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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ______ to ______
Commission File Number: 0-21044
UNIVERSAL ELECTRONICS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0204817
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1864 ENTERPRISE PARKWAY WEST, TWINSBURG, OHIO 44087
(Address of principal executive offices) Zip Code)
330-487-1110
(Registrant's telephone number, including area code)
---------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 6,311,538 shares of the
Company's Common Stock, $.01 par value, were outstanding at November 12, 1997
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INDEX OF EXHIBITS TO THIS QUARTERLY REPORT APPEARS ON PAGE 14
This quarterly report on Form 10-Q contains 17 pages of which this is page 1.
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UNIVERSAL ELECTRONICS INC.
--------------------------
INDEX
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet 3
Consolidated Statement of Income 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
Signature 15
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Item 1. Consolidated Financial Statements
UNIVERSAL ELECTRONICS INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
ASSETS
------
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
1997 (1) 1996 1996 (1)
-------- ---- --------
Current assets:
Cash and cash equivalents $ 231 $ 510 $ 722
Accounts receivable 27,824 20,163 20,877
Inventories 27,002 21,208 31,230
Refundable income taxes 2 1 -
Prepaid expenses 3,805 3,330 4,207
Deferred income taxes 1,423 1,943 4,329
-------- -------- --------
Total current assets 60,287 47,155 61,365
Equipment, furniture, and
fixtures, net 7,438 6,697 7,231
Deferred income taxes 4,209 4,209 -
Other assets 1,419 1,390 996
-------- -------- --------
Total assets $ 73,353 $ 59,451 $ 69,592
======== ======== ========
LIABILITIES AND STOCKHOLDERS EQUITY
-----------------------------------
Current liabilities:
Revolving credit facility $ 3,247 $ - $ 6,996
Accounts payable 14,079 7,171 8,050
Accrued income taxes 168 198 134
Accrued compensation 1,008 519 248
Other accrued expenses 3,223 2,753 1,887
-------- -------- --------
Total current liabilities 21,725 10,641 17,315
-------- -------- --------
Long-term debt 5,330 3,183 4,594
Stockholders' equity:
Capital stock 68 68 68
Paid-in capital 54,162 53,951 53,917
Currency translation adjustment (72) (25) (20)
Retained (deficit) (4,578) (5,773) (3,688)
Cost of common stock held
in treasury (3,282) (2,594) 2,594
-------- -------- --------
Total stockholders'
Equity 46,298 45,627 47,683
-------- -------- --------
Total liabilities and
Stockholders' equity $ 73,353 $ 59,451 $ 69,592
======== ======== ========
(1) Unaudited
The accompanying notes are an integral part of these financial statements.
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UNIVERSAL ELECTRONICS INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts) (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---- ---- ---- ----
Net Sales $ 33,499 $ 25,641 $ 79,810 $ 69,073
Cost of sales 23,208 18,870 55,479 49,835
-------- -------- -------- --------
Gross profit 10,291 6,771 24,331 19,238
Selling, general and
administrative expenses 8,333 6,482 22,138 19,668
-------- -------- -------- --------
Operating income (loss) 1,958 289 2,193 (430)
Interest expense 183 213 386 557
Interest income (3) (6) (11) (26)
Other (income)expenses, net (49) (83) (22) (221)
-------- -------- -------- --------
Income (loss) before income
taxes 1,827 165 1,840 (740)
Income tax (expense) benefit (640) (53) (644) 530
-------- -------- -------- --------
Net (income)loss $ 1,187 $ 112 $ 1,196 $ (210)
-------- -------- -------- --------
Net (income)loss
per share $ 0.19 $ 0.02 $ 0.19 $ (0.03)
-------- -------- -------- --------
Weighted average common and
common stock equivalents
outstanding 6,359 6,855 6,306 6,760
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
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UNIVERSAL ELECTRONICS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)(Unaudited)
NINE MONTHS ENDED SEPTEMBER 30,
1997 1996
-------- --------
Cash provided by (used for) operating activities:
Net income (loss) $ 1,195 $ (210)
Adjustments to reconcile net loss to net cash used for operating
activities:
Depreciation and amortization 1,532 1,192
Deferred income taxes 521 (627)
Issuance of common stock for
Retirement plan 73 -
Issuance of treasury stock for
Directors compensation 45 -
