Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 01, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ZAGG Inc | |
Entity Central Index Key | 1,296,205 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 28,115,656 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 6,162 | $ 13,002 |
Accounts receivable, net of allowances of $679 in 2016 and $568 in 2015 | 53,170 | 57,647 |
Inventories | 83,755 | 45,912 |
Prepaid expenses and other current assets | 2,258 | 3,142 |
Income tax receivable | 11,879 | 1,158 |
Deferred income tax assets | 36,725 | 10,840 |
Total current assets | 193,949 | 131,701 |
Property and equipment, net of accumulated depreciation of $12,053 in 2016 and $10,539 in 2015 | 21,640 | $ 8,309 |
Goodwill | 14,092 | |
Intangible assets, net of accumulated amortization of $44,571 in 2016 and $41,803 in 2015 | $ 65,739 | $ 23,045 |
Deferred income tax assets | 15,386 | |
Other assets | $ 2,346 | 1,100 |
Total assets | 297,766 | 179,541 |
Current liabilities | ||
Accounts payable | 54,495 | 33,846 |
Accrued liabilities | 12,297 | 5,068 |
Accrued wages and wage related expenses | 2,890 | 2,244 |
Deferred revenue | 25 | 17 |
Sales returns liability | 20,773 | $ 7,849 |
Current portion of long-term debt, net of deferred loan costs of $64 in 2016 | 6,186 | |
Revolving line of credit | 50,545 | |
Total current liabilities | 147,211 | $ 49,024 |
Noncurrent portion of long-term debt, net of deferred loan costs of $187 in 2016 | 18,563 | |
Deferred income tax liabilities | 2,593 | |
Other noncurrent liabilities | 513 | |
Total liabilities | 168,880 | $ 49,024 |
Stockholders' equity | ||
Common stock, $0.001 par value; 100,000 shares authorized; 33,812 and 33,219 shares issued in 2016 and 2015, respectively | 34 | 33 |
Additional paid-in capital | 90,322 | 88,983 |
Accumulated other comprehensive loss | (1,278) | (1,597) |
Treasury stock, 5,679 and 5,679 common shares in 2016 and 2015 respectively, at cost | (35,194) | (35,194) |
Retained earnings | 75,002 | 78,292 |
Total stockholders' equity | 128,886 | 130,517 |
Total liabilities and stockholders' equity | $ 297,766 | $ 179,541 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) shares in Thousands, $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Balance Sheets [Abstract] | ||
Allowances for doubtful accounts | $ 679 | $ 568 |
Accumulated depreciation on property and equipment | 12,053 | 10,539 |
Accumulated amortization on Intangible assets | 44,571 | $ 41,803 |
Deferred loan costs, Current | 64 | |
Deferred loan costs, Non current | $ 187 | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 33,812 | 33,219 |
Treasury stock | 5,679 | 5,679 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Operations [Abstract] | ||
Net sales | $ 62,432 | $ 57,216 |
Cost of sales | 38,703 | 34,258 |
Gross profit | 23,729 | 22,958 |
Operating expenses: | ||
Advertising and marketing | 2,914 | 2,631 |
Selling, general and administrative | 19,755 | $ 12,754 |
Transaction costs | 2,017 | |
Amortization of definite-lived intangibles | 2,746 | $ 2,134 |
Total operating expenses | 27,432 | 17,519 |
Income (loss) from operations | (3,703) | 5,439 |
Other (expense) income: | ||
Interest expense | (188) | (27) |
Other (expense) income | (200) | 80 |
Total other (expense) income | (388) | 53 |
Income (loss) before provision for income taxes | (4,091) | 5,492 |
Income tax benefit (provision) | 801 | (2,292) |
Net (loss) income | $ (3,290) | $ 3,200 |
Earnings (loss) per share: | ||
Basic earnings (loss) per share | $ (0.12) | $ 0.11 |
Diluted earnings (loss) per share | $ (0.12) | $ 0.11 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Other Comprehensive Income [Abstract] | ||
Net income (loss) | $ (3,290) | $ 3,200 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation gain (loss) | 320 | (852) |
Total other comprehensive income (loss) | 320 | (852) |
Comprehensive income (loss) | $ (2,970) | $ 2,348 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities | ||
Net income (loss) | $ (3,290) | $ 3,200 |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Stock-based compensation | 1,336 | 876 |
Excess tax benefits related to share-based payments | (570) | (198) |
Depreciation and amortization | 5,430 | 2,944 |
Deferred income taxes | (960) | 87 |
Amortization of deferred loan costs | 20 | 16 |
Changes in operating assets and liabilities, net of acquisition | ||
Accounts receivable, net | 18,097 | 31,319 |
Inventories | (1,550) | (226) |
Prepaid expenses and other current assets | 1,589 | $ 1,174 |
Other assets | (16) | |
Accounts payable | (19,156) | $ (20,426) |
Income taxes receivable | 1,200 | (3,792) |
Accrued liabilities | (1,705) | (2,332) |
Accrued wages and wage related expenses | (184) | (310) |
Deferred revenue | 8 | 3 |
Sales return liability | (4,235) | (4,859) |
Net cash (used in) provided by operating activities | (3,986) | 7,476 |
Cash flows from investing activities | ||
Purchase of property and equipment | (2,826) | $ (1,455) |
Purchase of mophie, net of cash acquired | (74,743) | |
Net cash used in investing activities | (77,569) | $ (1,455) |
Cash flows from financing activities | ||
Payment of debt issuance costs | (1,022) | |
Proceeds from revolving credit facility, net | 66,547 | $ 7,652 |
Payments on revolving credit facility | (16,003) | $ (7,652) |
Proceeds from term loan facility | 25,000 | |
Payment of withholdings on restricted stock units | (621) | $ (718) |
Proceeds from exercise of warrants and options | 54 | 206 |
Excess tax benefits related to share-based payments | 570 | 198 |
Net cash provided by (used in) financing activities | 74,525 | (314) |
Effect of foreign currently exchange rates on cash equivalents | 190 | (441) |
Net (decrease) increase in cash and cash equivalents | (6,840) | 5,266 |
Cash and cash equivalents at beginning of the period | 13,002 | 9,461 |
Cash and cash equivalents at end of the period | 6,162 | 14,727 |
Supplemental disclosure of cash flow information | ||
Cash paid during the period for interest | 17 | 18 |
Net cash paid (received) during the period for taxes | (1,090) | 5,903 |
Supplemental schedule of noncash investing and financing activities | ||
Purchase of fixed assets financed through accounts payable | 1,480 | $ 117 |
Debt issuance costs financed through accounts payable | $ 106 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Nature of Operations and Basis of Presentation [Abstract] | |
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | (1) NATURE OF OPERATIONS AND BASIS OF PRESENTATION ZAGG Inc and its subsidiaries (“we,” “us,” “our,” “ZAGG,” or the “Company”) is an innovation leader in mobile tech accessories for smartphones and tablets. For over 10 years, ZAGG has developed creative product solutions that enhance and protect mobile devices for consumers around the world. The Company has an award-winning product portfolio that includes screen protection, mobile keyboards, power management, cases, social tech, and personal audio sold under the ZAGG, InvisibleShield®, mophie®, and iFrogz® brands. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the financial position, the results of operations, and cash flows of the Company for the periods presented. The Company suggests that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s 2015 Annual Report on Form 10-K. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On March 3, 2016 the Company acquired mophie inc. ("mophie") for gross up-front cash consideration of $100,000. The results of operations of mopie are included in the Company's results of operations beginning on March 3, 2016. Based on the manner in which the Company manages, evaluates, and internally reports its operations, the Company determined that mophie will be reported as a separate operating segment. See Notes 2 and 14 for additional details on the acquisition and the Company's segments. The condensed consolidated financial statements include the accounts of ZAGG Inc and its wholly owned subsidiaries ZAGG International Distribution Limited (“ZAGG International”); Patriot Corporation; ZAGG Intellectual Property Holding Co, Inc. (“ZAGG IP”); ZAGG Retail, Inc; mophie inc.; mophie LLC, mophie Technology Development Co., Ltd; mophie Netherlands Cooperatie U.A.; and mophie Limited. All intercompany transactions and balances have been eliminated in consolidation. Significant Accounting Policies The Company’s significant accounting policies are described in Note 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. In addition to these policies, the Company has adopted a significant accounting policy relating to business combinations and accounting for goodwill as a result of the acquisition of mophie, as described below. Also, in connection with the acquisition of mophie, the Company changed its operating segments, as described in Note 14. Business Combinations Significant estimates in valuing certain intangible assets include but are not limited to: future expected cash flows related to each individual asset, market position of the tradenames, as well as assumptions about cash flow savings from the tradenames, determination of useful lives, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Goodwill At least annually and when events and circumstances warrant an evaluation, we perform our impairment assessment of goodwill. This assessment initially permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If an entity can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it would not need to perform the two-step impairment test for the reporting unit. However, if it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the two step analysis is performed, which incorporates a fair-value based approach. We determine the fair value of our reporting unit based on discounted cash flows and market approach analyses as considered necessary, and consider factors such as the economy, reduced expectations for future cash flows coupled with a decline in the market price of our stock and market capitalization for a sustained period as indicators for potential goodwill impairment. If the reporting unit’s carrying amount exceeds its estimated fair value, a second step must be performed to measure the amount of the goodwill impairment loss, if any. The second step compares the implied fair