Document
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 22, 2018
 
 
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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨




TABLE OF CONTENTS
 
 
 
EXHIBIT 99.1
 




Table of Contents


Item 2.02    Results of Operations and Financial Condition
On February 22, 2018, Universal Electronics Inc. is issuing a press release and holding a conference call regarding its financial results for the fourth quarter and full year ended December 31, 2017. A copy of this press release is furnished with this Report as Exhibit 99.1 and is incorporated herein by reference.
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 22, 2018.



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 22, 2018
 
 
 
By:
 
/s/ Bryan Hackworth
 
 
 
 
 
 
Bryan Hackworth
 
 
 
 
 
 
Chief Financial Officer
(Principal Financial Officer)



2

Table of Contents

INDEX TO EXHIBITS

 
 
 
 
Exhibit Number
 
Description
99.1
 



3
Exhibit


Exhibit 99.1

https://cdn.kscope.io/06f6227256b5b876d8fa4c9292904a31-ueilogoa23.jpg
Contacts: Paul Arling (UEI) 714.918.9500
Becky Herrick (IR Agency) 415.433.3777


UNIVERSAL ELECTRONICS REPORTS
FOURTH QUARTER AND YEAR-END 2017 FINANCIAL RESULTS
SANTA ANA, CA – February 22, 2018 – Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three and twelve months ended December 31, 2017.
Paul Arling, UEI's chairman and CEO, stated, “2018 began with a strong showing at CES, where we demonstrated devices with the latest voice navigation technology as well as Netflix and TiVo buttons. We also revealed our microphone, data compression, radio, fit and finish, and automatic speech recognition (ASR) capabilities in the new voice remote control for DISH. These and many more ongoing technological advances keep UEI at the forefront of control. Our fourth quarter revenue grew 13% reflecting strong performance from our home security products, European subscription broadcasting and OEM relationships in the Asia Pacific region. We expect this trend toward advanced, intuitive 2-way home entertainment systems to continue as additional customers launch their version of advanced platforms with us throughout 2018.”
Financial Results for the Three Months Ended December 31: 2017 Compared to 2016
GAAP net sales were $181.2 million, compared to $160.5 million; Adjusted Non-GAAP net sales were $180.7 million, compared to $160.1 million.
GAAP gross margins were 20.9%, compared to 25.7%; Adjusted Non-GAAP gross margins were 23.6%, compared to 26.9%.
GAAP operating loss was $0.5 million, compared to income of $6.3 million; Adjusted Non-GAAP operating income was $10.4 million, compared to $13.9 million.
GAAP net loss was $16.9 million, or $1.19 per diluted share, compared to GAAP net income of $3.2 million or $0.22 per diluted share; Adjusted Non-GAAP net income was $8.7 million, or $0.60 per diluted share, compared to $11.0 million, or $0.74 per diluted share.
At December 31, 2017, cash and cash equivalents were $62.4 million.
Financial Results for the Twelve Months Ended December 31: 2017 Compared to 2016
GAAP net sales were $695.8 million, compared to $651.4 million; Adjusted Non-GAAP net sales were $696.5 million, compared to $654.1 million.
GAAP gross margins were 23.8%, compared to 25.2%; Adjusted Non-GAAP gross margins were 25.6%, compared to 26.2%.
GAAP operating income was $10.7 million, compared to $25.4 million; Adjusted Non-GAAP operating income was $53.4 million, compared to $53.5 million.
GAAP net loss was $10.3 million, or $0.72 per diluted share, compared to GAAP net income of $20.4 million or $1.38 per diluted share; Adjusted Non-GAAP net income was $41.1 million, or $2.81 per diluted share, compared to $42.5 million, or $2.88 per diluted share.

Bryan Hackworth, UEI’s CFO, stated: “Overall, we are pleased with our top line results, as net sales grew 13 percent, driven by the worldwide adoption of our higher end platforms as well as the continued growth in home security. Improving our gross margin is a top priority, and to accomplish this goal we have implemented several measures including product rationalization and improvements in factory production. We expect our gross margin rate to expand sequentially, which is embedded in our first quarter guidance, and to continue to improve throughout the remainder of 2018.”

