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Universal Electronics Reports First Quarter 2012 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 the Company’s ability to gain market share; the Company’s ability to attract new customers and retain and expand our relationships with its existing customers; general economic conditions; the strength and growth prospects of the consumer electronics and broader retail industries; 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)
 

 
 

March 31, 2012
 

December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents $ 24,312 $ 29,372
Accounts receivable, net 73,817 82,184
Inventories, net 85,131 90,904
Prepaid expenses and other current assets 3,892 3,045
Deferred income taxes   6,502     6,558  
Total current assets 193,654 212,063
Property, plant, and equipment, net 78,990 80,449
Goodwill 30,882 30,820
Intangible assets, net 32,005 32,814
Other assets 5,225 5,350
Deferred income taxes   8,085     7,992  
Total assets $ 348,841   $ 369,488  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 40,224 $ 55,430
Line of credit 2,000 2,000
Notes payable 12,200 14,400
Accrued sales discounts, rebates and royalties 5,314 6,544
Accrued income taxes 3,388 5,707
Accrued compensation 29,111 29,204
Deferred income taxes 61 50
Other accrued expenses   9,481     13,967  
Total current liabilities 101,779 127,302
Long-term liabilities:
Deferred income taxes 11,206 11,056
Income tax payable 1,136 1,136
Other long-term liabilities   3     5  
Total liabilities   114,124     139,499  
 
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; 21,263,655 and 21,142,915 shares issued on March 31, 2012 and December 31, 2011, respectively 213 211
Paid-in capital 176,069 173,701
Accumulated other comprehensive income 1,866 938
Retained earnings   155,648     154,016  
333,796 328,866
 
Less cost of common stock in treasury, 6,362,796 and 6,353,035 shares on March 31, 2012 and December 31, 2011, respectively   (99,079 )   (98,877 )
Total stockholders’ equity   234,717     229,989  
Total liabilities and stockholders’ equity $ 348,841   $ 369,488  
 
UNIVERSAL ELECTRONICS INC.
CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

(Unaudited)
 

 
 

Three Months Ended March 31,
  2012       2011  
Net sales $ 103,732 $ 105,712
Cost of sales   75,405     78,133  
Gross profit 28,327 27,579
 
Research and development expenses 3,463 3,257
Selling, general and administrative expenses   22,552     21,787  
 
Operating income 2,312 2,535
Interest expense, net (37 ) (85 )
Other expense, net   (324 )   (34 )
 
Income before provision for income taxes 1,951 2,416
Provision for income taxes   (319 )   (589 )
Net income $ 1,632   $ 1,827  
 
Earnings per share:
Basic $ 0.11   $ 0.12  
Diluted $ 0.11   $ 0.12  
 
Shares used in computing earnings per share:
Basic   14,871     14,976  
Diluted   15,108     15,383  
 
UNIVERSAL ELECTRONICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)
 

 
 

Three Months Ended March 31,
  2012       2011  
Cash (used for) provided by operating activities:
Net income $ 1,632 $ 1,827
Adjustments to reconcile net income to net cash (used for) provided by operating activities:
Depreciation and amortization 4,260 4,309
Provision for doubtful accounts (17 ) 6
Provision for inventory write-downs 894 882
Deferred income taxes 124 124
Tax benefit from exercise of stock options and vested restricted stock 8 34
Excess tax benefit from stock-based compensation (30 ) (158 )
Shares issued for employee benefit plan 121 156
Stock-based compensation 1,197 1,032
 
Changes in operating assets and liabilities:
Accounts receivable 8,934 10,559
Inventories 5,387 1,129
Prepaid expenses and other assets (681 ) (83 )
Accounts payable and accrued expenses (21,511 ) (15,739 )
Accrued income taxes   (2,343 )   (3,930 )
Net cash (used for) provided by operating activities   (2,025 )   148  
 
Cash used for investing activities:
Acquisition of property, plant, and equipment (1,712 ) (2,338 )
Acquisition of intangible assets   (216 )   (283 )
Net cash used for investing activities   (1,928 )   (2,621 )
 
Cash used for financing activities:
Issuance of debt 5,000
Payment of debt (7,200 ) (7,200 )
Proceeds from stock options exercised 1,151 101
Treasury stock purchased (309 ) (371 )
Excess tax benefit from stock-based compensation   30     158  
Net cash used for financing activities   (1,328 )   (7,312 )
 
Effect of exchange rate changes on cash   221     624  
 
Net decrease in cash and cash equivalents (5,060 ) (9,161 )
 
Cash and cash equivalents at beginning of period   29,372     54,249  
 
Cash and cash equivalents at end of period $ 24,312   $ 45,088  

Supplemental Cash Flow Information — The Company had income tax payments of $1.1 million and $4.7 million during the three months ended March 31, 2012 and 2011, respectively. The Company had interest payments of $0.1 million and $0.1 million during the three months ended March 31, 2012 and 2011, respectively.
 
UNIVERSAL ELECTRONICS INC.
RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS

(In thousands, except share-related data)

(Unaudited)
 
  Three Months Ended     Three Months Ended

March 31, 2012

March 31, 2011
       
GAAP   Adjustments  

Adjusted Pro Forma
GAAP   Adjustments  

Adjusted Pro Forma
 
Net sales $ 103,732 $ - $ 103,732 $ 105,712 $ - $ 105,712
Cost of sales (1)   75,405     (277 )   75,128     78,133     (277 )   77,856  
Gross profit 28,327 277 28,604 27,579 277 27,856
 

Research and development expenses

3,463

-

3,463

3,257

-

3,257
Selling, general and administrative expenses (2)   22,552       (1,232 )     21,320    

21,787
      (633 )     21,154  
 
Operating income 2,312 1,509 3,821 2,535 910 3,445
Interest expense, net (37 ) - (37 ) (85 ) - (85 )
Other expense, net   (324 )     -       (324 )   (34 )     -       (34 )
 
Income before provision for income taxes 1,951 1,509 3,460 2,416 910 3,326
Provision for income taxes (3)   (319 )     (304 )     (623 )   (589 )     (145 )     (734 )
Net income $ 1,632     $ 1,205     $ 2,837   $ 1,827     $ 765     $ 2,592  
 

Earnings per diluted share
$ 0.11     $ 0.08     $ 0.19   $ 0.12     $ 0.05     $ 0.17  
 

(1) To reflect depreciation expense of $0.3 million for the three months ending March 31, 2012 and March 31, 2011, relating to the mark-up in fixed assets from cost to fair value as part of the Enson Assets Limited acquisition.

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