QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Large accelerated filer | ☐ | ☒ | ||||||
Non-accelerated filer | ☐ | 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 Exchange Act). | Yes | No | ☒ |
Page Number | |
June 30, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable, net | |||||||
Contract assets | |||||||
Inventories | |||||||
Prepaid expenses and other current assets | |||||||
Income tax receivable | |||||||
Total current assets | |||||||
Property, plant and equipment, net | |||||||
Goodwill | |||||||
Intangible assets, net | |||||||
Operating lease right-of-use assets | |||||||
Deferred income taxes | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | $ | |||||
Line of credit | |||||||
Accrued compensation | |||||||
Accrued sales discounts, rebates and royalties | |||||||
Accrued income taxes | |||||||
Other accrued liabilities | |||||||
Total current liabilities | |||||||
Long-term liabilities: | |||||||
Operating lease obligations | |||||||
Contingent consideration | |||||||
Deferred income taxes | |||||||
Income tax payable | |||||||
Other long-term liabilities | |||||||
Total liabilities | |||||||
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; 24,268,744 and 24,118,088 shares issued on June 30, 2020 and December 31, 2019, respectively | |||||||
Paid-in capital | |||||||
Treasury stock, at cost, 10,346,473 and 10,174,199 shares on June 30, 2020 and December 31, 2019, respectively | ( | ) | ( | ) | |||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||
Retained earnings | |||||||
Total stockholders' equity | |||||||
Total liabilities and stockholders' equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||
Cost of sales | |||||||||||||||
Gross profit | |||||||||||||||
Research and development expenses | |||||||||||||||
Selling, general and administrative expenses | |||||||||||||||
Operating income (loss) | ( | ) | ( | ) | |||||||||||
Interest income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Accrued social insurance adjustment | |||||||||||||||
Other income (expense), net | ( | ) | |||||||||||||
Income (loss) before provision for income taxes | ( | ) | ( | ) | |||||||||||
Provision for income taxes | |||||||||||||||
Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Diluted | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Shares used in computing earnings (loss) per share: | |||||||||||||||
Basic | |||||||||||||||
Diluted |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Other comprehensive income (loss): | |||||||||||||||
Change in foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ( | ) |
Common Stock Issued | Common Stock in Treasury | Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Totals | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | |||||||||||||||||
Net income (loss) | |||||||||||||||||||||||||||||
Currency translation adjustment | ( | ) | ( | ) | |||||||||||||||||||||||||
Shares issued for employee benefit plan and compensation | |||||||||||||||||||||||||||||
Purchase of treasury shares | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
Shares issued to directors | ( | ) | |||||||||||||||||||||||||||
Employee and director stock-based compensation | |||||||||||||||||||||||||||||
Performance-based common stock warrants | |||||||||||||||||||||||||||||
Balance at March 31, 2020 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | |||||||||||||||||
Net income (loss) | |||||||||||||||||||||||||||||
Currency translation adjustment | ( | ) | ( | ) | |||||||||||||||||||||||||
Shares issued for employee benefit plan and compensation | |||||||||||||||||||||||||||||
Purchase of treasury shares | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
Employee and director stock-based compensation | |||||||||||||||||||||||||||||
Performance-based common stock warrants | |||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ |
Common Stock Issued | Common Stock in Treasury | Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Totals | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | |||||||||||||||||
Net income (loss) | ( | ) | ( | ) | |||||||||||||||||||||||||
Currency translation adjustment | |||||||||||||||||||||||||||||
Shares issued for employee benefit plan and compensation | |||||||||||||||||||||||||||||
Purchase of treasury shares | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
Shares issued to directors | |||||||||||||||||||||||||||||
Employee and director stock-based compensation | |||||||||||||||||||||||||||||
Performance-based common stock warrants | |||||||||||||||||||||||||||||
Balance at March 31, 2019 | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
Net income (loss) | ( | ) | ( | ) | |||||||||||||||||||||||||
Currency translation adjustment | ( | ) | ( | ) | |||||||||||||||||||||||||
Shares issued for employee benefit plan and compensation | |||||||||||||||||||||||||||||
Purchase of treasury shares | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
Shares issued to directors | |||||||||||||||||||||||||||||
Employee and director stock-based compensation | |||||||||||||||||||||||||||||
Performance-based common stock warrants | |||||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ |
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Cash provided by (used for) operating activities: | |||||||
Net income (loss) | $ | $ | ( | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||
Depreciation and amortization | |||||||
Provision for bad debts | |||||||
Deferred income taxes | |||||||
Shares issued for employee benefit plan | |||||||
Employee and director stock-based compensation | |||||||
Performance-based common stock warrants | |||||||
Impairment of long-term assets | |||||||
Accrued social insurance adjustment | ( | ) | |||||
Loss on sale of Ohio call center | |||||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable and contract assets | ( | ) | ( | ) | |||
Inventories | ( | ) | |||||
Prepaid expenses and other assets | |||||||
Accounts payable and accrued liabilities | ( | ) | |||||
Accrued income taxes | ( | ) | |||||
Net cash provided by (used for) operating activities | |||||||
Cash provided by (used for) investing activities: | |||||||
Acquisitions of property, plant and equipment | ( | ) | ( | ) | |||
Acquisitions of intangible assets | ( | ) | ( | ) | |||
Payment on sale of Ohio call center | ( | ) | |||||
Net cash provided by (used for) investing activities | ( | ) | ( | ) | |||
Cash provided by (used for) financing activities: | |||||||
Borrowings under line of credit | |||||||
Repayments on line of credit | ( | ) | ( | ) | |||
Treasury stock purchased | ( | ) | ( | ) | |||
Contingent consideration payments in connection with business combinations | ( | ) | ( | ) | |||
Net cash provided by (used for) financing activities | ( | ) | ( | ) | |||
Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | |||
Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | |||
Cash and cash equivalents at beginning of period | |||||||
Cash and cash equivalents at end of period | $ | $ | |||||
Supplemental cash flow information: | |||||||
Income taxes paid | $ | $ | |||||
Interest paid | $ | $ |
(In thousands) | June 30, 2020 | December 31, 2019 | |||||
United States | $ | $ | |||||
People's Republic of China ("PRC") | |||||||
Asia (excluding the PRC) | |||||||
Europe | |||||||
South America | |||||||
Total cash and cash equivalents | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Goods and services transferred at a point in time | $ | $ | $ | $ | |||||||||||
Goods and services transferred over time | |||||||||||||||
Net sales | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
United States | $ | $ | $ | $ | |||||||||||
Asia (excluding PRC) | |||||||||||||||
Europe | |||||||||||||||
People's Republic of China | |||||||||||||||
Latin America | |||||||||||||||
Other | |||||||||||||||
Total net sales | $ | $ | $ | $ |
Three Months Ended June 30, | |||||||||||||
2020 | 2019 | ||||||||||||
$ (thousands) | % of Net Sales | $ (thousands) | % of Net Sales | ||||||||||
Comcast Corporation | $ | % | |||||||||||
Daikin Industries Ltd. | $ | % | (1) | (1) |
Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
$ (thousands) | % of Net Sales | $ (thousands) | % of Net Sales | |||||||||||
Comcast Corporation | $ | % | $ | % | ||||||||||
DISH Network Corporation | (1) | (1) | $ | % |
(1) | Net sales to this customer did not total more than 10% of our total net sales in the indicated period. |
(In thousands) | June 30, 2020 | December 31, 2019 | |||||
Trade receivables, gross | $ | $ | |||||
Allowance for bad debts | ( | ) | ( | ) | |||
Allowance for sales returns | ( | ) | ( | ) | |||
Net trade receivables | |||||||
Other | |||||||
Accounts receivable, net | $ | $ |
(In thousands) | Six Months Ended June 30, | ||||||
2020 | 2019 | ||||||
Balance at beginning of period | $ | $ | |||||
Additions to costs and expenses | |||||||
(Write-offs)/Foreign exchange effects | ( | ) | ( | ) | |||
Balance at end of period | $ | $ |
June 30, 2020 | December 31, 2019 | |||||||||||||
$ (thousands) | % of Accounts Receivable, Net | $ (thousands) | % of Accounts Receivable, Net | |||||||||||
Comcast Corporation | $ | % | (1) | (1) | ||||||||||
DISH Network Corporation | (1) | (1) | $ | % |
(1) | Trade receivables associated with this customer did not total more than 10% of our accounts receivable, net for the indicated period. |
(In thousands) | June 30, 2020 | December 31, 2019 | |||||
Raw materials | $ | $ | |||||
Components | |||||||
Work in process | |||||||
Finished goods | |||||||
Inventories | $ | $ |
Three Months Ended June 30, | ||||||||||||
2020 | 2019 | |||||||||||
$ (thousands) | % of Total Inventory Purchases | $ (thousands) | % of Total Inventory Purchases | |||||||||
Qorvo International Pte Ltd. | $ | % | (1) | (1) |
Six Months Ended June 30, | ||||||||||||
2020 | 2019 | |||||||||||
$ (thousands) | % of Total Inventory Purchases | $ (thousands) | % of Total Inventory Purchases | |||||||||
Qorvo International Pte Ltd. | $ | % | (1) | (1) |
(1) | Purchases associated with this supplier did not total more than 10% of our total inventory purchases for the indicated period. |
June 30, 2020 | December 31, 2019 | |||||||||||||
$ (thousands) | % of Accounts Payable | $ (thousands) | % of Accounts Payable | |||||||||||
Zhejiang Zhen You Electronics Co. Ltd. | $ | % | $ | % |
