Universal Electronics Reports Fourth Quarter and Year-End 2006 Financial Results

Universal Electronics Reports Fourth Quarter and Year-End 2006 Financial Results

Company Provides 2007 Guidance: Net Sales to Grow 10% to 15% Compared to 2006 and EPS to Grow 21% to 31% Compared to 2006

Leading wireless technology developer Universal Electronics Inc. (UEI) (NASDAQ:UEIC) today announced financial results for the fourth quarter and year ended December 31, 2006.

“Business and Consumer Category net sales grew significantly for the fourth quarter 2006 as compared to the fourth quarter of 2005 — a great finish to what was the strongest year ever for UEI,” stated Paul Arling, UEI’s chairman and chief executive officer. “Our Business Category remains robust and the successful launch of new products and traction in our CEDIA efforts drove Consumer Category up significantly in the fourth quarter. We anticipate building upon these trends in 2007; in fact, we have already done so with our announcement of our expanded agreement with VIZIO. We are projecting full year 2007 revenue to grow 10 percent to 15 percent over full year 2006, as we deliver solutions to simplify the ever increasingly complex home and continue to create innovative technologies to enhance our customers’ businesses.”

It is important to note the adjusted figures used throughout this press release are included as management believes they provide a more meaningful measure of quarter-over-quarter and year-over-year financial performance. A formal definition of adjusted figures and table reconciling generally accepted accounting principles (GAAP) amounts to adjusted figures are included in this press release.

Financial Results: Fourth Quarter 2006 Compared to Fourth Quarter 2005
Net sales were $69.7 million, compared to $49.3 million.
The Business Category contributed 71 percent of total net sales and the Consumer Category contributed 29 percent, compared to 67 and 33 percent, respectively.
Gross margins were 37.6 percent, compared to 36.2 percent in the third quarter 2006 and 37.9 percent in last year’s fourth quarter.
Operating income was $6.7 million, compared to $5.3 million.
Net income for the 2006 fourth quarter was $5.4 million, or $0.37 per diluted share, compared to $3.5 million, or $0.25 per diluted share, for the fourth quarter of 2005.
Adjusted operating income was $7.3 million in the current quarter, excluding $625,000 in stock based compensation expense, compared to adjusted operating income of $5.3 million for the same quarter last year.
Adjusted net income for the 2006 fourth quarter was $5.8 million, or $0.40 per diluted share, which excludes stock based compensation charges, compared to $3.7 million, or $0.27 per diluted share, for the same period last year.

Financial Results: Full Year 2006 Compared to Full Year 2005
Net sales were $235.8 million, compared to $181.3 million.
Net income was $13.5 million, or $0.94 per diluted share, compared to $9.7 million, or $0.69 per diluted share.
Adjusted net income for the full year 2006 was $15.3 million, or $1.06 per diluted share, compared to $11.3 million, or $0.81 per diluted share, for the full year 2005.

Financial Outlook

For the first quarter of 2007, net sales are expected to range between $61.5 million and $64.5 million, compared to $54.2 million in the first quarter of 2006. Gross margins for the first quarter of 2007 are expected to be approximately 37 percent of sales plus or minus one point. GAAP earnings per diluted share are expected to range from $0.25 to $0.29, compared to $0.15 per diluted share in the first quarter of 2006.

For the full year 2007, net sales are expected to range between $260 million and $271 million, reflecting growth of 10 percent to 15 percent over last year. GAAP EPS is expected to be between $1.13 per diluted share and $1.23 per diluted share, compared to $0.94 per diluted share for 2006.

UEI’s Recent Highlights:
VIZIO selected UEI to supply the universal remote control solution for its newest line of VIZIO large format plasma televisions, scheduled to be released in 2007. This relationship, announced on February 21st, builds on UEI’s status as the primary supplier of remote control devices for VIZIO’s 2006 range of solutions.
UEI and iMerge integrated NevoSL TM with the iMerge SoundServer S3000 hard disk audio system, as announced on January 29th. This further enhances the value both companies’ products offer to consumers and dealers.
Denon selected UEI to develop an advanced two-way interactive remote control to be distributed in United States, Europe and Asia in early 2007, as announced on January 4th.

Conference Call Information:

UEI’s management team will hold a conference call today, Thursday February 22, 2007 at 1:30 p.m. Pacific Time to review year-end results and hold a question and answer session for callers. To participate call 1-800-622-9917 ten minutes prior to start time. International dialers call 1-706-645-0366. The live call can also be accessed via the Internet through UEI’s Web site at www.uei.com. If you are unable to participate, a replay will be available beginning at 7:30 p.m. Eastern Time on February 22, 2007 until 11:59 p.m. Eastern Time on February 26, 2007. To access, please dial 1-800-642-1687 and international 706-645-9291, reservation number 8119270. The webcast replay will be available at www.uei.com.

About Universal Electronics Inc.

Founded in 1986, Universal Electronics Inc. (UEI) is the global leader in wireless control technology for the connected home. UEI designs, develops, and delivers innovative solutions that enable consumers to control entertainment devices, digital media, and home systems. The company’s broad portfolio of patented technologies and database of infrared control software have been adopted by many Fortune 500 companies in the consumer electronics, subscription broadcast, and computing industries. UEI sells and licenses wireless control products through distributors and retailers under the One For All® brand name. UEI also delivers complete home control solutions in the professional custom installation market under the brand name Nevo®, as well as software solutions for digital media control and enjoyment in the consumer and OEM markets under the brand SimpleCenter™.