Changes in operating assets and Liabilities:
Receivables (8,158) 5,469
Inventories (5,770) (982)
Other assets (492) (2,063)
Payables and accruals 8,316 (3,383)
Accrued income taxes (21) 641
-------- --------
Net cash (used for) provided by
Operating activities (2,759) 37
-------- --------
Cash used for investing activities:
Acquisition of fixed assets (2,183) (3,185)
Trademarks (113) (155)
Repayments from employees for Common
Stock purchases 109 -
Net cash used for investing activities (2,187) (3,340)
Cash provided by financing activities:
Short-term bank borrowings 31,424 46,259
Short-term bank payments (28,178) (45,383)
-------- --------
Long-term debt 2,147 4,594
-------- --------
Treasury stock purchased (688) 2,594
Proceeds from stock options
Exercised 28 295
Net cash provided by financing
activities 4,731 3,171
-------- --------
Effect of exchange rates on cash (66) (18)
-------- --------
Net decrease in cash and cash
equivalents (279) (150)
Cash and cash equivalents at beginning
of period 510 872
-------- --------
Cash and cash equivalents at end of
period $ 231 $ 722
======== ========
The accompanying notes are an integral part of these financial statements.
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UNIVERSAL ELECTRONICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ADJUSTMENTS
- -----------
All adjustments, consisting of recurring adjustments necessary for a fair
presentation of financial position and results of operations for these unaudited
interim periods, have been included in the accompanying consolidated financial
statements.
INVENTORIES
- -----------
Inventories consist of the following (in thousands):
September 30, December 31, September 30,
1997 1996 1996
-------------------------------------------
Components $ 9,293 $ 8,155 $13,273
Finished goods 17,709 13,053 17,957
------- ------- -------
Total inventories $27,002 $21,208 $31,230
======= ======= =======
The Company provides certain components to its contract manufacturers for
inclusion in the Company's finished goods.
Net Income Per Share
--------------------
Net income per share is computed by dividing net income by the weighted
average of common stock and common stock equivalents outstanding. Common
stock equivalents are computed using the treasury stock method.
Reclassification
----------------
Certain prior year amounts have been reclassified to conform with the
presentation utilized in the quarter ended September 30, 1997.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Net sales for the third quarter rose 30.6% to a record $33.5 million from $25.6
million from the same quarter last year. Net income increased to $1.19 million,
or $0.19 per share from $0.1 million, or $0.02 per share for the third quarter
of 1996.
Net sales for the first nine months of 1997 reached a record $79.8 million, up
15.5% from $69.1 million for the same period a year earlier. Net income for the
first three quarters of 1997 was $1.2 million or $0.19 per share, compared to a
net loss of $0.2, or $0.03 per share for the corresponding period last year.
Net sales in the Company's retail businesses (Domestic Retail, International
Retail and Private Label) totaled $17.0 million in the third quarter of 1997,
compared to $20.0 million for the same period of 1996, a 14.9% decrease. On a
year-to-date basis, the Company's retail businesses' net sales decreased 5.6% to
$44.1 million from $46.7 million. Domestic retail net sales were down 18.4% to
$7.8 million for the 1997 third quarter compared to $9.6 in 1996, while its net
sales for the nine months ended September 30, 1997 were $22.3 million, down 7.0%
from $24.0 million of a year earlier. Increased competition, resulting in
declining volume and market share and decreasing pricing are the major factors
contributing to the decreases in this business. International retail sales were
flat for the quarter ended September 30, 1997 at $5.3 million when compared to
the last years' third quarter. International Retail's net sales for the nine
months ended September 30, 1997 were down by 8.1% to $13.2 million from $14.4
million in 1996. Inventory reduction by some of the major European customers has
caused the decline in the international sales. Private label net sales were $3.8
million for the third quarter compared to $5.1 million in 1996. The decline
experienced during the third quarter principally represents a shift in the
timing of shipments from the prior year. Year to date net sales were $8.6
million or 2.8% greater than the $8.4 million for the same period of 1996.