Financial Outlook
For the first quarter of 2018, the company expects GAAP net sales to range between $169 million and $177 million, compared to $161.4 million in the first quarter of 2017. GAAP earnings per diluted share for the first quarter of 2018 is expected to range from $0.13 to $0.23, compared to GAAP earnings per diluted share of $0.01 in the first quarter of 2017.

1



For the first quarter of 2018, the company expects Adjusted Non-GAAP net sales to range between $169 million and $177 million, compared to $162.3 million in the first quarter of 2017. Adjusted Non-GAAP earnings per diluted share are expected to range from $0.60 to $0.70, compared to Adjusted Non-GAAP earnings per diluted share of $0.62 in the first quarter of 2017. The first quarter Adjusted Non-GAAP earnings per diluted share estimate excludes $0.47 per share related to stock-based compensation, amortization of acquired intangibles, changes in contingent consideration relating to acquisitions, effects of foreign currency fluctuations and the related tax impact of these adjustments.
Conference Call Information
UEI’s management team will hold a conference call today, Thursday, February 22, 2018 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its fourth quarter 2017 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 5088724. The conference call will also be broadcast live at www.uei.com where it will be available for replay for one year. In addition, a replay 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 dial 404-537-3406. The access code is 5088724.
Use of Non-GAAP Financial Metrics
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, UEI provides Adjusted Non-GAAP information as additional information for its operating results. References to Adjusted Non-GAAP information are to non-GAAP financial measures. These measures are not required by, in accordance with, or an alternative for, GAAP and may be different from non-GAAP financial measures used by other companies. UEI’s management uses these measures for reviewing the financial results of UEI, for budget planning purposes, and for making operational and financial decisions and believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, helps investors evaluate UEI’s core operating and financial performance and business trends consistent with how management evaluates such performance and trends.  Additionally, management believes these measures facilitate comparisons with the core operating and financial results and business trends of competitors and other companies.
Adjusted Non-GAAP net sales is defined as net sales excluding the impact of stock-based compensation for performance-based warrants. Adjusted Non-GAAP gross profit is defined as gross profit excluding stock-based compensation expense, 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, amortization of intangibles acquired, excess manufacturing costs resulting from the closure of our Guangzhou factory, and factory transition costs. Adjusted Non-GAAP operating expenses are defined as operating expenses excluding amortization of intangibles acquired, stock-based compensation expense, employee related restructuring costs, litigation settlement costs, transaction costs related to the sale of our Guangzhou factory, and changes in contingent consideration related to acquisitions as well as other acquisition related costs and nonrecurring items. Adjusted Non-GAAP net income is defined as net income excluding the aforementioned items, foreign currency gains and losses, and the related tax effects of all adjustments, as well as income tax expense representing the estimated tax impact of the U.S. Tax Cuts and Jobs Act, the income tax effects of nondeductible projected losses to be incurred as a result of the shutdown of the company's Guangzhou factory, the effect of net deferred tax asset adjustments related to tax incentives at one of our other China factories, and other nonrecurring income tax items. Adjusted Non-GAAP diluted earnings per share attributable to Universal Electronics Inc. is calculated using Adjusted Non-GAAP net income attributable to Universal Electronics Inc. A reconciliation of these financial measures to the most directly comparable GAAP financial measures is included at the end of this press release.
About Universal Electronics
Universal Electronics Inc. is the worldwide leader in universal control and sensing technologies for the smart home. For more information, please visit www.uei.com/about.

