10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________ 

FORM 10-Q

_______________________________________ 

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission File Number: 0-21044

_______________________________________ 

UNIVERSAL ELECTRONICS INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	33-0204817
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
201 E. Sandpointe Avenue, 8th Floor Santa Ana, California	92707
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code: (714) 918-9500

__________________________________ 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, any Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	ý
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨
		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. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  ý

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 14,305,749 shares of Common Stock, par value $0.01 per share, of the registrant were outstanding on November 6, 2017.

UNIVERSAL ELECTRONICS INC.

INDEX

	Page Number
PART I. FINANCIAL INFORMATION	3
Item 1. Consolidated Financial Statements (Unaudited)	3
Consolidated Balance Sheets	3
Consolidated Income Statements	4
Consolidated Comprehensive Income Statements	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	35
PART II. OTHER INFORMATION	36
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 6. Exhibits	37
Signatures	38
Exhibit Index	39

PART I. FINANCIAL INFORMATION

ITEM 1. Consolidated Financial Statements (Unaudited)

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share-related data)

(Unaudited)

	September 30, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	48,560		$	50,611
Restricted cash	4,799			4,623
Accounts receivable, net	153,355			124,592
Inventories, net	154,520			129,879
Prepaid expenses and other current assets	9,988			7,439
Assets held for sale	12,403			—
Income tax receivable	3,262			1,054
Deferred income taxes	—			5,960
Total current assets	386,887			324,158
Property, plant, and equipment, net	109,149			105,351
Goodwill	48,624			43,052
Intangible assets, net	30,159			28,549
Deferred income taxes	18,349			10,430
Long-term restricted cash	—			4,600
Other assets	4,040			4,896
Total assets	$	597,208		$	521,036
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	106,872		$	97,157
Line of credit	114,000			49,987
Accrued compensation	33,328			35,580
Accrued sales discounts, rebates and royalties	7,790			8,358
Accrued income taxes	994			375
Other accrued expenses	25,840			24,410
Total current liabilities	288,824			215,867
Long-term liabilities:
Long-term contingent consideration	14,000			10,500
Deferred income taxes	6,376			7,060
Income tax payable	791			791
Other long-term liabilities	1,598			6,308
Total liabilities	311,589			240,526
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized; none issued or outstanding	—			—
Common stock, $0.01 par value, 50,000,000 shares authorized; 23,687,651 and 23,575,340 shares issued on September 30, 2017 and December 31, 2016, respectively	237			236
Paid-in capital	262,776			250,481
Treasury stock, at cost, 9,352,551 and 9,022,587 shares on September 30, 2017 and December 31, 2016, respectively	(243,197		)	(222,980		)
Accumulated other comprehensive income (loss)	(17,831		)	(22,821		)
Retained earnings	283,634			275,594
Total stockholders' equity	285,619			280,510
Total liabilities and stockholders' equity	$	597,208		$	521,036

See Note 4 for further information concerning our purchases from related party vendors.

The accompanying notes are an integral part of these consolidated financial statements.

3

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net sales	$	175,652		$	169,185		$	514,638		$	490,829
Cost of sales	132,582			127,400			386,783			367,941
Gross profit	43,070			41,785			127,855			122,888
Research and development expenses	5,415			4,955			15,859			15,292
Factory transition restructuring charges	446			81			6,145			1,598
Selling, general and administrative expenses	32,997			28,628			94,701			86,867
Operating income	4,212			8,121			11,150			19,131
Interest income (expense), net	(721		)	(228		)	(1,676		)	(753		)
Other income (expense), net	61			335			2			1,726
Income before provision for income taxes	3,552			8,228			9,476			20,104
Provision for income taxes	1,824			421			2,945			2,956
Net income	1,728			7,807			6,531			17,148
Net income attributable to noncontrolling interest	—			—			—			30
Net income attributable to Universal Electronics Inc.	$	1,728		$	7,807		$	6,531		$	17,118
Earnings per share attributable to Universal Electronics Inc.:
Basic	$	0.12		$	0.54		$	0.45		$	1.19
Diluted	$	0.12		$	0.53		$	0.44		$	1.16
Shares used in computing earnings per share:
Basic	14,381			14,510			14,412			14,441
Diluted	14,666			14,848			14,689			14,740

See Note 4 for further information concerning our purchases from related party vendors.

The accompanying notes are an integral part of these consolidated financial statements.

4

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

(In thousands)

(Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017		2016
Net income	$	1,728	$	7,807		$	6,531	$	17,148
Other comprehensive income (loss):
Change in foreign currency translation adjustment	2,999		(540		)	4,990		(1,858		)
Total comprehensive income (loss)	4,727		7,267			11,521		15,290
Comprehensive income (loss) attributable to noncontrolling interest	—		—			—		30
Comprehensive income (loss) attributable to Universal Electronics Inc.	$	4,727	$	7,267		$	11,521	$	15,260

See Note 4 for further information concerning our purchases from related party vendors.

The accompanying notes are an integral part of these consolidated financial statements.

5

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2017			2016
Cash provided by (used for) operating activities:
Net income	$	6,531		$	17,148
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization	23,202			18,994
Provision for doubtful accounts	167			123
Provision for inventory write-downs	2,189			2,398
Deferred income taxes	(953		)	1,413
Tax benefit from exercise of stock options and vested restricted stock	—			2,230
Excess tax benefit from stock-based compensation	—			(2,292		)
Shares issued for employee benefit plan	591			763
Employee and director stock-based compensation	9,476			7,638
Performance-based common stock warrants	1,122			3,219
Changes in operating assets and liabilities:
Restricted cash	4,623			—
Accounts receivable	(24,440		)	(11,359		)
Inventories	(21,217		)	(4,470		)
Prepaid expenses and other assets	(2,422		)	(86		)
Accounts payable and accrued expenses	1,488			7,699
Accrued income taxes	(1,517		)	(4,737		)
Net cash provided by (used for) operating activities	(1,160		)	38,681
Cash used for investing activities:
Acquisition of property, plant, and equipment	(29,922		)	(28,914		)
Acquisition of net assets of Residential Control Systems, Inc.	(8,894		)	—
Acquisition of intangible assets	(1,275		)	(1,373		)
Increase in restricted cash	—			(4,797		)
Deposit received toward sale of Guangzhou factory	—			4,797
Deconsolidation of Encore Controls LLC	—			48
Net cash used for investing activities	(40,091		)	(30,239		)
Cash provided by (used for) financing activities:
Borrowings under line of credit	115,000			92,987
Repayments on line of credit	(50,987		)	(107,987		)
Proceeds from stock options exercised	1,107			4,813
Treasury stock purchased	(20,217		)	(2,188		)
Excess tax benefit from stock-based compensation	—			2,292
Net cash provided by (used for) financing activities	44,903			(10,083		)
Effect of exchange rate changes on cash	(5,703		)	(3,184		)
Net increase (decrease) in cash and cash equivalents	(2,051		)	(4,825		)
Cash and cash equivalents at beginning of year	50,611			52,966
Cash and cash equivalents at end of period	$	48,560		$	48,141
Supplemental cash flow information:
Income taxes paid	$	5,770		$	6,034
Interest paid	$	1,697		$	926

See Note 4 for further information concerning our purchases from related party vendors.

The accompanying notes are an integral part of these consolidated financial statements.

6

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

(Unaudited)

Note 1 — Basis of Presentation and Significant Accounting Policies

In the opinion of management, the accompanying consolidated financial statements of Universal Electronics Inc. and its subsidiaries contain all the adjustments necessary for a fair presentation of financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. Information and footnote disclosures normally included in financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. As used herein, the terms "Company," "we," "us," and "our" refer to Universal Electronics Inc. and its subsidiaries, unless the context indicates to the contrary.

Our results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk," and the "Financial Statements and Supplementary Data" included in Items 1A, 7, 7A, and 8, respectively, of our Annual Report on Form 10-K for the year ended December 31, 2016.

Estimates, Judgments and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and assumptions, including those related to revenue recognition, allowances for sales returns and doubtful accounts, inventory valuation, our review for impairment of long-lived assets, intangible assets and goodwill, business combinations, income taxes, stock-based compensation expense and performance-based common stock warrants. Actual results may differ from these estimates and assumptions, and they may be adjusted as more information becomes available. Any adjustment may be material.

See Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 for a summary of our significant accounting policies.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers," which will supersede most existing U.S. GAAP revenue recognition guidance. This new standard requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. In addition, ASU 2014-09 contains expanded disclosure requirements relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. As initially proposed, ASU 2014-09 would have been effective for fiscal periods beginning after December 15, 2016 and permits the use of either the full retrospective or modified retrospective transition method. In August 2015, the FASB postponed the effective date of this new revenue standard by one year. We have largely completed our review of customer contract terms and our assessment of the impact of adopting this standard on our revenue recognition policy, and are currently in the process of modifying certain revenue recognition processes and controls to comply with ASU 2014-09, including the new disclosure requirements. The impact of this new guidance is primarily expected to accelerate revenue recognition for those contractual arrangements under which we manufacture and sell customized products that have no alternative use, as defined under ASU 2014-09 and related guidance and interpretations. In particular, to the extent that we have the right to payment such as a firm order or other contractual commitment from the customer, revenue associated with customized products will be recognized as those products are manufactured rather than when title for those products transfers to the customer. We also expect revenue recognition to be accelerated for licensing arrangements that contain minimum guarantees. We expect to implement ASU 2014-09 on January 1, 2018, using the modified retrospective transition method. Thus prior periods will not be restated. The impact of the transition to this new accounting method, which will include a cumulative-effect adjustment to retained earnings as of the adoption date, could have a material impact on our consolidated results of operations.

In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory," which states that inventory should be measured at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for fiscal periods beginning after December 15, 2016 and must be applied prospectively. The adoption of ASU 2015-11 did not have a material impact on our consolidated financial position or results of operations.

7

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes." This new guidance requires all deferred tax assets and liabilities, along with any related valuation allowance, be classified as non-current on the balance sheet. ASU 2015-17 is effective for fiscal periods beginning after December 15, 2016 and may be adopted either prospectively or retrospectively. We prospectively adopted ASU 2015-17 effective January 1, 2017, and thus prior period balance sheets have not been adjusted. The adoption of ASU 2015-17 had no impact on our consolidated results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, "Leases," which changes the accounting for leases and requires expanded disclosures about leasing activities. This new guidance will require lessees to recognize a right of use asset and a lease liability at the commencement date for all leases with terms greater than twelve months. Accounting by lessors is largely unchanged. ASU 2016-02 is effective for fiscal periods beginning after December 15, 2018 and must be adopted using a modified retrospective approach. Early adoption is permitted. We are currently evaluating the impact that ASU 2016-02 will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09,"Improvements to Employee Share-Based Payment Accounting," which amends Accounting Standards Codification ("ASC") 718, "Compensation - Stock Compensation." ASU 2016-09 requires excess tax benefits and tax deficiencies to be recorded as a discrete adjustment to income tax expense when stock awards vest or are settled, rather than in paid-in capital when they impact income taxes payable. This new guidance also requires cash flows related to excess tax benefits from stock-based compensation to be presented with other income tax cash flows in operating activities, rather than separately as a financing activity, in the statement of cash flows. Additionally, ASU 2016-09 impacts the calculation of diluted weighted-average shares under the treasury stock method as the assumed proceeds from an employee vesting in or exercising a stock-based award are no longer increased or decreased by the amount of excess tax benefits or deficiencies taken to paid-in capital. We elected to adopt the provisions of ASU 2016-09 prospectively effective January 1, 2017. We also made the accounting policy election, as allowed by ASU 2016-09, to account for forfeitures of stock-based awards as they occur, rather than estimating forfeitures. The cumulative effect of adopting ASU 2016-09 was an increase of $1.5 million to deferred tax assets and an increase to retained earnings of $1.5 million, as of January 1, 2017, as a result of recognizing previously unrecognized excess tax benefits from stock-based compensation. There was no cumulative effect impact related to the change in accounting policy to account for forfeitures of stock-based awards when they occur as a result of our minimal historical forfeitures experience.

In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," which amends ASC 230, "Statement of Cash Flows". This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal periods beginning after December 15, 2017 and must be adopted retrospectively. Early adoption is permitted as long as all amendments are adopted in the same period. We are currently evaluating the impact that ASU 2016-15 will have on our consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory," which changes the accounting for income tax consequences of intra-entity transfers of assets other than inventory. Current guidance prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. Under this new guidance, the income tax consequences of an intra-entity transfer of an asset other than inventory will be recognized when the transfer occurs. ASU 2016-16 is effective for fiscal periods beginning after December 15, 2017. Early adoption is permitted. The impact of the adoption of ASU 2016-16 could be material depending on the size of any intra-entity transfers we may implement in future periods.

In November 2016, the FASB issued ASU 2016-18,"Restricted Cash," which amends ASC 230, "Statement of Cash Flows." This new guidance addresses the classifications and presentation of changes in restricted cash in the statement of cash flows. ASU 2016-18 is effective for fiscal periods beginning after December 15, 2017 and must be adopted retrospectively. Early adoption is permitted. The adoption of ASU 2016-18 will modify our current disclosures by reclassifying certain amounts within the consolidated statement of cash flows, but is not expected to have a material effect on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment." This guidance simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for fiscal periods beginning after December 31, 2019. Early adoption is permitted. We do not expect the adoption of ASU 2017-04 to have a material impact on our consolidated financial statements.

8

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Note 2 — Cash and Cash Equivalents and Restricted Cash

Cash and Cash Equivalents

Cash and cash equivalents were held in the following geographic regions:

(In thousands)	September 30, 2017		December 31, 2016
United States	$	4,795	$	3,277
People's Republic of China ("PRC")	22,120		22,142
Asia (excluding the PRC)	846		5,260
Europe	13,317		19,630
South America	7,482		302
Total cash and cash equivalents	$	48,560	$	50,611

Restricted Cash

In connection with a court order issued in a now settled litigation matter, we previously placed $4.6 million of cash into a collateralized surety bond. This bond had certain restrictions for liquidation and was therefore classified as restricted cash. On February 10, 2017, the $4.6 million surety bond was returned to us upon final settlement of the related litigation matter.

In connection with the pending sale of our Guangzhou factory in the PRC (Note 10), the buyer made a cash deposit of RMB 32 million ($4.8 million based on September 30, 2017 exchange rates) into an escrow account on September 29, 2016. Under the terms of the escrow account, these funds will not be paid to us until the close of the sale. Accordingly, this deposit is presented as restricted cash within our consolidated balance sheet.

Note 3 — Accounts Receivable, Net and Revenue Concentrations

Accounts receivable, net were as follows:

(In thousands)	September 30, 2017			December 31, 2016
Trade receivables, gross	$	147,194		$	120,965
Allowance for doubtful accounts	(1,052		)	(904		)
Allowance for sales returns	(459		)	(539		)
Net trade receivables	145,683			119,522
Other	7,672			5,070
Accounts receivable, net	$	153,355		$	124,592

Allowance for Doubtful Accounts

Changes in the allowance for doubtful accounts were as follows:

(In thousands)	Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	904		$	822
Additions (reductions) to costs and expenses	167			123
(Write-offs)/Foreign exchange effects	(19		)	15
Balance at end of period	$	1,052		$	960

9

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Sales Returns

The allowance for sales returns at September 30, 2017 and December 31, 2016 included reserves for items returned prior to period-end that were not completely processed, and therefore had not yet been removed from the allowance for sales returns balance. If these returns had been fully processed, the allowance for sales returns balance would have been approximately $0.3 million and $0.4 million on September 30, 2017 and December 31, 2016, respectively. The value of these returned goods was included in our inventory balance at September 30, 2017 and December 31, 2016.

Significant Customers

Net sales to the following customers totaled more than 10% of our net sales:

	Three Months Ended September 30,
	2017				2016
	$ (thousands)		% of Net Sales		$ (thousands)		% of Net Sales
Comcast Corporation	$	36,811	21.0	%	$	35,554	21.0	%
AT&T	20,117		11.5		21,139		12.5

	Nine Months Ended September 30,
	2017				2016
	$ (thousands)		% of Net Sales		$ (thousands)		% of Net Sales
Comcast Corporation	$	122,009	23.7	%	$	111,529	22.7	%
AT&T	61,057		11.9		60,709		12.4

Trade receivables associated with these significant customers that totaled more than 10% of our accounts receivable, net were as follows:

	September 30, 2017				December 31, 2016
	$ (thousands)		% of Accounts Receivable, Net		$ (thousands)		% of Accounts Receivable, Net
Comcast Corporation	$	26,553	17.3	%	$	23,716	19.0	%
AT&T (1)	—		—		14,108		11.3

⁽¹⁾   Trade receivables associated with this customer did not total more than 10% of our accounts receivable, net at September 30, 2017.

Note 4 — Inventories, Net and Significant Supplier

Inventories, net were as follows:

(In thousands)	September 30, 2017			December 31, 2016
Raw materials	$	36,803		$	33,059
Components	18,556			15,046
Work in process	6,596			5,860
Finished goods	95,690			80,119
Reserve for excess and obsolete inventory	(3,125		)	(4,205		)
Inventories, net	$	154,520		$	129,879

10

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Reserve for Excess and Obsolete Inventory

Changes in the reserve for excess and obsolete inventory were as follows:

(In thousands)	Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	4,205		$	3,045
Additions charged to costs and expenses (1)	1,960			2,120
Sell through (2)	(950		)	(781		)
(Write-offs)/Foreign exchange effects	(2,090		)	(726		)
Balance at end of period	$	3,125		$	3,658

⁽¹⁾ The additions charged to costs and expenses do not include inventory directly written-off that was scrapped during production totaling $0.2 million and $0.3 million for the nine months endedSeptember 30, 2017 and 2016, respectively. These amounts are production waste and are not included in management's reserve for excess and obsolete inventory.

⁽²⁾ These amounts represent the reduction in reserves associated with inventory items that were sold during the period.

Significant Supplier

We purchase integrated circuits, components and finished goods from multiple sources. Purchases from the following supplier totaled more than 10% of our total inventory purchases:

	Three Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Texas Instruments	$	13,115	12.4	%	$	12,353	13.0	%

	Nine Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Texas Instruments	$	33,693	11.3	%	$	32,294	11.9	%

11

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Related Party Supplier

We purchase certain printed circuit board assemblies from a related party supplier. The supplier is considered a related party for financial reporting purposes because our Senior Vice President of Strategic Operations owns 40% of this vendor. Inventory purchases from this supplier were as follows:

	Three Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Related party supplier	$	1,378	1.3	%	$	1,382	1.5	%

	Nine Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Related party supplier	$	3,962	1.3	%	$	4,971	1.8	%

Total accounts payable to this supplier were as follows:

	September 30, 2017				December 31, 2016
	$ (thousands)		% of Accounts Payable		$ (thousands)		% of Accounts Payable
Related party supplier	$	1,763	1.6	%	$	1,690	1.7	%

Our payment terms and pricing with this supplier are consistent with the terms offered by other suppliers in the ordinary course of business. The accounting policies that we apply to our transactions with our related party supplier are consistent with those applied in transactions with independent third parties. Corporate management routinely monitors purchases from our related party supplier to ensure these purchases remain consistent with our business objectives.

Note 5 — Goodwill and Intangible Assets, Net

Goodwill

Changes in the carrying amount of goodwill were as follows:

(In thousands)
Balance at December 31, 2016	$	43,052
Goodwill acquired during the period (1)	5,494
Foreign exchange effects	78
Balance at September 30, 2017	$	48,624

⁽¹⁾ During the second quarter of 2017, we recorded $5.5 million of goodwill related to the Residential Control Systems, Inc. acquisition. Refer to Note 18 for further information about this acquisition.

12

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Intangible Assets, Net

The components of intangible assets, net were as follows:

	September 30, 2017							December 31, 2016
(In thousands)	Gross (1)		Accumulated Amortization (1)			Net		Gross (1)		Accumulated Amortization (1)			Net
Distribution rights	$	340	$	(155	)	$	185	$	302	$	(119	)	$	183
Patents	12,593		(4,996		)	7,597		12,038		(4,775		)	7,263
Trademarks and trade names (2)	2,786		(1,518		)	1,268		2,400		(1,310		)	1,090
Developed and core technology	12,560		(5,567		)	6,993		12,585		(4,068		)	8,517
Capitalized software development costs	142		(59		)	83		142		(5		)	137
Customer relationships (2)	32,534		(18,613		)	13,921		27,703		(16,344		)	11,359
Order backlog (2)	150		(38		)	112		—		—			—
Total intangible assets, net	$	61,105	$	(30,946	)	$	30,159	$	55,170	$	(26,621	)	$	28,549

⁽¹⁾  This table excludes the gross value of fully amortized intangible assets totaling $6.0 million and $10.2 million at September 30, 2017 and December 31, 2016, respectively.

⁽²⁾  During the second quarter of 2017, we purchased a trade name valued at $0.4 million, which is being amortized ratably over eight years; customer relationships valued at $5.0 million, which are being amortized ratably over 10 years; and order backlog valued at $0.2 million, which is being amortized ratably over one year. Refer to Note 18 for further information regarding the purchase of these intangible assets.

Amortization expense is recorded in selling, general and administrative expenses, except amortization expense related to capitalized software development costs and order backlog, which are recorded in cost of sales. Amortization expense by income statement caption was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Cost of sales	$	54	$	21	$	128	$	63
Selling, general and administrative expenses	1,715		1,551		5,032		4,618
Total amortization expense	$	1,769	$	1,572	$	5,160	$	4,681

Estimated future annual amortization expense related to our intangible assets at September 30, 2017, is as follows:

(In thousands)
2017 (remaining 3 months)	$	1,776
2018	7,046
2019	6,901
2020	5,740
2021	2,289
Thereafter	6,407
Total	$	30,159

13

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Note 6 — Line of Credit

Our Amended and Restated Credit Agreement ("Amended Credit Agreement") with U.S. Bank National Association ("U.S. Bank") provided for a $125.0 million revolving line of credit ("Credit Line") that was to expire on November 1, 2019. On October 27, 2017, we entered into a Second Amended and Restated Credit Agreement ("Second Amended Credit Agreement") with U.S. Bank as administrative agent, sole lead arranger and sole book runner, and Wells Fargo Bank, National Association, which replaces the Amended Credit Agreement. Under the Second Amended Credit Agreement, the Credit Line was increased to $170.0 million and the expiration date remained November 1, 2019. The Credit Line may be used for working capital and other general corporate purposes including acquisitions, share repurchases and capital expenditures. Amounts available for borrowing under the Credit Line are reduced by the balance of any outstanding letters of credit. There were no outstanding letters of credit at September 30, 2017.

All obligations under the Credit Line are secured by substantially all of our U.S. personal property and tangible and intangible assets as well as 65% of our ownership interest in Enson Assets Limited, our wholly-owned subsidiary that controls our manufacturing factories in the PRC.

The interest rate applicable to outstanding Credit Line balances under the Second Amended Credit Agreement is the same as under the Amended Credit Agreement. We may elect to pay interest on the Credit Line based on LIBOR plus an applicable margin (varying from 1.25% to 1.75%) or base rate (based on the prime rate of U.S. Bank or as otherwise specified in the Second Amended Credit Agreement) plus an applicable margin (varying from 0.00% to 0.50%). The applicable margins are calculated quarterly and vary based on our cash flow leverage ratio as set forth in the Amended Credit Agreement and Second Amended Credit Agreement. The interest rate in effect at September 30, 2017 was 2.48%. There are no commitment fees or unused line fees under the Amended Credit Agreement or the Second Amended Credit Agreement.

The Amended Credit Agreement and Second Amended Credit Agreement include financial covenants requiring a minimum fixed charge coverage ratio and a maximum cash flow leverage ratio. In addition, the Amended Credit Agreement and Second Amended Credit Agreement also contain other customary affirmative and negative covenants and events of default. As of September 30, 2017, we were in compliance with the covenants and conditions of the Amended Credit Agreement.

At September 30, 2017, we had $114.0 million outstanding under the Credit Line. Our total interest expense on borrowings was $0.8 million and $0.3 million during the three months ended September 30, 2017 and 2016, respectively, and $1.8 million and $0.9 million during the nine months ended September 30, 2017 and 2016, respectively.

Note 7 — Income Taxes

We utilize our estimated annual effective tax rate to determine our provision for income taxes for interim periods. The income tax provision is computed by taking the estimated annual effective tax rate and multiplying it by the year-to-date pre-tax book income.

