SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): August 3, 2006

UNIVERSAL ELECTRONICS INC.

Delaware (State or other jurisdiction of incorporation or organization)		0-21044 (Commission File No.)		33-0204817 (I.R.S. Employer Identification No.)

6101 Gateway Drive
Cypress, California 90630
(Address of principal executive offices, with Zip Code)

(714) 820-1000
(Registrant’s telephone number, including area code):

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

 

 

Item 2.02 Results of Operations and Financial Condition

On August 3, 2006 Universal Electronics Inc. (“UEI”) is issuing a press release and holding a conference call regarding its financial results for the second quarter 2006. A copy of the press release is included as Exhibit 99.1 to this report.

Pursuant to General Instruction B,2 of Form 8-K, the information contained in Exhibit 99.1 will be deemed furnished, and not “filed,” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as expressly set forth by specific reference in any such filing.

Use of Non-GAAP Financial Information
UEI is making reference to non-GAAP financial information in both the press release and the conference call. The GAAP comparables and the reconciliation of the non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release and has been posted on the News Releases page of UEI’s website and can be found at: http://investor.uei.com/phoenix.zhtml?c=84751&p=irol-news.         .

Item 9.01 Financial Statements and Exhibits

(c) Exhibits. The following exhibit is furnished with this report.

99.1		Press Release of Universal Electronics Inc. dated August 3, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INDEX TO EXHIBITS

Exhibit Number		Description
99.1		Press Release dated August 3, 2006

Exhibit 99.1

		N E W S

Contacts: Paul Arling (UEI) 714.820.1000
Kirsten Chapman (IR Agency) 415.433.3777

Universal Electronics Reports Second Quarter 2006 Financial Results
- Net Sales of $52.4 Million Grew 18% Compared to Second Quarter 2005 —

CYPRESS, CA — August 3, 2006 — Leading wireless technology developer Universal Electronics Inc. (UEI; NASDAQ: UEIC) today announced financial results for the second quarter and the six-month period ended June 30, 2006.

“Solid demand from our Business Category customers, in particular our subscription broadcasting and original equipment manufacturer (OEM) customers, drove our net sales for the second quarter of 2006 to $52.4 million, up 18 percent as compared to last year’s quarter,” stated Paul Arling, the company’s chairman and chief executive officer. Arling continued, “We have built a leadership role in wireless control technology, resulting from our continued efforts to work with our customers to provide them with simple, affordable, highly functional and technically advanced control technology. In the next year, we will build further upon this idea of advanced, yet simple and affordable solutions by rolling out new products that meet the consumer’s need for control of devices and media within their home.”

Second Quarter 2006 Financial Results

•		Net sales for the second quarter of 2006 were $52.4 million, compared to $44.3 million for the same quarter last year.
•		The Business Category contributed 77 percent of the total revenue and the Consumer Category contributed 23 percent, compared to 73 percent and 27 percent, respectively in the second quarter of 2005.
•		Gross margins were 37.4 percent, compared to 35.5 percent in last year’s second quarter, reflecting additional sales in higher margin product lines and cost containment, primarily lower freight costs.
•		Operating income was $4.0 million, compared to operating income of $974,000 for the same quarter last year.
•		Net income for the 2006 second quarter was $2.4 million, or $0.17 per diluted share, compared to $1.5 million, or $0.11 per diluted share, for the second quarter of 2005.

The following adjusted figures are included as management believes they provide a more meaningful measure of quarter-over-quarter and year-over-year financial performance. A formal definition of adjusted figures and table reconciling generally accepted accounting principals (GAAP) to adjusted figures are included at the end of this press release.

•		Adjusted operating income was $4.7 million, excluding $671,000 in stock based compensation expense, compared to adjusted operating income of $2.6 million for the same quarter last year, excluding the $1.6 million write down of a balance due from a former European distributor.
•		Adjusted net income for the 2006 second quarter was $2.9 million, or $0.20 per diluted share, which excludes stock based compensation charges, compared to $2.8 million, or $0.20 per diluted share, for the same period last year, which excluded the $1.6 million write down of a balance due from a former

     European distributor.

Net sales for the six-month period ended June 30, 2006 were $106.5 million compared to $85.8 million for the first six months of 2005. Net income for the first six months of 2006 was $4.6 million, or $0.32 per diluted share. Adjusted net income for the first six months of 2006 was $5.5 million, or $0.39 per diluted share, compared to $4.6 million, or $0.33 per diluted share, for the same period last year.

