Form 8-K Ubiquiti Networks, Inc. For: May 10

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May 10, 2019 7:41 AM EDT

 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 10, 2019 
UBIQUITI NETWORKS, INC.
(Exact name of registrant as specified in its charter)
001-35300 Delaware 32-0097377
(Commission
File Number)
 (State or jurisdiction of incorporation) 
(I.R.S. Employer
Identification No.)
685 Third Avenue, 27th Floor
New York, New York 10017
(Address of principal executive offices, including zip code)
(646) 780-7958
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging Growth Company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. [ ]
Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareUBNTNASDAQ Global Select Market





Item 2.02Results of Operations and Financial Condition.

On May 10, 2019, Ubiquiti Networks, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 31, 2019. A copy of the press release is attached hereto as Exhibit 99.1.

The Company hereby furnishes the information relating to its financial results for the fiscal quarter ended March 31, 2019 set forth in the press release issued on May 10, 2019 and which is incorporated herein by reference. This information is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended (the “Securities Act”), in each case, whether made before or after the date hereof, regardless of any general incorporation language in such filing. Other documents filed with the Securities and Exchange Commission (the “SEC”) shall not incorporate this information by reference, except as otherwise expressly stated in such filing.

Item 9.01Financial Statements and Exhibits.
(d) Exhibits
Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall Exhibit 99.1 be deemed incorporated by reference into any filing of the Company under the Securities Act, in each case, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as expressly set forth in such filing.
Forward Looking Statements
Certain statements in this Current Report on Form 8-K are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements other than statements of historical fact including words such as “look”, “will”, “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “consider” and “plan” and statements in the future tense are forward looking statements. The statements in this Current Report on Form 8-K that could be deemed forward-looking statements include statements regarding expectations for financial results for the full fiscal year 2019 and statements regarding expectations of the impact of tariffs, expected impact of taxes on our liquidity and results of operations, our cash position, expenses, days' sales outstanding in accounts receivable, number of distributors and resellers, shipments, the introduction of new consumer products, gross margin, research and development, sales, general and administrative expenses, tax rates, inventory turns, growth opportunities, demand and long term global environment for our products, new products, and financial performance estimates including revenues and GAAP diluted EPS for the Company’s full fiscal year 2019, and any statements or assumptions underlying any of the foregoing.
Forward-looking statements are subject to certain risks and uncertainties that could cause our actual future results to differ materially, or cause a material adverse impact on our results. Potential risks and uncertainties include, but are not limited to, the impact of US tariffs on results, fluctuations in our operating results; varying demand for our products due to the financial and operating condition of our distributors and their customers, and distributors’ inventory management practices; political and economic conditions and volatility affecting the stability of business environments, economic growth, currency values, commodity prices and other factors that may influence the ultimate demand for our products in particular geographies or globally; impact of counterfeiting and our ability to contain such impact; our reliance on a limited number of distributors; inability of our contract manufacturers and suppliers to meet our demand; our dependence on Qualcomm Atheros for chipsets without a short-term alternative; as we move into new markets competition from certain of our current or potential competitors who may be more established in such markets; our ability to keep pace with technological and market developments; success and timing of new product introductions by us and the performance of our products generally; our ability to effectively manage the significant increase in our transactional sales volumes; we may become subject to warranty claims, product liability and product recalls; that a substantial majority of our sales are into countries outside the United States and we are subject to numerous U.S. export control and economic sanctions laws; costs related to responding to government inquiries related to regulatory compliance; our reliance on the Ubiquiti Community; our reliance on certain key members of our management team,


including our founder and chief executive officer, Robert J. Pera; adverse tax-related matters such as tax audits, changes in our effective tax rate or new tax legislative proposals; whether the final determination of our income tax liability may be materially different from our income tax provisions; the impact of any intellectual property litigation and claims for indemnification; litigation related to U.S. Securities laws; and economic and political conditions in the United States and abroad. We discuss these risks in greater detail under the heading “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended June 30, 2018, and subsequent filings filed with the U.S. Securities and Exchange Commission (the “SEC”), which are available at the SEC's website at www.sec.gov. Copies may also be obtained by contacting the Ubiquiti Networks Investor Relations Department, by email at IR@ubnt.com or by visiting the Investor Relations section of the Ubiquiti Networks website, http://ir.ui.com. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date made. Except as required by law, Ubiquiti Networks undertakes no obligation to update information contained herein. You should review our SEC filings carefully and with the understanding that our actual future results may be materially different from what we expect.