We recorded income tax expense of $1.8 million and $0.4 million for the three months ended September 30,2017 and 2016, respectively, and our effective tax rate was 51.4% and 5.1% during the three months ended September 30,2017 and 2016, respectively. We recorded income tax expense of $2.9 million and $3.0 million for the nine months ended September 30, 2017 and 2016, respectively, and our effective tax rate was 31.1% and 14.7% during the nine months ended September 30,2017 and 2016, respectively. The higher effective tax rate in both periods was primarily due to the nondeductibility of certain transactions in the PRC as a result of the pending sale of our Guangzhou factory (Note 10). In addition, during the three and nine months ended September 30, 2016, we received tax refunds from the Chinese government totaling $1.8 million for various tax incentives relating to fiscal year 2015.

At September 30, 2017, we had gross unrecognized tax benefits of $3.8 million, including interest and penalties, of which $3.5 million, if not for the state Research and Experimentation income tax credit valuation allowance, would affect the annual effective tax rate if these tax benefits are realized. Further, we are unaware of any positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly change within the next twelve months. However, based on federal, state and foreign statute expirations in various jurisdictions, we anticipate a decrease in unrecognized tax benefits of approximately $0.1 million within the next twelve months. We have classified uncertain tax positions as non-current income tax liabilities unless expected to be paid within one year.

We have elected to classify interest and penalties as a component of tax expense. Accrued interest and penalties of $0.3 million and $0.3 million at September 30, 2017 and December 31, 2016, respectively, are included in our unrecognized tax benefits.

14

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Note 8 — Accrued Compensation

The components of accrued compensation were as follows:

(In thousands)	September 30, 2017		December 31, 2016
Accrued social insurance (1)	$	17,506	$	19,974
Accrued salary/wages	7,721		7,903
Accrued vacation/holiday	2,844		2,411
Accrued bonus (2)	1,985		2,421
Accrued commission	851		933
Accrued medical insurance claims	284		122
Other accrued compensation	2,137		1,816
Total accrued compensation	$	33,328	$	35,580

⁽¹⁾  Effective January 1, 2008, the Chinese Labor Contract Law was enacted in the PRC. This law mandated that PRC employers remit the applicable social insurance payments to their local government. Social insurance is comprised of various components such as pension, medical insurance, job injury insurance, unemployment insurance, and a housing assistance fund, and is administered in a manner similar to social security in the United States. This amount represents our estimate of the amounts due to the PRC government for social insurance on September 30, 2017 and December 31, 2016.

⁽²⁾  Accrued bonus includes an accrual for an extra month of salary ("13^th month salary") to be paid to employees in certain geographies where it is the customary business practice. This 13^th month salary is paid to these employees if they remain employed with us through December 31st. The total accrued for the 13^th month salary was $0.7 million and $0.7 million at September 30, 2017 and December 31, 2016, respectively.

15

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Note 9 — Other Accrued Expenses

The components of other accrued expenses were as follows:

(In thousands)	September 30, 2017		December 31, 2016
Advertising and marketing	$	272	$	213
Deferred revenue	79		1,431
Deposit for sale of Guangzhou factory	4,799		—
Duties	757		1,127
Freight and handling fees	2,176		1,919
Product development	485		454
Product warranty claim costs	218		134
Professional fees	1,691		1,313
Property, plant, and equipment	1,564		1,017
Sales taxes and VAT	2,587		2,715
Short-term contingent consideration	3,400		—
Third-party commissions	685		853
Tooling (1)	1,769		1,520
Unrealized loss on foreign currency exchange contracts	86		1,623
URC court order and settlement agreement (Note 2)	—		6,622
Utilities	392		331
Other	4,880		3,138
Total other accrued expenses	$	25,840	$	24,410

⁽¹⁾  The tooling accrual balance relates to unearned revenue for tooling that will be sold to customers.

Note 10 — Commitments and Contingencies

Product Warranties

Changes in the liability for product warranty claim costs were as follows:

(In thousands)	Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	134		$	35
Accruals for warranties issued during the period	169			100
Settlements (in cash or in kind) during the period	(85		)	—
Balance at end of period	$	218		$	135

Restructuring Activities and Sale of Guangzhou Factory

In the first quarter of 2016, we implemented a plan to reduce the impact of rising labor rates in China by transitioning manufacturing activities from our southern-most China factory, located in the city of Guangzhou in the Guangdong province, to our other China factories where labor rates are rising at a slower rate. As a result, we incurred severance costs of $0.4 million and $0.1 million during the three months ended September 2017 and 2016, respectively, and $6.1 million and $1.6 million during the nine months ended September 30, 2017 and 2016, respectively, which are included within operating expenses. All operations in our Guangzhou factory ceased in July 2017. Accordingly, we do not expect to incur significant further severance or other restructuring costs related to this factory transition. At September 30, 2017, we had $0.2 million of unpaid severance costs included within accrued compensation.

16

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

On September 26, 2016, we entered into an agreement to sell our Guangzhou manufacturing facility for RMB 320 million (approximately $48.0 million based on September 30, 2017 exchange rates). Under the terms of this agreement, we have up to 24 months to cease all operations within the facility. The closing of the sale will be subject to customary due diligence and local regulatory approval and per the terms of the agreement could take up to approximately 28 months from the execution of the agreement. In accordance with the terms of the agreement, the buyer deposited 10% of the purchase price into an escrow account at agreement inception, which we have presented as restricted cash in our consolidated balance sheet (also refer to Note 2). The remaining balance of the purchase price is to be placed into the escrow account prior to the closing of the sale and will be released to us upon closing. Since all operations at our Guangzhou manufacturing facility ceased as of the end of July 2017, the related building and land lease assets of $12.4 million are classified as assets held for sale in our September 30, 2017 consolidated balance sheet.

Litigation

On or about June 10, 2015, FM Marketing GmbH ("FMH") and Ruwido Austria GmbH ("Ruwido"), filed a Summons in Summary Proceedings in Belgium court against one of our subsidiaries, Universal Electronics BV ("UEBV") and one of its customers, Telenet N.V. ("Telenet"), claiming that one of the products that UEBV previously supplied to Telenet violates two design patents and one utility patent owned by FMH and/or Ruwido. By this summons, FMH and Ruwido sought to enjoin Telenet and UEBV from continued distribution and use of the product at issue. After the September 29, 2015 hearing, the court issued its ruling in our and Telenet’s favor, rejecting FMH and Ruwido’s request entirely. On October 22, 2015, Ruwido filed its notice of appeal in this ruling. The parties have fully briefed and argued before the appellate court and we are awaiting the appellate court’s ruling. In addition, on or about February 9, 2016, Ruwido filed a writ of summons for proceeding on the merits with respect to asserted patents. UEBV and Telenet have replied, denying all of Ruwido's allegations and in June 2017, a hearing was held before the trial court. During this hearing, Ruwido sought to have a second product which we are currently selling to Telenet included in this case. In September 2017, the Court ruled in our favor that our current product cannot be made part of this case. The Court also refused to rule on whether the original product (which we are no longer selling) infringes the Ruwido patent, instead deciding to wait until the European Patent Office has ruled on our Opposition (see below). Finally, the Court ruled that our original product (which we are no longer selling) infringes certain of Ruwido’s design rights, but stay any decision of compensation and/or damages until all aspects of the case have been decided. We are presently deciding whether to appeal this Court’s rulings and have until later this year to file notice of appeal. Finally, in September 2015, UEBV filed an Opposition with the European Patent Office seeking to invalidate the one utility patent asserted against UEBV and Telenet by Ruwido. The hearing on this opposition was held in July 2017. During this hearing the panel requested additional information. We are in the process of assembling this additional information and scheduling a date for rehearing. On September 5, 2017, Ruwido and FMH filed a patent infringement case on the merits against UEBV and Telenet alleging the same claims of infringement as in the Belgium Courts (see above). This matter is in its early stages and as such we have not yet answered. But, as in the Belgium case, UEBV and Telenet will deny all claims of infringement and vigorously defend against these claims.

On January 26, 2017, OpenTV, Inc., Nagra USA, Inc., Nagravision SA, and Kudelski SA (collectively, the “Kudelski Group”) filed a request with the U.S. International Trade Commission (“ITC”) to institute an investigation pursuant to Section 337 of the Tariff Act of 1930, as amended, concerning certain remote control devices we supply Comcast Corporation (“Comcast”), which request was accepted by the ITC. On July 21, 2017, the Kudelski Group filed a motion to terminate the investigation as to all parties, including us and this motion was accepted by the ITC on August 11, 2017.

On March 15, 2017, one of our employee’s filed a lawsuit against us and certain of our employees in the Superior Court of California, County of Orange, claiming hostile work environment based on sexual orientation, intentional infliction of emotional distress, failure to prevent hostile work environment, retaliation, and constructive termination. We have answered by denying all of the employee’s claims and have filed a countersuit against this employee claiming, among other things that he has breached his duty of loyalty to us, that he stole certain of our property, that he converted certain of our property to his own benefit. We are still in the early stages of this case as discovery has recently commenced.

There are no other material pending legal proceedings to which we or any of our subsidiaries is a party or of which our respective property is the subject. However, as is typical in our industry and to the nature and kind of business in which we are engaged, from time to time, various claims, charges and litigation are asserted or commenced by third parties against us or by us against third parties arising from or related to product liability, infringement of patent or other intellectual property rights, breach of warranty, contractual relations, or employee relations. The amounts claimed may be substantial but may not bear any reasonable relationship to the merits of the claims or the extent of any real risk of court awards assessed against us or in our favor. However, no assurances can be made as to the outcome of any of these matters, nor can we estimate the range of potential losses to us. In our opinion, final

17

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

judgments, if any, which might be rendered against us in potential or pending litigation would not have a material adverse effect on our consolidated financial condition, results of operations, or cash flows. Moreover, we believe that our products do not infringe any third parties' patents or other intellectual property rights.

We maintain directors' and officers' liability insurance which insures our individual directors and officers against certain claims, as well as attorney's fees and related expenses incurred in connection with the defense of such claims.

Note 11 — Treasury Stock

From time to time, our Board of Directors authorizes management to repurchase shares of our issued and outstanding common stock on the open market. Repurchases may be made whenever we deem a repurchase to be a good use of our cash and the repurchase enhances shareholder value. As of September 30, 2017, we had 114,271 shares available for repurchase on the open market under the Board's authorizations. On October 23, 2017, our Board increased these repurchase authorizations by 300,000 shares bringing the total authorization as of the approval date to 386,434 shares. Shares may also be tendered by employees to satisfy tax withholding obligations in connection with the vesting of restricted stock.

Repurchased shares of our common stock were as follows:

	Nine Months Ended September 30,
(In thousands)	2017		2016
Shares repurchased	330		40
Cost of shares repurchased	$	20,217	$	2,188

Repurchased shares are recorded as shares held in treasury at cost. We hold these shares for future use as management and the Board of Directors deem appropriate, which has included compensating our outside directors.

Note 12 — Business Segment and Foreign Operations

Reportable Segment

An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. Our chief operating decision maker, the Chief Executive Officer, reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues for purposes of making operating decisions and assessing financial performance. Accordingly, we only have a single operating and reportable segment.

Foreign Operations

Our net sales to external customers by geographic area were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
United States	$	85,762	$	88,243	$	253,259	$	263,053
Asia (excluding PRC)	26,113		22,099		77,679		64,290
People's Republic of China	23,437		19,899		61,015		59,978
Europe	18,877		19,389		56,041		53,716
Latin America	13,567		13,032		44,593		32,273
Other	7,896		6,523		22,051		17,519
Total net sales	$	175,652	$	169,185	$	514,638	$	490,829

Specific identification of the customer billing location was the basis used for attributing revenues from external customers to geographic areas.

18

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Long-lived tangible assets by geographic area were as follows:

(In thousands)	September 30, 2017		December 31, 2016
United States	$	14,233	$	11,948
People's Republic of China	95,165		94,113
All other countries	3,791		4,186
Total long-lived tangible assets	$	113,189	$	110,247

Note 13 — Stock-Based Compensation

Stock-based compensation expense for each employee and director is presented in the same income statement caption as their cash compensation. Stock-based compensation expense by income statement caption and the related income tax benefit were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Cost of sales	$	19	$	14	$	53	$	43
Research and development expenses	149		136		412		409
Selling, general and administrative expenses:
Employees	1,843		1,748		5,562		5,324
Outside directors	1,910		770		3,449		1,862
Total employee and director stock-based compensation expense	$	3,921	$	2,668	$	9,476	$	7,638
Income tax benefit	$	603	$	812	2,307		2,281

Stock Options

Stock option activity was as follows:

	Number of Options (in 000's)		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in 000's)
Outstanding at December 31, 2016	652		$	39.27
Granted	92		62.70
Exercised	(45	)	24.87			$	1,893
Forfeited/canceled/expired	(168	)	46.44
Outstanding at September 30, 2017 (1)	531		$	42.26	4.49	$	11,391
Vested and expected to vest at September 30, 2017 (1)	531		$	42.26	4.49	$	11,390
Exercisable at September 30, 2017 (1)	378		$	35.35	3.94	$	10,731

⁽¹⁾  The aggregate intrinsic value represents the total pre-tax value (the difference between our closing stock price on the last trading day of the third quarter of 2017 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on September 30, 2017. This amount will change based on the fair market value of our stock.

On September 11, 2017, the independent members of our Board of Directors voluntarily surrendered 150,000 stock options originally granted to them in February 2016, resulting in the acceleration and recording of $1.2 million of stock-based compensation expense during the three and nine months ended September 30, 2017. This amount represented all remaining unamortized compensation expense associated with the surrendered stock options as of the surrender date.

19

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

The assumptions we utilized in the Black-Scholes option pricing model and the resulting weighted average fair value of stock option grants were the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Weighted average fair value of grants	$	—		$	—		$	19.61		$	17.96
Risk-free interest rate	—		%	—		%	1.75		%	1.36		%
Expected volatility	—		%	—		%	34.25		%	41.38		%
Expected life in years	0.00			0.00			4.52			4.55

As of September 30, 2017, we expect to recognize $2.4 million of total unrecognized pre-tax stock-based compensation expense related to non-vested stock options over a remaining weighted-average life of 1.8 years.

Restricted Stock

Non-vested restricted stock award activity was as follows:

	Shares (in 000's)		Weighted-Average Grant Date Fair Value
Non-vested at December 31, 2016	153		$	57.43
Granted	132		64.14
Vested	(59	)	61.28
Forfeited	(4	)	60.71
Non-vested at September 30, 2017	222		$	60.34

As of September 30, 2017, we expect to recognize $9.8 million of total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards over a weighted-average life of 1.7 years.

Note 14 — Performance-Based Common Stock Warrants

On March 9, 2016, we issued common stock purchase warrants to Comcast to purchase up to 725,000 shares of our common stock at a price of $54.55 per share. The right to exercise the warrants is subject to vesting over three successive two-year periods (with the first two-year period commencing on January 1, 2016) based on the level of purchases of goods and services from us by Comcast and its affiliates, as defined in the warrants. The table below presents the purchase levels and number of warrants that will vest in each period based upon achieving these purchase levels.

	Incremental Warrants That Will Vest
Aggregate Level of Purchases by Comcast and Affiliates	January 1, 2016 - December 31, 2017	January 1, 2018 - December 31, 2019	January 1, 2020 - December 31, 2021
$260 million	100,000	100,000	75,000
$300 million	75,000	75,000	75,000
$340 million	75,000	75,000	75,000
Maximum Potential Warrants Earned by Comcast	250,000	250,000	225,000

If total aggregate purchases by Comcast and its affiliates are below $260 million in any of the two-year periods above, no warrants will vest related to that two-year period. If total aggregate purchases of goods and services by Comcast and its affiliates exceed $340 million during either the first or second two-year period, the amount of any such excess will count toward aggregate purchases in the following two-year period. To fully vest in the rights to purchase all of the underlying shares, Comcast and its affiliates must purchase an aggregate of $1.02 billion in goods and services from us during the six-year vesting period.

20

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Any and all warrants that vest will expire on January 1, 2023. The warrants provide for certain adjustments that may be made to the exercise price and the number of shares issuable upon exercise due to customary anti-dilution provisions. Additionally, in connection with the warrants, we have also entered into a registration rights agreement with Comcast under which Comcast may from time to time request that we register the shares of common stock underlying vested warrants with the SEC.

Because the warrants contain performance criteria under which Comcast must achieve specified aggregate purchase levels for the warrants to vest, as detailed above, the measurement date for the warrants is the date on which the warrants vest. Through September 30, 2017, 100,000 of the warrants had vested.

The fair value of the warrants is determined using the Black-Scholes option pricing model. The assumptions we utilized and the resulting fair value of the warrants were the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Fair value	$	24.17		$	38.32		$	24.17		$	38.32
Price of Universal Electronics Inc. common stock	$	62.10		$	74.99		$	62.10		$	74.99
Risk-free interest rate	1.93		%	1.32		%	1.93		%	1.32		%
Expected volatility	34.41		%	40.54		%	34.41		%	40.54		%
Expected life in years	5.26			6.25			5.26			6.25

The impact to net sales recorded in connection with the warrants and the related income tax benefit were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2017			2016			2017			2016
Reduction/(increase) to net sales	$	(141	)	$	1,160		$	1,122		$	3,219
Income tax (benefit)/expense	53			(426		)	(418		)	(1,182		)

At September 30, 2017, we estimated the number of warrants that will vest based on the combination of purchases already made and projected future purchases that will be made by Comcast and its affiliates. These estimates may increase or decrease based on actual future purchases. The aggregate unrecognized estimated fair value of unvested warrants at September 30, 2017 was $14.2 million.

Note 15 — Other Income (Expense), Net

Other income (expense), net consisted of the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2017			2016			2017			2016
Net gain (loss) on foreign currency exchange contracts (1)	$	(1,488	)	$	(218	)	$	(2,852	)	$	(894	)
Net gain (loss) on foreign currency exchange transactions	1,176			439			2,512			2,455
Other income (expense)	373			114			342			165
Other income (expense), net	$	61		$	335		$	2		$	1,726

⁽¹⁾  This represents the gains (losses) incurred on foreign currency hedging derivatives (see Note 17 for further details).

21

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Note 16 — Earnings Per Share

Earnings per share was calculated as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per-share amounts)	2017		2016		2017		2016
BASIC
Net income attributable to Universal Electronics Inc.	$	1,728	$	7,807	$	6,531	$	17,118
Weighted-average common shares outstanding	14,381		14,510		14,412		14,441
Basic earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.54	$	0.45	$	1.19
DILUTED
Net income attributable to Universal Electronics Inc.	$	1,728	$	7,807	$	6,531	$	17,118
Weighted-average common shares outstanding for basic	14,381		14,510		14,412		14,441
Dilutive effect of stock options, restricted stock and common stock warrants	285		338		277		299
Weighted-average common shares outstanding on a diluted basis	14,666		14,848		14,689		14,740
Diluted earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.53	$	0.44	$	1.16

The number of stock options and shares of restricted stock excluded from the computation of diluted earnings per common share were as follows:

	Three Months Ended September 30,		Nine Months Ended September 30,
(In thousands)	2017	2016	2017	2016
Stock options	165	—	153	111
Restricted stock awards	30	5	30	8

Note 17 — Derivatives

The following table sets forth the total net fair value of derivatives:

	September 30, 2017										December 31, 2016
	Fair Value Measurement Using							Total Balance			Fair Value Measurement Using							Total Balance
(In thousands)	Level 1		Level 2			Level 3					Level 1		Level 2			Level 3
Foreign currency exchange contracts	$	—	$	(385	)	$	—	$	(385	)	$	—	$	(1,584	)	$	—	$	(1,584	)

We held foreign currency exchange contracts, which resulted in a net pre-tax loss of $1.5 million and $0.2 million for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, we had a net pre-tax loss of $2.9 million and $0.9 million, respectively (see Note 15).

22

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Details of foreign currency exchange contracts held were as follows:

Date Held	Type	Position Held	Notional Value (in millions)		Forward Rate	Unrealized Gain/(Loss) Recorded at Balance Sheet Date (in thousands)(1)			Settlement Date
September 30, 2017	USD/Euro	USD	$	17.0	1.2039	$	299		October 27, 2017
September 30, 2017	USD/Chinese Yuan Renminbi	USD	$	22.0	6.6174	$	111		October 20, 2017
September 30, 2017	USD/Brazilian Real	USD	$	4.5	3.2330	$	(86	)	October 20, 2017
September 30, 2017	USD/Brazilian Real	BRL	$	1.0	3.3660	$	61		October 20, 2017
December 31, 2016	USD/Euro	USD	$	18.0	1.0513	$	(61	)	January 27, 2017
December 31, 2016	USD/Chinese Yuan Renminbi	Chinese Yuan Renminbi	$	25.0	6.7230	$	(974	)	January 13, 2017
December 31, 2016	USD/Chinese Yuan Renminbi	Chinese Yuan Renminbi	$	10.0	6.6757	$	(457	)	January 13, 2017
December 31, 2016	USD/Brazilian Real	USD	$	2.0	3.4775	$	(131	)	January 13, 2017
December 31, 2016	USD/Brazilian Real	USD	$	4.0	3.2316	$	39		January 13, 2017

⁽¹⁾  Unrealized gains on foreign currency exchange contracts are recorded in prepaid expenses and other current assets. Unrealized losses on foreign currency exchange contracts are recorded in other accrued expenses.

Note 18 — Business Combination

On April 6, 2017, we acquired substantially all of the net assets of Residential Control Systems, Inc. ("RCS"), a U.S.-based designer and manufacturer of energy management and control products for the residential, small commercial and hospitality markets. The purchase price of $12.6 million was comprised of $8.9 million in cash and $3.7 million of contingent consideration. Additionally, we incurred $0.1 million in acquisition costs, consisting primarily of accounting related expenses, which are included within selling, general and administrative expenses for the nine months ended September 30, 2017. The acquisition of these assets will allow us to expand our product offering of home sensing, monitoring and control solutions to include smart thermostat, sensing and monitoring products sold and marketed by RCS.

Our consolidated income statement for the three and nine months ended September 30, 2017 includes net sales of $0.8 million and $2.2 million, respectively, and net losses of $0.3 million and $0.7 million, respectively, attributable to RCS for the period commencing on April 6, 2017.

Contingent Consideration

We are required to make additional earnout payments of up to $10.0 million upon the achievement of certain operating income levels attributable to RCS over the period commencing on the acquisition date through June 30, 2022. The amount of contingent consideration is calculated at the end of each calendar year and is based on the agreed upon percentage of operating income as defined in the RCS Asset Purchase Agreement ("APA"). Operating income will be calculated using certain revenues, costs and expenses directly attributable to RCS as specified in the APA. At the acquisition date, the value of earnout contingent consideration was estimated using a valuation methodology based on projections of future operating income calculated in accordance with the APA. Such projections were then discounted using an average discount rate of 24.8% to reflect the risk in achieving the projected operating income levels as well as the time value of money. The fair value measurement of the earnout contingent consideration was based primarily on significant inputs not observable in an active market and thus represents a Level 3 measurement as defined

23

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

under U.S. GAAP. The fair value of earnout consideration is presented as long-term contingent consideration in our consolidated balance sheet at September 30, 2017.

Purchase Price Allocation

Using the acquisition method of accounting, the acquisition date fair value of the consideration transferred was allocated to the net tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date. The excess of the purchase price over the estimated fair value of net assets acquired is recorded as goodwill. The goodwill is expected to be deductible for income tax purposes. Management's purchase price allocation was the following:

(in thousands)	Estimated Lives	Preliminary Fair Value
Accounts receivable		$	429
Inventories		1,508
Prepaid expenses and other current assets		7
Property, plant and equipment	1-4 years	14
Current liabilities		(408		)
Net tangible assets acquired		1,550
Trade name	8 years	400
Customer relationships	10 years	5,000
Order backlog	1 year	150
Goodwill		5,494
Total purchase price		12,594
Less: Contingent consideration		(3,700		)
Cash paid		$	8,894

Management's determination of the fair value of intangible assets acquired are based primarily on significant inputs not observable in an active market and thus represent Level 3 fair value measurements as defined under U.S. GAAP.

The fair value assigned to the RCS trade name intangible asset was determined utilizing a relief from royalty method. Under the relief from royalty method, the fair value of the intangible asset is estimated to be the present value of the royalties saved because the company owns the intangible asset. Revenue projections and estimated useful life were significant inputs into estimating the value of the RCS trade name.

The fair value assigned to RCS customer relationships and order backlog intangible assets were determined utilizing a multi-period excess earnings approach. Under the multi-period excess earnings approach, the fair value of the intangible asset is estimated to be the present value of future earnings attributable to the asset and utilizes revenue and cost projections, including an assumed contributory asset charge.

