SEC Filing | Universal Electronics Inc.

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ueic-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________

FORM 10-Q

_______________________________________

(Mark One)


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

For the quarterly period ended September 30, 2021


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

For the transition period from to

Commission File Number: 0-21044

_______________________________________

UNIVERSAL ELECTRONICS INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

33-0204817

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)

15147 N. Scottsdale Road, Suite H300, Scottsdale, Arizona 85254-2494

(Address of principal executive offices and zip code)

(480) 530-3000

(Registrant's telephone number, including area code)

_____________________


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	UEIC	The NASDAQ Stock Market LLC

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer

☐

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 ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 13,101,702 shares of Common Stock, par value $0.01 per share, of the registrant were outstanding on November 2, 2021.

UNIVERSAL ELECTRONICS INC.

INDEX


			Page Number
PART I. FINANCIAL INFORMATION			3
Item 1. Consolidated Financial Statements (Unaudited)			3
Consolidated Balance Sheets			3
Consolidated Statements of Operations			4
Consolidated Comprehensive Income (Loss) Statements			5
Consolidated Statements of Stockholders' Equity			6
Consolidated Statements of Cash Flows			8
Notes to Consolidated Financial Statements			9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3. Quantitative and Qualitative Disclosures About Market Risk			35
Item 4. Controls and Procedures			36
PART II. OTHER INFORMATION			36
Item 1. Legal Proceedings			36
Item 1A. Risk Factors			37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			38
Item 6. Exhibits			39
Signatures			40

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. Consolidated Financial Statements (Unaudited)

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share-related data)

(Unaudited)


	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	58,825	$	57,153
Accounts receivable, net	139,894		129,433
Contract assets	9,173		9,685
Inventories	123,981		120,430
Prepaid expenses and other current assets	6,155		6,828
Income tax receivable	2,877		3,314
Total current assets	340,905		326,843
Property, plant and equipment, net	79,199		87,285
Goodwill	48,510		48,614
Intangible assets, net	20,695		19,710
Operating lease right-of-use assets	17,726		19,522
Deferred income taxes	4,345		5,564
Other assets	2,144		2,752
Total assets	$	513,524	$	510,290
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	85,635	$	83,229
Line of credit	53,000		20,000
Accrued compensation	24,982		28,931
Accrued sales discounts, rebates and royalties	7,035		10,758
Accrued income taxes	1,598		3,535
Other accrued liabilities	32,522		33,057
Total current liabilities	204,772		179,510
Long-term liabilities:
Operating lease obligations	11,948		13,681
Contingent consideration	—		292
Deferred income taxes	180		1,913
Income tax payable	1,054		1,054
Other long-term liabilities	332		539
Total liabilities	218,286		196,989
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; 24,627,589 and 24,391,595 shares issued on September 30, 2021 and December 31, 2020, respectively	246		244
Paid-in capital	311,964		302,084
Treasury stock, at cost, 11,476,672 and 10,618,002 shares on September 30, 2021 and December 31, 2020, respectively	(339,712)		(295,495)
Accumulated other comprehensive income (loss)	(13,881)		(18,522)
Retained earnings	336,621		324,990
Total stockholders' equity	295,238		313,301
Total liabilities and stockholders' equity	$	513,524	$	510,290

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

Table of Contents

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net sales	$	155,625	$	153,505	$	456,658	$	458,416
Cost of sales	109,805		109,349		319,777		333,244
Gross profit	45,820		44,156		136,881		125,172
Research and development expenses	7,411		7,696		23,029		22,979
Selling, general and administrative expenses	29,505		26,214		87,316		77,441
Operating income	8,904		10,246		26,536		24,752
Interest income (expense), net	(212)		(268)		(447)		(1,272)
Loss on sale of Argentina subsidiary	(6,050)		—		(6,050)		—
Accrued social insurance adjustment	—		—		—		9,464
Other income (expense), net	(157)		(1,646)		(151)		(1,263)
Income before provision for income taxes	2,485		8,332		19,888		31,681
Provision for income taxes	3,440		2,164		8,257		5,267
Net income (loss)	$	(955)	$	6,168	$	11,631	$	26,414

Earnings (loss) per share:
Basic	$	(0.07)	$	0.44	$	0.85	$	1.90
Diluted	$	(0.07)	$	0.43	$	0.84	$	1.86
Shares used in computing earnings per share:
Basic	13,392		13,928		13,622		13,935
Diluted	13,392		14,205		13,920		14,189

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

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UNIVERSAL ELECTRONICS INC.