(In thousands) | June 30, 2020 | December 31, 2019 | |||||
Assets: | |||||||
Operating lease right-of-use assets | $ | $ | |||||
Liabilities: | |||||||
Other accrued liabilities | $ | $ | |||||
Long-term operating lease obligations | |||||||
Total lease liabilities | $ | $ |
(In thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Cost of sales | $ | $ | $ | $ | |||||||||||
Selling, general and administrative expenses | |||||||||||||||
Total operating lease expense | $ | $ | $ | $ | |||||||||||
Operating cash outflows from operating leases | $ | $ | $ | $ | |||||||||||
Operating lease right-of-use assets obtained in exchange for lease obligations | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||
Weighted average lease liability term (in years) | |||||
Weighted average discount rate | % | % |
(In thousands) | June 30, 2020 | ||
2020 (remaining 6 months) | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total lease payments | |||
Less: imputed interest | ( | ) | |
Total lease liabilities | $ |
(In thousands) | |||
Balance at December 31, 2019 | $ | ||
Foreign exchange effects | |||
Balance at June 30, 2020 | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
(In thousands) | Gross (1) | Accumulated Amortization (1) | Net | Gross (1) | Accumulated Amortization (1) | Net | |||||||||||||||||
Distribution rights | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||
Patents | ( | ) | ( | ) | |||||||||||||||||||
Trademarks and trade names | ( | ) | ( | ) | |||||||||||||||||||
Developed and core technology | ( | ) | ( | ) | |||||||||||||||||||
Capitalized software development costs | |||||||||||||||||||||||
Customer relationships | ( | ) | ( | ) | |||||||||||||||||||
Total intangible assets, net | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
(1) | This table excludes the gross value of fully amortized intangible assets totaling $ |
(In thousands) | |||
2020 (remaining 6 months) | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total | $ |
(In thousands) | June 30, 2020 | December 31, 2019 | |||||
Accrued social insurance (1) | $ | $ | |||||
Accrued salary/wages | |||||||
Accrued vacation/holiday | |||||||
Accrued bonus | |||||||
Accrued commission | |||||||
Other accrued compensation | |||||||
Total accrued compensation | $ | $ |
(1) | PRC employers are required by law to remit the applicable social insurance payments to their local government. Social insurance is comprised of various components such as pension, medical insurance, job industry 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 at June 30, 2020 and December 31, 2019. |
(In thousands) | June 30, 2020 | December 31, 2019 | |||||
Contract liabilities | $ | $ | |||||
Duties | |||||||
Freight and handling fees | |||||||
Operating lease obligations | |||||||
Product warranty claims costs | |||||||
Professional fees | |||||||
Sales taxes and VAT | |||||||
Short-term contingent consideration | |||||||
Other | |||||||
Total other accrued liabilities | $ | $ |
(In thousands) | Six Months Ended June 30, | ||||||
2020 | 2019 | ||||||
Balance at beginning of period | $ | $ | |||||
Accruals for warranties issued during the period | |||||||
Settlements (in cash or in kind) during the period/Foreign exchange effects | ( | ) | |||||
Balance at end of period | $ | $ |
Six Months Ended June 30, | |||||||
(In thousands) | 2020 | 2019 | |||||
Shares repurchased | |||||||
Cost of shares repurchased | $ | $ |
(In thousands) | June 30, 2020 | December 31, 2019 | |||||
United States | $ | $ | |||||
People's Republic of China | |||||||
Mexico | |||||||
All other countries | |||||||
Total long-lived tangible assets | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Cost of sales | $ | $ | $ | $ | |||||||||||
Research and development expenses | |||||||||||||||
Selling, general and administrative expenses: | |||||||||||||||
Employees | |||||||||||||||
Outside directors | |||||||||||||||
Total employee and director stock-based compensation expense | $ | $ | $ | $ | |||||||||||
Income tax benefit | $ | $ | $ | $ |
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, 2019 | $ | |||||||||||
Granted | ||||||||||||
Exercised | $ | |||||||||||
Forfeited/canceled/expired | ||||||||||||
Outstanding at June 30, 2020 (1) | $ | $ | ||||||||||
Vested and expected to vest at June 30, 2020 (1) | $ | $ | ||||||||||
Exercisable at June 30, 2020 (1) | $ | $ |
(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 second quarter of 2020 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 June 30, 2020. This amount will change based on the fair market value of our stock. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Weighted average fair value of grants | $ | $ | $ | $ | |||||||||||
Risk-free interest rate | % | % | % | % | |||||||||||
Expected volatility | % | % | % | % | |||||||||||
Expected life in years |
Shares (in 000's) | Weighted-Average Grant Date Fair Value | |||||
Non-vested at December 31, 2019 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Forfeited | ( | ) | ||||
Non-vested at June 30, 2020 | $ |
Potential Warrants To 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 | |||||
$ | ||||||||
$ | ||||||||
$ | ||||||||
Maximum Potential Warrants Earned by Comcast |
Fair value | $ |
Price of Universal Electronics Inc. common stock | $ |
Risk-free interest rate | |
Expected volatility | |
Expected life in years |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||
Fair value | $ | $ | |
Price of Universal Electronics Inc. common stock | $ | $ | |
Risk-free interest rate | |||
Expected volatility | |||
Expected life in years |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Reduction to net sales | $ | $ | $ | $ | |||||||||||
Income tax benefit | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net gain (loss) on foreign currency exchange contracts (1) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Net gain (loss) on foreign currency exchange transactions | |||||||||||||||
Other income | |||||||||||||||
Other (expense), net | $ | $ | $ | $ | ( | ) |
(1) | This represents the gains (losses) incurred on foreign currency hedging derivatives (see Note 18 for further details). |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In thousands, except per-share amounts) | 2020 | 2019 | 2020 | 2019 | |||||||||||
BASIC | |||||||||||||||
Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Weighted-average common shares outstanding | |||||||||||||||
Basic earnings (loss) per share | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
DILUTED | |||||||||||||||
Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Weighted-average common shares outstanding for basic | |||||||||||||||
Dilutive effect of stock options, restricted stock and common stock warrants | |||||||||||||||
Weighted-average common shares outstanding on a diluted basis | |||||||||||||||
Diluted earnings (loss) per share | $ | $ | ( | ) | $ | $ | ( | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
(In thousands) | 2020 | 2019 | 2020 | 2019 | |||||||
Stock options | |||||||||||
Restricted stock awards | |||||||||||
Performance-based warrants |
June 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||
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 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
Date Held | Currency | Position Held | Notional Value (in millions) | Forward Rate | Unrealized Gain/(Loss) Recorded at Balance Sheet Date (in thousands)(1) | Settlement Date | |||||||||||
June 30, 2020 | USD/Chinese Yuan Renminbi | CNY | $ | $ | ( | ) | July 24, 2020 | ||||||||||
June 30, 2020 | USD/Euro | USD | $ | $ | ( | ) | July 24, 2020 | ||||||||||
June 30, 2020 | USD/Brazilian Real | USD | $ | $ | July 24, 2020 | ||||||||||||
June 30, 2020 | USD/Mexican Peso | USD | $ | $ | July 24, 2020 | ||||||||||||
December 31, 2019 | USD/Chinese Yuan Renminbi | USD | $ | $ | January 23, 2020 | ||||||||||||
December 31, 2019 | USD/Brazilian Real | USD | $ | $ | ( | ) | January 24, 2020 | ||||||||||
December 31, 2019 | USD/Euro | USD | $ | $ | ( | ) | January 24, 2020 | ||||||||||
December 31, 2019 | USD/Brazilian Real | USD | $ | $ | ( | ) | January 24, 2020 |
(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 liabilities. |
• | easy-to-use, pre-programmed universal infrared ("IR") and radio frequency ("RF") remote controls that are sold primarily to subscription broadcast providers (cable, satellite and Internet Protocol television ("IPTV") and Over the Top services), original equipment manufacturers ("OEMs"), retailers, and private label customers; |
• | integrated circuits, on which our software and universal device control database is embedded, sold primarily to OEMs, subscription broadcast providers, and private label customers; |
• | software, firmware and technology solutions that can enable devices such as TVs, set-top boxes, audio systems, smartphones, tablets, game controllers and other consumer electronic devices to wirelessly connect and interact with home networks and interactive services to control and deliver digital entertainment and information; |
• | intellectual property which we license primarily to OEMs, software development companies, private label customers, and subscription broadcast providers; |
• | proprietary and standards-based RF sensors designed for residential security, safety and automation applications; |
• | wall-mount and handheld thermostat controllers and connected accessories for intelligent energy management systems, primarily to OEM customers as well as hospitality system integrators; and |
• | AV accessories sold, directly and indirectly, to consumers. |
• | Net sales decreased 21.0% to $153.1 million for the three months ended June 30, 2020 from $193.9 million for the three months ended June 30, 2019. |
• | Our gross margin percentage increased to 24.9% for the three months ended June 30, 2020 from 17.5% for the three months ended June 30, 2019. |
• | Operating expenses, as a percentage of net sales, increased to 20.7% for the three months ended June 30, 2020 from 19.5% for the three months ended June 30, 2019. |
• | Our operating income increased to $6.5 million for the three months ended June 30, 2020 from a loss of $3.9 million for the three months ended June 30, 2019. Our operating income percentage increased to 4.2% for the three months ended June 30, 2020 from a loss of 2.0% for the three months ended June 30, 2019. |
