View:
Download DOC
Download PDF
Download XLS
8-K
UNITED STATES
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): February 18, 2016
 
 
UNIVERSAL ELECTRONICS INC.
(Exact name of Registrant as specified in its charter)
 
 
 
 
 
 
 
 
Delaware
 
0-21044
 
33-0204817
(State or other jurisdiction
 
(Commission File No.)
 
(I.R.S. Employer
of incorporation or organization)
 
 
 
Identification No.)
201 E. Sandpointe Avenue, 8th Floor
Santa Ana, CA 92707
(Address of principal executive offices, with Zip Code)
(714) 918-9500
(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:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




TABLE OF CONTENTS
 
 
 
EXHIBIT 99.1
 



Table of Contents


Item 2.02    Results of Operations and Financial Condition
On February 18, 2016, Universal Electronics Inc. ("UEI") is issuing a press release and holding a conference call regarding its financial results for the fourth quarter and the full year ended December 31, 2015. A copy of the press release is furnished as Exhibit 99.1 to this report.
Pursuant to General Instruction B2 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, or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.
Use of Adjusted Pro Forma Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, UEI provides non-GAAP or Adjusted Pro Forma information in the press release as additional information for its operating results. References to Adjusted Pro Forma information are to non-GAAP pro forma measures. These measures are not in accordance with, or an alternative for, GAAP and may be different from non-GAAP measures used by other companies. UEI’s management believes that this presentation of Adjusted Pro Forma financial information provides useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. In addition, management uses these measures for reviewing the financial results of UEI and for budget planning purposes.
Item 9.01 Financial Statements and Exhibits
 
(d)
Exhibits. The following exhibit is furnished with this report.
99.1    Press Release of Universal Electronics Inc. dated February 18, 2016.



1
Table of Contents


SIGNATURE
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.
 
 
 
 
 
 
 
 
 
 
 
 
Universal Electronics Inc.
 
 
 
 
Date: February 18, 2016
 
 
 
By:
 
/s/ Bryan Hackworth
 
 
 
 
 
 
Bryan Hackworth
 
 
 
 
 
 
Chief Financial Officer
(Principal Financial Officer)



2
Table of Contents

INDEX TO EXHIBITS

 
 
 
 
Exhibit Number
 
Description
99.1
 
Press Release Dated February 18, 2016



3
Exhibit


Exhibit 99.1

Contacts: Paul Arling (UEI) 714.918.9500
Becky Herrick (IR Agency) 415.433.3777


UNIVERSAL ELECTRONICS REPORTS FOURTH QUARTER
AND YEAR-END 2015 FINANCIAL RESULTS
- Achieves record net sales and EPS in the fourth quarter 2015 -
SANTA ANA, CA – February 18, 2016 – Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three and twelve months ended December 31, 2015.
Paul Arling, UEI's Chairman and CEO, stated, "Our record fourth quarter 2015 sales and earnings results demonstrate the solid performance across our core business. Subscription broadcasting sales were particularly strong as the transition to more advanced remote control products and technologies continues. Looking ahead into 2016, the introduction of higher-end platforms will continue to ramp as our customers rollout new products throughout the year. In addition, we expect to further benefit from this trend as customers in regions around the world adopt more advanced features and devices.
"We continue to be very excited about our acquisition of Ecolink Intelligent Technology in August 2015 and remain on track with the integration. To take advantage of the opportunity in the emerging smart home market, we expect to introduce a variety of wireless security, sensing and home automation products and services with our industry partners throughout 2016," concluded Arling.
Adjusted Pro Forma Financial Results for the Three Months Ended December 31: 2015 Compared to 2014
•
Net sales were $162.1 million, compared to $138.4 million.
•
Business Category revenue was $145.4 million, compared to $120.7 million. The Business Category contributed 89.7% of total net sales, compared to 87.2%.
•
Consumer Category revenue was $16.7 million, compared to $17.7 million. The Consumer Category contributed 10.3% of total net sales, compared to 12.8%.
•
Gross margins were 28.8%, compared to 30.3%.
•
Operating expenses were $31.4 million, compared to $29.1 million.
•
Operating income was $15.2 million, compared to $12.8 million.
•
Net income was $13.4 million, or $0.91 per diluted share, compared to $11.3 million, or $0.70 per diluted share.
•
At December 31, 2015, cash and cash equivalents were $53.0 million.
Adjusted Pro Forma Financial Results for the Twelve Months Ended December 31: 2015 Compared to 2014
•
Net sales were $602.8 million, compared to $562.3 million.
•
Gross margins were 27.9%, compared to 29.8%.
•
Operating expenses were $112.9 million, compared to $115.3 million.
•
Operating income was $55.0 million, compared to $52.5 million.
•
Net income was $43.3 million, or $2.79 per diluted share, compared to $41.1 million, or $2.55 per diluted share.
Financial Outlook
Bryan Hackworth, UEI’s CFO, stated, "In comparing the first quarters of 2016 and 2015, it is important to note the year-ago period reflected a higher level of royalty income. However, as we have a number of new customers transitioning to advanced platforms throughout 2016, both in the U.S. as well as in Europe, and as we begin shipping home security products to new customers in the second quarter, we expect to see continued growth in earnings."
For the first quarter of 2016, the company expects net sales to range between $153.0 million and $161.0 million, compared to $132.7 million in the first quarter of 2015. Adjusted pro forma earnings per diluted share for the first quarter of 2016 are expected to range from $0.46 to $0.54, compared to adjusted pro forma earnings per diluted share of $0.46 in the first quarter of 2015.