2



Note on Forward-looking Statements
This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including net sales, profit margin and earnings trends, estimates and assumptions; our expectations about new product introductions; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those we identify below and other risk factors that we identify in our most recent annual report on Form 10-K and the periodic reports filed thereafter. Risks that could affect forward-looking statements in this press release include the continued adoption of our advanced control technologies by our customers as anticipated by management, including our voice control technologies; the continued and timely launching by our customers of our advanced, intuitive 2-way home entertainment systems and technologies as expected by management; the continued growth of our customers in certain geographic locations as expected by management; our ability to successfully and profitably transition our manufacturing operations and maintain and/or improve our margins and cost effective operations. Any of these factors could cause actual results to differ materially from the expectations we express or imply in this press release. We make these forward-looking statements as of February 22, 2018. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
– Tables Follow –

3



UNIVERSAL ELECTRONICS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share-related data)
(Unaudited)
 
 
December 31, 2017
 
December 31, 2016
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
62,438

 
$
50,611

Restricted cash
 
4,901

 
4,623

Accounts receivable, net
 
151,578

 
124,592

Inventories, net
 
162,589

 
129,879

Prepaid expenses and other current assets
 
11,687

 
7,439

Assets held for sale
 
12,517

 

Income tax receivable
 
1,587

 
1,054

Deferred income taxes
 

 
5,960

Total current assets
 
407,297

 
324,158

Property, plant, and equipment, net
 
110,962

 
105,351

Goodwill
 
48,651

 
43,052

Intangible assets, net
 
29,041

 
28,549

Deferred income taxes
 
7,913

 
10,430

Long-term restricted cash
 

 
4,600

Other assets
 
4,566

 
4,896

Total assets
 
$
608,430

 
$
521,036

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
119,165

 
$
97,157

Line of credit
 
138,000

 
49,987

Accrued compensation
 
34,499

 
35,580

Accrued sales discounts, rebates and royalties
 
8,882

 
8,358

Accrued income taxes
 
3,670

 
375

Other accrued liabilities
 
28,719

 
24,410

Total current liabilities
 
332,935

 
215,867

Long-term liabilities:
 
 
 
 
Long-term contingent consideration
 
13,400

 
10,500

Deferred income taxes
 
4,423

 
7,060

Income tax payable
 
2,520

 
791

Other long-term liabilities
 
1,603

 
6,308

Total liabilities
 
354,881

 
240,526

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; 23,760,434 and 23,575,340 shares issued on December 31, 2017 and 2016, respectively
 
238

 
236

Paid-in capital
 
265,195

 
250,481

Treasury stock, at cost, 9,702,874 and 9,022,587 shares on December 31, 2017 and 2016, respectively
 
(262,065
)
 
(222,980
)
Accumulated other comprehensive income (loss)
 
(16,599
)
 
(22,821
)
Retained earnings
 
266,780

 
275,594

Total stockholders’ equity
 
253,549

 
280,510

Total liabilities and stockholders’ equity
 
$
608,430

 
$
521,036


4



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

 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2017
 
2016
 
2017
 
2016
Net sales
 
$
181,152

 
$
160,542

 
$
695,790

 
$
651,371

Cost of sales
 
143,300

 
119,306

 
530,083

 
487,247

Gross profit
 
37,852

 
41,236

 
165,707

 
164,124

Research and development expenses
 
5,557

 
4,558

 
21,416

 
19,850

Factory transition restructuring charges
 

 
2,895

 
6,145

 
4,493

Selling, general and administrative expenses
 
32,775

 
27,517

 
127,476

 
114,384

Operating income (loss)
 
(480
)
 
6,266

 
10,670

 
25,397

Interest income (expense), net
 
(858
)
 
(296
)
 
(2,534
)
 
(1,049
)
Other income (expense), net
 
(850
)
 
(886
)
 
(848
)
 
840

Income (loss) before provision for income taxes
 
(2,188
)
 
5,084

 
7,288

 
25,188

Provision for income taxes
 
14,666

 
1,848

 
17,611

 
4,804

Net income (loss)
 
(16,854
)
 
3,236

 
(10,323
)
 
20,384

Net income attributable to noncontrolling interest
 

 

 

 
30

Net income (loss) attributable to Universal Electronics Inc.
 