value of the reporting unit’s goodwill, determined in the same manner as the amount of goodwill recognized in a business combination, with the carrying amount of such goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” This ASU includes a five-step process by which entities will recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which an entity expects to be entitled to in exchange for those goods or services. The ASU also will require enhanced disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. On July 9, 2015, the FASB voted to approve a one year deferral of the effective date of this ASU. This deferral was issued by the FASB in ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date”. As a result of ASU No. 2015-14 the Company expects that it will apply the new revenue standard to annual and interim reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” Previously, debt issuance costs were recorded as assets on the balance sheet. This update requires that debt issuance costs related to a debt liability be presented on the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. The Company adopted this standard during the first quarter of 2016. In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory.” This ASU provides guidance to entities that measure inventory using a method other than last-in, first-out (LIFO) or the retail inventory method. For entities using first-in, first-out (FIFO) or average cost, the measurement principle for their inventory changes from the lower of cost or market to lower of cost and net realizable value. Current U.S. GAAP requires, at each financial statement date, that entities measure inventory at the lower of cost or market. The measurement of market is commonly the current replacement cost. However, entities also need to consider net realizable value and net realizable value less an approximately normal profit margin in their measurement. For entities using a method other than LIFO or the retail inventory method, the ASU replaces market with net realizable value. This ASU requires prospective adoption for inventory measurement for annual and interim periods beginning after December 15, 2016 for public business entities. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. In September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments,” which eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. The ASU is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. The Company adopted this standard during the first quarter 2016. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes,” which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The ASU is effective for public business entities for interim and annual periods in fiscal years beginning after December 15, 2016. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. In February 2016, the FASB issued its new lease accounting standard, which requires lessees to recognize most leases, including operating leases, on-balance sheet via a right of use asset and lease liability. Lessees are allowed to account for short-term leases (i.e., leases with a term of 12 months or less) off-balance sheet, consistent with current operating lease accounting. A number of other significant changes to lease accounting have been effected through the issuance of this standard. The new standard is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. In April 2016, the FASB issued ASU No. 2016-11, which simplified accounting for share-based payments. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those years for public business entities. Early adoption is permitted in any interim or annual period provided that the entire ASU is adopted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. |
Acquisition of Mophie Inc
Acquisition of Mophie Inc | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
ACQUISITION OF MOPHIE INC | (2) ACQUISITION OF MOPHIE INC. On February 2, 2016, ZAGG and ZM Acquisition, Inc. (“Merger Sub”), a Delaware corporation and wholly-owned subsidiary of the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with mophie, a California corporation, the principal shareholders of mophie named therein (the “Principal Shareholders”), and Daniel Huang as representative of the mophie shareholders, warrant holders, and option holders, pursuant to which Merger Sub merged with and into mophie, with mophie continuing as the surviving corporation (the “Merger”). On March 3, 2016 (the “Acquisition Date”), the Company completed the Merger. The combination of ZAGG and mophie creates a diversified market leader in multiple mobile accessories categories. The Company purchased mophie for total gross up-front consideration of $100,000 in cash, subject to a working capital adjustment. The Merger Agreement includes an earn-out provision whereby additional consideration would be paid based on whether mophie’s 12-month Adjusted EBITDA (as defined in the Merger Agreement) from April 1, 2016 to March 31, 2017 (“Earnout Period”) exceeds $20,000. For every dollar in Adjusted EBITDA generated during the Earnout Period that exceeds $20,000, the Company will pay additional consideration at a five times multiple (“Earnout Consideration”). Any Earnout Consideration will initially be paid by the issuance of up to $5,000 in shares of the Company’s common stock valued as of February 2, 2016 (the day prior to the public announcement of the definitive agreement on February 3, 2016). In addition to the Earnout Consideration, the Company will also remit cash to the Principal Shareholders once the following contingent items related to pre-acquisition operations have been resolved: ● Federal and state tax refunds expected to be due to the Company related to 2012 and 2013 tax years. ● Customs and duties refunds for pre-closing overpayments of customs and duties amounts to governmental agencies. ● Proceeds from the sale of real property located in Kalamazoo, Michigan. In addition, $2,000 of the cash consideration paid to the Principal Shareholders was placed in an escrow account to cover any potential tax, legal, or other contingencies that could potentially arise relating to pre-acquisition events for which ZAGG is indemnified. If charges exceed $2,000, ZAGG may recover these amounts through a $10,000 insurance policy related to representations and warranties. Currently, the Company is not aware of any such contingencies or potential indemnity claims. The following summarizes the components of the purchase consideration: Cash consideration $ 100,000 Preliminary working capital adjustment (23,478 ) Preliminary contingent payments 2,027 Preliminary fair value of earnout consideration 1,565 Total purchase price $ 80,114 The total purchase price of $80,114 has been preliminarily allocated to identifiable assets acquired and liabilities assumed based on their respective preliminary fair values. The excess of the purchase price over the fair value of tangible and intangible assets acquired and liabilities assumed was recorded as goodwill. The allocation of goodwill to reportable segments has not yet been completed. The following table summarizes the preliminary estimates of the fair values of the identifiable assets acquired and liabilities assumed as of the Acquisition Date. The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are based on estimates and assumptions and are subject to revisions, which may result in adjustments to the preliminary values presented below, when management’s estimates are finalized: Cash and cash equivalents $ 1,779 Trade receivables (gross contractual receivables of $13,569) 13,483 Inventories 37,290 Prepaid expenses and other assets 1,073 Income tax receivable 11,548 Deferred tax assets 24,925 Property and equipment 10,196 Land held for sale 325 Amortizable identifiable intangible assets 45,463 Goodwill 14,092 Current liabilities (80,060 ) Total $ 80,114 Due to the fact that the acquisition of mophie occurred in the current interim period and in light of the magnitude of the transaction, the Company’s fair value estimates for the purchase price, assets acquired, and liabilities assumed are preliminary and may change during the allowable measurement period. The allowable measurement period continues to the date the Company obtains and analyzes all relevant information that existed as of the date of the acquisition necessary to determine the fair values of the assets acquired and liabilities assumed, but in no case is to exceed more than one year from the date of acquisition (March 3, 2017). The Company is analyzing information to verify assets acquired and liabilities assumed. As part of the acquisition of mophie, the Company incurred legal, accounting, and other due diligence fees that were expensed when incurred. Total fees incurred related to the acquisition of mophie for the three months ended March 31, 2016 were $2,017, which are included as a component of selling, general, and administrative expenses on the condensed consolidated statement of operations. Identifiable Intangible Assets Classes of acquired intangible assets include tradenames, technology, customer relationships, non-compete agreements, and backlog. The fair value of the identifiable intangible assets was determined using various valuation methods, including the income and market approaches. For assets valued under the income approach, the estimate of the present value of expected future cash flows for each identifiable asset was based on discount rates which incorporate a risk premium to take into account the risks inherent in those expected cash flows. The expected cash flows were estimated using available historical data adjusted based on the Company’s historical experience and the expectations of market participants. The market approach was utilized to determine appropriate royalty rates applied to the valuation of the trademarks and technology. The preliminary amounts assigned to each class of intangible asset and the related preliminary weighted average amortization periods are as follows: Intangible asset class Weighted-average amortization period Tradenames $ 18,693 10.0 years Patents and technology 14,137 7.6 years Customer relationships 10,170 5.0 years Non-compete agreements 2,164 5.0 years Backlog 299 0.3 years Total $ 45,463 Goodwill Goodwill represents the excess of the mophie purchase price over the fair value of the assets acquired and liabilities assumed. The Company believes that the primary factors supporting the amount of goodwill recognized are the significant growth opportunities and expected synergies of the combined entity. Results of Operations The results of operations of mophie are included in the Company’s results of operations beginning on March 3, 2016. From March 3, 2016 through March 31, 2016, mophie generated net sales of $7,636 and had a net loss of $4,115. Pro forma Results from Operations The following unaudited pro-forma results of operations for the three months ended March 31, 2016 and 2015 give pro forma effect as if the acquisition and borrowings used to finance the acquisition had occurred on January 1, 2015, after giving effect to certain adjustments including the amortization of intangible assets, interest expense, tax adjustments, specific transaction related expenses incurred prior to the execution date, and assumes the purchase price was allocated to the assets purchased and liabilities assumed based on their fair market values at the date of purchase. 