The trade name, customer relationships and order backlog intangible assets are expected to be deductible for income tax purposes.

Pro Forma Results (Unaudited)

The following unaudited pro forma financial information presents the combined results of our operations and the operations of RCS as if this transaction had occurred on January 1, 2016. This unaudited pro forma financial information is not intended to represent or be indicative of the consolidated results of operations that would have been achieved had the acquisition actually been completed as of January 1, 2016, and should not be taken as a projection of the future consolidated results of our operations.

24

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

	Three Months Ended September 30, 2017				Nine Months Ended September 30, 2017
(In thousands, except per-share amounts)	2017		2016		2017		2016
Net sales	$	175,652	$	170,658	$	515,200	$	497,172
Net income	1,751		7,525		6,292		16,892
Net income attributable to Universal Electronics Inc.	1,751		7,525		6,292		16,892
Basic earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.52	$	0.44	$	1.17
Diluted earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.51	$	0.43	$	1.14

For purposes of determining pro forma net income attributable to Universal Electronics Inc., adjustments were made to all periods presented in the table above. The pro forma net income and net income attributable to Universal Electronics Inc. assumes that amortization of acquired intangible assets began at January 1, 2016 rather than on April 6, 2017. The result is a net increase in amortization expense of $0.1 million for the nine months ended September 30, 2017, and a net increase in amortization expense of $0.2 million and $0.5 million for the three and nine months ended September 30, 2016, respectively. Additionally, acquisition costs totaling $0.1 million are excluded from pro forma net income attributable to Universal Electronics Inc. All adjustments have been made net of their related tax effects.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes that appear elsewhere in this document.

Overview

We develop and manufacture a broad line of pre-programmed universal remote control products, AV accessories, software and intelligent wireless security, sensing and automation components dedicated to redefining the home entertainment and automation experience. Our customers operate primarily in the consumer electronics market and include subscription broadcasters, OEMs, international retailers, private label brands, pro-security dealers and companies in the computing industry. We also sell integrated circuits, on which our software and device control database is embedded, and license our device control database to OEMs that manufacture televisions, digital audio and video players, streamer boxes, cable converters, satellite receivers, set-top boxes, room air conditioning equipment, game consoles, and wireless mobile phones and tablets.

Since our beginning in 1986, we have compiled an extensive device control code database that covers approximately one million individual device functions and approximately 8,000 unique consumer electronic brands. QuickSet®, our proprietary software, can automatically detect, identify and enable the appropriate control commands for home entertainment, automation and appliances like air conditioners. Our library is regularly updated with new control functions captured directly from devices, remote controls and manufacturer specifications to ensure the accuracy and integrity of our database and control engine. Our universal remote control library contains device codes that are capable of controlling virtually all set-top boxes, televisions, audio components, DVD players, Blu-Ray players, and CD players, as well as most other remote controlled home entertainment devices and home automation control modules worldwide.

With the wider adoption of more advanced technologies, emerging radio frequency ("RF") technologies, such as RF4CE, Bluetooth, and Bluetooth Smart, have increasingly become a focus in our development efforts. Several new recently released platforms utilize RF to effectively implement popular features like voice search.

We have developed a comprehensive patent portfolio of more than 400 pending and issued patents related to remote controls and home automation.

We operate as one business segment. We have 24 international subsidiaries located in Argentina, Brazil, British Virgin Islands, Cayman Islands, France, Germany, Hong Kong (3), India, Italy, Japan, Korea, Mexico, the Netherlands, People's Republic of China (6), Singapore, Spain, and the United Kingdom.

To recap our results for the three months ended September 30, 2017:

• Net sales increased3.8% to $175.7 million for the three months ended September 30, 2017 from $169.2 million for the three months ended September 30, 2016.

• Our gross margin percentage decreased from 24.7% for the three months ended September 30, 2016 to 24.5% for the three months ended September 30, 2017.

• Operating expenses, as a percent of net sales, increased from 19.9% for the three months ended September 30, 2016 to 22.1% for the three months ended September 30, 2017.

• Our operating income decreased from $8.1 million for the three months ended September 30, 2016 to $4.2 million for the three months ended September 30, 2017, and our operating margin percentage decreased from 4.8% for the three months ended September 30, 2016 to 2.4% for the three months ended September 30, 2017.

• Our effective tax rate increased to 51.4% for the three months ended September 30, 2017, compared to 5.1% for the three months ended September 30, 2016.

Our strategic business objectives for 2017 include the following:

• continue to develop and market the advanced remote control products and technologies that our customer base is adopting;

• continue to broaden our home control and automation product offerings;

• further penetrate international subscription broadcasting markets;

• acquire new customers in historically strong regions;

• increase our share with existing customers; and

• continue to seek acquisitions or strategic partners that complement and strengthen our existing business.

We intend for the following discussion of our financial condition and results of operations to provide information that will assist in understanding our consolidated financial statements, the changes in certain key items in those financial statements from period

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to period, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect our consolidated financial statements.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles accepted in the United States of America requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to revenue recognition, allowances for sales returns and doubtful accounts, inventory valuation, our review for impairment of long-lived assets, intangible assets and goodwill, business combinations, income taxes, stock-based compensation expense and performance-based common stock warrants. Actual results may differ from these judgments and estimates, and they may be adjusted as more information becomes available. Any adjustment may be significant and may have a material impact on our consolidated financial position or results of operations.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably may have been used, or if changes in the estimate that are reasonably likely to occur may materially impact the financial statements. We do not believe that there have been any significant changes during the nine months ended September 30, 2017 to the items that we disclosed as our critical accounting policies and estimates in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our Annual Report on Form 10-K for our fiscal year ended December 31, 2016.

Recent Accounting Pronouncements

See Note 1 contained in the "Notes to Consolidated Financial Statements" for a discussion of recent accounting pronouncements.

Results of Operations

The following table sets forth our results of operations expressed as a percentage of net sales for the periods indicated.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	75.5		75.3		75.2		75.0
Gross profit	24.5		24.7		24.8		25.0
Research and development expenses	3.1		2.9		3.1		3.1
Factory transition restructuring charges	0.2		0.1		1.2		0.3
Selling, general and administrative expenses	18.8		16.9		18.4		17.7
Operating income	2.4		4.8		2.1		3.9
Interest income (expense), net	(0.4	)	(0.1	)	(0.3	)	(0.2	)
Other income (expense), net	0.0		0.2		0.0		0.4
Income before provision for income taxes	2.0		4.9		1.8		4.1
Provision for income taxes	1.0		0.3		0.6		0.6
Net income	1.0		4.6		1.2		3.5
Net income attributable to noncontrolling interest	—		—		—		0.0
Net income attributable to Universal Electronics Inc.	1.0	%	4.6	%	1.2	%	3.5	%

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Three Months Ended September 30, 2017 versus Three Months Ended September 30, 2016

Net sales. Net sales for the three months ended September 30, 2017 were $175.7 million, an increase of 3.8% compared to $169.2 million for the three months ended September 30, 2016. Net sales by our Business and Consumer lines were as follows:

	Three Months Ended September 30,
	2017				2016
	$ (millions)		% of total		$ (millions)		% of total
Business	$	163.1	92.8	%	$	157.2	92.9	%
Consumer	12.6		7.2		12.0		7.1
Total net sales	$	175.7	100.0	%	$	169.2	100.0	%

Net sales in our Business lines (subscription broadcasting, OEM, and computing companies) were 92.8% of net sales for the three months ended September 30, 2017 compared to 92.9% for the three months ended September 30, 2016. Net sales in our Business lines for the three months ended September 30, 2017increased by 3.8% to $163.1 million from $157.2 million driven primarily by increased sales of home security products, increased sales to consumer electronics companies in Asia, and the rollout of higher end platforms in Europe. These increases were partially offset by a decrease in sales to North American satellite broadcasting customers as certain customers are in the process of depleting their current stock of inventory in preparation for the launch of their new advanced platforms.

Net sales in our Consumer lines (One For All^® retail and private label) were 7.2% of net sales for the three months ended September 30, 2017 compared to 7.1% for the three months ended September 30, 2016. Net sales in our Consumer lines for the three months ended September 30, 2017increased by 5.0% to $12.6 million from $12.0 million in the three months ended September 30, 2016 driven primarily by growth in international markets outside of Europe.

Gross profit. Gross profit for the three months ended September 30, 2017 was $43.1 million compared to $41.8 million for the three months ended September 30, 2016. Gross profit as a percent of sales decreased to 24.5% for the three months ended September 30, 2017 compared to 24.7% for the three months ended September 30, 2016. The gross margin percentage was unfavorably impacted by price reductions granted to certain large volume customers, manufacturing inefficiencies experienced due to our factory transition activities in China, and lower-margin projects undertaken in Latin America. These impacts were partially offset by raw material cost savings.

Research and development ("R&D") expenses. R&D expenses increased 9.3% to $5.4 million for the three months ended September 30, 2017 from $5.0 million for the three months ended September 30, 2016 primarily driven by R&D efforts dedicated to developing new product offerings for new and existing product categories.

Factory transition restructuring charges. In the first quarter of 2016, we implemented a plan to reduce the impact of rising labor rates in China by transitioning manufacturing activities from our southern-most China factory, located in the city of Guangzhou in the Guangdong province, to our other China factories where labor rates are rising at a slower rate. As a result, we incurred severance costs of $0.4 million and $0.1 million for the three months ended September 30, 2017 and 2016, respectively. We ceased manufacturing operations in our Guangzhou factory during the third quarter of 2017 and as a result, we do not expect to incur a significant amount of additional severance costs associated with the transition of manufacturing activities from this location.

Selling, general and administrative ("SG&A") expenses. SG&A expenses increased15.3% to $33.0 million for the three months ended September 30, 2017 from $28.6 million for the three months ended September 30, 2016. The increase was primarily due to incremental expense recorded to reflect an increase in the value of contingent consideration to be paid in connection with our acquisition of the net assets of Ecolink Intelligent Technology, Inc. ("Ecolink"); increased stock-based compensation expense; and increased payroll and benefits attributable to annual merit increases and additional headcount to support product development efforts. Partially offsetting these increases was a decrease in legal expense as a result of higher legal fees in the prior year period related to patent litigation matters.

Interest income (expense), net. Net interest expense was $0.7 million for the three months ended September 30, 2017 compared to net interest expense of $0.2 million for the three months ended September 30, 2016 as a result of an increased level of borrowings on our line of credit.

Other income (expense), net. Net other income was $0.1 million for the three months ended September 30, 2017 compared to net other income of $0.3 million for the three months ended September 30, 2016. This change was driven primarily by foreign currency losses associated with fluctuations in the Chinese Yuan Renminbi and British Pound exchange rates versus the U.S. Dollar.

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Provision for income taxes. Income tax expense was $1.8 million for the three months ended September 30, 2017 compared to $0.4 million for the three months ended September 30, 2016. Our effective tax rate was 51.4% for the three months ended September 30, 2017 compared to 5.1% for the three months ended September 30, 2016. The increase in our effective tax rate was primarily due to the nondeductibility of certain transactions in China as a result of the pending sale of our Guangzhou factory. In addition, during the three months ended September 30, 2016, we received tax refunds from the Chinese government totaling $1.8 million for various tax incentives relating to fiscal year 2015.

Nine Months Ended September 30, 2017 versus Nine Months Ended September 30, 2016

Net sales. Net sales for the nine months ended September 30, 2017 were $514.6 million, an increase of 4.8% compared to $490.8 million for the nine months ended September 30, 2016. Net sales by our Business and Consumer lines were as follows:

	Nine Months Ended September 30,
	2017				2016
	$ (millions)		% of total		$ (millions)		% of total
Business	$	477.9	92.9	%	$	456.3	93.0	%
Consumer	36.7		7.1		34.5		7.0	%
Total net sales	$	514.6	100.0	%	$	490.8	100.0	%

Net sales in our Business lines (subscription broadcasting, OEM, and computing companies) were 92.9% of net sales for the nine months ended September 30, 2017 compared to 93.0% for the nine months ended September 30, 2016. Net sales in our Business lines for the nine months ended September 30, 2017 increased by 4.7% to $477.9 million from $456.3 million driven primarily by increased sales of home security products, increased market share in Latin America, the rollout of higher end platforms in Europe and increased sales to consumer electronics companies in Asia. These increases were partially offset by a decrease in sales to North American satellite broadcasting customers as certain customers are in the process of depleting their current stock of inventory in preparation for the launch of their new advanced platforms.

Net sales in our Consumer lines (One For All^® retail and private label) were 7.1% of net sales for the nine months ended September 30, 2017 compared to 7.0% for the nine months ended September 30, 2016. Net sales in our Consumer lines for the nine months ended September 30, 2017 increased by 7.1% to $36.7 million from $34.5 million in the nine months ended September 30, 2016 driven primarily by growth in international markets outside of Europe and in the U.S. market.

Gross profit. Gross profit for the nine months ended September 30, 2017 was $127.9 million compared to $122.9 million for the nine months ended September 30, 2016. Gross profit as a percent of sales decreased slightly to 24.8% for the nine months ended September 30, 2017 compared to 25.0% for the nine months ended September 30, 2016. The gross margin percentage was unfavorably impacted by price reductions granted to certain large volume customers, manufacturing inefficiencies experienced due to factory transition activities in China, and lower-margin projects undertaken in Latin America. These impacts were partially offset by the weakening of the Chinese Yuan Renminbi relative to the U.S. Dollar.

Research and development expenses. R&D expenses increased3.7% to $15.9 million for the nine months ended September 30, 2017 from $15.3 million for the nine months ended September 30, 2016.

Factory transition restructuring charges. In the first quarter of 2016, we implemented a plan to reduce the impact of rising labor costs in China by transitioning manufacturing activities from our southern-most China factory, located in the city of Guangzhou in the Guangdong province, to our other China factories where labor rates are rising at a slower rate. As a result, we incurred severance costs of $6.1 million and $1.6 million for the nine months ended September 30, 2017 and 2016, respectively. We ceased manufacturing operations in our Guangzhou factory during the third quarter of 2017 and as a result, we do not expect to incur a significant amount of additional severance costs associated with the transition of manufacturing activities from this location.

Selling, general and administrative expenses. SG&A expenses increased 9.0% to $94.7 million for the nine months ended September 30, 2017 from $86.9 million for the nine months ended September 30, 2016. The increase was primarily due to incremental expense recorded to reflect an increase in the value of contingent consideration to be paid in connection with our acquisition of the net assets of Ecolink; increased stock-based compensation expense; increased headcount and other direct costs associated with product development efforts as a result of an increase in the number of higher end customer products; additional expense to support our implementation of a new ERP system; and additional expense as a result of the acquisition of the net assets of Residential Control Systems, Inc. ("RCS") in April 2017. Partially offsetting these increases was a decrease in legal expense as a result of higher legal fees, including the recording of a $2.0 million legal settlement, in the prior year period related to patent litigation matters.

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Interest income (expense), net. Net interest expense was $1.7 million for the nine months ended September 30, 2017 compared to net interest expense of $0.8 million for the nine months ended September 30, 2016 as a result of an increased level of borrowings on our line of credit.

Other income (expense), net. Net other income was $2.0 thousand for the nine months ended September 30, 2017 compared to net other income of $1.7 million for the nine months ended September 30, 2016. This change was driven primarily by a decrease in foreign currency gains associated with fluctuations in the Chinese Yuan Renminbi exchange rate versus the U.S. Dollar.

Provision for income taxes. Income tax expense was $2.9 million for the nine months ended September 30, 2017 compared to $3.0 million for the nine months ended September 30, 2016. Our effective tax rate was 31.1% for the nine months ended September 30, 2017 compared to 14.7% for the nine months ended September 30, 2016. The increase in our effective tax rate was primarily due to the nondeductibility of certain transactions in China as a result of the pending sale of our Guangzhou factory. In addition, during the nine months ended September 30, 2016, we received tax refunds from the Chinese government totaling $1.8 million for various tax incentives relating to fiscal year 2015.

Liquidity and Capital Resources

Sources and Uses of Cash

(In thousands)	Nine Months Ended September 30, 2017			Increase (Decrease)			Nine Months Ended September 30, 2016
Cash provided by (used for) operating activities	$	(1,160	)	$	(39,841	)	$	38,681
Cash used for investing activities	(40,091		)	(9,852		)	(30,239		)
Cash provided by (used for) financing activities	44,903			54,986			(10,083		)
Effect of exchange rate changes on cash	(5,703		)	(2,519		)	(3,184		)
Net increase (decrease) in cash and cash equivalents	$	(2,051	)	$	2,774		$	(4,825	)

	September 30, 2017		Increase (Decrease)			December 31, 2016
Cash and cash equivalents	$	48,560	$	(2,051	)	$	50,611
Working capital	98,063		(10,228		)	108,291

Net cash used for operating activities was $1.2 million during the nine months ended September 30, 2017 compared to $38.7 million of net cash provided by operating activities during the nine months ended September 30, 2016. The decrease in net cash provided by operating activities was primarily due to working capital needs associated with accounts receivable and inventories. Cash outflows associated with accounts receivable have increased primarily as a result of collection timing. Days sales outstanding have increased from 72 days at September 30, 2016 to 79 days at September 30, 2017. With respect to inventories, cash outflows increased during the nine months ended September 30, 2017 largely as a result of carrying increased inventory levels while we transition manufacturing operations between our factories in China. In addition, we had some buildup of inventory related to the anticipated rollout of higher end platforms to certain customers as well as further anticipated growth in home security product sales. Our inventory turns decreased from 4.2 turns at September 30, 2016 to 3.6 turns at September 30, 2017.

Net cash used for investing activities during the nine months ended September 30, 2017 was $40.1 million compared to $30.2 million during the nine months ended September 30,2016. The increase in cash used for investing activities was driven primarily by our acquisition of the net assets of RCS for $8.9 million in April 2017.

Net cash provided by financing activities was $44.9 million during the nine months ended September 30, 2017 compared to $10.1 million of net cash used for financing activities during the nine months ended September 30, 2016. The increase in cash provided by financing activities was driven primarily by net borrowings on our line of credit of $64.0 million during the nine months ended September 30, 2017, compared to net payments of $15.0 million on our line of credit during the nine months ended September 30, 2016. This was partially offset by an increase of $18.0 million in treasury stock purchases and a $3.7 million decrease in proceeds from the exercise of stock options.

During the nine months ended September 30, 2017, we repurchased 329,964 shares of our common stock at a cost of $20.2 million compared to our repurchase of 39,531 shares at a cost of $2.2 million during the nine months ended September 30, 2016. We hold these shares as treasury stock and they are available for reissue. Presently, we have no plans to distribute these shares, although we may change these plans if necessary to fulfill our on-going business objectives.

30

From time to time, our Board of Directors authorizes management to repurchase shares of our issued and outstanding common stock on the open market. Repurchases may be made whenever we deem a repurchase to be a good use of our cash and the repurchase enhances shareholder value. As of September 30, 2017, we had 114,271 shares available for repurchase on the open market under the Board's authorizations. On October 23, 2017, our Board increased these repurchase authorizations by 300,000 shares bringing the total authorization as of the approval date to 386,434 shares.

Contractual Obligations

The following table summarizes our contractual obligations and the effect these obligations are expected to have on our liquidity and cash flow in future periods.

	Payments Due by Period
(In thousands)	Total		Less than 1 year		1 - 3 years		4 - 5 years		After 5  years
Operating lease obligations	$	13,732	$	4,570	$	5,192	$	3,321	$	649
Purchase obligations(1)	7,037		7,037		—		—		—
Contingent consideration (2)	17,400		3,400		13,000		1,000		—
Total contractual obligations	$	38,169	$	15,007	$	18,192	$	4,321	$	649

⁽¹⁾  Purchase obligations primarily consist of contractual payments to purchase property, plant and equipment.

⁽²⁾  Contingent consideration consists of contingent payments related to our purchases of the net assets of Ecolink and RCS.

Liquidity

Historically, we have utilized cash provided from operations as our primary source of liquidity, as internally generated cash flows have been sufficient to support our business operations, capital expenditures and discretionary share repurchases. More recently, we have utilized our revolving line of credit to fund an increased level of share repurchases and our acquisitions of the net assets of Ecolink and RCS. We anticipate that we will continue to utilize both cash flows from operations and our revolving line of credit to support ongoing business operations, capital expenditures and future discretionary share repurchases. Our working capital needs have typically been greatest during the third and fourth quarters when accounts receivable and inventories increase in connection with the fourth quarter holiday selling season and when inventory levels increase in anticipation of factory closures in observance of Chinese New Year. We believe our current cash balances, anticipated cash flow to be generated from operations and available borrowing resources will be sufficient to cover expected cash outlays during the next twelve months; however, because our cash is located in various jurisdictions throughout the world, we may at times need to increase borrowing from our revolving line of credit or take on additional debt until we are able to transfer cash among our various entities.

Our liquidity is subject to various risks including the risks discussed under "Item 3. Quantitative and Qualitative Disclosures about Market Risk."

(In thousands)	September 30, 2017		December 31, 2016
Cash and cash equivalents	$	48,560	$	50,611
Available borrowing resources	11,000		35,000

Our cash balances are held in numerous locations throughout the world. The majority of our cash is held outside of the United States and may be repatriated to the United States but, under current law, would be subject to United States federal income taxes, less applicable foreign tax credits. Repatriation of some foreign balances is restricted by local laws. We have not provided for the United States federal tax liability on these amounts for financial statement purposes as this cash is considered indefinitely reinvested outside of the United States. Our intent is to meet our domestic liquidity needs through ongoing cash flows, external borrowings, or both. We utilize a variety of tax planning strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed.

On September 30, 2017, we had $4.8 million, $22.1 million, $0.8 million, $13.3 million and $7.5 million of cash and cash equivalents in the United States, the People's Republic of China ("PRC"), Asia (excluding the PRC), Europe, and South America, respectively. On December 31, 2016,we had $3.3 million, $22.1 million, $5.3 million, $19.6 million, and $0.3 million of cash and cash equivalents in the United States, the PRC, Asia (excluding the PRC), Europe and South America, respectively. We attempt to mitigate our exposure to liquidity, credit and other relevant risks by placing our cash and cash equivalents with financial institutions we believe are high quality.

31

Our Amended and Restated Credit Agreement ("Amended Credit Agreement") with U.S. Bank National Association ("U.S. Bank") provided for a $125.0 million revolving line of credit ("Credit Line") that was to expire on November 1, 2019. On October 27, 2017, we entered into a Second Amended and Restated Credit Agreement ("Second Amended Credit Agreement") with U.S. Bank as administrative agent, sole lead arranger and sole book runner, and Wells Fargo, National Association, which replaces the Amended Credit Agreement. Under the Second Amended Credit Agreement, the Credit Line was increased to $170.0 million and the expiration date remained November 1, 2019. The Credit Line may be used for working capital and other general corporate purposes including acquisitions, share repurchases and capital expenditures. Amounts available for borrowing under the Credit Line are reduced by the balance of any outstanding letters of credit. There were no outstanding letters of credit at September 30, 2017.

All obligations under the Credit Line are secured by substantially all of our U.S. personal property and tangible and intangible assets as well as 65% of our ownership interest in Enson Assets Limited, our wholly-owned subsidiary that controls our manufacturing factories in the PRC.

The interest rate applicable to outstanding Credit Line balances under the Second Amended Credit Agreement is the same as under the Amended Credit Agreement. We may elect to pay interest on the Credit Line based on LIBOR plus an applicable margin (varying from 1.25% to 1.75%) or base rate (based on the prime rate of U.S. Bank or as otherwise specified in the Amended Credit Agreement) plus an applicable margin (varying from 0.00% to 0.50%). The applicable margins are calculated quarterly and vary based on our cash flow leverage ratio as set forth in the Amended Credit Agreement and Second Amended Credit Agreement. The interest rate in effect at September 30, 2017 was 2.48%. There are no commitment fees or unused line fees under the Amended Credit Agreement or the Second Amended Credit Agreement.

The Amended Credit Agreement and Second Amended Credit Agreement include financial covenants requiring a minimum fixed charge coverage ratio and a maximum cash flow leverage ratio. In addition, the Amended Credit Agreement and Second Amended Credit Agreement also contain other customary affirmative and negative covenants and events of default. As of September 30, 2017, we were in compliance with the covenants and conditions of the Amended Credit Agreement.

At September 30, 2017, we had an outstanding balance of $114.0 million on our Credit Line and $11.0 million of availability.

