ZAGG (ZAGG) 8-K Results of Operations and Financial Condition

Exhibit 99.1

ZAGG INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(Unaudited)

		2014			2013
ASSETS
Current assets
Cash and cash equivalents	$	9,461		$	15,031
Accounts receivable, net of allowances of $1,910 in 2014 and $2,540 in 2013		75,729			46,591
Inventories		48,378			44,539
Prepaid expenses and other current assets		2,681			2,403
Deferred income tax assets		10,774			7,917
Total current assets		147,023			116,481
Property and equipment, net of accumulated depreciation at $7,659 in 2014 and $5,778 in 2013		7,300			5,004
Intangible assets, net of accumulated amortization at $33,242 in 2014 and $23,431 in 2013		31,408			41,219
Deferred income tax assets		14,290			11,377
Note receivable		801			801
Other assets		457			588
Total assets	$	201,279		$	175,470
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	49,379		$	15,207
Income taxes payable		6,464			6,359
Accrued liabilities		6,910			2,608
Accrued wages and wage related expenses		2,600			891
Deferred revenue		179			159
Sales returns liability		8,674			7,872
Total current liabilities		74,206			33,096
Revolving line of credit		—			17,543
Total liabilities		74,206			50,639
Stockholders' equity
Common stock, $0.001 par value; 100,000 shares authorized;
32,686 and 32,331 shares issued in 2014 and 2013, respectively		33			32
Additional paid-in capital		85,154			82,807
Accumulated other comprehensive income (loss)		(895	)		93
Note receivable collateralized by stock		(348	)		(348	)
Treasury stock, 3,569 and 1,756 common shares in 2014 and 2013 respectively, at cost		(19,576	)		(9,997	)
Retained earnings		62,705			52,244
Total stockholders' equity		127,073			124,831
Total liabilities and stockholders' equity	$	201,279		$	175,470

1

ZAGG INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Twelve Months Ended
	December 31, 2014			December 31, 2013			December 31, 2014			December 31, 2013
Net sales	$	102,415		$	66,818		$	261,585		$	219,356
Cost of sales		62,800			42,332			178,241			132,236
Gross profit		39,615			24,486			83,344			87,120
Operating expenses:
Advertising and marketing		2,779			2,359			7,542			8,952
Selling, general and administrative		14,335			11,342			49,110			46,356
Impairment of goodwill and intangibles		—			11,246			—			11,246
Amortization of definite-lived intangibles		2,427			2,451			9,709			9,620
Total operating expenses		19,541			27,398			66,361			76,174
Income (loss) from operations		20,074			(2,912	)		16,983			10,946
Other income (expense):
Interest expense		(47	)		(85	)		(170	)		(575	)
Loss from equity method investment in HzO		—			(177	)		—			(2,013	)
Other income and (expense)		(82	)		264			121			127
Total other income (expense)		(129	)		2			(49	)		(2,461	)
Income (loss) before provision for income taxes		19,945			(2,910	)		16,934			8,485
Income tax benefit (provision)		(6,946	)		866			(6,473	)		(3,695	)
Net income (loss)	$	12,999			(2,044	)		10,461			4,790
Earnings (loss) per share:
Basic earnings (loss) per share	$	0.44		$	(0.07	)	$	0.35		$	0.16
Diluted earnings (loss) per share	$	0.43		$	(0.07	)	$	0.34		$	0.15

2

ZAGG INC AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP

(Unaudited)

Unaudited Supplemental Data

The following are not financial measures under U.S. generally accepted accounting principals (GAAP).  In addition, they should not be construed as 

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, 2014		December 31, 2013			December 31, 2014		December 31, 2013
Net income (loss) in accordance with GAAP		$	12,999	$	(2,044	)	$	10,461	$	4,790
Adjustments:
a.	Stock-based compensation expense		572		964			2,249		4,126
b.	Depreciation and amortization		3,684		3,036			12,879		12,196
c.	Impairment of goodwill and intangibles		-		11,246			-		11,246
d.	Impairment of investment in private company		-		-			-		591
e.	Other (income) expense		129		(2	)		49		2,461
f.	Provision for income taxes		6,946		(866	)		6,473		3,695
Adjusted EBITDA		$	24,330	$	12,334		$	32,111	$	39,105

Pro forma Net Income Reconciliation			Three Months Ended					Twelve Months Ended
		December 31, 2014			December 31, 2013			December 31, 2014			December 31, 2013
Net income (loss) in accordance with GAAP		$	12,999		$	(2,044	)	$	10,461			4,790
Adjustments:
a.	Stock based compensation expense		572			964			2,249			4,126
b.	Amortization of intangibles		2,457			2,478			9,804			9,701
c.	Impairment of goodwill and intangibles		—			11,246			—			11,246
d.	Impairment of investment in private company		—			—			—			591
e.	Other (income) expense excluding cash interest expense and loss on equity method investment		99			(207	)		(56	)		20
f.	Loss on equity method investment		—			177			—			2,013
g.	Income tax effects		(1,227	)*		(5,539	)*		(4,706	)*		(9,598	)*
Pro forma net income		$	14,900		$	7,075		$	17,752		$	22,889
Pro forma diluted earnings per share		$	0.49		$	0.23		$	0.58		$	0.73
Weighted average number of shares outstanding - diluted			30,288			31,358			30,610			31,459

 *  For comparative purposes, we applied an annualized statutory tax rate of 39.23% in 2014 and 38.25% in 2013, which reflects the Company's statutory rate in each respective period.  

3