Attached files
Exhibit 99.1
ZAGG INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
(Unaudited)
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June 30,
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December 31,
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2014
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2013
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ASSETS
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Current assets
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Cash and cash equivalents
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$ | 12,226 | $ | 15,031 | ||||
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Accounts receivable, net of allowances of $2,570 in 2014 and $2,540 in 2013
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42,043 | 46,591 | ||||||
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Inventories
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39,367 | 44,539 | ||||||
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Prepaid expenses and other current assets
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1,322 | 2,403 | ||||||
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Deferred income tax assets
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8,009 | 7,917 | ||||||
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Total current assets
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102,967 | 116,481 | ||||||
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Property and equipment, net of accumulated depreciation at $6,928 in 2014 and $5,778 in 2013
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5,341 | 5,004 | ||||||
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Intangible assets, net of accumulated amortization at $28,332 in 2014 and $23,431 in 2013
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36,318 | 41,219 | ||||||
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Deferred income tax assets
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11,981 | 11,377 | ||||||
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Note receivable
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801 | 801 | ||||||
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Other assets
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549 | 588 | ||||||
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Total assets
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$ | 157,957 | $ | 175,470 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities
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Accounts payable
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$ | 21,066 | $ | 15,207 | ||||
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Income taxes payable
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688 | 6,359 | ||||||
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Accrued liabilities
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2,382 | 2,608 | ||||||
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Accrued wages and wage related expenses
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1,401 | 891 | ||||||
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Deferred revenue
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57 | 159 | ||||||
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Sales returns liability
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7,089 | 7,872 | ||||||
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Total current liabilities
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32,683 | 33,096 | ||||||
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Revolving line of credit
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- | 17,543 | ||||||
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Total liabilities
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32,683 | 50,639 | ||||||
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Stockholders' equity
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Common stock, $0.001 par value; 100,000 shares authorized;
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32,608 and 32,331 shares issued in 2014 and 2013, respectively
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33 | 32 | ||||||
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Additional paid-in capital
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84,078 | 82,807 | ||||||
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Accumulated other comprehensive income (loss)
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(28 | ) | 93 | |||||
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Note receivable collateralized by stock
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(348 | ) | (348 | ) | ||||
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Treasury stock, 2,312 and 1,756 common shares in 2014 and 2013 respectively, at cost
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(12,485 | ) | (9,997 | ) | ||||
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Retained earnings
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54,024 | 52,244 | ||||||
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Total stockholders' equity
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125,274 | 124,831 | ||||||
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Total liabilities and stockholders' equity
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$ | 157,957 | $ | 175,470 | ||||
1
ZAGG INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
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Three Months Ended
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Six Months Ended
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June 30, 2014
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June 30, 2013
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June 30, 2014
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June 30, 2013
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Net sales
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$ | 50,154 | $ | 51,198 | $ | 99,157 | $ | 102,669 | ||||||||
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Cost of sales
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33,367 | 29,663 | 64,592 | 62,135 | ||||||||||||
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Gross profit
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16,787 | 21,535 | 34,565 | 40,534 | ||||||||||||
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Operating expenses:
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Advertising and marketing
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1,378 | 1,914 | 3,386 | 4,253 | ||||||||||||
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Selling, general and administrative
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11,402 | 11,831 | 22,805 | 24,110 | ||||||||||||
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Amortization of definite-lived intangibles
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2,427 | 2,374 | 4,855 | 4,748 | ||||||||||||
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Total operating expenses
