Good afternoon. My name is Stephanie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Universal Electronics' First Quarter 2012 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Becky Herrick of LHA. Please go ahead.

Thank you, Stephanie, and good afternoon everyone. Thank you for joining us for the Universal Electronics' 2012 First Quarter Conference Call. By now, you should have received a copy of the press release. If you have not, please contact LHA at (415) 433-3777, and we will forward you a copy. This call is being broadcast live over the internet. A webcast replay will be available for 1 year at www.uei.com. Also, any additional updated material non-public information that might be discussed during this call will be provided on the company’s website, where it will be retained for at least 1 year. You may also access that information by listening to the webcast replay. After reading a short Safe Harbor statement, I will turn the call over to management. During the course of this conference call, management may make projections or other forward-looking statements regarding future events and the future financial performance of the company, including: the benefits the company anticipates as a result of continued growth on average of TV sales and household TV viewing habits; the continued growth in a subscription broadcasting business; it's continued development of new and innovative products and technologies, including the UEI QuickSet technologies and its solutions for smartphones and tablets that are accepted by and meet the needs of its customers and consumers; the company’s ability to successfully anticipate the needs and demands of the consumer with respect to new and more advanced products and technologies; the continued strong relationships with the company’s existing customers; the ability of the company to attract and retain new customers; the benefits the company expects via the growth of new markets in certain geographic areas, including Latin America, Brazil, and Eastern Europe, including Russia; the strength of the company’s financial position and its ability to manage its operating…

Thank you, Becky, and welcome everyone. There were several positive trends this quarter including the continued growth in subscription broadcasting, stronger sales from our consumer category, and our international expansion efforts. However, our first quarter 2012 results were impacted by lighter than expected sales to our consumer electronics customers. As a result, our revenue and adjusted pro forma net income were at the low range of our expectation. While consumer electronics products maybe going through a down period right now, throughout history, the face of television has evolved multiple times from black and white to color, from analog to digital, and from standard definition to high definition, all while keeping television as the nucleus of the home entertainment setup. I think it’s important at this point to address this specific issue regarding the future of television, which has been covered in the media over the past few months. The prediction forwarded in these reports is that television as we know it will cease to be as it is to be replaced by computers, tablets or other digital devices. First, for several years now, the average screen size of TVs sold across the world has grown. Just over the past 2 years, the average screen size globally has grown about 5% per year continuing, a long-term trend in consumer demand towards larger screen sizes. Given this trend of wanting to enjoy your entertainment on larger screen formats, it seems that laptops, tablets and the like will never replace, but rather supplement the consumers' media consumption needs. Further, consumers are watching more television now than at any time in history, despite predictions 10 years ago that TV watching would dramatically fall. Nielsen research shows that the average hours of TV watching in the U.S. has increased 4 hours per day per person…

Thanks, Paul. As a reminder, our first quarter 2012 and first quarter 2011 results will referenced adjusted pro forma metrics. First quarter 2012 net sales were $103.7 million compared to $105.7 million for the first quarter of 2011. Business category net sales were $92.4 million compared to the first quarter of 2011 net sales of $95.3 million. Our consumer category net sales were $11.3 million compared to the first quarter of 2011 net sales of $10.4 million. Gross profit for the first quarter was $28.6 million or 27.6% of sales compared to the gross margin of 26.4% in the first quarter of 2011. As a reminder, in the first quarter 2011, we experienced a temporal shortage of labor at our factories in China, which resulted in manufacturing inefficiencies as well as fewer units produced internally versus by third-party manufactures. This issue is rectified in the second quarter of 2011 and has subsequently not been an issue. Total operating expenses were $24.8 million compared to $24.4 million in the first quarter of 2011. Breaking down our operating expenses, R&D expense was $3.5 million compared to $3.2 million in the first quarter of 2011. SG&A expenses were $21.3 million compared to $21.2 million in the first quarter of 2011. Operating income was $3.8 million in the first quarter of 2012 compared to $3.4 million in the first quarter of 2011. The effective tax rate was 18% in the first quarter of 2012 compared to 22.1% in the first quarter of 2011. Net income for the first quarter of 2012 was $2.8 million or $0.19 per diluted share compared to $2.6 million or $0.17 per diluted in the first quarter of 2011. Now turning to our cash flow and balance sheet review. At March 31, 2012, we ended the quarter with cash and…

