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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, ~~2019~~2020 or


☐			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: 0-10235

GENTEX CORPORATION

(Exact name of registrant as specified in its charter)


Michigan						38-2030505
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

600 N. Centennial
Zeeland
Michigan						49464
(Address of principal executive offices)						(Zip Code)

(616) 772-1800

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 $0.06 per share	GNTX	NASDAQ Global Select Market

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: þ No: o

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: þ No: o

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. o

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes: ☐ No: þ

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE ~~PRECEEDING~~PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes: o No: o

APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class	Shares Outstanding, October ~~18, 2019~~23, 2020
Common Stock, $.06 Par Value	~~252,972,254~~	245,056,522

GENTEX CORPORATION AND SUBSIDIARIES

For the Three and Nine Months Ended September 30, ~~2019~~2020

FORM 10-Q

Index

PART I —FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements.

GENTEX CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of September 30, ~~2019~~2020 and December 31, ~~2018~~2019


		September 30, 2019 (Unaudited)		December 31, 2018 (Note)			September 30, 2020 (Unaudited)		December 31, 2019 (Note)
ASSETS	ASSETS					ASSETS
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	260,151,083	$	217,025,278	Cash and cash equivalents	$	400,499,542	$	296,321,622
Short-term investments	Short-term investments	207,156,287		169,412,999		Short-term investments	52,578,480		140,384,053
Accounts receivable, net	Accounts receivable, net	253,108,715		213,537,799		Accounts receivable, net	268,457,875		235,410,326
Inventories	Inventories	238,676,795		225,281,599		Inventories	233,358,102		248,941,855
Prepaid expenses and other	Prepaid expenses and other	28,402,524		25,672,579		Prepaid expenses and other	20,424,567		29,319,036
Total current assets	Total current assets	987,495,404		850,930,254		Total current assets	975,318,566		950,376,892

PLANT AND EQUIPMENT—NET	PLANT AND EQUIPMENT—NET	491,968,638		498,473,766		PLANT AND EQUIPMENT—NET	474,019,432		498,316,100

OTHER ASSETS	OTHER ASSETS					OTHER ASSETS
Goodwill	Goodwill	307,365,845		307,365,845		Goodwill	311,216,556		307,365,845
Long-term investments	Long-term investments	103,025,468		137,979,082		Long-term investments	159,011,362		139,909,323
Intangible assets, net	Intangible assets, net	255,200,000		269,675,000		Intangible assets, net	247,911,399		250,375,000
Patents and other assets, net	Patents and other assets, net	22,241,049		21,010,121		Patents and other assets, net	24,997,791		22,460,033
Total other assets	Total other assets	687,832,362		736,030,048		Total other assets	743,137,108		720,110,201

Total assets	Total assets	$	2,167,296,404	$	2,085,434,068	Total assets	$	2,192,475,106	$	2,168,803,193

LIABILITIES AND SHAREHOLDERS’ INVESTMENT	LIABILITIES AND SHAREHOLDERS’ INVESTMENT					LIABILITIES AND SHAREHOLDERS’ INVESTMENT

CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable	Accounts payable	$	95,309,797	$	92,810,316	Accounts payable	$	90,246,791	$	97,553,917

Current portion of long-term debt						Current portion of long-term debt	25,000,000		0
Accrued liabilities	Accrued liabilities	86,994,334		76,350,603		Accrued liabilities	121,242,379		74,292,883
Total current liabilities	Total current liabilities	182,304,131		169,160,919		Total current liabilities	236,489,170		171,846,800

OTHER NON-CURRENT LIABILITIES	OTHER NON-CURRENT LIABILITIES	6,952,703		—		OTHER NON-CURRENT LIABILITIES	15,071,701		7,414,424

DEFERRED INCOME TAXES	DEFERRED INCOME TAXES	56,711,307		54,521,489		DEFERRED INCOME TAXES	45,301,936		51,454,149

Total liabilities	Total liabilities	245,968,141		223,682,408		Total liabilities	296,862,807		230,715,373

SHAREHOLDERS’ INVESTMENT	SHAREHOLDERS’ INVESTMENT					SHAREHOLDERS’ INVESTMENT
Common stock	Common stock	15,178,860		15,559,717		Common stock	14,703,703		15,076,651
Additional paid-in capital	Additional paid-in capital	799,462,368		745,324,144		Additional paid-in capital	830,408,683		807,928,139
Retained earnings	Retained earnings	1,107,449,540		1,102,468,137		Retained earnings	1,046,052,853		1,116,372,133
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(762,505)		(1,600,338)		Accumulated other comprehensive income (loss)	4,447,060		(1,289,103)
Total shareholders’ investment	Total shareholders’ investment	1,921,328,263		1,861,751,660		Total shareholders’ investment	1,895,612,299		1,938,087,820
Total liabilities and shareholders’ investment	Total liabilities and shareholders’ investment	$	2,167,296,404	$	2,085,434,068	Total liabilities and shareholders’ investment	$	2,192,475,106	$	2,168,803,193

Note: The condensed consolidated balance sheet at December 31, ~~2018~~2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

GENTEX CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
		2019		2018		2019		2018			2020		2019		2020		2019
NET SALES	NET SALES	$	477,761,417	$	460,253,433	$	1,415,061,768	$	1,380,654,978	NET SALES	$	474,638,584	$	477,761,417	$	1,158,325,866	$	1,415,061,768

COST OF GOODS SOLD	COST OF GOODS SOLD	297,440,131		287,263,147		888,558,373		862,231,819		COST OF GOODS SOLD	286,401,872		297,440,131		769,556,865		888,558,373
Gross profit	Gross profit	180,321,286		172,990,286		526,503,395		518,423,159		Gross profit	188,236,712		180,321,286		388,769,001		526,503,395

OPERATING EXPENSES:	OPERATING EXPENSES:									OPERATING EXPENSES:
Engineering, research and development	Engineering, research and development	29,398,725		26,888,999		85,847,249		80,138,722		Engineering, research and development	27,812,730		29,398,725		86,421,121		85,847,249
Selling, general & administrative	Selling, general & administrative	22,786,881		18,673,376		63,019,167		55,658,189		Selling, general & administrative	21,571,093		22,786,881		65,206,080		63,019,167
Total operating expenses	Total operating expenses	52,185,606		45,562,375		148,866,416		135,796,911		Total operating expenses	49,383,823		52,185,606		151,627,201		148,866,416

Income from operations	Income from operations	128,135,680		127,427,911		377,636,979		382,626,248		Income from operations	138,852,889		128,135,680		237,141,800		377,636,979

OTHER INCOME (LOSS)
OTHER INCOME										OTHER INCOME
Investment income	Investment income	3,353,510		3,180,683		8,756,638		8,062,421		Investment income	1,825,257		3,353,510		5,733,939		8,756,638
Other income (loss), net		90,323		(73,979)		376,983		578,655
Other income, net										Other income, net	2,218,852		90,323		3,423,881		376,983
Total other income	Total other income	3,443,833		3,106,704		9,133,621		8,641,076		Total other income	4,044,109		3,443,833		9,157,820		9,133,621

INCOME BEFORE PROVISION FOR INCOME TAXES	INCOME BEFORE PROVISION FOR INCOME TAXES	131,579,513		130,534,615		386,770,600		391,267,324		INCOME BEFORE PROVISION FOR INCOME TAXES	142,896,998		131,579,513		246,299,620		386,770,600

PROVISION FOR INCOME TAXES	PROVISION FOR INCOME TAXES	19,681,661		19,198,798		61,633,712		59,658,782		PROVISION FOR INCOME TAXES	25,804,396		19,681,661		42,075,250		61,633,712

NET INCOME	NET INCOME	$	111,897,852	$	111,335,817	$	325,136,888	$	331,608,542	NET INCOME	$	117,092,602	$	111,897,852	$	204,224,370	$	325,136,888

EARNINGS PER SHARE: ⁽¹⁾	EARNINGS PER SHARE: ⁽¹⁾									EARNINGS PER SHARE: (1)
Basic	Basic	$	0.44	$	0.42	$	1.27	$	1.23	Basic	$	0.48	$	0.44	$	0.83	$	1.27
Diluted	Diluted	$	0.44	$	0.42	$	1.26	$	1.22	Diluted	$	0.48	$	0.44	$	0.82	$	1.26

Cash Dividends Declared per Share	Cash Dividends Declared per Share	$	0.115	$	0.110	$	0.345	$	0.330	Cash Dividends Declared per Share	$	0.120	$	0.115	$	0.360	$	0.345

⁽¹⁾ Earnings Per Share has been adjusted to exclude the portion of net income allocated to participating securities as a result of share-based payment awards.	⁽¹⁾ Earnings Per Share has been adjusted to exclude the portion of net income allocated to participating securities as a result of share-based payment awards.																	(1) Earnings Per Share has been adjusted to exclude the portion of net income allocated to participating securities as a result of share-based payment awards.

GENTEX CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net Income $ 111,897,852 $ 111,335,817 $325,136,888 $331,608,542
Other comprehensive (loss) income before tax:
Foreign currency translation adjustments (1,623,102) (1,174,213) (1,799,789) (2,013,638)
Unrealized gains on derivatives — 16,165 — 98,769
Unrealized gains (losses) on debt securities, net 457,438 (609,422) 3,338,762 (932,953)
Other comprehensive (loss) income, before tax (1,165,664) (1,767,470) 1,538,973 (2,847,822)
Income tax impact related to components of other comprehensive income 96,062 (124,584) 701,140 (175,177)
Other comprehensive (loss) income, net of tax (1,261,726) (1,642,886) 837,833 (2,672,645)
Comprehensive Income $ 110,636,126 $ 109,692,931 $ 325,974,721 $ 328,935,897


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net Income	$	117,092,602	$	111,897,852	$204,224,370		$325,136,888

Other comprehensive income before tax:
Foreign currency translation adjustments	1,823,667		(1,623,102)		1,268,204		(1,799,789)

Unrealized (losses) gains on debt securities, net	(146,647)		457,438		5,655,644		3,338,762

Other comprehensive income (loss), before tax	1,677,020		(1,165,664)		6,923,848		1,538,973

Income tax impact related to components of other comprehensive income	(30,796)		96,062		1,187,685		701,140

Other comprehensive income (loss), net of tax	1,707,816		(1,261,726)		5,736,163		837,833

Comprehensive Income	$	118,800,418	$	110,636,126	$	209,960,533	$	325,974,721

GENTEX CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT

For the Three Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

Common
Stock
Shares Common
Stock
Amount Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total
Shareholders’
Investment
BALANCE AS OF JULY 1, 2019 254,779,119 $ 15,286,747 $ 777,238,253 $ 1,111,310,014 $ 499,221 $ 1,904,334,235
Issuance of common stock from stock plan transactions 1,771,463 106,287 26,180,774 — — 26,287,061
Repurchases of common stock (3,569,577) (214,174) (9,744,945) (86,665,884) — (96,625,003)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock — — 5,788,286 — — 5,788,286
Dividends declared ($.115 per share) — — — (29,092,442) — (29,092,442)
Net income — — — 111,897,852 — 111,897,852
Other comprehensive loss — — — — (1,261,726) (1,261,726)
BALANCE AS OF SEPTEMBER 30, 2019 252,981,005 $ 15,178,860 $ 799,462,368 $ 1,107,449,540 $ (762,505) $ 1,921,328,263
BALANCE AS OF JULY 1, 2018 268,923,121 $ 16,135,387 $ 748,794,815 $ 1,157,048,214 $ (479,104) $ 1,921,499,312
Issuance of common stock from stock plan transactions 702,296 42,138 8,340,935 — — 8,383,073
Repurchases of common stock (7,508,249) (450,495) (18,545,378) (153,547,831) — (172,543,703)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock — — 4,905,626 — — 4,905,626
Dividends declared ($.110 per share) — — — (28,832,984) — (28,832,984)
Net income — — — 111,335,817 — 111,335,817
Other comprehensive loss — — — — (1,642,886) (1,642,886)
BALANCE AS OF SEPTEMBER 30, 2018 262,117,168 15,727,030 743,495,999 1,086,003,216 (2,121,990) 1,843,104,255


	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Investment
BALANCE AS OF JULY 1, 2020	245,775,488	$	14,746,529	$	818,678,880	$	986,442,760	$	2,739,244	$	1,822,607,413
Issuance of common stock from stock plan transactions	461,983	27,719		7,938,770		—		—		7,966,489

Repurchases of common stock	(1,175,756)	(70,545)		(3,515,510)		(28,074,807)		—		(31,660,862)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock	—	—		7,306,543		—		—		7,306,543
Dividends declared ($0.12 per share)	—	—		—		(29,407,702)		—		(29,407,702)
Net income	—	—		—		117,092,602		—		117,092,602
Other comprehensive income	—	—		—		—		1,707,816		1,707,816
BALANCE AS OF SEPTEMBER 30, 2020	245,061,715	$	14,703,703	$	830,408,683	$	1,046,052,853	$	4,447,060	$	1,895,612,299

BALANCE AS OF JULY 1, 2019	254,779,119	$	15,286,747	$	777,238,253	$	1,111,310,014	$	499,221	$	1,904,334,235
Issuance of common stock from stock plan transactions	1,771,463	106,287		26,180,774		—		—		26,287,061
Repurchases of common stock	(3,569,577)	(214,174)		(9,744,945)		(86,665,884)		—		(96,625,003)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock	—	—		5,788,286		—		—		5,788,286
Dividends declared ($0.115 per share)	—	—		—		(29,092,442)		—		(29,092,442)
Net income	—	—		—		111,897,852		—		111,897,852
Other comprehensive loss	—	—		—		—		(1,261,726)		(1,261,726)
BALANCE AS OF SEPTEMBER 30, 2019	252,981,005	$	15,178,860	$	799,462,368	$	1,107,449,540	$	(762,505)	$	1,921,328,263

GENTEX CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT

For the Nine Months Ended September 30, ~~2018~~2020 and 2019

Common
Stock
Shares Common
Stock
Amount Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total
Shareholders’
Investment
BALANCE AS OF JANUARY 1, 2019 259,328,613 $ 15,559,717 $ 745,324,144 $ 1,102,468,137 $ (1,600,338) $ 1,861,751,660
Issuance of common stock from stock plan transactions 5,021,616 301,297 67,920,578 — — 68,221,875
Repurchases of common stock (11,369,224) (682,154) (29,709,788) (232,371,433) — (262,763,375)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock — — 15,927,434 — — 15,927,434
Dividends declared ($.345 per share) — — — (87,784,052) — (87,784,052)
Net income — — — 325,136,888 — 325,136,888
Other comprehensive income — — — — 837,833 837,833
BALANCE AS OF SEPTEMBER 30, 2019 252,981,005 $ 15,178,860 $ 799,462,368 $ 1,107,449,540 $ (762,505) $ 1,921,328,263
BALANCE AS OF JANUARY 1, 2018 280,281,321 $ 16,816,879 $ 723,510,672 $ 1,301,997,327 $ 7,193,383 $ 2,049,518,261
Issuance of common stock from stock plan transactions 4,960,412 297,625 61,082,042 — — 61,379,666
Repurchases of common stock (23,124,565) (1,387,474) (54,655,280) (465,706,871) — (521,749,624)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock — — 13,558,565 — — 13,558,565
Impact of ASU 2016-01 Adoption — — — 6,642,727 (6,642,727) —
Dividends declared ($.330 per share) — — — (88,538,509) — (88,538,509)
Net income — — — 331,608,542 — 331,608,542
Other comprehensive loss — — — — (2,672,645) (2,672,647)
BALANCE AS OF SEPTEMBER 30, 2018 262,117,168 $ 15,727,030 $ 743,495,999 $ 1,086,003,216 $ (2,121,990) $ 1,843,104,255