• | Income tax expense increased to $1.9 million for the three months ended June 30, 2020 from $0.2 million for the three months ended June 30, 2019. |
• | 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 broadcast 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. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Cost of sales | 75.1 | 82.5 | 73.4 | 80.5 | |||||||
Gross profit | 24.9 | 17.5 | 26.6 | 19.5 | |||||||
Research and development expenses | 4.8 | 3.7 | 5.0 | 3.7 | |||||||
Selling, general and administrative expenses | 15.9 | 15.8 | 16.8 | 16.4 | |||||||
Operating income (loss) | 4.2 | (2.0 | ) | 4.8 | (0.6 | ) | |||||
Interest income (expense), net | (0.2 | ) | (0.6 | ) | (0.3 | ) | (0.6 | ) | |||
Accrued social insurance adjustment | 6.2 | — | 3.1 | — | |||||||
Other income (expense), net | 0.4 | 0.1 | 0.1 | (0.1 | ) | ||||||
Income (loss) before provision for income taxes | 10.6 | (2.5 | ) | 7.7 | (1.3 | ) | |||||
Provision for income taxes | 1.2 | 0.1 | 1.1 | 0.3 | |||||||
Net income (loss) | 9.4 | % | (2.6 | )% | 6.6 | % | (1.6 | )% |
(In thousands) | Six Months Ended June 30, 2020 | Increase (Decrease) | Six Months Ended June 30, 2019 | ||||||||
Cash provided by (used for) operating activities | $ | 4,487 | $ | (15,746 | ) | $ | 20,233 | ||||
Cash provided by (used for) investing activities | (9,787 | ) | 1,566 | (11,353 | ) | ||||||
Cash provided by (used for) financing activities | (4,496 | ) | 7,659 | (12,155 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (5,674 | ) | (5,307 | ) | (367 | ) | |||||
Net increase (decrease) in cash and cash equivalents | $ | (15,470 | ) | $ | (11,828 | ) | $ | (3,642 | ) |
June 30, 2020 | Increase (Decrease) | December 31, 2019 | |||||||||
Cash and cash equivalents | $ | 58,832 | $ | (15,470 | ) | $ | 74,302 | ||||
Working capital | 128,701 | 16,405 | 112,296 |
Payments Due by Period | |||||||||||||||||||
(In thousands) | Total | Less than 1 year | 1 - 3 years | 4 - 5 years | After 5 years | ||||||||||||||
Operating lease obligations | $ | 22,758 | $ | 6,877 | $ | 10,660 | $ | 3,763 | $ | 1,458 | |||||||||
Purchase obligations (1) | 3,467 | 3,467 | — | — | — | ||||||||||||||
Contingent consideration (2) | 2,234 | 2,000 | 234 | — | — | ||||||||||||||
Total contractual obligations | $ | 28,459 | $ | 12,344 | $ | 10,894 | $ | 3,763 | $ | 1,458 |
(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 Control Systems, Inc. ("RCS"). |
(In thousands) | June 30, 2020 | December 31, 2019 | |||||
Cash and cash equivalents | $ | 58,832 | $ | 74,302 | |||
Available borrowing resources | 49,300 | 54,300 |
• | Reduced consumer and investor confidence, instability in the credit and financial markets, volatile corporate profits, and reduced business and consumer spending, which may adversely affect our results of operations by reducing our sales, margins and/or net income as a result of a slowdown in customer orders or order cancellations. In addition, volatility in the financial markets may increase the cost of capital and/or limit its availability. |
• | Economic uncertainty as a result of the COVID-19 pandemic is expected to make it difficult for us and our customers and suppliers to accurately forecast and plan future business activities. |
• | The potential to weaken the financial position of some of our customers. If circumstances surrounding our customers’ financial capabilities were to deteriorate, write-downs or write-offs may negatively affect our operating results and, if large, may have a material adverse effect on our business, financial condition, results of operations and cash flows. |
• | As a result of governmental orders, we may experience disruptions in our manufacturing operations and in our supply chain in connection with the sourcing of materials from geographic areas that continue to be impacted by the COVID-19 pandemic and by efforts to contain its spread. |
Period | Total Number of Shares Purchased (1) | Weighted Average Price Paid per Share | 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 (2) | |||||||||
April 1, 2020 - April 30, 2020 | — | $ | — | — | 175,127 | ||||||||
May 1, 2020 - May 31, 2020 | 3,107 | 36.87 | — | 175,127 | |||||||||
June 1, 2020 - June 30, 2020 | — | — | — | 175,127 | |||||||||
Total | 3,107 | $ | 36.87 | — | 175,127 |
(1) | Of the repurchases in May, 3,107 shares 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) | On March 10, 2020, our Board of Directors replaced the repurchase plan approved in 2018 with a new repurchase plan authorizing the repurchase of up to 300,000 of our common stock ("2020 Plan"). As of June 30, 2020, we had 175,127 shares of common stock authorized for repurchase remaining under the 2020 Plan. We may repurchase shares of common stock in privately negotiated and/or open-market transactions, including pursuant to plans complying with Rule 10b5-1 promulgated under the Securities Exchange Act of 1934. While we have suspended repurchasing under our 2020 Plan due in part to the uncertainties surrounding the COVID-19 pandemic, management may resume such repurchasing when market and business conditions warrant. |
31.1 | ||
31.2 | ||
32 | ||
101.INS | Inline XBRL Instance Document | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Dated: | August 6, 2020 | UNIVERSAL ELECTRONICS INC. | |||
By: | /s/ Bryan M. Hackworth | ||||
Bryan M. Hackworth | |||||
Chief Financial Officer (principal financial officer | |||||
and principal accounting officer) |
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: |
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: |
/s/ Paul D. Arling |
Paul D. Arling |
Chairman and Chief Executive Officer (principal executive officer) |
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: |
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: |
/s/ Bryan M. Hackworth |
Bryan M. Hackworth |
Chief Financial Officer (principal financial officer and principal accounting officer) |
Dated: | August 6, 2020 | 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) |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Stockholders' equity: | ||
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) | 24,268,744 | 24,118,088 |
Treasury stock, shares (in shares) | 10,346,473 | 10,174,199 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income Statement [Abstract] | ||||
Net sales | $ 153,133 | $ 193,896 | $ 304,911 | $ 378,059 |
Cost of sales | 115,058 | 159,903 | 223,895 | 304,192 |
Gross profit | 38,075 | 33,993 | 81,016 | 73,867 |
Research and development expenses | 7,385 | 7,163 | 15,283 | 13,954 |
Selling, general and administrative expenses | 24,230 | 30,756 | 51,227 | 62,176 |
Operating income (loss) | 6,460 | (3,926) | 14,506 | (2,263) |
Interest income (expense), net | (372) | (1,098) | (1,004) | (2,304) |
Accrued social insurance adjustment | 9,464 | 0 | 9,464 | 0 |
Other income (expense), net | 731 | 188 | 383 | (278) |
Income (loss) before provision for income taxes | 16,283 | (4,836) | 23,349 | (4,845) |
Provision for income taxes | 1,883 | 225 | 3,103 | 1,221 |
Net income (loss) | $ 14,400 | $ (5,061) | $ 20,246 | $ (6,066) |
Earnings (loss) per share: | ||||
Basic (in dollars per share) | $ 1.03 | $ (0.37) | $ 1.45 | $ (0.44) |
Diluted (in dollars per share) | $ 1.02 | $ (0.37) | $ 1.43 | $ (0.44) |
Shares used in computing earnings (loss) per share: | ||||
Basic (in shares) | 13,915 | 13,863 | 13,938 | 13,845 |
Diluted (in shares) | 14,151 | 13,863 | 14,181 | 13,845 |
CONSOLIDATED COMPREHENSIVE INCOME (LOSS) STATEMENTS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 14,400 | $ (5,061) | $ 20,246 | $ (6,066) |
Other comprehensive income (loss): | ||||
Change in foreign currency translation adjustment | (770) | (1,833) | (7,779) | (100) |
Comprehensive income (loss) | $ 13,630 | $ (6,894) | $ 12,467 | $ (6,166) |
Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 and certain reclassifications have been made to prior year amounts in order to conform to the current year presentation. 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 ("SEC"). 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 six months ended June 30, 2020 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, 2019. 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; allowance for bad debts; inventory valuation; our review for impairment of long-lived assets, intangible assets and goodwill; leases; business combinations; income taxes; stock-based compensation expense and performance-based common stock warrants. The recent coronavirus ("COVID-19") pandemic and the mitigation efforts by governments to attempt to control its spread have created uncertainties and disruptions in the economic and financial markets. While we are not currently aware of events or circumstances that would require an update to our estimates, judgments or adjustments to the carrying values of our assets or liabilities, these estimates may change as developments occur and we obtain additional information. These future developments are highly uncertain and the outcomes are unpredictable. Actual results may differ from those estimates, and such differences may be material to the financial statements. See Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for a summary of our significant accounting policies. