and may require us to take actions to increase our customer incentive programs, which could impact our revenues and operating margins.

Pointing Devices, Keyboards and Desktops. Microsoft is our main competitor in the mice, keyboard and desktop product lines. Microsoft has significantly greater financial, technical, sales, marketing and other resources, as well as greater name recognition and a larger customer base. We are also experiencing competition and pricing pressure for corded and cordless mice and desktops from less-established brands, in the lower-price bands, which could potentially impact our market share. The notebook peripheral category is also an area where we face aggressive pricing and promotions, as well as new competitors that have broader notebook product offerings than we do.

Video. Our competitors for PC Web cameras include Microsoft, Creative Labs and Philips. We are encountering aggressive pricing practices and promotions on a worldwide basis, which have impacted our revenues and margins. The worldwide market for PC webcams has also slowed over the last several quarters, and as a result, pricing practices and promotions by our competitors have become more aggressive.

Microsoft is a leading producer of operating systems and applications with which our mice, keyboards and webcams are designed to operate. As a result, Microsoft may be able to improve the functionality of its own peripherals to correspond with ongoing enhancements to its operating systems and software applications before we are able to make such improvements. This ability could provide Microsoft with significant lead-time advantages. In addition, Microsoft may be able to offer pricing advantages on bundled hardware and software products that we may not be able to offer.

Audio. Competitors in audio devices vary by product line. In the PC, mobile entertainment and communication platform speaker business, competitors include Plantronics and its Altec Lansing subsidiary, Creative Labs, and Bose Corporation. In the PC headset and microphone business, our main competitors include Plantronics and its Altec Lansing subsidiary. We have expanded our audio product portfolio to include network-based audio systems for digital music, an emerging market with several small competitors as well as larger established consumer electronics companies, like Sony and Philips.

Gaming. Competitors for our interactive entertainment products include Intec, Pelican Accessories, Mad Catz and its Saitek subsidiary. Our controllers for PlayStation also compete against controllers offered by Sony.

Remotes. Our competitors for remotes include, among others, Philips, Universal Remote, Universal Electronics, RCA and Sony. We expect that the growth in recent years in consumer demand for personal peripheral devices for home entertainment systems will likely result in increased competition.

If we do not compete effectively, demand for our products could decline, our gross margin could decrease, we could lose market share and our revenues could decline.

If we do not successfully innovate and market products for notebook PCs, our business and results of operations may suffer.

We have historically targeted peripherals for the PC platform, a market that is dynamically changing as a result of the increasing popularity of notebook and mobile products over desktop PCs. In our OEM channel, this shift has adversely affected our sales of OEM mice, which are sold with name-brand desktop PCs. Our OEM mice sales have historically made up the bulk of our OEM sales, and our OEM sales accounted for 13% and 11% of total revenues during fiscal years 2008 and 2007. If the desktop PC market continues to experience slower growth or decline, and if we do not successfully diversify our OEM business, our OEM revenues could be adversely affected.

In our retail channels, notebook PCs are sold by retailers without peripherals. We believe this creates opportunities to sell products to consumers to help make their devices more productive and comfortable. However, if we do not successfully innovate and market products designed for notebook PCs and other mobile devices, our business and results of operations could be harmed. In addition, the increasing popularity of notebook PCs may result in a decreased demand by consumers for keyboards and desktops, which could negatively affect our sales of these products.

If we do not continue to improve our product demand forecasting, our business and operating results could be adversely affected.

We use our forecasts of product demand to make decisions regarding investments of our resources and production levels of our products. Although we receive forecasts from our customers, many are not obligated to purchase the forecasted demand. Also, actual sales volumes for individual products in our retail distribution channel can be volatile due to changes in consumer preferences and other reasons. In addition, our retail products have short product life cycles, so a failure to accurately predict high demand for a product can result in lost sales that we may not recover in subsequent periods, or higher product costs if we meet demand by paying higher costs for materials, production and delivery. We could also frustrate our customers and lose shelf space. Our failure to predict low demand for a product can result in excess inventory, lower cash flows and lower margins if we are required to reduce product prices in order to reduce inventories.

Over the past few years, we have rapidly and significantly expanded the number and types of products we sell, and the geographic markets in which we sell them, and we will endeavor to further expand our product portfolio and sales reach. The growth of our product portfolio and our sales markets has increased the difficulty of accurately forecasting product demand.

We have experienced large differences between our forecasts and actual demand for our products and expect differences to arise in the future. If we do not continue to improve the accuracy of our forecasts, our business and operating results could be adversely affected.

Our business depends in part on access to third-party platforms or technologies, and if the access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected.

In recent years we have expanded our product portfolio to include products designed for use with third-party platforms such as the Apple iPod, Microsoft Xbox, Sony PlayStation, and Nintendo Wii. The growth of our business is in part due to sales of these products. However, our business in these categories relies on our access to the platforms of third parties, which can be withdrawn, denied or not be available on terms acceptable to us.

Our access to third-party platforms may require paying a royalty, which lowers our product margins, or may otherwise be on terms that are not acceptable to us. In addition, the third-party platforms or technologies used to interact with our product portfolio can change without prior notice to us, which can result in our having excess inventory or lower margins.

If we are unable to access third-party platforms or technologies, or if our access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected.

Our principal manufacturing operations and third-party contract manufacturers are located in China, which exposes us to risks associated with doing business in that country.

Our principal manufacturing operations and third-party contract manufacturers are located in China. Our manufacturing operations in Suzhou, China could be severely impacted by changes in the interpretation and enforcement of legal standards, by strains on China’s energy, transportation, communications, trade, public health and other infrastructures, by conflicts, embargoes, increased tensions or escalation of hostilities between China and Taiwan, and by other trade customs and practices that are dissimilar to those in the United States and Europe. Interpretation and enforcement of China’s laws and regulations continue to evolve and we expect differences in interpretation and enforcement to continue in the foreseeable future.

Further, we may be exposed to fluctuations in the value of the Chinese renminbi (“CNY”), the local currency of China. Significant future appreciation of the CNY could increase our component and other raw material costs, as well as our labor costs, and could adversely affect our financial results.

We purchase key components and products from a limited number of sources, and our business and operating results could be harmed if supply were delayed or constrained or if there were shortages of required components.

We purchase certain products and key components from a limited number of sources. If the supply of these products or key components, such as micro-controllers and optical sensors, were to be delayed or constrained, we may be unable to find a new supplier on acceptable terms, or at all, or our product shipments to our customers could be delayed, any of which could harm our business, financial condition and operating results.

Lead times for materials, components and products ordered by us or by our contract manufacturers can vary significantly and depend on factors such as contract terms, demand for a component, and supplier capacity. From time to time, we have experienced component shortages. We continue to experience extended lead times on semiconductors, such as micro-controllers and optical sensors, and base metals used in our products. Shortages or interruptions in the supply of components or subcontracted products, or our inability to procure these components or products from alternate sources at acceptable prices in a timely manner, could delay shipment of our products or increase our production costs, which could adversely affect our business and operating results.

If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales.

Our business requires us to coordinate the manufacture and distribution of our products over much of the world. We increasingly rely on third parties to manufacture our products, manage centralized distribution centers, and transport our products. If we do not successfully coordinate the timely manufacturing and distribution of our products, we may have insufficient supply of products to meet customer demand and we could lose sales, or we may experience a build-up in inventory.