Thanks, Bryan. While there are short-term challenges, our long-term outlook is positive. We continue to focus on our strategy to invest in innovation. We are confident in our ability to introduce the products and technologies that apply to the many changing options and features in home entertainment devices and content. We will also continue to expand and invest in regions that show promising market opportunities. Our efforts are aligned to our ultimate mission to supply the technologies and solutions that simplify and connect the increasingly complex and ever changing home entertainment environment. Stay tuned. I will now open the call up for Q&A. Stephanie?

[Operator Instructions] Your first question comes from the line of Jason Ursaner with CJS Securities.

Just looking at the full year sales guidance reduction, you talked about a lot of positive things. So I guess, what is it about -- I’m assuming it's the consumer electronic side -- but what have you seen that is worse than where we were sort of at the end of the year when you provided the original range?

Well, the sales of the consumer electronics product, the forecast we’re hearing from customers are less than what we had predicted or what we were in discussions with them, and again, we talked about this in the past. We use macroeconomic forecasts as well as micro forecasts from customers and what we’re hearing now is that the expectation of sales throughout this year is going to be worse. Particularly in consumer-centric economies, places like Japan where it will be particularly bad -- the forecast is anyway -- U.S. and Western Europe. So the sale of consumer electronic products -- again, this is being somewhat offset by growth in subscription broadcast. We’ve actually taken in some new customers and the demand there seems to be pretty steady and good. And the consumer business, while small here at UEI, also has picked up. So the -- every part of the business was a bright spot with the exception of the consumer electronics, and the forecast from our customers and from the market have gotten worse than they were 3 months ago.

Okay. And just for Bryan, you guys paid down a little bit of the debt. What’s the plan for the rest of the debt at this point?

Yes, I mean we could pay it out tomorrow if we wanted. I'd have to repatriate some funds, but for right now the interest rate's so low. As I mentioned on the previous call, right now we're looking at different options and one in particular is potentially starting a different factory -- another factory in Asia. So right now we're -- with the interest rates so low that -- we like the flexibility of having cash.

Okay. And did you guys repurchase any stock in the quarter? And what do you have left on the authorization?

Very little. Yes, very little.

And just last question from me. Were there any legal expenses I guess atypical embedded in SG&A?

Yes, the legal expenses are embedded in SG&A and in the forecast and they are - I would say atypical. But we’ve got some lawsuits going on right now and it’s relatively expensive. The run rate in 2012 is much higher than that in 2011.

Can you -- I mean, can you quantify it at all?

I'd say it was $300,000 to $400,000 higher in Q1 2012 versus Q1 of 2011.

Okay. And is there any update on the litigation with the 2 offices?

No.

[Operator Instructions] Your next question comes from the line of Corey Barrett with Pacific Crest Securities.

I really just have 2 questions. First, you mentioned the inclusion of UEI tech in next gen of Google TV or the Google TV software. I was hoping you could provide a little more detail there, And then secondly provide perhaps a greater detail on your strategy in Brazil and how that’s developing, and sort of how incrementally you could see that going forward and potentially in 2013?

Sure. First, on the Google, we -- our QuickSet and associated data are being embedded in the reference standard. We are working with or are talking to a number of customers who are going to be implementing that platform. And I can’t give a lot of details obviously, because the customers would appreciate us not talking about their future products. But we will be embedded in it. We're not building a product, we're embedding our technology in the next platform. So it will be adopted as a control mechanism within those future Google TV products. As far as Brazil is concerned, we are set up in Brazil. We've closed a number of operators in that region. And we -- the projections -- the market projections of growth and the growth we've seen down there are pretty substantial. So we are fully a player down there. We've worked pretty hard over the last couple of years to set ourselves up there appropriately and are currently providing customers there, subscription broadcasters and potentially consumer electronics companies, product, remote control solutions in that region.

