UNIVERSAL ELECTRONICS INCUEIC
UNIVERSAL ELECTRONICS INC Commitments Disclosure
Commitments and Contingencies
Indemnifications
We indemnify our directors and officers to the maximum extent permitted under the laws of the state of Delaware and we have entered into indemnification agreements with each of our directors and executive officers. In addition, we insure our individual directors and officers against certain claims and attorney's fees and related expenses incurred in connection with the defense of such claims. The amounts and types of coverage may vary from period to period as dictated by market conditions. Management is not aware of any matters that require material indemnification of its officers or directors.
Fair Price Provisions and Other Anti-Takeover Measures
Our Restated Certificate of Incorporation, as amended, contains certain provisions restricting business combinations with interested stockholders under certain circumstances and imposing higher voting requirements for the approval of certain transactions ("fair price" provisions). Any of these provisions may delay or prevent a change in control.
The "fair price" provisions require that holders of at least two-thirds of our outstanding shares of voting stock approve certain business combinations and significant transactions with interested stockholders.
Purchase Commitments
We have entered into various inventory and property, plant and equipment related purchase agreements with suppliers. Certain of these agreements have provisions for a binding forecast (inventory) or non-cancellable purchase orders (inventory and PP&E). As of December 31, 2025, we had non-cancellable purchase commitments with suppliers for inventory and PP&E of $4.3 million and $0.7 million, respectively. These amounts are expected to be paid within the next twelve months.
Product Warranties
Changes in the liability for product warranty claim costs were as follows:
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance at beginning of period | $ | 35 | $ | 522 | $ | 522 | |||||||||||
| Additions (reductions) to costs and expenses | 11 | (305) | — | ||||||||||||||
| Settlements (in cash or in kind) | (35) | (182) | — | ||||||||||||||
| Foreign currency translation gain (loss) | — | — | — | ||||||||||||||
| Balance at end of period | $ | 11 | $ | 35 | $ | 522 | |||||||||||
Restructuring
In conjunction with our long term factory planning strategy to de-risk our reliance on a PRC-based supply chain and optimize our global manufacturing footprint, beginning in 2023 we have undertaken the restructuring activities further described below. Restructuring costs are included within factory restructuring charges on our consolidated statements of operations.
Asia
Beginning in the third quarter of 2023, we stopped all production activities and began to shut down our southwestern PRC factory. In addition, during the fourth quarter of 2024, we stopped production activities and shut down one of our two eastern PRC factories. In connection with these factory closures, we incurred $0.5 million of severance and $0.1 million of other exit costs during the year ended December 31, 2024, and $3.4 million of severance and $0.6 million of other exit costs during the year ended December 31, 2023. We have recognized a cumulative total of $4.6 million in factory restructuring charges in connection with the PRC factory closures, and we do not expect any further associated expenses.
Mexico
In 2024, we downsized our factory in Mexico due to decreased demand in the U.S. market and our Vietnam facility's ability to supply our North American customers. In July 2025, the further decision was made to cease production activities and shut down our Mexico manufacturing facility. In connection with this wind down and closure, we incurred $0.8 million of severance and $0.4 million of other exit costs during the year ended December 31, 2025, and $1.5 million of severance and $1.5 million of other exit costs during the year ended December 31, 2024. We have recognized a cumulative total of $4.2 million in factory restructuring charges in connection with the wind down of our Mexico manufacturing facility, and we do not expect to incur additional factory restructuring charges in connection with this shutdown.
Restructuring liabilities are included in accrued compensation, accounts payable and other accrued liabilities on our consolidated balance sheets. Total restructuring activities for the years ended December 31, 2025, December 31, 2024, and December 31, 2023 are as follows:
| Restructuring Costs | |||||||||||||||||
| (In thousands) | Total | Severance Expense | Other Exit Expense | ||||||||||||||
| Balance at December 31, 2022 | $ | — | $ | — | $ | — | |||||||||||
| Restructuring charges | $ | 4,015 | $ | 3,425 | $ | 590 | |||||||||||
| Cash payments | $ | (3,553) | $ | (3,278) | $ | (275) | |||||||||||
| Balance at December 31, 2023 | $ | 462 | $ | 147 | $ | 315 | |||||||||||
| Restructuring charges | 3,585 | 2,008 | 1,577 | ||||||||||||||
| Cash payments | (3,036) | (1,288) | (1,748) | ||||||||||||||
| Balance at December 31, 2024 | $ | 1,011 | $ | 867 | $ | 144 | |||||||||||
| Restructuring charges | 1,221 | 776 | 445 | ||||||||||||||
| Cash payments | (1,793) | (1,267) | (526) | ||||||||||||||
| Balance at December 31, 2025 | $ | 439 | $ | 376 | $ | 63 | |||||||||||
| Total costs incurred inception to date | $ | 8,821 | $ | 6,209 | $ | 2,612 | |||||||||||
| Total estimated expense to be incurred after December 31, 2025 | $ | — | $ | — | $ | — | |||||||||||
Litigation
Roku Matters
UEI and Roku Inc. ("Roku") and certain of its customers have been in litigation in various forums since 2018—i.e., two actions in the Central District of California ("CDCA") beginning in 2018 and 2020 including related cases against certain of Roku's customers (collectively, the "CDCA cases"), the International Trade Commission ("ITC"), the Patent and Trademark Office ("PTO") (ex parte reexams) and the Patent and Trademark Appeals Board ("PTAB"). The CDCA cases were all stayed on various grounds. The 2018 case was stayed in November 2019 pending resolution of Roku-initiated PTO and PTAB matters, all of which have since been resolved.