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments", which updates existing guidance for measuring and recording credit losses on financial assets measured at amortized cost by replacing the incurred loss impairment model with an expected loss impairment model. Accordingly, financial assets are presented at amortized costs net of an allowance for expected credit losses over the lifetime of the assets. We adopted this new guidance on January 1, 2020 using the modified retrospective method. The adoption did not require an implementation adjustment and did not materially impact our consolidated statement of financial position, results of operations and cash flows. See Note 3 for further discussion on our allowance for bad debts. In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment", which 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. Our adoption on January 1, 2020 did not have a material impact on our consolidated statement of financial position, results of operations and cash flows. In November 2019, the FASB issued ASU 2019-08, "Improvements - Share-based Consideration Payable to a Customer", which clarifies the accounting for share-based payments issued as sales incentives to customers. The guidance requires that stock-based compensation expense is recorded as a reduction in the transaction price on the basis of the grant-date fair value. The grant-date fair value is calculated using the provisions defined under Accounting Standards Codification "Stock Compensation". The transition provisions require that equity-classified awards be measured at the adoption date fair value if the measurement date has not been established prior to the adoption date. This guidance impacts the measurement date of our performance-based common stock warrants. The measurement periods for the first two successive two-year periods of our outstanding performance-based common stock warrants were completed prior to adoption and were not impacted by this updated guidance. The measurement period for the final two-year period began on January 1, 2020, and accordingly, we measured the fair value of the award as of our adoption date on January 1, 2020. We adopted this guidance using the modified retrospective method. Our adoption did not result in a cumulative adjustment in our consolidated statement of financial position. See Note 15 for further discussion on the performance-based common stock warrants. Recent Accounting Updates Not Yet Effective In December 2019, the FASB issued ASU 2019-12 "Simplifying the Accounting for Income Taxes", which among other provisions, eliminates certain exceptions to existing guidance related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated statement of financial position, results of operations and cash flows.
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Cash and Cash Equivalents |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents were held in the following geographic regions:
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Revenue and Accounts Receivable, Net |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue and Accounts Receivable, Net | Revenue and Accounts Receivable, Net Revenue Details The pattern of revenue recognition was as follows:
Our net sales to external customers by geographic area were as follows:
Specific identification of the customer billing location was the basis used for attributing revenues from external customers to geographic areas. Net sales to the following customers totaled more than 10% of our net sales:
Accounts Receivable, Net Accounts receivable, net were as follows:
Allowance for Bad Debts Changes in the allowance for bad debts were as follows:
Trade receivables associated with these significant customers that totaled more than 10% of our accounts receivable, net were as follows:
(1) Trade receivables associated with this customer did not total more than 10% of our accounts receivable, net for the indicated period.
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Inventories and Significant Suppliers |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories and Significant Suppliers | Inventories and Significant Suppliers Inventories were as follows:
Significant Suppliers 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:
The supplier that totaled more than 10% of our accounts payable, was as follows:
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases We have entered into various operating lease agreements for automobiles, offices and manufacturing facilities throughout the world. At June 30, 2020, our operating leases had remaining lease terms of up to 40 years. Lease balances within our consolidated balance sheet were as follows:
Operating lease expense, including variable and short-term lease costs which were insignificant to the total, operating lease cash flows and supplemental cash flow information were as follows:
The weighted average remaining lease liability term and the weighted average discount rate were as follows:
The following table reconciles the undiscounted cash flows for each of the first five years and thereafter to the operating lease liabilities recognized in our consolidated balance sheet at June 30, 2020. The reconciliation excludes short-term leases that are not recorded on the balance sheet.
At June 30, 2020, we had one operating lease with a five-year term that had not yet commenced. The total initial lease liability of approximately $1.6 million is not reflected within the above maturity schedule.
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Goodwill and Intangible Assets, Net |
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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:
Intangible Assets, Net The components of intangible assets, net were as follows:
Amortization expense, which was recognized in selling, general and administrative expenses, was $1.9 million and $1.8 million during the three months ended June 30, 2020 and 2019, respectively. Amortization expense, which was recognized in selling, general and administrative expenses, was $3.7 million and $3.6 million during the six months ended June 30, 2020 and 2019, respectively. Estimated future annual amortization expense related to our intangible assets at June 30, 2020, was as follows:
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Line of Credit |
6 Months Ended |
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Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Line of Credit | Line of Credit Our Second Amended and Restated Credit Agreement ("Second Amended Credit Agreement") with U.S. Bank National Association ("U.S. Bank") provides for a $125.0 million revolving line of credit ("Credit Line") that expires on November 1, 2021. 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, of which there were $2.7 million at June 30, 2020. 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 which controls our manufacturing factories in the PRC. Under the Second 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 Second Amended Credit Agreement. The interest rate in effect at June 30, 2020 was 1.43%. There are no commitment fees or unused line fees under the Second Amended Credit Agreement. The Second Amended Credit Agreement includes financial covenants requiring a minimum fixed charge coverage ratio and a maximum cash flow leverage ratio. In addition, the Second Amended Credit Agreement contains other customary affirmative and negative covenants and events of default. At June 30, 2020, we were in compliance with the covenants and conditions of the Second Amended Credit Agreement. At June 30, 2020, we had $73.0 million outstanding under the Credit Line. Our total interest expense on borrowings was $0.4 million and $1.2 million during the three months ended June 30, 2020 and 2019, respectively. Our total interest expense on borrowings was $1.1 million and $2.5 million during the six months ended June 30, 2020 and 2019, respectively.
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Income Taxes |
6 Months Ended |
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Jun. 30, 2020 | |
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 rate and multiplying it by the year-to-date pre-tax book income. We recorded income tax expense of $1.9 million and $0.2 million for the three months ended June 30, 2020 and 2019, respectively. We recorded income tax expense of $3.1 million and $1.2 million for the six months ended June 30, 2020 and 2019, respectively. The income tax expense for the six months ended June 30, 2020 increased primarily due to an increase in global pre-tax income, offset partially by an increase in income not subject to tax in foreign jurisdictions, research and development tax benefits received in China and the reversal of a reserve of an uncertain tax position related to our Guangzhou entity, which was sold in June 2018. The indemnification agreement related to the sale of our Guangzhou entity expired in June 2020. At December 31, 2019, we assessed the realizability of our deferred tax assets by considering whether it is "more likely than not" some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We considered taxable income in carryback years, the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. At December 31, 2019, we had a three-year cumulative operating loss for our U.S. operations and accordingly, have provided a full valuation allowance on our U.S. and state deferred tax assets. During the six months ended June 30, 2020, there was no change to our valuation allowance position. At June 30, 2020, we had gross unrecognized tax benefits of $3.1 million, including interest and penalties, of which approximately $3.1 million of this amount, 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 amounts of unrecognized tax benefits will significantly increase 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 $0.2 million within the next twelve months based on federal, state, and foreign statute expirations in various jurisdictions. We have classified uncertain tax positions as non-current income tax liabilities unless they are 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 $0.2 million at June 30, 2020 and $0.2 million at December 31, 2019 are included in the unrecognized tax benefits. On March 18, 2020 and March 22, 2020, the Families First Coronavirus Response ("FFCR") Act and the Coronavirus Aid, Relief and Economic Security ("CARES") Act, respectively, were enacted in response to the COVID-19 pandemic. The FFCR Act and the CARES Act contain numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the use of net operating losses arising in taxable years beginning after December 31, 2017. We are currently evaluating the impact of this legislation on our consolidated financial position, results of operations, and cash flows. Future regulatory guidance under the FFCR and CARES Acts (as well as under the Tax Cuts and Jobs Act) remains forthcoming and such guidance may ultimately increase or decrease their impact on our business and financial condition. It is also possible that Congress will enact additional legislation in connection with the COVID-19 pandemic, some of which may impact us. In April 2020, recent interpretations of a German law relating to withholding taxes on intellectual property rights emerged. We are currently evaluating this law and any related impact to our financial position and results of operations.
