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 |
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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 |
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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. |
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