Third quarter net sales in the Company's technology businesses (Cable, Cable
OEM, OEM) were $16.5 million in 1997, increasing 190.5% from $5.7 million in the
third quarter of 1996. For the first nine months of 1997, the Company's
technology businesses' net sales were $35.7 million, compared to $22.3 million
in the corresponding period of 1996, an increase of 59.7%. The increase in the
technology businesses continues to be driven primarily by the Company's
strengths in the subscription broadcasting market. Sales for the 1997 quarter
were 323.1% greater than in the same period the prior year, while year to date
1997 net sales were up by 102.1% over the nine month period for 1996.
Gross margins were 30.7% in the third quarter 1997 compared to 26.4% in the
third quarter of 1996, and 30.5% for the nine months ended September 30, 1997
compared to 26.9% for the same period of 1996. Retail gross margins improved on
a year to year basis from 26.8% to 30.3% for the third quarter in 1996 and 1997,
respectively, and from 26.8% to 30.6% for the nine months ended September 30,
1996 and 1997, respectively. Domestic retail gross profit margins improved in
1997 to 22.4% for the quarter versus 17.1% for the same period of 1996. The nine
month margins were 24.0% in 1997 and 16.3% in 1996, respectively. The margin
improvement is principally due to component and packaging cost savings and
control implemented by management during the year. The international retail
gross profit margins improved slightly in the 1997 third quarter to 47.3% from
47.1% the year earlier. The 1997 nine month
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margins also showed improvement, increasing to 46.5% from 44.9% in 1996. Again,
favorable component costs was the primary factor contributing to the improvement
for the international business. Private label gross profit margins declined
slightly during the quarter and on a year to date basis primarily due to sales
mix of product.
The technology businesses gross profit margins improved during the three months
ended September 30, 1997 at 31.1% compared to 24.9% in 1996. The nine month
gross margins were 30.4% and 27.3% for 1997 and 1996 respectively. Product mix
and component cost savings were the most significant contributors to these
improvements.
Selling, general and administrative expenses were $8.3 million or 24.9% of net
sales and $6.5 or 25.3% of net sales for the quarters ended September 30, 1997
and 1996, respectively. In the nine months ended September 30, 1997, the
selling, general and administrative expenses were $22.1 million or 27.7% of net
sales as compared to $19.7 million or 28.5% of net sales in the same period for
1996. While selling, general and administrative expense dollars show an increase
for both the quarter and nine months ended September 30, 1997 over 1996, the
Company's selling, general and administrative expenses as a percentage of sales
actually decreased for such periods due to management's continuing focus on cost
control and savings.
Operating income for the third quarter was $2.0 million in 1997 as compared to
$0.3 million in 1996. The nine months ended September 30, 1997 reflected an
increase in operating income from the prior year reaching $2.2 million in 1997
from a loss of $0.4 a year earlier.
The Company's retail businesses reflected a operating loss of $0.7 million in
the third quarter of 1997, compared to operating income of $0.3 million for the
same period of 1996. Year-to-date operating losses in the Company's retail
businesses were $2.7 million in 1997 compared to $2.6 million in 1996. Domestic
retail operating losses for the quarter were flat compared to the prior year at
$1.2 million, while the nine month year to date losses were reduced by 28.3% to
$3.2 million versus $4.5 million for the same period in 1996. The previously
discussed improvements in gross margins and cost control are the primary factors
leading to the reduction in the losses. International retail operating income
was down for the third quarter to $0.3 in 1997 from $0.7 the year earlier.
International operating income for the 1997 year to date was $0.2 million
compared to $1.1 for the nine month period ended in 1996. The principal reason
for the drop in the operating income from international business is the decrease
in the European sales. Private label operating income decreased for the quarter
and year to date primarily due to the product mix for the sales in the periods.