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Accrued Compensation |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Compensation | Accrued Compensation In June 2018, we sold our Guangzhou entity via a stock deal and the terms of the agreement included a two-year indemnification period. In June 2020, the indemnification period expired and we determined we were no longer legally liable for any liabilities associated with our Guangzhou entity. Accordingly, we reversed the accrued social insurance by the amount associated with the Guangzhou entity which was approximately $9.5 million. The components of accrued compensation were as follows:
(1) PRC employers are required by law to remit the applicable social insurance payments to their local government. Social insurance is comprised of various components such as pension, medical insurance, job industry 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 at June 30, 2020 and December 31, 2019. Other Accrued LiabilitiesThe components of other accrued liabilities were as follows:
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Other Accrued Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Accrued Liabilities | Accrued Compensation In June 2018, we sold our Guangzhou entity via a stock deal and the terms of the agreement included a two-year indemnification period. In June 2020, the indemnification period expired and we determined we were no longer legally liable for any liabilities associated with our Guangzhou entity. Accordingly, we reversed the accrued social insurance by the amount associated with the Guangzhou entity which was approximately $9.5 million. The components of accrued compensation were as follows:
(1) PRC employers are required by law to remit the applicable social insurance payments to their local government. Social insurance is comprised of various components such as pension, medical insurance, job industry 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 at June 30, 2020 and December 31, 2019. Other Accrued LiabilitiesThe components of other accrued liabilities were as follows:
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Product Warranties Changes in the liability for product warranty claims costs were as follows:
Litigation Ruwido Matters On May 28, 2020, we entered into a confidential settlement agreement with Universal Electronics BV, our wholly owned subsidiary ("UEBV"), Telenet BVBA, a customer of UEBV ("Telenet"), Ruwido Austria GmbH ("Ruwido") and FM Marketing GmbH, an affiliated company to Ruwido ("FM Marketing"), whereby all court proceedings (first filed in 2015) between the parties have been dismissed with prejudice and the patent opposition appeal pending before the European Patent Office has been withdrawn. As a part of this agreement, in addition to allowing UEBV and Telenet to continue manufacturing and selling the remote control at issue and dismissing Ruwido’s and FM Marketing’s claims against UEBV and Telenet, FM Marketing paid an undisclosed amount to UEBV and Telenet. Roku Matters 2018 Lawsuit On September 5, 2018, we filed a lawsuit against Roku, Inc. ("Roku") in the United States District Court, Central District of California, alleging that Roku is willfully infringing nine of our patents that are in four patent families related to remote control set-up and touchscreen remotes. On December 5, 2018, we amended our complaint to add additional details supporting our infringement and willfulness allegations. We have alleged that this complaint relates to multiple Roku streaming players and components therefore and certain universal control devices, including but not limited to the Roku App, Roku TV, Roku Express, Roku Streaming Stick, Roku Ultra, Roku Premiere, Roku 4, Roku 3, Roku 2, Roku Enhanced Remote and any other Roku product that provides for the remote control of an external device such as a TV, audiovisual receiver, sound bar or Roku TV Wireless Speakers. In October 2019, the Court stayed this lawsuit pending action by the Patent Trial and Appeals Board (the "PTAB") with respect to Roku’s Inter Party Review requests (see discussion below). International Trade Commission Investigation of Roku, TCL, Hisense and Funai On April 16, 2020, we filed a complaint with the International Trade Commission (the "ITC") against Roku, TCL Electronics Holding Limited and related entities (collectively, "TCL"), Hisense Co., Ltd. and related entities (collectively, "Hisense"), and Funai Electric Company, Ltd. and related entities (collectively, "Funai") claiming that certain of their televisions, set-top boxes, remote control devices, human interface devices, streaming devices, and sound bars infringe certain of our patents. We asked the ITC to issue a permanent limited exclusion order prohibiting the importation of these infringing products into the United States and a cease and desist order to stop these parties from continuing their infringing activities. On May 18, 2020, the ITC announced that it instituted its investigation as requested by us. We are in the early stages of this investigation, with discovery recently commencing. Inter Partes Reviews In September and October 2019, Roku filed Inter Partes Review ("IPR") requests with the PTAB on the nine patents at issue in the 2018 Lawsuit. Presently, the PTAB denied Roku’s request with respect to three of the nine patents and granted Roku’s request with respect to six of the nine patents. As for those IPRs for which the PTAB granted Roku’s request for review, we will vigorously defend our patents. In May and June 2020, Roku filed four IPR requests against three patents asserted in the ITC. UEI’s preliminary responses to these requests are due in August and September 2020. Federal District Court Actions against each of Roku, TCL, Hisense, and Funai related to the ITC Matter On April 9, 2020, we filed separate actions against each of Roku, TCL, Hisense, and Funai in the United States District Court, Central District of California, alleging that Roku is willfully infringing five of our patents and TCL, Hisense, and Funai are willfully infringing six of our patents by incorporating our patented technology into certain of their televisions, set-top boxes, remote control devices, human interface devices, streaming devices, and sound bars. Each of the parties have accepted service and have not yet answered our complaint. 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 |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
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 March 10, 2020, our Board of Directors replaced the repurchase plan approved in 2018 with a new repurchase plan authorizing the repurchase of up to 300,000 of our common stock ("2020 Plan"). As of June 30, 2020, we had 175,127 shares of common stock authorized for repurchase remaining under the 2020 Plan. We may repurchase shares of common stock in privately negotiated and/or open-market transactions, including pursuant to plans complying with Rule 10b5-1 promulgated under the Securities Exchange Act of 1934. While we have suspended repurchasing under our 2020 Plan due in part to the uncertainties surrounding the COVID-19 pandemic, management may resume such repurchasing when market and business conditions warrant. Repurchased shares of our common stock were as follows:
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.
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Long-lived Tangible Assets |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-lived Tangible Assets | Long-lived Tangible Assets Long-lived tangible assets by geographic area, which include property, plant, and equipment, net and operating lease right-of-use assets, were as follows:
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Stock-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense for each employee and director is presented in the same statement of operations caption as their cash compensation. Stock-based compensation expense by statement of operations caption and the related income tax benefit were as follows:
Stock Options Stock option activity was as follows:
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:
As of June 30, 2020, we expect to recognize $3.1 million of total unrecognized pre-tax stock-based compensation expense related to non-vested stock options over a remaining weighted-average life of 2.1 years. Restricted Stock Non-vested restricted stock award activity was as follows:
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Performance-Based Common Stock Warrants |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance-Based Common Stock Warrants | Performance-Based Common Stock Warrants On March 9, 2016, we issued common stock purchase warrants to Comcast Corporation ("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 potential number of warrants to vest in each period based upon achieving the purchase levels.
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 would count toward aggregate purchases in the following two-year period. This threshold was not met in either the first or second two-year period. For the two-year period ended December 31, 2017, Comcast earned and vested in 175,000 out of the maximum potential 250,000 warrants. For the two-year period ended December 31, 2019, Comcast earned and vested in 100,000 out of the maximum potential 250,000 warrants. At June 30, 2020, 275,000 vested warrants were outstanding. To fully vest in the rights to purchase all of the remaining unearned 225,000 underlying shares, Comcast and its affiliates must purchase an aggregate of $340 million in goods and services from us during the period January 1, 2020 through December 31, 2021. 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 common stock purchase 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. As 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 for the first two-year successive periods was the date on which the warrants vested. The FASB issued guidance in November 2019, which clarifies the accounting for share-based payments issued as sales incentives to customers. The guidance requires that stock-based compensation expense be recorded as a reduction in the transaction price on the basis of the grant-date fair value. The transition provisions require that equity-classified awards be measured at the adoption date fair value if the measurement date has not been established prior to the adoption date. The measurement periods for the first two successive two-year periods of our outstanding performance-based common stock warrants were completed prior to adoption and were not impacted by this updated guidance. The measurement period for the final two-year period began on January 1, 2020, and accordingly, we measured the fair value of the award as of our adoption date on January 1, 2020 using the Black-Scholes option pricing model. Through June 30, 2020, none of the warrants had vested for the two-year period beginning January 1, 2020. 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:
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 were the following:
The impact to net sales recorded in connection with the warrants and the related income tax benefit were as follows:
We estimate the number of warrants that will vest based on 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 estimated fair value of the warrants is recognized as a reduction to revenue over the related two-year vesting period. At June 30, 2020, the aggregate unrecognized estimated fair value of warrants we estimate will vest was $1.0 million.