	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Investment
BALANCE AS OF JANUARY 1, 2020	251,277,515	$	15,076,651	$	807,928,139	$	1,116,372,133	$	(1,289,103)	$	1,938,087,820
Issuance of common stock from stock plan transactions	1,815,270	108,917		23,568,264		—		—		23,677,181
Issuance of common stock related to acquisitions	163,718	9,823		3,549,406		—		—		3,559,229
Repurchases of common stock	(8,194,788)	(491,688)		(23,730,322)		(186,258,436)		—		(210,480,446)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock	—	—		19,093,196		—		—		19,093,196
Dividends declared ($0.36 per share)	—	—		—		(88,285,214)		—		(88,285,214)
Net income	—	—		—		204,224,370		—		204,224,370
Other comprehensive income	—	—		—		—		5,736,163		5,736,163
BALANCE AS OF SEPTEMBER 30, 2020	245,061,715	$	14,703,703	$	830,408,683	$	1,046,052,853	$	4,447,060	$	1,895,612,299

BALANCE AS OF JANUARY 1, 2019	259,328,613	$	15,559,717	$	745,324,144	$	1,102,468,137	$	(1,600,338)	$	1,861,751,660
Issuance of common stock from stock plan transactions	5,021,616	301,297		67,920,578				—		68,221,875
Repurchases of common stock	(11,369,224)	(682,154)		(29,709,788)		(232,371,433)		—		(262,763,375)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock	—	—		15,927,434		—		—		15,927,434
Dividends declared ($0.345 per share)	—	—		—		(87,784,052)		—		(87,784,052)
Net income	—	—		—		325,136,888		—		325,136,888
Other comprehensive income	—	—		—		—		837,833		837,833
BALANCE AS OF SEPTEMBER 30, 2019	252,981,005	$	15,178,860	$	799,462,368	$	1,107,449,540	$	(762,505)	$	1,921,328,263

GENTEX CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 325,136,888 $ 331,608,542
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 79,331,513 80,748,272
(Gain) on disposal of assets (148,376) (145,777)
Loss on disposal of assets 495,697 26,839
(Gain) on sale of investments (593,351) (1,508,411)
Loss on sale of investments — 532,494
Change in deferred income taxes 2,189,818 (5,538,048)
Stock-based compensation expense related to employee stock options, employee stock purchases and restricted stock 15,927,434 13,558,557
Change in operating assets and liabilities:
Accounts receivable, net (39,570,916) (16,200,315)
Inventories (13,395,196) 3,371,546
Prepaid expenses and other (2,729,945) (14,797,969)
Accounts payable 2,499,481 143,514
Accrued liabilities, excluding dividends declared and short-term debt 14,797,251 6,408,044
Net cash provided by operating activities 383,940,298 398,207,288
CASH FLOWS (USED FOR) INVESTING ACTIVITIES:
Activity in available-for-sale securities:
Sales proceeds 57,087,935 54,078,232
Maturities and calls 9,714,000 51,892,136
Purchases (66,360,636) (180,657,259)
Plant and equipment additions (58,322,472) (68,771,193)
Proceeds from sale of plant and equipment 1,937,207 194,200
Decrease in other assets (3,111,644) (4,557,125)
Net cash (used for) investing activities (59,055,610) (147,821,009)
CASH FLOWS (USED FOR) FINANCING ACTIVITIES:
Repayment of debt — (78,000,000)
Issuance of common stock from stock plan transactions 68,221,875 61,379,666
Cash dividends paid (87,217,383) (87,733,776)
Repurchases of common stock (262,763,375) (521,749,624)
Net cash (used for) financing activities (281,758,883) (626,103,734)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 43,125,805 (375,717,455)
CASH AND CASH EQUIVALENTS, beginning of period 217,025,278 569,734,496
CASH AND CASH EQUIVALENTS, end of period $ 260,151,083 $ 194,017,041


	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	204,224,370	$	325,136,888
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	78,489,026		79,331,513
(Gain) on disposal of assets	(281,542)		(148,376)
Loss on disposal of assets	146,195		495,697
(Gain) on sale of investments	(1,504,757)		(593,351)
Loss on sale of investments	143,370		0
Change in deferred income taxes	(9,559,993)		2,189,818
Stock-based compensation expense related to employee stock options, employee stock purchases and restricted stock	23,266,906		15,927,434

Change in operating assets and liabilities:
Accounts receivable, net	(32,832,997)		(39,570,916)
Inventories	15,659,539		(13,395,196)
Prepaid expenses and other	8,934,297		(2,729,945)
Accounts payable	(7,389,582)		2,499,481
Accrued liabilities, excluding dividends declared and short-term debt	49,749,418		14,797,251
Net cash provided by operating activities	329,044,250		383,940,298

CASH FLOWS (USED FOR) INVESTING ACTIVITIES:
Activity in available-for-sale securities:
Sales proceeds	15,559,590		57,087,935
Maturities and calls	117,172,368		9,714,000
Purchases	(59,933,780)		(66,360,636)
Plant and equipment additions	(37,048,073)		(58,322,472)
Proceeds from sale of plant and equipment	331,465		1,937,207
Acquisition of businesses, net of cash acquired	(8,043,217)		0
Increase in other assets	(3,326,783)		(3,111,644)
Net cash (used for) investing activities	24,711,570		(59,055,610)

CASH FLOWS (USED FOR) FINANCING ACTIVITIES:
Proceeds from borrowings on Credit Agreement	75,000,000		0
Repayment of borrowings on Credit Agreement	(50,000,000)		0

Issuance of common stock from stock plan transactions	23,677,181		68,221,875
Cash dividends paid	(87,774,635)		(87,217,383)
Repurchases of common stock	(210,480,446)		(262,763,375)

Net cash (used for) financing activities	(249,577,900)		(281,758,883)

NET INCREASE IN CASH AND CASH EQUIVALENTS	104,177,920		43,125,805

CASH AND CASH EQUIVALENTS, beginning of period	296,321,622		217,025,278

CASH AND CASH EQUIVALENTS, end of period	$	400,499,542	$	260,151,083

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

The unaudited condensed consolidated financial statements included herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's ~~2018~~2019 annual report on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only a normal and recurring nature, necessary to present fairly the financial position of the Company as of September 30, ~~2019,~~2020, and the results of operations and cash flows for the interim periods presented.

(2) Adoption of New Accounting Pronouncements

~~New Accounting Pronouncements Adopted in Fiscal Year 2019~~

Effective January 1, ~~2019,~~2020, the Company adopted Accounting Standards Update ("ASU") ~~2016-02,~~ ~~Leases~~, which provides guidance for lease accounting. The new guidance contained in the ASU stipulates that lessees will need to recognize a right-of-use ("ROU") asset and a lease liability for substantially all leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. Treatment in the consolidated statements of income will be similar to the historical treatment of operating and capital leases. The adoption of this standard did not have a material impact on the Company's consolidated balance sheet or consolidated income statement. Disclosures are now required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

~~New Accounting Pronouncements Not Yet Adopted~~

~~In June 2016, the FASB issued ASU~~ 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings in the period of adoption. Based on the insignificant impact of this ASU on the Company's financial statements, a cumulative-effect adjustment to retained earnings was not deemed necessary. The standard requires a change in the measurement approach for credit losses on financial assets measured on an amortized cost basis from an incurred loss method to an expected loss method, thereby eliminating the requirement that a credit loss be considered probable to impact the valuation of a financial asset measured on an amortized cost basis. The standard requires the measurement of expected credit losses to be based on relevant information about past events, including historical experience, current conditions, and a reasonable and supportable forecast that affects the collectability of the related financial asset. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. The ~~Company will be required to adopt ASU 2016-13 as~~adoption of ~~January 1, 2020. Early adoption is permitted. The Company does~~this standard did not ~~anticipate~~have a material impact on the ~~Company’s~~Company's consolidated ~~financial statements.~~balance sheet, consolidated income statement, or consolidated statement of cash flows.

(3) Goodwill and Other Intangible Assets

Goodwill represents the cost of an acquisition in excess of the fair values assigned to identifiable net assets acquired. The Company recorded Goodwill of $307.4 million as part of the HomeLink^®~~acquisition.~~acquisition in 2013 and recorded an additional $3.9 million in Goodwill as part of the acquisition of Vaporsens that occurred in the second quarter of 2020. See Note 16 for more information on the Vaporsens transaction. The carrying value of Goodwill as of ~~both~~ September 30, ~~2019~~2020 and December 31, ~~2018~~2019 was $311.2 million and $307.4 ~~million.~~million, respectively.


	Carrying Amount
Balance as of December 31, 2019	$	307,365,845
Acquisitions	3,850,711
Divestitures	0
Impairments	0
Other	0
Balance as of September 30, 2020	$	311,216,556

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In addition to annual impairment testing, which is performed as of the first day of the fourth quarter, the Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value of goodwill or other intangible assets thus resulting in the need for interim impairment testing, including long-term revenue growth projections, profitability, discount rates, recent market valuations from transactions by comparable companies, volatility in the Company's market capitalization, and general

~~GENTEX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

industry, market and macroeconomic conditions. ~~No such events or circumstances~~The impact of COVID-19 was again considered in the most recently completed quarter, ~~indicated~~but did not indicate the need for interim impairment testing.

The Company also acquired In-Process Research & Development as part of the acquisition of Vaporsens that occurred in the second quarter of 2020 and the acquisition of Air-Craftglass Production BV ("Air-Craftglass") in the third quarter of 2020. See Note 16 for more information on these transactions.

The patents and intangible assets and related change in carrying values are set forth in the tables below:

As of September 30, ~~2019:~~2020:

Other Intangible Assets Gross Accumulated Amortization Net Assumed Useful Life
Gentex Patents $ 37,160,431 $ (22,094,953) $ 15,065,478 Various
Other Intangible Assets
HomeLink^®Trade Names and Trademarks
$ 52,000,000 $ — $ 52,000,000 Indefinite
HomeLink^® Technology
180,000,000 (90,000,000) 90,000,000 12 years
Existing Customer Platforms 43,000,000 (25,800,000) 17,200,000 10 years
Exclusive Licensing Agreement 96,000,000 — 96,000,000 Indefinite
Total Other Intangible Assets $ 371,000,000 $ (115,800,000) $ 255,200,000
Total Patents & Other Intangible Assets $ 408,160,431 $ (137,894,953) $ 270,265,478


Other Intangible Assets	Gross		Accumulated Amortization		Net		Assumed Useful Life
Gentex Patents	$	38,011,452	$	(23,982,357)	$	14,029,095	Various
Vaporsens Technology Licenses	292,943		(35,002)		257,941		Various

Other Intangible Assets
HomeLink® Trade Names and Trademarks	$	52,000,000	$	—	$	52,000,000	Indefinite
HomeLink® Technology	180,000,000		(105,000,000)		75,000,000		12 years
Existing Customer Platforms	43,000,000		(30,100,000)		12,900,000		10 years
Exclusive Licensing Agreement	96,000,000		—		96,000,000		Indefinite
Vaporsens In-Process R&D	11,000,000		—		11,000,000		Indefinite
Air-Craftglass In-Process R&D	1,011,399		—		1,011,399		Indefinite
Total Other Intangible Assets	$	383,011,399	$	(135,100,000)	$	247,911,399

Total Patents & Other Intangible Assets	$	421,315,794	$	(159,117,359)	$	262,198,435

As of December 31, ~~2018:~~2019:


Other Intangible Assets	Other Intangible Assets	Gross		Accumulated Amortization		Net		Assumed Useful Life	Other Intangible Assets	Gross		Accumulated Amortization		Net		Assumed Useful Life
Gentex Patents	Gentex Patents	$	36,737,434	$	(21,014,168)	$	15,723,266	Various	Gentex Patents	$	37,328,963	$	(22,491,010)	$	14,837,953	Various

Other Intangible Assets	Other Intangible Assets								Other Intangible Assets
HomeLink^® Trade Names and Trademarks	HomeLink^® Trade Names and Trademarks	$	52,000,000	$	—	$	52,000,000	Indefinite	HomeLink® Trade Names and Trademarks	$	52,000,000	$	—	$	52,000,000	Indefinite
HomeLink^® Technology	HomeLink^® Technology	180,000,000		(78,750,000)		101,250,000		12 years	HomeLink® Technology	180,000,000		(93,750,000)		86,250,000		12 years
Existing Customer Platforms	Existing Customer Platforms	43,000,000		(22,575,000)		20,425,000		10 years	Existing Customer Platforms	43,000,000		(26,875,000)		16,125,000		10 years
Exclusive Licensing Agreement	Exclusive Licensing Agreement	96,000,000		—		96,000,000		Indefinite	Exclusive Licensing Agreement	96,000,000		—		96,000,000		Indefinite
Total Other Intangible Assets	Total Other Intangible Assets	$	371,000,000	$	(101,325,000)	$	269,675,000		Total Other Intangible Assets	$	371,000,000	$	(120,625,000)	$	250,375,000

Total Patents & Other Intangible Assets	Total Patents & Other Intangible Assets	$	407,737,434	$	(122,339,168)	$	285,398,266		Total Patents & Other Intangible Assets	$	408,328,963	$	(143,116,010)	$	265,212,953

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Amortization expense on patents and intangible assets was approximately $5.6 million and $16.8 million during the three and nine months ended September 30, ~~2019,~~2020, respectively, compared to approximately $5.6 millionand ~~$16.9~~$16.8 million for the same periods ended September 30, ~~2018,~~2019, respectively.

Excluding the impact of any future acquisitions, the Company ~~continues to estimate~~estimates amortization expense for each of the years ~~ended~~ending December 31, ~~2019,~~ 2020 and 2021 to be approximately $22 million annually, for the year ending December 31, 2022 to be approximately $21 million, for ~~2022, and~~the year ending December 31, 2023 to be approximately $19 million, and for the year ~~ended~~ending December 31, ~~2023.~~2024 to be approximately $16 million.

(4) Investments

The Company follows the provisions of Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures, for its financial assets and liabilities, and for its non-financial assets and liabilities subject to fair value measurements. ASC 820 provides a framework for measuring the fair value of

~~GENTEX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

assets and liabilities. This framework is intended to provide increased consistency in how fair value determinations are made under various existing accounting standards that permit, or in some cases, require estimates of fair-market value. This standard also expanded financial statement disclosure requirements ~~about~~with respect to a company’s use of fair-value measurements, including the effect of such ~~measurement~~measurements on earnings. The cost of securities sold is based on the specific identification method.

The Company determines the fair value of its government securities, asset-backed securities, municipal bonds, and corporate bonds by utilizing monthly valuation statements that are provided by its broker. The broker determines the investment valuation by utilizing the bid price in the market and also refers to third party sources to validate valuations, and as such are classified as Level 2 assets.

The Company's certificates of deposit ~~have remaining maturities of less than one year~~are classified as available for sale and are considered as Level 1 assets. These investments are carried at cost, which approximates fair value.

The Company ~~will~~ also periodically ~~make~~makes technology investments in certain non-consolidated third-parties. These equity investments are accounted for in accordance with ASC 321, Investments - Equity Securities. Equity investments that do not have readily determinable fair values, and where the Company has not identified any observable events that would cause adjustment of the valuation to date, such equity investments are held at cost. These technology investments totaled approximately $8.6 millionand ~~$3.85~~$9.0 million as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. These investments are classified within Long-Term Investments in the consolidated balance sheet.