1


Conference Call Information
UEI’s management team will hold a conference call today, Thursday, February 18, 2016 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its fourth quarter and the full year 2015 earnings results, review recent activity and answer questions. To access the call in the U.S. please dial 877-843-0414 and for international calls dial 315-625-3071 approximately 10 minutes prior to the start of the conference. The conference ID is 45191957. The conference call will also be broadcast live over the Internet and available for replay for one 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 855-859-2056 and internationally, 404-537-3406. Enter access code 45191957.
Use of Non-GAAP Financial Metrics
Non-GAAP gross margins, Non-GAAP operating expenses, and Non-GAAP net income and earnings per share are supplemental measures of the company's performance that are not required by, and are not presented in accordance with GAAP. The Non-GAAP information does not substitute for any performance measure derived in accordance with GAAP. Non-GAAP gross profit is defined as gross profit excluding cost of goods sold and depreciation expense related to the increase in inventories and fixed assets from cost to fair market value resulting from acquisitions. Non-GAAP operating expenses are defined as operating expenses excluding amortization of intangibles acquired, employee related restructuring costs, stock-based compensation expense, changes in contingent consideration related to the acquisition of the net assets of Ecolink Intelligent Technology, Inc., a court ordered award to a defendant in a lawsuit for a portion of its legal fees and acquisition related expenses. Non-GAAP net income is defined as net income from operations excluding the aforementioned items and the related tax effects as well as adjustments to certain deferred tax assets and liabilities resulting from tax law changes. A reconciliation of Non-GAAP financial results to GAAP results is included at the end of this press release.
About Universal Electronics
Universal Electronics Inc. (NASDAQ: UEIC) is the worldwide leader in sensing and control technologies for the smart home. For more information, please visit www.uei.com/about.
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 company’s ability to maintain and build its relationships with key customers; the company’s ability to anticipate the needs and wants of its customers and timely develop and deliver products that will meet those needs and wants; the significant percentage of our revenues attributable to a limited number of customers, the timing of new product rollout orders from the company’s customers as anticipated by management; the continued trend of the home entertainment industry in providing consumers with more advanced technologies; the successful integration of the Ecolink assets and business lines; the timely development, delivery and market acceptance of products and technologies such as home security, home automation, wireless sensors and other technologies identified in this release; management's ability to manage its business to achieve its revenue and earnings as guided; the continued ability to identify and execute on opportunities that maximize stockholder value, including the effects repurchasing the company’s shares have on the company’s stock value; and the other factors described in the company's filings with the U.S. Securities and Exchange Commission. The actual results 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 –

2


UNIVERSAL ELECTRONICS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share-related data)
 