Off-Balance Sheet Arrangements

We do not participate in any material off-balance sheet arrangements.

Factors That May Affect Financial Condition and Future Results

Forward-Looking Statements

We caution that the following important factors, among others (including but not limited to factors discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as those discussed in our 2016 Annual Report on Form 10-K, or in our other reports filed from time to time with the Securities and Exchange Commission), may affect our actual results and may contribute to or cause our actual consolidated results to differ materially from those expressed in any of our forward-looking statements. The factors included here are not exhaustive. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Therefore, forward-looking statements should not be relied upon as a prediction of actual future results.

While we believe that the forward-looking statements made in this report are based on reasonable assumptions, the actual outcome of such statements is subject to a number of risks and uncertainties, including the significant percentage of our revenue attributable to a limited number of customers; the failure of our markets to continue growing and expanding in the manner we anticipated; the failure of our customers to grow and expand as we anticipated; the effects of natural or other events beyond our control, including the effects political unrest, war or terrorist activities may have on us or the economy; the economic environment's effect on us or our customers; the growth of, acceptance of and the demand for our products and technologies in various markets and geographical regions, including cable, satellite, consumer electronics, retail, and digital media and interactive technology; our successful integration of the Ecolink and RCS assets and business lines; our inability to add profitable complementary products which are accepted by the marketplace; our inability to attract and retain a quality workforce at adequate levels in all regions of the world, and particularly Asia; our inability to continue to maintain our operating costs at acceptable levels through our cost containment efforts; an unfavorable ruling in any or all of the litigation matters to which we are party; our inability to continue selling our products or licensing our technologies at higher or profitable margins; our inability to obtain orders or maintain our order volume with new and existing customers; our inability to develop new and innovative technologies and products that are accepted by our

32

customers; the sale of our Guangzhou facility not occurring as or within the time frame anticipated by management; our inability to successfully and profitably restructure our manufacturing facilities and activities; possible dilutive effect our stock incentive programs may have on our earnings per share and stock price; the continued ability to identify and execute on opportunities that maximize stockholder value, including the effects repurchasing the company's shares have on the company's stock value; our inability to continue to obtain adequate quantities of component parts or secure adequate factory production capacity on a timely basis; and other factors listed from time to time in our press releases and filings with the Securities and Exchange Commission.

33

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, including interest rate and foreign currency exchange rate fluctuations. We have established policies, procedures and internal processes governing our management of these risks and the use of financial instruments to mitigate our risk exposure.

Interest Rate Risk

We are exposed to interest rate risk related to our debt. From time to time we borrow amounts on our Credit Line for working capital and other liquidity needs. Under our Amended Credit Agreement and Second Amended Credit Agreement, we may elect to pay interest on outstanding borrowings on our Credit Line based on LIBOR or a base rate (based on the prime rate of U.S. Bank) plus an applicable margin as defined in the Amended Credit Agreement and Second Amended Credit Agreement. Accordingly, changes in interest rates would impact our results of operations in future periods. A 100 basis point increase in interest rates would have an approximately $0.7 million annual impact on net income based on our outstanding line of credit balance at September 30, 2017.

We cannot make any assurances that we will not need to borrow additional amounts in the future or that funds will be extended to us under comparable terms or at all. If funding is not available to us at a time when we need to borrow, we would have to use our cash reserves, including potentially repatriating cash from foreign jurisdictions, which may have a material adverse effect on our operating results, financial position and cash flows.

Foreign Currency Exchange Rate Risk

At September 30, 2017, we had wholly-owned subsidiaries in Argentina, Brazil, Cayman Islands, France, Germany, Hong Kong, India, Italy, Japan, Korea, Mexico, the Netherlands, the PRC, Singapore, Spain and the United Kingdom. We are exposed to foreign currency exchange rate risk inherent in our sales commitments, anticipated sales, anticipated purchases, operating expenses, assets and liabilities denominated in currencies other than the U.S. Dollar. The most significant foreign currencies to our operations are the Chinese Yuan Renminbi, Euro, British Pound, Argentinian Peso, Mexican Peso, Brazilian Real, Indian Rupee and Japanese Yen. Our most significant foreign currency exposure is to the Chinese Yuan Renminbi as this is the functional currency of our China-based factories where the majority of our products are manufactured. If the Chinese Yuan Renminbi were to strengthen against the U.S. Dollar, our manufacturing costs would increase. We are generally a net payor of the Euro, Mexican Peso, Indian Rupee and Japanese Yen and therefore benefit from a stronger U.S. Dollar and are adversely affected by a weaker U.S. Dollar relative to the foreign currency. For the British Pound, Argentinian Peso and Brazilian Real, we are generally a net receiver of the foreign currency and therefore benefit from a weaker U.S. Dollar and are adversely affected by a stronger U.S. Dollar relative to the foreign currency. Even where we are a net receiver, a weaker U.S. Dollar may adversely affect certain expense figures taken alone.

From time to time, we enter into foreign currency exchange agreements to manage the foreign currency exchange rate risks inherent in our forecasted income and cash flows denominated in foreign currencies. The terms of these foreign currency exchange agreements normally last less than nine months. We recognize the gains and losses on these foreign currency contracts in the same period as the remeasurement losses and gains of the related foreign currency-denominated exposures.

It is difficult to estimate the impact of fluctuations on reported income, as it depends on the opening and closing rates, the average net balance sheet positions held in a foreign currency and the amount of income generated in local currency. We routinely forecast what these balance sheet positions and income generated in local currency may be and we take steps to minimize exposure as we deem appropriate. Alternatively, we may choose not to hedge the foreign currency risk associated with our foreign currency exposures, primarily if such exposure acts as a natural foreign currency hedge for other offsetting amounts denominated in the same currency or the currency is difficult or too expensive to hedge. We do not enter into any derivative transactions for speculative purposes.

The sensitivity of earnings and cash flows to variability in exchange rates is assessed by applying an approximate range of potential rate fluctuations to our assets, obligations and projected results of operations denominated in foreign currency with all other variables held constant. The analysis includes all of our foreign currency contracts offset by the underlying exposures. Based on our overall foreign currency rate exposure at September 30, 2017, we believe that movements in foreign currency rates may have a material effect on our financial position and results of operations. We estimate that if the exchange rates for the Chinese Yuan Renminbi, Euro, British Pound, Argentinian Peso, Mexican Peso, Brazilian Real, Indian Rupee and Japanese Yen relative to the U.S. Dollar fluctuate 10% from September 30, 2017, net income in the third quarter of 2017 would fluctuate by approximately $11.5 million.

34

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Exchange Act Rule 13a-15(d) defines "disclosure controls and procedures" to mean controls and procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. The definition further states that disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

An evaluation was performed under the supervision and with the participation of our management, including our principal executive and principal financial officers, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our principal executive and principal financial officers have concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this report, to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There have been no changes in internal controls or in other factors that may significantly affect our internal controls during the fiscal quarter covered by this Quarterly Report on Form 10-Q.

35

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to lawsuits arising out of the conduct of our business. The discussion of our litigation matters contained in "Notes to Consolidated Financial Statements - Note 10" is incorporated herein by reference.

ITEM 1A. RISK FACTORS

The reader should carefully consider, in connection with the other information in this report, the factors discussed in "Part I, Item

1A: Risk Factors" of the Company's 2016 Annual Report on Form 10-K incorporated herein by reference. These factors may cause our actual results to differ materially from those stated in forward-looking statements contained in this document and elsewhere.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended September 30, 2017, we repurchased 90,494 shares of our issued and outstanding common stock for $5.3 million. We make stock repurchases under ongoing and systematic programs approved by our Board of Directors when we deem a repurchase to be a good use of our cash and the repurchase enhances shareholder value. On September 30, 2017, we had 114,271 shares available for repurchase on the open market under the Board's authorizations. On October 23, 2017, our Board increased these repurchase authorizations by 300,000 shares bringing the total authorizations as of the approval date to 386,434 shares. Shares may also be tendered by employees to satisfy tax withholding obligations in connection with the vesting of restricted stock.

The following table sets forth, for the three months ended September 30, 2017, our total stock repurchases, average price paid per share and the maximum number of shares that may yet be purchased on the open market under our plans or programs:

Period	Total Number of Shares Purchased (1)	Weighted Average Price Paid per Share (2)		Total Number  of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (3)
July 1, 2017 - July 31, 2017	1,354	$	67.21	—	200,000
August 1, 2017 - August 31, 2017	38,462	57.33		35,729	164,271
September 1, 2017 - September 30, 2017	50,678	59.91		50,000	114,271
Total	90,494	$	58.92	85,729	114,271

⁽¹⁾  Of the repurchases in July, August and September, 1,354, 2,733 and 678 shares, respectively, represent common shares of the company that were owned and tendered by employees to satisfy tax withholding obligations in connection with the vesting of restricted shares.

⁽²⁾  For shares tendered in connection with the vesting of restricted shares, the average price paid per share is an average calculated using the daily high and low of the Company's common stock at the time of vesting.

⁽³⁾  The Company may purchase shares from time to time in open market purchases. The Company may make all or part of the purchases pursuant to accelerated share repurchases or Rule 10b5-1 plans.

36

ITEM 6. EXHIBITS

31.1	Rule 13a-14(a) Certifications of Paul D. Arling, Chief Executive Officer (principal executive officer) of Universal Electronics Inc.
31.2	Rule 13a-14(a) Certifications of Bryan M. Hackworth, Chief Financial Officer (principal financial officer and principal accounting officer) of Universal Electronics Inc.
32	Section 1350 Certifications of Paul D. Arling, Chief Executive Officer (principal executive officer) of Universal Electronics Inc., and Bryan M. Hackworth, Chief Financial Officer (principal financial officer and principal accounting officer) of Universal Electronics Inc. pursuant to 18 U.S.C. Section 1350
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

37

SIGNATURES

Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:	November 8, 2017	UNIVERSAL ELECTRONICS INC.
		By:	/s/ Bryan M. Hackworth
			Bryan M. Hackworth
			Chief Financial Officer (principal financial officer
			and principal accounting officer)

38

EXHIBIT INDEX

Exhibit No.	Description
31.1	Rule 13a-14(a) Certifications of Paul D. Arling, Chief Executive Officer (principal executive officer) of Universal Electronics Inc.
31.2	Rule 13a-14(a) Certifications of Bryan M. Hackworth, Chief Financial Officer (principal financial officer and principal accounting officer) of Universal Electronics Inc.
32	Section 1350 Certifications of Paul D. Arling, Chief Executive Officer (principal executive officer) of Universal Electronics Inc., and Bryan M. Hackworth, Chief Financial Officer (principal financial officer and principal accounting officer) of Universal Electronics Inc. pursuant to 18 U.S.C. Section 1350
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

39

EX-31.1

Exhibit 31.1

I, Paul D. Arling, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Universal Electronics Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2017

/s/ Paul D. Arling

Paul D. Arling

Chairman and Chief Executive Officer

(principal executive officer)

EX-31.2

Exhibit 31.2

I, Bryan M. Hackworth, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Universal Electronics Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2017

/s/ Bryan M. Hackworth

Bryan M. Hackworth

Chief Financial Officer

(principal financial officer

and principal accounting officer)

EX-32

Exhibit 32

SECTION 1350 CERTIFICATIONS

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Universal Electronics Inc. (the “Company”), hereby certifies that the (i) Company’s Form 10-Q for the fiscal quarter ended September 30, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	November 8, 2017	By:	/s/ Paul D. Arling
			Paul D. Arling
			Chief Executive Officer
			(principal executive officer)
		By:	/s/ Bryan M. Hackworth
			Bryan M. Hackworth
			Chief Financial Officer
			(principal financial officer and principal accounting officer)

A signed original of this written statement has been provided to Universal Electronics Inc. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 06, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	UNIVERSAL ELECTRONICS INC
Entity Central Index Key	0000101984
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Share Outstanding		14,305,749

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 48,560	$ 50,611
Restricted cash	4,799	4,623
Accounts receivable, net	153,355	124,592
Inventories, net	154,520	129,879
Prepaid expenses and other current assets	9,988	7,439
Assets held for sale	12,403	0
Income tax receivable	3,262	1,054
Deferred income taxes		5,960
Total current assets	386,887	324,158
Property, plant, and equipment, net	109,149	105,351
Goodwill	48,624	43,052
Intangible assets, net	30,159	28,549
Deferred income taxes	18,349
Deferred income taxes		10,430
Long-term restricted cash	0	4,600
Other assets	4,040	4,896
Total assets	597,208	521,036
Current liabilities:
Accounts payable	106,872	97,157
Line of credit	114,000	49,987
Accrued compensation	33,328	35,580
Accrued sales discounts, rebates and royalties	7,790	8,358
Accrued income taxes	994	375
Other accrued expenses	25,840	24,410
Total current liabilities	288,824	215,867
Long-term liabilities:
Long-term contingent consideration	14,000	10,500
Deferred income taxes	6,376
Deferred income taxes		7,060
Income tax payable	791	791
Other long-term liabilities	1,598	6,308
Total liabilities	311,589	240,526
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized; none issued or outstanding	0	0
Common stock, $0.01 par value, 50,000,000 shares authorized; 23,687,651 and 23,575,340 shares issued on September 30, 2017 and December 31, 2016, respectively	237	236
Paid-in capital	262,776	250,481
Treasury stock, at cost, 9,352,551 and 9,022,587 shares on September 30, 2017 and December 31, 2016, respectively	(243,197)	(222,980)
Accumulated other comprehensive income (loss)	(17,831)	(22,821)
Retained earnings	283,634	275,594
Total stockholders' equity	285,619	280,510
Total liabilities and stockholders' equity	$ 597,208	$ 521,036

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	23,687,651	23,575,340
Treasury stock, shares (in shares)	9,352,551	9,022,587

XML

CONSOLIDATED INCOME STATEMENTS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Net sales	$ 175,652	$ 169,185	$ 514,638	$ 490,829
Cost of sales	132,582	127,400	386,783	367,941
Gross profit	43,070	41,785	127,855	122,888
Research and development expenses	5,415	4,955	15,859	15,292
Factory transition restructuring charges	446	81	6,145	1,598
Selling, general and administrative expenses	32,997	28,628	94,701	86,867
Operating income	4,212	8,121	11,150	19,131
Interest income (expense), net	(721)	(228)	(1,676)	(753)
Other income (expense), net	61	335	2	1,726
Income before provision for income taxes	3,552	8,228	9,476	20,104
Provision for income taxes	1,824	421	2,945	2,956
Net income	1,728	7,807	6,531	17,148
Net income attributable to noncontrolling interest	0	0	0	30
Net income attributable to Universal Electronics Inc.	$ 1,728	$ 7,807	$ 6,531	$ 17,118
Earnings per share attributable to Universal Electronics Inc.:
Basic (in dollars per share)	$ 0.12	$ 0.54	$ 0.45	$ 1.19
Diluted (in dollars per share)	$ 0.12	$ 0.53	$ 0.44	$ 1.16
Shares used in computing earnings per share:
Basic (in shares)	14,381	14,510	14,412	14,441
Diluted (in shares)	14,666	14,848	14,689	14,740

XML

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 1,728	$ 7,807	$ 6,531	$ 17,148
Other comprehensive income (loss):
Change in foreign currency translation adjustment	2,999	(540)	4,990	(1,858)
Total comprehensive income (loss)	4,727	7,267	11,521	15,290
Comprehensive income (loss) attributable to noncontrolling interest	0	0	0	30
Comprehensive income (loss) attributable to Universal Electronics Inc.	$ 4,727	$ 7,267	$ 11,521	$ 15,260

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash provided by (used for) operating activities:
Net income	$ 6,531	$ 17,148
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization	23,202	18,994
Provision for doubtful accounts	167	123
Provision for inventory write-downs	2,189	2,398
Deferred income taxes	(953)	1,413
Tax benefit from exercise of stock options and vested restricted stock	0	2,230
Excess tax benefit from stock-based compensation	0	(2,292)
Shares issued for employee benefit plan	591	763
Employee and director stock-based compensation	9,476	7,638
Performance-based common stock warrants	1,122	3,219
Changes in operating assets and liabilities:
Restricted cash	4,623	0
Accounts receivable	(24,440)	(11,359)
Inventories	(21,217)	(4,470)
Prepaid expenses and other assets	(2,422)	(86)
Accounts payable and accrued expenses	1,488	7,699
Accrued income taxes	(1,517)	(4,737)
Net cash provided by (used for) operating activities	(1,160)	38,681
Cash used for investing activities:
Acquisition of property, plant, and equipment	(29,922)	(28,914)
Acquisition of net assets of Residential Control Systems, Inc.	(8,894)	0
Acquisition of intangible assets	(1,275)	(1,373)
Increase in restricted cash	0	(4,797)
Deposit received toward sale of Guangzhou factory	0	4,797
Deconsolidation of Encore Controls LLC	0	48
Net cash used for investing activities	(40,091)	(30,239)
Cash provided by (used for) financing activities:
Borrowings under line of credit	115,000	92,987
Repayments on line of credit	(50,987)	(107,987)
Proceeds from stock options exercised	1,107	4,813
Treasury stock purchased	(20,217)	(2,188)
Excess tax benefit from stock-based compensation	0	2,292
Net cash provided by (used for) financing activities	44,903	(10,083)
Effect of exchange rate changes on cash	(5,703)	(3,184)
Net increase (decrease) in cash and cash equivalents	(2,051)	(4,825)
Cash and cash equivalents at beginning of year	50,611	52,966
Cash and cash equivalents at end of period	48,560	48,141
Supplemental cash flow information:
Income taxes paid	5,770	6,034
Interest paid	$ 1,697	$ 926

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Basis of Presentation and Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

In the opinion of management, the accompanying consolidated financial statements of Universal Electronics Inc. and its subsidiaries contain all the adjustments necessary for a fair presentation of financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. Information and footnote disclosures normally included in financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. As used herein, the terms "Company," "we," "us," and "our" refer to Universal Electronics Inc. and its subsidiaries, unless the context indicates to the contrary.

Our results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk," and the "Financial Statements and Supplementary Data" included in Items 1A, 7, 7A, and 8, respectively, of our Annual Report on Form 10-K for the year ended December 31, 2016.

Estimates, Judgments and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and assumptions, including those related to revenue recognition, allowances for sales returns and doubtful accounts, inventory valuation, our review for impairment of long-lived assets, intangible assets and goodwill, business combinations, income taxes, stock-based compensation expense and performance-based common stock warrants. Actual results may differ from these estimates and assumptions, and they may be adjusted as more information becomes available. Any adjustment may be material.

See Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 for a summary of our significant accounting policies.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers," which will supersede most existing U.S. GAAP revenue recognition guidance. This new standard requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. In addition, ASU 2014-09 contains expanded disclosure requirements relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. As initially proposed, ASU 2014-09 would have been effective for fiscal periods beginning after December 15, 2016 and permits the use of either the full retrospective or modified retrospective transition method. In August 2015, the FASB postponed the effective date of this new revenue standard by one year. We have largely completed our review of customer contract terms and our assessment of the impact of adopting this standard on our revenue recognition policy, and are currently in the process of modifying certain revenue recognition processes and controls to comply with ASU 2014-09, including the new disclosure requirements. The impact of this new guidance is primarily expected to accelerate revenue recognition for those contractual arrangements under which we manufacture and sell customized products that have no alternative use, as defined under ASU 2014-09 and related guidance and interpretations. In particular, to the extent that we have the right to payment such as a firm order or other contractual commitment from the customer, revenue associated with customized products will be recognized as those products are manufactured rather than when title for those products transfers to the customer. We also expect revenue recognition to be accelerated for licensing arrangements that contain minimum guarantees. We expect to implement ASU 2014-09 on January 1, 2018, using the modified retrospective transition method. Thus prior periods will not be restated. The impact of the transition to this new accounting method, which will include a cumulative-effect adjustment to retained earnings as of the adoption date, could have a material impact on our consolidated results of operations.

In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory," which states that inventory should be measured at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for fiscal periods beginning after December 15, 2016 and must be applied prospectively. The adoption of ASU 2015-11 did not have a material impact on our consolidated financial position or results of operations.

In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes." This new guidance requires all deferred tax assets and liabilities, along with any related valuation allowance, be classified as non-current on the balance sheet. ASU 2015-17 is effective for fiscal periods beginning after December 15, 2016 and may be adopted either prospectively or retrospectively. We prospectively adopted ASU 2015-17 effective January 1, 2017, and thus prior period balance sheets have not been adjusted. The adoption of ASU 2015-17 had no impact on our consolidated results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, "Leases," which changes the accounting for leases and requires expanded disclosures about leasing activities. This new guidance will require lessees to recognize a right of use asset and a lease liability at the commencement date for all leases with terms greater than twelve months. Accounting by lessors is largely unchanged. ASU 2016-02 is effective for fiscal periods beginning after December 15, 2018 and must be adopted using a modified retrospective approach. Early adoption is permitted. We are currently evaluating the impact that ASU 2016-02 will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09,"Improvements to Employee Share-Based Payment Accounting," which amends Accounting Standards Codification ("ASC") 718, "Compensation - Stock Compensation." ASU 2016-09 requires excess tax benefits and tax deficiencies to be recorded as a discrete adjustment to income tax expense when stock awards vest or are settled, rather than in paid-in capital when they impact income taxes payable. This new guidance also requires cash flows related to excess tax benefits from stock-based compensation to be presented with other income tax cash flows in operating activities, rather than separately as a financing activity, in the statement of cash flows. Additionally, ASU 2016-09 impacts the calculation of diluted weighted-average shares under the treasury stock method as the assumed proceeds from an employee vesting in or exercising a stock-based award are no longer increased or decreased by the amount of excess tax benefits or deficiencies taken to paid-in capital. We elected to adopt the provisions of ASU 2016-09 prospectively effective January 1, 2017. We also made the accounting policy election, as allowed by ASU 2016-09, to account for forfeitures of stock-based awards as they occur, rather than estimating forfeitures. The cumulative effect of adopting ASU 2016-09 was an increase of $1.5 million to deferred tax assets and an increase to retained earnings of $1.5 million, as of January 1, 2017, as a result of recognizing previously unrecognized excess tax benefits from stock-based compensation. There was no cumulative effect impact related to the change in accounting policy to account for forfeitures of stock-based awards when they occur as a result of our minimal historical forfeitures experience.

In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," which amends ASC 230, "Statement of Cash Flows". This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal periods beginning after December 15, 2017 and must be adopted retrospectively. Early adoption is permitted as long as all amendments are adopted in the same period. We are currently evaluating the impact that ASU 2016-15 will have on our consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory," which changes the accounting for income tax consequences of intra-entity transfers of assets other than inventory. Current guidance prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. Under this new guidance, the income tax consequences of an intra-entity transfer of an asset other than inventory will be recognized when the transfer occurs. ASU 2016-16 is effective for fiscal periods beginning after December 15, 2017. Early adoption is permitted. The impact of the adoption of ASU 2016-16 could be material depending on the size of any intra-entity transfers we may implement in future periods.

In November 2016, the FASB issued ASU 2016-18,"Restricted Cash," which amends ASC 230, "Statement of Cash Flows." This new guidance addresses the classifications and presentation of changes in restricted cash in the statement of cash flows. ASU 2016-18 is effective for fiscal periods beginning after December 15, 2017 and must be adopted retrospectively. Early adoption is permitted. The adoption of ASU 2016-18 will modify our current disclosures by reclassifying certain amounts within the consolidated statement of cash flows, but is not expected to have a material effect on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment." This guidance simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for fiscal periods beginning after December 31, 2019. Early adoption is permitted. We do not expect the adoption of ASU 2017-04 to have a material impact on our consolidated financial statements.

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Cash and Cash Equivalents and Restricted Cash

9 Months Ended

Sep. 30, 2017

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents and Restricted Cash

Cash and Cash Equivalents and Restricted Cash

Cash and Cash Equivalents

Cash and cash equivalents were held in the following geographic regions:

(In thousands)	September 30, 2017		December 31, 2016
United States	$	4,795	$	3,277
People's Republic of China ("PRC")	22,120		22,142
Asia (excluding the PRC)	846		5,260
Europe	13,317		19,630
South America	7,482		302
Total cash and cash equivalents	$	48,560	$	50,611

Restricted Cash

In connection with a court order issued in a now settled litigation matter, we previously placed $4.6 million of cash into a collateralized surety bond. This bond had certain restrictions for liquidation and was therefore classified as restricted cash. On February 10, 2017, the $4.6 million surety bond was returned to us upon final settlement of the related litigation matter.