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
  UBIQUITI NETWORKS, INC.
May 10, 2019 By: /s/ Robert J. Pera
 Name: Robert J. Pera
 Title: Chief Executive Officer


EXHIBIT INDEX
 
Exhibit Number
  Description
99.1   Press release of Ubiquiti Networks, Inc. dated May 10, 2019
Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall Exhibit 99.1 be deemed incorporated by reference into any filing of the Company under the Securities Act, in each case, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as expressly set forth in such filing.



Exhibit 99.1
 
image1.jpg

UBIQUITI NETWORKS REPORTS THIRD QUARTER FISCAL 2019 FINANCIAL RESULTS
~ Revenues of $284.9 million~

New York, NY - May 10, 2019 - Ubiquiti Networks, Inc. (NASDAQ: UBNT) (“Ubiquiti” or the “Company”) today announced results for the third quarter fiscal 2019, ended March 31, 2019.
Third Quarter Fiscal 2019 Financial Highlights
•Revenues of $284.9 million, increasing 13.8% year-over-year
•GAAP net income of $88.3 million and GAAP diluted EPS of $1.25
•Non-GAAP net income of $88.9 million and non-GAAP diluted EPS of $1.26, increasing 28.6% year-over-year
Additional Highlights
•The Company repurchased and retired 91,249 shares of common stock for $9.0 million at an average price of $98.63 per share during the third quarter fiscal 2019.
•The Company has $178.2 million of availability remaining under the $200 million share repurchase program announced on November 9, 2018.
•The Company's Board of Directors declared a $0.25 per share cash dividend payable on May 28, 2019 to shareholders of record at the close of business on May 20, 2019.

Financial Highlights ($, in millions, except per share data)
Income statement highlightsF3Q19F2Q19F3Q18
Revenues284.9 307.3 250.4 
Service Provider Technology109.4 113.2 100.9 
Enterprise Technology175.5 194.1 149.5 
Gross profit132.8 140.2 114.5 
Gross Profit (%)46.6%  45.6%  45.7%  
Total Operating Expenses30.7 48.6 29.6 
Income from Operations102.1 91.7 84.9 
GAAP Net Income88.3 77.8 102.7 
GAAP EPS (diluted)1.25 1.09 1.32 
Non-GAAP Net Income88.9 95.1 76.0 
Non-GAAP EPS (diluted)1.26 1.33 0.98 




Ubiquiti Networks, Inc.
Revenues by Product Type (In thousands)
(Unaudited)
 Three Months Ended March 31,Nine Months Ended March 31,
 2019201820192018
Service Provider Technology$109,379 $100,892 $327,558 $340,659 
Enterprise Technology175,532 149,512 547,534 406,424 
Total revenues$284,911 $250,404 $875,092 $747,083 