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Other Income (Expense), Net |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income (Expense), Net | Other Income (Expense), Net Other income (expense), net consisted of the following:
(1) This represents the gains (losses) incurred on foreign currency hedging derivatives (see Note 18 for further details).
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Earnings (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share | Earnings (Loss) Per Share Earnings (loss) per share was calculated as follows:
The following number of stock options, shares of restricted stock and common stock warrants were excluded from the computation of diluted earnings per common share as their inclusion would have been anti-dilutive:
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Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | Derivatives The following table sets forth the total net fair value of derivatives:
We held foreign currency exchange contracts, which resulted in a net pre-tax loss of $0.7 million and a net pre-tax loss of $0.1 million for the three months ended June 30, 2020 and 2019, respectively. For the six months ended June 30, 2020 and 2019, we had a net pre-tax loss of $0.5 million and a net pre-tax loss of $0.4 million, respectively (see Note 16). Details of foreign currency exchange contracts held were as follows:
(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 liabilities.
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Basis of Presentation (Policies) |
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Jun. 30, 2020 | |
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 and certain reclassifications have been made to prior year amounts in order to conform to the current year presentation. 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 ("SEC"). 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.
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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; allowance for bad debts; inventory valuation; our review for impairment of long-lived assets, intangible assets and goodwill; leases; business combinations; income taxes; stock-based compensation expense and performance-based common stock warrants.
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Recently Adopted Accounting Pronouncements and Recent Accounting Updates Note Yet Effective | Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments", which updates existing guidance for measuring and recording credit losses on financial assets measured at amortized cost by replacing the incurred loss impairment model with an expected loss impairment model. Accordingly, financial assets are presented at amortized costs net of an allowance for expected credit losses over the lifetime of the assets. We adopted this new guidance on January 1, 2020 using the modified retrospective method. The adoption did not require an implementation adjustment and did not materially impact our consolidated statement of financial position, results of operations and cash flows. See Note 3 for further discussion on our allowance for bad debts. In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment", which 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. Our adoption on January 1, 2020 did not have a material impact on our consolidated statement of financial position, results of operations and cash flows. In November 2019, the FASB issued ASU 2019-08, "Improvements - Share-based Consideration Payable to a Customer", which clarifies the accounting for share-based payments issued as sales incentives to customers. The guidance requires that stock-based compensation expense is recorded as a reduction in the transaction price on the basis of the grant-date fair value. The grant-date fair value is calculated using the provisions defined under Accounting Standards Codification "Stock Compensation". The transition provisions require that equity-classified awards be measured at the adoption date fair value if the measurement date has not been established prior to the adoption date. This guidance impacts the measurement date of our performance-based common stock warrants. The measurement periods for the first two successive two-year periods of our outstanding performance-based common stock warrants were completed prior to adoption and were not impacted by this updated guidance. The measurement period for the final two-year period began on January 1, 2020, and accordingly, we measured the fair value of the award as of our adoption date on January 1, 2020. We adopted this guidance using the modified retrospective method. Our adoption did not result in a cumulative adjustment in our consolidated statement of financial position. See Note 15 for further discussion on the performance-based common stock warrants. Recent Accounting Updates Not Yet Effective In December 2019, the FASB issued ASU 2019-12 "Simplifying the Accounting for Income Taxes", which among other provisions, eliminates certain exceptions to existing guidance related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated statement of financial position, results of operations and cash flows.
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Cash and Cash Equivalents (Tables) |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents by Geographic Region | Cash and cash equivalents were held in the following geographic regions:
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Revenue and Accounts Receivable, Net (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pattern of Revenue Recognition | The pattern of revenue recognition was as follows:
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Revenue from External Customers by Geographic Areas | Our net sales to external customers by geographic area were as follows:
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Net Sales to Significant Customers | Net sales to the following customers totaled more than 10% of our net sales:
(1) Net sales to this customer did not total more than 10% of our total net sales in the indicated period.
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Accounts Receivable, Net and Changes in the Allowance for Doubtful Accounts | Changes in the allowance for bad debts were as follows:
Accounts receivable, net were as follows:
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Trade Receivables Associated with Significant Customers | Trade receivables associated with these significant customers that totaled more than 10% of our accounts receivable, net were as follows:
(1) Trade receivables associated with this customer did not total more than 10% of our accounts receivable, net for the indicated period.
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Inventories and Significant Suppliers (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Inventories | Inventories were as follows:
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Purchases from Significant Suppliers | Purchases from the following supplier totaled more than 10% of our total inventory purchases:
The supplier that totaled more than 10% of our accounts payable, was as follows:
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Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Balances within the Consolidated Balance Sheet | Lease balances within our consolidated balance sheet were as follows:
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Operating Lease Expense, Operating Lease Cash Flows and Supplemental Cash Flow Information | Operating lease expense, including variable and short-term lease costs which were insignificant to the total, operating lease cash flows and supplemental cash flow information were as follows:
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Lease Terms and Discount Rates | The weighted average remaining lease liability term and the weighted average discount rate were as follows:
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Reconciliation of the Undiscounted Cash Flows for Each of the First Five Years and Thereafter to Operating Lease Liabilities | The following table reconciles the undiscounted cash flows for each of the first five years and thereafter to the operating lease liabilities recognized in our consolidated balance sheet at June 30, 2020. The reconciliation excludes short-term leases that are not recorded on the balance sheet.
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Goodwill and Intangible Assets, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the Carrying Amount of Goodwill | Changes in the carrying amount of goodwill were as follows:
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Components of Intangible Assets, Net | The components of intangible assets, net were as follows:
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Estimated Future Amortization Expense Related to Intangible Assets | Estimated future annual amortization expense related to our intangible assets at June 30, 2020, was as follows:
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Accrued Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accrued Compensation | The components of accrued compensation were as follows:
(1) PRC employers are required by law to remit the applicable social insurance payments to their local government. Social insurance is comprised of various components such as pension, medical insurance, job industry 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 at June 30, 2020 and December 31, 2019. The components of other accrued liabilities were as follows:
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Other Accrued Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Other Accrued Liabilities | The components of accrued compensation were as follows:
(1) PRC employers are required by law to remit the applicable social insurance payments to their local government. Social insurance is comprised of various components such as pension, medical insurance, job industry 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 at June 30, 2020 and December 31, 2019. The components of other accrued liabilities were as follows:
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Commitments and Contingencies (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the Liability for Product Warranty Claim Costs | Changes in the liability for product warranty claims costs were as follows:
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Treasury Stock (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Repurchased Shares of Common Stock | Repurchased shares of our common stock were as follows:
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Long-lived Tangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Lived Tangible Assets by Geographic Area | Long-lived tangible assets by geographic area, which include property, plant, and equipment, net and operating lease right-of-use assets, were as follows:
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Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation Expense and Related Income Tax Benefit | Stock-based compensation expense by statement of operations caption and the related income tax benefit were as follows:
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Stock Option Activity | Stock option activity was as follows:
(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 second quarter of 2020 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 June 30, 2020. This amount will change based on the fair market value of our stock.
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Assumptions Used in Valuation and Weighted Average Fair Value of Stock Option Grants | 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:
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Non-Vested Restricted Stock Award Activity | Non-vested restricted stock award activity was as follows:
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Performance-Based Common Stock Warrants (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase Level and Number of Warrants That Will Vest | The table below presents the purchase levels and potential number of warrants to vest in each period based upon achieving the purchase levels.
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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:
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 were the following:
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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:
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Other Income (Expense), Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income (Expense), Net | Other income (expense), net consisted of the following:
(1) This represents the gains (losses) incurred on foreign currency hedging derivatives (see Note 18 for further details).