The 2020 case was also immediately stayed due to UEI's related ITC action against Roku, in which UEI ultimately prevailed when in July 2021, the Administrative Law Judge ("ALJ") issued an initial determination finding Roku in violation of Section 337. The Commission issued a final determination in November 2021, affirming the ALJ’s finding. The Commission then issued a limited exclusion order and cease and desist order against Roku, which went into effect following the expiration of the Presidential Review Period in January 2022. The Federal Circuit affirmed in January 2024. Following UEI's win and affirmance by the Federal Circuit, Roku sought rehearing en banc and sought cert from the Supreme Court on a domestic industry question. In January 2025, the Supreme Court denied cert.
While this ITC matter has been finally resolved and Roku has no more ability to appeal, we agreed to continue the stay of the CDCA cases pending the outcome of one final PTAB action involving one of our patents. UEI and Roku participated in a hearing in July 2025 regarding the consolidation of the 2018 and 2020 cases, the stay of the cases, and amending the claims that
UEI would be allowed to move forward with a consolidated case by the court if unstayed. On July 29, 2025 the Judge issued an order lifting the stay, consolidating the cases and allowing UEI to move forward on 25 claims in the case. On September 4, 2025, the Court set various dates and deadlines for the case, including a trial date of March 16, 2027. On December 15, 2025, UEI filed a second amended complaint in the consolidated case, and on January 20, 2026, Roku filed a motion to dismiss one of the patents in suit, to which UEI filed a response on February 24, 2026.
Roku also filed its own retaliatory ITC action against UEI and certain of our customers on two patents it purchased for this purpose. Roku’s action failed when in June 2022, the ALJ found on of Roku’s patents to be invalid as indefinite. Thereafter, in June 2022, the ALJ issued its initial determination ("ID") fully exonerating us and our customers, finding Roku’s second patent invalid and that Roku failed to establish the requisite domestic industry and thus no violation of the Tariff Act. Roku and UEI filed petitions to appeal certain portions of the ID. In October 2022, the full ITC issued its final determination affirming the ID, ruling there was no violation of the Tariff Act and terminating the investigation. In December 2022, Roku filed an appeal. Further, in October 2023, the PTAB issued its Final Written Decision invalidating all of Roku's infringement claims. Roku also filed an appeal of this decision. On June 17, 2025, the Federal Circuit affirmed the PTAB decision that invalidated the Roku patent and also remanded the case to the PTAB with respect to one remaining claim. On January 21, 2026, the PTAB issued a ruling invalidating the final remaining claim, and thus all claims of both asserted patents have been invalidated. As a companion to its ITC request, on April 8, 2021, Roku also filed a lawsuit against us in Federal CDCA alleging that we are infringing the same two patents they alleged were infringed in the ITC investigation explained above. On February 27, 2026, Roku voluntarily dismissed this District Court case.
Tongshun Matters
On January 23, 2024, Tongshun Company ("TS") filed suit against one of our subsidiaries, Gemstar Technology (Yangzhou) Co. Ltd. ("GTY"), claiming among other things, breach of an employment agency, and as is standard in Chinese litigation matters such as these, TS requested the Court to order a hold on GTY's bank account for the total claimed amount. On February 8, 2024, we deposited RMB 35.0 million (approximately $4.9 million) with the court. On July 12, 2024, we were refunded RMB 10.0 million (approximately $1.4 million) of the original deposit. This deposit was included in prepaid expenses and other current assets on our consolidated balance sheets at December 31, 2024. On December 20, 2024, the Jiangsu Province Baoying People’s Court rendered a decision in favor of TS and ordered a judgment of RMB 27.4 million (approximately $3.8 million) plus interest and costs totaling approximately RMB 30.4 million (approximately $4.2 million). We recorded an accrual of RMB 30.4 million (approximately $4.2 million) for this judgment during the fourth quarter of 2024. This accrual is included in other accrued expenses on our consolidated balance sheets at December 31, 2024. We filed an appeal of this judgment and on May 20, 2025, the Jiangsu Province Yangzhou Intermediate People's Court affirmed the lower court’s decision in its entirety. The full judgment amount of RMB 30.4 million (approximately $4.2 million) was paid to TS during the second quarter of 2025. Both the deposit and accrual have been released from our consolidated balance sheets at September 30, 2025.
IT Convergence Matters
In mid-2024, an arbitration proceeding commenced between UEI and IT Convergence, Inc. ("IT Convergence"), in which IT Convergence alleged misappropriation of confidential information and theft of trade secrets, and we denied these claims and filed a counterclaim asserting breach of contract. The arbitration hearing took place in August 2025 and the arbitrator issued his decision on October 29, 2025. After making rulings on various claims and counterclaims, the arbitrator awarded the net amount of approximately $0.2 million in favor of UEI and against IT Convergence, which amount was received by the Company during the quarter ended December 31, 2025.
Other Litigation Matters
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.
Defined Benefit Plan
Our subsidiary in India maintains a defined benefit pension plan ("India Plan") for local employees, which is consistent with local statutes and practices. The pension plan was adequately funded on December 31, 2025 based on its latest actuarial report. The India Plan has an independent external manager that advises us of the appropriate funding contribution requirements to which we comply. At December 31, 2025, approximately 52 percent of our India subsidiary employees had qualified for eligibility. An individual must be employed by our India subsidiary for a minimum of five years before becoming eligible. Upon the termination, resignation or retirement of an eligible employee, we are liable to pay the employee an amount equal to 15 days salary for each full year of service completed. The total amount of liability outstanding at December 31, 2025 and 2024 for the India Plan was not material. During the years ended December 31, 2025, 2024 and 2023, the net periodic benefit costs were also not material.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 8, 2023 | |
| 2021 | Mar 4, 2022 | |
| 2020 | Mar 5, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 15, 2019 | |
| 2017 | Mar 13, 2018 | |
| 2016 | Mar 9, 2017 | |
| 2015 | Mar 11, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.