CONSOLIDATED COMPREHENSIVE INCOME (LOSS) STATEMENTS

(In thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income (loss)	$	(955)	$	6,168	$	11,631	$	26,414
Other comprehensive income (loss):
Change in foreign currency translation adjustment	(1,959)		5,005		(784)		(2,774)
Change in foreign currency translation due to sale of Argentina subsidiary	5,425		—		5,425		—
Comprehensive income	$	2,511	$	11,173	$	16,272	$	23,640

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

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UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

The following summarizes the changes in total equity for the three and nine months ended September 30, 2021:


	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, 2020	24,392	$	244	(10,618)	$	(295,495)	$	302,084	$	(18,522)	$	324,990	$	313,301
Net income											6,993		6,993
Currency translation adjustment									(2,868)				(2,868)
Shares issued for employee benefit plan and compensation	160	2					408						410
Purchase of treasury shares				(191)	(10,951)								(10,951)
Stock options exercised	22	—					991						991
Shares issued to directors	7	—					—						—
Employee and director stock-based compensation							2,600						2,600
Performance-based common stock warrants							143						143
Balance at March 31, 2021	24,581	246		(10,809)	(306,446)		306,226		(21,390)		331,983		310,619
Net income											5,593		5,593
Currency translation adjustment									4,043				4,043
Shares issued for employee benefit plan and compensation	15	—					271						271
Purchase of treasury shares				(320)	(15,733)								(15,733)
Shares issued to directors	8	—					—						—
Employee and director stock-based compensation							2,444						2,444
Performance-based common stock warrants							131						131
Balance at June 30, 2021	24,604	246		(11,129)	(322,179)		309,072		(17,347)		337,576		307,368
Net loss											(955)		(955)
Currency translation adjustment									(1,959)				(1,959)
Change in foreign currency translation due to sale of Argentina subsidiary									5,425				5,425
Shares issued for employee benefit plan and compensation	16	—					296						296
Purchase of treasury shares				(348)	(17,533)								(17,533)
Shares issued to directors	8	—					—						—
Employee and director stock-based compensation							2,472						2,472
Performance-based common stock warrants							124						124
Balance at September 30, 2021	24,628	$	246	(11,477)	$	(339,712)	$	311,964	$	(13,881)	$	336,621	$	295,238

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

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UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

The following summarizes the changes in total equity for the three and nine months ended September 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, 2019	24,118	$	241	(10,174)	$	(277,817)	$	288,338	$	(22,781)	$	286,418	$	274,399
Net income											5,846		5,846
Currency translation adjustment									(7,009)				(7,009)
Shares issued for employee benefit plan and compensation	129	1					526						527
Purchase of treasury shares				(169)	(6,291)								(6,291)
Shares issued to directors	9	1					(1)						—
Employee and director stock-based compensation							2,303						2,303
Performance-based common stock warrants							184						184
Balance at March 31, 2020	24,256	243		(10,343)	(284,108)		291,350		(29,790)		292,264		269,959
Net income											14,400		14,400
Currency translation adjustment									(770)				(770)
Shares issued for employee benefit plan and compensation	13	—					212						212
Purchase of treasury shares				(3)	(114)								(114)
Employee and director stock-based compensation							2,291						2,291
Performance-based common stock warrants							154						154
Balance at June 30, 2020	24,269	243		(10,346)	(284,222)		294,007		(30,560)		306,664		286,132
Net income											6,168		6,168
Currency translation adjustment									5,005				5,005
Shares issued for employee benefit plan and compensation	15	$	—				220						220
Purchase of treasury shares				(91)	(3,417)								(3,417)
Shares issued to directors	9	$	—				—						—
Employee and director stock-based compensation							2,260						2,260
Performance-based common stock warrants							187						187
Balance at September 30, 2020	24,293	$	243	(10,437)	$	(287,639)	$	296,674	$	(25,555)	$	312,832	$	296,555

