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Universal Electronics Reports Third Quarter 2011 Financial Results

About Universal Electronics Inc.

Founded in 1986, Universal Electronics Inc. (UEI) is the global leader in wireless control technology for the connected home. UEI designs, develops, and delivers innovative solutions that enable consumers to control entertainment devices, digital media, and home systems. The company’s broad portfolio of patented technologies and database of infrared control software have been adopted by many Fortune 500 companies in the consumer electronics, subscription broadcast, and computing industries. UEI sells and licenses wireless control products through distributors and retailers under the One For All® brand name. For additional information, please visit our website at www.uei.com.

Safe Harbor Statement

This press release contains forward-looking statements that are made pursuant to the Safe-Harbor provisions of the Private Securities Litigation Reform Act of 1995. Words and expressions reflecting something other than historical fact are intended to identify forward-looking statements. These forward-looking statements involve a number of risks and uncertainties, including the benefits anticipated by the Company due to continued innovation of products and technologies; new markets growth; the Company’s ability to gain market share; general economic conditions; that pending patents will be issued and that when issued, will result in technologies that are accepted and adopted by our customers; the consumer electronics and broader retail industries to be weaker than anticipated by management; and other factors described in the Company's filings with the U.S. Securities and Exchange Commission. The actual results that the Company achieves may differ materially from any forward looking statement due to such risks and uncertainties. The Company undertakes no obligations to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share-related data)

(Unaudited)
 

 
 

September 30, 2011
 

December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents $ 32,000 $ 54,249
Accounts receivable, net 88,983 86,304
Inventories, net 84,818 65,402
Prepaid expenses and other current assets 2,072 2,582
Deferred income taxes   6,173     5,896  
Total current assets 214,046 214,433
Property, plant, and equipment, net 80,237 78,097
Goodwill 30,857 30,877
Intangible assets, net 33,566 35,994
Other assets 5,335 5,464
Deferred income taxes   7,776     7,806  
Total assets $ 371,817   $ 372,671  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 63,623 $ 56,086
Notes payable 18,400 35,000
Accrued sales discounts, rebates and royalties 6,408 7,942
Accrued income taxes 3,891 5,873
Accrued compensation 28,530 30,634
Deferred income taxes 55
Other accrued expenses   13,693     13,295  
Total current liabilities 134,600 148,830
Long-term liabilities:
Deferred income taxes 11,508 11,369
Income tax payable 1,212 1,212
Other long-term liabilities   5     56  
Total liabilities   147,325     161,467  
 
Commitments and contingencies
 
Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized; none issued or outstanding

Common stock, $0.01 par value, 50,000,000 shares authorized; 21,076,830 and 20,877,248 shares issued on September 30, 2011 and December 31, 2010, respectively 211 209
Paid-in capital 172,264 166,940
Accumulated other comprehensive income (loss) 1,628 (489 )
Retained earnings   149,102     134,070  
323,205 300,730
 
Less cost of common stock in treasury, 6,344,642 and 5,926,071 shares on September 30, 2011 and December 31, 2010, respectively   (98,713 )   (89,526 )
Total stockholders’ equity   224,492     211,204  
Total liabilities and stockholders’ equity $ 371,817   $ 372,671  

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

(Unaudited)
 

 
  Three Months Ended

September 30,
  Nine Months Ended

September 30,
  2011       2010     2011       2010  
Net sales $ 123,527 $ 79,007 $ 350,985 $ 229,275
Cost of sales   89,349     53,289     254,284     154,068  
Gross profit 34,178 25,718 96,701 75,207
 
Research and development expenses 2,861 2,687 9,275 7,944
Selling, general and administrative expenses   21,852     16,465     67,116     50,694  
 
Operating income 9,465 6,566 20,310 16,569
Interest (expense) income, net (56 ) (1 ) (210 ) 99
Other (expense) income, net   (353 )   40     (771 )   62  
 
Income before provision for income taxes 9,056 6,605 19,329 16,730
Provision for income taxes   (1,972 )   (1,903 )   (4,297 )   (5,415 )
Net income $ 7,084   $ 4,702   $ 15,032   $ 11,315  
 
Earnings per share:
Basic $ 0.48   $ 0.35   $ 1.00   $ 0.83  
Diluted $ 0.47   $ 0.34   $ 0.98   $ 0.81  
 
Shares used in computing earnings per share:
Basic   14,887     13,417     14,963     13,572  
Diluted   15,147     13,671     15,312     13,897  