Assets or liabilities that have recurring fair value measurements are shown below as of September 30, ~~2019~~2020 and December 31, ~~2018:~~

~~As of September 30,~~ 2019:

Fair Value Measurements at Reporting Date Using
Total as of
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable
Inputs
Significant
Unobservable
Inputs
Description September 30, 2019 (Level 1) (Level 2) (Level 3)
Cash & Cash Equivalents $ 260,151,083 $ 260,151,083 $ — $ —
Short-Term Investments:
Certificate of Deposit 150,299,384 150,299,384 — —
Government Securities 38,163,353 — 38,163,353 —
Corporate Bonds 16,050,560 — 16,050,560 —
Municipal Bonds 1,671,264 — 1,671,264 —
Other 971,726 971,726 — —
Long-Term Investments:
Corporate Bonds 42,320,659 — 42,320,659 —
Municipal Bonds 40,467,299 — 40,467,299 —
Government Securities 11,637,510 — 11,637,510 —
Total $ 561,732,838 $ 411,422,193 $ 150,310,645 $ —

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of September 30, 2020:


			Fair Value Measurements at Reporting Date Using
	Total as of		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	September 30, 2020		(Level 1)		(Level 2)		(Level 3)
Cash & Cash Equivalents	$	400,499,542	$	400,499,542	$	0	$	0
Short-Term Investments:
Certificate of Deposit	1,270,465		1,270,465		0		0
Corporate Bonds	14,105,245		0		14,105,245		0
Government Securities	23,235,183		0		23,235,183		0
Municipal Bonds	11,025,844		0		11,025,844		0
Other	2,941,743		2,941,743		0		0
Long-Term Investments:
Asset Backed Securities	42,012,670		0		42,012,670		0
Certificate of Deposit	3,913,968		3,913,968		0		0
Corporate Bonds	8,975,930		0		8,975,930		0
Government Securities	0		0		0		0
Municipal Bonds	95,487,532		0		95,487,532		0


Total	$	603,468,122	$	408,625,718	$	194,842,404	$	0

As of December 31, ~~2018:~~2019:


				Fair Value Measurements at Reporting Date Using													Fair Value Measurements at Reporting Date Using
		Total as of		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs			Total as of		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	Description	December 31, 2018		(Level 1)		(Level 2)		(Level 3)		Description	December 31, 2019		(Level 1)		(Level 2)		(Level 3)
Cash & Cash Equivalents	Cash & Cash Equivalents	$	217,025,278	$	217,025,278	$	—	$	—	Cash & Cash Equivalents	$	296,321,622	$	296,321,622	$	0	$	0
Short-Term Investments:	Short-Term Investments:									Short-Term Investments:
Certificate of Deposit	Certificate of Deposit	150,299,384		150,299,384		—		—		Certificate of Deposit	50,099,795		50,099,795		0		0
Corporate Bonds										Corporate Bonds	29,219,685		0		29,219,685		0
Government Securities	Government Securities	9,176,227		—		9,176,227		—		Government Securities	58,432,823		0		58,432,823		0
Other										Other	2,631,750		2,631,750		0		0

Long-Term Investments:										Long-Term Investments:
Asset-backed Securities										Asset-backed Securities	25,791,029		0		25,791,029		0
Certificate of Deposit										Certificate of Deposit	3,557,798		3,557,798				0
Corporate Bonds	Corporate Bonds	6,967,700		—		6,967,700		—		Corporate Bonds	22,815,998		0		22,815,998		0
Other		2,219,688		2,219,688		—		—
Long-Term Investments:
Corporate Bonds		60,369,930		—		60,369,930		—

Governmental Securities										Governmental Securities	6,088,190		0		6,088,190		0
Municipal Bonds	Municipal Bonds	18,025,432		—		18,025,432		—		Municipal Bonds	72,638,690		0		72,638,690		0
Government Securities		56,483,720		—		56,483,720		—
Total	Total	$	520,567,359	$	369,544,350	$	151,023,009	$	—	Total	$	567,597,380	$	352,610,965	$	214,986,415	$	0

The amortized cost, unrealized gains and losses, and market value of investment securities are shown as of September 30, ~~2019~~2020 and December 31, ~~2018:~~

~~As of September 30,~~ 2019:

Unrealized
Cost Gains Losses Market Value
Short-Term Investments:
Certificate of Deposit $ 150,299,384 $ — $ — $ 150,299,384
Government Securities 38,067,382 97,271 (1,300) 38,163,353
Municipal Bonds 1,673,133 13,163 (15,032) 1,671,264
Corporate Bonds 15,955,794 94,766 — 16,050,560
Other 971,726 — — 971,726
Long-Term Investments:
Corporate Bonds 41,191,483 1,130,771 (1,595) 42,320,659
Municipal Bonds 39,170,735 1,296,564 — 40,467,299
Government Securities 11,539,947 97,563 — 11,637,510
Total $ 298,869,584 $ 2,730,098 $ (17,927) $ 301,581,755

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of September 30, 2020:


			Unrealized
	Cost		Gains		Losses		Market Value
Short-Term Investments:
Certificate of Deposit	$	1,252,187	$	18,278	$	0	$	1,270,465
Corporate Bonds	13,970,360		134,885		0		14,105,245
Government Securities	23,105,527		129,656		0		23,235,183
Municipal Bonds	10,864,899		160,945		0		11,025,844
Other	2,941,743		0		0		2,941,743
Long-Term Investments:
Asset Backed Securities	41,521,603		1,086,633		(595,566)		42,012,670
Certificate of Deposit	3,754,312		159,656		0		3,913,968
Corporate Bonds	8,598,910		377,020		0		8,975,930

Municipal Bonds	89,916,703		5,580,670		(9,841)		95,487,532
Total	$	195,926,244	$	7,647,743	$	(605,407)	$	202,968,580

As of December 31, ~~2018:~~2019:


				Unrealized											Unrealized
		Cost		Gains		Losses		Market Value			Cost		Gains		Losses		Market Value
Short-Term Investments:	Short-Term Investments:									Short-Term Investments:
Certificate of Deposit	Certificate of Deposit	$	150,299,384	$	—	$	—	$	150,299,384	Certificate of Deposit	$	50,099,795	$	0	$	0	$	50,099,795
Corporate Bonds										Corporate Bonds	29,025,624		194,061		0		29,219,685

Government Securities	Government Securities	9,186,586		—		(10,359)		9,176,227		Government Securities	58,343,911		99,917		(11,005)		58,432,823

Corporate Bonds		6,981,305		—		(13,605)		6,967,700
Other	Other	2,219,688		—		—		2,219,688		Other	2,631,750		0		0		2,631,750
Long-Term Investments:	Long-Term Investments:									Long-Term Investments:
Asset-backed Securities										Asset-backed Securities	25,971,156		0		(180,127)		25,791,029
Certificate of Deposit										Certificate of Deposit	3,500,000		58,808		(1,010)		3,557,798
Corporate Bonds	Corporate Bonds	60,659,498		50,340		(339,908)		60,369,930		Corporate Bonds	22,306,130		509,868		0		22,815,998

Government Securities										Government Securities	6,012,705		75,485		0		6,088,190
Municipal Bonds	Municipal Bonds	17,840,518		184,914		—		18,025,432		Municipal Bonds	71,997,996		1,036,116		(395,422)		72,638,690
Government Securities		56,280,552		205,553		(2,385)		56,483,720

Total	Total	$	303,467,531	$	440,807	$	(366,257)	$	303,542,081	Total	$	269,889,067	$	1,974,255	$	(587,564)	$	271,275,758

Unrealized losses on investments as of September 30, ~~2019,~~2020, are as follows:

Aggregate Unrealized Losses Aggregate Fair Value
Less than one year $ 17,927 $ 10,055,721
Greater than one year — —
Total $ 17,927 $ 10,055,721


	Aggregate Unrealized Losses		Aggregate Fair Value
Loss duration of less than one year	$	605,407	$	24,572,356
Loss duration of greater than one year	0		0
Total	$	605,407	$	24,572,356

Unrealized losses on investments as of December 31, ~~2018,~~2019, are as follows:

Aggregate Unrealized Losses Aggregate Fair Value
Less than one year $ 365,824 $ 68,722,980
Greater than one year 433 3,000,000
Total $ 366,257 $ 71,722,980

~~ASC 320,~~ ~~Accounting for Certain Investments in Debt and Equity Securities~~, as amended, provides guidance on determining when an investment is other than temporarily impaired. NaN investment losses were considered to be other than temporary during the periods presented. The Company has the intention and current ability to hold its debt investments until the amortized cost basis has been recovered.

~~Fixed income securities as of September 30, 2019 have contractual maturities as follows:~~


~~Due within one year~~	$	~~206,184,561~~
~~Due between one and five years~~	~~59,332,380~~
~~Due over five years~~	~~35,093,088~~
	$	~~300,610,029~~


	Aggregate Unrealized Losses		Aggregate Fair Value
Loss duration of less than one year	$	587,564	$	90,721,081
Loss duration of greater than one year	0		0
Total	$	587,564	$	90,721,081

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As stated in Note 1, effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The guidance modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. The Company utilized the guidance provided by ASC 326 to determine whether any of the available-for-sale debt securities held by the Company were impaired. NaN investments were considered to be impaired during the periods presented. The Company has the intention and current ability to hold its debt investments until the amortized cost basis has been recovered.

Fixed income securities as of September 30, 2020 have contractual maturities as follows:


Due within one year	$	49,192,972
Due between one and five years	30,466,413
Due over five years	113,325,115
	$	192,984,500

(5) Inventories

Inventories consisted of the following at the respective balance sheet dates:


		September 30, 2019		December 31, 2018			September 30, 2020		December 31, 2019
Raw materials	Raw materials	$	158,436,983	$	139,058,541	Raw materials	$	160,155,658	$	164,974,553
Work-in-process	Work-in-process	32,096,512		35,386,615		Work-in-process	30,308,212		33,069,255
Finished goods	Finished goods	48,143,300		50,836,443		Finished goods	42,894,232		50,898,047
Total Inventory	Total Inventory	$	238,676,795	$	225,281,599	Total Inventory	$	233,358,102	$	248,941,855

(6) Earnings Per Share

The Company has unvested share-based payment awards with a right to receive non-forfeitable dividends, which are considered participating securities under ASC 260, Earnings Per Share. The Company allocates earnings to participating securities and computes earnings per share using the two-class method. Under the two-class method, net income per share is computed by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, net income is allocated to both common shares and participating securities based on their respective weighted average shares outstanding for the period. For a period of net loss, net loss is not allocated to participating securities.

The following table sets forth the computation of basic and diluted net income per common share under the two-class method for the three and nine months ended September 30, 2020 and September 30, 2019:

Three Months Ended September 30, Nine Months Ended September 30,
2019 2019
Basic Earnings Per Share
Net Income $ 111,897,852 $ 325,136,888
Less: Allocated to participating securities 1,389,659 3,699,548
Net Income available to common shareholders $ 110,508,193 $ 321,437,340
Basic weighted average shares outstanding 251,075,859 252,811,950
Net Income per share - Basic $ 0.44 $ 1.27
Diluted Earnings Per Share
Allocation of Net Income used in basic computation $ 110,508,193 $ 321,437,340
Reallocation of undistributed earnings 6,051 15,389
Net Income available to common shareholders - Diluted $ 110,514,244 $ 321,452,729
Number of shares used in basic computation 251,075,859 252,811,950
Additional weighted average dilutive common stock equivalents 1,503,123 1,455,901
Diluted weighted average shares outstanding 252,578,982 254,267,851
Net income per share - Diluted $ 0.44 $ 1.26
Shares related to stock plans not included in diluted average common shares outstanding because their effect would be anti-dilutive 3,054 170,386

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Basic Earnings Per Share
Net (Loss) Income	$	117,092,602	$	111,897,852	$	204,224,370	$	325,136,888
Less: Dividends and undistributed earnings allocated to participating securities	1,697,281		1,389,659		2,906,048		3,699,548
Net (Loss) Income available to common shareholders	$	115,395,321	$	110,508,193	$	201,318,322	$	321,437,340

Basic weighted average shares outstanding	241,898,117		251,075,859		243,240,699		252,811,950
Net (Loss) Income per share - Basic	$	0.48	$	0.44	$	0.83	$	1.27

Diluted Earnings Per Share
Allocation of Net (Loss) Income used in basic computation	$	115,395,321	$	110,508,193	$	201,318,322	$	321,437,340
Reallocation of undistributed earnings	4,742		6,051		6,731		15,389
Net (Loss) Income available to common shareholders - Diluted	$	115,400,063	$	110,514,244	$	201,325,053	$	321,452,729

Number of shares used in basic computation	241,898,117		251,075,859		243,240,699		252,811,950
Additional weighted average dilutive common stock equivalents	918,950		1,503,123		1,026,916		1,455,901
Diluted weighted average shares outstanding	242,817,067		252,578,982		244,267,615		254,267,851

Net (Loss) Income per share - Diluted	$	0.48	$	0.44	$	0.82	$	1.26

Shares related to stock plans not included in diluted average common shares outstanding because their effect would be anti-dilutive	412,775		3,054		412,775		170,386

(7) Stock-Based Compensation Plans

As of September 30, ~~2019,~~2020, the Company had 2 equity incentive plans, which include the Gentex Corporation 2019 Omnibus Incentive Plan ("2019 Omnibus Plan"), and an employee stock purchase plan. Those plans and any prior material amendments thereto have previously been approved by shareholders.

~~In February 2019, the Company's Compensation Committee and Board of Directors approved the 2019 Omnibus Plan, which was then approved by shareholders in May 2019.~~ The 2019 Omnibus Plan provides for the potential awards to: i) employees; and ii) non-employee directors of the Company or its subsidiaries, which potential awards may be stock options ~~both~~(both incentive stock options and non-qualified stock ~~options,~~options), appreciation rights, restricted stock, restricted stock units, performance share awards and performance units, and other awards that are stock-based, cash-based or a combination of both. ~~Upon shareholder approval, the~~The 2019 Omnibus Plan replaced the Company's Employee Stock Option Plan, Second Restricted Stock Plan, and Amended and Restated Non-Employee Director Stock Option Plan (the "Prior Plans"), which were also approved by shareholders. Any existing awards previously granted under the Prior Plans ~~including those made to non-officers in the first quarter of 2019,~~ remain outstanding in accordance with their terms and are governed by the Prior Plans as applicable.

Readers should refer to Note 5 of the consolidated financial statements in the Company's Annual Report on Form 10-K for the calendar year ended December 31, ~~2018,~~2019, for additional information related to the Prior Plans.

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company recognized total compensation expense for share-based payments of $6,904,725 for the three months endedSeptember 30, 2020, and total compensation expense for share-based payments of $22,865,087 for nine months ended September 30, 2020, which included approximately $4,173,710 in severance expense that was recognized during the second quarter 2020. The Company recognized compensation expense for share-based payments of $5,712,132 and $15,927,434 for the three and nine months ended September 30, 2019, ~~respectively, and $4,829,463 and $13,196,413 for~~respectively. A portion of the ~~three and nine months ended September 30, 2018, respectively.~~

~~Compensation~~compensation cost for share based payment awards is capitalized as part of ~~inventory as of September 30, 2019 and December 31, 2018 was $320,009 and $242,673, respectively.~~

inventory.

2019 Omnibus Incentive Plan

The 2019 Omnibus Incentive Plan ~~was approved by shareholders during the second quarter of 2019 (thereby replacing the Prior Plans) and~~ covers 45,000,000 shares of common stock. The purpose of the 2019 Omnibus Incentive Plan is to attract and retain employees, officers, and directors of the Company and its subsidiaries and to motivate and provide such persons incentives and rewards for performance. As of September 30, 2020, 9,191,249 shares (net of shares from canceled/expired options) have been issued under the 2019 Omnibus Plan, which includes stock options (at a set conversion rate), restricted shares, and performance share awards.

Employee Stock Options

~~The 2019 Omnibus Plan replaced the Company's shareholder approved Employee Stock Option Plan.~~

Under the 2019 Omnibus Plan and the Employee Stock Option Plan, the option exercise price equals the stock’s market price on the date of grant. The options vest after one to five years, and expire after five to ten ~~years~~ years. As of September 30, ~~2019,~~2020, there was ~~$7,235,605~~$7,153,596 of unearned compensation cost ~~related to share-based payments,~~associated with stock options granted under the 2019 Omnibus Incentive Plan and the Employee Stock Option Plan, which is expected to be recognized over the remaining vesting periods.

~~GENTEX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the indicated periods:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
		2019		2018		2019		2018			2020		2019		2020		2019
Dividend Yield ⁽¹⁾	Dividend Yield ⁽¹⁾	1.99	%	1.99	%	2.02	%	2.09	%	Dividend Yield (1)	1.98	%	1.99	%	1.99	%	2.02	%
Expected volatility ⁽²⁾	Expected volatility ⁽²⁾	24.25	%	23.32	%	23.84	%	26.65	%	Expected volatility (2)	27.72	%	24.25	%	27.38	%	23.84	%
Risk-free interest rate ⁽³⁾	Risk-free interest rate ⁽³⁾	1.55	%	2.94	%	1.85	%	2.78	%	Risk-free interest rate (3)	0.28	%	1.55	%	0.31	%	1.85	%
Expected term of options (years) ⁽⁴⁾	Expected term of options (years) ⁽⁴⁾	4.16		4.19		4.18		4.21		Expected term of options (years) (4)	4.16		4.16		4.16		4.18
Weighted-avg. grant date fair value	Weighted-avg. grant date fair value	$4.76		$4.05		$4.23		$4.70		Weighted-avg. grant date fair value	$4.64		$4.76		$4.38		$4.23

^1.Represents the Company’s estimated cash dividend yield over the expected term of option grant.