3 Months Ended March 31, 2016 March 31, 2015 Net sales $ 79,759 $ 109,781 Net loss $ (6,395 ) $ (2,997 ) Basic net loss per share $ (.23 ) $ (.10 ) Diluted net loss per share $ (.23 ) $ (.10 ) The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred had the transaction been consummated for the dates indicated. Furthermore, such unaudited pro forma information is not necessarily indicative of future operating results of the combined companies, due to changes in operating activities following the purchase, and should not be construed as representative of the operating results of the combined companies for any future dates or periods. For the three months ended March 31, 2016 and 2015, pro forma net income includes projected amortization expense of $2,392 and $1,924, respectively. In addition, the Company included interest from the new credit facility and amortization of debt issuance costs for the three months ended March 31, 2016 and 2015 of $493 and $523, respectively. Material non-recurring adjustments excluded from the pro forma financial information above consists of the $6,937 step up of mophie inventory to its fair value, which is expected to be recorded as an unfavorable adjustment to cost of goods sold during the six months following the acquisition date. The unaudited pro forma results do not reflect events that either have occurred or may occur after the Merger, including, but not limited to, the anticipated realization of ongoing savings from operating synergies in subsequent periods. They also do not give effect to certain charges that the Company expects to incur in connection with the Merger, including, but not limited to, additional professional fees, employee integration, retention and severance costs, or product rationalization charges. |
Debt and Letters of Credit
Debt and Letters of Credit | 3 Months Ended |
Mar. 31, 2016 | |
Debt and Letters of Credit [Abstract] | |
DEBT AND LETTERS OF CREDIT | (3) DEBT AND LETTERS OF CREDIT Concurrent with the close of the Merger on March 3, 2016, the Company entered into a Credit and Security Agreement with KeyBank National Association (“KeyBank”), acting as administrative agent and swing line lender; KeyBanc Capital Markets Inc., acting as joint lead arranger and sole book runner; Zions Bank (“Zions”), as joint lead arranger; and JP Morgan Chase, as a member of the bank syndicate (“Credit and Security Agreement”). The Credit and Security Agreement replaces the prior credit agreement with Wells Fargo, which was terminated upon signing the Credit and Security Agreement. The Credit and Security Agreement provides an $85,000 revolving credit commitment (“Line of Credit”). Borrowings and repayments under the Line of Credit may occur from time to time in the Company’s ordinary course of business through the maturity date of March 2, 2021, at which time any amounts outstanding are to be paid in full (60-month term). All borrowings under the Line of Credit are subject to a borrowing base limit, which is calculated from outstanding accounts receivable and inventory, and reported to the administrative agent monthly. Interest on the Line of Credit will accrue at the base rate plus 0.50% or LIBOR plus 1.50%. The Line of Credit is subject to an unused line fee calculated as 0.20% multiplied by the average unused amount of the Line of Credit. The Credit and Security Agreement also provides a $25,000 term loan commitment (“Term Loan”). Principal and interest payments on the Term Loan are to be made in consecutive monthly installments of $521 commencing on April 1, 2016 and continuing until the Term Loan is paid in full on March 2, 2020 (48-month term). Interest on the Term Loan will accrue at the base rate plus 1.0% or at a rate of LIBOR plus 2.0%. The Credit and Security Agreement also provides for letters of credit with a fronting fee of 0.125% (paid per annum) for all issued and outstanding letters of credit. The Credit and Security Agreement provides for a lockbox and cash collateral account that will be maintained with KeyBank. The Credit and Security Agreement is collateralized by substantially all of the assets of the Company. The Credit and Security Agreement establishes two debt covenants that are measured on a quarterly basis starting with the quarter-ended June 30, 2016: ● Maximum Leverage Ratio ● Minimum Fixed Charge Coverage Ratio In connection with the establishment of the Credit and Security Agreement, the Company incurred and capitalized $1,128 of direct costs; $872 of the costs are related to the line of credit and as such are reflected as a component of prepaid expense and other current assets, and $256 was reflected as an offset to long-term debt in the condensed consolidated balance sheet. For the three months ended March 31, 2016, the Company amortized $20 of these loan costs, which are included as a component of interest expense in the condensed consolidated statements of operations. For the three months ended March 31, 2015, the Company amortized $16 of capitalized costs related to the Wells Fargo credit agreement, which are included as a component of interest expense in the condensed consolidated statements of operations. All costs capitalized associated with the Wells Fargo credit agreement were fully amortized at December 31, 2015. For the three months ended March 31, 2016 and 2015, $8 and $9, respectively, in unused line fees were incurred and included as a component of interest expense in the condensed consolidated statements of operations. At March 31, 2016 and 2015, the weighted average interest rate on all outstanding borrowings under the revolving lines of credit was 3.21% and 1.13%, respectively. At March 31, 2016, the effective interest rate on the Term Loan was 2.96%. Contractual future payments under the Credit and Security Agreement are as follows: Line of Credit Term Loan Total Remaining 2016 $ — $ 4,688 $ 4,688 2017 — 6,250 6,250 2018 — 6,250 6,250 2019 — 6,250 6,250 2020 — 1,562 1,562 Thereafter 50,545 — 50,545 Total $ 50,545 $ 25,000 $ 75,545 |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2016 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | (4) INTANGIBLE ASSETS Amortizable intangibles as of March 31, 2016, and December 31, 2015, were as follows: As of March 31, 2016 Gross Carrying Amount Acquisitions Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period Customer relationships $ 41,500 $ 10,170 $ (30,463 ) $ 21,207 7.4 years Tradenames 12,921 18,693 (6,887 ) 24,727 9.8 years Patents and technology 6,002 14,137 (2,868 ) 17,271 8.9 years Non-compete agreements 4,100 2,164 (3,960 ) 2,304 4.9 years Other 324 299 (393 ) 230 2.2 years Total amortizable assets $ 64,847 $ 45,463 $ (44,571 ) $ 65,739 8.2 years As of December 31, 2015 Gross Carrying Amount Acquisitions Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period Customer relationships $ 41,500 $ — $ (29,150 ) $ 12,350 8.0 years Tradenames 12,921 — (6,253 ) 6,668 9.5 years Patents and technology 5,805 198 (2,381 ) 3,622 11.9 years Non-compete agreements 4,100 — (3,729 ) 371 4.8 years Other 324 — (290 ) 34 4.1 years Total amortizable assets $ 64,650 $ 198 $ (41,803 ) $ 23,045 8.4 years Customer relationships, tradenames, and other intangibles are amortized on an accelerated basis consistent with their expected future cash flows over their estimated useful life, which results in accelerated amortization. The remaining amortizable intangible assets are amortized using the straight line method over their estimated useful life. For the three months ended March 31, 2016 and 2015, amortization expense was $2,768 and $2,155, respectively. Amortization expense is primarily recorded as a component of operating expense. However, amortization expense related to acquired technology for the three months ended March 31, 2016 and 2015, of $22 and $21, respectively, is recorded as a component of cost of sales. Estimated future amortization expense is as follows: Remaining 2016 $ 11,920 2017 13,315 2018 11,030 2019 9,606 2020 7,013 Thereafter 12,855 Total $ 65,739 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2016 | |
Inventories [Abstract] | |
INVENTORIES | (5) INVENTORIES At March 31, 2016, and December 31, 2015, inventories consisted of the following: March 31, 2016 December 31, 2015 Finished goods $ 82,085 $ 44,764 Raw materials 1,670 1,148 Total inventory $ 83,755 $ 45,912 In addition, included in prepaid expenses and other current assets were inventory deposits with third-party manufacturers at March 31, 2016 and December 31, 2015 of $360 and $813, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Stock-Based Compensation [Abstract] | |
