Exhibit 99.1
ZAGG INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
(Unaudited)
| September 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 16,344 | $ | 26,433 | ||||
| Accounts receivable, net of allowances of $3,074 in 2012 and $2,070 in 2011 | 44,995 | 45,450 | ||||||
| Inventories | 34,445 | 29,622 | ||||||
| Prepaid expenses and other current assets | 4,264 | 1,593 | ||||||
| Income tax receivable | 1,888 | - | ||||||
| Deferred income tax assets | 6,728 | 5,132 | ||||||
| Total current assets | 108,664 | 108,230 | ||||||
| Investment in HzO | 3,398 | 4,879 | ||||||
Property and equipment, net of accumulated depreciation at $2,708 in 2012 and $1,857 in 2011 | 4,955 | 4,162 | ||||||
| Goodwill | 6,925 | 6,925 | ||||||
Intangible assets, net of accumulated amortization at $11,351 in 2012 and $3,989 in 2011 | 66,400 | 73,691 | ||||||
| Deferred income tax assets | 82 | 82 | ||||||
| Note receivable | 583 | 1,349 | ||||||
| Other assets | 3,014 | 3,010 | ||||||
| Total assets | $ | 194,021 | $ | 202,328 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 16,019 | $ | 16,013 | ||||
| Income taxes payable | - | 4,294 | ||||||
| Accrued liabilities | 3,908 | 3,886 | ||||||
| Accrued wages and wage related expenses | 1,500 | 1,468 | ||||||
| Deferred revenue | 287 | 320 | ||||||
| Current portion of note payable | - | 2,372 | ||||||
| Sales returns liability | 4,995 | 5,387 | ||||||
| Total current liabilities | 26,709 | 33,740 | ||||||
| Revolving line of credit | 3,534 | 23,332 | ||||||
| Noncurrent portion of note payable | 41,000 | 42,628 | ||||||
| Total liabilities | 71,243 | 99,700 | ||||||
| Stockholders' equity | ||||||||
| Common stock, $0.001 par value; 100,000 shares authorized; | ||||||||
| 30,401 and 29,782 shares issued and outstanding, respectively | 30 | 30 | ||||||
| Additional paid-in capital | 76,247 | 70,248 | ||||||
| Accumulated other comprehensive income | (193 | ) | (33 | ) | ||||
| Note receivable collateralized by stock | (566 | ) | (566 | ) | ||||
| Retained earnings | 47,260 | 32,949 | ||||||
| Total stockholders' equity | 122,778 | 102,628 | ||||||
| Total liabilities and stockholders' equity | $ | 194,021 | $ | 202,328 | ||||
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ZAGG INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |||||||||||||
| Net sales | $ | 59,828 | $ | 45,887 | $ | 176,943 | $ | 111,565 | ||||||||
| Cost of sales | 33,203 | 26,414 | 94,980 | 61,043 | ||||||||||||
| Gross profit | 26,625 | 19,473 | 81,963 | 50,522 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Advertising and marketing | 3,378 | 2,763 | 8,181 | 7,880 | ||||||||||||
| Selling, general and administrative | 13,707 | 10,305 | 38,237 | 26,719 | ||||||||||||
| Amortization of definite-lived intangibles | 2,422 | 1,791 | 7,313 | 2,198 | ||||||||||||
| Total operating expenses | 19,507 | 14,859 | 53,731 | 36,797 | ||||||||||||
| Income from operations | 7,118 | 4,614 | 28,232 | 13,725 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (1,012 | ) | (1,399 | ) | (3,519 | ) | (1,570 | ) | ||||||||
| Loss from equity method investment in HzO | (545 | ) | - | (1,481 | ) | - | ||||||||||
| Other income and (expense) | (215 | ) | 126 | (237 | ) | 137 | ||||||||||
| Total other expense | (1,772 | ) | (1,273 | ) | (5,237 | ) | (1,433 | ) | ||||||||
| Income before provision for income taxes | 5,346 | 3,341 | 22,995 | 12,292 | ||||||||||||
| Income tax provision | (1,958 | ) | (1,241 | ) | (8,684 | ) | (4,335 | ) | ||||||||
| Net income | 3,388 | 2,100 | 14,311 | 7,957 | ||||||||||||
| Net loss attributable to noncontrolling interest | - | 148 | - | 345 | ||||||||||||