In connection with the pending sale of our Guangzhou factory in the PRC (Note 10), the buyer made a cash deposit of RMB 32 million ($4.8 million based on September 30, 2017 exchange rates) into an escrow account on September 29, 2016. Under the terms of the escrow account, these funds will not be paid to us until the close of the sale. Accordingly, this deposit is presented as restricted cash within our consolidated balance sheet.

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Accounts Receivable, Net and Revenue Concentrations

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Accounts Receivable, Net and Revenue Concentrations

Accounts Receivable, Net and Revenue Concentrations

Accounts receivable, net were as follows:

(In thousands)	September 30, 2017			December 31, 2016
Trade receivables, gross	$	147,194		$	120,965
Allowance for doubtful accounts	(1,052		)	(904		)
Allowance for sales returns	(459		)	(539		)
Net trade receivables	145,683			119,522
Other	7,672			5,070
Accounts receivable, net	$	153,355		$	124,592

Allowance for Doubtful Accounts

Changes in the allowance for doubtful accounts were as follows:

(In thousands)	Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	904		$	822
Additions (reductions) to costs and expenses	167			123
(Write-offs)/Foreign exchange effects	(19		)	15
Balance at end of period	$	1,052		$	960

Sales Returns

The allowance for sales returns at September 30, 2017 and December 31, 2016 included reserves for items returned prior to period-end that were not completely processed, and therefore had not yet been removed from the allowance for sales returns balance. If these returns had been fully processed, the allowance for sales returns balance would have been approximately $0.3 million and $0.4 million on September 30, 2017 and December 31, 2016, respectively. The value of these returned goods was included in our inventory balance at September 30, 2017 and December 31, 2016.

Significant Customers

Net sales to the following customers totaled more than 10% of our net sales:

	Three Months Ended September 30,
	2017				2016
	$ (thousands)		% of Net Sales		$ (thousands)		% of Net Sales
Comcast Corporation	$	36,811	21.0	%	$	35,554	21.0	%
AT&T	20,117		11.5		21,139		12.5

	Nine Months Ended September 30,
	2017				2016
	$ (thousands)		% of Net Sales		$ (thousands)		% of Net Sales
Comcast Corporation	$	122,009	23.7	%	$	111,529	22.7	%
AT&T	61,057		11.9		60,709		12.4

Trade receivables associated with these significant customers that totaled more than 10% of our accounts receivable, net were as follows:

	September 30, 2017				December 31, 2016
	$ (thousands)		% of Accounts Receivable, Net		$ (thousands)		% of Accounts Receivable, Net
Comcast Corporation	$	26,553	17.3	%	$	23,716	19.0	%
AT&T (1)	—		—		14,108		11.3

⁽¹⁾   Trade receivables associated with this customer did not total more than 10% of our accounts receivable, net at September 30, 2017.

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Inventories, Net and Significant Supplier

9 Months Ended

Sep. 30, 2017

Inventory Disclosure [Abstract]

Inventories, Net and Significant Supplier

Inventories, Net and Significant Supplier

Inventories, net were as follows:

(In thousands)	September 30, 2017			December 31, 2016
Raw materials	$	36,803		$	33,059
Components	18,556			15,046
Work in process	6,596			5,860
Finished goods	95,690			80,119
Reserve for excess and obsolete inventory	(3,125		)	(4,205		)
Inventories, net	$	154,520		$	129,879

Reserve for Excess and Obsolete Inventory

Changes in the reserve for excess and obsolete inventory were as follows:

(In thousands)	Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	4,205		$	3,045
Additions charged to costs and expenses (1)	1,960			2,120
Sell through (2)	(950		)	(781		)
(Write-offs)/Foreign exchange effects	(2,090		)	(726		)
Balance at end of period	$	3,125		$	3,658

⁽¹⁾ The additions charged to costs and expenses do not include inventory directly written-off that was scrapped during production totaling $0.2 million and $0.3 million for the nine months endedSeptember 30, 2017 and 2016, respectively. These amounts are production waste and are not included in management's reserve for excess and obsolete inventory.

⁽²⁾ These amounts represent the reduction in reserves associated with inventory items that were sold during the period.

Significant Supplier

We purchase integrated circuits, components and finished goods from multiple sources. Purchases from the following supplier totaled more than 10% of our total inventory purchases:

	Three Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Texas Instruments	$	13,115	12.4	%	$	12,353	13.0	%

	Nine Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Texas Instruments	$	33,693	11.3	%	$	32,294	11.9	%

Related Party Supplier

We purchase certain printed circuit board assemblies from a related party supplier. The supplier is considered a related party for financial reporting purposes because our Senior Vice President of Strategic Operations owns 40% of this vendor. Inventory purchases from this supplier were as follows:

	Three Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Related party supplier	$	1,378	1.3	%	$	1,382	1.5	%

	Nine Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Related party supplier	$	3,962	1.3	%	$	4,971	1.8	%

Total accounts payable to this supplier were as follows:

	September 30, 2017				December 31, 2016
	$ (thousands)		% of Accounts Payable		$ (thousands)		% of Accounts Payable
Related party supplier	$	1,763	1.6	%	$	1,690	1.7	%

Our payment terms and pricing with this supplier are consistent with the terms offered by other suppliers in the ordinary course of business. The accounting policies that we apply to our transactions with our related party supplier are consistent with those applied in transactions with independent third parties. Corporate management routinely monitors purchases from our related party supplier to ensure these purchases remain consistent with our business objectives.

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Goodwill and Intangible Assets, Net

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Net

Goodwill and Intangible Assets, Net

Goodwill

Changes in the carrying amount of goodwill were as follows:

(In thousands)
Balance at December 31, 2016	$	43,052
Goodwill acquired during the period (1)	5,494
Foreign exchange effects	78
Balance at September 30, 2017	$	48,624

⁽¹⁾ During the second quarter of 2017, we recorded $5.5 million of goodwill related to the Residential Control Systems, Inc. acquisition. Refer to Note 18 for further information about this acquisition.

Intangible Assets, Net

The components of intangible assets, net were as follows:

	September 30, 2017							December 31, 2016
(In thousands)	Gross (1)		Accumulated Amortization (1)			Net		Gross (1)		Accumulated Amortization (1)			Net
Distribution rights	$	340	$	(155	)	$	185	$	302	$	(119	)	$	183
Patents	12,593		(4,996		)	7,597		12,038		(4,775		)	7,263
Trademarks and trade names (2)	2,786		(1,518		)	1,268		2,400		(1,310		)	1,090
Developed and core technology	12,560		(5,567		)	6,993		12,585		(4,068		)	8,517
Capitalized software development costs	142		(59		)	83		142		(5		)	137
Customer relationships (2)	32,534		(18,613		)	13,921		27,703		(16,344		)	11,359
Order backlog (2)	150		(38		)	112		—		—			—
Total intangible assets, net	$	61,105	$	(30,946	)	$	30,159	$	55,170	$	(26,621	)	$	28,549

⁽¹⁾  This table excludes the gross value of fully amortized intangible assets totaling $6.0 million and $10.2 million at September 30, 2017 and December 31, 2016, respectively.

⁽²⁾  During the second quarter of 2017, we purchased a trade name valued at $0.4 million, which is being amortized ratably over eight years; customer relationships valued at $5.0 million, which are being amortized ratably over 10 years; and order backlog valued at $0.2 million, which is being amortized ratably over one year. Refer to Note 18 for further information regarding the purchase of these intangible assets.

Amortization expense is recorded in selling, general and administrative expenses, except amortization expense related to capitalized software development costs and order backlog, which are recorded in cost of sales. Amortization expense by income statement caption was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Cost of sales	$	54	$	21	$	128	$	63
Selling, general and administrative expenses	1,715		1,551		5,032		4,618
Total amortization expense	$	1,769	$	1,572	$	5,160	$	4,681

Estimated future annual amortization expense related to our intangible assets at September 30, 2017, is as follows:

(In thousands)
2017 (remaining 3 months)	$	1,776
2018	7,046
2019	6,901
2020	5,740
2021	2,289
Thereafter	6,407
Total	$	30,159

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Line of Credit

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Line of Credit

Line of Credit

Our Amended and Restated Credit Agreement ("Amended Credit Agreement") with U.S. Bank National Association ("U.S. Bank") provided for a $125.0 million revolving line of credit ("Credit Line") that was to expire on November 1, 2019. On October 27, 2017, we entered into a Second Amended and Restated Credit Agreement ("Second Amended Credit Agreement") with U.S. Bank as administrative agent, sole lead arranger and sole book runner, and Wells Fargo Bank, National Association, which replaces the Amended Credit Agreement. Under the Second Amended Credit Agreement, the Credit Line was increased to $170.0 million and the expiration date remained November 1, 2019. The Credit Line may be used for working capital and other general corporate purposes including acquisitions, share repurchases and capital expenditures. Amounts available for borrowing under the Credit Line are reduced by the balance of any outstanding letters of credit. There were no outstanding letters of credit at September 30, 2017.

All obligations under the Credit Line are secured by substantially all of our U.S. personal property and tangible and intangible assets as well as 65% of our ownership interest in Enson Assets Limited, our wholly-owned subsidiary that controls our manufacturing factories in the PRC.

The interest rate applicable to outstanding Credit Line balances under the Second Amended Credit Agreement is the same as under the Amended Credit Agreement. We may elect to pay interest on the Credit Line based on LIBOR plus an applicable margin (varying from 1.25% to 1.75%) or base rate (based on the prime rate of U.S. Bank or as otherwise specified in the Second Amended Credit Agreement) plus an applicable margin (varying from 0.00% to 0.50%). The applicable margins are calculated quarterly and vary based on our cash flow leverage ratio as set forth in the Amended Credit Agreement and Second Amended Credit Agreement. The interest rate in effect at September 30, 2017 was 2.48%. There are no commitment fees or unused line fees under the Amended Credit Agreement or the Second Amended Credit Agreement.

The Amended Credit Agreement and Second Amended Credit Agreement include financial covenants requiring a minimum fixed charge coverage ratio and a maximum cash flow leverage ratio. In addition, the Amended Credit Agreement and Second Amended Credit Agreement also contain other customary affirmative and negative covenants and events of default. As of September 30, 2017, we were in compliance with the covenants and conditions of the Amended Credit Agreement.

At September 30, 2017, we had $114.0 million outstanding under the Credit Line. Our total interest expense on borrowings was $0.8 million and $0.3 million during the three months ended September 30, 2017 and 2016, respectively, and $1.8 million and $0.9 million during the nine months ended September 30, 2017 and 2016, respectively.

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Income Taxes

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We utilize our estimated annual effective tax rate to determine our provision for income taxes for interim periods. The income tax provision is computed by taking the estimated annual effective tax rate and multiplying it by the year-to-date pre-tax book income.

We recorded income tax expense of $1.8 million and $0.4 million for the three months ended September 30,2017 and 2016, respectively, and our effective tax rate was 51.4% and 5.1% during the three months ended September 30,2017 and 2016, respectively. We recorded income tax expense of $2.9 million and $3.0 million for the nine months ended September 30, 2017 and 2016, respectively, and our effective tax rate was 31.1% and 14.7% during the nine months ended September 30,2017 and 2016, respectively. The higher effective tax rate in both periods was primarily due to the nondeductibility of certain transactions in the PRC as a result of the pending sale of our Guangzhou factory (Note 10). In addition, during the three and nine months ended September 30, 2016, we received tax refunds from the Chinese government totaling $1.8 million for various tax incentives relating to fiscal year 2015.

At September 30, 2017, we had gross unrecognized tax benefits of $3.8 million, including interest and penalties, of which $3.5 million, if not for the state Research and Experimentation income tax credit valuation allowance, would affect the annual effective tax rate if these tax benefits are realized. Further, we are unaware of any positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly change within the next twelve months. However, based on federal, state and foreign statute expirations in various jurisdictions, we anticipate a decrease in unrecognized tax benefits of approximately $0.1 million within the next twelve months. We have classified uncertain tax positions as non-current income tax liabilities unless expected to be paid within one year.

We have elected to classify interest and penalties as a component of tax expense. Accrued interest and penalties of $0.3 million and $0.3 million at September 30, 2017 and December 31, 2016, respectively, are included in our unrecognized tax benefits.

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Accrued Compensation

9 Months Ended

Sep. 30, 2017

Payables and Accruals [Abstract]

Accrued Compensation

Accrued Compensation

The components of accrued compensation were as follows:

(In thousands)	September 30, 2017		December 31, 2016
Accrued social insurance (1)	$	17,506	$	19,974
Accrued salary/wages	7,721		7,903
Accrued vacation/holiday	2,844		2,411
Accrued bonus (2)	1,985		2,421
Accrued commission	851		933
Accrued medical insurance claims	284		122
Other accrued compensation	2,137		1,816
Total accrued compensation	$	33,328	$	35,580

⁽¹⁾  Effective January 1, 2008, the Chinese Labor Contract Law was enacted in the PRC. This law mandated that PRC employers remit the applicable social insurance payments to their local government. Social insurance is comprised of various components such as pension, medical insurance, job injury insurance, unemployment insurance, and a housing assistance fund, and is administered in a manner similar to social security in the United States. This amount represents our estimate of the amounts due to the PRC government for social insurance on September 30, 2017 and December 31, 2016.

⁽²⁾  Accrued bonus includes an accrual for an extra month of salary ("13^th month salary") to be paid to employees in certain geographies where it is the customary business practice. This 13^th month salary is paid to these employees if they remain employed with us through December 31st. The total accrued for the 13^th month salary was $0.7 million and $0.7 million at September 30, 2017 and December 31, 2016, respectively.

Other Accrued Expenses

The components of other accrued expenses were as follows:

(In thousands)	September 30, 2017		December 31, 2016
Advertising and marketing	$	272	$	213
Deferred revenue	79		1,431
Deposit for sale of Guangzhou factory	4,799		—
Duties	757		1,127
Freight and handling fees	2,176		1,919
Product development	485		454
Product warranty claim costs	218		134
Professional fees	1,691		1,313
Property, plant, and equipment	1,564		1,017
Sales taxes and VAT	2,587		2,715
Short-term contingent consideration	3,400		—
Third-party commissions	685		853
Tooling (1)	1,769		1,520
Unrealized loss on foreign currency exchange contracts	86		1,623
URC court order and settlement agreement (Note 2)	—		6,622
Utilities	392		331
Other	4,880		3,138
Total other accrued expenses	$	25,840	$	24,410

⁽¹⁾  The tooling accrual balance relates to unearned revenue for tooling that will be sold to customers.

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Other Accrued Expenses

9 Months Ended

Sep. 30, 2017

Payables and Accruals [Abstract]

Other Accrued Expenses

Accrued Compensation

The components of accrued compensation were as follows:

(In thousands)	September 30, 2017		December 31, 2016
Accrued social insurance (1)	$	17,506	$	19,974
Accrued salary/wages	7,721		7,903
Accrued vacation/holiday	2,844		2,411
Accrued bonus (2)	1,985		2,421
Accrued commission	851		933
Accrued medical insurance claims	284		122
Other accrued compensation	2,137		1,816
Total accrued compensation	$	33,328	$	35,580

⁽¹⁾  Effective January 1, 2008, the Chinese Labor Contract Law was enacted in the PRC. This law mandated that PRC employers remit the applicable social insurance payments to their local government. Social insurance is comprised of various components such as pension, medical insurance, job injury insurance, unemployment insurance, and a housing assistance fund, and is administered in a manner similar to social security in the United States. This amount represents our estimate of the amounts due to the PRC government for social insurance on September 30, 2017 and December 31, 2016.

⁽²⁾  Accrued bonus includes an accrual for an extra month of salary ("13^th month salary") to be paid to employees in certain geographies where it is the customary business practice. This 13^th month salary is paid to these employees if they remain employed with us through December 31st. The total accrued for the 13^th month salary was $0.7 million and $0.7 million at September 30, 2017 and December 31, 2016, respectively.

Other Accrued Expenses

The components of other accrued expenses were as follows:

(In thousands)	September 30, 2017		December 31, 2016
Advertising and marketing	$	272	$	213
Deferred revenue	79		1,431
Deposit for sale of Guangzhou factory	4,799		—
Duties	757		1,127
Freight and handling fees	2,176		1,919
Product development	485		454
Product warranty claim costs	218		134
Professional fees	1,691		1,313
Property, plant, and equipment	1,564		1,017
Sales taxes and VAT	2,587		2,715
Short-term contingent consideration	3,400		—
Third-party commissions	685		853
Tooling (1)	1,769		1,520
Unrealized loss on foreign currency exchange contracts	86		1,623
URC court order and settlement agreement (Note 2)	—		6,622
Utilities	392		331
Other	4,880		3,138
Total other accrued expenses	$	25,840	$	24,410

⁽¹⁾  The tooling accrual balance relates to unearned revenue for tooling that will be sold to customers.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Product Warranties

Changes in the liability for product warranty claim costs were as follows:

(In thousands)	Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	134		$	35
Accruals for warranties issued during the period	169			100
Settlements (in cash or in kind) during the period	(85		)	—
Balance at end of period	$	218		$	135

Restructuring Activities and Sale of Guangzhou Factory

In the first quarter of 2016, we implemented a plan to reduce the impact of rising labor rates in China by transitioning manufacturing activities from our southern-most China factory, located in the city of Guangzhou in the Guangdong province, to our other China factories where labor rates are rising at a slower rate. As a result, we incurred severance costs of $0.4 million and $0.1 million during the three months ended September 2017 and 2016, respectively, and $6.1 million and $1.6 million during the nine months ended September 30, 2017 and 2016, respectively, which are included within operating expenses. All operations in our Guangzhou factory ceased in July 2017. Accordingly, we do not expect to incur significant further severance or other restructuring costs related to this factory transition. At September 30, 2017, we had $0.2 million of unpaid severance costs included within accrued compensation.

On September 26, 2016, we entered into an agreement to sell our Guangzhou manufacturing facility for RMB 320 million (approximately $48.0 million based on September 30, 2017 exchange rates). Under the terms of this agreement, we have up to 24 months to cease all operations within the facility. The closing of the sale will be subject to customary due diligence and local regulatory approval and per the terms of the agreement could take up to approximately 28 months from the execution of the agreement. In accordance with the terms of the agreement, the buyer deposited 10% of the purchase price into an escrow account at agreement inception, which we have presented as restricted cash in our consolidated balance sheet (also refer to Note 2). The remaining balance of the purchase price is to be placed into the escrow account prior to the closing of the sale and will be released to us upon closing. Since all operations at our Guangzhou manufacturing facility ceased as of the end of July 2017, the related building and land lease assets of $12.4 million are classified as assets held for sale in our September 30, 2017 consolidated balance sheet.

Litigation

On or about June 10, 2015, FM Marketing GmbH ("FMH") and Ruwido Austria GmbH ("Ruwido"), filed a Summons in Summary Proceedings in Belgium court against one of our subsidiaries, Universal Electronics BV ("UEBV") and one of its customers, Telenet N.V. ("Telenet"), claiming that one of the products that UEBV previously supplied to Telenet violates two design patents and one utility patent owned by FMH and/or Ruwido. By this summons, FMH and Ruwido sought to enjoin Telenet and UEBV from continued distribution and use of the product at issue. After the September 29, 2015 hearing, the court issued its ruling in our and Telenet’s favor, rejecting FMH and Ruwido’s request entirely. On October 22, 2015, Ruwido filed its notice of appeal in this ruling. The parties have fully briefed and argued before the appellate court and we are awaiting the appellate court’s ruling. In addition, on or about February 9, 2016, Ruwido filed a writ of summons for proceeding on the merits with respect to asserted patents. UEBV and Telenet have replied, denying all of Ruwido's allegations and in June 2017, a hearing was held before the trial court. During this hearing, Ruwido sought to have a second product which we are currently selling to Telenet included in this case. In September 2017, the Court ruled in our favor that our current product cannot be made part of this case. The Court also refused to rule on whether the original product (which we are no longer selling) infringes the Ruwido patent, instead deciding to wait until the European Patent Office has ruled on our Opposition (see below). Finally, the Court ruled that our original product (which we are no longer selling) infringes certain of Ruwido’s design rights, but stay any decision of compensation and/or damages until all aspects of the case have been decided. We are presently deciding whether to appeal this Court’s rulings and have until later this year to file notice of appeal. Finally, in September 2015, UEBV filed an Opposition with the European Patent Office seeking to invalidate the one utility patent asserted against UEBV and Telenet by Ruwido. The hearing on this opposition was held in July 2017. During this hearing the panel requested additional information. We are in the process of assembling this additional information and scheduling a date for rehearing. On September 5, 2017, Ruwido and FMH filed a patent infringement case on the merits against UEBV and Telenet alleging the same claims of infringement as in the Belgium Courts (see above). This matter is in its early stages and as such we have not yet answered. But, as in the Belgium case, UEBV and Telenet will deny all claims of infringement and vigorously defend against these claims.

On January 26, 2017, OpenTV, Inc., Nagra USA, Inc., Nagravision SA, and Kudelski SA (collectively, the “Kudelski Group”) filed a request with the U.S. International Trade Commission (“ITC”) to institute an investigation pursuant to Section 337 of the Tariff Act of 1930, as amended, concerning certain remote control devices we supply Comcast Corporation (“Comcast”), which request was accepted by the ITC. On July 21, 2017, the Kudelski Group filed a motion to terminate the investigation as to all parties, including us and this motion was accepted by the ITC on August 11, 2017.

On March 15, 2017, one of our employee’s filed a lawsuit against us and certain of our employees in the Superior Court of California, County of Orange, claiming hostile work environment based on sexual orientation, intentional infliction of emotional distress, failure to prevent hostile work environment, retaliation, and constructive termination. We have answered by denying all of the employee’s claims and have filed a countersuit against this employee claiming, among other things that he has breached his duty of loyalty to us, that he stole certain of our property, that he converted certain of our property to his own benefit. We are still in the early stages of this case as discovery has recently commenced.

There are no other material pending legal proceedings to which we or any of our subsidiaries is a party or of which our respective property is the subject. However, as is typical in our industry and to the nature and kind of business in which we are engaged, from time to time, various claims, charges and litigation are asserted or commenced by third parties against us or by us against third parties arising from or related to product liability, infringement of patent or other intellectual property rights, breach of warranty, contractual relations, or employee relations. The amounts claimed may be substantial but may not bear any reasonable relationship to the merits of the claims or the extent of any real risk of court awards assessed against us or in our favor. However, no assurances can be made as to the outcome of any of these matters, nor can we estimate the range of potential losses to us. In our opinion, final judgments, if any, which might be rendered against us in potential or pending litigation would not have a material adverse effect on our consolidated financial condition, results of operations, or cash flows. Moreover, we believe that our products do not infringe any third parties' patents or other intellectual property rights.

We maintain directors' and officers' liability insurance which insures our individual directors and officers against certain claims, as well as attorney's fees and related expenses incurred in connection with the defense of such claims.

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Treasury Stock

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Treasury Stock

Treasury Stock

From time to time, our Board of Directors authorizes management to repurchase shares of our issued and outstanding common stock on the open market. Repurchases may be made whenever we deem a repurchase to be a good use of our cash and the repurchase enhances shareholder value. As of September 30, 2017, we had 114,271 shares available for repurchase on the open market under the Board's authorizations. On October 23, 2017, our Board increased these repurchase authorizations by 300,000 shares bringing the total authorization as of the approval date to 386,434 shares. Shares may also be tendered by employees to satisfy tax withholding obligations in connection with the vesting of restricted stock.

Repurchased shares of our common stock were as follows:

	Nine Months Ended September 30,
(In thousands)	2017		2016
Shares repurchased	330		40
Cost of shares repurchased	$	20,217	$	2,188

Repurchased shares are recorded as shares held in treasury at cost. We hold these shares for future use as management and the Board of Directors deem appropriate, which has included compensating our outside directors.

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Business Segment and Foreign Operations

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Business Segment and Foreign Operations

Business Segment and Foreign Operations

Reportable Segment

An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. Our chief operating decision maker, the Chief Executive Officer, reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues for purposes of making operating decisions and assessing financial performance. Accordingly, we only have a single operating and reportable segment.

Foreign Operations

Our net sales to external customers by geographic area were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
United States	$	85,762	$	88,243	$	253,259	$	263,053
Asia (excluding PRC)	26,113		22,099		77,679		64,290
People's Republic of China	23,437		19,899		61,015		59,978
Europe	18,877		19,389		56,041		53,716
Latin America	13,567		13,032		44,593		32,273
Other	7,896		6,523		22,051		17,519
Total net sales	$	175,652	$	169,185	$	514,638	$	490,829

Specific identification of the customer billing location was the basis used for attributing revenues from external customers to geographic areas.