We rely on commercial air freight carriers, ocean freight carriers, trucking companies and other transportation companies for the movement of our products. Consequently, our ability to ship products to our distribution centers could be adversely impacted by shortages in available cargo capacity. The logistics and supply chain infrastructure in China, where our products are manufactured, has not kept pace with the rapid expansion of China’s economy, resulting in periodic capacity constraints in the transportation of goods. If we are unable to secure cost-effective freight resources in a timely manner, we could incur incremental costs to expedite delivery, which could adversely affect our gross margins, and we could experience delays in bringing our products to market, resulting in lost product sales or the accumulation of excess inventory. Air, ocean and ground transportation costs remain under upward pressure primarily due to high fuel costs. Continued increases in the worldwide cost of fuel could result in higher transportation costs, which could adversely affect gross margins.

A significant portion of our quarterly retail orders and product deliveries generally occur in the last month of the fiscal quarter. This places pressure on our supply chain and could adversely impact our revenues and profitability if we are unable to successfully fulfill customer orders in the quarter.

We conduct operations in a number of countries and the effect of business, legal and political risks associated with international operations could significantly harm us.

We conduct operations in a number of countries. There are risks inherent in doing business in international markets, including:

•

difficulties in staffing and managing international operations;

•

compliance with laws and regulations, including environmental and tax laws, which vary from country to country and over time, increasing the costs of compliance and potential risks of non-compliance;

•

exposure to political and financial instability, leading to currency exchange losses and collection difficulties or other losses;

•

exposure to fluctuations in the value of local currencies;

•

difficulties or increased costs in establishing sales and distribution channels in unfamiliar markets, with their own market characteristics and competition, particularly in Latin America, Eastern Europe and Asia;

•

changes in value-added tax (“VAT”) or VAT reimbursement;

•

imposition of currency exchange controls; and

•

delays from customs brokers or government agencies.

Any of these risks could significantly harm our business, financial condition and operating results.

We may be unable to protect our proprietary rights. Unauthorized use of our technology may result in the development of products that compete with our products.

Our future success depends in part on our proprietary technology, technical know-how and other intellectual property. We rely on a combination of patent, trade secret, copyright, trademark and other intellectual property laws, and confidentiality procedures and contractual provisions such as nondisclosure terms and licenses, to protect our intellectual property.

We hold various United States patents and pending applications, together with corresponding patents and pending applications from other countries. It is possible that any patent owned by us will be invalidated, deemed unenforceable, circumvented or challenged, that the patent rights granted will not provide competitive advantages to us, or that any of our pending or future patent applications will not be granted. In addition, other intellectual property laws or our confidentiality procedures and contractual provisions may not adequately protect our intellectual property. Also, others may independently develop similar technology, duplicate our products, or design around our patents or other intellectual property rights. Unauthorized parties have copied and may in the future attempt to copy aspects of our products or to obtain and use information that we regard as proprietary. Any of these events could significantly harm our business, financial condition and operating results.

Product quality issues could adversely affect our reputation and could impact our operating results.

The market for our products is characterized by rapidly changing technology and evolving industry standards. To remain competitive, we must continually introduce new products and technologies. The products that we sell could contain defects in design or manufacture. Defects could also occur in the products or components that are supplied to us. There can be no assurance we will be able to detect and remedy all defects in the hardware and software we sell. Failure to do so could result in product recalls, product redesign efforts, lost revenue, loss of reputation, and significant warranty and other expenses to remedy.

Our effective tax rates may increase in the future, which could adversely affect our net income.

We operate in multiple jurisdictions and our profits are taxed pursuant to the tax laws of these jurisdictions. Our effective tax rate may be affected by changes in or interpretations of tax laws in any given jurisdiction, utilization of net operating loss and tax credit carryforwards, changes in geographical allocation of income and expense, and changes in management’s assessment of matters such as the realizability of deferred tax assets. In the past, we have experienced fluctuations in our effective income tax rate. Our effective income tax rate in a given fiscal year reflects a variety of factors that may not be present in the succeeding fiscal year or years. There is no assurance that our effective income tax rate will not change in future periods. The amount of income taxes we pay could be subject to ongoing audits in various jurisdictions and a material assessment by a governing tax authority could affect our profitability. If our effective tax rate increases in future periods, our net income could be adversely affected.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Share Repurchases

The following table sets forth certain information related to purchases made by Logitech of its equity securities (in thousands, except share and per share amounts):


	Total Number of Shares Purchased				Total Number of Shares Purchased as Part of Publicly Announced Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Programs



Period		Average Price Paid Per Share
Period		in USD		in CHF
July, 2008	—	$	—	CHF —	—	$	155,811
August, 2008	470,000	$	26.95	CHF 26.36	470,000		143,171
September, 2008	581,000	$	24.67	CHF 27.03	581,000		128,871

Total	1,051,000	$	25.69	CHF 26.73	1,051,000

During the three months ended September 30, 2008, we repurchased shares pursuant to our buyback program announced in June 2007 authorizing the purchase of an additional $250 million of our shares. The June 2007 program is in effect until the 2010 Annual General Meeting, unless concluded earlier or discontinued.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We held our Annual General Meeting of Shareholders on September 10, 2008. At the meeting, our shareholders voted on the following nine proposals and cast their votes as follows:

Proposal 1: To approve the Annual Report, the Compensation Report, the consolidated financial statements and the statutory financial statements of Logitech International S.A. for the fiscal year ended March 31, 2008


For		Against		Abstain	Non-Votes
69,106,697		28,640		2,036,334	—
99.96	%	0.04	%	N/A	N/A

The proposal was approved.

Proposal 2: To carry forward all retained earnings of CHF 316,586,000 (US $310,570,866 based on exchange rates on June 30, 2008) without payment of a dividend


For		Against		Abstain	Non-Votes
67,686,368		3,349,876		135,427	—
95.28	%	4.72	%	N/A	N/A

The proposal was approved.

Proposal 3: To decrease the conditional capital for employee equity incentive plans from an amount representing 60,661,860 shares to 25,000,000 shares


For		Against		Abstain	Non-Votes
64,923,527		165,145		1,218,882	4,864,117
99.75	%	0.25	%	N/A	N/A

The proposal was approved.

Proposal 4: To increase the shares available for issuance under the Company’s 1996 Employee Share Purchase Plan (U.S.) and the 2006 Employee Share Purchase Plan (Non-U.S.) by 4,000,000 shares


For		Against		Abstain	Non-Votes
65,629,114		489,269		189,171	4,864,117
99.26	%	0.74	%	N/A	N/A

The proposal was approved.

Proposal 5: To authorize the creation of conditional capital representing the issuance of up to 25,000,000 shares to cover any conversion rights under a future convertible bond issuance


For		Against		Abstain		Non-Votes
57,892,385		8,255,600		155,869		4,864,117
87.31	%	12.45	%	0.24	%	N/A

The proposal was approved.

Proposal 6: To approve the Logitech Management Performance Bonus Plan as it applies to Logitech executive officers


For		Against		Abstain	Non-Votes
50,113,384		20,523,784		532,103	—
70.94	%	29.06	%	N/A	N/A

The proposal was approved.

Proposal 7: To release the members of the Board of Directors for liability for activities during fiscal year 2008


For		Against		Abstain	Non-Votes
59,430,052		471,170		200,060	—
99.21	%	0.79	%	N/A	N/A

The proposal was approved.

Proposal 8: To elect nominees to the Board of Directors


Nominee	For		Against		Abstain	Non-Votes
Gerald Quindlen	68,927,867		327,573		1,914,231	—
	99.53	%	0.47	%	N/A	N/A
Richard Laube	70,707,571		265,426		196,174	—
	99.63	%	0.37	%	N/A	N/A
Matthew Bousquette	70,784,458		195,915		188,798	—
	99.72	%	0.28	%	N/A	N/A

All of the above nominees were elected to Logitech’s Board of Directors. Each of our directors serves a three-year term, with the terms of the directors staggered so that not all directors are up for election in any one year. This is a recommended practice under the Swiss Code of Best Practice for Corporate Governance, in order to help ensure continuity among the Board.