^2.Amount is determined based on analysis of historical price volatility of the Company’s common stock. The expected volatility is based on the daily percentage change in the price of the stock over a period equal to the expected term of the option grant.

^3.Represents the U.S. Treasury yield over the expected term of the option grant.

^4.Represents the period of time that options granted are expected to be outstanding. Based on analysis of historical option exercise activity, the Company has determined that all employee groups exhibit similar exercise and post-vesting termination behavior.

Restricted Shares

~~The 2019 Omnibus Plan replaced the Company's shareholder approved Second Restricted Stock Plan.~~

Restricted shares awarded under the 2019 Omnibus Plan and the Second Restricted Stock Plan entitle the shareholder to all rights of common stock ownership except that the shares may not be sold, transferred, pledged, exchanged or otherwise disposed of during the restriction period. The restriction period is determined by the Compensation Committee, appointed by the Board of Directors, but may not exceed ten years under the terms of such plans. As of September 30, ~~2019,~~2020, the Company had unearned stock-based compensation of ~~$45,627,650~~$40,755,008 associated with the restricted stock grants issued under the 2019 Omnibus Plan and the prior plan. The unearned stock-based compensation related to these grants is being amortized to compensation expense over the applicable restriction periods. Amortization expense from restricted stock grants in the three months ended September 30, 2020 was $4,366,025 and amortization expense from restricted stock grants in the nine months ended September 30, 2020 was $16,271,774, which included $4,148,477 of severance related expense that occurred in the second quarter of 2020. Amortization expense from restricted stock grants for the three and nine months ended September 30, 2019 was $3,843,962 and $9,890,137, ~~respectively, and for the three and nine months ended September 30, 2018 was $2,480,911 and $6,314,544,~~ respectively.

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Performance Shares

Performance shares awarded under the 2019 Omnibus Plan are considered performance condition awards as attainment is based on the Company's performance relative to pre-established metrics. The fair value of such performance share awards was determined using the Company's closing stock price on the date of grant. The expected attainment of the metrics for these awards is then analyzed each reporting period, and the related expense is adjusted based on expected attainment, if the then expected attainment differs from previous expectations. The cumulative effect on current and prior periods of a change in expected attainment is recognized in the period of change.

As of September 30, ~~2019,~~2020, the Company had unearned stock-based compensation of ~~$2,480,321~~$5,133,550 associated with these performance share grants. The unearned stock-based compensation related to these grants is being amortized to compensation expense over the applicable performance periods. Amortization expense from performance share grants in the three and nine months ended September 30, 2020 was $1,403,799 and $2,361,359, respectively. Amortization expense from performance share grants in the three and nine months ended September 30, 2019 was $263,392 and $633,576, respectively. ~~NaN amortization expense for performance share grants was incurred in 2018, as no such awards were issued and outstanding.~~

~~GENTEX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Employee Stock Purchase Plan

The Company has an employee stock purchase plan covering 2,000,000 shares of common stock. Under the plan, the Company sells shares at 85% of the stock’s market price at date of purchase. Under ASC 718, Compensation - Stock Compensation, the 15% discounted value is recognized as compensation expense. As of September 30, ~~2019,~~2020, the Company has issued ~~1,105,438~~1,321,981 shares under this plan.

(8) Comprehensive Income

Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. For the Company, comprehensive income represents net income adjusted for unrealized gains and losses on certain debt investments, foreign currency translation adjustments, and derivatives.

The following table presents the net changes in the Company's accumulated other comprehensive income ~~(loss)~~ by component (all amounts shown are net of tax):

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Foreign currency translation adjustments:
Balance at beginning of period $ (1,851,574) $ (194,395) $ (1,674,887) $ 645,030
Other Comprehensive loss before reclassifications (1,623,102) (1,174,213) (1,799,789) (2,013,638)
Net current-period change (1,623,102) (1,174,213) (1,799,789) (2,013,638)
Balance at end of period (3,474,676) (1,368,608) (3,474,676) (1,368,608)
Unrealized gains (losses) on available-for-sale debt securities:
Balance at beginning of period 2,350,795 (271,939) 74,549 (16,349)
Other Comprehensive income (loss) before reclassifications 657,128 (276,010) 3,106,369 33,941
Amounts reclassified from accumulated other comprehensive income (295,752) (205,433) (468,747) (770,974)
Net current-period change 361,376 (481,443) 2,637,622 (737,033)
Balance at end of period 2,712,171 (753,382) 2,712,171 (753,382)
Unrealized gains on derivatives:
Balance at beginning of period — (12,770) — (78,026)
Other comprehensive income before reclassifications — 114,889 — 175,308
Amounts reclassified from accumulated other comprehensive income — (102,119) — (97,282)
Net current-period change — 12,770 — 78,026
Balance at end of period — — — —
Accumulated other comprehensive loss, end of period $ (762,505) $ (2,121,990) $ (762,505) $ (2,121,990)

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Foreign currency translation adjustments:
Balance at beginning of period	$	(2,940,052)	$	(1,851,574)	$	(2,384,589)	$	(1,674,887)
Other Comprehensive income (loss) before reclassifications	1,823,667		(1,623,102)		1,268,204		(1,799,789)

Net current-period change	1,823,667		(1,623,102)		1,268,204		(1,799,789)
Balance at end of period	(1,116,385)		(3,474,676)		(1,116,385)		(3,474,676)

Unrealized gains on available-for-sale debt securities:
Balance at beginning of period	5,679,296		2,350,795		1,095,486		74,549
Other Comprehensive income before reclassifications	208,503		657,128		5,543,455		3,106,369
Amounts reclassified from accumulated other comprehensive income	(324,354)		(295,752)		(1,075,496)		(468,747)
Net current-period change	(115,851)		361,376		4,467,959		2,637,622
Balance at end of period	5,563,445		2,712,171		5,563,445		2,712,171







Accumulated other comprehensive income (loss), end of period	$	4,447,060	$	(762,505)	$	4,447,060	$	(762,505)

The following table presents details of reclassifications out of accumulated other comprehensive income for the three and nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019.


Details about Accumulated Other Comprehensive Income Components	Details about Accumulated Other Comprehensive Income Components	Amounts Reclassified from Other Comprehensive Income														Affected Line item in the Statement of Consolidated Income		Details about Accumulated Other Comprehensive Income Components	Amounts Reclassified from Other Comprehensive Income			Affected Line item in the Statement of Consolidated Income
		Three Months Ended September 30,						Nine Months Ended September June 30,									Three Months Ended September 30,				Nine Months Ended September 30,
		2019		2018		2019		2018				2020		2019			2020		2019
Unrealized gains on available-for-sale debt securities	Unrealized gains on available-for-sale debt securities										Unrealized gains on available-for-sale debt securities
Realized gain on sale of securities	Realized gain on sale of securities	$	374,370	$	260,042	$	593,351	$	975,917	Other income (loss), net	Realized gain on sale of securities	$	410,575	$	374,370		$	1,361,387	$	593,351	Investment income
Provision for income taxes	Provision for income taxes	(78,618)		(54,609)		(124,604)		(204,943)		Provision for income taxes	Provision for income taxes	(86,221)		(78,618)			(285,891)		(124,604)		Provision for income taxes
Total net reclassifications for the period											Total net reclassifications for the period	$	324,354	$	295,752		$	1,075,496	$	468,747	Net of tax
		$	295,752	$	205,433	$	468,747	$	770,974	Net of tax

Unrealized gains on derivatives
Realized gain on interest rate swap		$	—	$	129,265	$	—	$	123,142	Other income (loss), net
Provision for income taxes		—		(27,146)		—		(25,860)		Provision for income taxes
		$	—	$	102,119	$	—	$	97,282	Net of tax

Total net reclassifications for the period		$	295,752	$	307,552	$	468,747	$	868,256	Net of tax

(9) Debt and Financing Arrangements

On October 15, 2018, the Company entered into a ~~new~~ Credit Agreement (“Credit Agreement”) with PNC as the administrative agent and sole lender.

Pursuant to this ~~new~~ Credit Agreement, the Company has access to a $150 million senior revolving credit facility (“Revolver”). Under the terms of the Credit Agreement, the Company is entitled to further request an additional aggregate principal amount of up to $100 million, subject to the satisfaction of certain conditions. In addition, the Company is entitled to the benefit of swing loans from amounts otherwise available under the Revolver in the aggregate principal amount of up to $20 million and to request Letters of Credit from amounts otherwise available under the Revolver in the aggregate principle amount up to $20 million, both subject to certain conditions. The obligations of the Company under the Credit Agreement are not secured, but are subject to certain covenants. ~~As of September 30, 2019, there was 0 outstanding balance on the Revolver. The Revolver expires on October 15, 2023.~~

~~The Credit Agreement contains customary representations and warranties and certain covenants that place certain limitations on the Company.~~

~~As of September 30, 2019, the Company was in compliance with its covenants under the Credit Agreement.~~

During the three and nine months ended September 30, 2018, under a previous credit facility, interest expense was $0.1 million and $0.8 million, respectively, which was netted with the "Other income (loss), net" section of the ~~Unaudited Consolidated Statements of Income~~.

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

During the three months ended September 30, 2020, the Company made principal repayments of $50 million, plus accrued interest, on the Revolver. The Company used cash and cash equivalents to fund the payments. As of September 30, 2020, there was an outstanding balance of $25 million on the Revolver. The Company has the ability and intent to repay the full outstanding balance using cash, and anticipates paying the remaining balance during the fourth quarter of 2020; therefore, this balance has been classified as a current liability. The Revolver expires on October 15, 2023.

As of September 30, 2020, the borrowing rate on its Revolver is derived from the one month LIBOR, and based on the Company's leverage ratio as of September 30, 2020, the interest rate on its borrowings is equal to 1.03%. During the three and nine months ended September 30, 2020, interest expense was $0.2 million and $0.6 million, respectively, which was recorded with the "Other income (loss), net" section of the Unaudited Consolidated Statements of Income. Based on the loan balance as of September 30, 2020, a 1 percent increase in the Company's borrowing rate would increase net interest expense paid by the Company on its borrowings by approximately $0.1 million on an annual basis.

The Credit Agreement contains customary representations and warranties and certain covenants that place certain limitations on the Company.

As of September 30, 2020, the Company is in compliance with its covenants under the Credit Agreement.

(10) Equity

The decrease in common stock during the nine months ended September 30, ~~2019,~~2020, was primarily due to the repurchases of ~~11.4~~8.2 million shares, partially offset by the issuance of ~~5.1~~1.9 million shares of the Company’s common stock under the Company’s stock-based compensation ~~plans.~~plans and the issuance of 0.1 million shares of the Company's common stock as part of the acquisition of Vaporsens (see Note 16 for more information). The total net decrease was ~~6.3~~6.2 million shares.

The Company announced a $0.005 (1/2 cent) per share increase in its quarterly cash dividend rate during the first quarter of ~~2019.~~2020. As such, the Company recorded a cash dividend of ~~$0.115~~$0.120 per share during the third quarter of ~~2019~~2020 as compared to a cash dividend of ~~$0.110~~$0.115 per share during the third quarter of ~~2018.~~2019. The third quarter ~~2019~~2020 dividend of ~~$29.1~~$29.4 million was declared on August ~~27, 2019,~~31, 2020, and was paid on October ~~23, 2019.~~21, 2020.

(11) Contingencies

The Company is periodically involved in legal proceedings, legal actions and claims arising in the normal course of business, including proceedings relating to product liability, intellectual property, safety and health, employment, regulatory, and other matters. Such matters are subject to many uncertainties and outcomes are not predictable. The Company does not believe, however, that at the current time any of these matters constitute material pending legal proceedings that will have a material adverse effect on the financial position or future results of operations or cash flows of the Company.

(12) Segment Reporting

The Company's automotive segment develops and manufactures digital vision and connected car products and electronics, including: automatic-dimming rearview mirrors with and without electronic features; non-auto dimming rearview mirrors with and without electronic features; and other electronics. The Company also develops and manufactures variably dimming windows for the aerospace industry and fire protection products for the commercial construction industry, which are combined into the "Other" segment. During the second quarter of 2020, the Company also acquired Vaporsens, which specializes in nanofiber chemical sensing research and development, which was also combined in the "Other" segment, as shown below. Further information in regards to the Vaporsens transaction is included in Note 16 of the financial statements.

GENTEX CORPORATION AND SUBSIDIARIES

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Revenue:
Automotive Products $ 464,280,707 $ 449,184,447 $ 1,376,704,413 $ 1,348,395,245
Other 13,480,710 11,068,986 38,357,355 32,259,733
Total $ 477,761,417 $ 460,253,433 $ 1,415,061,768 $ 1,380,654,978
Income from operations:
Automotive Products $ 123,342,538 $ 124,351,499 $ 364,590,462 $ 373,071,852
Other 4,793,142 3,076,412 13,046,517 9,554,396
Total $ 128,135,680 $ 127,427,911 $ 377,636,979 $ 382,626,248
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenue:
Automotive Products	$	464,673,587	$	464,280,707	$	1,126,597,020	$	1,376,704,413
Other	9,964,997		13,480,710		31,728,846		38,357,355
Total	$	474,638,584	$	477,761,417	$	1,158,325,866	$	1,415,061,768
Income from operations:
Automotive Products	$	138,428,628	$	123,342,538	$	233,149,936	$	364,590,462
Other	424,261		4,793,142		3,991,864		13,046,517
Total	$	138,852,889	$	128,135,680	$	237,141,800	$	377,636,979

(13) Income Taxes

The effective tax rate was ~~15.9%~~17.1% in the nine months ended September 30, ~~2019~~2020 compared to ~~15.2%~~15.9% for the same period in ~~2018.~~2019. Generally, effective tax rates for these periods differ from statutory federal income tax rates, due to provisions for state and local income taxes, permanent tax differences, and the foreign-derived intangible income tax deduction and research and development tax credits. ~~The increase in the effective tax rate for the nine months ended September 30, 2019 compared to the same period of 2018 was primarily~~

~~GENTEX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~due to a decrease in discrete tax benefits related to stock-based compensation in the current year and other tax planning strategies.~~

(14) Revenue

The following table shows the Company’s Automotive revenue and Other Products revenue disaggregated by geographical location for Automotive Products for the three and nine month periods ended September 30, ~~2019~~2020 and September 30, ~~2018:~~2019:


											Three Months Ended September 30,				Nine Months Ended September 30,
Revenue	Revenue	Three Months Ended September 30, 2019		Three Months Ended September 30, 2018		Nine Months Ended September 30, 2019		Nine Months Ended September 30, 2018		Revenue	2020		2019		2020		2019
Automotive Products	Automotive Products									Automotive Products
U.S.	U.S.	$	145,798,028	$	151,229,829	$	431,729,037	$	434,439,455	U.S.	$	156,521,110	$	145,798,028	$	347,952,489	$	431,729,037
Germany	Germany	74,047,596		81,621,623		225,649,215		259,057,369		Germany	56,514,969		74,047,596		153,166,702		225,649,215
Japan	Japan	60,641,977		55,363,644		172,697,963		153,843,723		Japan	64,353,263		60,641,977		152,824,143		172,697,963
Mexico	Mexico	43,884,609		28,410,998		130,473,702		73,868,425		Mexico	33,342,171		43,884,609		92,882,253		130,473,702
Other	Other	139,908,497		132,558,353		416,154,496		427,186,273		Other	153,942,074		139,908,497		379,771,433		416,154,496
Total Automotive Products	Total Automotive Products	$	464,280,707	$	449,184,447	$	1,376,704,413	$	1,348,395,245	Total Automotive Products	$	464,673,587	$	464,280,707	$	1,126,597,020	$	1,376,704,413
Other Products (U.S.)	Other Products (U.S.)	13,480,710		11,068,986		38,357,355		32,259,733		Other Products (U.S.)	9,964,997		13,480,710		31,728,846		38,357,355
Total Revenue	Total Revenue	$	477,761,417	$	460,253,433	$	1,415,061,768	$	1,380,654,978	Total Revenue	$	474,638,584	$	477,761,417	$	1,158,325,866	$	1,415,061,768

Revenue by geographic area may fluctuate based on many factors, including: exposure to local economic, political and labor conditions; a pandemic; unexpected changes in laws, regulations, trade or monetary or fiscal policy, including interest rates, foreign currency exchange rates and changes in the rate of inflation in the U.S. and other foreign countries; and tariffs, quotas, customs and other import or export restrictions and other trade barriers.