Operating income was $0.2 million and $0.8 million for the quarters ended 1997
and 1996, respectively, and $0.3 million and $0.9 million for the nine months
1997 and 1996 respectively.
Third quarter operating income in the Company's technology businesses was $2.9
million in 1997 up from breakeven in the third quarter of 1996. For the first
nine months of 1997, the Company's technology businesses' operating income was
$5.2 million compared to $2.2 million in the corresponding period of 1996. As
discussed previously, the increase in the technology businesses continues to be
driven primarily by the Company's strengths in the subscription broadcasting
market.
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The Company recorded interest expense of approximately $386,000 related to
borrowings under its revolving credit line for the first nine months of 1997
compared to approximately $557,000 for the same period of 1996. The decrease is
the result of a lower average outstanding balance. However, the interest rate on
the borrowing increased in 1997 compared to the same period in 1996.
Income tax expense was approximately $644,000 for the first three quarters of
1997 as compared to a benefit of approximately $530,000 for the same period of
1996. The 1996 benefit includes the recognition of certain research and
development credits and deferred state income taxes not previously provided for.
Backlog
As of the end of the third quarter of 1997, the Company had backlog orders of
$16.0 million. This reflects an increase of 110.5% as of the same date in 1996
when the Company had backlog orders representing $7.6 million in sales.
Liquidity and Capital Resources
The Company's principal sources of funds are its operations and bank credit
facilities. Cash used for operating activities was $2.8 million for the first
nine months of 1997 compared to $37,000 provided from operations in 1996. The
use of cash for the nine months ended September 30, 1997 reflects the buildup of
inventories and accounts receivable which the Company believes are normal as it
enters its holiday seasonal sales period.
The Company's bank credit facilities include a revolving credit line, which is
available to fund the Company's seasonal working capital needs and for general
operating purposes. This revolving credit facility, which expires April 30,
1998, provides the Company with borrowing availability of $22 million and bears
interest equal to the bank's prime rate plus one-quarter percent. It is
management's intention to extend the revolving credit facility beyond its
current maturity. In accordance with the provisions of Statement of Financial
Accounting Standards No. 6, "Classification of Short-Term Obligations Expected
to be Refinanced," the Company has classified a portion of the amount
outstanding under the agreement as long-term debt in the accompanying financial
statements. The credit facility is secured by a first priority security interest
in the accounts receivable, inventory, equipment, and general intangibles of the
Company. At September 30, 1997, the interest rate charged on the outstanding
balance of this credit line was 8.75%. Under the terms of this revolving credit
facility, the Company's ability to pay cash dividends on its common stock and
the acquisition of treasury shares is generally restricted, however, the Company
has authority under this credit facility to acquire up to 1,000,000 shares of
its common stock in market purchases and, to date, the Company has acquired
approximately 552,000 shares of stock which it holds as treasury shares and are
available for reissuance by the Company. Presently, except for using a small
number of these treasury shares to compensate its outside board members, the
Company has no plans to distribute these shares.
The outstanding balance of the Company's import letters of credit reduces
amounts available for borrowing. As of September 30, 1997, the Company had
utilized approximately $5.3 million of the credit facility for the acquisition
of its facility in Ohio and treasury stock purchases and had approximately
$252,000 of outstanding import letters of credit. The Company's borrowing
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under this revolving credit facility and outstanding import letters of credit
fluctuates due to among other things, seasonality of the business, the timing of
supplier shipments, customer orders and payments, and vendor payments.
Capital expenditures for the nine months ended September 30, 1997 and 1996 were
approximately $2.2 and $3.2, respectively. The 1997 capital expenditures relate
primarily to product tooling, computer equipment and the relocation of the
Company's California facility. Approximately $1.7 million of the 1996 capital
expenditures were for the acquisition of the Twinsburg, Ohio facility. The
balance of the 1996 capital expenditures were primarily for product tooling.