The 3-year terms of office of Logitech directors Erh-Hsun Chang, Kee-Lock Chua, Sally Davis, Guerrino De Luca, Robert Malcolm and Monika Ribar continued after the meeting. Mr. Gary Bengier retired from the Board at the 2008 Annual General Meeting, after serving a total of six years on Logitech’s Board.

Proposal 9: To re-elect PricewaterhouseCoopers S.A. as auditors


For		Against		Abstain	Non-Votes
70,877,194		195,171		96,806	—
99.73	%	0.27	%	N/A	N/A

The proposal was approved.

ITEM 6.

EXHIBITS

Exhibit Index


Exhibit No.		Description
3.1		Articles of Incorporation of Logitech International S.A. as amended.

10.1		Logitech, Inc. Management Deferred Compensation Plan.

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

32.1		Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.**

This exhibit is furnished herewith, but not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section. Such certifications will not be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act, except to the extent that we explicitly incorporate them by reference.

SIGNATURES

Pursuant to the requirements the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LOGITECH INTERNATIONAL S.A.

/s/ Gerald P. Quindlen

Gerald P. Quindlen

President and Chief Executive Officer

/s/ Mark J. Hawkins

Mark J. Hawkins

Chief Financial Officer and U.S. Representative

November 4, 2008

Exhibit 3.1

LOGITECH INTERNATIONAL S.A.

ARTICLES OF INCORPORATION

APPROVED BY THE ANNUAL GENERAL MEETING OF SHAREHOLDERS

ON SEPTEMBER 10, 2008

TITLE 1

CORPORATE NAME – REGISTERED OFFICE – PURPOSE – DURATION

Article 1

There exists under the corporate name

“ Logitech International S.A. ”

a corporation ( société anonyme ) governed by the present Articles of Incorporation and by Title twenty-six of the Swiss Code of Obligations (the “CO”).

The duration of the Company shall be indefinite.

The registered office is in Apples.

Article 2

The Company shall be a holding company with the purpose of coordinating the activities of various Swiss and foreign subsidiaries of the Logitech group.

In addition, it shall have as a purpose the acquisition and management of shareholdings in other companies, and in particular the acquisition, holding and/or assignment of shareholdings in other commercial, industrial, financial or real property companies and enterprises, in Switzerland or abroad, directly or indirectly, in its own name and for its own account, or for the accounts of third parties, as investments or for other reasons, as well as for the financing of affiliated companies.

The Company may conduct, in Switzerland or abroad, any manner of activities, create branch offices, and undertake any real estate, financial or commercial operations which relate directly or indirectly to its purpose.

TITLE II

SHARE CAPITAL AND SHARES

Article 3

The share capital is fixed at CHF 47,901,655.- (forty-seven million nine hundred one thousand six hundred fifty-five Swiss francs), entirely paid-in.

It is divided into 191,606,620 (one hundred ninety-one million six hundred six thousand six hundred twenty) registered shares with a nominal value of CHF 0.25 (twenty-five centimes) each.

Article 4

The shares shall be registered. They shall be numbered and shall bear the facsimile signatures of two members of the Board of Directors.

The general meeting of shareholders shall have the authority to convert the registered shares into bearer shares by means of an amendment to the Articles of Incorporation.

The Company shall have the authority to issue certificates representing blocks of shares.

The Company may forego the printing of registered shares and issuing of securities. However, any shareholder may require that the Company print and issue stock certificates at any time and free of charge. The Board of Directors shall set forth in regulations the details and the requirements for the execution thereof.

Article 5

Each share shall confer the right to a proportional part of the profit resulting from the balance sheet and the proceeds of liquidation.

Shareholders shall only have those obligations specified in the Articles of Incorporation, and shall not be personally liable for the debts of the Company.

Shares shall be indivisible; the Company shall recognize only one representative per share.

The ownership of a share shall entail acceptance of the provisions of these Articles of Incorporation.

Article 6

The Company shall maintain a share register which lists the names of the owners and beneficiaries of the shares as well as their domiciles.

Only those persons entered in the share register as owners shall be deemed to be shareholders of the Company.

The transfer of share ownership shall require delivery of the properly endorsed share certificate to the purchaser.

Registered shares not incorporated into a certificate as well as the respective rights associated therewith which are not incorporated into any certificate may be transferred only by assignment. Such assignment shall be valid only if the Company has been notified thereof.

When a shareholder appoints a bank as his agent to manage registered shares not incorporated into a certificate, such shares and the respective rights attached thereto likewise not incorporated into any certificate may be transferred only with the consent of said bank. Share pledging shall be possible only for the benefit of that bank; it is not necessary that the Company be notified.

Article 7

Should a shareholder change his address, he must so inform the Company. As long as a shareholder has not provided notice of a change of address to the Company, any written communication shall be validly made to his last address entered in the share register.

TITLE III

THE ORGANIZATION OF THE COMPANY

A. GENERAL MEETING OF SHAREHOLDERS

Article 8

The general meeting of shareholders shall be the supreme authority of the Company. It holds the inalienable rights provided for under Art. 698 of the CO.

The general meeting of shareholders shall convene at the place designated by the Board of Directors.

One or more shareholders who represent together at least ten per cent of the share capital may demand that a general meeting of the shareholders be called. One or more shareholders, who represent together shares representing at least the lesser of (i) one (1) percent of the share capital or (ii) an aggregate nominal value of CHF 1,000,000 (one million Swiss Francs), may demand that an item be included on the agenda for a shareholders’ meeting. A shareholder demand to call a meeting and to include an item on the agenda shall be made in writing and shall describe the matters to be considered and any proposals to be made to the shareholders. Such written request shall be received by the Board of Directors at least sixty (60) days before the date proposed for the general meeting of shareholders.

Article 9

The general meeting of shareholders shall be called in writing by notices sent to each shareholder at the address entered in the share register at least twenty days before the date of the meeting.

Article 10

Each share confers the right to one vote.

Article 11

Any shareholder may appoint a representative who need not be a shareholder, provided that person holds a written proxy. Members of the Board of Directors who are present shall decide whether to accept or refuse such proxies.

Article 12

The general meeting of shareholders shall be presided over by the chairman of the board or any other member of the Board of Directors. In the absence of such persons, the chairman shall be appointed by the general meeting.

The chairman shall appoint the secretary of the general meeting and the scrutineers.

Article 13

In the absence of any provision to the contrary in the law or these Articles of Incorporation, the general meeting of shareholders shall make resolutions and proceed to elections by an absolute majority of the votes cast. In the event of a tie vote, the vote of the chairman shall decide.

As a general rule, voting and elections shall be conducted by a show of hands; however, a secret ballot shall be used when the chairman so orders or when 25 shareholders present at the meeting shall so request.

B. BOARD OF DIRECTORS

Article 14

The Board of Directors of the Company shall be composed of at least three members appointed by the general meeting of shareholders for a term of three years and who shall be indefinitely re-eligible.

The Board of Directors shall organize itself. It shall be called to a meeting by the chairman as often as business requires.

Article 15

The Board of Directors shall make decisions and proceed to elections by a majority vote of the members present at the meeting. In the event of a tie vote, the vote of the chairman shall decide.

The decisions of the Board of Directors may be made in the form of a written consent (given by letter, fax or telegram) to a proposal, such consent representing a majority of all the members of the Board of Directors inasmuch as the proposal was submitted to all the members of the Board of Directors, unless a discussion is requested by one of them.

Article 16

The Board of Directors shall have the non-transferable and inalienable powers provided for under Art. 716a of the CO.

It may make decisions on any matters which have not been reserved to the general meeting of shareholders.

Article 17

The Board of Directors may, in compliance with the organizational regulations, entrust the management and the representation of the Company to one or more of its members (delegates) or to third parties (managers) who need not be shareholders.