The following table disaggregates the Company’s Automotive revenue and Other revenue by major source for the three and nine month periods ended September 30, ~~2019~~2020 and September 30, ~~2018:~~

Revenue Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018
Automotive Segment
Automotive Mirrors & Electronics $ 418,746,334 $ 399,732,577 $ 1,241,147,268 $ 1,200,521,589
HomeLink Modules* 45,534,373 49,451,870 135,557,145 147,873,656
Total Automotive Products $ 464,280,707 $ 449,184,447 $ 1,376,704,413 $ 1,348,395,245
Other Segment
Fire Protection Products 5,977,245 5,918,085 18,188,744 17,010,954
Windows Products 7,503,465 5,150,901 20,168,611 15,248,779
Total Other $ 13,480,710 $ 11,068,986 $ 38,357,355 $ 32,259,733
*Excludes HomeLink revenue where HomeLink electronics are integrated into interior auto-dimming mirrors.

2019:

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
Revenue	2020		2019		2020		2019
Automotive Segment
Automotive Mirrors & Electronics	$	427,426,159	$	418,746,334	$	1,039,112,012	$	1,241,147,268
HomeLink Modules*	37,247,428		45,534,373		87,485,008		135,557,145
Total Automotive Products	$	464,673,587	$	464,280,707	$	1,126,597,020	$	1,376,704,413

Other Segment
Fire Protection Products	6,378,303		5,977,245		17,384,594		18,188,744
Windows Products	3,586,694		7,503,465		14,344,252		20,168,611
Total Other	$	9,964,997	$	13,480,710	$	31,728,846	$	38,357,355

*Excludes HomeLink revenue where HomeLink electronics are integrated into interior auto-dimming mirrors.

(15) Leases

The Company has operating leases for corporate offices, warehouses, vehicles, and other equipment, which are included within "Plant and Equipment - Net" section of the Condensed Consolidated Balance Sheets. The leases have remaining lease terms of 1 year to 5 years. The weighted average remaining lease term for operating leases as of September 30, ~~2019~~2020 was 2 years, with a weighted average discount rate of ~~2.9%~~1.2%.

Future minimum lease payments for operating leases as of September 30, ~~2019~~2020 were as follows:


Year ending December 31,	Year ending December 31,			Year ending December 31,

2019 (excluding the nine months ended September 30, 2019)		$	361,604
2020		575,861
2020 (excluding the nine months ended September 30, 2020)				2020 (excluding the nine months ended September 30, 2020)	$	394,431
2021	2021	143,581		2021	1,345,977
2022	2022	57,143		2022	825,645
2023	2023	11,130		2023	268,705
2024				2024	32,956
Thereafter	Thereafter	12,797		Thereafter	5,951
Total future minimum lease payments	Total future minimum lease payments	1,162,116		Total future minimum lease payments	2,873,665
Less imputed interest	Less imputed interest	(20,423)		Less imputed interest	(24,182)
Total	Total	$	1,141,693	Total	$	2,849,483


Reported as of September 30, ~~2019~~2020

Accrued Liabilities	$	~~870,930~~1,419,060
Other Non-Current Liabilities	~~270,763~~1,430,423
Total	$	~~1,141,693~~2,849,483

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(16) Acquisitions

On April 3, 2020, the Company acquired Vaporsens, Inc (“Vaporsens”) for $10.6 million in a stock purchase deal, which was in addition to the previous $3.0 million equity investment by the Company in Vaporsens. The Company funded the acquisition with $7.1 million in cash payments, with the remaining $3.5 million of consideration paid with common stock of the Company. Vaporsens specializes in nanofiber chemical sensing research and development, which the Company anticipates using to complement and expand its product offerings. Vaporsens is now a 100% owned subsidiary of the Company, and has been classified within the “Other” segment.

The assets acquired and liabilities assumed were recorded at fair value on the acquisition date. The Company accounted for the acquisition under the provisions of FASB ASC Topic 805, Business Combinations. There were no revenues of the business of Vaporsens which were included in the Company’s consolidated statement of income and comprehensive income for the quarter or year to date periods ended September 30, 2020.

The following table summarizes the fair values of the assets acquired, and the liabilities assumed, as of the acquisition date of April 3, 2020. The valuation process is not complete and the final determination of the fair values may result in further adjustments to the values presented below:


	Fair Value
Current Assets	$	435,722
Personal Property	562,840
Technology Licenses	245,335
In-Process R&D	11,000,000
Goodwill	3,850,711
Total assets acquired	16,094,608
Current liabilities	255,522
Deferred Tax Liability	2,220,086
Total Liabilities assumed	2,475,608
Net Assets Acquired	$	13,619,000

The allocation of the purchase price above is considered preliminary and was based upon valuation information available and estimates and assumptions made as of September 30, 2020. The Company is still in the process of verifying data and finalizing information related to the valuation and recording of identifiable intangible assets, deferred taxes, net working capital, and the resulting effects on the amount of recorded goodwill. The Company expects to finalize these matters within the measurement period, which is currently expected to remain open through the end of calendar year 2020.

On September 18, 2020, the Company acquired Air-Craftglass, a Belgian company specializing in research and development for aircraft windows, for an initial payment of $1.1 million in a stock purchase deal. The Company funded the acquisition with a cash payment from cash on hand. The transaction also included contingent consideration based on future revenues. The Company is still in the process of verifying data and finalizing information related to the valuation and recording of identifiable intangible assets, deferred taxes, net working capital, contingent consideration liability, and the resulting effects on the amount of recorded goodwill. The Company expects to finalize these matters within the measurement period, which is currently expected to remain open through the second quarter of 2021.

Air-Craftglass is now a 100% owned subsidiary of the Company, and will be classified within the “Other” segment. The assets acquired and liabilities assumed were recorded at fair value on the acquisition date. The Company accounted for the acquisition under the provisions of FASB ASC Topic 805, Business

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Combinations. There were no revenues of the business of Air-Craftglass which were included in the the Company’s consolidated statement of income and comprehensive income for the quarter or year to date periods ended September 30, 2020.

Through September 30, 2020, the Company has incurred acquisition-related costs of approximately $600,000, which has been expensed as incurred in the "Selling, general & administrative" section of its Condensed Consolidated Income Statement.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

RESULTS OF OPERATIONS:

THIRD QUARTER ~~2019~~2020 VERSUS THIRD QUARTER ~~2018~~2019

Net Sales. Net sales for the third quarter of ~~2019 increased~~2020 decreased by ~~$17.5~~$3.1 million or 4%1% when compared with the third quarter of ~~2018.~~2019.

Automotive net sales for the third quarter of ~~2019 increased 3% to $464.3~~ 2020 were $464.7million, compared with automotive net sales of ~~$449.2~~$464.3 million in the third quarter of ~~2018. This~~2019. Automotive net sales were strong during the third quarter of 2020 despite the 3% quarter over quarter ~~growth was driven primarily by a 6% quarter over quarter increase~~decrease in ~~automotive~~interior auto-dimming mirror unit ~~shipments.~~shipments, which strength was primarily driven by ongoing revenue growth of the Company's Full Display Mirror® product. The ~~6% increase~~3% decrease in automotive mirror unit shipments in the third quarter of ~~2019~~2020 to ~~10.8~~10.6 million units compared with ~~10.2~~10.8 million units in the third quarter of ~~2018,~~2019, was driven primarily ~~due to an increase of 18% for the Company's exterior auto-dimming mirrors unit shipments on~~by a 5% quarter over quarter ~~basis. The quarter over quarter growth~~decrease in ~~revenue was partially offset by Company specific product revenue headwinds of approximately 350 basis points when compared to~~international auto-dimming mirror unit shipments, stemming largely from the ~~same prior year quarter, in addition to the GM strike affecting the Company's shipments in the third quarter of 2019. The GM strike began on September 15, 2019~~COVID-19 pandemic and ~~as a result, caused approximately 200 basis points in lost revenue in the third quarter of 2019.~~related shutdowns.

The below table represents the Company's auto-dimming mirror unit shipments for the three and nine months ended September 30, ~~2019,~~2020, and ~~2018~~2019 (in thousands).


		Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended September 30,		Nine Months Ended September 30,
		2019	2018	% Change	2019	2018	% Change		2020	2019	% Change	2020	2019	% Change
North American Interior Mirrors	North American Interior Mirrors	2,139	2,108	1%	6,571	6,636	(1)%	North American Interior Mirrors	2,234	2,139	4%	5,040	6,571	(23)%
North American Exterior Mirrors	North American Exterior Mirrors	1,412	1,103	28%	3,961	2,871	38%	North American Exterior Mirrors	1,404	1,412	(1)%	3,093	3,961	(22)%
Total North American Mirror Units	Total North American Mirror Units	3,551	3,211	11%	10,532	9,507	11%	Total North American Mirror Units	3,638	3,551	2%	8,133	10,532	(23)%

International Interior Mirrors	International Interior Mirrors	5,189	5,154	1%	15,785	15,801	—%	International Interior Mirrors	4,940	5,189	(5)%	11,670	15,785	(26)%
International Exterior Mirrors	International Exterior Mirrors	2,101	1,864	13%	6,025	6,091	(1)%	International Exterior Mirrors	1,981	2,101	(6)%	7,028	6,025	17%
Total International Mirror Units	Total International Mirror Units	7,290	7,018	4%	21,810	21,892	—%	Total International Mirror Units	6,921	7,290	(5)%	18,697	21,810	(14)%

Total Interior Mirrors	Total Interior Mirrors	7,328	7,262	1%	22,356	22,437	—%	Total Interior Mirrors	7,174	7,328	(2)%	16,709	22,356	(25)%
Total Exterior Mirrors	Total Exterior Mirrors	3,513	2,967	18%	9,986	8,962	11%	Total Exterior Mirrors	3,385	3,513	(4)%	10,121	9,986	1%
Total Auto-Dimming Mirror Units	Total Auto-Dimming Mirror Units	10,841	10,229	6%	32,342	31,399	3%	Total Auto-Dimming Mirror Units	10,559	10,841	(3)%	26,830	32,342	(17)%

Note: Percent change and amounts may not total due to rounding.

Other net sales were $~~13.5~~10.0 million in the third quarter of ~~2019, an increase~~2020, a decrease of ~~22%~~26%, compared to ~~$11.1~~$13.5 million in the third quarter of ~~2018.~~2019. This ~~increase~~decrease is in large part attributable to a ~~46%~~52% quarter over quarter ~~improvement~~decline in variable dimmable aircraft windows sales, which ~~increased~~decreased to $3.6 million in the third quarter of 2020 from $7.5 million in the third quarter of ~~2019 from $5.2~~2019. Fire protection sales increased by 7% in the third quarter of 2020 to $6.4 million, compared to $6.0 million in the third quarter of ~~2018. Fire protection sales increased by 1% in the third quarter of 2019 to $6.0 million, compared to $5.9 million in the third quarter of 2018.~~2019.

Cost of Goods Sold. As a percentage of net sales, cost of goods sold decreased to 60.3% in the third quarter of 2020 versus 62.3% in the third quarter of ~~2019 versus 62.4% in the third quarter of 2018.~~ 2019.The quarter over quarter net increase in ~~the~~ gross ~~profit~~ margin was ~~primarily~~directly impacted by the ~~result of annual customer price reductions and additional tariffs enacted over the course of 2019 impacting~~increasing strength in orders during the third quarter ~~which was partially offset by improvements in product mix related to certain advance feature products~~of 2020, as well as the previously announced $35 million in annualized structural cost reductions that took place in the second quarter of 2020. Gross margin was also impacted positively by purchasing cost reductions and improvements in tariff related costs, which together were able to offset the typical impact caused by annual customer price reductions. On a quarter over quarter basis, the savings as a result of structural cost reductions that took place in the second quarter of 2020 had a positive impact of approximately 150 - 200 basis points on gross margin, and the above-referenced purchasing cost reductions and tariffs independently had a positive impact of approximately 50 - 100 basis points on gross margin, each on a quarter over quarter basis. These positive impacts were partially offset by annual customer price

reductions, which had a negative impact of approximately 200 - 250 basis points ~~and the above-referenced enacted tariffs had a negative impact of approximately 50 - 100 basis points. Purchasing cost reductions had a positive impact of approximately 100 - 150 basis points, and~~

~~product mix improvements independently had a positive impact of approximately 150 - 200 basis points~~on gross margin on a quarter over quarter basis.

Operating Expenses. Engineering, research and development ~~expenses~~ ("E, R & D") expenses for the third quarter of ~~2019 increased~~2020 decreased by 9%5% or ~~$2.5~~$1.6 million when compared with the third quarter of ~~2018,~~2019, primarily due to ~~increased staffing levels~~reductions in wages and ~~benefits, which continue to support growth and~~discretionary spending as a result of the ~~development of new business and technology advances.~~structural cost reductions that took place in the second quarter 2020.

Selling, general and administrative ("S, G & A") expenses ~~increased~~decreased by ~~22%~~5% or ~~$4.1~~$1.2 million for the third quarter of ~~2019~~2020 compared to the third quarter of ~~2018.~~2019. S, G & A expenses ~~were~~remained at ~~approximately~~ 5% of net sales in the third quarter of ~~2019, up from 4% of net sales in~~2020, similar to the third quarter of ~~2018.~~2019. S, G, & A expenses ~~increased~~decreased on a quarter over quarter basis primarily due to ~~increased headcount~~reductions in wages and other resources required to fund development and launch of new products, travel and other resources associated with mitigation of tariffs, increased legal and professional fees associated with a minor acquisition of new technology, and ongoing focus on tax planning.discretionary spending.

Total operating expenses were $49.4 million in the third quarter of 2020, which decreased by 5% or $2.8 million, from $52.2 million in the third quarter of ~~2019, which increased~~2019. The decrease in total operating expenses was primarily driven by ~~15% or $6.6 million, from $45.6 million~~reductions in ~~the third quarter of 2018.~~wages and discretionary spending, such as decreased spending for trade shows and travel expenses.

Total Other Income. Total other income for the third quarter of ~~2019~~2020 increased by ~~$0.3~~$0.6 million when compared with the third quarter of ~~2018.~~2019.

Provision for Income Taxes. The effective tax rate was ~~15.0%~~18.1% and income tax expense of $25.8 million in the third quarter of ~~2019~~2020 compared to ~~14.7%~~a 15.0% effective tax rate and income tax expense of $19.7 million for the same quarter of ~~2018. Generally,~~2019. Typically, effective tax rates for ~~these quarters~~the Company differ from statutory federal income tax rates, due to provisions for state and local income taxes, permanent tax differences, research and development tax credits and the foreign-derived intangible income tax deduction.

Net Income. Net income for the third quarter of ~~2019~~2020 was ~~$111.9~~$117.1 million, up from ~~$111.3~~a net income of $111.9 million the third quarter of ~~2018.~~2019.

Earnings Per Share. The Company had earnings per diluted share for the third quarter of 2020 of $0.48 which compared to earnings per diluted share of $0.44 for the third quarter of 2019.

NINE MONTHS ENDED SEPTEMBER 30, ~~2019~~2020 VERSUS NINE MONTHS ENDED SEPTEMBER 30, ~~2018~~2019

Net Sales. Net Sales for the nine months ended September 30, ~~2019 increased~~2020 decreased by ~~$34.4~~$256.7 million or 2%18% when compared with the same period in ~~2018.~~2019.

