Universal Electronics Inc. Reports Operating Results (10-Q)

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Aug 06, 2010
Universal Electronics Inc. (UEIC, Financial) filed Quarterly Report for the period ended 2010-06-30.

Universal Electronics Inc. has a market cap of $229.9 million; its shares were traded at around $16.83 with a P/E ratio of 15 and P/S ratio of 0.8. Universal Electronics Inc. had an annual average earning growth of 7.5% over the past 10 years.UEIC is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Net sales in our Consumer lines (One For All® retail, private label and custom installers) were approximately 15% of net sales during the second quarter of 2010 compared to approximately 13% during the second quarter of 2009. Net sales in our Consumer lines increased by 14% to $11.6 million during the second quarter of 2010 from $10.2 million during the second quarter of 2009. International retail sales increased by $2.1 million from $7.5 million during the second quarter of 2009 to $9.6 million during the second quarter of 2010 primarily as a result of the analog-to-digital transition that took place in some European countries. The weakening of both the Euro and the British Pound compared to the U.S. dollar resulted in a decrease in net sales of approximately $0.4 million. Net of this currency effect, international retail sales increased $2.5 million. CEDIA sales decreased by $0.7 million compared to the second quarter of 2009.

Selling, general and administrative expenses decreased 0.8% from $17.8 million during the second quarter of 2009 to $17.6 million during the second quarter of 2010. The weakening of the Euro compared to the U.S. dollar resulted in a decrease of $0.4 million. Net of this favorable currency effect, expenses increased by $0.2 million, primarily due to increased bonus expense of $1.0 million and increased bad debt expense of $0.6 million. The bad debt expense was related to two specific customers. Offsetting these increases were personnel costs, which decreased $0.5 million; outside legal fees decreased $0.3 million due to the acquisition of certain assets and operations from Zilog, Inc. that occurred during the first quarter of 2009. In addition, freight and delivery expense decreased by $0.3 million and marketing expense decreased by $0.2 million during the second quarter of 2010 compared to the second quarter of 2009.

Net sales during the six months ended June 30, 2010 were $150.3 million, an increase of 0.6% compared to $149.4 million during the six month ended June 30, 2009. Net income for the six months ended June 30, 2010 was $6.6 million or $0.47 per diluted share compared to $4.6 million or $0.33 per diluted share for the six months ended June 30, 2009.

Net sales in our Consumer lines (One For All® retail, private label and custom installers) were approximately 15% of net sales during the six months ended June 30, 2010 compared to approximately 14% during the six months ended June 30, 2009. Net sales in our Consumer lines increased by 12% to $22.7 million during the six months ended June 30, 2010 from $20.4 million during the same period in the prior year. International retail sales increased by $2.3 million from $15.9 million during the first six months of 2009 to $18.2 million during the first six months of 2010. The strengthening of the British Pound compared to the U.S. dollar resulted in an increase in net sales of approximately $0.1 million. Net of this currency effect, international retail sales increased $2.2 million. North American retail sales increased by $0.9 million compared to the first six months of 2009, as a result of our new partnership agreement with a distributor in the U.S. market. CEDIA sales decreased by $0.9 million compared to the first six months of 2009.

Selling, general and administrative expenses decreased 3.7% from $35.5 million during the six months ended June 30, 2009 to $34.2 million during the six months ended June 30, 2010. Professional service expenses decreased by $1.4 million, due primarily to the non-recurring professional service expenses of approximately $1.1 million related to the acquisition of certain assets and operations from Zilog, Inc. that occurred during the first quarter of 2009. Additionally, personnel costs decreased by $0.6 million and non-billable product development costs decreased by $0.3 million. Partially offsetting these cost decreases were bonus expense and bad debt expense, both increased by $0.6 million during the first six months of 2010 compared to the first six months of 2009. The bad debt expense was related to two specific customers.

Net cash provided by (used for) investing activities increased by $107.1 million from cash outflows of $61.6 million during the first six months of 2009 to cash inflows of $45.5 million during the first six months of 2010. The increase in cash provided by (used for) investing activities was primarily due to the maturity of our term deposit resulting in cash inflows of $49.2 million during the first six months of 2010, compared with cash outflows to purchase a term deposit of $49.2 million during the first six months of 2009. In addition, the acquisition of intangible assets and goodwill from Zilog, Inc. during the first six months of 2009 resulted in cash outflows of $9.5 million compared to $0 during the first six months of 2010. Refer to Note 17 for further discussion about our purchase of assets from Zilog, Inc. These relative increases in cash inflows from investing activities were partially offset by an increase in cash utilized to purchase equipment, furniture and fixtures, which resulted in cash outflows of $3.0 million during the first six months of 2010, greater than the cash outflows of $2.2 million recorded during the first six months of 2009.

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