Exhibit 99.1
ZAGG INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
(Unaudited)
2013 | 2012 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 15,031 | $ | 20,177 | ||||
Accounts receivable, net of allowances of $2,540 in 2013 and $2,974 in 2012 | 46,591 | 54,561 | ||||||
Inventories | 44,539 | 39,988 | ||||||
Prepaid expenses and other current assets | 2,403 | 9,547 | ||||||
Deferred income tax assets | 7,917 | 6,912 | ||||||
Total current assets | 116,481 | 131,185 | ||||||
Investment in HzO | - | 2,013 | ||||||
Property and equipment, net of accumulated depreciation at $5,778 in 2013 and $3,317 in 2012 | 5,004 | 4,862 | ||||||
Goodwill | - | 1,484 | ||||||
Intangible assets, net of accumulated amortization at $23,431 in 2013 and $13,790 in 2012 | 41,219 | 57,905 | ||||||
Deferred income tax assets | 11,377 | 6,596 | ||||||
Note receivable | 801 | 583 | ||||||
Other assets | 588 | 1,457 | ||||||
Total assets | $ | 175,470 | $ | 206,085 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 15,207 | $ | 19,027 | ||||
Income taxes payable | 6,359 | 3,062 | ||||||
Accrued liabilities | 2,608 | 3,754 | ||||||
Accrued wages and wage related expenses | 891 | 2,554 | ||||||
Deferred revenue | 159 | 722 | ||||||
Current portion of note payable | - | 6,000 | ||||||
Sales returns liability | 7,872 | 6,697 | ||||||
Total current liabilities | 33,096 | 41,816 | ||||||
Revolving line of credit | - | 22,173 | ||||||
Noncurrent portion of note payable | 17,543 | 18,000 | ||||||
Total liabilities | 50,639 | 81,989 | ||||||
Stockholders' equity | ||||||||
Common stock, $0.001 par value; 100,000 shares authorized; | ||||||||
32,331 and 31,215 shares issued in 2013 and 2012, respectively | 32 | 31 | ||||||
Additional paid-in capital | 82,807 | 77,234 | ||||||
Accumulated other comprehensive income | 93 | (57 | ) | |||||
Note receivable collateralized by stock | (348 | ) | (566 | ) | ||||
Treasury stock, 1,756 and 0 common shares in 2013 and 2012 respectively, at cost | (9,997 | ) | - | |||||
Retained earnings | 52,244 | 47,454 | ||||||
Total stockholders' equity | 124,831 | 124,096 | ||||||
Total liabilities and stockholders' equity | $ | 175,470 | $ | 206,085 |
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ZAGG INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||||
Net sales | $ | 66,818 | $ | 87,482 | $ | 219,356 | $ | 264,425 | ||||||||
Cost of sales | 42,332 | 48,900 | 132,236 | 143,880 | ||||||||||||
Gross profit | 24,486 | 38,582 | 87,120 | 120,545 | ||||||||||||
Operating expenses: | ||||||||||||||||
Advertising and marketing | 2,359 | 4,312 | 8,952 | 12,495 | ||||||||||||
Selling, general and administrative | 11,342 | 15,095 | 46,356 | 53,330 | ||||||||||||
Impairment of goodwill and intangibles | 11,246 | 11,497 | 11,246 | 11,497 | ||||||||||||
Amortization of definite-lived intangibles | 2,451 | 2,418 | 9,620 | 9,732 | ||||||||||||
Total operating expenses | 27,398 | 33,322 | 76,174 | 87,054 | ||||||||||||
Income (loss) from operations | (2,912 | ) | 5,260 | 10,946 | 33,491 | |||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (85 | ) | (2,802 | ) | (575 | ) | (6,321 | ) | ||||||||
Loss from equity method investment in HzO | (177 | ) | (1,385 | ) | (2,013 | ) | (2,866 | ) | ||||||||
Other income and (expense) | 264 | (170 | ) | 127 | (406 | ) | ||||||||||
Total other income (expense) | 2 | (4,357 | ) | (2,461 | ) | (9,593 | ) | |||||||||
Income (loss) before provision for income taxes | (2,910 | ) | 903 | 8,485 | 23,898 | |||||||||||
Income tax (provision) or benefit | 866 | (710 | ) | (3,695 | ) | (9,393 | ) | |||||||||
Net income (loss) | (2,044 | ) | 193 | 4,790 | 14,505 | |||||||||||
Earnings per share | ||||||||||||||||
Basic earnings (loss) per share | $ | (0.07 | ) | $ | 0.01 | $ | 0.16 | $ | 0.48 | |||||||
Diluted earnings (loss) per share | $ | (0.07 | ) | $ | 0.01 | $ | 0.15 | $ | 0.46 |
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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 | Twelve months ended | |||||||||||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | ||||||||||||||||||
Net income (loss) in accordance with GAAP | $ | (2,044 | ) | $ | 193 | $ | 4,790 | $ | 14,505 | ||||||||||||
Adjustments: | |||||||||||||||||||||
a. Stock based compensation expense | 964 | 1,096 | 4,126 | 6,018 | |||||||||||||||||
b. Impairment of goodwill and intangibles | 11,246 | 11,497 | 11,246 | 11,497 | |||||||||||||||||
c. Depreciation and amortization | 3,036 | 3,059 | 12,196 | 11,561 | |||||||||||||||||
d. Impairment of investment in private company | - | - | 591 | - | |||||||||||||||||
e. Other (income) expense | (2 | ) | 4,357 | 2,461 | 9,593 | ||||||||||||||||
f. Provision (benefit) for income taxes | (866 | ) | 710 | 3,695 | 9,393 | ||||||||||||||||
Adjusted EBITDA | $ | 12,334 | $ | 20,912 | $ | 39,105 | $ | 62,567 | |||||||||||||
Pro forma Net Income Reconciliation - Three and Twelve Months Ended December 31, 2013 | Three months ended | Twelve months ended | |||||||||||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | ||||||||||||||||||
Net income (loss) in accordance with GAAP | $ | (2,044 | ) | $ | 193 | $ | 4,790 | $ | 14,505 | ||||||||||||
Adjustments: | |||||||||||||||||||||
a. Stock based compensation expense | 964 | 1,096 | 4,126 | 6,018 | |||||||||||||||||
b. Impairment of goodwill and intangibles | 11,246 | 11,497 | 11,246 | 11,497 | |||||||||||||||||
c. Amortization of intangibles | 2,478 | 2,439 | 9,701 | 9,801 | |||||||||||||||||
d. Impairment of investment in private company | - | - | 591 | - | |||||||||||||||||
e. Other expense excluding cash interest expense and loss on equity method investment | (264 | ) | 170 | (127 | ) | 406 | |||||||||||||||
f. Non-cash deferred loan costs charge | 57 | 1,509 | 147 | 1,509 | |||||||||||||||||
g. Former CEO departure expense | - | - | - | 910 | |||||||||||||||||
h. Loss on equity method investment | 177 | 1,385 | 2,013 | 2,866 | |||||||||||||||||
i. Income tax effects | (5,539 | ) * | (6,392 | ) * | (9,598 | ) * | (11,529 | ) | |||||||||||||
Pro forma net income | $ | 7,075 | $ | 11,897 | $ | 22,889 | $ | 35,983 | |||||||||||||
Pro forma diluted EPS | $ | 0.23 | $ | 0.37 | $ | 0.73 | $ | 1.14 | |||||||||||||
Weighted average number of shares outstanding - diluted | 31,358 | 31,735 | 31,459 | 31,656 | |||||||||||||||||
* For comparative purposes, we applied an annualized statutory tax rate of 38.5% |
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