Automotive net sales for the first nine months of ~~2019~~2020 were ~~$1.38~~$1.13 billion, ~~up 2%~~down 18% compared with automotive net sales of ~~$1.35~~$1.38 billion for the first nine months of ~~2018,~~2019, driven by a 3%17% period over period ~~increase~~decrease in automotive mirror unit shipments. North American automotive mirror shipments in the nine months ended September 30, ~~2019 increased 11%~~2020 decreased 23% to ~~10.5~~8.1 million units compared with the same period in ~~2018, primarily due to a period over period increase of 38% for North American unit shipments of the Company's exterior auto-dimming mirrors.~~

2019.

Cost of Goods Sold. As a percentage of net sales, cost of goods sold increased to ~~62.8%~~66.4% for the first nine months of ~~2019,~~2020, versus ~~62.5%~~62.8% in the same period last year. The period over period decrease in the gross profit margin was primarily the result of the Company's inability to leverage fixed overhead during the second quarter of 2020 as a result of COVID-19 related shutdowns and decreases in demand, as well as annual customer price reductions, ~~and tariffs enacted in the second half of calendar year 2018 and in 2019,~~ which ~~was~~were partially offset by improvements in product mix related to ~~certain advance feature products~~Full Display Mirror® as well as purchasing cost reductions and structural cost reductions. On a period over period basis, the inability to leverage fixed overhead had a negative impact of approximately 200 - 300 basis points, and annual customer price reductions had aan additional negative impact of approximately 150 - 200 basis points, ~~and the above-referenced enacted tariffs had a negative impact of approximately 50 - 100 basis points.~~each on gross margin. Purchasing cost reductions, ~~and~~ product mix improvements, and structural cost reductions each independently had a positive impact on gross margin on a period over period basis of approximately ~~100~~50 - ~~150~~100 basis points.

Operating Expenses. E, R & D expenses for the nine months ended September 30, ~~2019~~2020 increased 7%1% or ~~$5.7~~$0.6 million when compared with the same period last year. The increase was primarily due to severance

related costs incurred in the second quarter of 2020 and staffing levels in the first six months of 2020, which were partially offset by lower overall expense levels as a result of the COVID-19 pandemic.

S, G & A expenses for the first nine months of 2020 increased 3% or $2.2 million when compared with the same period last year, primarily due to ~~increased staffing levels~~severance related ~~to development and launch of new business.~~

~~S, G & A expenses for the first nine months of 2019 increased 13% or $7.4 million when compared with the same period last year, primarily due to increases in staffing levels~~costs, wages and benefits, ~~travel and~~ other resources

associated with mitigation of ~~tariffs,~~the impacts of the global COVID-19 pandemic, and increased legal and professional fees associated with ~~a minor acquisition~~acquisitions of new technology ~~and ongoing focus on tax planning.~~described in Note 16 of the financial statements included in this Form 10-Q.

Total Other Income. Total other income for the nine months ended September 30, ~~2019 increased by $0.5~~2020 was $9.2 million ~~when~~ compared with $9.1 million for the same period last ~~year, primarily due to lower period over period interest expense compared to the first nine months of 2018.~~year.

Provision for Income Taxes. The effective tax rate was ~~15.9%~~17.1% for the nine months ended September 30, ~~2019~~2020 compared to ~~15.2%~~15.9% for the same period of 2018. The increase in the effective tax rate for the nine months ended September 30, 2019 compared to the same period of 2018 is primarily due to a decrease in discrete tax benefits related to equity compensation in the current year.2019.

Net Income. Net income for the nine months ended September 30, ~~2019~~2020 decreased by ~~$6.5~~$120.9 million or 2%37% to ~~$325.1~~$204.2 million versus ~~$331.6~~$325.1 million in the same period last year, due to the lower net sales and the corresponding decrease in gross ~~margin and~~profit, as well as the increases in operating expenses described above.

Earnings Per Share. The Company had earnings per diluted share for the nine months ended September 30, 2020 of$0.82 which compared to earnings per diluted share of$1.26 for the nine months ended September 30, 2019, primarily as a result of the COVID-19 pandemic and the related shutdowns as explained above.

FINANCIAL CONDITION:

The Company's cash and cash equivalents as of September 30, ~~2019~~2020 were ~~$260.2~~$400.5 million, which increased ~~$43.1~~$104.2 million compared to ~~$217.0~~$296.3 million as of December 31, ~~2018.~~2019. The increase was primarily due to ~~positive~~ cash flows from operations and the draw-down of $75 million on the Company's line of credit during the first quarter of 2020 (as described in Note 9 of the financial statements included in this Form 10-Q), which was partially offset by share repurchases, dividend payments, ~~and~~ capital expenditures, and repayment of $50 million on the line of credit during the nine months ended September 30, ~~2019.~~2020.

Short-term investments as of September 30, ~~2019~~2020 were ~~$207.2~~$52.6 million, updown from ~~$169.4~~$140.4 million as of December 31, ~~2018,~~2019, and ~~Long-term~~long-term investments were ~~$103.0~~$159.0 million as of September 30, ~~2019,~~2020, compared to ~~$138.0~~$139.9 million as of December 31, ~~2018. Fluctuations~~2019. Changes in the ~~two~~investment balances were primarily driven by changes in fixed income investment maturities within the investment portfolio.

Accounts receivable as of September 30, ~~2019~~2020 increased approximately ~~$39.6~~$33.0 million compared to December 31, ~~2018,~~2019, primarily due to the ~~higher~~increase in sales during the most recently completed ~~quarter, as well as timing~~quarter. As of ~~sales within each~~September 30, 2020, all of the ~~comparative periods.~~Company's material tier one and OEM customers continue to be in good standing.

Inventories as of September 30, ~~2019~~2020 were ~~$238.7~~$233.4 million, compared to ~~$225.3~~$248.9 million as of December 31, ~~2018.~~2019, primarily due to decreases in finished goods and raw materials on hand. Throughout 2020, the Company's purchasing and supply chain teams have had to manage through supply chain stresses, which have included managing rolling shutdowns in the Company's supplier base, managing run-out situations on certain components, working through the second quarter order reductions, and now meeting rebounding demand that occurred in the third, and is expected to occur in the fourth, quarter of 2020.

Accounts payable as of September 30, ~~2019 increased~~2020 decreased approximately ~~$2.5~~$7.3 million to ~~$95.3~~$90.2 million when compared to December 31, ~~2018.~~2019, primarily driven by lower purchases from suppliers in the quarter, lower levels of capital expenditures and less discretionary spending during the quarter.

Accrued liabilities as of September 30, ~~2019~~2020 increased approximately ~~$10.6~~$46.9 million compared to December 31, ~~2018,~~2019, primarily due to an increase in accrued salaries and wages, accrued severance liabilities, and tax liabilities due to timing of certain wage and tax payments.

The current portion of long-term debt as of September 30, 2020 increased $25.0 million compared to December 31, 2019. This is a result of the draw-down of $75.0 million on the Company's $150 million line of credit during the first quarter of 2020, of which $50 million was paid off during the third quarter. See Note 9 of the financial statements included in this Form 10-Q for additional details.

Cash flow from operating activities for the nine months ended September 30, ~~2019~~2020 decreased ~~$14.3~~$54.9 million to ~~$383.9~~$329.0 million, compared with ~~$398.2~~$383.9 million during the same nine month period last year, primarily due to lower net income, ~~and~~which was partially offset by changes in working capital.

Capital expenditures for the nine months ended September 30, ~~2019~~2020 were approximately ~~$58.3~~$37.0 million, compared with approximately ~~$68.8~~$58.3 million for the same nine month period last ~~year.~~year, as a result of spending containment strategies.

The Company believes its existing and planned facilities are currently suitable, adequate, and have the capacity required for current and near-term planned business. Nevertheless, the Company continues to evaluate longer term facility needs.

The Company estimates that it currently has building capacity to manufacture approximately 33 - 36 million interior mirror units annually and approximately 14 - 17 million exterior mirror units annually, based on current product mix. The Company evaluates equipment capacity on an ongoing basis and adds equipment as needed.

Management considers the current working capital and long-term investments, in addition to internally generated cash flow, its Credit Agreement, and credit worthiness, to be sufficient to cover anticipated cash needs for the foreseeable future considering its contractual obligations and commitments.

2427

The following is a summary of working capital and long-term investments:


		September 30, 2019		December 31, 2018			September 30, 2020		December 31, 2019
Working Capital	Working Capital	$	805,191,273	$	681,769,335	Working Capital	$	738,829,396	$	778,530,092
Long Term Investments	Long Term Investments	103,025,468		137,979,082		Long Term Investments	159,011,362		139,909,323
Total	Total	$	908,216,741	$	819,748,417	Total	$	897,840,758	$	918,439,415

The decrease in working capital as of September 30, 2020 is primarily due to lower sales and lower net income, as well as share repurchases, dividend payments and capital expenditures. In order to continue to maintain flexibility and liquidity during the COVID-19 pandemic, in the first quarter of 2020 the Company drew-down $75 million on its line of credit, of which $50 million was paid off in the third quarter of 2020, which is classified as short-term debt as discussed in Note 9 of the financial statements included in this Form 10-Q. The Company believes it has the ability to repay the remaining balance in the fourth quarter of 2020.

The Company has a previously announced share repurchase plan under which the Board of Directors has authorized the repurchase of shares of the Company's common stock, which remains a part of the broader publicly disclosed capital allocation strategy. ~~As previously disclosed,~~During the third quarter of 2020, the Company ~~intends to continue to~~repurchased 1,175,756 shares under the share repurchase ~~additional shares of common stock in the future in support of the capital allocation strategy, but~~plan. Future share repurchases may vary from time to time and will take into account macroeconomic events (including the COVID-19 pandemic), market trends, and other factors the Company deems appropriate (including the market price of the stock, anti-dilutive effect of repurchases, and available cash). During the ~~three and~~ nine months ended September 30, ~~2019,~~2020, the Company repurchased ~~3,569,577 and 11,369,224 shares, respectively.~~8,194,788 shares. The Company has ~~22,472,033~~11,870,531 shares remaining under the plan as of September 30, ~~2019,~~2020, as is further detailed in Part II, Item 2 of this Form 10-Q.

BUSINESS UPDATE

~~The Company's overall revenue growth during~~For the third quarter of ~~2019 out-paced word-wide light vehicle production growth by between approximately seven and nine percent (7%-9%), in large part due to~~2020, the ~~many different product launches that have been executed in 2018 and year to date in 2019. The growth in revenue~~Company reported net sales of $474.6 million,which was ~~partially offset by Company specific product revenue headwinds~~a decrease of ~~approximately 350 basis points when~~1% compared to the same prior year quarter, in addition to the GM strike affecting the Company's unit shipments. The GM strike began on September 15, 2019 and, as a result, caused approximately 200 basis points in lost revenuenet sales of $477.8 million in the third quarter of 2019. The ~~Company's unit~~Company’s decrease of 1% in net sales was in comparison to global light vehicle production levels that dropped 4% for the third quarter of 2020 when compared to the third quarter of 2019. However, the light vehicle production declines were even more severe in Europe and ~~revenue growth continue to be driven~~the Japan/Korea markets, which each experienced a 8% quarter over quarter reduction, which was partially offset by the China market increase of 11%, while North America remained relatively flat. The Company's ~~electrochromic technology,~~main revenue generating markets are North America, Europe, and Japan/Korea which were collectively down 5% quarter over quarter. The Company's overall revenue out-performance in comparison to production declines in the Company's primary underlying markets was largely due to the relative success of the Full Display Mirror^®~~, as well as other electronic features, such as the Integrated Toll Module~~^® ~~and HomeLink~~^®.

Interior and exterior auto-dimming mirrors and advanced electronic features were launched on 1623 net new ~~vehicle models~~nameplates during the third quarter of ~~2019. Advanced feature~~2020, net of previously announced losses. Of these new launches in the third quarter of 2020, approximately 50% contained advanced features, which was primarily driven by HomeLink®, Integrated Toll Module®, and Full Display Mirror®.

Despite challenging economic conditions created by the COVID-19 pandemic, the base inside auto-dimming mirror launches included new models in all of the Company's major markets, while advanced feature launches were led by new ~~launches of~~models for both HomeLink^®, where there were 7 net new nameplate launches. During the third quarter of 2019 the Company launched base interior auto-dimming mirrors on 5 new nameplates for domestic China automaker customers. These nameplate launches represent further penetration of the Company's core auto-dimming technology into the China market.Integrated Toll Module®,and Full Display Mirror®.

PRODUCT UPDATE

The Full Display Mirror^® began production in the fourth quarter of 2015. Current automotive design trends are yielding vehicles with small rear windows that are often further obstructed by headrests, passengers, and roof support pillars which can significantly hinder the mirror’s rearward view. The Company's Full Display Mirror^® is an intelligent rear vision system that uses a custom, internally or externally mounted video camera and mirror-integrated video display to optimize a vehicle driver’s rearward view. This rear vision system consists of a hybrid Full Display Mirror^® that offers bi-modal functionality. In mirror mode, the product functions as an auto-dimming rearview mirror which means that during nighttime driving, digital light

sensors talk to one another via a microprocessor to automatically darken the mirror when glare is detected. With the flip of a switch, the mirror enters display mode, and a clear, bright display appears through the mirror’s reflective surface, providing a wide, unobstructed rearward view. The bi-modality of the Full Display Mirror^® is essential, because in the event of any failure of the camera or display, the product is able to function as a mirror, which meets long-standing safety requirements in the automotive industry. In addition, the driver has the ability to switch between modes to accommodate usage preferences for various weather conditions, lighting conditions, and driving tasks.

In the first quarter of 2020, the Company announced Aston Martin at CES, and began shipping to Mitsubishi, as OEMs for Full Display Mirror

®. As of the third quarter of ~~2019,~~2020, the Company is shipping production Full Display Mirrors^® to ~~five~~eight automaker customers, which are General Motors, Subaru, Toyota, Nissan, ~~and Jaguar Land Rover. The launches for~~ Jaguar Land Rover, ~~are~~Mitsubishi, Aston Martin, and FCA. As of the ~~first launches with a European based OEM and include product shipments that will be used for global applications on these vehicles. In~~end of the third quarter of ~~2019, the Company launched one additional nameplate, which means~~2020, the Company is ~~currently~~ shipping ~~on 31 vehicle nameplates for~~ Full Display Mirror^®~~. During the third~~on 50 nameplates, of which 18 nameplates were launched during 2020. The second quarter launch of ~~2019,~~ the ~~Company was also able to secure its 10th OEM for~~ Full Display Mirror^®. for the Toyota Harrier was the first Full Display Mirror~~The Company continues~~® to ~~see interest~~launch with Digital Video Recording ("DVR") capability. This mirror and system launched in the Japan market, and combine the superior functionality of the Full Display Mirror® with the added capability to record video from ~~other automotive customers~~the rearward facing and forward-facing cameras simultaneously. Per OEM request, the data is ~~negotiating~~stored to an SD storage card. This integrated solution provides consumers with ~~other customers on an on-going basis.~~the features they want, while allowing the OEM to control the integration and execution in the vehicle. The Company remains confident that on-going discussions with certain other customers, in the future, may cause such customers to consider adding the Full Display Mirror^® into their product road-map for future vehicles.

In 2017, the Company introduced a new three-camera rear vision system that streams rear video in multiple composite views to its Full Display Mirror^®. The Company believes it is the industry’s first practical and comprehensive rear vision solution designed to meet automaker, driver, safety and regulatory requirements. The Company's rear vision system, known generally as a camera monitoring system ("CMS"), uses three cameras to provide a comprehensive view of the sides and rear of the vehicle. The side-view cameras are discretely housed in downsized, automatic-dimming exterior mirrors. Their video feeds are combined with that of a roof-mounted or rear window based camera and stitched together into multiple composite views, which are streamed to the driver using the Full Display Mirror^®. The system’s modular nature lets the automaker customize functionality while offering it as an affordable, optional feature thereby enhancing safety by allowing the system to fail safe. During any failures due to weather conditions or otherwise that disrupt the digital view, drivers can still safely use the interior and exterior mirrors. The system also supports user preference by permitting drivers to use standard mirror views, camera views, or both. The system can also be tuned to meet the various regulatory field-of-view requirements around the world by using different types of flat and curved glass, combined with simple alterations to the video viewing modes. Downsized exterior mirrors provide automakers with significant weight savings and fuel efficiency improvements. To further enhance safety, the Company's CMS solution can also work in conjunction with a vehicle’s side blind zone warning system. When a trailing vehicle enters a side blind zone, a warning indicator illuminates in both the interior and exterior mirrors while the corresponding side-view video feed appears in the display until the vehicle passes. In January 2020, the Company announced a collaboration with Aston Martin to bring CMS to future Aston Martin vehicles.