RISK FACTORS PERTAINING TO THE THIRD QUARTER 1997
The Company cautions that the following important factors, among others
(including but not limited to factors mentioned from time to time in the
Company's reports filed with the Securities and Exchange Commission), could
affect the Company's actual results and could cause the Company's actual results
to differ materially from those expressed in any forward-looking statements of
the Company made by or on behalf of the Company. The factors included here are
not exhaustive. Further, any forward-looking statement speaks only as of the
date on which such statement is made, and the Company undertakes no obligation
to update any forward-looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to time and it
is not possible for management to predict all of such factors, nor can it assess
the impact of each such factor on the business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements. Therefore,
forward-looking statements should not be relied upon as a prediction of actual
future results.
BACKLOG
- -------
Although the Company believes current orders to be firm and expect that
substantially all of the backlog will be shipped in 1997, there can be no
assurance that such orders will be shipped. The Company further believes that
backlog is not a meaningful indicator of its future performance.
COMPETITION
- -----------
The remote control industry is characterized by intense competition based
primarily on product availability, price, speed of delivery, ability to tailor
specific solutions to customer needs, quality and depth of product lines. The
Company's competition is fragmented across its product lines, and accordingly,
the Company does not compete with any one company across all product lines. The
Company competes with a variety of entities, some of which have greater
financial and other resources than the Company. The Company's ability to remain
competitive in this industry depends in part on its ability to successfully
identify new product opportunities and develop and introduce new products and
enhancements on a timely and cost effective basis.
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DEPENDENCE UPON CONSUMER PREFERENCE
- -----------------------------------
The Company is susceptible to fluctuations in its businesses based upon consumer
demand for its products. The Company believes that its success depends in
substantial part on its ability to anticipate, gauge and respond to such
fluctuation in consumer demand. However, it is impossible to predict with
complete accuracy the occurrence and effect of any such event that will cause
such fluctuations in consumer demand for the Company's products.
DEPENDENCE ON FOREIGN MANUFACTURING
- -----------------------------------
Third-party manufacturers located in foreign countries manufacture substantially
all of the Company's remote controls products. The Company's arrangements with
its foreign manufacturers are subject to the risks of doing business abroad,
such as import duties, trade restrictions, work stoppages, political instability
and other factors which could have a material adverse effect on the Company's
business and results of operations. The Company believes that the loss of any
one or more of its manufacturers would not have a long-term material adverse
effect on the Company's business and results of operations because numerous
other manufacturers are available to fulfill the Company's requirements,
however, the loss of any of the Company's major manufacturers could adversely
affect the Company's business until alternative manufacturing arrangements are
secured. In addition to continuing to seek out alternative and additional third
party manufacturers both domestically and abroad, the Company manufactures a
small amount of its remote controls in-house. Such in-house manufacturing,
however, does not presently reduce its dependence on its third party
manufacturers. Nor would it be sufficient to offset the interruptions which
would occur in the event of a loss of any one of more of its manufacturers.
DEPENDENCE UPON KEY SUPPLIERS
- -----------------------------
Most of the components used in the Company's products are available from
multiple sources; however, the Company has elected to purchase integrated
circuit components used in the Company's products, principally its remote
control products, and certain other components used in the Company's products,
from a couple of selected sources. The Company continues to develop alternative
sources of supply for these components, however, there can be no assurance that
the Company will be able to continue to obtain these components on a timely
basis or in the quantities necessary to maintain or meet the forecasted
requirements. The Company generally maintains inventories of its integrated
chips, which could be used in part to mitigate, but not eliminate, delays
resulting from supply interruptions. An extended interruption or termination in
the supply of any of the components used in the Company's products, or a
reduction in their quality or reliability, would have a material adverse effect
on the Company's business and results of operations.
