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Universal Electronics Reports First Quarter 2008 Financial Results

- Posts Sales of $61.2 Million and Net Income of $2.5 Million -

- Company Reaffirms 2008 Guidance: Net Sales to Grow 12% to 18% and EPS to Grow 15% to 23% Compared to 2007 -

CYPRESS, Calif.--(BUSINESS WIRE)--May 7, 2008--Universal Electronics Inc. (UEI), (NASDAQ:UEIC) announced financial results for the first quarter ended March 31, 2008.

"Our first quarter performance was generally in line with our expectations, with which we are pleased," stated Paul Arling, UEI's Chairman and CEO. "More importantly, we continue to execute on our strategies of broadening share with current customers, adding key new customers, expanding geographically, and introducing new products and technologies, which will lead UEI to produce record financial results in 2008. Today, we announced our exclusive supply agreement with Audiovox Accessories Corporation, which along with unannounced international wins in Indonesia, Portugal, The Netherlands and the United Arab Emirates, to name a few, exemplifies what our team is focused on accomplishing. As such, we have confidence we will deliver the full-year guidance that we committed to in February 2008."

Financial Results: First Quarter 2008 Compared to First Quarter 2007

  • Net sales were $61.2 million, compared to $66.0 million.
  • The Business Category contributed 79% of total net sales and the Consumer Category contributed 21%, compared to 76% and 24%, respectively.
  • Gross margins were 35.5%, compared to 36.9%.
  • Net income was $2.5 million, or $0.17 per diluted share, compared to $4.6 million, or $0.31 per diluted share.

Bryan Hackworth, UEI's CFO, commented, "During the quarter, we repurchased 500,000 shares for approximately $11.5 million. After this significant repurchase, we ended the quarter with a cash balance of $83.4 million and no debt. We are well positioned for growth, and we reiterate our 2008 guidance of 12% to 18% revenue growth and 15% to 23% EPS growth over 2007, which includes the impact of the agreement with Audiovox announced earlier today."

Financial Outlook

For the second quarter of 2008, net sales are expected to range between $69.0 million and $72.0 million, compared to $71.5 million in the second quarter of 2007. Management expects Business Category sales to range from $54.0 million to $57.0 million, compared to $60.5 million in 2007, and Consumer Category sales to range from $13.5 million to $16.5 million, compared to $11.0 million in 2007. Gross margins for the second quarter of 2008 are expected to be approximately 35.0% of sales plus or minus one point. Operating expenses are expected to be between $19.8 million and $20.4 million, including employee stock based compensation charges of approximately $800,000, and the tax rate is expected to be between 33% and 35% of pre-tax income. GAAP earnings per diluted share are expected to range from $0.23 to $0.27, compared to $0.30 per diluted share in the second quarter of 2007.

Management reaffirms the annual 2008 guidance delivered on February 21, 2008. For the full year 2008, net sales are expected to grow between 12% and 18% to reach between $305 million and $322 million. Business Category revenue is expected to increase 8% to 15% and Consumer Category revenue is expected to increase 12% to 40%. Operating expenses are expected to be between $79 million and $84 million, and the tax rate is expected to range from 33% to 35% of pre-tax income, resulting in GAAP EPS between $1.53 and $1.64 per diluted share, compared to $1.33 per diluted share for 2007.

Conference Call Information

UEI's management team will hold a conference call today, Wednesday, May 7, 2008 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its first quarter 2008 earnings results, review the quarterly activity and answer questions. To participate in the U.S. please dial 800-622-9917 and internationally dial 706-645-0366 approximately 10 minutes prior to the start of the conference. The live call can also be accessed over the Internet through UEI's Web site at www.uei.com and will be available for replay for a year at www.uei.com. In addition, a replay of the call will be available via telephone for two business days, beginning two hours after the call. To listen to the replay, in the U.S., please dial 800-642-1687 and internationally, 706-645-9291. Enter access code 42999604.

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(R) brand name. UEI also delivers complete home control solutions in the professional custom installation market under the brand name Nevo(R), as well as software solutions for digital media control and enjoyment in the consumer and OEM markets under the brand SimpleCenter(TM).

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 timely development, ordering, delivery and market acceptance of products and technologies identified in this release; the Company's continued ability to design products in a fashion that results in its technology being accepted by the Company's customers and the end users; the continued importance of the Company's database of infrared codes and other technologies; the continued growth in the markets identified in this release to occur as anticipated by management; the continued strength and growth of the Company and of its customers, including those recently announced; the success of the new contracts and business relationships as identified in this release; as and other factors described in the Company's filings with the 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.