On March 31, 2014, the Alliance of Automobile Manufacturers petitioned the National Highway Traffic Safety Administration ("NHTSA") to allow automakers to use cameras as an option to replace conventional rearview mirrors within the United States. ~~NHTSA responded to this petition on June 30, 2016 with a letter requesting additional information, and noted on October 10, 2019 that NHTSA had not received a complete response to the letter.~~ At the annual SAE Government-Industry Meeting in January 2017, NHTSA requested that SAE develop Recommended Procedures for test protocols and performance criteria for CMS that would replace mirror systems on light vehicles in the U.S. market. SAE assigned the task to the Driver Vision Committee, and the SAE Driver Vision Committee created a CMS Task Force to draft the Recommended Procedures. In the second half of 2018, the Office of Management and Budget published its regulatory and deregulatory agenda, which included a reference to a prerule stage for NHTSA related to amending the rear visibility standard to allow the option for camera-monitor systems to replace mirrors. Also, NHTSA published a report dated October 2018 related to camera monitoring systems for outside mirror replacements. On October 10, 2019, an Advanced Notice of Proposed Rulemaking (ANPRM) was published seeking public comment on permitting camera-based rear visibility systems, as an alternative to inside and outside rearview mirrors required under Federal motor vehicle safety standard (FMVSS) No. 111, “Rear Visibility,” which currently requires that vehicles be equipped with rearview mirrors to provide drivers with a view of objects that are to their side or to their side and rear. This ANPRM builds on NHTSA's prior efforts to obtain supporting technical information, data, and analysis on CMS so that the agency can determine whether these systems can provide the same level of safety as the rearview mirrors currently required under FMVSS No. 111. The ANPRM states that one reason

NHTSA is seeking additional information is because research conducted by NHTSA and others between 2006 and 2017 has consistently shown that prototype and preproduction camera-based rear visibility systems can exhibit safety-relevant performance issues.

On October 18, 2019, a petition for temporary exemption from FMVSS 111 submitted by Audi of America was published requesting NHTSA to grant a two-year exemption to sell up to 2,500 vehicles for each twelve month period (up to 5,000 vehicles) that are equipped with camera monitoring systems and do not include FMVSS 111 compliant outside mirrors.

In July 2016, a revision to UN-ECE Regulation 46 was published with an effective date of June 18, 2016, which allows for CMS to replace mirrors in Japan and European countries. ~~As of~~Since January 2017, ~~CMS~~camera monitoring systems are also permitted as an alternative to replace mirrors in the Korean market. Notwithstanding the foregoing, the Company continues to believe rearview mirrors provide a robust, simple and cost effective means to view

the surrounding areas of a vehicle and remain the primary safety function for rear ~~vision.~~vision today. Cameras when used as the primary rear vision delivery mechanism have some inherent limitations such as: electrical failure; cameras being blocked or obstructed; depth perception challenges; and viewing angles of the camera. Nonetheless, the Company continues designing and manufacturing not only rearview mirrors, but CMOS imagers and video displays as well. The Company believes that combining video displays with mirrors may well provide a more robust product by addressing all driving conditions in a single solution that can be controlled by the driver. As noted, the Company is currently in production with a rear vision camera system that streams rear video to a rearview-mirror-integrated display using the Company's Full Display Mirror^®. The Company's CMS solution uses three cameras to provide a comprehensive view of the sides and rear of the vehicle. The Company also continues ~~to develop~~development in the areas of imager performance, camera dynamic range, lens design, image processing from the camera to the display, and camera lens cleaning. The Company acknowledges that as such technology evolves over time, such as cameras replacing mirrors and/or autonomous driving, there could be increased competition.

The Company's HomeLink^® products are the auto industry's most widely used and trusted car-to-home communication system, with an estimated 50 million units on the road. The system consists of two or three in-vehicle buttons that can be programmed to operate garage doors, security gates, home lighting, and other radio-frequency-controlled devices. During the first quarter of 2017, the Company demonstrated the next generation of HomeLink^®, commonly referred to as HomeLink Connect^TM® which uses both RF and wireless cloud-based connectivity to deliver complete vehicle-to-home automation. With ~~the~~ HomeLink Connect^TM®, a HomeLink^® button press communicates with the HomeLink Connect^TM® app on the user’s ~~smartphone via Bluetooth Low Energy.~~smartphone. The app contains predefined, user-programmed actions, from single device operations to entire home automation scenes. The app, in turn, communicates to the home’s smart hub over the cloud ~~server network and~~ activates the appropriate devices, including security systems, door locks, thermostats, lighting, and other home automation devices, providing comprehensive vehicle-to-home automation. The ability to prepare the home for arrival or departure can occur with one button press. For the automaker, it allows them to offer a customizable, yet proven solution without the engineering effort or security concerns associated with integrating ~~the~~3rd party software into the vehicle’s computer network. The Company also continues to work on providing HomeLink^® applications for alternative automobile and vehicle types which include but are not limited to motorcycles, mopeds, snowmobiles, tractors, combines, lawn mowers, loaders, bulldozers, road-graders, backhoes and golf carts. The Company further continues to work with compatibility partners for HomeLink^® applications in ~~new~~newer markets like China. The unique attributes of the China market allow for potential ~~new~~different use cases of these products and offer ~~what~~ the ~~Company believes to be a real opportunity~~potential for additional growth opportunities for the of the HomeLink^® brand and products. In 2017, the Company began its first volume production shipments of HomeLink^® units on vehicles for the China market.

In January 2016, the Company announced a partnership with TransCore to provide automobile manufacturers with a vehicle-integrated tolling solution that enables motorists to drive on nearly all U.S. toll roads without a traditional toll tag on the windshield. Currently more than 75 percent of new car registrations are in states with toll roads with over 50 million drivers accessing these roads each year. The Company signed an exclusive agreement, in the ordinary course of business, to integrate TransCore's toll module ~~technology into the Company's rearview mirrors.~~technology. In January 2017, the Company signed an extension of its agreement in the ordinary course of business, which enables the Company to offer the Integrated Toll Module system in Canada and Mexico. In September 2019, the Company signed a new agreement with TransCore, in the ordinary course of business, which extended the term of the partnership.The interior mirror is the optimal location for a vehicle-integrated toll transponder and it eliminates the need to affix multiple toll tags to the windshield and

helps automakers seamlessly integrate toll collection into the car. Since the Integrated Toll Module^® or ITM^® enables travel across almost all United States toll roads, and others in North America, motorists would no longer need multiple toll tags for different regions of the country or to manage multiple toll accounts. The Company's vehicle-integrated solution simplifies and expedites local, regional, and national travel. ITM^®provides transportation agencies with an interoperability solution without costly infrastructure changes to the thousands of miles of toll lanes throughout North America. The Company believes that this product could potentially represent another growth opportunity over the next several years.

The Company has its first OEM award of ITM^® with Audi. In the first quarter of 2019, the Company

began its first volume shipments of the ITM^® product to Audi. During the second quarter of 2019, the first consumers began registering their ITM^® systems online to activate the device and began using the system for normal tolling use. The Company ~~will~~continues to monitor and assess feedback from consumers, dealers, and the OEM in order to help others understand the use case and acceptance of this product. In late June of 2020, Audi published a press release on the 2021 Audi Q5, in which they announced it will implement the ITM® product as well. During the third quarter of 2020, the Company made its first production shipments of ITM® on 6 new platforms for Audi. Currently, the Company is shipping ITM® on 9 platforms, which are: the A4, A5, A6, A7, Q5, Q7, Q8, e-tron, and the e-tron Sportback. Over the next 18 months, the Company expects further ITM^®nameplate launches with Audi, as well as the initial launch of ITM^® at ~~two additional OEMs. These OEM launches are~~its second OEM. The launch is targeted to begin production shipments intoward the end of calendar year 2020. In April 2020, ~~or 2021 time periods.~~the Company was honored with an Automotive News PACE Award for its ITM® product, which recognizes automotive suppliers for superior innovation, technological advancement, and business performance.

Further, the Company has previously announced an embedded biometric solution for vehicles that leverages iris scanning technology to create a secure environment in the vehicle. There are many use cases for authentication, which range from vehicle security to start functionality to personalization of mirrors, music, seat location and temperature, to the ability to control transactions not only for the ITM^® system, but also the ride sharing car of the future. The Company believes iris recognition is among the most secure forms of biometric identification, with a false acceptance rate as low as one in 10 million, far superior to facial, voice, and other biometric systems. The Company's future plans include integrating biometric authentication with HomeLink^® and HomeLink Connect^TM®. The biometric system will allow HomeLink^® to provide added security and convenience for multiple drivers by activating the unique home automation presets of different authorized users. The Company announced in January 2018 that it completed an exclusive licensing agreement, in the ordinary course of business, with Fingerprint Cards AB to deploy its ActiveIRIS^® iris-scanning biometric technology in automotive applications.

In January 2018, the Company also announced that an agreement had been signed, in the ordinary course of business, to participate in a round of financing with Yonomi, the Company's partner in home automation technology. The Company is working with Yonomi as a home automation aggregation partner and the Company has developed an app and cloud infrastructure known as HomeLink Connect^TM®. As discussed above, HomeLink Connect^TM® is the home automation app that pairs with the vehicle and allows drivers to operate home automation devices from the ~~vehicle's center console display.~~vehicle. Drivers of HomeLink Connect^TM® compatible vehicles will be able to download and configure the app to control many available home automation devices and create entire home automation settings.

SmartBeam^®is the Company's proprietary high beam control system integrated into its auto-dimming mirror.SmartBeam^® Generation 4, which was developed using the fourth generation of the Company's custom designed CMOS imager, has an advanced feature set made possible by the high dynamic range of the imager including: high beam assist; dynamic forward lighting with high beams constantly on; LED matrix beam; and a variety of specific detection applications including tunnel, fog and road type as well as certain lane tracking features to assist with lighting control. The Company has the ability to package the control electronics inside of its interior rearview mirrors with a self-calibrating camera attached to the mirror mount with optimal mechanical packaging which also provides for ease of service. In addition, the Company has long been integrating its camera products to optimize performance by fusing with other systems on the vehicle, including radar, navigation, steering and related modules provided by other suppliers. This enables the Company to provide its customers with a highly customizable solution that meets their unique needs and specifications.

The European New Car Assessment Program ("Euro NCAP") provides an incentive for automobiles sold in Europe to apply safety technologies that include driver assist features such as lane detection, vehicle detection, and pedestrian detection as standard equipment. Euro NCAP compliant driver assist systems are

also capable of including high beam assist as a function. The increased application of Euro NCAP on European vehicles has had the effect of replacing, and could potentially ~~replace~~continue replacing, the Company's SmartBeam^® application on these vehicles.

On December 8, 2015 NHTSA proposed changes to the NHTSA's 5-Star Safety Ratings for new vehicles (also known as the New Car Assessment Program or NCAP) and initiated a comment period. The proposed changes will, for the first time, encompass assessment of crash-avoidance technologies, which includes lower beam headlamp performance, semi-automatic headlamp switching, and blind spot detection. NHTSA initially intended to implement the enhancements in NCAP in 2018 beginning with model year 2019 vehicles. The NCAP implementation has been delayed. Under these proposed changes, the Company believes that its SmartBeam^® technology will qualify with the semi-automatic headlamp NCAP rating system, and that its SmartBeam^® technology and exterior mirrors with blind spot alert lighting can be included in a system that qualifies with the lower beam headlamp performance and blind spot detection NCAP rating system, respectively. On October 16, 2019, NHTSA issued a press release comparing NCAP

to other regions’ version of NCAP, identified new technologies that are not currently included in NCAP, and suggested Congress legislatively direct actions to improve NCAP. In March 2020, HR 6256 was introduced, which would require NHTSA to update NCAP.

On October 12, 2018, NHTSA published a Notice of Proposed Rulemaking ("NPRM") for amendments to Federal Motor Vehicle Safety Standard ("FMVSS") No. 108: Lamps, reflective devices, and associated equipment, and initiated a comment period. The NPRM proposes amendments that would permit the certification of adaptive driving beam headlighting systems, if the manufacturer chooses to equip vehicles with these systems. NHTSA proposes to establish appropriate performance requirements to ensure the safe introduction of adaptive driving beam headlighting systems if equipped on newly manufactured vehicles. The Company believes that its dynamic SmartBeam^® lighting control system (dynamic forward lighting or DFL), which has been sold in markets outside of North America for several years, will meet the requirements of the new FMVSS 108 standards, if amended. The Company's SmartBeam^® application has and will continue to be affected by increased competition by suppliers of multi-function driver assist camera products, which are able to achieve some of the same functionality as SmartBeam^® but at a lower cost, due to other suppliers leveraging similar hardware costs, but offering products with multiple software features.

The Company previously announced that it is providing variably dimmable windows for the Boeing 787 Dreamliner series of aircraft. The Company continues to work with other aircraft manufacturers that have an interest in this technology regarding potential additional programs. In January 2019, the Company announced that its latest generation of dimmable aircraft windows will be offered as optional content on the new Boeing 777X. During the third quarter of 2019, the first production shipments of variably dimmable windows were made to Boeing for the 777X program. In January 2020, the Company announced that Airbus will also be offering the Company's dimmable aircraft windows on its aircraft with production starting in late 2020.

In January 2020 the Company unveiled an innovative lighting technology for medical applications that was co-developed with Mayo Clinic. This new lighting concept represents the collaboration of a global, high-technology electronics company with a world leader in health care. The Company's new intelligent lighting system combines ambient room lighting with camera-controlled, adaptive task lighting to optimize illumination for surgical and patient-care environments. The system was developed over an 18 month period of collaboration between Company engineers and Mayo Clinic surgeons, scientists, and operating room staff. The teams researched, designed, and rapidly iterated multiple prototypes in order to develop unique features intended to address major gaps in current surgical lighting solutions.

Throughout 2020 the Company has been working on the intelligent medical lighting system in preparation for clinical trials in order to assess system performance and work toward obtaining any necessary approvals. The Company estimates that it could take 18 to 24 months to complete these trials, before a system could be available for commercial applications.

OTHER

Automotive revenues represent approximately 97% - 98% of the Company's total revenue, consisting of interior and exterior electrochromic automatic-dimming rearview mirrors and automotive electronics.

The Company does continue to experience pricing pressure from its automotive customers and competitors, which will continue to cause downward pressure on its sales and profit margins. The Company works continuously to offset these price reductions with engineering and purchasing cost reductions, productivity improvements, and increases in unit sales volume, but there is no assurance the Company will be able to do so in the future.

Because the Company sells its products throughout the world, and automotive manufacturing is highly dependent on economic conditions, the Company can be affected by uncertain economic conditions that can reduce demand for its products. The Company has been likewise affected by the COVID-19 pandemic.

The Company believes that its patents and trade secrets provide it with a competitive advantage in dimmable devices, electronics and other ~~electronic~~ features that it offers ~~in vehicles~~for the automotive, aerospace and ~~the aerospace~~medical industry. Claims of patent infringement can be costly and time-consuming to address. To that end, the Company obtains intellectual property rights in the ordinary course of business to strengthen its intellectual property portfolio and to minimize the risk of infringement.

The Company does not have any significant off-balance sheet arrangements or commitments that have not been recorded in its consolidated financial statements.