“Leveraging our technology and bringing to market new solutions that simplify connectivity is satisfying customers and driving strong net sales growth,” said Rob Lilleness, the company’s president and chief operating officer. “We continue to increase the breadth of our technology portfolio. Examples of our progress can be seen in our new types of offerings with LodgeNet and Crestron Electronics, expanded relationships with Comcast Corporation and DirecTV, and innovations in new media applications with our Pace Micro Technology relationship.”

UEI’s Recent Highlights:

•		Partnered with Crestron Electronics, Inc. to develop the TPMC-4X handheld touchpanel controller, as announced on July 31st. Based on the award-winning UEI NevoSLTM and Crestron automation and control technology, the TPMC-4X delivers true 2-way WiFi communication for seamless system integration in modern homes.
•		Signed a definitive agreement with the Canadian Cable Systems Alliance to supply DVR-enabled universal remote controls to its 94 independent member companies, as announced on June 21st.
•		Selected by LodgeNet Entertainment Corporation to develop SIGNETURE HDTVSM Remote Controls for guests to access to a wide variety of guest services at properties served by LodgeNet, as announced on June 20th.
•		Showcased new and expanded control solutions at the annual SCTE Cable-Tec Expo in Denver, CO, as announced on June 19th. Products included PolarisTM, Atlas DVRTM, urcsupport.com and ActiveSupportTM, customer interaction management services from service and support to retention.
•		Formed a joint development relationship with Pace Micro Technology plc, for Pace Micro to utilize its flagship Tahoe Dual Tuner HD DVR set-top box in conjunction with UEI’s My ChannelTM, enabling the set-top box to be the true center of the connected home, also announced on June 19th.

Conference Call Information:
UEI’s management team will hold a conference call today, Thursday August 3, 2006 at 1:30 p.m. Pacific Time to review the second quarter 2006 results and hold a question and answer session for callers. To participate call 1-800-622-9917 ten minutes prior to start time. International dialers call 1-706-645-0366. The live call can also be accessed via the Internet through Universal’s Web site at www.uei.com. If you are unable to participate, a replay will be available for two business days following the call. To access, please dial 1-800-642-1687 and international 706-645-9291, reservation number 7904235. The webcast replay will be available at www.uei.com.

About Universal Electronics
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 has been adopted by many Fortune 500 companies in the consumer electronics, subscription broadcast, and computing industries. In addition, the company sells wireless control products to distributors and retailers under the One For All^® brand name. More information about UEI can be obtained at http://www.uei.com.

Safe Harbor Statement
Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially from those expressed herein are the following: the failure of the

company to experience the increased demand from our Business Category customers as we anticipate; the failure of the retail season to be as strong as we anticipate; the growth of, acceptance of, and the demand for our products and technologies, including new products and our home connectivity line of products and software, in the various markets and geographical regions we serve, including the subscription broadcasting cable, satellite, consumer electronics, retail, home automation, automotive, and cellular industries, not materializing as we believe; the possible dilutive effect our stock based compensation programs may have on our EPS and stock price; our inability to deliver the new products and our home connectivity line of products and software at the time and in the quantities we anticipate; the relationships with our customers not expanding as we anticipate; and other factors listed from time to time in our press releases and SEC filings. All forward looking statements included in this release are based upon information we have as of the date of this release and we undertake no obligation 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)
(Unaudited)

		June 30,				December 31,
		2006				2005
ASSETS
Current assets:
Cash and cash equivalents		$	58,776			$	43,641
Accounts receivable, net			42,397				41,861
Inventories, net			29,146				26,708
Prepaid expenses and other current assets			3,157				3,841
Income tax receivable			903				903
Deferred income taxes			2,993				2,971
Total current assets			137,372				119,925
Equipment, furniture and fixtures, net			5,389				4,352
Goodwill			10,578				10,431
Intangible assets, net			5,924				6,007
Other assets			714				403
Deferred income taxes			5,565				5,201
Total assets			165,542				146,319
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	24,210			$	22,731
Accrued income taxes			9,876				7,551
Accrued compensation			3,469				2,766
Other accrued expenses			9,411				9,676
Total current liabilities			46,966				42,724
Deferred income taxes			90				74
Deferred Revenue			—				229
Total liabilities			47,056				43,027
Stockholders’ equity:
Common stock			173				169
Paid-in capital			88,360				83,220
Accumulated other comprehensive income (loss)			140				(5,265	)
Retained earnings			59,549				54,994
Deferred stock-based compensation			—				(163	)
Common stock held in treasury			(29,736	)			(29,663	)
Total stockholders’ equity			118,486				103,292
Total liabilities and stockholders’ equity			165,542				146,319