DEPENDENCE ON MAJOR CUSTOMERS
- -----------------------------
The Company's performance is affected by the economic strength and weakness of
its worldwide customers. The Company sells its products to mass merchants, such
as Wal-Mart and K-mart, and to technology oriented business such as Primestar
and other companies doing business in the cable and telecommunications
industries. The Company also supplies its products to its wholly-owned, non-U.S.
subsidiaries and to independent foreign distributors, who in turn distribute the
Company's products worldwide, with the United Kingdom, Europe, and Australia
currently representing the Company's principal
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foreign markets. The loss of any one or more of the Company's key customers
either in the United States or abroad due to the financial weakness or
bankruptcy of any such customer may have an adverse affect on the Company's
financial condition or results of operations.
DEPENDENCE UPON TIMELY PRODUCT INTRODUCTION
- -------------------------------------------
The Company's ability to remain competitive in the remote control products
market will depend in part upon its ability to successfully identify new product
opportunities and to develop and introduce new products and enhancements on a
timely and cost effective basis. There can be no assurance that the Company will
be successful in developing and marketing new products or in enhancing its
existing products, that new products will achieve ongoing consumer acceptance,
that products developed by others will not render the Company's products
non-competitive or obsolete or that the Company will be able to obtain or
maintain the rights to use proprietary technologies developed by others which
are incorporated in the Company's products. Any failure by the Company to
anticipate or respond adequately to technological developments and customer
requirements, or any significant delays in product development or introduction,
could have a material adverse effect on the Company's financial condition and
results of operations.
In addition, any new products which the Company may introduce in the future may
require the expenditure of funds for research and development, tooling,
manufacturing processes, inventory and marketing. In order to achieve high
volume production of any new product, the Company may have to make substantial
investments in inventory and expand its production capabilities.
GROSS MARGIN FLUCTUATIONS
- -------------------------
Gross profit margins will fluctuate due to a variety of factors, including,
among other things, shifts in product mix, changes in product pricing,
fluctuations in manufacturing and freight costs, and changes in customer mix.
LIQUIDITY
- ---------
It is the Company's policy to carefully monitor the state of its business, cash
requirements and capital structure. The Company believes that funds generated
from operations and available from its borrowing capacity will be sufficient to
fund its currently anticipated cash needs, however, there can be no assurances
that this will occur. Moreover, while it is the Company's present intention to
extend its existing revolving credit facility beyond the facility's current
maturity, until such an extension is formally executed, there can be no
assurances that such an extension will occur or that, if extended, it will be
done upon terms and conditions that are no less favorable than those under the
current facility, although management knows of no reason why any such extension
would not occur on terms and conditions acceptable to management.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
- -------------------------------------------
The Company's quarterly financial results may vary significantly depending
primarily upon factors such as the timing of significant orders, the timing of
new product offerings by the Company and its competitors and product
presentations. In addition, the Company's business historically has been
seasonal, with the largest proportion of sales occurring in September, October
and November of each calendar year. Factors such as quarterly variations in
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financial results could aversely affect the market price of the Company's common
stock and cause it to fluctuate substantially. In addition, the Company may from
time to time (i) increase its operating expenses to fund greater levels of
research and development, increase its sales and marketing activities, develop
new distribution channels, improve its operational and financial systems and
broaden its customer support capabilities and (ii) incur significant operating
expenses associated with any new acquisitions. To the extent that such expenses
precede or are not subsequently followed by increased revenues, the Company's
business, operating results and financial condition will be materially adversely
affected.
The Company expects to experience significant fluctuations in future quarterly
operating results that may be caused by many factors, including demand for the
Company's products, introduction or enhancement of products by the Company and
its competitors, market acceptance of new products, price reductions by the
Company or its competitors, mix of distribution channels through which products
are sold, level of product returns, mix of products sold, component pricing, mix
of international and North American revenues, and general economic conditions.
In addition, as a strategic response to changes in the competitive environment,
the Company may from time to time make certain pricing or marketing decisions or
acquisitions that could have a material adverse effect on the Company's
business, results of operations or financial condition. As a result, the Company
believes that period-to-period comparisons of its results of operations are not
necessarily meaningful and should not be relied upon as any indication of future
performance. Due to all of the foregoing factors, it is likely that in some
future quarters, the Company's operating results will be below the expectations
of public market analysts and investors. In such event, the price of the
Company's common stock would likely be materially adversely affected.