STOCK-BASED COMPENSATION | (6) STOCK-BASED COMPENSATION The Company granted 529 and 545 restricted stock units during the three months ended March 31, 2016 and 2015, respectively. The restricted stock units granted during the three months ended March 31, 2016 and 2015, were estimated to have a weighted-average fair value per share of $9.87 and $6.51, respectively. The fair value of the restricted stock units granted is based on the closing share price of the Company’s common stock on the date of grant. The restricted stock units vest annually on a straight-line basis over a nine-month (annual board of directors’ grant) to three-year vesting term, depending on the terms of the individual grant. As part of the 529 and 545 shares of restricted stock granted as discussed above, during the first three months of 2016 and 2015, the Company granted 373 and 269 shares of restricted stock, respectively, to certain executives of the Company where vesting is linked to specific performance criterion. The shares of restricted stock granted in 2016 only vest upon the Company’s achievement of specified thresholds of net sales, Adjusted EBITDA, or specific goals for the individual executive. The shares of restricted stock granted in 2015 only vested upon the achievement of specified thresholds of net sales, Adjusted EBITDA, and earnings per share. As of March 31, 2016, the Company believes it is probable that it will achieve the targets for 321 shares of restricted stock granted in the first three months of 2016. Of the 269 shares of restricted stock granted in 2015, 224 shares vested (including 7 shares granted in excess of the original grant due to the Company exceeding the operating thresholds) and 52 shares were forfeited. The Company recorded share-based compensation expense only for those restricted stock units that are expected to vest. The estimated fair value of the restricted stock units is recognized on a straight-line basis over the requisite service period of the award, which is generally the vesting term of the award. During the three months ended March 31, 2016 and 2015, the Company recorded stock-based compensation expense related to restricted stock units of $1,336 and $876, respectively, which is included as a component of selling, general, and administrative expense. During the three months ended March 31, 2016 and 2015, certain ZAGG employees elected to receive a net amount of shares upon the vesting of a restricted stock unit grant in exchange for the Company paying the minimum statutory withholding amount of the employees’ tax liabilities for the fair value of the award on the vesting date. This resulted in the Company paying $621 and $718, respectively, which is reflected as a reduction of additional paid-in capital. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
INCOME TAXES | (7) INCOME TAXES The Company’s effective tax rate was 19.6% and 41.7% for the three months ended March 31, 2016 and 2015, respectively. The decrease in the effective tax rate was primarily due to (1) a decrease in the state rate used for deferred taxes caused by the acquisition of mophie and the resulting change in the mix of state apportionment factors, which resulted in a discrete item being recognized during 2016, and (2) reduced losses from foreign jurisdictions that are taxed at a 0% rate. The Company’s effective tax rate will generally differ from the U.S. Federal statutory rate of 35%, due to state taxes, permanent items, and the Company’s global tax strategy. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | (8) EARNINGS PER SHARE Basic earnings per common share excludes dilution and is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share reflect the potential dilution that could occur if restricted stock units, or other common stock equivalents were exercised or converted into common stock. The dilutive effect of restricted stock units or other common stock equivalents is calculated using the treasury stock method. The following is a reconciliation of the denominator used to calculate basic earnings per share and diluted earnings per share for the three months ended March 31, 2016 and 2015: March 31, 2016 March 31, 2015 Net income (loss) $ (3,290 ) $ 3,200 Weighted average shares outstanding: Basic 27,710 29,380 Dilutive effect of warrants and restricted stock units — 298 Diluted 27,710 29,678 Earnings (loss) per share: Basic $ (0.12 ) $ 0.11 Diluted $ (0.12 ) $ 0.11 For the three months ended March 31, 2015, warrants and restricted stock units to purchase 442 shares of common stock were not considered in calculating diluted earnings per share because the warrant or stock option exercise prices or the total expected proceeds under the treasury stock method for the warrants, restricted stock units, or stock options was greater than the average market price of common shares during the period and, therefore, the effect would be anti-dilutive. |
Treasury Stock
Treasury Stock | 3 Months Ended |
Mar. 31, 2016 | |
Treasury Stock [Abstract] | |
TREASURY STOCK | (9) TREASURY STOCK During the fourth quarter of 2015, the Company’s board of directors authorized the repurchase of up to $20,000 of the Company’s outstanding common stock with no expiration date. The Company’s board of directors also authorized the Company to enter into a Rule 10b5-1 plan when appropriate. For the three months ended March 31, 2016 and 2015, no purchases of treasury stock occurred. |
Note Receivable
Note Receivable | 3 Months Ended |
Mar. 31, 2016 | |
Note Receivable [Abstract] | |
NOTE RECEIVABLE | (10) NOTE RECEIVABLE In June 2008, Lorence Harmer became a member of the Company’s board of directors and in December 2009, was appointed as the chairman of the audit committee. Mr. Harmer introduced the Company to a consumer electronics product, which became known as the ZAGGbox. The Company subsequently entered into negotiations with Teleportall, LLC (“Teleportall”), the owner of the technology used in the ZAGGbox, regarding production and distribution of the ZAGGbox. In 2009 and 2010 the Company entered into various agreements with Teleportall, including agreements appointing the Company as the exclusive distributor for the ZAGGbox in North America, issued purchase orders for ZAGGbox units in the aggregate amount of $3,500 and advanced to Teleportall a total of $3,900 against the total purchase price for the units ordered by the Company. Additionally, in May 2010, the Company entered into an agreement with Harmer Holdings, LLC (“Holdings”), an affiliate of Mr. Harmer, under which Holdings agreed to repurchase unsold ZAGGboxes under certain circumstances. In late 2010 the Company determined that the ZAGGbox product would not be ready to market and sell during the 2010 Christmas season and the Company commenced discussions to restructure its agreements with Teleportall. As a result of the foregoing, the Company entered into an agreement with Teleportall, Mr. Harmer and several entities owned or controlled by Mr. Harmer (the “Harmer Agreement”), dated March 23, 2011, but subject to further negotiations and ratification through April 5, 2011. Pursuant to the Harmer Agreement, the parties agreed to terminate the prior agreements and convey all ZAGG rights in the ZAGGbox to Teleportall on the following terms: ● Mr. Harmer, Teleportall, and certain of their affiliates delivered a promissory note (the “Note”) dated March 23, 2011, to the Company in the original principal amount of $4,126 which accrued interest at the rate of LIBOR plus 4% per annum (adjusted quarterly) payable as follows: (i) interest only payments (a) on September 23, 2011, and (b) thereafter on or before the last day of each calendar quarter, (ii) 50% of the net profits of each ZAGGbox sale by Teleportall and its affiliates, and (iii) the unpaid balance of principal and interest due in full on March 23, 2013. The Note was secured by certain real property, interests in entities that own real property and restricted and free-trading securities. ● In exchange for a license fee to the Company, Teleportall and the Company entered into a License Agreement under which the Company licensed to Teleportall the use of certain ZAGG names and trademarks to sell and distribute the ZAGGbox product. ● In exchange for commissions to be paid by the Company, Teleportall and ZAGG entered into a non-exclusive, two year Commission Agreement on March 23, 2011, under which Teleportall could make introductions of many ZAGG products in all countries where ZAGG did not then have exclusive dealing agreements in respect of the marketing, distribution or sale of its products. No revenue has been recognized from Teleportall. The Note was originally accounted for under the cost recovery method and was originally included in the consolidated balance sheet at $3,900 which was the value of the ZAGGbox inventory advances. The original face value of the Note of $4,126 was for reimbursement of the inventory advances and other costs associated with the ZAGGbox and approximated fair value at March 23, 2011, as the variable interest rate on the Note approximated market rates. On September 20, 2011, and prior to the due date of the first interest-only payment due on the Note, Mr. Harmer and two of his affiliates, Holdings and Teleportall, filed a lawsuit in Utah state court (the “Court”) against the Company, Robert G. Pedersen, II (ZAGG’s former CEO), Brandon T. O’Brien (ZAGG’s former CFO) and KPMG LLP (ZAGG’s independent registered public accounting firm). KPMG LLP and Messrs. Pedersen and O’Brien were subsequently dismissed from the lawsuit. In their lawsuit, the plaintiffs allege that the defendants defamed Mr. Harmer, breached the Harmer Agreement and interfered with other rights of the plaintiffs. Mr. Harmer failed to make the required interest-only payment to the Company due on September 23, 2011. Thereafter, the Company filed counterclaims against Mr. Harmer, Holdings and Teleportall to collect the balance due under the Note. Also, ZAGG commenced foreclosure on the collateral securing the Note, which consisted of real property, interests in entities that own real property, and restricted and free-trading securities, which included shares of ZAGG Inc common stock. On May 21, 2015, the Court issued a final judgment whereby all claims brought by Harmer were disposed of in favor of ZAGG and dismissed with prejudice. In addition, the Court granted summary judgment in favor of ZAGG on all counterclaims against Harmer, Holdings and Teleportall and ZAGG was awarded judgment in the amount of $4,735 with interest at 12% per annum until paid in full and reasonable attorney fees. Following the final judgment the Company began the foreclosure process on all remaining collateral securing the Note. On June 29, 2015, the Company foreclosed on