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15,207 | 16,119 | 31,046 | 33,111 | ||||||||||||
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Income from operations
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1,580 | 5,416 | 3,519 | 7,423 | ||||||||||||
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Other income (expense):
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Interest expense
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(40 | ) | (144 | ) | (83 | ) | (371 | ) | ||||||||
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Loss from equity method investment in HzO
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- | (617 | ) | - | (1,224 | ) | ||||||||||
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Other income and (expense)
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24 | (27 | ) | 113 | (47 | ) | ||||||||||
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Total other income (expense)
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(16 | ) | (788 | ) | 30 | (1,642 | ) | |||||||||
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Income before provision for income taxes
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1,564 | 4,628 | 3,549 | 5,781 | ||||||||||||
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Income tax provision
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(771 | ) | (1,854 | ) | (1,769 | ) | (2,130 | ) | ||||||||
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Net income
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$ | 793 | $ | 2,774 | $ | 1,780 | $ | 3,651 | ||||||||
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Earnings per share:
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Basic earnings per share
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$ | 0.03 | $ | 0.09 | $ | 0.06 | $ | 0.12 | ||||||||
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Diluted earnings per share
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$ | 0.03 | $ | 0.09 | $ | 0.06 | $ | 0.12 | ||||||||
2
ZAGG INC AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(Unaudited)
Unaudited Supplemental Data
The following information is not a financial measure under generally accepted accounting principals (GAAP). In addition, it should not be construed as an alternative to any other measures of performance determined in accordance with GAAP, or as an indicator of our operating performance, liquidity or cash flows generated by operating, investing and financing activities as there may be significant factors or trends that it fails to address. We present this financial information because we believe that it is helpful to some investors as a measure of our operations. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions; accordingly, its use can make it difficult to compare our results with our results from other reporting periods and with the results of other companies.
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Adjusted EBITDA Reconciliation
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Three months ended
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Six months ended
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June 30, 2014
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June 30, 2013
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June 30, 2014
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June 30, 2013
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Net income in accordance with GAAP
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$ | 793 | $ | 2,774 | $ | 1,780 | $ | 3,651 | |||||||||||||||
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Adjustments:
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| a. |
Stock based compensation expense
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650 | 1,331 | 1,171 | 2,368 | ||||||||||||||||||
| b. |
Depreciation and amortization
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3,052 | 3,120 | 6,072 | 6,214 | ||||||||||||||||||
| c. |
Impairment of investment in private company
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- | 591 | - | 591 | ||||||||||||||||||
| d. |
Other (income) expense
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16 | 788 | (30 | ) | 1,642 | |||||||||||||||||
| e. |
Provision for income taxes
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771 | 1,854 | 1,769 | 2,130 | ||||||||||||||||||
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Adjusted EBITDA
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$ | 5,282 | $ | 10,458 | $ | 10,762 | $ | 16,596 | |||||||||||||||
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Pro forma Net Income Reconciliation - Three and Six Months Ended June 30, 2014 and 2013
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Three months ended
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Six months ended
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June 30, 2014
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June 30, 2013
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June 30, 2014
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June 30, 2013
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Net income in accordance with GAAP
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$ | 793 | $ | 2,774 | $ | 1,780 | $ | 3,651 | |||||||||||||||
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Adjustments:
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| a. |
Stock based compensation expense
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650 | 1,331 | 1,171 | 2,368 | ||||||||||||||||||
| b. |
Amortization of intangibles
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2,453 | 2,394 | 4,900 | 4,782 | ||||||||||||||||||
| c. |
Other (income) expense excluding cash interest expense and loss on equity method investment
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(8 | ) | 57 | (81 | ) | 107 | ||||||||||||||||
| d. |
Loss on equity method investment
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- | 617 | - | 1,224 | ||||||||||||||||||
| e. |
Impairment of investment in private company
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- | 591 | - | 591 | ||||||||||||||||||
| f. |
Income tax effects
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(1,184 | ) * | (1,447 | ) | (2,291 | ) * | (2,776 | )* | ||||||||||||||
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Pro forma net income
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$ | 2,704 | $ | 6,317 | $ | 5,479 | $ | 9,947 | |||||||||||||||
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Pro forma diluted EPS
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$ | 0.09 | $ | 0.20 | $ | 0.18 | $ | 0.32 | |||||||||||||||
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Weighted average number of shares outstanding - diluted
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30,575 | 31,218 | 30,718 | 31,471 | |||||||||||||||||||
| * For comparative purposes, we applied an annualized statutory tax rate of 38.25% | |||||||||||||||||||||||