$
(16,854
)
 
$
3,236

 
$
(10,323
)
 
$
20,354

 
 
 
 
 
 
 
 
 
Earnings (loss) per share attributable to Universal Electronics Inc.:
 
 
 
 
 
 
Basic
 
$
(1.19
)
 
$
0.22

 
$
(0.72
)
 
$
1.41

Diluted
 
$
(1.19
)
 
$
0.22

 
$
(0.72
)
 
$
1.38

Shares used in computing earnings (loss) per share:
 
 
 
 
 
 
 
 
Basic
 
14,172

 
14,535

 
14,351

 
14,465

Diluted
 
14,172

 
14,833

 
14,351

 
14,764













5



UNIVERSAL ELECTRONICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
Year Ended December 31,
 
 
2017
 
2016
Cash provided by operating activities:
 
 
 
 
Net income
 
$
(10,323
)
 
$
20,384

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
31,312

 
26,967

Provision for doubtful accounts
 
166

 
183

Provision for inventory write-downs
 
4,119

 
3,806

Deferred income taxes
 
7,597

 
(1,637
)
Tax benefit from exercise of stock options and vested restricted stock
 

 
2,007

Excess tax benefit from stock-based compensation
 

 
(1,970
)
Shares issued for employee benefit plan
 
648

 
913

Employee and director stock-based compensation
 
11,943

 
10,324

Performance-based common stock warrants
 
683

 
2,728

Impairment of China factory equipment
 
4,100

 

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

 

Accounts receivable
 
(22,192
)
 
(3,882
)
Inventories
 
(29,916
)
 
(14,800
)
Prepaid expenses and other assets
 
(4,477
)
 
(772
)
Accounts payable and accrued expenses
 
10,970

 
10,451

Accrued income taxes
 
4,535

 
(5,159
)
Net cash provided by operating activities
 
13,788

 
49,543

Cash used for investing activities:
 
 
 
 
Acquisition of property, plant, and equipment
 
(40,384
)
 
(40,651
)
Acquisition of net assets of Residential Control Systems, Inc.
 
(8,894
)
 

Acquisition of intangible assets
 
(1,949
)
 
(1,912
)
Increase in restricted cash
 

 
(4,797
)
Deposit received toward sale of Guangzhou factory
 

 
4,797

Deconsolidation of Encore Controls LLC
 

 
48

Net cash used for investing activities
 
(51,227
)
 
(42,515
)
Cash provided by (used for) financing activities:
 
 
 
 
Borrowings under line of credit
 
157,000

 
147,974

Repayments on line of credit
 
(68,987
)
 
(147,987
)
Proceeds from stock options exercised
 
1,442

 
6,244

Treasury stock purchased
 
(39,085
)
 
(12,647
)
Excess tax benefit from stock-based compensation
 

 
1,970

Net cash provided by (used for) financing activities
 
50,370

 
(4,446
)
Effect of exchange rate changes on cash
 
(1,104
)
 
(4,937
)
Net increase (decrease) in cash and cash equivalents
 
11,827

 
(2,355
)
Cash and cash equivalents at beginning of year
 
50,611

 
52,966

Cash and cash equivalents at end of period
 
$
62,438

 
$
50,611

 
 
 
 
 
Supplemental cash flow information:
 
 
 
 
Income taxes paid
 
$
8,280

 
$
9,891

Interest paid
 
$
2,751

 
$
1,208


6



UNIVERSAL ELECTRONICS INC.
RECONCILIATION OF ADJUSTED NON-GAAP FINANCIAL RESULTS
(In thousands, except per share amounts)
(Unaudited) 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2017
 
2016
 
2017
 
2016
Net sales:
 
 
 
 
 
 
 
 
Net sales - GAAP
 
$
181,152

 
$
160,542

 
$
695,790

 
$
651,371

Stock-based compensation for performance-based warrants
 
(439
)
 
(491
)
 
683

 
2,728

Adjusted Non-GAAP net sales
 
$
180,713

 
$
160,051

 
$
696,473

 
$
654,099

 
 
 
 
 
 
 
 
 
Cost of sales:
 
 
 
 
 
 
 
 
Cost of sales - GAAP
 
$
143,300

 
$
119,306

 
$
530,083

 
$
487,247

Adjustments to acquired tangible assets (1)
 