Long-lived tangible assets by geographic area were as follows:

(In thousands)	September 30, 2017		December 31, 2016
United States	$	14,233	$	11,948
People's Republic of China	95,165		94,113
All other countries	3,791		4,186
Total long-lived tangible assets	$	113,189	$	110,247

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Stock-based compensation expense for each employee and director is presented in the same income statement caption as their cash compensation. Stock-based compensation expense by income statement caption and the related income tax benefit were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Cost of sales	$	19	$	14	$	53	$	43
Research and development expenses	149		136		412		409
Selling, general and administrative expenses:
Employees	1,843		1,748		5,562		5,324
Outside directors	1,910		770		3,449		1,862
Total employee and director stock-based compensation expense	$	3,921	$	2,668	$	9,476	$	7,638
Income tax benefit	$	603	$	812	2,307		2,281

Stock Options

Stock option activity was as follows:

	Number of Options (in 000's)		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in 000's)
Outstanding at December 31, 2016	652		$	39.27
Granted	92		62.70
Exercised	(45	)	24.87			$	1,893
Forfeited/canceled/expired	(168	)	46.44
Outstanding at September 30, 2017 (1)	531		$	42.26	4.49	$	11,391
Vested and expected to vest at September 30, 2017 (1)	531		$	42.26	4.49	$	11,390
Exercisable at September 30, 2017 (1)	378		$	35.35	3.94	$	10,731

⁽¹⁾  The aggregate intrinsic value represents the total pre-tax value (the difference between our closing stock price on the last trading day of the third quarter of 2017 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on September 30, 2017. This amount will change based on the fair market value of our stock.

On September 11, 2017, the independent members of our Board of Directors voluntarily surrendered 150,000 stock options originally granted to them in February 2016, resulting in the acceleration and recording of $1.2 million of stock-based compensation expense during the three and nine months ended September 30, 2017. This amount represented all remaining unamortized compensation expense associated with the surrendered stock options as of the surrender date.

The assumptions we utilized in the Black-Scholes option pricing model and the resulting weighted average fair value of stock option grants were the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Weighted average fair value of grants	$	—		$	—		$	19.61		$	17.96
Risk-free interest rate	—		%	—		%	1.75		%	1.36		%
Expected volatility	—		%	—		%	34.25		%	41.38		%
Expected life in years	0.00			0.00			4.52			4.55

As of September 30, 2017, we expect to recognize $2.4 million of total unrecognized pre-tax stock-based compensation expense related to non-vested stock options over a remaining weighted-average life of 1.8 years.

Restricted Stock

Non-vested restricted stock award activity was as follows:

	Shares (in 000's)		Weighted-Average Grant Date Fair Value
Non-vested at December 31, 2016	153		$	57.43
Granted	132		64.14
Vested	(59	)	61.28
Forfeited	(4	)	60.71
Non-vested at September 30, 2017	222		$	60.34

As of September 30, 2017, we expect to recognize $9.8 million of total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards over a weighted-average life of 1.7 years.

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Performance-Based Common Stock Warrants

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Performance-Based Common Stock Warrants

Performance-Based Common Stock Warrants

On March 9, 2016, we issued common stock purchase warrants to Comcast to purchase up to 725,000 shares of our common stock at a price of $54.55 per share. The right to exercise the warrants is subject to vesting over three successive two-year periods (with the first two-year period commencing on January 1, 2016) based on the level of purchases of goods and services from us by Comcast and its affiliates, as defined in the warrants. The table below presents the purchase levels and number of warrants that will vest in each period based upon achieving these purchase levels.

	Incremental Warrants That Will Vest
Aggregate Level of Purchases by Comcast and Affiliates	January 1, 2016 - December 31, 2017	January 1, 2018 - December 31, 2019	January 1, 2020 - December 31, 2021
$260 million	100,000	100,000	75,000
$300 million	75,000	75,000	75,000
$340 million	75,000	75,000	75,000
Maximum Potential Warrants Earned by Comcast	250,000	250,000	225,000

If total aggregate purchases by Comcast and its affiliates are below $260 million in any of the two-year periods above, no warrants will vest related to that two-year period. If total aggregate purchases of goods and services by Comcast and its affiliates exceed $340 million during either the first or second two-year period, the amount of any such excess will count toward aggregate purchases in the following two-year period. To fully vest in the rights to purchase all of the underlying shares, Comcast and its affiliates must purchase an aggregate of $1.02 billion in goods and services from us during the six-year vesting period.

Any and all warrants that vest will expire on January 1, 2023. The warrants provide for certain adjustments that may be made to the exercise price and the number of shares issuable upon exercise due to customary anti-dilution provisions. Additionally, in connection with the warrants, we have also entered into a registration rights agreement with Comcast under which Comcast may from time to time request that we register the shares of common stock underlying vested warrants with the SEC.

Because the warrants contain performance criteria under which Comcast must achieve specified aggregate purchase levels for the warrants to vest, as detailed above, the measurement date for the warrants is the date on which the warrants vest. Through September 30, 2017, 100,000 of the warrants had vested.

The fair value of the warrants is determined using the Black-Scholes option pricing model. The assumptions we utilized and the resulting fair value of the warrants were the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Fair value	$	24.17		$	38.32		$	24.17		$	38.32
Price of Universal Electronics Inc. common stock	$	62.10		$	74.99		$	62.10		$	74.99
Risk-free interest rate	1.93		%	1.32		%	1.93		%	1.32		%
Expected volatility	34.41		%	40.54		%	34.41		%	40.54		%
Expected life in years	5.26			6.25			5.26			6.25

The impact to net sales recorded in connection with the warrants and the related income tax benefit were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2017			2016			2017			2016
Reduction/(increase) to net sales	$	(141	)	$	1,160		$	1,122		$	3,219
Income tax (benefit)/expense	53			(426		)	(418		)	(1,182		)

At September 30, 2017, we estimated the number of warrants that will vest based on the combination of purchases already made and projected future purchases that will be made by Comcast and its affiliates. These estimates may increase or decrease based on actual future purchases. The aggregate unrecognized estimated fair value of unvested warrants at September 30, 2017 was $14.2 million.

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Other Income (Expense), Net

9 Months Ended

Sep. 30, 2017

Other Income and Expenses [Abstract]

Other Income (Expense), Net

Other Income (Expense), Net

Other income (expense), net consisted of the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2017			2016			2017			2016
Net gain (loss) on foreign currency exchange contracts (1)	$	(1,488	)	$	(218	)	$	(2,852	)	$	(894	)
Net gain (loss) on foreign currency exchange transactions	1,176			439			2,512			2,455
Other income (expense)	373			114			342			165
Other income (expense), net	$	61		$	335		$	2		$	1,726

⁽¹⁾  This represents the gains (losses) incurred on foreign currency hedging derivatives (see Note 17 for further details).

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Earnings Per Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Earnings per share was calculated as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per-share amounts)	2017		2016		2017		2016
BASIC
Net income attributable to Universal Electronics Inc.	$	1,728	$	7,807	$	6,531	$	17,118
Weighted-average common shares outstanding	14,381		14,510		14,412		14,441
Basic earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.54	$	0.45	$	1.19
DILUTED
Net income attributable to Universal Electronics Inc.	$	1,728	$	7,807	$	6,531	$	17,118
Weighted-average common shares outstanding for basic	14,381		14,510		14,412		14,441
Dilutive effect of stock options, restricted stock and common stock warrants	285		338		277		299
Weighted-average common shares outstanding on a diluted basis	14,666		14,848		14,689		14,740
Diluted earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.53	$	0.44	$	1.16

The number of stock options and shares of restricted stock excluded from the computation of diluted earnings per common share were as follows:

	Three Months Ended September 30,		Nine Months Ended September 30,
(In thousands)	2017	2016	2017	2016
Stock options	165	—	153	111
Restricted stock awards	30	5	30	8

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Derivatives

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Derivatives

The following table sets forth the total net fair value of derivatives:

	September 30, 2017										December 31, 2016
	Fair Value Measurement Using							Total Balance			Fair Value Measurement Using							Total Balance
(In thousands)	Level 1		Level 2			Level 3					Level 1		Level 2			Level 3
Foreign currency exchange contracts	$	—	$	(385	)	$	—	$	(385	)	$	—	$	(1,584	)	$	—	$	(1,584	)

We held foreign currency exchange contracts, which resulted in a net pre-tax loss of $1.5 million and $0.2 million for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, we had a net pre-tax loss of $2.9 million and $0.9 million, respectively (see Note 15).

Details of foreign currency exchange contracts held were as follows:

Date Held	Type	Position Held	Notional Value (in millions)		Forward Rate	Unrealized Gain/(Loss) Recorded at Balance Sheet Date (in thousands)(1)			Settlement Date
September 30, 2017	USD/Euro	USD	$	17.0	1.2039	$	299		October 27, 2017
September 30, 2017	USD/Chinese Yuan Renminbi	USD	$	22.0	6.6174	$	111		October 20, 2017
September 30, 2017	USD/Brazilian Real	USD	$	4.5	3.2330	$	(86	)	October 20, 2017
September 30, 2017	USD/Brazilian Real	BRL	$	1.0	3.3660	$	61		October 20, 2017
December 31, 2016	USD/Euro	USD	$	18.0	1.0513	$	(61	)	January 27, 2017
December 31, 2016	USD/Chinese Yuan Renminbi	Chinese Yuan Renminbi	$	25.0	6.7230	$	(974	)	January 13, 2017
December 31, 2016	USD/Chinese Yuan Renminbi	Chinese Yuan Renminbi	$	10.0	6.6757	$	(457	)	January 13, 2017
December 31, 2016	USD/Brazilian Real	USD	$	2.0	3.4775	$	(131	)	January 13, 2017
December 31, 2016	USD/Brazilian Real	USD	$	4.0	3.2316	$	39		January 13, 2017

⁽¹⁾  Unrealized gains on foreign currency exchange contracts are recorded in prepaid expenses and other current assets. Unrealized losses on foreign currency exchange contracts are recorded in other accrued expenses.

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Business Combination

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Business Combination

Business Combination

On April 6, 2017, we acquired substantially all of the net assets of Residential Control Systems, Inc. ("RCS"), a U.S.-based designer and manufacturer of energy management and control products for the residential, small commercial and hospitality markets. The purchase price of $12.6 million was comprised of $8.9 million in cash and $3.7 million of contingent consideration. Additionally, we incurred $0.1 million in acquisition costs, consisting primarily of accounting related expenses, which are included within selling, general and administrative expenses for the nine months ended September 30, 2017. The acquisition of these assets will allow us to expand our product offering of home sensing, monitoring and control solutions to include smart thermostat, sensing and monitoring products sold and marketed by RCS.

Our consolidated income statement for the three and nine months ended September 30, 2017 includes net sales of $0.8 million and $2.2 million, respectively, and net losses of $0.3 million and $0.7 million, respectively, attributable to RCS for the period commencing on April 6, 2017.

Contingent Consideration

We are required to make additional earnout payments of up to $10.0 million upon the achievement of certain operating income levels attributable to RCS over the period commencing on the acquisition date through June 30, 2022. The amount of contingent consideration is calculated at the end of each calendar year and is based on the agreed upon percentage of operating income as defined in the RCS Asset Purchase Agreement ("APA"). Operating income will be calculated using certain revenues, costs and expenses directly attributable to RCS as specified in the APA. At the acquisition date, the value of earnout contingent consideration was estimated using a valuation methodology based on projections of future operating income calculated in accordance with the APA. Such projections were then discounted using an average discount rate of 24.8% to reflect the risk in achieving the projected operating income levels as well as the time value of money. The fair value measurement of the earnout contingent consideration was based primarily on significant inputs not observable in an active market and thus represents a Level 3 measurement as defined under U.S. GAAP. The fair value of earnout consideration is presented as long-term contingent consideration in our consolidated balance sheet at September 30, 2017.

Purchase Price Allocation

Using the acquisition method of accounting, the acquisition date fair value of the consideration transferred was allocated to the net tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date. The excess of the purchase price over the estimated fair value of net assets acquired is recorded as goodwill. The goodwill is expected to be deductible for income tax purposes. Management's purchase price allocation was the following:

(in thousands)	Estimated Lives	Preliminary Fair Value
Accounts receivable		$	429
Inventories		1,508
Prepaid expenses and other current assets		7
Property, plant and equipment	1-4 years	14
Current liabilities		(408		)
Net tangible assets acquired		1,550
Trade name	8 years	400
Customer relationships	10 years	5,000
Order backlog	1 year	150
Goodwill		5,494
Total purchase price		12,594
Less: Contingent consideration		(3,700		)
Cash paid		$	8,894

Management's determination of the fair value of intangible assets acquired are based primarily on significant inputs not observable in an active market and thus represent Level 3 fair value measurements as defined under U.S. GAAP.

The fair value assigned to the RCS trade name intangible asset was determined utilizing a relief from royalty method. Under the relief from royalty method, the fair value of the intangible asset is estimated to be the present value of the royalties saved because the company owns the intangible asset. Revenue projections and estimated useful life were significant inputs into estimating the value of the RCS trade name.

The fair value assigned to RCS customer relationships and order backlog intangible assets were determined utilizing a multi-period excess earnings approach. Under the multi-period excess earnings approach, the fair value of the intangible asset is estimated to be the present value of future earnings attributable to the asset and utilizes revenue and cost projections, including an assumed contributory asset charge.

The trade name, customer relationships and order backlog intangible assets are expected to be deductible for income tax purposes.

Pro Forma Results (Unaudited)

The following unaudited pro forma financial information presents the combined results of our operations and the operations of RCS as if this transaction had occurred on January 1, 2016. This unaudited pro forma financial information is not intended to represent or be indicative of the consolidated results of operations that would have been achieved had the acquisition actually been completed as of January 1, 2016, and should not be taken as a projection of the future consolidated results of our operations.

	Three Months Ended September 30, 2017				Nine Months Ended September 30, 2017
(In thousands, except per-share amounts)	2017		2016		2017		2016
Net sales	$	175,652	$	170,658	$	515,200	$	497,172
Net income	1,751		7,525		6,292		16,892
Net income attributable to Universal Electronics Inc.	1,751		7,525		6,292		16,892
Basic earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.52	$	0.44	$	1.17
Diluted earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.51	$	0.43	$	1.14

For purposes of determining pro forma net income attributable to Universal Electronics Inc., adjustments were made to all periods presented in the table above. The pro forma net income and net income attributable to Universal Electronics Inc. assumes that amortization of acquired intangible assets began at January 1, 2016 rather than on April 6, 2017. The result is a net increase in amortization expense of $0.1 million for the nine months ended September 30, 2017, and a net increase in amortization expense of $0.2 million and $0.5 million for the three and nine months ended September 30, 2016, respectively. Additionally, acquisition costs totaling $0.1 million are excluded from pro forma net income attributable to Universal Electronics Inc. All adjustments have been made net of their related tax effects.

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Basis of Presentation and Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation

In the opinion of management, the accompanying consolidated financial statements of Universal Electronics Inc. and its subsidiaries contain all the adjustments necessary for a fair presentation of financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. Information and footnote disclosures normally included in financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. As used herein, the terms "Company," "we," "us," and "our" refer to Universal Electronics Inc. and its subsidiaries, unless the context indicates to the contrary.

Our results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk," and the "Financial Statements and Supplementary Data" included in Items 1A, 7, 7A, and 8, respectively, of our Annual Report on Form 10-K for the year ended December 31, 2016.

Estimates, Judgments and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and assumptions, including those related to revenue recognition, allowances for sales returns and doubtful accounts, inventory valuation, our review for impairment of long-lived assets, intangible assets and goodwill, business combinations, income taxes, stock-based compensation expense and performance-based common stock warrants. Actual results may differ from these estimates and assumptions, and they may be adjusted as more information becomes available. Any adjustment may be material.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers," which will supersede most existing U.S. GAAP revenue recognition guidance. This new standard requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. In addition, ASU 2014-09 contains expanded disclosure requirements relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. As initially proposed, ASU 2014-09 would have been effective for fiscal periods beginning after December 15, 2016 and permits the use of either the full retrospective or modified retrospective transition method. In August 2015, the FASB postponed the effective date of this new revenue standard by one year. We have largely completed our review of customer contract terms and our assessment of the impact of adopting this standard on our revenue recognition policy, and are currently in the process of modifying certain revenue recognition processes and controls to comply with ASU 2014-09, including the new disclosure requirements. The impact of this new guidance is primarily expected to accelerate revenue recognition for those contractual arrangements under which we manufacture and sell customized products that have no alternative use, as defined under ASU 2014-09 and related guidance and interpretations. In particular, to the extent that we have the right to payment such as a firm order or other contractual commitment from the customer, revenue associated with customized products will be recognized as those products are manufactured rather than when title for those products transfers to the customer. We also expect revenue recognition to be accelerated for licensing arrangements that contain minimum guarantees. We expect to implement ASU 2014-09 on January 1, 2018, using the modified retrospective transition method. Thus prior periods will not be restated. The impact of the transition to this new accounting method, which will include a cumulative-effect adjustment to retained earnings as of the adoption date, could have a material impact on our consolidated results of operations.

In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory," which states that inventory should be measured at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for fiscal periods beginning after December 15, 2016 and must be applied prospectively. The adoption of ASU 2015-11 did not have a material impact on our consolidated financial position or results of operations.

In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes." This new guidance requires all deferred tax assets and liabilities, along with any related valuation allowance, be classified as non-current on the balance sheet. ASU 2015-17 is effective for fiscal periods beginning after December 15, 2016 and may be adopted either prospectively or retrospectively. We prospectively adopted ASU 2015-17 effective January 1, 2017, and thus prior period balance sheets have not been adjusted. The adoption of ASU 2015-17 had no impact on our consolidated results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, "Leases," which changes the accounting for leases and requires expanded disclosures about leasing activities. This new guidance will require lessees to recognize a right of use asset and a lease liability at the commencement date for all leases with terms greater than twelve months. Accounting by lessors is largely unchanged. ASU 2016-02 is effective for fiscal periods beginning after December 15, 2018 and must be adopted using a modified retrospective approach. Early adoption is permitted. We are currently evaluating the impact that ASU 2016-02 will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09,"Improvements to Employee Share-Based Payment Accounting," which amends Accounting Standards Codification ("ASC") 718, "Compensation - Stock Compensation." ASU 2016-09 requires excess tax benefits and tax deficiencies to be recorded as a discrete adjustment to income tax expense when stock awards vest or are settled, rather than in paid-in capital when they impact income taxes payable. This new guidance also requires cash flows related to excess tax benefits from stock-based compensation to be presented with other income tax cash flows in operating activities, rather than separately as a financing activity, in the statement of cash flows. Additionally, ASU 2016-09 impacts the calculation of diluted weighted-average shares under the treasury stock method as the assumed proceeds from an employee vesting in or exercising a stock-based award are no longer increased or decreased by the amount of excess tax benefits or deficiencies taken to paid-in capital. We elected to adopt the provisions of ASU 2016-09 prospectively effective January 1, 2017. We also made the accounting policy election, as allowed by ASU 2016-09, to account for forfeitures of stock-based awards as they occur, rather than estimating forfeitures. The cumulative effect of adopting ASU 2016-09 was an increase of $1.5 million to deferred tax assets and an increase to retained earnings of $1.5 million, as of January 1, 2017, as a result of recognizing previously unrecognized excess tax benefits from stock-based compensation. There was no cumulative effect impact related to the change in accounting policy to account for forfeitures of stock-based awards when they occur as a result of our minimal historical forfeitures experience.

In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," which amends ASC 230, "Statement of Cash Flows". This new guidance addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal periods beginning after December 15, 2017 and must be adopted retrospectively. Early adoption is permitted as long as all amendments are adopted in the same period. We are currently evaluating the impact that ASU 2016-15 will have on our consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory," which changes the accounting for income tax consequences of intra-entity transfers of assets other than inventory. Current guidance prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. Under this new guidance, the income tax consequences of an intra-entity transfer of an asset other than inventory will be recognized when the transfer occurs. ASU 2016-16 is effective for fiscal periods beginning after December 15, 2017. Early adoption is permitted. The impact of the adoption of ASU 2016-16 could be material depending on the size of any intra-entity transfers we may implement in future periods.

In November 2016, the FASB issued ASU 2016-18,"Restricted Cash," which amends ASC 230, "Statement of Cash Flows." This new guidance addresses the classifications and presentation of changes in restricted cash in the statement of cash flows. ASU 2016-18 is effective for fiscal periods beginning after December 15, 2017 and must be adopted retrospectively. Early adoption is permitted. The adoption of ASU 2016-18 will modify our current disclosures by reclassifying certain amounts within the consolidated statement of cash flows, but is not expected to have a material effect on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment." This guidance simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for fiscal periods beginning after December 31, 2019. Early adoption is permitted. We do not expect the adoption of ASU 2017-04 to have a material impact on our consolidated financial statements.

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Cash and Cash Equivalents and Restricted Cash (Tables)

9 Months Ended

Sep. 30, 2017

Cash and Cash Equivalents [Abstract]

Schedule of Cash and Cash Equivalents

Cash and cash equivalents were held in the following geographic regions:

(In thousands)	September 30, 2017		December 31, 2016
United States	$	4,795	$	3,277
People's Republic of China ("PRC")	22,120		22,142
Asia (excluding the PRC)	846		5,260
Europe	13,317		19,630
South America	7,482		302
Total cash and cash equivalents	$	48,560	$	50,611

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Accounts Receivable, Net and Revenue Concentrations (Tables)

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Schedule of Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable, net were as follows:

(In thousands)	September 30, 2017			December 31, 2016
Trade receivables, gross	$	147,194		$	120,965
Allowance for doubtful accounts	(1,052		)	(904		)
Allowance for sales returns	(459		)	(539		)
Net trade receivables	145,683			119,522
Other	7,672			5,070
Accounts receivable, net	$	153,355		$	124,592

Allowance for Doubtful Accounts

Changes in the allowance for doubtful accounts were as follows:

(In thousands)	Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	904		$	822
Additions (reductions) to costs and expenses	167			123
(Write-offs)/Foreign exchange effects	(19		)	15
Balance at end of period	$	1,052		$	960

Schedule of Significant Customers to Net Sales

Net sales to the following customers totaled more than 10% of our net sales:

	Three Months Ended September 30,
	2017				2016
	$ (thousands)		% of Net Sales		$ (thousands)		% of Net Sales
Comcast Corporation	$	36,811	21.0	%	$	35,554	21.0	%
AT&T	20,117		11.5		21,139		12.5

	Nine Months Ended September 30,
	2017				2016
	$ (thousands)		% of Net Sales		$ (thousands)		% of Net Sales
Comcast Corporation	$	122,009	23.7	%	$	111,529	22.7	%
AT&T	61,057		11.9		60,709		12.4

Schedule of Significant Customers to Accounts Receivable

Trade receivables associated with these significant customers that totaled more than 10% of our accounts receivable, net were as follows:

	September 30, 2017				December 31, 2016
	$ (thousands)		% of Accounts Receivable, Net		$ (thousands)		% of Accounts Receivable, Net
Comcast Corporation	$	26,553	17.3	%	$	23,716	19.0	%
AT&T (1)	—		—		14,108		11.3

⁽¹⁾   Trade receivables associated with this customer did not total more than 10% of our accounts receivable, net at September 30, 2017.

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Inventories, Net and Significant Supplier (Tables)

9 Months Ended

Sep. 30, 2017

Inventory Disclosure [Abstract]

Schedule of Inventories, Net

Inventories, net were as follows:

(In thousands)	September 30, 2017			December 31, 2016
Raw materials	$	36,803		$	33,059
Components	18,556			15,046
Work in process	6,596			5,860
Finished goods	95,690			80,119
Reserve for excess and obsolete inventory	(3,125		)	(4,205		)
Inventories, net	$	154,520		$	129,879

Schedule of Reserve for Excess and Obsolete Inventory

Changes in the reserve for excess and obsolete inventory were as follows:

(In thousands)	Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	4,205		$	3,045
Additions charged to costs and expenses (1)	1,960			2,120
Sell through (2)	(950		)	(781		)
(Write-offs)/Foreign exchange effects	(2,090		)	(726		)
Balance at end of period	$	3,125		$	3,658

⁽¹⁾ The additions charged to costs and expenses do not include inventory directly written-off that was scrapped during production totaling $0.2 million and $0.3 million for the nine months endedSeptember 30, 2017 and 2016, respectively. These amounts are production waste and are not included in management's reserve for excess and obsolete inventory.