Article 18

In countries where laws or customs require for companies that important documents, or those subject to certain conditions of form have a seal, a seal may be affixed next to the signature.

The Board of Directors shall determine those seals and set the rules regarding the use thereof.

C. AUDITORS

Article 19

The general meeting of shareholders shall appoint one or several auditors as statutory auditors. It may appoint substitute auditors.

The tenure of the auditors shall be one year; such term shall end during the general meeting of shareholders to which the annual report must be submitted. Reappointment shall be possible.

TITLE IV

BUSINESS YEAR, ANNUAL ACCOUNTS AND ALLOCATION OF PROFITS

Article 20

The business year shall begin on April 1st and end on March 31st.

Article 21

Five per cent of the annual profits shall be allocated to the general reserve until such reaches twenty per cent of the paid in share capital. Should the general reserve be used in any amount the allocation of profits shall be made until this level is reached again.

The balance of the profits arising from the balance sheet shall be distributed according to the resolutions of the general meeting of shareholders, upon proposition of the Board of Directors; however, the mandatory legal provisions of the law relating to the legal reserve must be complied with.

Article 22

Dividends shall be paid at the time specified by the Board of Directors. Any dividend which has not been claimed within five years of it becoming due is time-barred by statute of limitations and shall be forfeited to the Company by simple right and automatically.

TITLE V

LIQUIDATION

Article 23

The general meeting of shareholders shall retain its right to approve the accounts at the time of liquidation and shall have the authority to discharge the liquidators with respect to their activities in connection therewith.

After payment of liabilities, the assets of the dissolved Company shall be distributed among the shareholders pro rata according to the par value of each such shareholders’ shares.

TITLE VI

PUBLIC NOTICES – COMMUNICATIONS

Article 24

Public notices by the Company shall be made in the Feuille Officielle Suisse du Commerce (Swiss Official Commercial Gazette).

TITLE VII

CONDITIONAL CAPITAL

Article 25

By the exercise of share option or other rights granted to certain employees, officers and directors of the group according to the group’s employee equity incentive plans, the share capital of the Company may be increased at most by CHF 6,250,000 (six million two hundred fifty thousand Swiss Francs) by way of the issue of 25,000,000 (twenty-five million) registered shares with a nominal value of CHF 0.25 (twenty-five centimes) each.

The shareholders’ preferential subscription rights shall be eliminated for such new shares.

Article 26

By the exercise of conversion rights which are granted in relation with the issue of convertible bonds, the share capital of the Company shall be increased by a maximum aggregate amount of CHF 6,250,000 (six million, two hundred fifty thousand Swiss Francs) through the issuance to the holders of such bonds of a maximum of 25,000,000 (twenty-five million) fully paid-in registered shares with a nominal value of CHF 0.25 (twenty-five centimes) each.

The shareholders shall not have the right to subscribe by preference for the shares issuable on conversion of the bonds.

The Board of Directors may limit or withdraw the shareholders’ right to subscribe for the bonds by preference for valid reasons, in particular (a) if the bonds are issued in connection with the financing or refinancing of the acquisition of one or more companies, businesses or parts of businesses, or (b) to facilitate the placement of the bonds on the international markets or to increase the security holder base of the Company.

If the shareholders’ right to subscribe for the bonds by preference is limited or withdrawn, the bonds must be issued at market conditions, the exercise period of the conversion rights must not exceed 7 (seven) years from the date of issuance of the bonds, and the conversion price must be set at a level that is not lower than the market price of the shares preceding the determination of the final conditions for the bonds.

***********

These articles of incorporation were approved on June 24 ^th , 1993, and modified on June 27 ^th , 1996, February 13 ^th , 1998, June 25 ^th , 1998, June 23 ^rd and June 29 ^th , 2000, March 19 ^th , 2001, May 1 ^st , 2001, June 1 ^st and 28 ^th , 2001, June 26 ^th and 27 ^th , 2002, June 24 ^th , 2004, June 16 ^th , 2005, June 16 ^th , 2006, June 19 ^th , June 20 ^th , 2007, September 10, 2008 and September 11, 2008.

The above text is a translation of the original French articles of incorporation (Statuts), which constitute the definitive text and are binding in law.

EXHIBIT 10.1

LOGO

LOGITECH INC.

MANAGEMENT DEFERRED COMPENSATION PLAN

ADOPTED EFFECTIVE JANUARY 1, 1997

AMENDED AND RESTATED EFFECTIVE JULY 1, 2002

FURTHER AMENDED AND RESTATED EFFECTIVE JULY 1, 2003

AND OCTOBER 31, 2005 ¹

¹	Note: The Plan is being administered in accordance with the terms of Section 409A of the Internal Revenue Code. The terms are not reflected in the Plan document.

TABLE OF CONTENTS


		Page
ARTICLE I TITLE AND DEFINITIONS		2
1.1 Title		2
1.2 Definitions		2

ARTICLE II PARTICIPATION		5
2.1 Participation		5

ARTICLE III DEFERRAL ELECTIONS		5
3.1 Elections to Defer Compensation		5
3.2 Company Contributions		6
3.3 Investment Elections		6

ARTICLE IV ACCOUNTS		7
4.1 Participant Accounts		7

ARTICLE V VESTING		8
5.1 Account		8

ARTICLE VI GENERAL DUTIES		9
6.1 Trustee Duties		9
6.2 Company Contributions		9
6.3 Department of Labor Determination		9
6.4 Trust Agreement		9

ARTICLE VII DISTRIBUTIONS		9
7.1 Distribution of Deferred Compensation — Termination of Employment		9
7.2 Early Distributions — Payout		11
7.3 Early Distributions — Withdrawal		11
7.4 Unforeseeable Emergency		12
7.5 Inability To Locate Participant		12

ARTICLE VIII ADMINISTRATION		13
8.1 Committee		13
8.2 Committee Action		13
8.3 Powers and Duties of the Committee		13
8.4 Construction and Interpretation		14
8.5 Information		14
8.6 Compensation, Expenses and Indemnity		14
8.7 Quarterly Statements		15

ARTICLE IX MISCELLANEOUS		15
9.1 Unsecured General Creditor		15
9.2 Restriction Against Assignment		15
9.3 Withholding		15


9.4 Amendment, Modification, Suspension or Termination		15
9.5 Governing Law		16
9.6 Receipt or Release		16
9.7 Payments on Behalf of Persons Under Incapacity		16
9.8 No Employment Rights		16
9.9 Headings, etc. Not Part of Agreement		16

LOGITECH INC.

MANAGEMENT DEFERRED COMPENSATION PLAN

This Plan, effective as of January 1, 1997 (the “Effective Date”), is adopted by Logitech Inc. (the “Company”), acting on behalf of itself and its designated subsidiaries. The Plan was amended and restated effective as of July 1, 2002 and further amended and restated effective as of July 1, 2003 and October 31, 2005. ² Throughout, the term “Company” shall include wherever relevant any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity or investment interest, as determined by the Company.

RECITALS

1. The Company wishes to establish a supplemental retirement plan for the benefit of a select group of management or highly compensated employees of the Company.

2. The Company wishes to provide that the plan to be established shall be designated as the Logitech Inc. Management Deferred Compensation Plan (the “Plan”).

3. The Company wishes to provide under the plan for the payment of vested accrued benefits to Plan participants and their beneficiary or beneficiaries (“Trust Beneficiaries”).

4. The Company wishes to provide under the Plan that the Company shall pay all of the accrued benefits from its general assets.

5. The Company intends to enter into an agreement (the “Trust Agreement”) with a person or persons, including an entity, who shall serve as trustee (the “Trustee”) under an irrevocable trust (the “Trust”) to be used in connection with the Plan.