certain real property securing the Note, which was valued by an independent appraiser and determined to have a current fair value of $1,099. In conjunction with the foreclosure, the Company reclassified $801 of the Note previously collateralized by the foreclosed real property and included in other assets, and $298 of the Note collateralized by ZAGG Inc stock, as a $1,099 asset held for sale and presented it as a component of other assets in the condensed consolidated balance sheets. After this reclassification, the remaining balance of the Note was $50. On July 13, 2015, the Company foreclosed on 80 shares of ZAGG Inc common stock that were determined by the Company to have a fair value of $688 on the date of foreclosure. At the time of the foreclosure, the Note receivable balance totaled $50 and was reduced to $0. The $639 excess in value of the common stock over the book value of the Note was recorded by the Company as a recovery of a previously established reserve in selling, general and administrative expense in the consolidated statement of operations, which is the same financial statement line item in which the Company previously recorded write-downs of the Note. As of December 31, 2015, management determined that the estimated fair value of the remaining underlying collateral was between $135 and $270, consisting of real property investments. Since the Note became collateral dependent in October 2011, management has (1) foreclosed on and sold 45 shares of ZAGG Inc common stock for $496 (December 2011); (2) foreclosed on real property valued at $250 (January 2012); (3) foreclosed on stock and warrants in a private company of $516 (May 2012); (4) foreclosed on real property valued at $1,099 as discussed above; and (5) foreclosed on 80 shares of ZAGG Inc common stock for $688. These foreclosures were recorded as a reduction to the Note in the period in which the foreclosure occurred. Management continues to actively pursue the foreclosure of all remaining collateral and execution on other assets of Harmer, Holdings, and Teleportall. At March 31, 2016 and December 31, 2015, the entire unpaid balances on the note receivable was fully reserved. The total unpaid principal balance, including accrued interest, late fees, attorney fees, and costs incurred in collection, totaled $4,939 and $4,836, respectively. The increase to the reserve during the three months ended March 31, 2016 consisted of accrued interest of $103. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements [Abstract] | |
FAIR VALUE MEASUREMENTS | (11) FAIR VALUE MEASURES Fair Value of Financial Instruments At March 31, 2016, the Company’s financial instruments included cash and cash equivalents, accounts receivable, accounts payable, a line of credit, and a term loan. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturities of these financial instruments. The carrying value of the debt balances approximate fair value because the variable interest rates reflect current market rates and terms. Fair Value Measurements The Company measures at fair value certain financial and non-financial assets by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are: Level 1 — Quoted market prices in active markets for identical assets or liabilities; Level 2 — Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs); and Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting unit to develop its own assumptions. At March 31, 2016, and December 31, 2015, the following assets and liabilities were measured at fair value on a recurring basis using the level of inputs shown: Fair Value Measurements Using: March 31, Level 1 Level 2 Inputs Level 3 Inputs Money market funds included in cash equivalents $ 5 $ 5 — — Fair Value Measurements Using: December 31, 2015 Level 1 Inputs Level 2 Inputs Level 3 Inputs Money market funds included in cash equivalents $ 375 $ 375 — — |
Concentrations
Concentrations | 3 Months Ended |
Mar. 31, 2016 | |
Concentrations [Abstract] | |
CONCENTRATIONS | (12) CONCENTRATIONS Concentration of credit risk Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with high credit quality financial institutions. The Company maintains its cash in bank deposit accounts, which, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts through March 31, 2016. At March 31, 2016 and December 31, 2015, the balance of accounts receivable from two separate customers exceeded 10%: March 31, 2016 December 31, 2015 Customer A 17 % 29 % Customer B 34 % 31 % No other customer account balances were more than 10% of accounts receivable at March 31, 2016 or December 31, 2015. If one or more of the Company’s significant customers were to become insolvent or were otherwise unable to pay for the products provided, it would have a material adverse effect on the Company’s financial condition and results of operations. Concentration of supplier The Company’s logistics partners arrange for production of its raw materials related to the InvisibleShield film products primarily from one source. Management is aware of similar raw materials that would be available from other sources if required and has current plans to immediately engage such resources if necessary. A change in supplier, however, could cause a delay in manufacturing and a possible loss of sales, which could adversely affect operating results. Concentration of sales For the three months ended March 31, 2016 and 2015, three customers individually accounted for over 10% of the quarterly revenues in each respective quarter: Three months Three months Customer A 13 % 19 % Customer B 10 % 19 % Customer C 7 % 12 % Customer D 19 % 8 % No other customers accounted for more than 10% of sales for the three months ended March 31, 2016 and 2015. If the Company loses one or more of the Company’s significant customers, it would have a material adverse effect on the Company’s financial condition and results of operations. The percentage of sales by geographic region for the three months ended March 31, 2016 and 2015 was approximately: Three months Three months United States 88 % 92 % Europe 9 % 7 % Other 3 % 1 % |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | (13) COMMITMENTS AND CONTINGENCIES Operating leases The Company leases office and warehouse space, office equipment, and mall cart locations under operating leases that expire through 2023. Future minimum rental payments required under the operating leases at March 31, 2016 are as Remaining 2016 $ 1,890 2017 2,421 2018 1,721 2019 1,454 2020 1,485 Thereafter 4,036 Total $ 13,007 For the three months ended March 31, 2016 and 2015, rent expense was $717 and $394, respectively, and is included in selling, general and administrative expense in the condensed consolidated statement of operations. Commercial Litigation Lorence A. Harmer, et al v ZAGG Inc et al., Third Judicial District Court, Salt Lake County, State of Utah, Civil No. 110917687 Peter Kravitz v. ZAGG Inc., U.S. Bankruptcy Court, District of Delaware, Adv. Pro. No. 15-51558(BLS). Patent/Trademark Litigation ZAGG Intellectual Property Holding Co v. Tech21 et al., U.S. District Court, District of Utah, 2:14-cv-00113-BCW. ZAGG Intellectual Property Holding Co v. Superior Communications, Inc., U.S. District Court, District of Utah 2:14-cv-00121-TS. Inter Partes Review of Patent No. 8,567,596 B1 in the United States Patent and Trademark Office, Patent Trial and Appeal Board (“PTAB”), Case IPR2014-01262. Derivative Lawsuits Albert Pikk v. Robert G. Pedersen II, et al., U.S. District Court, District of Utah, Case No. 2:12-cv-01188 Rosenberg v. Robert G. Pedersen II, et al., U.S. District Court, District of Utah, Case No. 2:12-cv-01216 Pikk Rosenberg In re ZAGG Inc. Shareholder Derivative Litigation Arthur Morganstern, et al. v. Robert G. Pedersen II, et al., Third Judicial District Court, Salt Lake County, State of Utah, Civil No. 120908452 Morganstern SEC Investigation In the fourth quarter of 2012, the Company received requests to provide documentation and information to the staff of the SEC in connection with an investigation being conducted by the SEC’s Salt Lake City office. The Company believes the investigation includes a review of the facts and circumstances surrounding some of the same issues raised by the plaintiffs in the above lawsuits, including whether the Company failed to disclose Mr. Pedersen’s margin account sales. The Company responded to these requests and is cooperating with the staff although there has been no resolution to date. Other Litigation The Company is not a party to any other material litigation or claims at this time. While the Company currently believes that the amount of any ultimate potential loss for known matters would not be material to the Company’s financial condition, the outcome of these actions is inherently difficult to predict. In the event of an adverse outcome, the ultimate potential loss could have a material adverse effect on the Company’s financial condition or results of operations in a particular period. The Company establishes reserves when a particular contingency is probable and estimable. Other than those discussed above, the Company has not accrued for any loss at March 31, 2016 in the condensed consolidated financial statements as the Company does not consider a loss to be probable or estimable. The Company faces contingencies that are reasonably possible to occur; however, the reasonably possible exposure to losses cannot currently be estimated. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | (14) SEGMENT REPORTING The Company designs, produces, and distributes professional and premium creative product solutions in domestic and international markets. The Company’s operations are conducted in two reporting business segments: ZAGG and mophie. The Company defines its segments as those operations whose results its chief operating decision maker (“CODM”) regularly reviews to analyse performance and allocate resources. The results of operations of mophie are included in the Company’s results of operations beginning on March 3, 2016. The ZAGG segment designs and distributes screen protection, keyboards for tablet computers and other mobile devices, earbuds, headphones, Bluetooth speakers, mobile power, cables, and cases under the ZAGG, InvisibleShield, and iFrogz brands. Domestic operations are headquartered in Midvale, Utah, while international operations are directed from Shannon, Ireland. The mophie segment designs and distributes power cases, mobile power, and cables under the mophie brand. Domestic operations are headquartered in Tustin, California, while international operations are directed from Amsterdam, Netherlands. The Company measures the results of its segments using, among other measures, each segment's net sales, gross profit, and operating income (loss). The Company may revise the measurement of each segment's operating income (loss) as determined by the information regularly reviewed by the CODM. Net sales by segment are as follows: Three months Three months ZAGG segment $ 54,796 $ 57,216 mophie segment 7,636 — Net sales $ 62,432 $ 57,216 Gross profit by segment is as follows: Three months Three months ZAGG segment $ 22,819 $ 22,958 mophie segment 910 — Gross profit $ 23,729 $ 22,958 Income (loss) from operations by segment is as follows: Three months Three months ZAGG segment $ 413 $ 5,439 mophie segment (4,116 ) — Income (loss) from operations $ (3,703 ) $ 5,439 Total assets by segment are as follows: March 31, 2016 December 31, 2015 ZAGG segment $ 137,230 $ 179,541 mophie segment 160,536 — Total assets $ 297,766 $ 179,541 |
