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Universal Electronics Reports Fourth Quarter and Year End 2009 Financial Results

- Fourth Quarter 2009 Net Sales of $84.9 Million Highest Quarterly Revenue in Company History - 2009 Annual Net Sales Increased 11% Over 2008

CYPRESS, Calif., Feb 18, 2010 (BUSINESS WIRE) -- Universal Electronics Inc. (UEI), (NASDAQ:UEIC) reported financial results for the fourth quarter and year ended December 31, 2009.

"During the fourth quarter, we continued to execute on our strategy to expand customer relationships, win new customers and invest in new products and technologies with a focus on offering our customers and consumers the technology and solutions that meet their future needs," stated Paul Arling, UEI's Chairman and CEO. "Most recently, at the 2010 Consumer Electronics Show in January, we announced the availability of our Quickset application on the new suite of remote controls and high-definition (HD) set-top boxes from DIRECTV(R). The adoption of our Quickset application featuring our XMP-2(TM) technology demonstrates not only our focus on making the increasingly complex home entertainment experience simpler for consumers, but also our dedication to offering our subscription broadcasting customers cost-effective technology solutions."

Financial Results for the Quarter Ended December 31: 2009 Compared to 2008

  • Net sales were $84.9 million, compared to $78.7 million.
    • Business Category revenue was $66.4 million, compared to $65.1 million. The Business Category contributed 78.2% of total net sales, compared to 82.7%.
    • Consumer Category revenue was $18.5 million, compared to $13.6 million. The Consumer Category contributed 21.8% of total net sales, compared to 17.3%.
  • Gross margins were 33.7%, compared to 32.2%.
  • Total operating expenses were $20.5 million, compared to $17.5 million, reflecting the settlement of a lawsuit, the integration of acquired business and assets and a weaker US dollar in the fourth quarter of 2009.
  • Operating income was $8.1 million, compared to $7.8 million.
  • Interest income was $95,000, compared to $368,000.
  • Net income was $5.8 million, or $0.42 per diluted share, compared to $5.8 million, or $0.42 per diluted share.
  • At December 31, 2009, the cash and cash equivalents and term deposit balance was $78.3 million.

Bryan Hackworth, UEI's CFO, commented, "The fourth quarter of 2009 represented the second consecutive quarter where we achieved the highest quarterly revenue in the history of UEI. The $84.9 million in net sales for the quarter included a higher contribution from our Consumer Category, which increased from 17.3% of sales in the fourth quarter of 2008 to 21.8% in the fourth quarter of 2009."

Financial Results for the Twelve-months Ended December 31: 2009 Compared to 2008

  • Net sales were $317.6 million, compared to $287.1 million.
  • Gross margins were 32.0%, compared to 33.5%.
  • Total operating expenses were $79.7 million, compared to $75.4 million due primarily to the operating expenses related to acquired business and assets.
  • Operating income was $21.9 million, compared to $20.8 million.
  • Interest income was $471,000, compared to $3.0 million, due to significantly lower interest rates.
  • Net income was $14.7 million, or $1.05 per diluted share, compared to $15.8 million, or $1.09 per diluted share.

"During 2009, we benefitted from a significant customer purchasing a large majority of their remote controls from us. In 2010, we expect this customer to return to a more traditional dual source arrangement, where UEI will continue to supply 100% of the chipsets, but will share the full remote volume. We estimate this will decrease our sales to this customer by approximately $25 million year-on-year. However, growth in other customers and the conversion of prospects, both domestically and internationally, as well as the impact of the business and asset acquisition from Zilog, will, we believe, more than offset this shift," concluded Hackworth.

Financial Outlook

For the first quarter of 2010, net sales are expected to range between $71 million and $74 million, compared to $71.1 million in the first quarter of 2009. The company anticipates gross margins for the first quarter of 2010 to be approximately 32.5% of sales, plus or minus one point, compared to 30.1% of sales in the first quarter of 2009. For the first quarter of 2010, operating expenses are expected to range from $20.3 million to $20.9 million, compared to first quarter 2009 operating expenses of $19.9 million. Earnings per diluted share for the first quarter of 2010 are expected to range from $0.12 to $0.16, compared to earnings per diluted share of $0.06 in the first quarter of 2009.

For the full 2010 year, net sales are expected to range between $325.0 million and $340.0 million, compared to $317.6 million in 2009. Earnings per diluted share for 2010 are expected to range from $1.20 to $1.35, compared to earnings per diluted share of $1.05 in 2009.

Conference Call Information

UEI's management team will hold a conference call today, Thursday, February 18, 2010 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its fourth quarter and year end 2009 earnings results, review the quarterly and yearly activity and answer questions. To access the call in the U.S. please dial 877-655-6895 and for international calls dial 706-758-0299 approximately 10 minutes prior to the start of the conference. The conference ID is 52254418. The conference call will also be broadcast live over the Internet and available for replay for one year at http://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 52254418.