(162
)
 
(265
)
 
(1,185
)
 
(1,157
)
Stock-based compensation expense
 
(18
)
 
(14
)
 
(71
)
 
(57
)
Factory transition costs (2)
 
(5,074
)
 

 
(5,074
)
 

Excess manufacturing overhead (3)
 

 
(1,951
)
 
(5,468
)
 
(3,213
)
Amortization of acquired intangible assets
 
(38
)
 

 
(113
)
 

Adjusted Non-GAAP cost of sales
 
138,008

 
117,076

 
518,172

 
482,820

Adjusted Non-GAAP gross profit
 
$
42,705

 
$
42,975

 
$
178,301

 
$
171,279

 
 
 
 
 
 
 
 
 
Gross margin:
 
 
 
 
 
 
 
 
Gross margin - GAAP
 
20.9
 %
 
25.7
 %
 
23.8
%
 
25.2
%
Stock-based compensation for performance-based warrants
 
(0.2
)%
 
(0.2
)%
 
0.1
%
 
0.3
%
Adjustments to acquired tangible assets (1)
 
0.1
 %
 
0.2
 %
 
0.2
%
 
0.2
%
Stock-based compensation expense
 
0.0
 %
 
0.0
 %
 
0.0
%
 
0.0
%
Factory transition costs (2)
 
2.8
 %
 
 %
 
0.7
%
 
%
Excess manufacturing overhead (3)
 
 %
 
1.2
 %
 
0.8
%
 
0.5
%
Amortization of acquired intangible assets
 
0.0
 %
 
 %
 
0.0
%
 
%
Adjusted Non-GAAP gross margin
 
23.6
 %
 
26.9
 %
 
25.6
%
 
26.2
%
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
Operating expenses - GAAP
 
$
38,332

 
$
34,970

 
$
155,037

 
$
138,727

Amortization of acquired intangible assets
 
(1,401
)
 
(1,268
)
 
(5,472
)
 
(4,977
)
Stock-based compensation expense
 
(2,449
)
 
(2,672
)
 
(11,872
)
 
(10,267
)
Employee related restructuring costs
 

 
(3,052
)
 
(7,008
)
 
(4,977
)
Litigation settlement costs
 

 

 

 
(2,000
)
Change in contingent consideration
 
200

 
1,100

 
(3,000
)
 
1,251

Transaction costs related to sale of Guangzhou factory
 
(1,912
)
 

 
(1,912
)
 

Other
 
(483
)
 

 
(849
)
 

Adjusted Non-GAAP operating expenses
 
$
32,287

 
$
29,078

 
$
124,924

 
$
117,757


7



UNIVERSAL ELECTRONICS INC.
RECONCILIATION OF ADJUSTED NON-GAAP FINANCIAL RESULTS
(In thousands, except per share amounts)
(Unaudited) 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2017
 
2016
 
2017
 
2016
Operating income (loss):
 
 
 
 
 
 
 
 
Operating income (loss) - GAAP
 
$
(480
)
 
$
6,266

 
$
10,670

 
$
25,397

Stock-based compensation for performance-based warrants
 
(439
)
 
(491
)
 
683

 
2,728

Adjustments to acquired tangible assets (1)
 
162

 
265

 
1,185

 
1,157

Factory transition costs (2)
 
5,074

 

 
5,074

 

Excess manufacturing overhead (3)
 

 
1,951

 
5,468

 
3,213

Amortization of acquired intangible assets
 
1,439

 
1,268

 
5,585

 
4,977

Stock-based compensation expense
 
2,467

 
2,686

 
11,943

 
10,324

Employee related restructuring costs
 

 
3,052

 
7,008

 
4,977

Litigation settlement costs
 

 

 

 
2,000

Change in contingent consideration
 
(200
)
 
(1,100
)
 
3,000

 
(1,251
)
Transaction costs related to sale of Guangzhou factory
 
1,912

 

 
1,912

 

Other
 
483

 

 
849

 