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Earnings (Loss) Per Share (Tables) |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Earnings Per Share | Earnings (loss) per share was calculated as follows:
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Securities Excluded from the Computation of Diluted Earnings (Loss) Per Common Share | The following number of stock options, shares of restricted stock and common stock warrants were excluded from the computation of diluted earnings per common share as their inclusion would have been anti-dilutive:
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Derivatives (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Net Fair Value of Derivatives | The following table sets forth the total net fair value of derivatives:
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Foreign Currency Exchange Contracts | Details of foreign currency exchange contracts held were as follows:
(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 liabilities.
|
Cash and Cash Equivalents (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents | $ 58,832 | $ 74,302 |
United States | ||
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents | 8,608 | 16,751 |
People's Republic of China (PRC) | ||
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents | 14,799 | 13,700 |
Asia (excluding the PRC) | ||
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents | 9,808 | 21,691 |
Europe | ||
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents | 15,185 | 9,081 |
South America | ||
Cash and Cash Equivalents [Line Items] | ||
Cash and cash equivalents | $ 10,432 | $ 13,079 |
Revenue and Accounts Receivable, Net - Pattern of Revenue Recognition (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenues, net | $ 153,133 | $ 193,896 | $ 304,911 | $ 378,059 |
Goods and services transferred at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues, net | 121,187 | 140,670 | 238,245 | 277,008 |
Goods and services transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues, net | $ 31,946 | $ 53,226 | $ 66,666 | $ 101,051 |
Revenue and Accounts Receivable, Net - Revenue from External Customers by Geographic Areas (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 153,133 | $ 193,896 | $ 304,911 | $ 378,059 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 65,233 | 106,547 | 139,614 | 205,483 |
Asia (excluding the PRC) | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 30,295 | 25,468 | 58,120 | 49,544 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 26,004 | 22,823 | 46,506 | 46,122 |
People's Republic of China (PRC) | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 20,511 | 20,453 | 38,028 | 42,761 |
Latin America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 3,466 | 10,119 | 8,106 | 17,906 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 7,624 | $ 8,486 | $ 14,537 | $ 16,243 |
Revenue and Accounts Receivable, Net - Accounts Receivable, Net (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Accounts Receivable, after Allowance for Credit Loss, Current [Abstract] | ||||
Trade receivables, gross | $ 138,177 | $ 130,888 | ||
Allowance for bad debts | (1,697) | (1,492) | $ (1,122) | $ (1,121) |
Allowance for sales returns | (547) | (623) | ||
Net trade receivables | 135,933 | 128,773 | ||
Other | 7,960 | 10,425 | ||
Accounts receivable, net | $ 143,893 | $ 139,198 |
Revenue and Accounts Receivable, Net - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Schedule of Allowance for Doubtful Accounts | ||
Balance at beginning of period | $ 1,492 | $ 1,121 |
Additions to costs and expenses | 240 | 5 |
(Write-offs)/Foreign exchange effects | (35) | (4) |
Balance at end of period | $ 1,697 | $ 1,122 |
Revenue and Accounts Receivable, Net - Trade Receivables Associated with Significant Customers (Details) - Trade Accounts Receivable - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Comcast Corporation | ||
Revenue, Major Customer [Line Items] | ||
Accounts receivable, net | $ 25,782 | $ 0 |
Concentration risk percentage | 17.90% | 0.00% |
DISH Network Corporation | ||
Revenue, Major Customer [Line Items] | ||
Accounts receivable, net | $ 0 | $ 14,677 |
Concentration risk percentage | 0.00% | 10.50% |
Inventories and Significant Suppliers - Summary of Inventories (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 48,523 | $ 56,352 |
Components | 21,799 | 24,599 |
Work in process | 3,570 | 1,526 |
Finished goods | 60,758 | 62,658 |
Inventories | $ 134,650 | $ 145,135 |
Inventories and Significant Suppliers - Purchases from Significant Suppliers (Details) - Supplier Concentration Risk - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Inventory Purchases | |||||
Concentration Risk [Line Items] | |||||
Inventory purchases | $ 10,030 | $ 0 | $ 21,207 | $ 0 | |
Concentration risk percentage | 13.10% | 0.00% | 13.60% | 0.00% | |
Accounts Payable | |||||
Concentration Risk [Line Items] | |||||
Inventory purchases | $ 8,176 | $ 11,394 | |||
Concentration risk percentage | 10.10% | 11.10% |
Leases - Narrative (Details) $ in Millions |
Jun. 30, 2020
USD ($)
lease
|
---|---|
Leases [Abstract] | |
Remaining lease terms (up to) | 40 years |
Number of operating leases not yet commenced | lease | 1 |
Initial lease liability of operating leases that have not yet commenced | $ | $ 1.6 |
Term of operating lease that has not yet commenced | 5 years |
Leases - Lease Balances within the Consolidated Balance Sheet (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Assets: | ||
Operating lease right-of-use assets | $ 17,854 | $ 19,826 |
Liabilities: | ||
Other accrued liabilities | 5,288 | 4,903 |
Long-term operating lease obligations | 13,121 | 15,639 |
Total lease liabilities | $ 18,409 | $ 20,542 |
Lease liability location within the Consolidated Balance Sheets | us-gaap:OtherAccruedLiabilitiesCurrent |
Leases - Operating Lease Expense, Operating Lease Cash Flows and Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Lessee, Lease, Description [Line Items] | ||||
Operating lease expense | $ 1,402 | $ 1,768 | $ 2,790 | $ 3,492 |
Operating cash outflows from operating leases | 1,543 | 1,579 | 3,068 | 3,094 |
Operating lease right-of-use assets obtained in exchange for lease obligations | 0 | 0 | 186 | 1,524 |
Cost of sales | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease expense | 382 | 612 | 772 | 1,204 |
Selling, general and administrative expenses | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease expense | $ 1,020 | $ 1,156 | $ 2,018 | $ 2,288 |
Leases - Lease Terms and Discount Rates (Details) |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
Weighted average lease term | 3 years 10 months 24 days | 4 years 3 months 18 days |
Weighted average discount rate | 4.42% | 4.50% |
Leases - Reconciliation of the Undiscounted Cash Flows for Each of the First Five Years and Thereafter to Operating Lease Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
2020 (remaining 6 months) | $ 2,852 | |
2021 | 6,242 | |
2022 | 5,240 | |
2023 | 2,405 | |
2024 | 1,344 | |
Thereafter | 2,042 | |
Total lease payments | 20,125 | |
Less: imputed interest | (1,716) | |
Total lease liabilities | $ 18,409 | $ 20,542 |
Goodwill and Intangible Assets, Net - Changes in the Carrying Amount of Goodwill (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Goodwill [Roll Forward] | |
Balance | $ 48,447 |
Foreign exchange effects | 4 |
Balance | $ 48,451 |
Goodwill and Intangible Assets, Net - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Selling, General and Administrative Expenses | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 1.9 | $ 1.8 | $ 3.7 | $ 3.6 |
Goodwill and Intangible Assets, Net - Estimated Future Annual Amortization Expense Related to Intangible Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Schedule of Estimated Future Amortization expense | ||
2020 (remaining 6 months) | $ 2,913 | |
2021 | 3,445 | |
2022 | 3,334 | |
2023 | 3,172 | |
2024 | 2,592 | |
Thereafter | 3,731 | |
Net | $ 19,187 | $ 19,830 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | |||||
Income tax expense | $ 1,883 | $ 225 | $ 3,103 | $ 1,221 | |
Unrecognized tax benefits | 3,100 | 3,100 | |||
Unrecognized tax benefits that would impact effective rate | 3,100 | 3,100 | |||
Anticipated decrease in unrecognized tax benefits | 200 | 200 | |||
Accrued interest and penalties | $ 200 | $ 200 | $ 200 |
Accrued Compensation (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued social insurance | $ 6,878 | $ 16,588 |
Accrued salary/wages | 5,816 | 7,465 |
Accrued vacation/holiday | 2,962 | 2,766 |
Accrued bonus | 2,301 | 13,965 |
Accrued commission | 531 | 1,283 |
Other accrued compensation | 1,152 | 1,601 |
Total accrued compensation | $ 19,640 | $ 43,668 |
Accrued Compensation - Narrative (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2018 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Accrued social insurance adjustment | $ 9,464 | $ 0 | $ 9,464 | $ 0 | ||
Guangzhou | Disposed of by Sale | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Indemnification period | 2 years | |||||
Accrued social insurance adjustment | $ 9,500 |
Other Accrued Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Payables and Accruals [Abstract] | ||