Ubiquiti Networks, Inc.
Revenues by Geographical Area
(In thousands)
(Unaudited)
 Three Months Ended March 31,Nine Months Ended March 31,
 2019201820192018
North America$109,135 $94,800 $349,740 $285,927 
South America22,976 19,882 58,059 71,681 
Europe, the Middle East and Africa125,662 113,738 384,985 309,078 
Asia Pacific27,138 21,984 82,308 80,397 
Total revenues$284,911 $250,404 $875,092 $747,083 
Income Statement Items
Revenues
Revenues for the third quarter fiscal 2019 were $284.9 million, representing a decrease from the prior quarter of 7.3% and an increase from the comparable prior year period of 13.8%. Revenues for the first nine months of fiscal 2019 were $875.1 million, representing an increase of 17.1% from the first nine months of fiscal 2018.
We believe the sequential decline in revenues for the third quarter fiscal 2019 is primarily due to distributor ordering patterns and as described in the “Outlook” section below, we expect to achieve revenues for the fiscal year ending June 30, 2019 at the high end of the guidance range previously provided.   
Gross Margins
During the third quarter fiscal 2019, GAAP gross profit was $132.8 million. GAAP gross margin of 46.6% increased 0.9% versus the comparable prior year period GAAP gross margin of 45.7% and increased 1.0% versus the prior quarter GAAP gross margin of 45.6%.  
The increase in gross margin as a percentage of revenue for the third quarter fiscal 2019 as compared to the comparable prior year period was driven by the mix of products sold and offset, in part, by higher indirect expenses. The increase in gross margin as a percentage of revenue for the third quarter fiscal 2019 as compared to the second quarter fiscal 2019 was driven by the mix of products sold and lower indirect expenses.
We expect to incur costs as a result of tariffs on certain products imported into the U.S. from China. However, we anticipate mitigating the effect of the tariffs in the long-term and therefore our long-term gross margins are expected to remain between 45% to 50%
Research and Development
During the third quarter fiscal 2019, research and development (R&D) expenses were $21.3 million. This reflects an increase as compared to the R&D expenses of $17.4 million in the comparable prior year period and R&D expense of $20.0 million in the prior quarter.
Increased costs in third quarter fiscal 2019 as compared to both the prior year period and prior quarter is primarily driven by higher employee-related expenses. R&D expenses represented 7.5% of revenues in the third quarter fiscal 2019, which is in line with the Company's target model range of 6% to 8%.
Sales, General and Administrative
The Company’s sales, general and administrative (“SG&A”) expenses for the third quarter fiscal 2019 were $9.4 million. This reflects a decrease as compared to the SG&A expenses of $12.2 million in the comparable prior year period and SG&A expenses of $10.6 million in the prior quarter. The decrease in SG&A costs as compared to the prior year period was primarily related to lower professional fees and lower employer payroll taxes associated with tax withholding related to settlement of equity awards recorded in the third quarter fiscal 2018. The decrease in SG&A costs as compared to the prior quarter was primarily related to lower professional fees. 
SG&A expenses represented 3.3% of revenues in the third quarter fiscal 2019, which is in line with the Company’s target model range of 3% to 5%.
Taxes
The GAAP effective tax rate was 11.4% for the nine months ended March 31, 2019. For long-term planning purposes, we assume a target effective tax rate of 11% to 14%.
Net Income and Earnings Per Share
During the third quarter fiscal 2019, GAAP net income was $88.3 million and non-GAAP net income was $88.9 million. This reflects an increase in non-GAAP net income from the comparable prior year period by 16.9%, primarily driven by a 13.8% increase in revenues and a higher gross margin.
During the third quarter fiscal 2019, GAAP earnings per diluted share were $1.25 and non-GAAP earnings per diluted share were $1.26. This reflects an increase in non-GAAP earnings per diluted share from the comparable prior year period by 28.6%, primarily driven by higher non-GAAP net income and a reduction in non-GAAP diluted shares outstanding.
Balance Sheet Items
Cash and Investments
Total cash and cash equivalents were $310.3 million as of March 31, 2019 compared with $666.7 million as of June 30, 2018. In addition, as of March 31, 2019, we held $102.0 million in available-for-sale securities. During the third quarter fiscal 2019, the Company repurchased 91,249 shares of common stock for $9.0 million at an average price of $98.63 per share.
DSOs
This quarter the Company experienced a decline in days sales outstanding (DSOs) in accounts receivable of 51 days, as compared with 52 days in the second quarter fiscal 2019.
Inventory
Finished goods inventory as of March 31, 2019 was $276.7 million, representing an increase of $25.0 million from December 31, 2018 and an increase of $180.0 million from June 30, 2018. Finished goods inventory increased during both periods due to increased production of inventory to satisfy expected demand for our products. We expect to manage our finished goods inventory to meet demand, reduce lead times and secure supply.
Cash Flow Statement Items
The Company’s net cash flow from operations for the nine months ended March 31, 2019 was $158.3 million, compared with a net cash flow from operations of $285.1 million for the comparable prior year period. The $126.9 million decrease in operating cash flow for the nine months ended March 31, 2019 as compared with the comparable prior year period was primarily driven by the net impact of increased inventory and the corresponding payables, partially offset by higher net income. For the nine months ended March 31, 2019, the Company used $400.7 million of cash for financing activities, which was driven by $328.1 million in stock repurchases and $53.8 million in cash dividend payments.
Outlook
Based on recent business trends, the Company expects to achieve results at the high end of the guidance range previously provided for the full fiscal year ending June 30, 2019.
About Ubiquiti Networks
Ubiquiti Networks is focused on democratizing network technology on a global scale — aggregate shipments of nearly 85 million devices play a key role in creating networking infrastructure in over 200 countries and territories around the world. Our professional networking products are powered by our UNMS and UniFi software platforms to provide high-capacity distributed Internet access and unified information technology management, respectively.
Ubiquiti and the U logo are trademarks or registered trademarks of Ubiquiti and/or its affiliates in the United States and other countries. For more information, please visit www.ui.com.
Investor Relations Contact
Laura Kiernan
High Touch Investor Relations
laura.kiernan@ubnt.com
Ph. 1-914-598-7733
Safe Harbor for Forward Looking Statements
Certain statements in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements other than statements of historical fact including words such as “look”, "will", “anticipate”, “believe”, “estimate”, “expect”, "forecast", “consider” and “plan” and statements in the future tense are forward looking statements. The statements in this press release that could be deemed forward-looking statements include statements regarding expectations for financial results for the full fiscal year 2019, and statements regarding expectations of the impact of tariffs, expected impact of taxes on our liquidity and results of operations, our cash position, expenses, DSOs, number of distributors and resellers, shipments, the introduction of new consumer products, Gross Margins, R&D, SG&A, tax rates, inventory turns, growth opportunities, demand and long term global environment for our products, new products, and financial performance estimates including revenues and GAAP diluted EPS for the Company's full fiscal year 2019, and any statements or assumptions underlying any of the foregoing.
Forward-looking statements are subject to certain risks and uncertainties that could cause our actual future results to differ materially or cause a material adverse impact on our results. Potential risks and uncertainties include, but are not limited to, the impact of U.S. tariffs on results, fluctuations in our operating results; varying demand for our products due to the financial and operating condition of our distributors and their customers, and distributors' inventory management practices; political and economic conditions and volatility affecting the stability of business environments, economic growth, currency values, commodity prices and other factors that may influence the ultimate demand for our products in particular geographies or globally; impact of counterfeiting and our ability to contain such impact; our reliance on a limited number of distributors; inability of our contract manufacturers and suppliers to meet our demand; our dependence on Qualcomm Atheros for chipsets without a short-term alternative; as we move into new markets competition from certain of our current or potential competitors who may be more established in such markets; our ability to keep pace with technological and market developments; success and timing of new product introductions by us and the performance of our products generally; our ability to effectively manage the significant increase in our transactional sales volumes; we may become subject to warranty claims, product liability and product recalls; that a substantial majority of our sales are into countries outside the United States and we are subject to numerous U.S. export control and economic sanctions laws; costs related to responding to government inquiries related to regulatory compliance; our reliance on the Ubiquiti Community; our reliance on certain key members of our management team, including our founder and chief executive officer, Robert J. Pera; adverse tax-related matters such as tax audits, changes in our effective tax rate or new tax legislative proposals; whether the final determination of our income tax liability may be materially different from our income tax provisions; the impact of any intellectual property litigation and claims for indemnification; litigation related to U.S. Securities laws; and economic and political conditions in the United States and abroad. We discuss these risks in greater detail under the heading “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended June 30, 2018, and subsequent filings filed with the U.S. Securities and Exchange Commission (the “SEC”), which are available at the SEC's website at www.sec.gov. Copies may also be obtained by contacting the Ubiquiti Networks Investor Relations Department, by email at IR@ubnt.com or by visiting the Investor Relations section of the Ubiquiti Networks website, http://ir.ui.com.
Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date made. Except as required by law, Ubiquiti Networks undertakes no obligation to update information contained herein. You should review our SEC filings carefully and with the understanding that our actual future results may be materially different from what we expect.