Your next question comes from the line Jason Ursaner with CJS Securities.

Quick follow-up on the last question. You mentioned embedded in there, and I know in the past you've talked a little bit about -- if there is a change in the implementation of media control, how does your revenue differ when you are getting a royalty versus actually selling a tangible device with the TV or some other type of media device?

Well, the revenue changes. The revenue of course with a license is typically lower, although I've seen cases in the past where the average license is actually higher than a lot of the products we sell. It all depends on the solution. But remember in this case, what we are embedding is the control methodology, both 2-way and dataset for the control codes of the various devices that will be in the consumers' AV stack. What this potentially gives us is an opportunity to not only embed the technology, but to sell products built around that technology. If our technology is embedded in the product, the target product, it makes it much simpler for somebody to implement a remote control with us as well. So I wouldn’t think of this as just an opportunity to license, although it is. It's also an opportunity for us to sell full control products with our technology embedded in the system. It’s the best way to put it.

Those would be third-party remotes that work with a device?

Well, they could be the product that ships with the device itself. To the extent they want to have text entry-type capabilities, pointing capabilities, we can build a variety of products that would allow all of those types of functionality within the control device. But what we are doing here is embedding some of our technology in the target device as well, which again, gives us a potential to sell the remote control device, the hardware side as well. So we have embedded technology in the target side and then an opportunity to sell the remote control device with a variety of new capabilities, text entry, again, pointing technology, et cetera.

And if you didn’t ship the device, would whoever who made that device need to also license yours to I guess interact with the target device or is that not -- am I not thinking of it the right way?

No, you are. There is an opportunity for us there as well for a license opportunity depending on the capabilities of the products that would get designed into those. But I would say in more cases what we’re working on is the design of the actual control device, the design and sale of the actual control device that ships with the product.

[Operator Instructions] At this time, there are no further questions. I would like to turn the conference back over to Paul Arling for closing remarks.

Okay. I have a couple of remarks I want to make. One issue I'd like to address is the rumor of Apple's entry into the TV market. As we've been asked this a number of times, I felt it would be appropriate to make a statement on this. It's important to note that Apple's been in the home entertainment business for over 5 years already with its current Apple TV product, which UEI is incorporated into our library along with tens of thousands of other products. To date, the product -- that product, the Apple TV, has had little impact on our industry. While Apple may or may not introduce a different kind of product such as a TV monitor, we believe that they, like other successful companies across the globe that have introduced industry-leading home entertainment products, will be a potential customer or licensee of UEI Technology. Over the years, the most successful companies in our industry have utilized the UEI technology to innovate in control technology as they advance the state-of-the-art in home entertainment. Examples of this include Sony, Panasonic, Samsung, Mitsubishi, Denon, JVC, Toshiba, DirecTV, Comcast, Echostar, Sky, Microsoft, Google, and many others. It’s important to note that over UEI’s history, new entrants into the subscription broadcasting or consumer electronics market that brought distinct new innovation or differentiation also brought new growth to the industry. The competitive response was fast, dynamic, and led to increased product introductions requiring new forms of control causing a bloom in our business. As we always have, we look forward to exciting new home entertainment products to be introduced by existing and new players to the industry, to better -- to prompt better solutions for consumers. This has fueled our growth across the years. Thanks for joining us today. We’ll be meeting with investors at the 13th Annual B. Riley Investor Conference on May 22 in Santa Monica, California. We look forward to seeing many of you there and speaking with you again on our second quarter results call in a couple of months. Thanks, very much, and we’ll talk to you soon. Bye-bye.

Thank you. This concludes today’s conference. You may now disconnect.