6. The Company wishes to make contributions to the Trust so that such contributions to be held by the Trustee and invested, reinvested and distributed, all in accordance with the provisions of this Plan and the Trust Agreement.

7. The Company intends that amounts allocated to the Trust and the earnings thereon shall be used by the Trustee to satisfy the liabilities of the Company under the Plan with respect to each plan participant for whom an Account has been established and such utilization shall be in accordance with the procedures set forth herein.

8. The Company intends that the Trust be a “grantor trust” with the principal and income of the Trust treated as assets and income of the Company for federal and state income tax purposes.

²	Note: The Plan is being administered in accordance with the terms of Section 409A of the Internal Revenue Code. The terms are not reflected in the Plan document.

9. The Company intends that the assets of the Trust shall at all times be subject to the claims of the general creditors of the Company as provided in the Trust Agreement.

10. The Company intends that the existence of the Trust shall not alter the characterization of the Plan as “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and shall not be construed to provide income to Plan participants under the Plan prior to actual payment of the vested accrued benefits thereunder.

NOW THEREFORE, the Company does hereby establish the Plan as follows and does also hereby agree that the Plan shall be structured, held and disposed of as follows:

ARTICLE I

TITLE AND DEFINITIONS

1.1 Title . This Plan shall be known as the Logitech, Inc. Management Deferred Compensation Plan.

1.2 Definitions . Whenever the following words and phrases are used in this Plan, with the first letter capitalized, they shall have the meanings specified below.

“Account” means for each Participant the bookkeeping account maintained by the Committee that is credited with amounts equal to (1) the portion of the Participant’s Salary that he or she elects to defer, (2) the portion of the Participant’s Bonus that he or she elects to defer, (3) the portion of the Participant’s Commissions that he or she elects to defer, (4) Company contributions trade to the Plan for the Participant’s benefit, and (5) adjustments to reflect deemed earnings pursuant to Section 4.1(d).

“Beneficiary” or “Beneficiaries” means the beneficiary last designated in writing by a Participant in accordance with procedures established by the Committee to receive the benefits specified hereunder in the event of the Participant’s death. No beneficiary designation shall become effective until it is filed with the Committee during the Participant’s lifetime.

“Board of Directors” or “Board” means the Board of Directors of the Company.

“Bonus” means any cash-based incentive compensation payable to a Participant in addition to the Participant’s Salary.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commissions” means any cash-based commission compensation payable to a Participant.

“Committee” means the Committee appointed by the Board to administer the Plan in accordance with Article VIII.

“Company” means Logitech Inc., any successor corporation and any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity or investment interest, as determined by the Company.

“Compensation” means the Salary, Commissions and Bonus that the Participant is entitled to for services rendered to the Company.

“Deferral Base Amount” means the amount used for purposes of calculating a Participant’s death benefit pursuant to Section 7.1(c). A Participant’s Deferral Base Amount shall be the total Compensation deferred by a deceased Participant for the Plan Year immediately preceding the Participant’s death; provided, however, that if the Participant did not make any deferrals for such Plan Year, or if the Participant deferred Compensation for only a portion of the preceding Plan Year, then the Participant’s Deferral Base Amount shall be the sum of (i) the Compensation deferred by the Participant for the Plan Year of his or her death, plus (ii) an amount determined by the Committee in its sole discretion to approximate the deferrals the Participant would have made for such Plan Year absent death making reasonable assumptions as to the Participant’s Compensation for such period and applying the deferral percentages in effect at the time of the Participant’s death.

“Distributable Amount” means the amount credited to a Participant’s Account.

“Early Retirement Date” means the date on which an Employee attains age 55.

“Effective Date” means January 1, 1997.

“Eligible Employee” means a common law employee of the Company who is on the payroll of Logitech Inc. and is designated as an Eligible Employee by the Committee. For Plan Years prior to January 1, 2006, the Committee will designate an individual as an Eligible Employee only if his or her annual Salary equals or exceeds $115,000. For Plan Years beginning on or after January 1, 2006, the Committee will designate an individual as an Eligible Employee only if (i) he or she was a Participant at any time prior to January 1, 2006 and his or her annual Salary equals or exceeds $115,000, or (ii) his or her annual Salary equals or exceeds $140,000, or (iii) his or her combined Salary and target annual Commission equals or exceeds $140,000. The Committee will not designate an individual as an Eligible Employee on or after January 1, 2002, if he or she is considered an “expatriate” under the Company’s policies. Only employees who are highly compensated or members of a select group of management shall be eligible to participate in the Plan. An individual’s status as an Eligible Employee for a Plan Year shall be determined immediately prior to the first day of such Plan Year or, if applicable, immediately prior to the first day of his or her Initial Election Period.

“Fund” or “Funds” means one or more of the funds or contracts selected by the Committee pursuant to Section 3.3.

“Initial Election Period” for an Eligible Employee means the later of January 1, 1997 or the 30-day period following the Eligible Employee’s date of hire or promotion.

“Insurable Participant” means a Participant who satisfies underwriting standards for the issuance of life insurance determined by the insurance company selected by the Company to provide the pre-distribution death benefit described in Section 7.1(c).

“Interest Rate” means, for each Fund, an amount equal to the net rate of gain or loss on the assets of such Fund during each valuation period.

“Normal Retirement Date” means the date on which an Employee attains age 65.

“Participant” means any Eligible Employee who elects to defer Compensation in accordance with Section 3.1.

“Payment Eligibility Date” means the first day of the month following the calendar quarter in which a Participant terminates employment or dies, or if not such date, as soon as administratively possible thereafter.

“Plan” means the Logitech Inc. Management Deferred Compensation Plan set forth herein, now in effect, or as amended from time to time.

“Plan Year” means the 12-consecutive month period beginning January 1 and ending December 31.

“Retirement Date” means a Participant’s Early or Normal Retirement Date, as applicable.

“Salary” means the Employee’s base salary for the Plan Year. Salary excludes any other form of compensation such as bonuses, restricted stock, proceeds from stock options or stock appreciation rights, severance payments, moving expenses, car or other special allowance, or any other amounts included in an Eligible Employee’s taxable income that is not compensation for services. Deferral elections shall be computed before taking into account any reduction in taxable income by salary reduction under Code Sections 125 or 401(k), or under this Plan.

ARTICLE II

PARTICIPATION

2.1 Participation . An Eligible Employee shall become a Participant in the Plan by electing to defer all or a portion of his or her Compensation in accordance with Section 3.1, by completing an application for the life insurance benefit described in Section 7.1(c), and complying with any applicable medical underwriting requirements of the insurance company.

ARTICLE III

DEFERRAL ELECTIONS

3.1 Elections to Defer Compensation .

(a) Initial Election Period . Each Eligible Employee may elect to defer Compensation by filing with the Committee an election that conforms to the requirements of this Section 3.1, on a form provided by the Committee, no later than the last day of his or her Initial Election Period.

(b) General Rule . Subject to the limitations set forth in paragraph (c) below, the amount of Compensation which an Eligible Employee may elect to defer in 2002 and subsequent years is as follows:

(1)

Any whole percentage of Salary up to 80%;

(2)

Any whole percentage of Bonus up to 90%; and/or

(3)

Any whole percentage of Commissions up to 90%;

provided, however, that no election shall be effective to reduce the Compensation paid to an Eligible Employee for a calendar year to an amount that is less than the amount necessary to pay applicable employment taxes (e.g., FICA, hospital insurance, SDI) payable with respect to amounts deferred hereunder, amounts necessary to satisfy any other benefit plan withholding obligations, any resulting income taxes payable with respect to Compensation that cannot be so deferred, and any amounts necessary to satisfy any wage garnishment or similar type obligations.