Nature of Operations and Basi21
Nature of Operations and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Nature of Operations and Basis of Presentation [Abstract] | |
Business Combinations | Business Combinations Significant estimates in valuing certain intangible assets include but are not limited to: future expected cash flows related to each individual asset, market position of the tradenames, as well as assumptions about cash flow savings from the tradenames, determination of useful lives, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. |
Goodwill | Goodwill At least annually and when events and circumstances warrant an evaluation, we perform our impairment assessment of goodwill. This assessment initially permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If an entity can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it would not need to perform the two-step impairment test for the reporting unit. However, if it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the two step analysis is performed, which incorporates a fair-value based approach. We determine the fair value of our reporting unit based on discounted cash flows and market approach analyses as considered necessary, and consider factors such as the economy, reduced expectations for future cash flows coupled with a decline in the market price of our stock and market capitalization for a sustained period as indicators for potential goodwill impairment. If the reporting unit’s carrying amount exceeds its estimated fair value, a second step must be performed to measure the amount of the goodwill impairment loss, if any. The second step compares the implied fair value of the reporting unit’s goodwill, determined in the same manner as the amount of goodwill recognized in a business combination, with the carrying amount of such goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” This ASU includes a five-step process by which entities will recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which an entity expects to be entitled to in exchange for those goods or services. The ASU also will require enhanced disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. On July 9, 2015, the FASB voted to approve a one year deferral of the effective date of this ASU. This deferral was issued by the FASB in ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date”. As a result of ASU No. 2015-14 the Company expects that it will apply the new revenue standard to annual and interim reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” Previously, debt issuance costs were recorded as assets on the balance sheet. This update requires that debt issuance costs related to a debt liability be presented on the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. The Company adopted this standard during the first quarter of 2016. In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory.” This ASU provides guidance to entities that measure inventory using a method other than last-in, first-out (LIFO) or the retail inventory method. For entities using first-in, first-out (FIFO) or average cost, the measurement principle for their inventory changes from the lower of cost or market to lower of cost and net realizable value. Current U.S. GAAP requires, at each financial statement date, that entities measure inventory at the lower of cost or market. The measurement of market is commonly the current replacement cost. However, entities also need to consider net realizable value and net realizable value less an approximately normal profit margin in their measurement. For entities using a method other than LIFO or the retail inventory method, the ASU replaces market with net realizable value. This ASU requires prospective adoption for inventory measurement for annual and interim periods beginning after December 15, 2016 for public business entities. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. In September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments,” which eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. The ASU is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. The Company adopted this standard during the first quarter 2016. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes,” which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent. The ASU is effective for public business entities for interim and annual periods in fiscal years beginning after December 15, 2016. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. In February 2016, the FASB issued its new lease accounting standard, which requires lessees to recognize most leases, including operating leases, on-balance sheet via a right of use asset and lease liability. Lessees are allowed to account for short-term leases (i.e., leases with a term of 12 months or less) off-balance sheet, consistent with current operating lease accounting. A number of other significant changes to lease accounting have been effected through the issuance of this standard. The new standard is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. In April 2016, the FASB issued ASU No. 2016-11, which simplified accounting for share-based payments. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those years for public business entities. Early adoption is permitted in any interim or annual period provided that the entire ASU is adopted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements. |
Acquisition of Mophie Inc (Tabl
Acquisition of Mophie Inc (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Schedule of purchase consideration | Cash consideration $ 100,000 Preliminary working capital adjustment (23,478 ) Preliminary contingent payments 2,027 Preliminary fair value of earnout consideration 1,565 Total purchase price $ 80,114 |
Schedule of the preliminary estimates of the fair values of the identifiable assets acquired and liabilities assumed | Cash and cash equivalents $ 1,779 Trade receivables (gross contractual receivables of $13,569) 13,483 Inventories 37,290 Prepaid expenses and other assets 1,073 Income tax receivable 11,548 Deferred tax assets 24,925 Property and equipment 10,196 Land held for sale 325 Amortizable identifiable intangible assets 45,463 Goodwill 14,092 Current liabilities (80,060 ) Total $ 80,114 |
Schedule of identifiable intangible assets | Intangible asset class Weighted-average amortization period Tradenames $ 18,693 10.0 years Patents and technology 14,137 7.6 years Customer relationships 10,170 5.0 years Non-compete agreements 2,164 5.0 years Backlog 299 0.3 years Total $ 45,463 |
Schedule of pro forma results from operations | 3 Months Ended March 31, 2016 March 31, 2015 Net sales $ 79,759 $ 109,781 Net loss $ (6,395 ) $ (2,997 ) Basic net loss per share $ (.23 ) $ (.10 ) Diluted net loss per share $ (.23 ) $ (.10 ) |
Debt and Letters of Credit (Tab
Debt and Letters of Credit (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt and Letters of Credit [Abstract] | |
Scedule of Contractual future payments of credit and security agreement | Line of Credit Term Loan Total Remaining 2016 $ — $ 4,688 $ 4,688 2017 — 6,250 6,250 2018 — 6,250 6,250 2019 — 6,250 6,250 2020 — 1,562 1,562 Thereafter 50,545 — 50,545 Total $ 50,545 $ 25,000 $ 75,545 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Intangible Assets [Abstract] | |
Schedule of definite-lived intangibles | As of March 31, 2016 Gross Carrying Amount Acquisitions Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period Customer relationships $ 41,500 $ 10,170 $ (30,463 ) $ 21,207 7.4 years Tradenames 12,921 18,693 (6,887 ) 24,727 9.8 years Patents and technology 6,002 14,137 (2,868 ) 17,271 8.9 years Non-compete agreements 4,100 2,164 (3,960 ) 2,304 4.9 years Other 324 299 (393 ) 230 2.2 years Total amortizable assets $ 64,847 $ 45,463 $ (44,571 ) $ 65,739 8.2 years As of December 31, 2015 Gross Carrying Amount Acquisitions Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period Customer relationships $ 41,500 $ — $ (29,150 ) $ 12,350 8.0 years Tradenames 12,921 — (6,253 ) 6,668 9.5 years Patents and technology 5,805 198 (2,381 ) 3,622 11.9 years Non-compete agreements 4,100 — (3,729 ) 371 4.8 years Other 324 — (290 ) 34 4.1 years Total amortizable assets $ 64,650 $ 198 $ (41,803 ) $ 23,045 8.4 years |
Schedule of estimated future amortization expense | Remaining 2016 $ 11,920 2017 13,315 2018 11,030 2019 9,606 2020 7,013 Thereafter 12,855 Total $ 65,739 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Inventories [Abstract] | |
Schedule of inventories | March 31, 2016 December 31, 2015 Finished goods $ 82,085 $ 44,764 Raw materials 1,670 1,148 Total inventory $ 83,755 $ 45,912 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of numerator and denominator used to calculate basic earnings per share and diluted earnings per share | March 31, 2016 March 31, 2015 Net income (loss) $ (3,290 ) $ 3,200 Weighted average shares outstanding: Basic 27,710 29,380 Dilutive effect of warrants and restricted stock units — 298 Diluted 27,710 29,678 Earnings (loss) per share: Basic $ (0.12 ) $ 0.11 Diluted $ (0.12 ) $ 0.11 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements [Abstract] | |
