UNIVERSAL ELECTRONICS INCUEIC

UNIVERSAL ELECTRONICS INC Leases Disclosure

10-KFiled Mar 12, 20263 min read
Leases
We have entered into various operating lease agreements for automobiles, offices and manufacturing facilities throughout the world. At December 31, 2025, our operating leases had remaining lease terms of up to 35 years, including any reasonably probable extensions.

Lease balances within our consolidated balance sheets were as follows:
(In thousands)December 31, 2025December 31, 2024
Assets:
Operating lease right-of-use assets
$10,203 $14,322 
Liabilities:
Other accrued liabilities
$3,213 $3,553 
Long-term operating lease obligations
6,193 9,232 
Total lease liabilities
$9,406 $12,785 

Operating lease expense, operating lease cash flows and supplemental cash flow information were as follows:
Year Ended December 31,
(In thousands)202520242023
Cost of sales$1,312 $2,390 $3,012 
Selling, general and administrative expenses5,954 5,017 4,378 
Total operating lease expense$7,266 $7,407 $7,390 
Operating lease expenses from variable and short-term lease costs$1,401 $1,146 $1,033 
Operating cash outflows from operating leases$6,002 $8,152 $7,736 
Operating lease right-of-use assets obtained in exchange for lease obligations$4,806 $1,249 $4,360 

As part of our continued evaluation of our global manufacturing footprint and our overall cost optimization and return to profitability strategy, we ceased production activities and shut down our manufacturing facility in Mexico and vacated and abandoned our office space in Carlsbad, California. As a result of these actions, we reassessed our Mexico factory lease and recorded a decrease of $0.7 million and $0.8 million to our Mexico operating lease ROU asset and lease liability, respectively, during the year ended December 31, 2025. In addition, the estimated useful lives of the Mexico and Carlsbad related ROU assets were revised to reflect shorter lease terms than those originally estimated at lease inception. A change in the estimated useful life of a long-lived asset represents a change in accounting estimate and is accounted for prospectively. The Mexico
ROU asset was fully amortized by December 31, 2025. The Carlsbad ROU asset was fully amortized by December 31, 2025 and we recognized accelerated amortization of $1.3 million during the year ended December 31, 2025.

The weighted average remaining lease liability term and the weighted average discount rate were as follows:
Year Ended December 31,
20252024
Weighted average lease liability term (in years)4.34.6
Weighted average discount rate5.80 %5.45 %

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 December 31, 2025. The reconciliation excludes short-term leases that are not recorded on the balance sheet.

(In thousands)
2026$3,519 
20272,958 
20281,201 
2029584 
2030487 
Thereafter1,661 
Total lease payments10,410 
Less: imputed interest(1,004)
Total lease liabilities$9,406 

At December 31, 2025, we did not have any operating leases that had not yet commenced.

Prepaid Land Lease

We operate one factory within the PRC on which the land is leased from the government as of December 31, 2025. This land lease was prepaid to the PRC government at the time our subsidiary occupied the land. We have obtained a land-use right certificate for the land pertaining to this factory.

The factory is located in the city of Yangzhou in the Jiangsu province. The remaining net book value of this operating lease ROU asset was $2.1 million at December 31, 2025, and is being amortized on a straight-line basis over the remaining term of approximately 33 years. The buildings located on this land had a net book value of $10.6 million at December 31, 2025 and are being depreciated over a remaining weighted average period of approximately 14 years.

Historical Timeline

Fiscal YearFiled
2025Mar 12, 2026Showing above
2024Mar 11, 2025
2023Mar 14, 2024
2022Mar 8, 2023
2021Mar 4, 2022
2020Mar 5, 2021
2019Mar 16, 2020
2018Mar 15, 2019
2017Mar 13, 2018
2016Mar 9, 2017
2015Mar 11, 2016

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

Other Available Disclosures

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