 
December 31, 2015
 
December 31, 2014
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
52,966

 
$
112,521

Restricted cash
 
4,623

 
—

Accounts receivable, net
 
121,801

 
97,989

Inventories, net
 
122,366

 
97,474

Prepaid expenses and other current assets
 
6,217

 
6,856

Income tax receivable
 
55

 
77

Deferred income taxes
 
7,296

 
5,048

Total current assets
 
315,324


319,965

Property, plant, and equipment, net
 
90,015

 
76,135

Goodwill
 
43,116

 
30,739

Intangible assets, net
 
32,926

 
24,614

Deferred income taxes
 
8,474

 
6,146

Other assets
 
5,365

 
5,471

Total assets
 
$
495,220


$
463,070

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
93,843

 
$
69,991

Line of credit
 
50,000

 
—

Accrued compensation
 
37,452

 
40,656

Accrued sales discounts, rebates and royalties
 
7,618

 
8,097

Accrued income taxes
 
4,745

 
4,263

Other accrued expenses
 
21,466

 
13,358

Total current liabilities
 
215,124


136,365

Long-term liabilities:
 
 
 
 
Long-term contingent consideration
 
11,751

 
—

Deferred income taxes
 
7,891

 
8,456

Income tax payable
 
629

 
566

Other long-term liabilities
 
1,917

 
2,062

Total liabilities
 
237,312


147,449

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; 23,176,277 and 22,909,884 shares issued on December 31, 2015 and 2014, respectively
 
232

 
229

Paid-in capital
 
228,269

 
214,710

Treasury stock, at cost, 8,824,768 and 7,008,475 shares on December 31, 2015 and 2014, respectively
 
(210,333
)
 
(120,938
)
Accumulated other comprehensive income (loss)
 
(15,799
)
 
(4,446
)
Retained earnings
 
255,240

 
226,066

Universal Electronics Inc. stockholders' equity
 
257,609


315,621

Noncontrolling interest
 
299

 
—

Total stockholders’ equity
 
257,908


315,621

Total liabilities and stockholders’ equity
 
$
495,220


$
463,070



3


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

 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2015
 
2014
 
2015
 
2014
Net sales
 
$
162,110

 
$
138,389

 
$
602,833

 
$
562,329

Cost of sales
 
115,859

 
96,708

 
436,084

 
395,429

Gross profit
 
46,251


41,681


166,749


166,900

Research and development expenses
 
5,477

 
4,369

 
18,141

 
16,975

Selling, general and administrative expenses
 
30,391

 
27,481

 
112,689

 
108,645

Operating income
 
10,383


9,831


35,919


41,280

Interest income (expense), net
 
(135
)
 
32

 
63

 
11

Other income (expense), net
 
265

 
498

 
(7
)
 
(840
)
Income before provision for income taxes
 
10,513


10,361


35,975


40,451

Provision for income taxes
 
1,178

 
1,459

 
6,802

 
7,917

Net income
 
9,335


8,902


29,173


32,534

Net income (loss) attributable to noncontrolling interest
 
(4
)
 
—

 
(1
)
 
—

Net income attributable to Universal Electronics Inc.
 
$
9,339


$
8,902


$
29,174


$
32,534

 
 





 





Earnings per share attributable to Universal Electronics Inc.:
 
 
 
 
 
 
Basic
 
$
0.65


$
0.56


$
1.91


$
2.06

Diluted
 
$
0.64


$
0.55


$
1.88


$
2.01

Shares used in computing earnings per share:
 
 
 
 
 
 
 
 
Basic
 
14,404

 
15,831

 
15,248

 
15,781

Diluted
 
14,682

 
16,204

 
15,542

 
16,152














4


UNIVERSAL ELECTRONICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 
 
Year Ended December 31,
 
 
2015
 
2014
Cash provided by operating activities:
 
 
 
 
Net income
 
$
29,173

 
$
32,534

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
20,452

 
18,244

Provision for doubtful accounts
 
299

 
249

Provision for inventory write-downs
 
3,382

 
3,473

Deferred income taxes
 
(5,348
)
 
(538
)
Tax benefit from exercise of stock options and vested restricted stock
 
3,069

 
—

Excess tax benefit from stock-based compensation
 
(2,619
)
 
—

Shares issued for employee benefit plan
 
867

 
847

Stock-based compensation
 
7,913

 
6,444

Changes in operating assets and liabilities:
 
 
 
 
Restricted cash
 
(4,623
)
 
—

Accounts receivable
 
(29,406
)
 
(7,966
)
Inventories
 
(31,877
)
 
(8,161
)
Prepaid expenses and other assets
 
774

 
(2,803
)
Accounts payable and accrued expenses
 
33,309

 
19,964

Accrued income taxes
 
729

 
1,186

Net cash provided by operating activities
 
26,094


63,473

Cash used for investing activities:
 
 
 
 
Acquisition of net assets of Ecolink Intelligent Technology, Inc., net of cash acquired
 