Schedule of assets and liabilities measured at fair value on recurring basis | Fair Value Measurements Using: March 31, Level 1 Level 2 Inputs Level 3 Inputs Money market funds included in cash equivalents $ 5 $ 5 — — Fair Value Measurements Using: December 31, 2015 Level 1 Inputs Level 2 Inputs Level 3 Inputs Money market funds included in cash equivalents $ 375 $ 375 — — |
Concentrations (Tables)
Concentrations (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Concentrations [Abstract] | |
Schedules of concentration of accounts receivable and sales | March 31, 2016 December 31, 2015 Customer A 17 % 29 % Customer B 34 % 31 % Three months Three months Customer A 13 % 19 % Customer B 10 % 19 % Customer C 7 % 12 % Customer D 19 % 8 % |
Schedule of percentage of sales by geographic region | Three months Three months United States 88 % 92 % Europe 9 % 7 % Other 3 % 1 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Schedule of future minimum rental payments required under the operating leases | Remaining 2016 $ 1,890 2017 2,421 2018 1,721 2019 1,454 2020 1,485 Thereafter 4,036 Total $ 13,007 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information | Three months Three months ZAGG segment $ 54,796 $ 57,216 mophie segment 7,636 — Net sales $ 62,432 $ 57,216 Three months Three months ZAGG segment $ 22,819 $ 22,958 mophie segment 910 — Gross profit $ 23,729 $ 22,958 Three months Three months ZAGG segment $ 413 $ 5,439 mophie segment (4,116 ) — Income (loss) from operations $ (3,703 ) $ 5,439 March 31, 2016 December 31, 2015 ZAGG segment $ 137,230 $ 179,541 mophie segment 160,536 — Total assets $ 297,766 $ 179,541 |
Nature of Operations and Basi31
Nature of Operations and Basis of Presentation (Details) - USD ($) $ in Thousands | Mar. 03, 2016 | Feb. 29, 2016 |
Nature of Operations and Basis of Presentation [Abstract] | ||
Cash consideration on acquired | $ 100,000 | |
Lease term | P12M |
Acquisition of Mophie Inc (Deta
Acquisition of Mophie Inc (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Business Combinations [Abstract] | |
Cash consideration | $ 100,000 |
Preliminary working capital adjustment | (23,478) |
Preliminary contingent payments | 2,027 |
Preliminary fair value of earnout consideration | 1,565 |
Total purchase price | $ 80,114 |
Acquisition of Mophie Inc (De33
Acquisition of Mophie Inc (Details 1) - Mophie Inc [Member] $ in Thousands | Mar. 31, 2016USD ($) |
Business Acquisition [Line Items] | |
Cash and cash equivalents | $ 1,779 |
Trade receivables (gross contractual receivables of $13,569) | 13,483 |
Inventories | 37,290 |
Prepaid expenses and other assets | 1,073 |
Income tax receivable | 11,548 |
Deferred tax assets | 24,925 |
Property and equipment | 10,196 |
Land held for sale | 325 |
Amortizable identifiable intangible assets | 45,463 |
Goodwill | 14,092 |
Current liabilities | (80,060) |
Total | $ 80,114 |
Acquisition of Mophie Inc (De34
Acquisition of Mophie Inc (Details 2) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Business Acquisition [Line Items] | |
Intangible asset class | $ 45,463 |
Tradenames [Member] | |
Business Acquisition [Line Items] | |
Intangible asset class | $ 18,693 |
Weighted-average amortization period | 10 years |
Patents and technology [Member] | |
Business Acquisition [Line Items] | |
Intangible asset class | $ 14,137 |
Weighted-average amortization period | 7 years 7 months 6 days |
Customer relationships [Member] | |
Business Acquisition [Line Items] | |
Intangible asset class | $ 10,170 |
Weighted-average amortization period | 5 years |
Non-compete agreements [Member] | |
Business Acquisition [Line Items] | |
Intangible asset class | $ 2,164 |
Weighted-average amortization period | 5 years |
Backlog [Member] | |
Business Acquisition [Line Items] | |
Intangible asset class | $ 299 |
Weighted-average amortization period | 3 months 18 days |
Acquisition of Mophie Inc (De35
Acquisition of Mophie Inc (Details 3) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Business Combinations [Abstract] | ||
Net sales | $ 79,759 | $ 109,781 |
Net loss | $ (6,395) | $ (2,997) |
Basic net loss per share | $ (0.23) | $ (0.10) |
Diluted net loss per share | $ (0.23) | $ (0.10) |
Acquisition of Mophie Inc (De36
Acquisition of Mophie Inc (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Feb. 02, 2016 | |
Aquisition of MOPHIE (Textual) | |||
Cash consideration | $ 100,000 | ||
Issuance of common stock value | $ 5,000 | ||
Paid to principal shareholders in escrow account | 2,000 | ||
Recover amount | 10,000 | ||
Contractual receivable amount | 13,569 | ||
Purchase price | 80,114 | ||
Acquisition related costs | 2,017 | ||
Cost of sales | 38,703 | $ 34,258 | |
Net loss | (3,290) | 3,200 | |
Pro forma net income amortization expense | 2,392 | 1,924 | |
Accumulated amortization of debt issuance costs | $ 493 | $ 523 | |
Mophie Inc [Member] | |||
Aquisition of MOPHIE (Textual) | |||
Acquisition date | Mar. 3, 2016 | ||
Cash consideration | $ 100,000 | ||
Earn out consideration | 20,000 | ||
Acquisition related costs | 2,017 | ||
Cost of sales | 7,636 | ||
Net loss | 4,115 | ||
Business acquisition pro forma information | $ 6,937 |
Debt and Letters of Credit (Det
Debt and Letters of Credit (Details) $ in Thousands | Mar. 31, 2016USD ($) |
Short-term Debt [Line Items] | |
Remaining 2,016 | $ 4,688 |
2,017 | 6,250 |
2,018 | 6,250 |
2,019 | 6,250 |
2,020 | 1,562 |
Thereafter | 50,545 |
Total | $ 75,545 |
Line of Credit [Member] | |
Short-term Debt [Line Items] | |
Remaining 2,016 | |
2,017 | |
2,018 | |
2,019 | |
2,020 | |
Thereafter | $ 50,545 |
Total | 50,545 |
Term Loan [Member] | |
Short-term Debt [Line Items] | |
Remaining 2,016 | 4,688 |
2,017 | 6,250 |
2,018 | 6,250 |
2,019 | 6,250 |
2,020 | $ 1,562 |
Thereafter | |
Total | $ 25,000 |
Debt and Letters of Credit (D38
Debt and Letters of Credit (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Line Of Credit Facility [Line Items] | ||
Unused line fees | $ 8,000 | $ 9,000 |
Weighted average interest rate on all outstanding borrowings | 3.21% | 1.13% |
Effective interest rate | 2.96% | |
Incurred and capitalization direct cost | $ 1,022,000 | |
Long-term Debt | $ 256,000 | |
Line of Credit [Member] | ||
Line Of Credit Facility [Line Items] | ||
Line of credit maturity date | Mar. 2, 2021 | |
Line of credit interest rate, description | Interest on the Line of Credit will accrue at the base rate plus 0.50% or LIBOR plus 1.50%. | |
Line of credit fee Percentage | 0.20% | |
Revolving credit commitment | $ 85,000 | |
Term Loan [Member] | ||
Line Of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 25,000,000 | |
Line of credit maturity date | Mar. 2, 2020 | |
Line of credit interest rate, description | Interest on the Term Loan will accrue at the base rate plus 1.0% or at a rate of LIBOR plus 2.0%. | |
Line of credit facility principal Payment | $ 521,000 | |
Credit and Security Agreement [Member] | ||
Line Of Credit Facility [Line Items] | ||
Line of credit facility, outstanding balance | 872,000 | |
Incurred and capitalization direct cost | 1,128,000 | |
Amortization of capitalization costs | $ 20,000 | |
Line of credit fee Percentage | 0.125% | |
Wells Fargo Bank | ||
Line Of Credit Facility [Line Items] | ||
Amortization of capitalization costs | $ 16,000 |
Intangible Assets (Details )
Intangible Assets (Details ) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 64,847 | $ 64,650 |
Acquisitions | 45,463 | 198 |
Accumulated Amortization | (44,571) | (41,803) |
Net Carrying Amount | $ 65,739 | $ 23,045 |
Weighted Average Amortization Period | 8 years 2 months 12 days | 8 years 4 months 24 days |
Customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 41,500 | $ 41,500 |
Acquisitions | 10,170 | |
Accumulated Amortization | (30,463) | $ (29,150) |
Net Carrying Amount | $ 21,207 | $ 12,350 |
Weighted Average Amortization Period | 7 years 4 months 24 days | 8 years |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 12,921 | $ 12,921 |
Acquisitions | 18,693 | |
Accumulated Amortization | (6,887) | $ (6,253) |
Net Carrying Amount | $ 24,727 | $ 6,668 |
Weighted Average Amortization Period | 9 years 9 months 18 days | 9 years 6 months |
Patents and technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 6,002 | $ 5,805 |
Acquisitions | 14,137 | 198 |
Accumulated Amortization | (2,868) | (2,381) |
Net Carrying Amount | $ 17,271 | $ 3,622 |
Weighted Average Amortization Period | 8 years 10 months 24 days | 11 years 10 months 24 days |
Non-compete agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 4,100 | $ 4,100 |
Acquisitions | 2,164 | |
Accumulated Amortization | (3,960) | $ (3,729) |
Net Carrying Amount | $ 2,304 | $ 371 |
Weighted Average Amortization Period | 4 years 10 months 24 days | 4 years 9 months 18 days |
Other [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 324 | $ 324 |
Acquisitions | 299 | |
Accumulated Amortization | (393) | $ (290) |
Net Carrying Amount | $ 230 | $ 34 |
Weighted Average Amortization Period | 2 years 2 months 12 days | 4 years 1 month 6 days |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Intangible Assets [Abstract] | ||
Remaining 2,016 | $ 11,920 | |
2,017 | 13,315 | |
2,018 | 11,030 | |
2,019 | 9,606 | |
2,020 | 7,013 | |
Thereafter | 12,855 | |
Total | $ 65,739 | $ 23,045 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expenses | $ 2,746 | $ 2,134 |
Acquired technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expenses | $ 22 | $ 21 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Inventories [Abstract] | ||
Finished goods | $ 82,085 | $ 44,764 |
Raw materials | 1,670 | 1,148 |
Total inventories | $ 83,755 | $ 45,912 |
Inventories (Details Textual)
Inventories (Details Textual) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Inventories (Textual) | ||
Inventory deposits with third-party manufacturers | $ 360 | $ 813 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Payment of withholdings on restricted stock units | $ 621 | $ 718 | |
Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of restricted stock granted | 529 | 545 | |
