Performance-Based Common Stock Warrants (Tables)

9 Months Ended

Sep. 30, 2017

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		)

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

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