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United States securities and exchange commission logo
April 12, 2024
Bryan M. Hackworth
Chief Financial Officer
Universal Electronics Inc.
15147 N. Scottsdale Road, Suite H300
Scottsdale, AZ 85254-2494
Re: Universal
Electronics Inc.
Form 10-K for the
Fiscal Year Ended December 31, 2023
Form 8-K Furnished
February 15, 2024
File No. 0-21044
Dear Bryan M. Hackworth:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments.
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to this letter, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2023
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations, page 35
1. Where you describe two
or more business reasons that contributed to a material change in
a financial statement
line item between periods, please quantify, where possible, the extent
to which each factor
contributed to the overall change in that line item, including any
offsetting factors. For
example, we note that you attribute the annual change in gross
profit to multiple
unquantified factors. When you discuss sales fluctuations, also
specifically describe
the extent to which changes are attributable to changes in prices,
such as the sales price
increases referenced on page 31, or to changes in the volume or
amount of goods or
services being sold or to the introduction of new products or
services. In addition,
where you identify intermediate causes of changes in your operating
results, also describe
the reasons underlying the intermediate causes. As an example, you
disclose that the
decline in net sales was primarily due to lower customer demand in your
home entertainment
channel without providing additional context. Ensure you explain in
Bryan M. Hackworth
FirstName LastNameBryan
Universal Electronics Inc. M. Hackworth
Comapany
April NameUniversal Electronics Inc.
12, 2024
April 212, 2024 Page 2
Page
FirstName LastName
sufficient detail the reasons driving such changes and that your
overall revised disclosures
assist in satisfying the requirements of Item 303(a)-(b) of Regulation
S-K and the three
principal objectives of MD&A, as noted in SEC Release No. 33-8350:
to provide a narrative explanation of a company s financial
statements that enables
investors to see the company through the eyes of management;
to enhance the overall financial disclosure and provide the
context within which
financial information should be analyzed; and
to provide information about the quality of, and potential
variability of, a company s
earnings and cash flow, so that investors can ascertain the
likelihood that past
performance is indicative of future performance
2. We note your disclosures, including on pages 19 and 31, regarding
increases in various
costs, such as component, materials, logistic, labor and borrowing
costs, as well as
additional tariffs on certain goods imported from China. Please revise
your disclosures in
future filings to expand upon the principal factors contributing to
your inflationary
pressures, the specific actions planned or taken, if any, to mitigate
the inflationary
pressures, and to quantify the resulting impact on your results of
operations and financial
condition.
Note 2 - Summary of Significant Accounting Policies
Revenue Recognition, page 49
3. We note that you recognize revenue related to products, services, and
royalties. We
further note your disclosure on page 3 that your products serve
various sales channels
and industries, such as consumer electronics, climate control, and
safety and home
automation, and your disclosure on page 48 that your chief operating
decision maker
reviews disaggregated revenues. Please tell us how you considered
providing
disaggregated revenue disclosures of such categories pursuant to ASC
606-10-50-5 and
ASC 606-10-55-89 through 55-91. If you believe your current
disclosures fully comply
with such guidance, further clarify how your disclosures comply with
the product and
services disclosure requirement of ASC 280-10-50-40. As part of your
response, ensure
you tell us the specific revenue categories included in the
information regularly provided
to your chief operating decision maker.
Note 10 - Income Taxes, page 64
4. Please address the following comments related to your tax rate
reconciliation on page 66:
Tell us and consider disclosing the nature of the "Distribution
of previously taxed
foreign earnings and profits" and "Foreign participation
exemption" line items.
Tell us the nature of the items included within the Foreign
tax rate differential line
Bryan M. Hackworth
FirstName LastNameBryan
Universal Electronics Inc. M. Hackworth
Comapany
April NameUniversal Electronics Inc.
12, 2024
April 312, 2024 Page 3
Page
FirstName LastName
item. If this line item includes amounts that do not relate to
the difference in tax rates
between foreign and domestic operations, please segregate this
line item into
additional categories. If a particular country contributes
disproportionately to your
income based on significantly lower tax rates, provide additional
disclosure in
MD&A regarding the impact such tax structures had on your
results.
Note 13 - Commitments and Contingencies
Product Warranties, page 69
5. Please tell us why activity in your product warranty liability
rollforward has significantly
decreased since fiscal year 2021, including no activity during fiscal
year 2023.
Form 8-K Furnished February 15, 2024
Exhibit 99 - Reconciliation of Adjusted Non-GAAP Financial Results, page 7
6. Please address the following comments related to your non-GAAP
measures:
We note your non-GAAP adjustments for Excess manufacturing
overhead and
factory transition costs" and "Litigation costs." Tell us the
specific nature of the items
included within these line items. Explain how you concluded that
they are not
normal, recurring, cash operating expenses of your business and
why eliminating
them within your non-GAAP financial measures is meaningful and
appropriate. In
doing so, ensure you explain in sufficient detail how you
determine the costs that
should and should not be included within "Excess manufacturing
overhead and
factory transition costs" and why you consider the legal costs to
be "non-recurring."
Specifically provide us with the frequency and amounts of
litigation cost non-GAAP
adjustments made in prior periods. Refer to Question 100.01 of
the Non-GAAP
Financial Measures Compliance and Disclosure Interpretations
("Non-GAAP
C&DIs").
We note that the line item "Adjustments to acquired tangible
assets" eliminates
"depreciation related to the mark-up from cost to fair value of
fixed assets acquired in
business combinations." Tell us how you determined the adjustment
does not result in
an individually tailored measure pursuant to the guidance in
Question 100.0 of the
Non-GAAP C&DIs.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Bryan M. Hackworth
Universal Electronics Inc.
April 12, 2024
Page 4
Please contact Andrew Blume at 202-551-3254 or Kevin Woody at
202-551-3629 with
any questions.
FirstName LastNameBryan M. Hackworth Sincerely,
Comapany NameUniversal Electronics Inc.
Division of Corporation
Finance
April 12, 2024 Page 4 Office of Manufacturing
FirstName LastName