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

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UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities:
Net income	$	11,631	$	26,414
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,719		22,857
Provision for credit losses	1		271
Deferred income taxes	(483)		503
Shares issued for employee benefit plan	977		959
Employee and director stock-based compensation	7,516		6,854
Performance-based common stock warrants	398		525
Impairment of long-term assets	—		57
Loss on sale of Argentina subsidiary, net of cash transferred	5,960		—
Accrued social insurance adjustment	—		(9,464)
Loss on sale of Ohio call center	—		712
Changes in operating assets and liabilities:
Accounts receivable and contract assets	(12,129)		11,556
Inventories	(4,466)		30,466
Prepaid expenses and other assets	2,872		601
Accounts payable and accrued liabilities	(7,416)		(50,507)
Accrued income taxes	(1,664)		2,023
Net cash provided by operating activities	22,916		43,827
Cash flows from investing activities:
Acquisitions of property, plant and equipment	(8,782)		(10,864)
Acquisitions of intangible assets	(3,626)		(5,254)
Payment on sale of Ohio call center	—		(500)
Net cash used for investing activities	(12,408)		(16,618)
Cash flows from financing activities:
Borrowings under line of credit	71,000		70,000
Repayments on line of credit	(38,000)		(88,000)
Proceeds from stock options exercised	991		—
Treasury stock purchased	(44,217)		(9,822)
Contingent consideration payments in connection with business combinations	—		(3,091)
Net cash used for financing activities	(10,226)		(30,913)
Effect of foreign currency exchange rates on cash and cash equivalents	1,390		(3,452)
Net increase (decrease) in cash and cash equivalents	1,672		(7,156)
Cash and cash equivalents at beginning of period	57,153		74,302
Cash and cash equivalents at end of period	$	58,825	$	67,146

Supplemental cash flow information:
Income taxes paid	$	8,235	$	3,242
Interest paid	$	375	$	1,404

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

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UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Note 1 — Basis of Presentation

In the opinion of management, the accompanying consolidated financial statements of Universal Electronics Inc. and its subsidiaries contain all the adjustments necessary for a fair presentation of financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. Information and footnote disclosures normally included in financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("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 nine months ended September 30, 2021 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, 2020.

Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates 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 credit losses; inventory valuation; impairment of long-lived assets, intangible assets and goodwill; business combinations; income taxes and related valuation allowances; stock-based compensation expense and performance-based common stock warrants.

The 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.

Summary of Significant Accounting Policies

With the exception of the following policy, our significant accounting policies are unchanged from those disclosed in Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Revenue Recognition

We license our symbolic intellectual property which includes our patented technologies and database of control codes. Revenue is recognized for these licensing arrangements on an over-time basis. We record license revenue for per-unit based licenses when our customers manufacture or ship a product incorporating our intellectual property and we have a present right to payment. We record per-unit-based licenses with minimum guarantees ratably over the license period to which the minimum guarantee relates and any per-unit sales in excess of the minimum guarantee in the period in which the sale occurs. We record licenses with fixed consideration ratably over the license period. Tiered royalties are recorded on a straight-line basis according to the forecasted per-unit fees taking into account the pricing tiers.

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UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Recently Adopted Accounting Pronouncements

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 previous guidance, an entity recognized the effects of the enacted tax law change on the effective income tax rate in the period that included the effective date of the tax law. Our adoption of this guidance on January 1, 2021 did not have a material impact on our consolidated statement of financial position, results of operations and cash flows.

Recent Accounting Updates Not Yet Effective

In March 2020, the FASB issued ASU 2020-04, "Facilitation of the Effects of Reference Rate Reform on Financial Reporting" and in January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform". This guidance is intended to provide temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The amendments in these ASUs are elective and are effective upon issuance for all entities through December 31, 2022. These amendments are not expected to have a material impact on our consolidated statement of financial position, results of operations and cash flows.

Note 2 — Cash and Cash Equivalents

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


(In thousands)	September 30, 2021		December 31, 2020
North America	$	7,663	$	9,812
People's Republic of China ("PRC")	14,573		14,244
Asia (excluding the PRC)	11,904		13,518
Europe	15,194		10,926
South America	9,491		8,653
Total cash and cash equivalents	$	58,825	$	57,153

Note 3 — Revenue and Accounts Receivable, Net

Revenue Details

The pattern of revenue recognition was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2021		2020		2021		2020
Goods and services transferred at a point in time	$	129,530	$	127,657	$	371,921	$	365,902
Goods and services transferred over time	26,095		25,848		84,737		92,514
Net sales	$	155,625	$	153,505	$	456,658	$	458,416

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UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2021		2020		2021		2020
United States	$	49,637	$	64,367	$	151,251	$	203,981
Asia (excluding PRC)	34,422		27,923		100,247		86,043
Europe	32,187		26,119		91,353		72,625
People's Republic of China	23,413		25,625		71,242		63,653
Latin America	6,917		4,546		18,429		12,652
Other	9,049		4,925		24,136		19,462
Total net sales	$	155,625	$	153,505	$	456,658	$	458,416

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:


	Three Months Ended September 30,
	2021						2020
	$ (thousands)			% of Net Sales			$ (thousands)			% of Net Sales
Comcast Corporation	$	22,578		14.5	%		$	32,533		21.2	%
Daikin Industries Ltd.	$	20,610		13.2	%		$	—	(1)	—	%	(1)
Sony Corporation	$	—	(1)	—	%	(1)	$	15,927		10.4	%


	Nine Months Ended September 30,
	2021				2020
	$ (thousands)		% of Net Sales		$ (thousands)			% of Net Sales
Comcast Corporation	$	74,478	16.3	%	$	95,014		20.7	%
Daikin Industries Ltd.	$	54,495	11.9	%	$	—	(1)	—	%	(1)

(1)Sales associated with this customer did not total more than 10% of our net sales for the indicated period.