Ubiquiti Networks, Inc.
Condensed Consolidated Statements of Operations
and Comprehensive Income
(In thousands, except per share data) (Unaudited)
 Three Months Ended March 31,Nine Months Ended March 31,
  
2019201820192018
Revenues$284,911 $250,404 $875,092 $747,083 
Cost of revenues152,081 135,928 470,425 424,052 
Gross profit$132,830 $114,476 $404,667 $323,031 
Operating expenses:
Research and development21,341 17,420 59,540 54,816 
Sales, general and administrative9,352 12,186 33,715 30,203 
Litigation settlement— — 18,000 — 
Total operating expenses30,693 29,606 111,255 85,019 
Income from operations102,137 84,870 293,412 238,012 
Interest expense and other, net(3,447)(4,681)(9,186)(8,534)
Income before income taxes98,690 80,189 284,226 229,478 
Income tax expense (benefit)10,390 (22,550)32,427 103,274 
Net income$88,300 $102,739 $251,799 $126,204 
Net income per share of common stock:
Basic$1.25 $1.34 $3.50 $1.61 
Diluted$1.25 $1.32 $3.50 $1.58 
Weighted average shares used in computing net income per share of common stock:
Basic70,540 76,782 71,856 78,200 
Diluted70,692 77,953 72,036 79,661 
Other comprehensive income:
Unrealized gains on available-for-sale securities325 — 177 — 
Comprehensive income$88,625 $102,739 $251,976 $126,204 




