Performance-Based Common Stock Warrants (Tables)

3 Months Ended

Mar. 31, 2020

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

Assumptions Used in Valuation and Weighted Average Fair Value of Warrants

The assumptions we utilized in the Black-Scholes option pricing model and the resulting grant-date fair value of the warrants as of January 1, 2020 were the following:



Fair value	$17.19
Price of Universal Electronics Inc. common stock	$52.21
Risk-free interest rate	1.62%
Expected volatility	48.86%
Expected life in years	3.00

Prior to the adoption of the new guidance on January 1, 2020, we adjusted the estimated weighted average fair value of the warrants each period. The assumptions we utilized in the Black Scholes option pricing model and the resulting weighted average fair value of the warrants for the three months ended March 31, 2019 were the following:



Fair value	$9.00
Price of Universal Electronics Inc. common stock	$37.46
Risk-free interest rate	2.22%
Expected volatility	44.45%
Expected life in years	3.75

Impact to Net Sales in Connection with Warrants and Related Income Tax Benefit

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



	Three Months Ended March 31,
(In thousands)	2020		2019
Reduction to net sales	$	184	$	434
Income tax benefit	$	46	$	108