Adjusted Non-GAAP operating income
 
$
10,418

 
$
13,897

 
$
53,377

 
$
53,522

 
 
 
 
 
 
 
 
 
Adjusted Non-GAAP operating income as a percentage of net sales
 
5.8
%
 
8.7
%
 
7.7
%
 
8.2
%
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Universal Electronics Inc.:
 
 
 
 
 
 
 
 
Net income (loss) attributable to Universal Electronics Inc. - GAAP
 
$
(16,854
)
 
$
3,236

 
$
(10,323
)
 
$
20,354

Stock-based compensation for performance-based warrants
 
(439
)
 
(491
)
 
683

 
2,728

Adjustments to acquired tangible assets (1)
 
162

 
265

 
1,185

 
1,157

Factory transition costs (2)
 
5,074

 

 
5,074

 

Excess manufacturing overhead (3)
 

 
1,951

 
5,468

 
3,213

Amortization of acquired intangible assets
 
1,439

 
1,268

 
5,585

 
4,977

Stock-based compensation expense
 
2,467

 
2,686

 
11,943

 
10,324

Employee related restructuring costs
 

 
3,052

 
7,008

 
4,977

Litigation settlement costs
 

 

 

 
2,000

Change in contingent consideration
 
(200
)
 
(1,100
)
 
3,000

 
(1,251
)
Transaction costs related to sale of Guangzhou factory
 
1,912

 

 
1,912

 

Foreign currency (gain) loss
 
1,089

 
901

 
1,429

 
(660
)
Other
 
483

 

 
849

 
(11
)
Income tax provision on adjustments
 
(2,532
)
 
(1,656
)
 
(9,705
)
 
(6,888
)
Other income tax adjustments (4)
 
16,057

 
886

 
16,975

 
1,577

Adjusted Non-GAAP net income attributable to Universal Electronics Inc.
 
$
8,658

 
$
10,998

 
$
41,083

 
$
42,497

 
 
 
 
 
 
 
 
 
Diluted shares used in computing earnings (loss) per share:
 
 
 
 
 
 
 
 
GAAP
 
14,172

 
14,833

 
14,351

 
14,764

Adjusted Non-GAAP
 
14,395

 
14,833

 
14,615

 
14,764

 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share attributable to Universal Electronics Inc.:
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share attributable to
Universal Electronics Inc. - GAAP
 
$
(1.19
)
 
$
0.22

 
$
(0.72
)
 
$
1.38

Total adjustments
 
$
1.79

 
$
0.52

 
$
3.53

 
$
1.50

Adjusted Non-GAAP diluted earnings per share attributable to
Universal Electronics Inc.
 
$
0.60

 
$
0.74

 
$
2.81

 
$
2.88


8




(1) 
Consists of depreciation related to the mark-up from cost to fair value of fixed assets acquired in business combinations as well as the effect of fair value adjustments to inventories acquired in business combinations that sold through during the period.
(2) 
Includes $3.9 million of factory equipment impairment charges and $0.2 million in inventory write-offs incurred during the three months ended December 31, 2017 as a result of the transition of manufacturing activities from our now closed Guangzhou factory to our other factories. Also includes $0.9 million of air freight incurred due to manufacturing delays caused by this factory transition.
(3) 
Excess manufacturing costs incurred resulting from the transition of manufacturing activities from our Guangzhou factory to our other China factories.
(4) 
The three and twelve months ended December 31, 2017 include $16.6 million of income tax expense representing the estimated tax impact of the U.S. Tax Cuts and Jobs Act that was enacted in December 2017. Additionally, the three months ended December 31, 2017 includes $0.5 million of net other income tax benefits, and the twelve months ended December 31, 2017 includes $0.4 million of net other income tax expense. The three and twelve months ended December 31, 2016 include a $0.9 million deferred tax valuation allowance adjustment related to the pending sale of our Guangzhou factory. The twelve months ended December 31, 2016 also includes a $0.7 million deferred tax adjustment resulting from a lower statutory tax rate due to tax incentives at one of our China factories.





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