Contract liabilities | $ 2,292 | $ 1,840 |
Duties | 4,620 | 3,731 |
Freight and handling fees | 2,330 | 3,769 |
Operating lease obligations | 5,288 | 4,903 |
Product warranty claims costs | 1,782 | 1,514 |
Professional fees | 3,272 | 2,833 |
Sales taxes and VAT | 3,863 | 3,926 |
Short-term contingent consideration | 2,000 | 5,428 |
Other | 5,670 | 7,501 |
Total other accrued liabilities | $ 31,117 | $ 35,445 |
Commitments and Contingencies - Changes in the Liability for Product Warranty Claim Costs (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Schedule of Changes in Reserve for Product Warranty Claim Costs | ||
Balance at beginning of period | $ 1,514 | $ 276 |
Accruals for warranties issued during the period | 578 | 0 |
Settlements (in cash or in kind) during the period/Foreign exchange effects | (310) | 0 |
Balance at end of period | $ 1,782 | $ 276 |
Commitments and Contingencies - Narrative (Details) |
2 Months Ended | ||
---|---|---|---|
Apr. 09, 2020
patent
|
Sep. 05, 2018
patent
|
Jun. 30, 2020
inter_partes_review
patent
|
|
Contingencies [Line Items] | |||
Number of IPR requests denied | inter_partes_review | 3 | ||
Number of IPR requests granted | inter_partes_review | 6 | ||
Number of IPR requests | inter_partes_review | 4 | ||
Number of patents subject to IPR requests | 3 | ||
Roku Lawsuit | Pending Litigation | |||
Contingencies [Line Items] | |||
Number of patents allegedly infringed upon | 9 | ||
Number of patent families | 4 | ||
Roku, TCL, Hisense, and Funai Patent Infringement - ITC Matter | Pending Litigation | |||
Contingencies [Line Items] | |||
Number of patents allegedly infringed upon | 5 | ||
TLC Hisense and Funai - ITC Matter | Pending Litigation | |||
Contingencies [Line Items] | |||
Number of patents allegedly infringed upon | 6 |
Treasury Stock - Narrative (Details) - shares |
Jun. 30, 2020 |
Mar. 10, 2020 |
---|---|---|
Equity, Class of Treasury Stock [Line Items] | ||
Remaining common stock authorized for repurchase (in shares) | 175,127 | |
Share Repurchase Program Authorized March 10 2020 | ||
Equity, Class of Treasury Stock [Line Items] | ||
Repurchase of common stock (in shares) | 300,000 |
Treasury Stock - Repurchased Shares of Common Stock (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Equity [Abstract] | ||||||
Shares repurchased (in shares) | 172 | 48 | ||||
Cost of shares repurchased | $ 114 | $ 6,291 | $ 189 | $ 1,215 | $ 6,405 | $ 1,404 |
Long-lived Tangible Assets - Long-Lived Tangible Assets by Geographic Area (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Long-lived Assets from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived tangible assets | $ 101,292 | $ 110,558 |
United States | ||
Long-lived Assets from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived tangible assets | 17,976 | 19,938 |
People's Republic of China (PRC) | ||
Long-lived Assets from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived tangible assets | 61,089 | 67,625 |
Mexico | ||
Long-lived Assets from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived tangible assets | 16,960 | 16,644 |
All other countries | ||
Long-lived Assets from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived tangible assets | $ 5,267 | $ 6,351 |
Stock-Based Compensation - Assumptions Used in Valuation and Weighted Average Fair Value of Stock Option Grants (Details) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Share-based Payment Arrangement [Abstract] | ||||
Weighted average fair value of grants (in dollars per share) | $ 0 | $ 0 | $ 17.70 | $ 10.28 |
Risk-free interest rate | 0.00% | 0.00% | 1.44% | 2.49% |
Expected volatility | 0.00% | 0.00% | 43.95% | 41.64% |
Expected life | 0 days | 0 days | 4 years 7 months 2 days | 4 years 6 months 14 days |
Stock-Based Compensation - Narrative (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized pre-tax stock-based compensation expense | $ 3.1 |
Unrecognized pre-tax stock-based compensation expense, remaining weighted-average life | 2 years 1 month 6 days |
Restricted Stock Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized pre-tax stock-based compensation expense | $ 10.6 |
Unrecognized pre-tax stock-based compensation expense, remaining weighted-average life | 2 years 2 months 12 days |
Stock-Based Compensation - Non-Vested Restricted Stock Award Activity (Details) shares in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2020
$ / shares
shares
| |
Shares | |
Non-vested at beginning of period (in shares) | shares | 310 |
Granted (in shares) | shares | 200 |
Vested (in shares) | shares | (132) |
Forfeited (in shares) | shares | (1) |
Non-vested at end of period (in shares) | shares | 377 |
Weighted-Average Grant Date Fair Value | |
Non-vested at beginning of period (in dollars per share) | $ / shares | $ 34.99 |
Granted (in dollars per share) | $ / shares | 35.18 |
Vested (in dollars per share) | $ / shares | 37.89 |
Forfeited (in dollars per share) | $ / shares | 36.06 |
Non-vested at end of period (in dollars per share) | $ / shares | $ 34.07 |
Performance-Based Common Stock Warrants - Assumptions Used in Valuation and Weighted Average Fair Value of Warrants (Details) - Common Stock Purchase Warrants |
Jan. 01, 2020
$ / shares
|
Jun. 30, 2019
$ / shares
|
---|---|---|
Class of Warrant or Right [Line Items] | ||
Fair value (in dollars per share) | $ 17.19 | $ 10.61 |
Price of Universal Electronics Inc. common stock (in dollars per share) | $ 52.21 | $ 40.69 |
Risk-free interest rate | ||
Class of Warrant or Right [Line Items] | ||
Valuation assumption rate | 0.0162 | 0.0172 |
Expected volatility | ||
Class of Warrant or Right [Line Items] | ||
Valuation assumption rate | 0.4886 | 0.4632 |
Expected life | ||
Class of Warrant or Right [Line Items] | ||
Expected life | 3 years | 3 years 6 months |
Performance-Based Common Stock Warrants - Impact to Net Sales in Connection with Warrants and Related Income Tax Benefit (Details) - Common Stock Purchase Warrants - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Class of Warrant or Right [Line Items] | ||||
Reduction to net sales | $ 154 | $ 236 | $ 338 | $ 670 |
Income tax benefit | $ 38 | $ 59 | $ 84 | $ 167 |
Other Income (Expense), Net (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Other Income and Expenses [Abstract] | ||||
Net gain (loss) on foreign currency exchange contracts | $ (703) | $ (105) | $ (451) | $ (376) |
Net gain (loss) on foreign currency exchange transactions | 1,208 | 158 | 660 | 27 |
Other income | 226 | 135 | 174 | 71 |
Other (expense), net | $ 731 | $ 188 | $ 383 | $ (278) |
Earnings (Loss) Per Share - Calculation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
BASIC | ||||||
Net income (loss) | $ 14,400 | $ 5,846 | $ (5,061) | $ (1,005) | $ 20,246 | $ (6,066) |
Weighted-average common shares outstanding (in shares) | 13,915 | 13,863 | 13,938 | 13,845 | ||
Basic earnings (loss) per share (in dollars per share) | $ 1.03 | $ (0.37) | $ 1.45 | $ (0.44) | ||
DILUTED | ||||||
Net income (loss) | $ 14,400 | $ 5,846 | $ (5,061) | $ (1,005) | $ 20,246 | $ (6,066) |
Weighted-average common shares outstanding (in shares) | 13,915 | 13,863 | 13,938 | 13,845 | ||
Dilutive effect of stock options, restricted stock and common stock warrants (in shares) | 236 | 0 | 243 | 0 | ||
Weighted-average common shares outstanding on a diluted basis (in shares) | 14,151 | 13,863 | 14,181 | 13,845 | ||
Diluted earnings (loss) per share (in dollars per share) | $ 1.02 | $ (0.37) | $ 1.43 | $ (0.44) |
Earnings (Loss) Per Share - Securities Excluded from the Computation of Diluted Earnings (Loss) Per Common Share (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Securities excluded in computation of diluted earning per share (in shares) | 511 | 382 | 486 | 462 |
Restricted stock awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Securities excluded in computation of diluted earning per share (in shares) | 3 | 31 | 27 | 129 |
Performance-based warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Securities excluded in computation of diluted earning per share (in shares) | 275 | 175 | 275 | 175 |
Derivatives - Total Net Fair Value of Derivatives (Details) - Fair Value Measurements on a Recurring Basis - Foreign Currency Exchange Contracts - Not Designated as Hedging Instrument - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Total Balance | ||
Derivatives, Fair Value [Line Items] | ||
Foreign currency exchange contracts | $ (73) | $ (172) |
Level 1 | ||
Derivatives, Fair Value [Line Items] | ||
Foreign currency exchange contracts | 0 | 0 |
Level 2 | ||
Derivatives, Fair Value [Line Items] | ||
Foreign currency exchange contracts | (73) | (172) |
Level 3 | ||
Derivatives, Fair Value [Line Items] | ||
Foreign currency exchange contracts | $ 0 | $ 0 |
Derivatives - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Derivative Instruments,Gain (Loss) [Line Items] | ||||
Net gain (loss) on foreign currency exchange contracts | $ (703) | $ (105) | $ (451) | $ (376) |
Not Designated as Hedging Instrument | Foreign Currency Exchange Contracts | Other Income (Expense), Net | ||||
Derivative Instruments,Gain (Loss) [Line Items] | ||||
Net gain (loss) on foreign currency exchange contracts | $ (700) | $ (100) | $ (500) | $ (400) |