UNIVERSAL ELECTRONICS INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2006				2005				2006				2005
Net sales		$	52,370			$	44,322			$	106,543			$	85,824
Cost of sales			32,788				28,604				68,473				54,389
Gross profit			19,582				15,718				38,070				31,435
Research and development			1,919				1,570				3,765				3,170
Selling, general and administrative expenses			13,620				13,174				27,132				25,606
Operating expenses			15,539				14,744				30,897				28,776
Operating income			4,043				974				7,173				2,659
Interest income, net			(349	)			(135	)			(621	)			(352	)
Other expense (income), net			411				(1,296	)			572				(2,249	)
Income before income taxes			3,981				2,405				7,222				5,260
Provision for income taxes			(1,562	)			(860	)			(2,667	)			(1,859	)
Net income		$	2,419			$	1,545			$	4,555			$	3,401
Earnings per share:
Basic		$	0.18			$	0.11			$	0.33			$	0.25
Diluted		$	0.17			$	0.11			$	0.32			$	0.24
Shares used in computing earnings per share:
Basic			13,802				13,467				13,722				13,493
Diluted			14,356				13,983				14,297				14,032

To supplement UEI’s consolidated financial statements presented in accordance with GAAP, UEI uses non-GAAP net income and non-GAAP EPS financial measures internally. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. UEI’s management believes these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses that may not be indicative of our core business operating results. UEI believes both management and investors benefit from referring to these non-GAAP financial measures in assessing UEI’s performance and when planning, forecasting and analyzing historical and future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to UEI’s historical performance. UEI believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making.

Universal Electronics
GAAP to Non-GAAP Reconciliation Tables

										Three Months Ended
										June 30,
		2006				2006				2006				2005				2005				2005
		GAAP				Adj. (1)				Non-GAAP (3)				GAAP				Adj. (2)				Non-GAAP (3)
Net sales			52,370								52,370				44,322								44,322
Cost of sales			32,788				(6	)			32,782				28,604								28,604
Gross profit			19,582				6				19,588				15,718								15,718
Research and development			1,919				(94	)			1,825				1,570								1,570
Selling, general and administrative expenses			13,620				(571	)			13,049				13,174				(1,592	)			11,582
Operating expenses			15,539				(665	)			14,874				14,744				(1,592	)			13,152
Operating income			4,043				671				4,714				974				1,592				2,566
Interest income, net			(349	)							(349	)			(135	)							(135	)
Other expense (income), net			411								411				(1,296	)							(1,296	)
Income before income taxes			3,981				671				4,652				2,405				1,592				3,997
Provision for income taxes			(1,562	)			(225	)			(1,787	)			(860	)			(355	)			(1,215	)
Net income			2,419				446				2,865				1,545				1,237				2,782
Earnings per share diluted		$	0.17			$	0.03			$	0.20			$	0.11			$	0.09			$	0.20

										Six Months Ended
										June 30,
		2006				2006				2006				2005				2005				2005
		GAAP				Adj. (1)				Non-GAAP (3)				GAAP				Adj. (2)				Non-GAAP (3)
Net sales			106,543								106,543				85,824								85,824
Cost of sales			68,473				(13	)			68,460				54,389								54,389
Gross profit			38,070				13				38,083				31,435								31,435
Research and development			3,765				(199	)			3,566				3,170								3,170
Selling, general and administrative expenses			27,132				(1,229	)			25,903				25,606				(1,592	)			24,014
Operating expenses			30,897				(1,428	)			29,469				28,776				(1,592	)			27,184
Operating income			7,173				1,441				8,614				2,659				1,592				4,251
Interest income, net			(621	)							(621	)			(352	)							(352	)
Other expense (income), net			572								572				(2,249	)							(2,249	)
Income before income taxes			7,222				1,441				8,663				5,260				1,592				6,852
Provision for income taxes			(2,667	)			(484	)			(3,151	)			(1,859	)			(355	)			(2,214	)
Net income			4,555				957				5,512				3,401				1,237				4,638
Earnings per share diluted		$	0.32			$	0.07			$	0.39			$	0.24			$	0.09			$	0.33