(c) Minimum Deferrals . For each Plan Year during which the Eligible Employee is a Participant, the minimum dollar amount that may be deferred under this Section 3.1 is $2,500.

(d) Effect of Initial Election . An election to defer Compensation during an Initial Election Period shall be effective with respect to Salary earned during the first pay period beginning after the Initial Election Period and to the Commissions and Bonus payable during the Plan Year in which the election is made.

(e) Duration of Compensation Deferral Election . Any Compensation deferral election made under paragraph (a) or paragraph (f) of this Section 3.1 shall remain in effect, notwithstanding any change in the Participant’s Compensation, until changed or terminated in accordance with the terms of this paragraph (e); provided, however, that such election shall terminate for any Plan Year for which the Participant is not an Eligible Employee. A Participant may increase, terminate and, subject to the minimum deferral request of Section 3.1(c), decrease his or her Compensation deferral election, effective for Salary earned (and in the case of Bonus and Commissions, paid with respect to services performed) during pay periods beginning after the beginning of the next succeeding Plan Year, by filing a new election, in accordance with the terms of this Section 3.1, with the Committee on or before the preceding December 15. In addition, and notwithstanding anything in the Plan to the contrary, a Participant may request a termination of his or her Compensation deferral election at any time in the event of an unforeseen financial hardship as determined by the Committee in its discretion. In the event the Committee permits a Participant to terminate his or her Compensation deferral election, no further Compensation shall be deferred for the Participant’s Account, provided that the Participant may resume Compensation deferral effective for Compensation earned during pay periods beginning after the beginning of the next succeeding Plan Year, by filing a new election, in accordance with the terms of Section 3.1, with the Committee on or before the preceding December 15.

(f) Elections Other Than Elections During the Initial Election Period . Any Eligible Employee who fails to elect to defer Compensation during his or her Initial Election Period may subsequently become a Participant, and any Eligible Employee who has terminated a prior deferral election may elect to again defer Compensation, by filing an election, on a form provided by the Committee, to defer Compensation as described in paragraph (b) above. An election to defer Compensation must be filed on or before December 15 and will be effective for Salary earned (and in the case of Bonus and Commissions, paid with respect to services performed) during pay periods beginning after the following January 1.

3.2 Company Contributions . The Company may, in its sole discretion, make discretionary contributions to the Accounts of one or more Participants at such times and in such amounts as the Board may determine.

3.3 Investment Elections . The Committee may, in its discretion, provide each Participant with a list of investment Funds available for hypothetical investment, and the Participant may designate, on a form provided by the Committee, one or more Funds that his or

her Account will be deemed to be invested in for purposes of determining the amount of earnings to be credited to that Account. The Committee may, from time to tune, in its sole discretion select a commercially available fund or contract to constitute the Fund actually selected. The Interest Rate of each such commercially available fund or contract shall be used to determine the amount of earnings to be credited to Participants’ Accounts under Section 4.1(d).

In making the designation pursuant to this Section 3.3, the Participant may specify that all or any whole number percentage of his or her Account be deemed to be invested in one or more of the Funds offered by the Committee. Effective as of the end of any calendar month, a Participant may change the designation made under this Section 3.3 by filing an election, on a form provided by the Committee, prior to the end of such month. If a Participant fails to elect a Fund under this Section 3.3, he or she shall be deemed to have elected a money market or similar Fund.

The Company may, but need not, acquire investments corresponding to those designated by the Participants hereunder, and it is not under any obligation to maintain any investment it may make. Any such investments, if made, shall be in the name of the Company, and shall be its sole property in which no Participant shall have any interest.

ARTICLE IV

ACCOUNTS

4.1 Participant Accounts .

The Committee shall establish and maintain an Account for each Participant under the Plan. Each Participant’s Account shall be further divided into separate subaccounts (“investment fund subaccounts”), each of which corresponds to an investment fund or contract elected by the Participant pursuant to Section 3.3(a). A Participant’s Account shall be credited as follows:

(a) As of the last day of each month, the Committee shall credit the investment fund subaccounts of the Participant’s Account with an amount equal to Salary deferred by the Participant during each pay period ending in that month in accordance with the Participant’s election; that is, the portion of the Participant’s deferred Salary that the Participant has elected to be deemed to be invested in a certain type of investment fund shall be credited to the investment fund subaccount corresponding to that investment fund.

(b) As of the last day of the month in which the Commissions or Bonus or partial Bonus would have been paid, the Committee shall credit the investment fund subaccounts of the Participant’s Account with an amount equal to the portion of the Commissions or Bonus deferred by the Participant’s election; that is, the portion of the Participant’s deferred Commissions or Bonus that the Participant has elected to be deemed to be invested in a certain type of investment fund shall be credited to the investment fund subaccount corresponding to that investment fund.

(c) As of the last day of the Plan Year or such earlier time or times as the Committee may determine, the Committee shall credit the investment fund subaccounts of the Participant’s Account with an amount equal to the portion, if any, of any Company contribution made to or for the Participant’s benefit in accordance with Section 3.3; that is, the portion of the Participant’s Company contribution, if any, that the Participant has elected to be deemed to be invested in a certain type of investment fund shall be credited to the investment fund subaccount corresponding to that investment fund.

(d) As of the last day of each valuation period, each investment fund subaccount of a Participant’s Account shall be credited with earnings in an amount equal to that determined by multiplying the balance credited to such investment fund subaccount as of the last day of the preceding valuation period by the Interest Rate for the corresponding Fund selected by the Company. Valuations shall be effected monthly or daily, as determined by the Committee.

ARTICLE V

VESTING

5.1 Account .

(a) Compensation Deferrals . A Participant’s Account attributable to Compensation deferred by a Participant pursuant to the terms of this Plan, together with any amounts credited to the Participant’s Account under Section 4.1(d) with respect to such deferrals, shall be 100% vested at all times.

(b) Company Contributions . The value of a Participant’s Account attributable to any Company contributions pursuant to Section 3.2 shall vest at such time or times as the Board shall specify in connection with any such contributions. Unless otherwise specified by the Board, Participants shall be 100% vested in such amounts, together with any amounts credited to the Participant’s Account under Section 4.1(d) with respect to such amounts.

ARTICLE VI

GENERAL DUTIES

6.1 Trustee Duties . The Trustee shall manage, invest and reinvest the Trust Fund as provided in the Trust Agreement. The Trustee shall collect the income on the Trust Fund, and make distributions therefrom, all as provided in this Plan and in the Trust Agreement.

6.2 Company Contributions . While the Plan remains in effect, the Company shall make contributions to the Trust Fund at least once each quarter. The amount of any quarterly contribution shall be at the discretion of the Committee. At the close of each calendar year, the Company shall make an additional contribution to the Trust Fund to the extent that previous contributions to the Trust Fund for the current calendar year are not equal to the total of the Compensation deferrals made by each Participant plus Company contributions, if any, accrued as of the close of the current calendar year. The Trustee shall not be liable for any failure by the Company to provide contributions sufficient to pay all accrued benefits under the Plan in accordance with the terms of this Plan.

6.3 Department of Labor Determination . In the event that any Participants are found to be ineligible, that is, not members of a select group of highly compensated employees, according to a determination made by the Department of Labor, the Committee shall take whatever steps it deems necessary, in its sole discretion, to equitably protect the interests of the affected Participants.

6.4 Trust Agreement . The Trust Agreement shall conform to the terms of the model trust described in Revenue Procedure 92-64 issued by the Internal Revenue Service.