Ubiquiti Networks, Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands, except per share data)
(Unaudited)
 Three Months EndedNine Months Ended March 31,
 March 31, 2019December 31, 2018March 31, 201820192018
Net Income$88,300 $77,796 $102,739 $251,799 $126,204 
Stock-based compensation:
Cost of revenues26 261 39 320 324 
Research and development555 497 527 1,519 1,353 
Sales, general and administrative171 21 166 467 747 
Net Tax Benefits related to Equity Awards Exercises and Vesting— — (27,419)— (28,188)
Tax Reform Transition Tax— 2,765 — 2,765 112,798 
Litigation settlement— 18,000 — 18,000 — 
SEC Related matters— — 317 — 317 
Tax effect of Non-GAAP adjustments(177)(4,200)(325)(4,617)(932)
Non-GAAP net income$88,875 $95,140 $76,044 $270,253 $212,623 
Non-GAAP diluted EPS$1.26 $1.33 $0.98 $3.75 $2.68 
Shares outstanding (Diluted)70,692 71,406 77,953 72,036 79,661 
Share adjustment (ASU 2016-09 Adoption)— — (346)— (433)
Weighted-average shares used in Non-GAAP diluted EPS70,692 71,406 77,607 72,036 79,228 
Use of Non-GAAP Financial Information
To supplement our condensed consolidated financial results prepared under generally accepted accounting principles, or GAAP, we use non-GAAP measures of net income and earnings per diluted share that are adjusted to exclude certain costs, expenses and gains such as stock-based compensation expense, net tax benefits related to equity awards exercises and vesting, unusual litigation settlements, SEC related matters, Tax Reform Transition Tax and the tax effects of these non-GAAP adjustments.
Reconciliations of the adjustments to GAAP results for the periods presented are provided above. In addition, an explanation of the ways in which management uses non-GAAP financial information to evaluate its business, the substance behind management's decision to use this non-GAAP financial information, material limitations associated with the use of non-GAAP financial information, the manner in which management compensates for those limitations, and the substantive reasons management believes that this non-GAAP financial information provides useful information to investors is included under the paragraphs below.
A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis due to the high variability and low visibility with respect to the charges which are excluded from these non-GAAP measures. For example, share-based compensation expense is impacted by the Company’s future price at which the Company’s stock will trade in those future periods. The items that are being excluded are difficult to predict and a reconciliation could result in disclosure that would be imprecise or potentially misleading. Material changes to any one of these items could have a significant effect on our guidance and future GAAP results. Certain exclusions, such as share-based compensation expenses, are generally incurred each quarter, but the amounts have historically and may continue to vary significantly from quarter to quarter.
Usefulness of Non-GAAP Financial Information to Investors
We believe that the presentation of non-GAAP net income and non-GAAP earnings per diluted share provides important supplemental information regarding non-cash expenses, significant items that we believe are important to understanding our financial, and business trends relating to our financial condition and results of operations. Non-GAAP net income and non-GAAP earnings per diluted share are among the primary indicators used by management as a basis for planning and forecasting future periods and by management and our board of directors to determine whether our operating
performance has met specified targets and thresholds. Management uses non-GAAP net income and non-GAAP earnings per diluted share when evaluating operating performance because it believes that the exclusion of the items described below, for which the amounts or timing may vary significantly depending upon the Company's activities and other factors, facilitates comparability of the Company's operating performance from period to period. We have chosen to provide this information to investors so they can analyze our operating results in the same way that management does and use this information in their assessment of our business and the valuation of our Company.
About our Non-GAAP Net Income and Non-GAAP Earnings per Diluted Share
We compute non-GAAP net income and non-GAAP earnings per diluted share by adjusting GAAP net income and GAAP earnings per diluted share to remove the impact of certain adjustments and the tax effect of those adjustments. Items excluded from net income are:

•Stock-based compensation expense
•Net Tax Benefits related to Equity Awards Exercises and Vesting
•Litigation settlement
•Tax Reform Transition Tax
•SEC Related matters
•Tax effect of non-GAAP adjustments, applying the principles of ASC 740