| Net income attributable to stockholders | $ | 3,388 | $ | 2,248 | $ | 14,311 | $ | 8,302 | ||||||||
| Earnings per share attributable to stockholders: | ||||||||||||||||
| Basic earnings per share | $ | 0.11 | $ | 0.07 | $ | 0.47 | $ | 0.31 | ||||||||
| Diluted earnings per share | $ | 0.11 | $ | 0.07 | $ | 0.45 | $ | 0.29 | ||||||||
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. | ||||||||||||||||||||
| Adjusted EBITDA Reconciliation | Three months ended | Nine months ended | ||||||||||||||||||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |||||||||||||||||
| Net income attributable to stockholders in accordance with GAAP | $ | 3,388 | $ | 2,248 | $ | 14,311 | $ | 8,302 | ||||||||||||
| Adjustments: | ||||||||||||||||||||
| a. | Stock based compensation expense | 2,087 | 406 | 4,922 | 2,674 | |||||||||||||||
| b. | Depreciation and amortization | 2,823 | 2,400 | 8,506 | 3,463 | |||||||||||||||
| c. | iFrogz acquisition expenses | - | 119 | - | 1,947 | |||||||||||||||
| d. | iFrogz inventory fair value write up | - | 3,063 | - | 3,642 | |||||||||||||||
| e. | Provision for income taxes | 1,958 | 1,241 | 8,684 | 4,335 | |||||||||||||||
| f. | Impairment of note receivable | - | 1,071 | - | 1,071 | |||||||||||||||
| g. | Other expense | 1,772 | 1,273 | 5,237 | 1,433 | |||||||||||||||
| h. | Noncontrolling interest | - | (148 | ) | - | (345 | ) | |||||||||||||
| Adjusted EBITDA | $ | 12,028 | $ | 11,673 | $ | 41,660 | $ | 26,522 | ||||||||||||
| Non-GAAP Reconciliation | Three months ended | Nine months ended | ||||||||||||||||||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |||||||||||||||||
| Net income attributable to stockholders in accordance with GAAP | $ | 3,388 | $ | 2,248 | $ | 14,311 | $ | 8,302 | ||||||||||||
| Adjustments: | ||||||||||||||||||||
| a. | Stock based compensation expense | 2,087 | 406 | 4,922 | 2,674 | |||||||||||||||
| c. | Depreciation and amortization | 2,823 | 2,400 | 8,506 | 3,463 | |||||||||||||||
| d. | iFrogz acquisition expenses | - | 119 | - | 1,947 | |||||||||||||||
| e. | iFrogz inventory fair value write up | - | 3,063 | - | 3,642 | |||||||||||||||
| f. | Impairment of note receivable | - | 1,071 | - | 1,071 | |||||||||||||||
| g. | Other expense | 1,772 | 1,273 | 5,237 | 1,433 | |||||||||||||||
| h. | Noncontrolling interest | - | (148 | ) | - | (345 | ) | |||||||||||||
| i. | CEO departure expense | 910 | - | 910 | - | |||||||||||||||
| j. | Income tax effects | (2,781 | ) | (3,122 | ) | (7,392 | ) | (5,332 | ) | |||||||||||
| Non-GAAP net income attributable to stockholders | $ | 8,199 | $ | 7,310 | $ | 26,494 | $ | 16,855 | ||||||||||||
| Non-GAAP EPS attributable to stockholders | $ | 0.26 | $ | 0.23 | $ | 0.84 | $ | 0.60 | ||||||||||||
| Weighted average number of shares outstanding - diluted | 31,734 | 31,375 | 31,647 | 28,308 | ||||||||||||||||
| Non-GAAP Reconciliation | Three months ended | |||||||||||||||||||
| June 30, 2012 | ||||||||||||||||||||
| Net income attributable to stockholders in accordance with GAAP | $ | 5,812 | ||||||||||||||||||
| Adjustments: | ||||||||||||||||||||
| a. | Stock based compensation expense | 1,494 | ||||||||||||||||||
| b. | Depreciation and amortization | 2,862 | ||||||||||||||||||
| c. | Other expense | 1,235 | ||||||||||||||||||
| d. | Income tax effects | (2,189 | ) | |||||||||||||||||
| Non-GAAP net income attributable to stockholders | $ | 9,214 | ||||||||||||||||||
| Non-GAAP EPS attributable to stockholders | $ | 0.29 | ||||||||||||||||||
| Weighted average number of shares outstanding - diluted | 31,738 | |||||||||||||||||||
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