ARTICLE VII

DISTRIBUTIONS

7.1 Distribution of Deferred Compensation — Termination of Employment .

(a) Employment Termination after Retirement Date, etc . In the case of a Participant who terminates employment with the Company on or after his or her Retirement Date or as a result of the Participant’s long-term disability (as defined in the Company’s long-term disability plan for employees) or death, the Distributable Amount shall be paid to the Participant (and after his death to his or her Beneficiary) in a lump sum on his or her Payment Eligibility Date. Notwithstanding the foregoing, a Participant described in the preceding sentence may elect quarterly installments over two, five, 10 or 15 years beginning on the Participant’s Payment Eligibility Date, provided that his or her election is filed with the Committee at least one year prior to his or her Payment Eligibility Date. Notwithstanding this subsection, if the Participant’s Distributable Amount is $25,000 or less, the Distributable Amount shall automatically be distributed in the form of a cash lump sum on the

Participant’s Payment Eligibility Date. To the extent the Distributable Amount is paid in installments, the Participant’s Account shall continue to be credited with earnings pursuant to Section 4.1(d) of the Plan and the installment amount shall be adjusted annually to reflect gains and losses until all amounts credited to his or her Account under the Plan have been distributed.

(b) Employment Termination Before Retirement Date . In the case of a Participant whose Payment Eligibility Date occurs for reasons other than a long-term disability, termination after attaining Retirement Age or death, the Distributable Amount shall be paid to the Participant in the form of a cash lump sum on the Participant’s Payment Eligibility Date.

(c) Life Insurance (if applicable) . In the case of a Participant who dies while employed by the Company, the following benefits shall be provided:

(1) That portion of the death benefit of any life insurance policy purchased by the Company to insure the life of the Participant (the “Policy”) which is equal to the lesser of (i) the actual Policy death benefit or (ii) 15 times the Participant’s Deferral Base Amount shall be paid to Participant’s beneficiary under the Policy by the insurance company which issued the Policy. Any such Policy shall be subject to the conditions set forth in a “Split-Dollar Life Insurance Agreement” between the Participant and the Trustee, pursuant to which the Participant may designate a beneficiary with respect to the portion of the Policy proceeds described in the preceding sentence in the event the Participant dies prior to terminating employment with the Company. The Participant shall have the right to designate and change such beneficiary (which need not be his Beneficiary as determined under Section 1.2 hereof) at any time on a form provided by and filed with the insurance company, and the life insurance proceeds designated in this paragraph (1) shall be paid to such beneficiary.

The benefit payable pursuant to this paragraph (1) shall be paid only with respect to a Participant who is, at the time of death, deferring Compensation under the Plan. In addition, benefits shall be paid only if a Policy has been issued on the Participant’s life and is in force at the time of the Participant’s death and any such payment shall be subject to all conditions and exceptions set forth in the Policy. Death benefits payable pursuant to this paragraph shall be in addition to any other Company-sponsored life insurance benefits under any other Policy plan or program provided by the Company. Notwithstanding any provision of this Plan or any other document to the contrary, the Company shall not have any obligation to pay the Participant or his Beneficiary any amounts described in this Section 7.1(c). Any such amounts shall be payable solely from the proceeds of the Policy, and if no Policy is in force, no payment shall be made. Furthermore, the Company is not obligated to maintain any Policy, and no death benefit shall be payable hereunder if the Company has been notified by the Committee to discontinue the Policy for the Participant. In addition, no Policy shall be allocated to any Account.

(2) The Distributable Amount shall be paid to the Participant’s Beneficiary in a lump sum unless the Participant elected a quarterly distribution under Section 7.1(a), in which case the Participant’s Account shall continue to be credited with earnings pursuant to Section 4.1(d) of the Plan until all amounts credited to his or her Account under the Plan have been distributed.

(d) If the Participant is in pay status at the time of death, the Beneficiary shall be paid the remaining quarterly installments as they come due.

7.2 Early Distributions — Scheduled In-Service Withdrawals . Notwithstanding Section 7.1, a Participant may elect to receive all or a portion of his or her Accounts prior to terminating employment with the Company by filing an election (a “Payout Election”). A Participant may make a Payout Election during the Initial Election Period or on or before the December 15 in any Plan Year. The Payout Election shall be made on a form provided by the Committee and shall be subject to such terms and conditions as the Committee may specify. A Payout Election may not specify a date that is within two years beyond the end of the Plan Year in which the Payout Election is made and shall apply to all Compensation that is deferred by the Participant beginning (i) in the case of a Payout Election made during the Initial Election Period, with the first pay period after the Initial Election Period, and (ii) in the case of a Payout Election made other than during the Initial Election Period, with the pay period beginning after the following January 1, provided that the Participant may specify the Plan Years with respect to which deferred amounts will be distributed pursuant to a Payout Election. A Participant may either cancel or make a one-time deferral to a later date of a Payout Election at least one year prior to the scheduled Payout date by filing a new distribution election with the Committee, subject to such other terms and conditions as the Committee may establish. A Participant who has made a one-time deferral of a Payout Election may then cancel, but not further defer, a deferred Payout Election, by following the procedures in the preceding sentence. If a Participant cancels a Payout Election in accordance with this Section 7.2 the distribution of the Participant’s Distribute Amount that was subject to the cancelled Payout Election shall be governed by Sections 7.1, 7.3 and 7.4. Notwithstanding the foregoing in this Section, in the event the Participant’s employment with the Company terminates for any reason, the Participant’s Payout Election, if any, shall be disregarded, and the distribution of the Participant’s Distributable Amount shall be governed by Sections 7.1, 7.3 and 7.4.

7.3 Early Distributions — Withdrawal . Participants shall be permitted to withdraw amounts from their Accounts before termination of their employment with the Company or the scheduled payout date under their Payout Election, or, in the case of a Participant who terminated employment with the Company on or after his or her Retirement Date and elected payment of his or her Distributable Amount in quarterly installments, such Participant shall be permitted to withdraw amounts from his or her Account after the termination of employment with the Company (“Early Distributions”), subject to the following restrictions:

(a) The election to take an Early Distribution shall be made by filing a form provided by and filed with the Committee prior to the end of any calendar month.

(b) The amount payable to a Participant in connection with an Early Distribution shall in all cases equal 90% of the amount requested by the Participant; provided, however, that the maximum amount payable to a Participant in connection with an Early Distribution shall be 90% of the Distributable Amount as of the end of the calendar month in which the Early Distribution election is made.

(c) The amount described in subsection (b) above shall be paid in a single cash lump sum as soon as practicable after the end of the calendar month in which the Early Distribution election is made.

(d) If a Participant receives an Early Distribution, the remaining portion of the requested amount, as applicable (i.e., 10% of such amount), shall be permanently forfeited and the Company shall have no obligation to the Participant or his Beneficiary with respects to such forfeited amount.

(e) If a Participant receives an Early Distribution, the Participant shall be ineligible to Participate in the Plan for the balance of the Plan Year in which the Early Distribution occurs and the following Plan Year.

(f) A Participant shall be limited to a maximum of two Early Distributions during all of his or her periods of Plan Participation.

7.4 Unforeseeable Emergency . The Committee may, pursuant to rules adopted by it and applied in a uniform manner, accelerate the date of distribution of a Participant’s Account because of an Unforeseeable Emergency at any time. “Unforeseeable Emergency” shall mean an unforeseeable, severe financial condition resulting from (a) a sudden and unexpected illness or accident of the Participant or his or her dependent (as defined in Section 152(a) of the Code); (b) loss of the Participant’s property due to casualty, or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, but which may not be relieved through other available resources of the Participant, as determined by the Committee in accordance with uniform rules adopted by it. Distribution pursuant to this subsection of less than the Participant’s entire interest in the Plan shall be made pro rata from his or her assumed investments according to the balances in such investments. Subject to the foregoing, payment of any amount with respect to which a Participant has filed a request under this subsection shall be made as soon as practicable after approval of such request by the Committee. Any withdrawal approved by the Committee under this subsection shall be limited to the amount necessary to meet the Unforeseeable Emergency.