(12,265
)
 
—

Acquisition of property, plant, and equipment
 
(32,989
)
 
(16,566
)
Acquisition of intangible assets
 
(2,395
)
 
(1,853
)
Net cash used for investing activities
 
(47,649
)

(18,419
)
Cash provided by (used for) financing activities:
 
 
 
 
Borrowings under line of credit
 
84,500

 
—

Repayments on line of credit
 
(34,500
)
 
—

Proceeds from stock options exercised
 
1,712

 
8,122

Treasury stock purchased
 
(89,395
)
 
(16,168
)
Distribution to noncontrolling interest
 
(78
)
 
—

Excess tax benefit from stock-based compensation
 
2,619

 
—

Net cash provided by (used for) financing activities
 
(35,142
)

(8,046
)
Effect of exchange rate changes on cash
 
(2,858
)
 
(661
)
Net increase (decrease) in cash and cash equivalents
 
(59,555
)

36,347

Cash and cash equivalents at beginning of year
 
112,521

 
76,174

Cash and cash equivalents at end of period
 
$
52,966


$
112,521

 
 
 
 
 
Supplemental cash flow information:
 
 
 
 
Income taxes paid
 
$
7,793

 
$
7,178

Interest paid
 
$
255

 
$
—


5


UNIVERSAL ELECTRONICS INC.
RECONCILIATION OF ADJUSTED PRO FORMA FINANCIAL RESULTS
(In thousands, except per share amounts)
(Unaudited) 
 
 
Three months ended December 31, 2015
 
Three months ended December 31, 2014
 
 
GAAP
 
Adjustments
 
Adjusted
Pro Forma
 
GAAP
 
Adjustments
 
Adjusted
Pro Forma
Net sales
 
$
162,110

 
$
—

 
$
162,110

 
$
138,389

 
$
—

 
$
138,389

Cost of sales (1)
 
115,859

 
(378
)
 
115,481

 
96,708

 
(239
)
 
96,469

Gross profit
 
46,251

 
378

 
46,629

 
41,681

 
239

 
41,920

Research and development expenses (2)
 
5,477

 
(123
)
 
5,354

 
4,369

 
(62
)
 
4,307

Selling, general and administrative expenses (3)
 
30,391

 
(4,353
)
 
26,038

 
27,481

 
(2,715
)
 
24,766

Operating income
 
10,383

 
4,854

 
15,237

 
9,831

 
3,016

 
12,847

Interest income (expense), net
 
(135
)
 
—

 
(135
)
 
32

 
—

 
32

Other income (expense), net
 
265

 
—

 
265

 
498

 
—

 
498

Income before provision for income taxes
 
10,513

 
4,854

 
15,367

 
10,361

 
3,016

 
13,377

Provision for income taxes (4)
 
1,178

 
822

 
2,000

 
1,459

 
626

 
2,085

Net income
 
9,335

 
4,032


13,367

 
8,902

 
2,390

 
11,292

Net income (loss) attributable to noncontrolling interest
 
(4
)
 
—

 
(4
)
 
—

 
—

 
—

Net income attributable to Universal Electronics Inc.
 
$
9,339


$
4,032


$
13,371


$
8,902


$
2,390


$
11,292

Diluted earnings per share attributable to Universal Electronics Inc.
 
$
0.64

 
$
0.27

 
$
0.91

 
$
0.55

 
$
0.15

 
$
0.70


 
 
Twelve months ended December 31, 2015
 
Twelve months ended December 31, 2014
 
 
GAAP
 
Adjustments
 
Adjusted
Pro Forma
 
GAAP
 
Adjustments
 
Adjusted
Pro Forma
Net sales
 
$
602,833

 
$
—

 
$
602,833

 
$
562,329

 
$
—

 
$
562,329

Cost of sales (5)
 
436,084

 
(1,181
)
 
434,903

 
395,429

 
(946
)
 
394,483

Gross profit
 
166,749

 
1,181

 
167,930

 
166,900

 
946

 
167,846

Research and development expenses (6)
 
18,141

 
(428
)
 
17,713

 
16,975

 
(323
)
 
16,652

Selling, general and administrative expenses (7)
 
112,689

 
(17,507
)
 
95,182

 
108,645

 
(9,949
)
 
98,696

Operating income
 
35,919

 
19,116

 
55,035

 
41,280

 
11,218

 
52,498

Interest income (expense), net
 
63

 
—

 
63

 
11

 
—

 
11

Other income (expense), net
 
(7
)
 
