EX-99.1 4 a0331198kex991.htm EXHIBIT 99.1 Document

ZAGG INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
(Unaudited)
As of December 31,
20182017
ASSETS
Current assets:
Cash and cash equivalents $15,793 $24,989 
Accounts receivable, net of allowances of $885 and $734 156,667 123,220 
Income tax receivable375 — 
Inventories 82,919 75,046 
Prepaid expenses and other current assets 5,473 4,547 
Total current assets261,227 227,802 
Property and equipment, net of accumulated depreciation of $11,844 and $12,54016,118 13,444 
Intangible assets, net of accumulated amortization of $78,627 and $66,63952,054 39,244 
Deferred income tax assets19,403 24,403 
Goodwill27,638 12,272 
Other assets1,571 3,426 
Total assets$378,011 $320,591 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $80,908 $96,472 
Income tax payable — 2,052 
Sales returns liability54,432 34,536 
Accrued wages and wage related expenses6,624 5,652 
Accrued liabilities 13,723 8,168 
Deferred revenue — 315 
Line of credit — 23,475 
Current portion of long-term debt, net of deferred loan costs of $0 and $141 — 13,922 
Total current liabilities155,687 184,592 
Line of credit58,363 — 
Other long-term liabilities5,470 — 
Total liabilities219,520 184,592 
Commitments and contingencies 
Stockholders' equity:
Common stock, $0.001 par value; 100,000 shares authorized; 34,457 and 34,104 shares issued 34 34 
Treasury stock, 6,983 and 6,065 common shares, at cost(49,733)(37,637)
Additional paid-in capital 96,486 96,145 
Accumulated other comprehensive loss (1,410)(348)
Retained earnings 113,114 77,805 
Total stockholders' equity158,491 135,999 
Total liabilities and stockholders' equity$378,011 $320,591 



ZAGG INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
For the Three Months Ended
December 31,		For the Years Ended
December 31,
2018201720182017
Net sales$166,513 $176,924 $538,231 $519,495 
Cost of sales108,062 120,748 352,358 350,497 
Gross profit58,451 56,176 185,873 168,998 
Operating expenses:
Advertising and marketing 3,672 3,399 11,994 11,101 
Selling, general and administrative 29,931 26,671 108,623 105,398 
Gain on disputed mophie purchase price — (6,967)— (6,967)
Transaction costs 1,042 114 1,678 725 
Impairment of intangible asset — — — 1,959 
Amortization of long-lived intangibles 3,478 3,007 11,882 12,047 
Total operating expenses38,123 26,224 134,177 124,263 
Income from operations20,328 29,952 51,696 44,735 
Other (expense) income:
Interest expense (552)(555)(1,684)(2,081)
Other (expense) income (120)633 (483)698 
Total other (expense) income(672)78 (2,167)(1,383)
Income before provision for income taxes19,656 30,030 49,529 43,352 
Income tax provision(5,337)(21,971)(10,340)(28,252)
Net income$14,319 $8,059 $39,189 $15,100 
Earnings per share attributable to stockholders:
Basic earnings per share$0.52 $0.29 $1.40 $0.54 
Diluted earnings per share$0.52 $0.28 $1.38 $0.53 



ZAGG INC AND SUBSIDIARIES
RECONCILIATION OF NON-U.S. GAAP FINANCIAL INFORMATION TO U.S. GAAP
(in thousands)
(Unaudited)
UNAUDITED SUPPLEMENTAL DATA 
The following are not financial measures under United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”). In addition, these measures should not be construed as alternatives to any other measures of performance determined in accordance with U.S. GAAP, or as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities as there may be significant factors or trends that they fail to address. We present this financial information because we believe that it is helpful to some investors as measures of our operations. We caution investors that non-U.S. GAAP financial information, by its nature, departs from traditional accounting conventions; accordingly, its use can make it difficult to compare our results with our results from other reporting periods and with the results of other companies.
Adjusted EBITDA Reconciliation For the Three Months Ended
December 31,
 		For the Years Ended
December 31, 
2018201720182017
Net income in accordance with U.S. GAAP $14,319 $8,059 $39,189 $15,100 
Adjustments: 
a. Stock-based compensation expense 844 1,067 3,009 3,602 
b. Depreciation and amortization 4,959 5,382 18,288 21,888 
c. Impairment of intangible asset — — — 1,959 
d. Other expense (income), net 672 (76)2,167 1,383 
e. Inventory step up expense 108 — 179 — 
f. Transaction costs 1,042 (611)1,678 — 
g. mophie restructuring charges — — — 437 
h.mophie employee retention bonus — — — 346 
i. BRAVEN employee retention bonus 77 — 77 — 
j. CFO retention bonus 366 — 366 — 
k. CEO signing bonus 400 — 400 — 
l. Consulting fees to former CEO — — 700 — 
m. Income tax provision 5,337 21,971 10,340 28,252 
Total Adjustments 13,805 27,733 37,204 57,867 
Adjusted EBITDA $28,124 $35,792 $76,393 $72,967 





Diluted Operating Earnings per Share Reconciliation For the Three Months Ended
December 31, 		For the Years Ended
December 31, 
2018 2017 2018 2017 
Net income in accordance with U.S. GAAP $14,319 $8,059 $39,189 $15,100 
Adjustments: 
a. Amortization expense related to acquisitions of BRAVEN and Gear4 705 — 792 — 
b. Transaction costs related to acquisitions of BRAVEN, Gear4 and HALO 1,042 — 1,678 — 
c. Inventory step-up amortization related to acquisitions of BRAVEN and Gear4 108 — 179 — 
Total adjustments before tax 1,855 — 2,649 — 
Tax effect1
(502)— (716)— 
Adjustments, net of tax 1,353 — 1,933 — 
Adjusted net income 15,672 8,059 41,122 15,100 
Diluted shares outstanding 28,258 28,781 28,500 28,407 
Diluted operating earnings per share $0.55 $0.28 $1.44 $0.53 

1 Income tax effect calculated using the 2018 statutory rate of 27.04%