⁽²⁾ These amounts represent the reduction in reserves associated with inventory items that were sold during the period.

Schedule of Significant Supplier Transactions

Purchases from the following supplier totaled more than 10% of our total inventory purchases:

	Three Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Texas Instruments	$	13,115	12.4	%	$	12,353	13.0	%

	Nine Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Texas Instruments	$	33,693	11.3	%	$	32,294	11.9	%

Schedule of Related Party Transactions

Inventory purchases from this supplier were as follows:

	Three Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Related party supplier	$	1,378	1.3	%	$	1,382	1.5	%

	Nine Months Ended September 30,
	2017				2016
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Related party supplier	$	3,962	1.3	%	$	4,971	1.8	%

Total accounts payable to this supplier were as follows:

	September 30, 2017				December 31, 2016
	$ (thousands)		% of Accounts Payable		$ (thousands)		% of Accounts Payable
Related party supplier	$	1,763	1.6	%	$	1,690	1.7	%

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Goodwill and Intangible Assets, Net (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Changes in the carrying amount of goodwill were as follows:

(In thousands)
Balance at December 31, 2016	$	43,052
Goodwill acquired during the period (1)	5,494
Foreign exchange effects	78
Balance at September 30, 2017	$	48,624

⁽¹⁾ During the second quarter of 2017, we recorded $5.5 million of goodwill related to the Residential Control Systems, Inc. acquisition. Refer to Note 18 for further information about this acquisition.

Schedule of Components of Intangible Assets

The components of intangible assets, net were as follows:

	September 30, 2017							December 31, 2016
(In thousands)	Gross (1)		Accumulated Amortization (1)			Net		Gross (1)		Accumulated Amortization (1)			Net
Distribution rights	$	340	$	(155	)	$	185	$	302	$	(119	)	$	183
Patents	12,593		(4,996		)	7,597		12,038		(4,775		)	7,263
Trademarks and trade names (2)	2,786		(1,518		)	1,268		2,400		(1,310		)	1,090
Developed and core technology	12,560		(5,567		)	6,993		12,585		(4,068		)	8,517
Capitalized software development costs	142		(59		)	83		142		(5		)	137
Customer relationships (2)	32,534		(18,613		)	13,921		27,703		(16,344		)	11,359
Order backlog (2)	150		(38		)	112		—		—			—
Total intangible assets, net	$	61,105	$	(30,946	)	$	30,159	$	55,170	$	(26,621	)	$	28,549

⁽¹⁾  This table excludes the gross value of fully amortized intangible assets totaling $6.0 million and $10.2 million at September 30, 2017 and December 31, 2016, respectively.

⁽²⁾  During the second quarter of 2017, we purchased a trade name valued at $0.4 million, which is being amortized ratably over eight years; customer relationships valued at $5.0 million, which are being amortized ratably over 10 years; and order backlog valued at $0.2 million, which is being amortized ratably over one year. Refer to Note 18 for further information regarding the purchase of these intangible assets.

Intangible Assets Amortization Expense

Amortization expense by income statement caption was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Cost of sales	$	54	$	21	$	128	$	63
Selling, general and administrative expenses	1,715		1,551		5,032		4,618
Total amortization expense	$	1,769	$	1,572	$	5,160	$	4,681

Schedule of Estimated Future Amortization Expense

Estimated future annual amortization expense related to our intangible assets at September 30, 2017, is as follows:

(In thousands)
2017 (remaining 3 months)	$	1,776
2018	7,046
2019	6,901
2020	5,740
2021	2,289
Thereafter	6,407
Total	$	30,159

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Accrued Compensation (Tables)

9 Months Ended

Sep. 30, 2017

Payables and Accruals [Abstract]

Components of Accrued Compensation

The components of accrued compensation were as follows:

(In thousands)	September 30, 2017		December 31, 2016
Accrued social insurance (1)	$	17,506	$	19,974
Accrued salary/wages	7,721		7,903
Accrued vacation/holiday	2,844		2,411
Accrued bonus (2)	1,985		2,421
Accrued commission	851		933
Accrued medical insurance claims	284		122
Other accrued compensation	2,137		1,816
Total accrued compensation	$	33,328	$	35,580

⁽¹⁾  Effective January 1, 2008, the Chinese Labor Contract Law was enacted in the PRC. This law mandated that PRC employers remit the applicable social insurance payments to their local government. Social insurance is comprised of various components such as pension, medical insurance, job injury insurance, unemployment insurance, and a housing assistance fund, and is administered in a manner similar to social security in the United States. This amount represents our estimate of the amounts due to the PRC government for social insurance on September 30, 2017 and December 31, 2016.

⁽²⁾  Accrued bonus includes an accrual for an extra month of salary ("13^th month salary") to be paid to employees in certain geographies where it is the customary business practice. This 13^th month salary is paid to these employees if they remain employed with us through December 31st. The total accrued for the 13^th month salary was $0.7 million and $0.7 million at September 30, 2017 and December 31, 2016, respectively.

The components of other accrued expenses were as follows:

(In thousands)	September 30, 2017		December 31, 2016
Advertising and marketing	$	272	$	213
Deferred revenue	79		1,431
Deposit for sale of Guangzhou factory	4,799		—
Duties	757		1,127
Freight and handling fees	2,176		1,919
Product development	485		454
Product warranty claim costs	218		134
Professional fees	1,691		1,313
Property, plant, and equipment	1,564		1,017
Sales taxes and VAT	2,587		2,715
Short-term contingent consideration	3,400		—
Third-party commissions	685		853
Tooling (1)	1,769		1,520
Unrealized loss on foreign currency exchange contracts	86		1,623
URC court order and settlement agreement (Note 2)	—		6,622
Utilities	392		331
Other	4,880		3,138
Total other accrued expenses	$	25,840	$	24,410

⁽¹⁾  The tooling accrual balance relates to unearned revenue for tooling that will be sold to customers.

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Other Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2017

Payables and Accruals [Abstract]

Components of Other Accrued Expenses

The components of accrued compensation were as follows:

(In thousands)	September 30, 2017		December 31, 2016
Accrued social insurance (1)	$	17,506	$	19,974
Accrued salary/wages	7,721		7,903
Accrued vacation/holiday	2,844		2,411
Accrued bonus (2)	1,985		2,421
Accrued commission	851		933
Accrued medical insurance claims	284		122
Other accrued compensation	2,137		1,816
Total accrued compensation	$	33,328	$	35,580

⁽¹⁾  Effective January 1, 2008, the Chinese Labor Contract Law was enacted in the PRC. This law mandated that PRC employers remit the applicable social insurance payments to their local government. Social insurance is comprised of various components such as pension, medical insurance, job injury insurance, unemployment insurance, and a housing assistance fund, and is administered in a manner similar to social security in the United States. This amount represents our estimate of the amounts due to the PRC government for social insurance on September 30, 2017 and December 31, 2016.

⁽²⁾  Accrued bonus includes an accrual for an extra month of salary ("13^th month salary") to be paid to employees in certain geographies where it is the customary business practice. This 13^th month salary is paid to these employees if they remain employed with us through December 31st. The total accrued for the 13^th month salary was $0.7 million and $0.7 million at September 30, 2017 and December 31, 2016, respectively.

The components of other accrued expenses were as follows:

(In thousands)	September 30, 2017		December 31, 2016
Advertising and marketing	$	272	$	213
Deferred revenue	79		1,431
Deposit for sale of Guangzhou factory	4,799		—
Duties	757		1,127
Freight and handling fees	2,176		1,919
Product development	485		454
Product warranty claim costs	218		134
Professional fees	1,691		1,313
Property, plant, and equipment	1,564		1,017
Sales taxes and VAT	2,587		2,715
Short-term contingent consideration	3,400		—
Third-party commissions	685		853
Tooling (1)	1,769		1,520
Unrealized loss on foreign currency exchange contracts	86		1,623
URC court order and settlement agreement (Note 2)	—		6,622
Utilities	392		331
Other	4,880		3,138
Total other accrued expenses	$	25,840	$	24,410

⁽¹⁾  The tooling accrual balance relates to unearned revenue for tooling that will be sold to customers.

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Schedule of Changes in Reserve for Product Warranty Claim Costs

Changes in the liability for product warranty claim costs were as follows:

(In thousands)	Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	134		$	35
Accruals for warranties issued during the period	169			100
Settlements (in cash or in kind) during the period	(85		)	—
Balance at end of period	$	218		$	135

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Treasury Stock (Tables)

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Schedule of Repurchased Shares of Common Stock

Repurchased shares of our common stock were as follows:

	Nine Months Ended September 30,
(In thousands)	2017		2016
Shares repurchased	330		40
Cost of shares repurchased	$	20,217	$	2,188

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Business Segment and Foreign Operations (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Schedule of Net Sales to External Customers by Geographic Area

Our net sales to external customers by geographic area were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
United States	$	85,762	$	88,243	$	253,259	$	263,053
Asia (excluding PRC)	26,113		22,099		77,679		64,290
People's Republic of China	23,437		19,899		61,015		59,978
Europe	18,877		19,389		56,041		53,716
Latin America	13,567		13,032		44,593		32,273
Other	7,896		6,523		22,051		17,519
Total net sales	$	175,652	$	169,185	$	514,638	$	490,829

Schedule of Long-lived Assets

Long-lived tangible assets by geographic area were as follows:

(In thousands)	September 30, 2017		December 31, 2016
United States	$	14,233	$	11,948
People's Republic of China	95,165		94,113
All other countries	3,791		4,186
Total long-lived tangible assets	$	113,189	$	110,247

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Stock-based Compensation Expense

Stock-based compensation expense by income statement caption and the related income tax benefit were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Cost of sales	$	19	$	14	$	53	$	43
Research and development expenses	149		136		412		409
Selling, general and administrative expenses:
Employees	1,843		1,748		5,562		5,324
Outside directors	1,910		770		3,449		1,862
Total employee and director stock-based compensation expense	$	3,921	$	2,668	$	9,476	$	7,638
Income tax benefit	$	603	$	812	2,307		2,281

Schedule of Stock Option Activity

Stock option activity was as follows:

	Number of Options (in 000's)		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in 000's)
Outstanding at December 31, 2016	652		$	39.27
Granted	92		62.70
Exercised	(45	)	24.87			$	1,893
Forfeited/canceled/expired	(168	)	46.44
Outstanding at September 30, 2017 (1)	531		$	42.26	4.49	$	11,391
Vested and expected to vest at September 30, 2017 (1)	531		$	42.26	4.49	$	11,390
Exercisable at September 30, 2017 (1)	378		$	35.35	3.94	$	10,731

⁽¹⁾  The aggregate intrinsic value represents the total pre-tax value (the difference between our closing stock price on the last trading day of the third quarter of 2017 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on September 30, 2017. This amount will change based on the fair market value of our stock.

Schedule of Black Scholes Assumptions

The assumptions we utilized in the Black-Scholes option pricing model and the resulting weighted average fair value of stock option grants were the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Weighted average fair value of grants	$	—		$	—		$	19.61		$	17.96
Risk-free interest rate	—		%	—		%	1.75		%	1.36		%
Expected volatility	—		%	—		%	34.25		%	41.38		%
Expected life in years	0.00			0.00			4.52			4.55

Schedule of Non-vested Restricted Stock Awards Activity

Non-vested restricted stock award activity was as follows:

	Shares (in 000's)		Weighted-Average Grant Date Fair Value
Non-vested at December 31, 2016	153		$	57.43
Granted	132		64.14
Vested	(59	)	61.28
Forfeited	(4	)	60.71
Non-vested at September 30, 2017	222		$	60.34

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Performance-Based Common Stock Warrants (Tables)

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Schedule of Purchase Level and Number of Warrants That Will Vest

The table below presents the purchase levels and number of warrants that will vest in each period based upon achieving these purchase levels.

	Incremental Warrants That Will Vest
Aggregate Level of Purchases by Comcast and Affiliates	January 1, 2016 - December 31, 2017	January 1, 2018 - December 31, 2019	January 1, 2020 - December 31, 2021
$260 million	100,000	100,000	75,000
$300 million	75,000	75,000	75,000
$340 million	75,000	75,000	75,000
Maximum Potential Warrants Earned by Comcast	250,000	250,000	225,000

Schedule of Fair Value Assumptions Used

The fair value of the warrants is determined using the Black-Scholes option pricing model. The assumptions we utilized and the resulting fair value of the warrants were the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Fair value	$	24.17		$	38.32		$	24.17		$	38.32
Price of Universal Electronics Inc. common stock	$	62.10		$	74.99		$	62.10		$	74.99
Risk-free interest rate	1.93		%	1.32		%	1.93		%	1.32		%
Expected volatility	34.41		%	40.54		%	34.41		%	40.54		%
Expected life in years	5.26			6.25			5.26			6.25

Schedule of Impact to Net Sales Due to Warrants

The impact to net sales recorded in connection with the warrants and the related income tax benefit were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2017			2016			2017			2016
Reduction/(increase) to net sales	$	(141	)	$	1,160		$	1,122		$	3,219
Income tax (benefit)/expense	53			(426		)	(418		)	(1,182		)

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Other Income (Expense), Net (Tables)

9 Months Ended

Sep. 30, 2017

Other Income and Expenses [Abstract]

Schedule of Components of Other Income (Expense), Net

Other income (expense), net consisted of the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2017			2016			2017			2016
Net gain (loss) on foreign currency exchange contracts (1)	$	(1,488	)	$	(218	)	$	(2,852	)	$	(894	)
Net gain (loss) on foreign currency exchange transactions	1,176			439			2,512			2,455
Other income (expense)	373			114			342			165
Other income (expense), net	$	61		$	335		$	2		$	1,726

⁽¹⁾  This represents the gains (losses) incurred on foreign currency hedging derivatives (see Note 17 for further details).

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Earnings Per Share

Earnings per share was calculated as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per-share amounts)	2017		2016		2017		2016
BASIC
Net income attributable to Universal Electronics Inc.	$	1,728	$	7,807	$	6,531	$	17,118
Weighted-average common shares outstanding	14,381		14,510		14,412		14,441
Basic earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.54	$	0.45	$	1.19
DILUTED
Net income attributable to Universal Electronics Inc.	$	1,728	$	7,807	$	6,531	$	17,118
Weighted-average common shares outstanding for basic	14,381		14,510		14,412		14,441
Dilutive effect of stock options, restricted stock and common stock warrants	285		338		277		299
Weighted-average common shares outstanding on a diluted basis	14,666		14,848		14,689		14,740
Diluted earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.53	$	0.44	$	1.16

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The number of stock options and shares of restricted stock excluded from the computation of diluted earnings per common share were as follows:

	Three Months Ended September 30,		Nine Months Ended September 30,
(In thousands)	2017	2016	2017	2016
Stock options	165	—	153	111
Restricted stock awards	30	5	30	8

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Derivatives (Tables)

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivatives at Fair Value on a Recurring Basis

The following table sets forth the total net fair value of derivatives:

	September 30, 2017										December 31, 2016
	Fair Value Measurement Using							Total Balance			Fair Value Measurement Using							Total Balance
(In thousands)	Level 1		Level 2			Level 3					Level 1		Level 2			Level 3
Foreign currency exchange contracts	$	—	$	(385	)	$	—	$	(385	)	$	—	$	(1,584	)	$	—	$	(1,584	)

Schedule of Futures Contracts

Details of foreign currency exchange contracts held were as follows:

Date Held	Type	Position Held	Notional Value (in millions)		Forward Rate	Unrealized Gain/(Loss) Recorded at Balance Sheet Date (in thousands)(1)			Settlement Date
September 30, 2017	USD/Euro	USD	$	17.0	1.2039	$	299		October 27, 2017
September 30, 2017	USD/Chinese Yuan Renminbi	USD	$	22.0	6.6174	$	111		October 20, 2017
September 30, 2017	USD/Brazilian Real	USD	$	4.5	3.2330	$	(86	)	October 20, 2017
September 30, 2017	USD/Brazilian Real	BRL	$	1.0	3.3660	$	61		October 20, 2017
December 31, 2016	USD/Euro	USD	$	18.0	1.0513	$	(61	)	January 27, 2017
December 31, 2016	USD/Chinese Yuan Renminbi	Chinese Yuan Renminbi	$	25.0	6.7230	$	(974	)	January 13, 2017
December 31, 2016	USD/Chinese Yuan Renminbi	Chinese Yuan Renminbi	$	10.0	6.6757	$	(457	)	January 13, 2017
December 31, 2016	USD/Brazilian Real	USD	$	2.0	3.4775	$	(131	)	January 13, 2017
December 31, 2016	USD/Brazilian Real	USD	$	4.0	3.2316	$	39		January 13, 2017

⁽¹⁾  Unrealized gains on foreign currency exchange contracts are recorded in prepaid expenses and other current assets. Unrealized losses on foreign currency exchange contracts are recorded in other accrued expenses.

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Business Combination (Tables)

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Schedule of Preliminary Purchase Price Allocation

Management's purchase price allocation was the following:

(in thousands)	Estimated Lives	Preliminary Fair Value
Accounts receivable		$	429
Inventories		1,508
Prepaid expenses and other current assets		7
Property, plant and equipment	1-4 years	14
Current liabilities		(408		)
Net tangible assets acquired		1,550
Trade name	8 years	400
Customer relationships	10 years	5,000
Order backlog	1 year	150
Goodwill		5,494
Total purchase price		12,594
Less: Contingent consideration		(3,700		)
Cash paid		$	8,894

Pro Forma Information

The following unaudited pro forma financial information presents the combined results of our operations and the operations of RCS as if this transaction had occurred on January 1, 2016. This unaudited pro forma financial information is not intended to represent or be indicative of the consolidated results of operations that would have been achieved had the acquisition actually been completed as of January 1, 2016, and should not be taken as a projection of the future consolidated results of our operations.

	Three Months Ended September 30, 2017				Nine Months Ended September 30, 2017
(In thousands, except per-share amounts)	2017		2016		2017		2016
Net sales	$	175,652	$	170,658	$	515,200	$	497,172
Net income	1,751		7,525		6,292		16,892
Net income attributable to Universal Electronics Inc.	1,751		7,525		6,292		16,892
Basic earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.52	$	0.44	$	1.17
Diluted earnings per share attributable to Universal Electronics Inc.	$	0.12	$	0.51	$	0.43	$	1.14

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Basis of Presentation and Significant Accounting Policies (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Jan. 01, 2017
Deferred tax asset increase	$ 18,349
Accounting Standards Update 2016-09
Deferred tax asset increase		$ 1,500
Retained Earnings | Accounting Standards Update 2016-09
Retained earnings increase		$ 1,500

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Cash and Cash Equivalents and Restricted Cash (Details) $ in Thousands, ¥ in Millions		9 Months Ended
	Feb. 10, 2017 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Sep. 26, 2016 CNY (¥)	Dec. 31, 2015 USD ($)	Sep. 04, 2015 USD ($)
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents		$ 48,560	$ 48,141	$ 50,611		$ 52,966
Restricted Cash [Abstract]
Increase in restricted cash		0	$ (4,797)
Long-term restricted cash		0		4,600
Disposed of by sale | Guangzhou Factory
Restricted Cash [Abstract]
Long-term restricted cash		4,800			¥ 32
Surety bond
Restricted Cash [Abstract]
Restricted cash							$ 4,600
Increase in restricted cash	$ 4,600
United States
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents		4,795		3,277
People's Republic of China (PRC)
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents		22,120		22,142
Asia (excluding the PRC)
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents		846		5,260
Europe
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents		13,317		19,630
South America
Cash and Cash Equivalents [Line Items]
Total cash and cash equivalents		$ 7,482		$ 302

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Accounts Receivable, Net and Revenue Concentrations - Accounts Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015
Accounts Receivable, Net, Current [Abstract]
Trade receivables, gross	$ 147,194	$ 120,965
Allowance for doubtful accounts	(1,052)	(904)	$ (960)	$ (822)
Allowance for sales returns	(459)	(539)
Net trade receivables	145,683	119,522
Other	7,672	5,070
Accounts receivable, net	$ 153,355	$ 124,592

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Accounts Receivable, Net and Revenue Concentrations - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Schedule of Allowance for Doubtful Accounts
Balance at beginning of period	$ 904	$ 822
Additions (reductions) to costs and expenses	167	123
(Write-offs)/Foreign exchange effects	(19)	15
Balance at end of period	$ 1,052	$ 960

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Accounts Receivable, Net and Revenue Concentrations - Sales Returns (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Receivables [Abstract]
Allowance for sales return	$ 0.3	$ 0.4

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Accounts Receivable, Net and Revenue Concentrations - Significant Customers (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Revenue and Accounts Receivable, Major Customer [Line Items]
Net sales	$ 175,652	$ 169,185	$ 514,638	$ 490,829
Accounts receivable, net	153,355		153,355		$ 124,592
Sales | Comcast Corporation
Revenue and Accounts Receivable, Major Customer [Line Items]
Net sales	$ 36,811	$ 35,554	$ 122,009	$ 111,529
Concentration risk percentage	21.00%	21.00%	23.70%	22.70%
Sales | AT&T
Revenue and Accounts Receivable, Major Customer [Line Items]
Net sales	$ 20,117	$ 21,139	$ 61,057	$ 60,709
Concentration risk percentage	11.50%	12.50%	11.90%	12.40%
Trade accounts receivable | Comcast Corporation
Revenue and Accounts Receivable, Major Customer [Line Items]
Concentration risk percentage			17.30%		19.00%
Accounts receivable, net	$ 26,553		$ 26,553		$ 23,716
Trade accounts receivable | AT&T
Revenue and Accounts Receivable, Major Customer [Line Items]
Concentration risk percentage			0.00%		11.30%
Accounts receivable, net	$ 0		$ 0		$ 14,108

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Inventories, Net and Significant Supplier - Inventories, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 36,803	$ 33,059
Components	18,556	15,046
Work in process	6,596	5,860
Finished goods	95,690	80,119
Reserve for excess and obsolete inventory	(3,125)	(4,205)	$ (3,658)	$ (3,045)
Inventories, net	$ 154,520	$ 129,879

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Inventories, Net and Significant Supplier - Inventory Reserve (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Schedule of Reserve for Excess and Obsolete Inventory [Rollforward]
Balance at beginning of period	$ 4,205	$ 3,045
Additions charged to costs and expenses	1,960	2,120
Sell through	(950)	(781)
(Write-offs)/Foreign exchange effects	(2,090)	(726)
Balance at end of period	3,125	3,658
Inventory scrapped during production	$ 200	$ 300

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Inventories, Net and Significant Supplier - Purchases from Significant Supplier (Details) - Texas Instrument - Cost of goods - Related party supplier - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Concentration Risk [Line Items]
Purchases from significant supplier	$ 13,115	$ 12,353	$ 33,693	$ 32,294
Concentration risk percentage	12.40%	13.00%	11.30%	11.90%

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Inventories, Net and Significant Supplier - Related Party Supplier (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Executive Vice President
Related Party Transaction
Ownership percentage in third party by executive			40.00%
Affiliated Entity | Related party supplier | Cost of goods
Related Party Transaction
Purchases from related party	$ 1,378	$ 1,382	$ 3,962	$ 4,971
Concentration risk percentage	1.30%	1.50%	1.30%	1.80%
Affiliated Entity | Related party supplier | Accounts payable
Related Party Transaction
Concentration risk percentage			1.60%		1.70%
Accounts payable	$ 1,763		$ 1,763		$ 1,690

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Goodwill and Intangible Assets, Net - Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Goodwill [Roll Forward]
Balance at December 31, 2016	$ 43,052
Goodwill acquired during the period (1)	5,494
Foreign exchange effects	78
Balance at September 30, 2017	48,624
Residential Control Systems, Inc
Goodwill [Roll Forward]
Balance at September 30, 2017	$ 5,494