- Tables Follow -

                      UNIVERSAL ELECTRONICS INC.
                     CONSOLIDATED BALANCE SHEETS
              (In thousands, except share-related data)
                             (Unaudited)

                                                             December
                                                   March 31,    31,
                                                     2008      2007
                                                   --------- ---------
                                ASSETS
Current assets:
    Cash and cash equivalents                      $ 83,386  $ 86,610
   Accounts receivable, net                          53,878    60,146
   Inventories, net                                  42,093    34,906
   Prepaid expenses and other current assets          2,405     1,874
   Deferred income taxes                              2,887     2,871
                                                   --------- ---------
     Total current assets                           184,649   186,407
Equipment, furniture and fixtures, net                9,256     7,558
Goodwill                                             11,051    10,863
Intangible assets, net                                5,590     5,700
Other assets                                            404       369
Deferred income taxes                                 6,518     6,388
                                                   --------- ---------
     Total assets                                  $217,468  $217,285
                                                   ========= =========

                 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                $ 29,769  $ 29,382
   Accrued sales discounts, rebates and royalties     4,037     4,671
   Accrued income taxes                               2,722     1,720
   Accrued compensation                               3,274     3,737
   Other accrued expenses                             6,278     6,567
                                                   --------- ---------
     Total current liabilities                       46,080    46,077

Long-term liabilities:
   Deferred income taxes                                143       127
   Income tax payable                                 1,506     1,506
   Other long-term liabilities                        1,128     1,333
                                                   --------- ---------
     Total liabilities                               48,857    49,043
                                                   --------- ---------

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; 18,563,814 and 18,547,019 shares
  issued at March 31, 2008 and December 31, 2007,
  respectively                                          186       185
 Paid-in capital                                    115,870   114,441
 Accumulated other comprehensive income              19,067    11,221
 Retained earnings                                   90,981    88,508
                                                   --------- ---------
                                                    226,104   214,355

 Less cost of common stock in treasury, 4,470,439
  and 3,975,439 shares at March 31, 2008 and
  December 31, 2007, respectively                   (57,493)  (46,113)
                                                   --------- ---------
     Total stockholders' equity                     168,611   168,242
                                                   --------- ---------
     Total liabilities and stockholders' equity    $217,468  $217,285
                                                   ========= =========
                      UNIVERSAL ELECTRONICS INC.
                    CONSOLIDATED INCOME STATEMENTS
               (In thousands, except per share amounts)
                             (Unaudited)

                                                       Three Months
                                                           Ended
                                                         March 31,
                                                     -----------------
                                                       2008     2007
                                                     -------- --------
Net sales                                            $61,191  $66,019
Cost of sales                                         39,456   41,678
                                                     -------- --------
Gross profit                                          21,735   24,341

Research and development expenses                      2,196    2,322
Selling, general and administrative expenses          16,856   15,833
                                                     -------- --------

Operating income                                       2,683    6,186
Interest income, net                                     897      588
Other income, net                                        182       94
                                                     -------- --------

Income before provision for income taxes               3,762    6,868
Provision for income taxes                            (1,289)  (2,231)
                                                     -------- --------
Net income                                           $ 2,473  $ 4,637
                                                     ======== ========

Earnings per share:
 Basic                                               $  0.17  $  0.33
                                                     ======== ========
 Diluted                                             $  0.17  $  0.31
                                                     ======== ========

Shares used in computing earnings per share:
 Basic                                                14,474   14,130
                                                     ======== ========
 Diluted                                              14,957   14,908
                                                     ======== ========
                      UNIVERSAL ELECTRONICS INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands)
                             (Unaudited)

                                                    Three Months Ended
                                                        March 31,
                                                      2008      2007
                                                    --------- --------
Cash provided by operating activities:
 Net income                                         $  2,473  $ 4,637
   Adjustments to reconcile net income to net cash
    provided by operating activities:
   Depreciation and amortization                       1,369    1,114
   Provision for doubtful accounts                        47       16
   Provision for inventory write-downs                   325      469
   Deferred income taxes                                 (58)     892
   Tax benefit from exercise of stock options             42      847
    Excess tax benefit from stock-based compensation     (20)    (350)
   Shares issued for employee benefit plan                60      106
   Stock-based compensation                            1,179      676
    Changes in operating assets and liabilities:
       Accounts receivable                             8,698    1,196
       Inventories                                    (6,187)     269
       Prepaid expenses and other assets                (458)    (307)
       Accounts payable and accrued expenses          (2,594)    (814)
       Accrued income taxes                              702     (655)
                                                    --------- --------
         Net cash provided by operating activities     5,578    8,096
                                                    --------- --------

Cash used for investing activities:
   Acquisition of equipment, furniture and fixtures   (2,502)    (883)
   Acquisition of intangible assets                     (212)    (207)
                                                    --------- --------
         Net cash used for investing activities       (2,714)  (1,090)
                                                    --------- --------

Cash (used for) provided by financing activities:
   Proceeds from stock options exercised                 223    4,285
    Treasury stock purchased                         (11,455)      --
    Excess tax benefit from stock-based compensation      20      350
                                                    --------- --------
         Net cash (used for) provided by financing
          activities                                 (11,212)   4,635
                                                    --------- --------

Effect of exchange rate changes on cash                5,124      497
                                                    --------- --------

Net (decrease) increase in cash and cash equivalents  (3,224)  12,138

Cash and cash equivalents at beginning of period      86,610   66,075
                                                    --------- --------

Cash and cash equivalents at end of period          $ 83,386  $78,213
                                                    ========= ========

CONTACT: Universal Electronics Inc.
Paul Arling, 714-820-1000
or
Kirsten Chapman, 415-433-3777 (IR Agency)

SOURCE: Universal Electronics Inc.