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). For additional information, please visit our website at http://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 timing and success of the Company's recently announced Quickset and XMP-2(TM) technologies; the ability of the Company to continue winning new customers and expanding existing relationships; the continued growth emanating from the integration of the business and assets acquired from Zilog; the Company's ability to maintain its worldwide market share; the continued softness in our worldwide markets due to the current economic environment;general economic conditions; 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)

December 31,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $ 29,016 $ 75,238
Term deposit 49,246 --
Accounts receivable, net 64,392 59,825
Inventories, net 40,947 43,675
Prepaid expenses and other current assets 2,423 3,461
Deferred income taxes 3,016 2,421
Total current assets

189,040

184,620
Equipment, furniture and fixtures, net 9,990 8,686
Goodwill 13,724 10,757
Intangible assets, net 11,572 5,637
Other assets 1,144 609
Deferred income taxes 7,837 7,246
Total assets $ 233,307 $ 217,555
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 39,514 $ 44,705
Accrued sales discounts, rebates and royalties 6,028 4,848
Accrued income taxes 3,254 2,334
Accrued compensation 4,619 3,617
Other accrued expenses 8,539 6,813
Total current liabilities 61,954 62,317
Long--term liabilities:
Deferred income taxes 153 130
Income tax payable 1,348 1,442
Other long term liabilities 122 313
Total liabilities 63,577 64,202
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued or outstanding -- --
Common stock, $.01 par value, 50,000,000 shares authorized; 19,140,232 and 18,715,833 shares issued at December 31, 2009 and 2008, respectively 191 187
Paid--in capital 128,913 120,551
Accumulated other comprehensive income 1,463 750
Retained earnings 118,989 104,314
249,556 225,802
Less cost of common stock in treasury, 5,449,962 and 5,070,319 shares at December 31, 2009 and 2008, respectively (79,826 ) (72,449 )
Total stockholders' equity 169,730 153,353
Total liabilities and stockholders' equity $ 233,307 $ 217,555

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2009 2008 2009 2008
Net sales $ 84,939 $ 78,693 $ 317,550 $ 287,100
Cost of sales 56,329 53,378 215,938 190,910
Gross profit 28,610 25,315 101,612 96,190
Research and development expenses 2,280 1,858 8,691 8,160
Selling, general and administrative expenses 18,250 15,646 70,974 67,269
Operating income 8,080 7,811 21,947 20,761
Interest income, net 95 368 471 3,017
Other (expense) income, net (80 ) 548 (241 ) 311
Income before provision for income taxes 8,095 8,727 22,177 24,089
Provision for income taxes (2,255 ) (2,894 ) (7,502 ) (8,283 )
Net income $ 5,840 $ 5,833 $ 14,675 $ 15,806
Earnings per share:
Basic $ 0.43 $ 0.43 $ 1.07 $ 1.13
Diluted $ 0.42 $ 0.42 $ 1.05 $ 1.09
Shares used in computing earnings per share:
Basic 13,700 13,638 13,667 14,015
Diluted 14,063 13,903 13,971 14,456

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Year Ended December 31,
2009 2008 2007
Cash provided by operating activities:
Net income $ 14,675 $ 15,806 $ 20,230
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 6,801 6,084 4,675
Provision for doubtful accounts 363 442 23
Provision for inventory write--downs 3,480 2,671 2,146
Deferred income taxes (1,141 ) (448 ) 219
Tax benefit from exercise of stock options and vested restricted stock 408 431 3,339
Excess tax benefit from stock--based compensation (250 ) (344 ) (3,320 )
Shares issued for employee benefit plan 741 633 631
Stock--based compensation 4,312 4,243 3,521
Changes in operating assets and liabilities:
Accounts receivable (4,206 ) (1,478 ) (5,033 )
Inventories (354 ) (12,219 ) (9,194 )
Prepaid expenses and other assets 552 (1,888 ) 837
Accounts payable and accrued expenses (2,096 ) 15,557 3,982
Accrued income and other taxes 702 662 (2,119 )
Net cash provided by operating activities 23,987 30,152 19,937
Cash used for investing activities:
Term deposit (49,246 ) -- --
Acquisition of equipment, furniture and fixtures (6,171 ) (5,945 ) (4,802 )
Acquisition of intangible assets (1,172 ) (1,475 ) (1,381 )
Acquisition of assets from Zilog Inc. (9,502 ) -- --
Net cash used for investing activities (66,091 ) (7,420 ) (6,183 )
Cash (used for) provided by financing activities:
Proceeds from stock options exercised 3,275 1,158 12,597
Treasury stock purchased (7,747 ) (26,689 ) (14,519 )
Excess tax benefit from stock--based compensation 250 344 3,320
Net cash (used for) provided by financing activities (4,222 ) (25,187 ) 1,398
Effect of exchange rate changes on cash 104 (8,917 ) 5,383
Net (decrease) increase in cash and cash equivalents (46,222 ) (11,372 ) 20,535
Cash and cash equivalents at beginning of year 75,238 86,610 66,075
Cash and cash equivalents at end of year $ 29,016 $ 75,238 $ 86,610

Supplemental Cash Flow Information - Income taxes paid were $7.3 million, $8.2million and $8.1 million in 2009, 2008, and 2007, respectively.

SOURCE: Universal Electronics Inc.

UEI
Paul Arling, 714-820-1000
or
IR Agency
Kirsten Chapman, 415-433-3777