These non-GAAP measures are not in accordance with, or an alternative to, GAAP and may be materially different from other non-GAAP measures, including similarly titled non-GAAP measures used by other companies. The presentation of this additional information should not be considered in isolation from, as a substitute for, or superior to, net income or earnings per diluted share prepared in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results.
For more information on the non-GAAP adjustments, please see the table captioned “Reconciliation of GAAP Net Income to Non-GAAP Net Income” included in this press release.
Ubiquiti Networks, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)
March 31, 2019
June 30, 2018 (1)
Assets
Current assets:
Cash and cash equivalents$310,264 $666,681 
Investments — short-term61,325 — 
Accounts receivable, net159,867 174,521 
Inventories279,924 102,220 
Vendor deposits 23,721 39,029 
Prepaid income taxes3,533 — 
Prepaid expenses and other current assets22,513 18,901 
Total current assets861,147 1,001,352 
Property and equipment, net13,412 14,328 
Deferred tax assets — long-term3,106 3,106 
Investments — long-term40,668 — 
Other long-term assets12,216 3,791 
Total assets$930,549 $1,022,577 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$91,437 $14,098 
Income taxes payable14,751 5,780 
Debt — short-term27,550 24,425 
Other current liabilities37,331 68,613 
Total current liabilities171,069 112,916 
Income taxes payable — long-term123,034 127,719 
Debt — long-term438,926 460,352 
Other long-term liabilities9,420 5,842 
Total liabilities742,449 706,829 
Stockholders’ equity:
Common Stock71 74 
Additional paid–in capital769 393 
Accumulated other comprehensive income177 — 
Retained earnings187,083 315,281 
Total stockholders’ equity188,100 315,748 
Total liabilities and stockholders’ equity$930,549 $1,022,577 
(1) Derived from audited consolidated financial statements as of and for the fiscal year ended June 30, 2018.










Ubiquiti Networks, Inc.
Condensed Consolidated Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended March 31,
20192018
Cash Flows from Operating Activities:
Net income$251,799 $126,204 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization5,474 5,069 
Amortization of debt issuance costs836 473 
Premium amortization and (discount accretion), net(555)— 
Write off unamortized debt issuance costs— 489 
Provision for inventory obsolescence2,995 2,447 
Provision/(recovery) for loss on vendor deposits2,333 15,050 
Stock-based compensation2,306 2,423 
Deferred Taxes— 2,300 
Other, net(399)148 
Changes in operating assets and liabilities:
Accounts receivable14,888 (17,902)
Inventories(180,749)46,462 
Vendor deposits16,170 (4,076)
Prepaid income taxes(3,533)(10,332)
Prepaid expenses and other assets(4,576)(6,850)
Accounts payable77,362 23,012 
Income taxes payable4,286 102,293 
Deferred revenues8,687 1,531 
Accrued and other liabilities(39,070)(3,632)
Net cash provided by operating activities158,254 285,109 
Cash Flows from Investing Activities:
Purchase of property and equipment and other long-term assets(7,701)(7,318)
Private equity investment(5,000)— 
Purchase of investments(200,791)— 
Proceeds from sale of investments69,670 — 
Proceeds from maturities of investments29,831 — 
Net cash (used in) investing activities(113,991)(7,318)
Cash Flows from Financing Activities:
Proceeds from borrowing under the Second Amended & Restated Facility - Term— 500,000 
Proceeds from borrowing under the Amended Credit Facility- Revolver— 218,500 
Repayment against Amended Credit Facility- Revolver— (399,500)
Repayment against Credit Facility(18,750)(82,500)
Debt Issuance Costs — (5,186)
Repurchases of common stock(328,078)(381,883)
Payment of common stock cash dividends(53,770)— 
Proceeds from exercise of stock options810 1,118 
Tax withholdings related to net share settlements of stock options— (40,622)
Tax withholdings related to net share settlements of restricted stock units(892)(1,110)
Net cash (used in) provided by financing activities(400,680)(191,183)
Net (decrease) increase in cash and cash equivalents(356,417)86,608 
Cash and cash equivalents at beginning of period666,681 604,198 
Cash and cash equivalents at end of period$310,264 $690,806 
Supplemental Disclosure of Cash Flow Information:
Income taxes paid, net of refunds$31,284 $18,944 
Interest paid$18,228 $9,955 
Non-Cash Investing and Financing Activities:
Unpaid stock repurchases$— $21,984 
Unpaid property and equipment and other long-term assets$120 $180 
Net unsettled investment purchases, sales and maturities$(29)$— 

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