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Goodwill and Intangible Assets, Net - Finite-Lived Intangibles (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2017	Jun. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Finite-Lived Intangible Assets, Net [Abstract]
Gross	$ 61,105			$ 61,105		$ 55,170
Accumulated Amortization	(30,946)			(30,946)		(26,621)
Net	30,159			30,159		28,549
Finite-lived intangible assets, fully amortized, gross	6,000			6,000		10,200
Amortization expense	1,769		$ 1,572	5,160	$ 4,681
Cost of sales
Finite-Lived Intangible Assets, Net [Abstract]
Amortization expense	54		21	128	63
Selling, general and administrative expenses
Finite-Lived Intangible Assets, Net [Abstract]
Amortization expense	1,715		$ 1,551	5,032	$ 4,618
Distribution rights
Finite-Lived Intangible Assets, Net [Abstract]
Gross	340			340		302
Accumulated Amortization	(155)			(155)		(119)
Net	185			185		183
Patents
Finite-Lived Intangible Assets, Net [Abstract]
Gross	12,593			12,593		12,038
Accumulated Amortization	(4,996)			(4,996)		(4,775)
Net	7,597			7,597		7,263
Trademarks and trade names (2)
Finite-Lived Intangible Assets, Net [Abstract]
Gross	2,786			2,786		2,400
Accumulated Amortization	(1,518)			(1,518)		(1,310)
Net	1,268			1,268		1,090
Developed and core technology
Finite-Lived Intangible Assets, Net [Abstract]
Gross	12,560			12,560		12,585
Accumulated Amortization	(5,567)			(5,567)		(4,068)
Net	6,993			6,993		8,517
Capitalized software development costs
Finite-Lived Intangible Assets, Net [Abstract]
Gross	142			142		142
Accumulated Amortization	(59)			(59)		(5)
Net	83			83		137
Customer relationships (2)
Finite-Lived Intangible Assets, Net [Abstract]
Gross	32,534			32,534		27,703
Accumulated Amortization	(18,613)			(18,613)		(16,344)
Net	13,921			13,921		11,359
Order backlog (2)
Finite-Lived Intangible Assets, Net [Abstract]
Gross	150			150		0
Accumulated Amortization	(38)			(38)		0
Net	112			112		$ 0
Residential Control Systems, Inc | Customer relationships (2)
Finite-Lived Intangible Assets, Net [Abstract]
Finite-lived intangible assets	5,000	$ 5,000		5,000
Estimated lives, finite-lived intangible asset		10 years
Residential Control Systems, Inc | Order backlog (2)
Finite-Lived Intangible Assets, Net [Abstract]
Finite-lived intangible assets	150	$ 200		150
Estimated lives, finite-lived intangible asset		1 year
Residential Control Systems, Inc | Trade name
Finite-Lived Intangible Assets, Net [Abstract]
Finite-lived intangible assets	$ 400	$ 400		$ 400
Estimated lives, finite-lived intangible asset		8 years

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Goodwill and Intangible Assets, Net - Future Amortization Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Estimated Future Amortization expense
2017 (remaining 3 months)	$ 1,776
2018	7,046
2019	6,901
2020	5,740
2021	2,289
Thereafter	6,407
Net	$ 30,159	$ 28,549

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Line of Credit (Details) - USD ($)			3 Months Ended		9 Months Ended
	Oct. 27, 2017	Apr. 14, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Sep. 19, 2016
Line of Credit Facility [Line Items]
Amount outstanding under line of credit			$ 114,000,000		$ 114,000,000		$ 49,987,000
Interest expense on borrowings			800,000	$ 300,000	1,800,000	$ 900,000
Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity								$ 125,000,000
Letter of credit outstanding amount			$ 0		$ 0
Line of Credit | US Bank
Line of Credit Facility [Line Items]
Effective interest rate			2.48%		2.48%
Commitment fees					$ 0
Line of Credit | US Bank | London Interbank Offered Rate (LIBOR) | Minimum
Line of Credit Facility [Line Items]
Basis spread on variable rate		1.25%
Line of Credit | US Bank | London Interbank Offered Rate (LIBOR) | Maximum
Line of Credit Facility [Line Items]
Basis spread on variable rate		1.75%
Line of Credit | US Bank | Base Rate | Minimum
Line of Credit Facility [Line Items]
Basis spread on variable rate		0.00%
Line of Credit | US Bank | Base Rate | Maximum
Line of Credit Facility [Line Items]
Basis spread on variable rate		0.50%
Line of Credit | US Bank | Enson
Line of Credit Facility [Line Items]
Subsidiary ownership percentage securing facility		65.00%
Subsequent Event | Second Amended Credit Agreement | Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 170,000,000.0
Subsequent Event | Second Amended Credit Agreement | Line of Credit | US Bank
Line of Credit Facility [Line Items]
Commitment fees	$ 0
Subsequent Event | Second Amended Credit Agreement | Line of Credit | US Bank | London Interbank Offered Rate (LIBOR) | Minimum
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.25%
Subsequent Event | Second Amended Credit Agreement | Line of Credit | US Bank | London Interbank Offered Rate (LIBOR) | Maximum
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.75%
Subsequent Event | Second Amended Credit Agreement | Line of Credit | US Bank | Base Rate | Minimum
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.00%
Subsequent Event | Second Amended Credit Agreement | Line of Credit | US Bank | Base Rate | Maximum
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.50%

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Income Tax Contingency [Line Items]
Income tax expense (benefit)	$ 1,824	$ 421	$ 2,945	$ 2,956
Effective tax rate	51.40%	5.10%	31.10%	14.70%
Unrecognized tax benefits	$ 3,800		$ 3,800
Unrecognized tax benefits that would impact effective rate	3,500		3,500
Decrease in unrecognized tax benefits is reasonably possible in next 12 months	100		100
Accrued interest and penalties	$ 300		$ 300		$ 300
State Administration of Taxation, China
Income Tax Contingency [Line Items]
Tax refunds		$ 1,800		$ 1,800

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Accrued Compensation (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Components of Accrued Compensation
Accrued social insurance	$ 17,506	$ 19,974
Accrued salary/wages	7,721	7,903
Accrued vacation/holiday	2,844	2,411
Accrued bonus	1,985	2,421
Accrued commission	851	933
Accrued medical insurance claims	284	122
Other accrued compensation	2,137	1,816
Total accrued compensation	33,328	35,580
Accrued salaries - 13th month salaries	$ 700	$ 700

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Other Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Advertising and marketing	$ 272	$ 213
Deferred revenue	79	1,431
Deposit for sale of Guangzhou factory	4,799	0
Duties	757	1,127
Freight and handling fees	2,176	1,919
Product development	485	454
Product warranty claim costs	218	134	$ 135	$ 35
Professional fees	1,691	1,313
Property, plant, and equipment	1,564	1,017
Sales taxes and VAT	2,587	2,715
Short-term contingent consideration	3,400	0
Third-party commissions	685	853
Tooling	1,769	1,520
Unrealized loss on foreign currency exchange contracts	86	1,623
URC court order and settlement agreement	0	6,622
Utilities	392	331
Other	4,880	3,138
Total other accrued expenses	$ 25,840	$ 24,410

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Commitments and Contingencies - Product Warranties (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Schedule of Changes in Reserve for Product Warranty Claim Costs
Balance at beginning of period	$ 134	$ 35
Accruals for warranties issued during the period	169	100
Settlements (in cash or in kind) during the period	(85)	0
Balance at end of period	$ 218	$ 135

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Commitments and Contingencies - Restructuring Activities and Sale of Guangzhou Factory (Details) $ in Thousands, ¥ in Millions		3 Months Ended		9 Months Ended
	Sep. 26, 2016 CNY (¥)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Restructuring Cost and Reserve [Line Items]
Factory transition restructuring charges		$ 446	$ 81	$ 6,145	$ 1,598
Assets held for sale		12,403		12,403		$ 0
Guangzhou Factory | Disposed of by sale
Restructuring Cost and Reserve [Line Items]
Consideration	¥ 320	48,000		48,000
Period to cease operations (up to)	24 months
Expected term of completion	28 months
Escrow deposit as percentage of purchase price	10.00%
Assets held for sale		12,400		12,400
Employee severance | Manufacturing activities transition | Accrued compensation
Restructuring Cost and Reserve [Line Items]
Unpaid severance costs		200		200
Employee severance | Manufacturing activities transition | Selling, general and administrative expenses
Restructuring Cost and Reserve [Line Items]
Factory transition restructuring charges		$ 400	$ 100	$ 6,100	$ 1,600

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Commitments and Contingencies - Litigation (Details) - Patent Lawsuit Against UEBV and Telenet - Pending litigation		1 Months Ended
	Jun. 10, 2015 product subsidiary patent customer	Sep. 30, 2015 patent
Contingencies [Line Items]
Number of subsidiaries named in lawsuit | subsidiary	1
Number of customers named in lawsuit | customer	1
Design patents
Contingencies [Line Items]
Number of products named in lawsuit | product	1
Number of patents allegedly infringed upon	2
Utility patent
Contingencies [Line Items]
Number of patents allegedly infringed upon	1	1

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Treasury Stock (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Oct. 23, 2017
Class of Stock [Line Items]
Shares available for repurchase (in shares)	114,271
Shares repurchased (in shares)	330,000	40,000
Cost of shares repurchased	$ 20,217	$ 2,188
Scenario, Forecast
Class of Stock [Line Items]
Shares available for repurchase (in shares)			386,434
Increase in shares available for repurchase (in shares)			300,000

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Business Segment and Foreign Operations - Foreign Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Schedule of Revenues from Geographical Segments [Line Items]
Total net sales	$ 175,652	$ 169,185	$ 514,638	$ 490,829
United States
Schedule of Revenues from Geographical Segments [Line Items]
Total net sales	85,762	88,243	253,259	263,053
Asia (excluding the PRC)
Schedule of Revenues from Geographical Segments [Line Items]
Total net sales	26,113	22,099	77,679	64,290
People's Republic of China (PRC)
Schedule of Revenues from Geographical Segments [Line Items]
Total net sales	23,437	19,899	61,015	59,978
Europe
Schedule of Revenues from Geographical Segments [Line Items]
Total net sales	18,877	19,389	56,041	53,716
Latin America
Schedule of Revenues from Geographical Segments [Line Items]
Total net sales	13,567	13,032	44,593	32,273
Other
Schedule of Revenues from Geographical Segments [Line Items]
Total net sales	$ 7,896	$ 6,523	$ 22,051	$ 17,519

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Business Segment and Foreign Operations - Long-lived Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Long-lived Assets from External Customers and Long-Lived Assets [Line Items]
Total long-lived tangible assets	$ 113,189	$ 110,247
United States
Long-lived Assets from External Customers and Long-Lived Assets [Line Items]
Total long-lived tangible assets	14,233	11,948
People's Republic of China (PRC)
Long-lived Assets from External Customers and Long-Lived Assets [Line Items]
Total long-lived tangible assets	95,165	94,113
All other countries
Long-lived Assets from External Customers and Long-Lived Assets [Line Items]
Total long-lived tangible assets	$ 3,791	$ 4,186

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Stock-Based Compensation - Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee and director stock-based compensation expense	$ 3,921	$ 2,668	$ 9,476	$ 7,638
Income tax benefit	603	812	2,307	2,281
Cost of sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee and director stock-based compensation expense	19	14	53	43
Research and development expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee and director stock-based compensation expense	149	136	412	409
Selling, general and administrative expenses | Employees
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee and director stock-based compensation expense	1,843	1,748	5,562	5,324
Selling, general and administrative expenses | Outside directors
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee and director stock-based compensation expense	$ 1,910	$ 770	$ 3,449	$ 1,862

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Stock-Based Compensation - Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($) $ / shares shares
Number of Options (in 000's)
Outstanding at beginning of period (in shares) | shares	652
Granted (in shares) | shares	92
Exercised (in shares) | shares	(45)
Forfeited/canceled/expired (in shares) | shares	(168)
Outstanding at end of period (in shares) | shares	531
Vested and expected to vest at end of period (in shares) | shares	531
Exercisable at end of period (in shares) | shares	378
Weighted-Average Exercise Price
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 39.27
Granted (in dollars per share) | $ / shares	62.70
Exercised (in dollars per share) | $ / shares	24.87
Forfeited/canceled/expired (in dollars per share) | $ / shares	46.44
Outstanding at end of period (in dollars per share) | $ / shares	42.26
Vested and expected to vest at end of period (in dollars per share) | $ / shares	42.26
Exercisable at end of period (in dollars per share) | $ / shares	$ 35.35
Weighted-Average Remaining Contractual Term (in years)
Outstanding at end of period	4 years 5 months 26 days
Vested and expected to vest at end of period	4 years 5 months 26 days
Exercisable at end of period	3 years 11 months 8 days
Exercised | $	$ 1,893
Outstanding at end of period | $	11,391
Vested and expected to vest at end of period | $	11,390
Exercisable at end of period | $	$ 10,731

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Stock-Based Compensation - Valuation Assumptions (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Weighted average fair value of grants (in dollars per share)	$ 0.00	$ 0.00	$ 19.61	$ 17.96
Risk-free interest rate	0.00%	0.00%	1.75%	1.36%
Expected volatility	0.00%	0.00%	34.25%	41.38%
Expected life in years	0 years	0 years	4 years 6 months 7 days	4 years 6 months 18 days

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Stock-based Compensation - Additional Disclosures (Details) - USD ($) $ in Millions		3 Months Ended	9 Months Ended
	Sep. 11, 2017	Sep. 30, 2017	Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Surrendered stock options (in shares)			168,000
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized pre-tax stock-based compensation expense		$ 2.4	$ 2.4
Unrecognized pre-tax stock-based compensation expense, remaining weighted-average life			1 year 9 months 18 days
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized pre-tax stock-based compensation expense		9.8	$ 9.8
Unrecognized pre-tax stock-based compensation expense, remaining weighted-average life			1 year 8 months 12 days
Outside directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Surrendered stock options (in shares)	150,000
Outside directors | Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Acceleration of stock-based compensation expense		$ 1.2	$ 1.2

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Stock-Based Compensation - Restricted Stock Activity (Details) shares in Thousands	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Shares (in 000's)
Non-vested at beginning of period (in shares) | shares	153
Granted (in shares) | shares	132
Vested (in shares) | shares	(59)
Forfeited (in shares) | shares	(4)
Non-vested at end of period (in shares) | shares	222
Weighted-Average Grant Date Fair Value
Non-vested at beginning of period (in dollars per share) | $ / shares	$ 57.43
Granted (in dollars per share) | $ / shares	64.14
Vested (in dollars per share) | $ / shares	61.28
Forfeited (in dollars per share) | $ / shares	60.71
Non-vested at end of period (in dollars per share) | $ / shares	$ 60.34

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Performance-Based Common Stock Warrants - Additional Disclosures (Details) - Common stock purchase warrant	Mar. 09, 2016 USD ($) vesting_period $ / shares shares	Sep. 30, 2017 USD ($) shares
Class of Warrant or Right [Line Items]
Number of shares called by warrants (in shares) | shares	725,000
Exercise price of warrants (in dollars per share) | $ / shares	$ 54.55
Number of vesting periods | vesting_period	3
Term of successive voting periods (in years)	2 years
Vesting period one (in years)	2 years
Total vesting period (in years)	6 years
Warrants vested (in shares) | shares		100,000
Unrecognized fair value of unvested warrants		$ 14,200,000
Supply threshold
Class of Warrant or Right [Line Items]
Supply threshold level one, amount	$ 260,000,000
Supply threshold level three, amount	340,000,000
Supply threshold, amount	$ 1,020,000,000.00

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Performance-Based Common Stock Warrants - Purchase Level and Number of Warrants to Vest (Details) - Supply threshold - Common stock purchase warrant	Mar. 09, 2016 USD ($) shares
Class of Warrant or Right [Line Items]
Supply threshold level one, amount | $	$ 260,000,000
Supply threshold level two, amount | $	300,000,000
Supply threshold level three, amount | $	$ 340,000,000
Incremental warrants that will vest, vesting period one, supply threshold level one (in shares)	100,000
Incremental warrants that will vest, vesting period one, supply threshold level two (in shares)	75,000
Incremental warrants that will vest, vesting period one, supply threshold level three (in shares)	75,000
Maximum potential warrants that will vest, vesting period one (in shares)	250,000
Incremental warrants that will vest, vesting period two, supply threshold level one (in shares)	100,000
Incremental warrants that will vest, vesting period two, supply threshold level two (in shares)	75,000
Incremental warrants that will vest, vesting period two, supply threshold level three (in shares)	75,000
Maximum potential warrants that will vest, vesting period two (in shares)	250,000
Incremental warrants that will vest, vesting period three, supply threshold level one (in shares)	75,000
Incremental warrants that will vest, vesting period three, supply threshold level two (in shares)	75,000
Incremental warrants that will vest, vesting period three, supply threshold level three (in shares)	75,000
Maximum potential warrants that will vest, vesting period three (in shares)	225,000

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Performance-Based Common Stock Warrants - Fair Value Assumptions (Details) - Common stock purchase warrant - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Class of Warrant or Right [Line Items]
Fair value (in dollars per share)	$ 24.17	$ 38.32	$ 24.17	$ 38.32
Price of Universal Electronics Inc. common stock (in dollars per share)	$ 62.1	$ 74.99	$ 62.1	$ 74.99
Risk-free interest rate	1.93%	1.32%	1.93%	1.32%
Expected volatility	34.41%	40.54%	34.41%	40.54%
Expected life in years	5 years 3 months 3 days	6 years 3 months	5 years 3 months 3 days	6 years 3 months

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Performance-Based Common Stock Warrants Performance-Based Common Stock Warrants - (Details) - Common stock purchase warrant - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Class of Warrant or Right [Line Items]
Reduction/(increase) to net sales	$ (141)	$ 1,160	$ 1,122	$ 3,219
Income tax (benefit)/expense	$ 53	$ (426)	$ (418)	$ (1,182)

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Other Income (Expense), Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Other Income and Expenses [Abstract]
Net gain (loss) on foreign currency exchange contracts	$ (1,488)	$ (218)	$ (2,852)	$ (894)
Net gain (loss) on foreign currency exchange transactions	1,176	439	2,512	2,455
Other income (expense)	373	114	342	165
Other income (expense), net	$ 61	$ 335	$ 2	$ 1,726

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Earnings Per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
BASIC
Net income attributable to Universal Electronics Inc.	$ 1,728	$ 7,807	$ 6,531	$ 17,118
Weighted-average common shares outstanding (in shares)	14,381	14,510	14,412	14,441
Basic earnings per share attributable to Universal Electronics Inc. (in dollars per share)	$ 0.12	$ 0.54	$ 0.45	$ 1.19
DILUTED
Net income attributable to Universal Electronics Inc.	$ 1,728	$ 7,807	$ 6,531	$ 17,118
Weighted-average common shares outstanding (in shares)	14,381	14,510	14,412	14,441
Dilutive effect of stock options, restricted stock and common stock warrants (in shares)	285	338	277	299
Weighted-average common shares outstanding on a diluted basis (in shares)	14,666	14,848	14,689	14,740
Diluted earnings per share attributable to Universal Electronics Inc. (in dollars per share)	$ 0.12	$ 0.53	$ 0.44	$ 1.16

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Earnings Per Share - Antidilutive Shares (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options and restricted stock excluded in computation of diluted earning per share (in shares)	165	0	153	111
Restricted stock awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options and restricted stock excluded in computation of diluted earning per share (in shares)	30	5	30	8

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Derivatives - Additional Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Derivative Instruments,Gain (Loss) [Line Items]
Net loss on foreign currency exchange contracts	$ 1,488	$ 218	$ 2,852	$ 894
Other income (expense), net | Not designated as hedging instrument | Foreign currency exchange contracts
Derivative Instruments,Gain (Loss) [Line Items]
Net loss on foreign currency exchange contracts	$ 1,500	$ 200	$ 2,900	$ 900

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Derivatives - Fair Value (Details) - Fair Value Measurement Using - Foreign currency exchange contracts - Not designated as hedging instrument - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Estimate of fair value measurement
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts	$ (385)	$ (1,584)
Level 1
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts	0	0
Level 2
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts	(385)	(1,584)
Level 3
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts	$ 0	$ 0

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Derivatives - Contracts Held (Details) - Not designated as hedging instrument	9 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($) $ / ¥ $ / € BRL / $ $ / BRL	Dec. 31, 2016 USD ($) ¥ / $ $ / € $ / BRL
Foreign currency exchange contracts | USD/Euro
Derivative [Line Items]
Notional value	$ 17,000,000	$ 18,000,000
Forward rate | $ / €	1.20390	1.0513
Unrealized gain/(loss) recorded at balance sheet date	$ 299,000	$ (61,000)
Foreign currency exchange contracts | USD/Chinese Yuan Renminbi
Derivative [Line Items]
Notional value	$ 22,000,000
Forward rate | $ / ¥	6.61740
Unrealized gain/(loss) recorded at balance sheet date	$ 111,000
Foreign currency exchange contract, One | USD/Brazilian Real
Derivative [Line Items]
Notional value	$ 4,500,000.0	$ 2,000,000
Forward rate | $ / BRL	3.23300	3.4775
Unrealized gain/(loss) recorded at balance sheet date	$ (86,000)	$ (131,000)
Foreign currency exchange contract, Two | USD/Brazilian Real
Derivative [Line Items]
Notional value	$ 1,000,000	$ 4,000,000
Forward rate	3.3660	3.2316
Unrealized gain/(loss) recorded at balance sheet date	$ 61,000	$ 39,000
Foreign currency exchange contract, Three | USD/Chinese Yuan Renminbi
Derivative [Line Items]
Notional value		$ 10,000,000
Forward rate | ¥ / $		6.6757
Unrealized gain/(loss) recorded at balance sheet date		$ (457,000)
Foreign currency exchange contract, Four | USD/Chinese Yuan Renminbi
Derivative [Line Items]
Notional value		$ 25,000,000
Forward rate | ¥ / $		6.7230
Unrealized gain/(loss) recorded at balance sheet date		$ (974,000)

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Business Combination - Additional Disclosures (Details) - USD ($)		3 Months Ended		6 Months Ended	9 Months Ended
	Apr. 06, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2017	Sep. 30, 2016
Business Combination
Cash consideration					$ 8,894,000	$ 0
Residential Control Systems, Inc
Business Combination
Initial purchase price	$ 12,600,000
Cash consideration	8,900,000				8,894,000
Contingent consideration	3,700,000
Acquisition costs					100,000
Net sales		$ 800,000		$ 2,200,000
Net loss		$ 300,000		$ 700,000
Potential additional earnout payments	$ 10,000,000.0
Pro forma information, increase (decrease) in amortization expense, net			$ 200,000		$ 100,000	$ 500,000
Residential Control Systems, Inc | Valuation methodology based on projections of future operating income
Business Combination
Contingent consideration discount rate	24.80%

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Business Combination - Schedule of Purchase Price Allocation (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
	Apr. 06, 2017	Jun. 30, 2017	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Business Combination
Goodwill			$ 48,624		$ 43,052
Cash paid			8,894	$ 0
Residential Control Systems, Inc
Business Combination
Accounts receivable			429
Inventories			1,508
Prepaid expenses and other current assets			7
Property, plant and equipment			14
Current liabilities			(408)
Net tangible assets acquired			1,550
Goodwill		$ 5,500	5,494
Total purchase price			12,594
Less: Contingent consideration			(3,700)
Cash paid	$ 8,900		8,894
Residential Control Systems, Inc | Trade name
Business Combination
Finite-lived intangible assets		$ 400	400
Estimated lives, finite-lived intangible asset		8 years
Residential Control Systems, Inc | Customer relationships
Business Combination
Finite-lived intangible assets		$ 5,000	5,000
Estimated lives, finite-lived intangible asset		10 years
Residential Control Systems, Inc | Order backlog
Business Combination
Finite-lived intangible assets		$ 200	$ 150
Estimated lives, finite-lived intangible asset		1 year
Residential Control Systems, Inc | Minimum
Business Combination
Estimated lives, Property, plant and equipment			1 year
Residential Control Systems, Inc | Minimum | Order backlog
Business Combination
Estimated lives, finite-lived intangible asset			1 year
Residential Control Systems, Inc | Maximum
Business Combination
Estimated lives, Property, plant and equipment			4 years
Residential Control Systems, Inc | Maximum | Trade name
Business Combination
Estimated lives, finite-lived intangible asset			8 years
Residential Control Systems, Inc | Maximum | Customer relationships
Business Combination
Estimated lives, finite-lived intangible asset			10 years

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Business Combination - Schedule of Pro Forma Financial Information (Details) - Residential Control Systems, Inc - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Business Combination
Net sales	$ 175,652	$ 170,658	$ 515,200	$ 497,172
Net income	1,751	7,525	6,292	16,892
Net income attributable to Universal Electronics Inc.	$ 1,751	$ 7,525	$ 6,292	$ 16,892
Basic earnings per share attributable to Universal Electronics Inc. (in dollars per share)	$ 0.12	$ 0.52	$ 0.44	$ 1.17
Diluted earnings per share attributable to Universal Electronics Inc. (in dollars per share)	$ 0.12	$ 0.51	$ 0.43	$ 1.14