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Universal Electronics Reports Fourth Quarter And Year-End 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 continued innovation of products and technologies, such as solutions to address mode confusion, that eliminate remote control setup, and that transform smart devices (such as smartphones and tablets) and gaming consoles into universal remote controls; the Company’s ability to gain market share through the consolidation of our industry and by adding new customers and retaining current customers; the Company’s app technologies being embedded in smart devices and game consoles as anticipated by management; the demand for smart devices and game consoles to grow as anticipated by management; the continued global general economic conditions; the benefits the Company expects via the growth of new markets in certain geographic areas including Latin America, Asia-Pacific region, and Eastern Europe; 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)

   
December 31, 2012 December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents $ 44,593 $ 29,372
Accounts receivable, net 91,048 82,184
Inventories, net 84,381 90,904
Prepaid expenses and other current assets 3,661 3,045
Income tax receivable 270
Deferred income taxes 5,210   6,558  
Total current assets 229,163 212,063
Property, plant, and equipment, net 77,706 80,449
Goodwill 30,890 30,820
Intangible assets, net 29,835 32,814
Other assets 5,361 5,350
Deferred income taxes 6,369   7,992  
Total assets $ 379,324   $ 369,488  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 59,831 $ 55,430
Line of credit 2,000
Notes payable 14,400
Accrued sales discounts, rebates and royalties 8,093 6,544
Accrued income taxes 3,668 5,707
Accrued compensation 33,398 29,204
Deferred income taxes 41 50
Other accrued expenses 10,644   13,967  
Total current liabilities 115,675 127,302
Long-term liabilities:
Deferred income taxes 10,687 11,056
Income tax payable 525 1,136
Other long-term liabilities 1,787   5  
Total liabilities 128,674   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; 21,491,398 and 21,142,915 shares issued on December 31, 2012 and 2011, respectively 215 211
Paid-in capital 180,607 173,701
Accumulated other comprehensive income (loss) 1,052 938
Retained earnings 170,569   154,016  
352,443 328,866
Less cost of common stock in treasury, 6,516,382 and 6,353,035 shares on December 31, 2012 and 2011, respectively (101,793 ) (98,877 )
Total stockholders’ equity 250,650   229,989  
Total liabilities and stockholders’ equity $ 379,324   $ 369,488  
 

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

       
Three Months Ended

December 31,

Twelve Months Ended

December 31,

2012   2011 2012   2011
Net sales $ 117,783 $ 117,645 $ 463,090 $ 468,630
Cost of sales 82,081   84,285   329,653   338,569  
Gross profit 35,702 33,360 133,437 130,061
Research and development expenses 3,744 2,992 14,152 12,267
Selling, general and administrative expenses 24,068   24,102   93,083   91,218  
Operating income 7,890 6,266 26,202 26,576
Interest expense, net (39 ) (60 ) (151 ) (270 )
Other expense, net (898 ) (304 ) (1,413 ) (1,075 )
Income before provision for income taxes 6,953 5,902 24,638 25,231
Provision for income taxes 4,035   988   8,085   5,285  
Net income $ 2,918   $ 4,914   $ 16,553   $ 19,946  
Earnings per share:
Basic $ 0.19   $ 0.33   $ 1.11   $ 1.34  
Diluted $ 0.19   $ 0.33   $ 1.10   $ 1.31  
Shares used in computing earnings per share:
Basic 15,016   14,763   14,952   14,912  
Diluted 15,180   14,919   15,110   15,213  
 

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 
Year Ended December 31,
2012   2011
Cash provided by operating activities:  
Net income $ 16,553 $ 19,946
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 17,613 17,335
Provision for doubtful accounts 73 277
Provision for inventory write-downs 2,994 5,625
Deferred income taxes 2,536 (1,043 )
Tax benefit from exercise of stock options and vested restricted stock (83 ) 280
Excess tax benefit from stock-based compensation (111 ) (439 )
Shares issued for employee benefit plan 749 729
Stock-based compensation 4,575 4,511
Changes in operating assets and liabilities:
Accounts receivable (8,998 ) 3,142
Inventories 2,987 (30,597 )
Prepaid expenses and other assets (588 ) (345 )
Accounts payable and accrued expenses 8,186 (4,319 )
Accrued income and other taxes (2,943 ) (302 )
Net cash provided by operating activities 43,543   14,800  
Cash used for investing activities:
Acquisition of property, plant, and equipment (10,463 ) (13,630 )
Acquisition of intangible assets (1,140 ) (1,064 )
Net cash used for investing activities (11,603 ) (14,694 )
Cash used for financing activities:
Issuance of debt 30,800 4,200
Payment of debt (47,200 ) (22,800 )
Debt issuance costs (42 )
Proceeds from stock options exercised 2,204 1,677
Treasury stock purchased (3,451 ) (9,785 )
Excess tax benefit from stock-based compensation 111   439  
Net cash used for financing activities (17,578 ) (26,269 )
Effect of exchange rate changes on cash 859   1,286  
Net increase (decrease) in cash and cash equivalents 15,221 (24,877 )
Cash and cash equivalents at beginning of year 29,372   54,249  
Cash and cash equivalents at end of year $ 44,593   $ 29,372  
 
Supplemental Cash Flow Information:
Income taxes paid $ 10,445 $ 8,097
Interest payments $ 304 $ 438
 

UNIVERSAL ELECTRONICS INC.

RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS

(In thousands)

(Unaudited)

           
Three Months Ended December 31, 2012 Three Months Ended December 31, 2011
GAAP Adjustments Adjusted

Pro Forma

GAAP Adjustments Adjusted

Pro Forma

Net sales $ 117,783 $ $ 117,783 $ 117,645 $ $ 117,645
Cost of sales (1)   82,081     (277 )   81,804     84,285     (277 )   84,008  
Gross profit 35,702 277 35,979 33,360 277 33,637
Research and development expenses 3,744 3,744 2,992 2,992
Selling, general and administrative expenses (2)   24,068     (743 )   23,325     24,102     (890 )   23,212  
Operating income 7,890 1,020 8,910 6,266 1,167 7,433
Interest expense, net (39 ) (39 ) (60 ) (60 )
Other expense, net   (898 )       (898 )   (304 )       (304 )
Income before provision for income taxes 6,953 1,020 7,973 5,902 1,167 7,069
Provision for income taxes (4)   4,035     (2,388 )   1,647     988     179     1,167  
Net income $ 2,918   $ 3,408   $ 6,326   $ 4,914   $ 988   $ 5,902  
Earnings per share diluted $ 0.19   $ 0.22   $ 0.42   $ 0.33   $ 0.07   $ 0.40  
 
Twelve Months Ended December 31, 2012 Twelve Months Ended December 31, 2011
GAAP Adjustments Adjusted

Pro Forma

GAAP Adjustments Adjusted

Pro Forma

Net sales $ 463,090 $ $ 463,090 $ 468,630 $ $ 468,630
Cost of sales (1)   329,653     (1,108 )   328,545     338,569     (1,108 )   337,461  
Gross profit 133,437 1,108 134,545 130,061 1,108 131,169
Research and development expenses 14,152 14,152 12,267 12,267
Selling, general and administrative expenses (3)   93,083     (4,316 )   88,767     91,218     (3,292 )   87,926  
Operating income 26,202 5,424 31,626 26,576 4,400 30,976
Interest expense, net (151 ) (151 ) (270 ) (270 )
Other expense, net   (1,413 )       (1,413 )   (1,075 )       (1,075 )
Income before provision for income taxes 24,638 5,424 30,062 25,231 4,400 29,631
Provision for income taxes (4)   8,085     (1,454 )   6,631     5,285     765     6,050  
Net income $ 16,553   $ 6,878   $ 23,431   $ 19,946   $ 3,635   $ 23,581  
Earnings per share diluted $ 1.10   $ 0.46   $ 1.55   $ 1.31   $ 0.24   $ 1.55  
(1) To reflect depreciation expense for the corresponding periods relating to the mark-up in fixed assets from cost to fair value as part of the Enson Assets Limited acquisition.
(2) To reflect $0.7 million of amortization expense for each of the three months ended December 31, 2012 and 2011 relating to intangible assets acquired as part of acquisitions. For the quarter ending December 31, 2011, there was an additional $0.1 million incurred relating to other employee restructuring costs, primarily severance.
(3)

To reflect $3.0 million of amortization expense for the twelve months ended December 31, 2012 and 2011, relating to intangible assets acquired as part of acquisitions. For the twelve months ended 2012, there were approximately $0.8 million of other employee restructuring costs incurred, primarily severance, as well as $0.5 million incurred relating to moving our corporate headquarters from Cypress, CA to Santa Ana, CA. For the twelve months ended December 31, 2011, there were approximately $0.3 million of other employee restructuring costs incurred, primarily severance.

(4) To reflect $2.8 million of tax expense for the three and twelve months ended December 31, 2012 relating to a valuation allowance applied to the California R&D credit (deferred tax asset) which resulted in a $2.2 million tax expense, net of federal benefit, as well as a $0.6 million write-off of a deferred tax asset in China which was acquired as part of the November 4, 2010 acquisition of Enson Assets Limited. Both of the aforementioned items resulted from tax law changes.
 
To reflect a tax refund of approximately $0.3 million, recorded on the books of Enson Assets Limited, for the three and twelve months ended December 31, 2012, relating to tax years preceding the acquisition.
 
To reflect the tax effect of $0.2 million and $1.1 million for the three and twelve months ended December 31, 2012, respectively, relating to the pre-tax income adjustments.
 
To reflect the tax effect of $0.2 million and $0.8 million for the three and twelve months ended December 31, 2011, respectively, relating to the pre-tax income adjustments.




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