—

 
(7
)
 
(840
)
 
—

 
(840
)
Income before provision for income taxes
 
35,975

 
19,116

 
55,091

 
40,451

 
11,218

 
51,669

Provision for income taxes (8)
 
6,802

 
4,949

 
11,751

 
7,917

 
2,621

 
10,538

Net income
 
29,173

 
14,167

 
43,340

 
32,534

 
8,597

 
41,131

Net income (loss) attributable to noncontrolling interest
 
(1
)
 
—

 
(1
)
 
—

 
—

 
—

Net income attributable to Universal Electronics Inc.
 
$
29,174


$
14,167


$
43,341


$
32,534

 
$
8,597

 
$
41,131

Diluted earnings per share attributable to Universal Electronics Inc.
 
$
1.88

 
$
0.91

 
$
2.79

 
$
2.01

 
$
0.53

 
$
2.55



6


(1)
To reflect depreciation expense of $0.3 million and $0.2 million for the three months ended December 31, 2015 and 2014, respectively, related to the mark-up in fixed assets from cost to fair value as a result of acquisitions. Also, to reflect the effect of fair value adjustments to inventories sold through during the three months ended December 31, 2015 of $0.1 million. The inventory fair value adjustments relate to inventories purchased as a part of the Ecolink Intelligent Technology, Inc. acquisition.
(2)
To reflect stock-based compensation expense for the three months ended December 31, 2015 and 2014.
(3) 
To reflect amortization expense of $1.2 million and $0.7 million for the three months ended December 31, 2015 and 2014, respectively, related to intangible assets acquired as part of acquisitions; to reflect stock-based compensation expense of $1.9 million and $1.5 million for the three months ended December 31, 2015 and 2014, respectively; to reflect other employee related restructuring costs of $0.7 million and $0.4 million for the three months ended December 31, 2015 and 2014, respectively; and to reflect an increase in contingent consideration of $0.6 million related to the acquisition of the net assets of Ecolink Intelligent Technology, Inc. for the three months ended December 31, 2015.
(4) 
To reflect the tax effect of the adjustments. In addition, the three months ended December 31, 2015 and 2014 include adjustments of $0.6 million and $0.7 million, respectively, related to the write-off of acquisition-related deferred tax assets resulting from a tax law change in China. Partially offsetting this adjustment for the three months ended December 31, 2014 is an adjustment to net deferred tax assets of $0.6 million resulting from the expiration of a tax holiday at one of our factories in China.
(5) 
To reflect depreciation expense of $1.0 million and $0.9 million for the twelve months ended December 31, 2015 and 2014, respectively, related to the mark-up in fixed assets from cost to fair value as a result of acquisitions. Also, to reflect the effect of fair value adjustments to inventories sold through during the four months period ended December 31, 2015 of $0.2 million. The inventory fair value adjustments relate to inventories purchased as a part of the Ecolink Intelligent Technology, Inc. acquisition.
(6) 
To reflect stock-based compensation expense for the twelve months ended December 31, 2015 and 2014.
(7) 
To reflect amortization expense of $3.6 million and $3.0 million for the twelve months ended December 31, 2015 and 2014, respectively, related to intangible assets acquired as part of acquisitions; to reflect stock-based compensation expense of $7.4 million and $6.1 million for the twelve months ended December 31, 2015 and 2014, respectively; to reflect other employee related restructuring costs of $1.0 million and $0.9 million for the twelve months ended December 31, 2015 and 2014, respectively; to reflect an increase in contingent consideration of $0.6 million related to the acquisition of the net assets of Ecolink Intelligent Technology, Inc. for the twelve months ended December 31, 2015; and to reflect $4.6 million related to a court ordered award to a defendant in a lawsuit for a portion of its legal fees and $0.2 million of acquisition related expenses for the twelve months ended December 31, 2015.
(8) 
To reflect the tax effect of the adjustments. In addition, the twelve months ended December 31, 2015 and 2014 include adjustments of $0.6 million and $0.7 million, respectively, related to the write-off of acquisition-related deferred tax assets resulting from a tax law change in China. Partially offsetting this adjustment for the twelve months ended December 31, 2014 is an adjustment to net deferred tax assets of $0.6 million resulting from the expiration of a tax holiday at one of our factories in China.


###




7