GENERAL ECONOMIC CONDITIONS
- ---------------------------
General economic conditions, both domestic and foreign, have an impact on the
Company's business and financial results. From time to time the markets in which
the Company sells its products experience weak economic conditions that may
negatively affect the sales of the Company's products. To the extent that
general economic conditions affect the demand for products sold by the Company,
such conditions could have an adverse effect on the Company's business.
Moreover, operating its business in countries outside of the United States
exposes the Company to fluctuations in foreign currency exchange rates, exchange
ratios, nationalization or expropriation of assets, import/export controls,
political instability, variations in the protection of intellectual property
rights, limitations on foreign investments and restrictions on the ability to
convert currency are risks inherent in conducting operations in geographically
distant locations, with customers speaking different languages and having
different cultural approaches to the conduct of business, any one of which alone
or collectively, may have an adverse affect on the Company's international
operations, and consequently on the Company's business, operating results and
financial condition as a whole.
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on May 28, 1997. The
following individuals were elected to the Company's Board of Directors to hold
office until the Annual Meeting of Stockholders to be held in 1998 or until
election and qualification of their successors.
Nominee In Favor Withheld
------- -------- --------
Class I Directors
-----------------
Paul D. Arling 4,993,469 583,990
David M. Gabrielsen 4,993,919 583,540
Mark S. Kopaskie 4,994,219 583,240
Class II Directors
------------------
F. Rush McKnight 4,994,619 582,840
The results of the voting ratifying and approving the Universal Electronics Inc.
1996 Stock Incentive Plan were as follows:
In Favor Opposed Abstained
-------- ------- ---------
4,403,632 1,152,012 21,815
The results of the voting ratifying the appointment of Price Waterhouse as the
Company's independent accountants for the year ending December 31, 1997 were as
follows:
In Favor Opposed Abstained
-------- ------- ---------
5,526,849 41,435 9,175
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits Page
11.1 Statement re: Computation of Per 14 Share
Earnings (filed herewith).
(B) Reports on Form 8-K
There were no reports on Forms 8-K filed during the
quarter ended September 30, 1997.
(C) Exhibit 27 Financial Data Schedule
14
15
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.
(Registrant) Universal Electronics Inc.
Date: November 14, 1997 /s/ Paul D. Arling
---------------------------
Paul D. Arling
Senior Vice President and
Chief Financial Officer
15
1
Exhibit 11.1
UNIVERSAL ELECTRONICS INC.
COMPUTATION OF PER SHARE EARNINGS
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
Common stock
outstanding, beginning
of period 6,372,025 6,750,898 6,372,025 6,750,898
----------- ----------- ----------- -----------
Weighted average common
stock outstanding from
exercise of stock options,
treasury stock purchases and
employee benefit plan (111,045) 1,204 (94,703) 8,770
----------- ----------- ----------- -----------
Weighted average common
stock outstanding 6,260,980 6,748,792 6,277,790 6,759,668
=========== =========== =========== ===========
Stock options 97,983 106,237 28,770 --
=========== =========== =========== ===========
Weighted average common
and common stock
equivalents outstanding 6,358,963 6,855,029 6,306,093 6,759,668
=========== =========== =========== ===========
Net income (loss)
attributable to common
stockholders $ 1,182,429 $ 112,183 $ 1,190,132 $ (210,313)
=========== =========== =========== ===========
Net income (loss) per
common and common stock
equivalents $ 0.19 $ 0.02 $ 0.19 $ (0.03)
=========== =========== =========== ===========
16
5
9-MOS
DEC-31-1996
JAN-01-1997
SEP-30-1997
231
0
28,202
(378)
27,002
60,287
12,202
(4,764)
73,353
21,725
5,330
0
0
68
46,230
73,353
79,810
79,810
55,479
22,138
0
243
386
1,840
644
1,196
0
0
0
1,196
0.19
0.19