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)
 

 
 

Nine months Ended September 30,
  2011       2010  
Cash provided by operating activities:
Net income $ 15,032 $ 11,315
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 12,907 4,660
Provision for doubtful accounts 241 661
Provision for inventory write-downs 3,610 2,651
Deferred income taxes 26 17
Tax benefit from exercise of stock options and vested restricted stock 399 102
Excess tax benefit from stock-based compensation (422 ) (131 )
Shares issued for employee benefit plan 592 375
Stock-based compensation 3,280 3,757
 
Changes in operating assets and liabilities:
Accounts receivable (2,772 ) 4,508
Inventories (22,172 ) (6,806 )
Prepaid expenses and other assets 674 1,158
Accounts payable and accrued expenses 2,456 (8,229 )
Accrued income taxes   (2,049 )   (3,407 )
Net cash provided by operating activities   11,802     10,631  
 
Cash used for investing activities:
Term deposit (290 )
Acquisition of property, plant, and equipment (10,140 ) (4,449 )
Acquisition of intangible assets   (814 )   (1,061 )
Net cash used for investing activities   (10,954 )   (5,800 )
 
Cash used for financing activities:
Payment of debt (16,600 )
Proceeds from stock options exercised 1,381 257
Treasury stock purchased (9,512 ) (9,835 )
Excess tax benefit from stock-based compensation   422     131  
Net cash used for financing activities   (24,309 )   (9,447 )
 
Effect of exchange rate changes on cash   1,212     (953 )
 
Net decrease in cash and cash equivalents (22,249 ) (5,569 )
 
Cash and cash equivalents at beginning of period   54,249     29,016  
 
Cash and cash equivalents at end of period $ 32,000   $ 23,447  
 

Supplemental Cash Flow Information — We had net income tax payments of $6.9 million and $8.9 million during the nine months ended September 30, 2011 and 2010, respectively. We had interest payments of $0.3 million and $0 during the nine months ended September 30, 2011 and 2010, respectively.

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS

(In thousands)

(Unaudited)
 
 

Three Months Ended

September 30, 2011
 

Three Months Ended

September 30, 2010
       

GAAP

Adjustments

Adjusted Pro Forma

GAAP

Adjustments

Adjusted Pro Forma
 
Net sales $ 123,527 $ $ 123,527 $ 79,007 $ $ 79,007
Cost of sales (1)   89,349     (277 )   89,072     53,289       53,289  
Gross profit 34,178 277 34,455 25,718 25,718
 
Research and development expenses 2,861 2,861 2,687 2,687

Selling, general and administrative expenses (2)
  21,852     (743 )   21,109     16,465       16,465  
 
Operating income 9,465 1,020 10,485 6,566 6,566
Interest (expense) income, net (56 ) (56 ) (1 ) (1 )
Other (expense) income, net   (353 )       (353 )   40       40  
 
Income before provision for income taxes 9,056 1,020 10,076 6,605 6,605
Provision for income taxes (3)   1,972     144     2,116     1,903       1,903  
Net income $ 7,084   $ 876   $ 7,960   $ 4,702   $ $ 4,702  
 
Earnings per share diluted $ 0.47   $ 0.06   $ 0.53   $ 0.34   $ $ 0.34  

 

Nine Months Ended

September 30, 2011

Nine Months Ended

September 30, 2010
 

GAAP

Adjustments

Adjusted Pro Forma

GAAP

Adjustments

Adjusted Pro Forma
 
 
Net sales $ 350,985 $ $ 350,985 $ 229,275 $ $ 229,275
Cost of sales (1)   254,284     (831 )   253,453     154,068       154,068  
Gross profit 96,701 831 97,532 75,207 75,207
 
Research and development expenses 9,275 9,275 7,944 7,944
Selling, general and administrative expenses (2)   67,116     (2,402 )   64,714     50,694       50,694  
 
Operating income 20,310 3,233 23,543 16,569 16,569
Interest (expense) income, net (210 ) (210 ) 99 99
Other (expense) income, net   (771 )       (771 )   62       62  
 
Income before provision for income taxes 19,329 3,233 22,562 16,730 16,730
Provision for income taxes (3)   4,297     585     4,882     5,415       5,415  
Net income $ 15,032   $ 2,648   $ 17,680   $ 11,315   $ $ 11,315  
 
Earnings per share diluted $ 0.98   $ 0.17   $ 1.15   $ 0.81   $ $ 0.81  

____________

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