Weighted average fair value of restricted stock per share | $ 9.87 | $ 6.51 | |
Number of restricted stock acheived | 321 | ||
Number of restricted shares vested | 224 | ||
Shares granted in excess of original grant | 7 | ||
Number of restricted shares forfeited | 52 | ||
Payment of withholdings on restricted stock units | $ 621 | $ 718 | |
Maximum [Member] | Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Term of restricted stock vested | 3 years | ||
Minimum [Member] | Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Term of restricted stock vested | 9 months | ||
Selling, general and administrative expenses [Member] | Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 1,336 | $ 876 | |
Executive Officer [Member] | Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of restricted stock granted | 373 | 269 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Taxes (Textual) | ||
Effective tax rate | 19.60% | 41.70% |
Foreign jurisdictions tax rate | 0.00% | |
Federal statutory rate | 35.00% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (3,290) | $ 3,200 |
Weighted average shares outstanding: | ||
Basic | 27,710 | 29,380 |
Dilutive effect of warrants and restricted stock units | 298 | |
Diluted | 27,710 | 29,678 |
Earnings (loss) per share: | ||
Basic | $ (0.12) | $ 0.11 |
Diluted | $ (0.12) | $ 0.11 |
Earnings Per Share (Details Tex
Earnings Per Share (Details Textual) shares in Thousands | 3 Months Ended |
Mar. 31, 2015shares | |
Earning per share (Textual) | |
Warrants and restricted stock units granted not considered in calculation of diluted earnings | 442 |
Treasury Stock (Details)
Treasury Stock (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Treasury Stock (Textual) | |||
Number of repurchase of shares authorized by board of directors | $ 20,000 | ||
Number of common stock repurchased under plan |
Note Receivable (Details Textua
Note Receivable (Details Textual) - USD ($) $ in Thousands | Oct. 02, 2015 | May. 21, 2015 | Mar. 23, 2011 | Mar. 31, 2016 | Jul. 13, 2015 | Jun. 29, 2015 | Jan. 31, 2012 | Dec. 31, 2009 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Advance payments for ZAGGbox in aggregate amount | $ 50 | $ 50 | ||||||
Description of first term or condition to terminate agreement | Mr. Harmer, Teleportall, and certain of their affiliates delivered a promissory note (the "Note") dated March 23, 2011, to the Company in the original principal amount of $4,126 which accrued interest at the rate of LIBOR plus 4% per annum (adjusted quarterly) payable as follows: (i) interest only payments (a) on September 23, 2011, and (b) thereafter on or before the last day of each calendar quarter, (ii) 50% of the net profits of each ZAGGbox sale by Teleportall and its affiliates, and (iii) the unpaid balance of principal and interest due in full on March 23, 2013. The Note was secured by certain real property, interests in entities that own real property and restricted and free-trading securities. | |||||||
Foreclosed on real estate property valued | 1,099 | $ 250 | ||||||
Litigation settlement amount | $ 1,396 | $ 4,735 | ||||||
Litigation settlement interest rate | 12.00% | |||||||
ZAGG products [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Advance payments for ZAGGbox in aggregate amount | $ 3,900 | $ 639 | ||||||
Original principal amount | $ 4,126 | |||||||
Teleportall, LLC ('Teleportall') | Promissory note (the 'Note') [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Fixed rate | 4.00% | |||||||
Original principal amount | $ 4,126 | |||||||
Description of reference rate | LIBOR | |||||||
Percentage of the net profits of selling product | 50.00% | |||||||
Teleportall, LLC ('Teleportall') | ZAGG products [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Advance payments for ZAGGbox in aggregate amount | $ 3,900 | |||||||
Initial purchase order price for ZAGGbox units | $ 3,500 | |||||||
Zagg Inc [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Advance payments for ZAGGbox in aggregate amount | 298 | |||||||
Real estate property other assets | 801 | |||||||
Asset held for sale | $ 1,099 |
Note Receivable (Details Text50
Note Receivable (Details Textual 1) - USD ($) shares in Thousands, $ in Thousands | Jul. 13, 2015 | Mar. 31, 2016 | Dec. 31, 2011 | Dec. 31, 2015 | Jun. 29, 2015 | May. 31, 2012 | Jan. 31, 2012 | Mar. 23, 2011 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Number of shares issued in the process of foreclosure | 45 | |||||||
Value of shares issued in the process of foreclosure | $ 496 | |||||||
Foreclosed on real estate property valued | $ 1,099 | $ 250 | ||||||
Foreclosed on stock and warrants | $ 516 | |||||||
Note receivable carrying amount | $ 50 | |||||||
Notes receivable net | $ 50 | 50 | ||||||
Reduced balance | $ 0 | |||||||
Unpaid fee | 4,939 | $ 4,836 | ||||||
Accrued interest | 493 | |||||||
Reduced amount of reserve | 639 | |||||||
Increase in accured interest | 103 | |||||||
Zagg Inc [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Number of shares issued in the process of foreclosure | 80 | |||||||
Value of shares issued in the process of foreclosure | $ 688 | |||||||
Notes receivable net | $ 298 | |||||||
Reduced balance | 0 | |||||||
ZAGG products [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Notes receivable net | $ 639 | $ 3,900 | ||||||
ZAGG products [Member] | Minimum [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Estimated value of the underlying collateral security | 135 | |||||||
ZAGG products [Member] | Maximum [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Estimated value of the underlying collateral security | $ 270 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair value measurements recurring basis [Member] - Money market funds [Member] - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Estimate of Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Money market funds included in cash equivalents | $ 5 | $ 375 |
Level 1 Inputs [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Money market funds included in cash equivalents | $ 5 | $ 375 |
Level 2 Inputs [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Money market funds included in cash equivalents | ||
Level 3 Inputs [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Money market funds included in cash equivalents |
Concentrations (Details)
Concentrations (Details) - Customer Concentration Risk [Member] | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 10.00% | 10.00% | |
Accounts Receivable [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 17.00% | 29.00% | |
Accounts Receivable [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 34.00% | 31.00% | |
Sales Revenue, Net [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 10.00% | 10.00% | |
Sales Revenue, Net [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 13.00% | 19.00% | |
Sales Revenue, Net [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 10.00% | 19.00% | |
Sales Revenue, Net [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 7.00% | 12.00% | |
Sales Revenue, Net [Member] | Customer D [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 19.00% | 8.00% |
Concentrations (Details 1)
Concentrations (Details 1) - Sales revenue [Member] | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
United States [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of sales | 88.00% | 92.00% |
Europe [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of sales | 9.00% | 7.00% |
Other [Member] | ||
Concentration Risk [Line Items] | ||
Percentage of sales | 3.00% | 1.00% |
Concentrations (Details Textual
Concentrations (Details Textual) - Customer Concentration Risk [Member] - Customer | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Accounts Receivable [Member] | |||
Concentrations (Textual) | |||
Percentage of sales | 10.00% | 10.00% | |
Number of customer | 2 | 2 | |
Accounts revenues in percentage of all customers | No other customer account balances were more than 10% of accounts receivable. | No other customer account balances were more than 10% of accounts receivable. | |
Sales Revenue, Net [Member] | |||
Concentrations (Textual) | |||
Percentage of sales | 10.00% | 10.00% | |
Number of customer | 3 | 3 | |
Accounts revenues in percentage of all customers | No other customers accounted for more than 10% of sales. | No other customers accounted for more than 10% of sales. |
Commitments and Contingencies55
Commitments and Contingencies (Details) $ in Thousands | Mar. 31, 2016USD ($) |
Commitments and Contingencies [Abstract] | |
Remaining 2,016 | $ 1,890 |
2,017 | 2,421 |
2,018 | 1,721 |
2,019 | 1,454 |
2,020 | 1,485 |
Thereafter | 4,036 |
Total | $ 13,007 |
Commitments and Contingencies56
Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands | Oct. 02, 2015 | May. 21, 2015 | Mar. 31, 2016 | Mar. 31, 2015 |
Commitments and contingencies (Textual) | ||||
Rent expense | $ 717 | $ 394 | ||
Litigation settlement amount | $ 1,396 | $ 4,735 | ||
Litigation settlement interest rate | 12.00% | |||
Complaint against the company | Peter Kravitz v. ZAGG Inc., U.S. Bankruptcy Court, District of Delaware, Adv. Pro. No. 15-51558(BLS). On October 29, 2015, Kravitz, as Liquidating Trustee (the "Trustee") of the RSH Liquidating Trust (formally known as RadioShack) filed a complaint against the Company, alleging, among other things, that the Company received preference payments for product the Company sold and delivered to RadioShack in the amount of $1,834 pursuant to Section 547 of the Bankruptcy Code. | |||
Unamortization acquisition costs | $ 2,163 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||
Net sales | $ 62,432 | $ 57,216 | |
Gross profit | 23,729 | 22,958 | |
Income (loss) from operations | (3,703) | 5,439 | |
Total assets | 297,766 | $ 179,541 | |
ZAGG segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | 54,796 | 57,216 | |
Gross profit | 22,819 | 22,958 | |
Income (loss) from operations | 413 | $ 5,439 | |
Total assets | 137,230 | $ 179,541 | |
mophie segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | 7,636 | ||
Gross profit | 910 | ||
Income (loss) from operations | (4,116) | ||
Total assets | $ 160,536 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) | 3 Months Ended |
Mar. 31, 2016Segment | |
Segment Reporting (Textual) | |
Number of operating segments | 2 |