7.5 Inability to Locate Participant . In the event that the Committee is unable to locate a Participant or Beneficiary within two years following the Participant’s Payment Eligibility Date, the amount allocated to the Participant’s Deferral Account shall be forfeited. If, after such forfeiture, the Participant or Beneficiary later claims such benefit, such benefit shall be reinstated without interest or earnings.

ARTICLE VIII

ADMINISTRATION

8.1 Committee . A Committee shall be appointed by, and serve at the pleasure of, the Board. The number of members comprising the committee shall be determined by the Board which may from time to time vary the number of members. A member of the Committee may resign by delivering a written notice of resignation to the Board. The Board may remove any member by delivering a certified copy of its resolution of removal to such member. Vacancies in the membership of the Committee shall be filled promptly by the Board.

8.2 Committee Action . The Committee shall act at meetings by affirmative vote of a majority of the members of the Committee. Any action permitted to be taken at a meeting may be taken without a meeting if, prior to such action, a written consent to the action is signed by all members of the Committee and such written consent if filed with the minutes of the proceedings of the Committee. A member of the Committee shall not vote or act upon any matter which relates solely to himself or herself as a Participant. The Chairman or any other member or members of the Committee designated by the Chairman may execute any certificate or other written direction on behalf of the Committee.

8.3 Powers and Duties of the Committee .

(a) The Committee, on behalf of the Participants and their Beneficiaries, shall enforce the Plan in accordance with the terms, shall be charged with the general administration of the Plan and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

(1) To select the funds or contracts to be the Funds in accordance with Section 3.3 hereof;

(2) To construe and interpret the terms and provisions of this Plan;

(3) To amend, modify, suspend or terminate the Plan in accordance with Section 9.4;

(4) To compute and certify to the amount and kind of benefits payable to Participants and their Beneficiaries and to direct the Trustee as to the distribution of Plan assets;

(5) To maintain all records that may be necessary for the administration of the Plan;

(6) To provide for the disclosure of all information and the filing or provision of all reports and statements to Participants, Beneficiaries or governmental agencies as shall be required by law;

(7) To make and publish such rules for the regulation of the Plan and procedures for the administration of the Plan as are not inconsistent with the terms hereof; and

(8) To appoint a plan administrator or any other agent, and to delegate to them such powers and duties in connection with the administration of the Plan as the Committee may from time to time prescribe.

8.4 Construction and Interpretation . The Committee shall have full discretion to construe and interpret the terms and provisions of this Plan, which interpretation or construction shall be final and binding on all parties, including but not limited to the Company and any Participant or Beneficiary. The Committee shall administer such terms and provisions in a uniform and nondiscriminatory manner and in full accordance with any and all laws applicable to the Plan.

8.5 Information . To enable the Committee to perform its functions, the Company shall supply full and timely information to the Committee on all matters relating to the Compensation of all Participants, their death or other cause of termination, and such other pertinent facts as the Committee may reasonably require.

8.6 Compensation, Expenses and Indemnity .

(a) The members of the Committee shall serve without compensation for their services hereunder.

(b) The Committee is authorized at the expense of the Company to employ such legal counsel as it may deem advisable to assist in the performance of its duties hereunder. Expenses and fees in connection with the administration of the Plan shall be paid by the Company.

(c) To the extent permitted by applicable state law, the Company shall indemnify and save harmless the Committee and each member thereof, the Board and any delegate of the Committee who is an employee of the Company against any and all expenses, liabilities and claims, including legal fees to defend against such liabilities and claims arising out of their discharge in good faith of responsibilities under or incident to the Plan, other than expenses and liabilities arising out of willful misconduct. This indemnity shall not preclude such further indemnities as may be available under insurance purchased by the Company or provided by the Company under any bylaw, agreement or otherwise, as such indemnities are permitted under state law.

8.7 Quarterly Statements . Under procedures established by the Committee, a Participant shall receive a statement, with respect to such Participant’s Account on a quarterly basis.

ARTICLE IX

MISCELLANEOUS

9.1 Unsecured General Creditor . Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of the Company. Any and all of the Company’s assets shall be, and remain, the general unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future, and the rights of the Participants and Beneficiaries shall be no greater than those of unsecured general creditors. It is the Company’s intention that the Plan shall be treated as unfunded for tax purposes and for purposes of Title I of ERISA.

9.2 Restriction Against Assignment . The Company shall pay all amounts payable hereunder only to the person or persons designated by the Plan and not to any other person or corporation. No part of a Participant’s Account shall be liable for the debts, contracts, or engagements of any Participant, his or her Beneficiary, or successors in interest, nor shall a Participant’s Account be subject to execution by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever. If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any distribution or payment from the Plan, voluntarily or involuntarily, the Committee, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the Committee shall direct.

9.3 Withholding . There shall be deducted from each payment made under the Plan all taxes which are required to be withheld by the Company in respect to such payment. The Company shall have the right to reduce any payment by the amount of cash sufficient to provide the amount of said taxes.

9.4 Amendment, Modification, Suspension or Termination . The Committee may amend, modify, suspend or terminate the Plan in whole or in part, except that no amendment, modification, suspension or termination shall have any retroactive effect to reduce any amounts allocated to a Participant’s Account, provided that a termination or suspension of the Plan or any Plan amendment or modification that will significantly increase costs to the Company shall be approved by the Board. In the event that this Plan is terminated, the disposition of the amounts credited to a Participant’s Deferral Account shall be at the sole discretion of the Committee.

9.5 Governing Law . This Plan shall be construed, governed and administered in accordance with ERISA and, to the extent that state law is not preempted by ERISA, the laws of the State of California.

9.6 Receipt or Release . Any payment to a Participant or the Participant’s Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof be in full satisfaction of all claims against the Committee and the Company. The Committee may require such Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect.

9.7 Payments on Behalf of Persons Under Incapacity . In the event that any amount becomes payable under the Plan to a person who, in the sole judgment of the Committee, is considered by reason of physical or mental condition to be unable to give a valid receipt therefore, the Committee may direct that such payment be made to any person found by the Committee, in its sole judgment, to have assumed the care of such person. Any payment made pursuant to such determination shall constitute a full release and discharge of the Committee and the Company.

9.8 No Employment Rights . Neither participation in this Plan nor coverage under any Policy shall confer upon any person any right to be employed by the Company nor any other right not expressly provided hereunder, under the Policy or under the Split-Dollar Life Insurance Agreement executed in connection therewith.

9.9 Headings, etc. Not Part of Agreement . Headings and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.

IN WITNESS WHEREOF, the Company has caused this document to be executed by its duly authorized officer effective as of this 31st day of October, 2005.


LOGITECH INC.

By:		/s/ Guerrino De Luca
Name:		Guerrino De Luca
Title:		President & CEO

Exhibit 31.1

CERTIFICATIONS

I, Gerald P. Quindlen, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Logitech International S.A.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 4, 2008

/s/ Gerald P. Quindlen

Gerald P. Quindlen

Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Mark J. Hawkins, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Logitech International S.A.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 4, 2008

/s/ Mark J. Hawkins

Mark J. Hawkins

Chief Financial Officer

Exhibit 32.1

SECTION 1350 CERTIFICATIONS OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

The certification set forth below is being submitted in connection with this quarterly report on Form 10-Q (the “Report”) of Logitech International S.A. (“the Company”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Gerald P. Quindlen, the Chief Executive Officer of the Company, and Mark J. Hawkins, the Chief Financial Officer of the Company, each certify that, to the best of his knowledge:

(1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 4, 2008

/s/ Gerald P. Quindlen

Gerald P. Quindlen

Chief Executive Officer

/s/ Mark J. Hawkins

Mark J. Hawkins

Chief Financial Officer