Accounts Receivable, Net

Accounts receivable, net were as follows:


(In thousands)	September 30, 2021		December 31, 2020
Trade receivables, gross	$	132,931	$	122,828
Allowance for credit losses	(1,344)		(1,412)
Allowance for sales returns	(520)		(761)
Trade receivables, net	131,067		120,655
Other (1)	8,827		8,778
Accounts receivable, net	$	139,894	$	129,433

(1)Other accounts receivable is primarily comprised of value added tax and supplier rebate receivables.

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UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Allowance for Credit Losses

Changes in the allowance for credit losses were as follows:


(In thousands)	Nine Months Ended September 30,
	2021		2020
Balance at beginning of period	$	1,412	$	1,492
Additions to costs and expenses	1		271

Write-offs/Foreign exchange effects	(69)		34
Balance at end of period	$	1,344	$	1,797

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


	September 30, 2021				December 31, 2020
	$ (thousands)		% of Accounts Receivable, Net		$ (thousands)		% of Accounts Receivable, Net
Comcast Corporation	$	21,517	15.4	%	$	19,782	15.3	%

Note 4 — Inventories and Significant Suppliers

Inventories were as follows:


(In thousands)	September 30, 2021		December 31, 2020
Raw materials	$	42,907	$	44,273
Components	24,598		16,954
Work in process	4,802		6,211
Finished goods	51,674		52,992
Inventories	$	123,981	$	120,430

Significant Suppliers

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


	Three Months Ended September 30,
	2021				2020
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Qorvo International Pte Ltd.	$	12,064	14.5	%	$	8,472	13.0	%


	Nine Months Ended September 30,
	2021				2020
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Qorvo International Pte Ltd.	$	31,677	13.1	%	$	29,679	13.4	%

Zhejiang Zhen You Electronics Co. Ltd. totaled $9.4 million and 11.0% of our accounts payable balance at September 30, 2021. No supplier totaled 10% or more of our accounts payable balance at December 31, 2020.

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UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

Note 5 — 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:


(In thousands)	September 30, 2021		December 31, 2020
United States	$	14,561	$	15,411
People's Republic of China	58,027		64,197
Mexico	20,788		22,410
All other countries	3,549		4,789
Total long-lived tangible assets	$	96,925	$	106,807

Property, plant, and equipment are shown net of accumulated depreciation of $164.5 million and $154.2 million at September 30, 2021 and December 31, 2020, respectively.

Note 6 — Goodwill and Intangible Assets, Net

Goodwill

Changes in the carrying amount of goodwill were as follows:


(In thousands)
Balance at December 31, 2020	$	48,614
Foreign exchange effects	(104)
Balance at September 30, 2021	$	48,510

Intangible Assets, Net

The components of intangible assets, net were as follows:


	September 30, 2021						December 31, 2020
(In thousands)	Gross (1)		Accumulated Amortization (1)		Net		Gross (1)		Accumulated Amortization (1)		Net
Capitalized software development costs	$	1,018	$	(15)	$	1,003	$	477	$	—	$	477
Customer relationships	8,100		(4,859)		3,241		8,100		(4,329)		3,771
Developed and core technology	4,080		(3,262)		818		4,080		(3,044)		1,036
Distribution rights	333		(268)		65		352		(261)		91
Patents	23,944		(8,603)		15,341		21,601		(7,574)		14,027
Trademarks and trade names	800		(573)		227		800		(492)		308
Total intangible assets, net	$	38,275	$	(17,580)	$	20,695	$	35,410	$	(15,700)	$	19,710

(1)This table excludes the gross value of fully amortized intangible assets totaling $43.1 million and $42.7 million at September 30, 2021 and December 31, 2020, respectively.

Table of Contents

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(Unaudited)

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


(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of sales	$	7	$	—	$	15	$	—
Selling, general and administrative expenses	938		1,752		2,622		5,472
Total amortization expense	$