OUTLOOK

The Company’s forecasts for light vehicle production for the fourth quarter and full year ~~of 2019~~2020 are based on IHS Markit's mid-October ~~2019~~2020 forecasts for light vehicle production in North America, Europe, China, and ~~Japan and~~ Japan/Korea. ~~Using the mid-October 2019~~Based on this information, light vehicle production ~~forecasts indicated~~ in the ~~table below,~~Company's primary markets are expected to be down 2% for the ~~Company has provided certain guidance for~~fourth quarter of 2020 versus the same quarter last year. For calendar year 2020, light vehicle production in the Company's primary markets is expected to be down 16% when compared to calendar year 2019. Fourth quarter 2020, and calendar years ~~2019~~2020 and ~~2020.~~2021, forecasted vehicle production volumes are shown below:


Light Vehicle Production (per IHS Markit Automotive mid-October light vehicle production forecast)	Light Vehicle Production (per IHS Markit Automotive mid-October light vehicle production forecast)																	Light Vehicle Production (per IHS Markit Automotive mid-October light vehicle production forecast)
(in Millions)	(in Millions)																	(in Millions)
Region	Region	4Q 2019	4Q 2018	% Change		Calendar Year 2019	Calendar Year 2018	% Change		Region	Q4 2020	Q4 2019	% Change		Calendar Year 2021	Calendar Year 2020	Calendar Year 2019		2021 vs 2020 % Change		2020 vs 2019 % Change
North America	North America	3.78	4.19	(10)	%	16.27	16.96	(4)	%	North America	3.82	3.84	(1)	%	15.90	13.00	16.32		22	%	(20)	%
Europe	Europe	5.30	5.44	(3)	%	21.21	21.99	(4)	%	Europe	5.11	5.17	(1)	%	18.97	16.37	21.14		16	%	(23)	%
Japan and Korea	Japan and Korea	3.25	3.56	(9)	%	13.18	13.20	—	%	Japan and Korea	3.13	3.22	(3)	%	11.83	11.08	13.11		7	%	(15)	%
China	China	7.06	7.12	(1)	%	24.53	26.85	(9)	%	China	7.07	7.36	(4)	%	24.18	22.84	24.67		6	%	(7)	%
Total Light Vehicle Production	Total Light Vehicle Production	19.39	20.31	(5)	%	75.19	79.00	(5)	%	Total Light Vehicle Production	19.13	19.59	(2)	%	70.88	63.29	75.24		12	%	(16)	%

Based on ~~the aforementioned IHS Markit~~this light vehicle production ~~forecasts, current forecasted product mix, expense growth estimates, actual performance through~~forecast and the ~~first nine months of 2019, and estimates regarding the impact of the GM strike~~structural changes that ~~are detailed herein,~~ the Company has made during 2020, the Company is updating previously provided ~~certain updates~~guidance estimates for the ~~fourth quarter 2019, as well as its previously announced annual~~second half of 2020. Given the magnitude of changes this year, the Company continues to believe that providing updated second half guidance ~~ranges, which are also set forth below. Guidance~~will provide a more accurate representation of the new cost structure and financial performance for the ~~fourth quarter~~remainder of ~~2019~~2020. Such guidance for the second half of 2020 reflects the Company's best estimate of the impact of the ongoing ~~GM strike,~~COVID-19 pandemic, as well as changes to the IHS Markit's estimates for light vehicle production for the ~~fourth quarter. Based on order changes the Company has seen during the end~~remainder of the third quarter and beginning of the fourth quarter of 2019 from GM, the Company estimates the impact to be approximately $7 - $8 million in lost sales, per week of the strike. Based on the lost sales to date, the Company's estimate of additional lost revenue before the GM strike ends and GM resumes full vehicle production, and changes to IHS estimates, the Company estimates that net sales will be between $430 million and $455 million for the fourth quarter of 2019.2020.

Based on the aforementioned, the Company currently estimates that top line revenue for the second half of calendar year ~~2019~~2020 will be between ~~$1.84~~$940 and ~~$1.87 billion.~~

~~The Company continues~~$960 million. Ongoing uncertainties remain around the impact of the COVID-19 pandemic on customer demand and restrictions on operations. COVID-19 has created unprecedented circumstances for the Company's industries, which included massive changes to ~~see order rates and booked business that allow for these estimates despite period-over-period year declines~~production levels at its customers, which occurred in ~~light vehicle production in its primary markets. Nevertheless,~~a very short time period. Beyond the impact of the COVID-19 pandemic, other ongoing uncertainties remain including: ~~impact of ongoing customer employee strikes;~~ light vehicle production levels; impacts of already in place and potential additional future tariffs; impacts of regulation changes; automotive plant shutdowns; supplier part shortages; vehicle sales rates in Europe, Asia and North America; OEM strategies and cost pressures; customer inventory management and the impact of potential automotive customer (including their Tier 1 suppliers) and supplier bankruptcies; work ~~stoppages,~~stoppages; etc., all of which could disrupt shipments to these customers and make forecasting difficult.

Based on updated net sales guidance for the ~~fourth quarter and~~remainder of calendar year ~~2019,~~2020, as well as actual results for the first nine months of 2020 and anticipated product mix, the Company has estimated that the gross margin ~~for the fourth quarter~~ will be between ~~35%~~39% and ~~36%. Based on actual results~~40% for the ~~first nine months~~second half of 2019, the aforementioned forecasted revenues for the remainder of 2019, anticipated product mix and anticipated tariff costs, the Company has also estimated that the gross profit margin will be between 36.6% and 37.0% for calendar year ~~2019.~~2020.

The Company ~~has estimated that its~~is updating the guidance range for operating expenses, which include E, R & D expenses and S, G & A expenses. The Company has estimated that its operating expenses are now expected to be approximately ~~$198~~$95 - ~~$200~~$100 million for the second half of calendar year ~~2019, primarily due to staffing costs, professional fees and travel expenses, which continue to support growth and the development of new business and technology advances.~~2020.

~~In light~~As part of ~~on-going demand~~the Company's renewed focus on optimizing its cost structure over the remainder of the year, the Company now anticipates that capital expenditures for the ~~Company's auto-dimming mirrors and electronics, and based on actual spending levels through the first nine months~~second half of ~~2019, the Company continues to anticipate that 2019~~

~~capital expenditures~~calendar year 2020 will be approximately ~~$90~~$25 - ~~$100~~$30 million, the majority of which will be equipment purchases. Capital expenditures in ~~the~~ calendar year ~~2019~~2020 are currently anticipated to be financed from current cash and cash equivalents on hand and cash flows from operating activities.

Based on actual results for the first nine months of ~~2019,~~2020, and expected projects in the ~~fourth quarter,~~remainder of the year, the Company ~~has estimated~~now estimates that depreciation and amortization expense for the second half of calendar year ~~2019~~2020 will be approximately ~~$104~~$50 - ~~$107~~$55 million.

The Company ~~has estimated~~now estimates its effective annual tax rate for the second half of calendar year ~~2019~~2020 to be in the range of ~~16.0%~~16% to ~~16.5%.~~ 17%, which reflects the anticipated lower discrete benefits from stock option exercises of the Company's employees and reduced foreign-derived intangible income tax benefits due to geographical mix changes within its customer base.

In accordance with the previously announced share repurchase plan, and provided that business begins to return to more normalized levels, the Company ~~intends to continue to repurchase additional shares~~will consider the appropriateness of ~~its common stock in 2019, but~~any share repurchases ~~may vary from time to time and~~for the remainder of 2020. This determination will take into account macroeconomic ~~events,~~issues (including the impact of the COVID-19 pandemic), market trends, and other factors that the Company deems appropriate (including the market price of the stock, anti-dilutive effect of repurchases, and available cash). As of September 30, 2020, the Company has 11.9 million shares remaining available for repurchase under the previously announced share repurchase plan.

~~Finally,~~Additionally, based on ~~available~~the mid-October 2020 light vehicle production ~~forecasts and current forecasted product mix,~~estimates for 2021, the Company is ~~making no changes~~re-introducing revenue guidance for 2021, despite the fact that there continues to ~~its previously announced range of~~be significant uncertainty regarding macroeconomic conditions, underlying overall consumer demand for light vehicles worldwide, and the continued impact from the COVID-19 pandemic. The Company currently estimates that revenue ~~estimates~~ for calendar year ~~2020, which continues to~~2021 will be approximately 15 - 20% higher than estimated ~~to be over and above the 2019~~ revenue ~~estimates~~ in ~~the range of 3% to 8%.~~

calendar year 2020.

3135

CRITICAL ACCOUNTING POLICIES:

The preparation of the Company’s consolidated condensed financial statements contained in this report, which have been prepared in accordance with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates. Estimates are based on historical experience and/or on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources. Historically, actual results have not been materially different from the Company’s estimates. However, actual results may differ from these estimates under different assumptions or conditions.

The Company has identified critical accounting policies used in determining estimates and assumptions in the amounts reported in its Management’s Discussion and Analysis of Financial Condition and Results of Operations in its Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019.

Item 3. Quantitative And Qualitative Disclosures About Market Risk.

The Company is subject to market risk exposures of varying correlations and volatilities, including foreign exchange rate risk and interest rate risk. Fluctuating interest rates could negatively impact the Company's financial performance due to outstanding debt and realized losses on the sale of fixed income investments and/or recognized losses due to ~~other-than-temporary~~ impairment ~~adjustment on~~of available for sale securities (mark-to-market adjustments). ~~During~~As previously disclosed in the Company's report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2019, there are no~~2020, material changes in ~~the~~ risk factors ~~previously~~ disclosed in the Company's report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2018, except as~~2019 are again set forth ~~in Item 2.~~herein.

The Company has some assets, liabilities and operations outside the United States, including euro-denominated accounts, which currently are not significant overall to the Company as a whole. Because the Company sells its automotive mirrors throughout the world, and automotive manufacturing is highly dependent on general economic conditions, the Company ~~could~~has been and will continue to be affected by uncertain economic conditions in North American and foreign markets that ~~can~~have and will continue to reduce demand for its products.

Item 4. Controls And Procedures.

Evaluation of Disclosure Controls and Procedures.

Under the supervision of, and with the participation of management, the Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, ~~2019,~~2020, and have concluded that as of that date, the Company's disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended September 30, ~~2019~~2020 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

SAFE HARBOR STATEMENT:

This Quarterly Report contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements contained in this communication that are not purely historical are forward-looking statements. Forward-looking statements give the Company’s current expectations or forecasts of future events. These forward-looking statements generally can be identified by the use of words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “goal”, “hope”, “may”, “plan”, “project”, "poised", “will”, and variations of such words and similar expressions. Such statements are subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control, and could cause the Company’s results to differ materially from those described. These risks and uncertainties include, without limitation: changes in general industry or regional market conditions; changes in consumer and customer preferences for our products (such as cameras replacing mirrors and/or

autonomous driving); our ability to be awarded new business; continued uncertainty in pricing negotiations

with customers; loss of business from increased competition; changes in strategic relationships; customer bankruptcies or divestiture of customer brands; fluctuation in vehicle production schedules (including the impact of customer employee strikes); changes in product mix; raw material shortages; higher raw material, fuel, energy and other costs; unfavorable fluctuations in currencies or interest rates in the regions in which we operate; costs or difficulties related to the integration and/or ability to maximize the value of any new or acquired technologies and businesses; changes in regulatory conditions; warranty and recall claims and other litigation and customer reactions thereto; possible adverse results of pending or future litigation or infringement claims; changes in tax laws; import and export duty and tariff rates in or with the countries with which we conduct business; ~~and~~ negative impact of any governmental investigations and associated litigations including securities litigations relating to the conduct of our ~~business.~~business; and the length and severity of the COVID-19 (coronavirus) pandemic, including its impact across our business on demand, operations and the global supply chain. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or the rules of the NASDAQ Global Select Market. Accordingly, any forward-looking statements should be read in conjunction with additional information about risks and uncertainties identified herein and under the heading "Risk Factors" in the Company's latest Form 10-K filed with the SEC, which risks now include the impacts of the COVID-19 pandemic that have affected, and will continue to affect, general economic and industry conditions, customers, suppliers, and the regulatory environment in which the Company operates. Includes content supplied by IHS Markit Light Vehicle Production Forecast (October 16, ~~2019)~~2020) (http://www.gentex.com/ forecast-disclaimer).

Other Information

On November 4, 2020, Steve Downing, President and Chief Executive Officer of the Company, entered into a stock trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 providing for a third-party broker to sell shares of common stock of the Company that Mr. Downing may acquire upon the vesting of the 6,300 and 6,384 restricted shares of common stock awarded to Mr. Downing in 2016 and 2017, respectively, and in respect to 15,000 and 13,504 shares of common stock issuable upon exercise of stock options awarded to Mr. Downing in 2014 and 2015, respectively. Options will be exercised and/or shares will be sold under the stock trading plan on the open market over the period of time and according to the other parameters set forth under the stock trading plan. The stock trading plan terminates on October 15, 2021.

On November 4, 2020, Kevin Nash, Vice President of Finance and Chief Financial Officer of the Company, entered into a stock trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 providing for a third-party broker to sell shares of common stock of the Company that Mr. Nash may acquire upon the vesting of 6,552 restricted shares awarded in 2017; 3,150 restricted shares awarded in 2018; and 5,666 restricted shares in 2019; and 13,220 performance shares (payable in common stock) that were awarded in 2019, subject to certain performance conditions. This plan also provides for a third-party broker to sell 5,864 and 4,836 shares of common stock issuable upon exercise of stock options awarded to Mr. Nash in 2014 and 2015, respectively. Options will be exercised and/or shares will be sold under the stock trading plan on the open market over the period of time and according to the other parameters set forth under the stock trading plan. The stock trading plan terminates on March 15, 2022.

On November 4, 2020, Matt Chiodo, Vice President of Sales of the Company, entered into a stock trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 providing for a third-party broker to sell shares of common stock of the Company that Mr. Chiodo may acquire upon the vesting of the 5,000 restricted shares of common stock awarded to Mr. Chiodo on March 31, 2016. The shares will be sold under the stock trading plan on the open market over the period of time and according to the other parameters set forth under the stock trading plan. The stock trading plan terminates on April 14, 2021.

On November 4, 2020, Neil Boehm, Chief Technology Officer and Vice President of Engineering, entered into a stock trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 providing for a third-party broker to sell shares of common stock of the Company that Mr. Boehm may acquire upon the vesting of the 2,053 restricted shares of common stock awarded to Mr. Boehm in 2017, and in respect to 4,968 and 15,000 shares of common stock issuable upon exercise of stock options awarded to Mr. Boehm in 2016 and 2018, respectively. Options will be exercised and/or shares will be sold under the stock

3337

trading plan on the open market over the period of time and according to the other parameters set forth under the stock trading plan. The stock trading plan terminates on April 14, 2021.

Rule 10b5-1 trading plans are permitted under the Company’s insider trading policy and other policies, and, to the extent required, transactions under such trading plans will be disclosed publicly through Form 144 and/or Form 4 filings with the Securities and Exchange Commission. Except as may be required by law, the Company does not undertake any obligation to report Rule 10b5-1 plans by officers or directors of the Company in the future, or to report modifications or terminations of any such plans, whether or not any such plans were publicly announced.

The COVID-19 pandemic has had a significant impact on the macroeconomic environment and, in particular, on the Company's industries. Such impact has resultantly affected the ability of officers of the Company to achieve performance metrics under the Company's Amended and Restated Annual Incentive Performance-Based Bonus Plan ("Annual Incentive Plan") and Long-Term Incentive Plan. The performance metrics under the Annual Incentive Plan are revenue, operating income, and earnings per diluted share and the performance metrics under the Long-Term Incentive Plan are EBITDA and return on invested capital, over the performance period. Such performance metrics under the Annual Incentive Plan are intended to measure performance and align with overall business strategy, while the performance metrics under the Long-Term Incentive Plan are intended to drive profitable sales growth, optimize cost structure, and ensure capital is used in an effective manner, so as to provide shareholder returns.

The Compensation Committee of the Company designed the performance metrics to property incentivize officers to perform well operationally and deliver shareholder returns. The Compensation Committee has met in 2020 to discuss the fact that macroeconomic factors and industry conditions, including significantly decreased light vehicle production, outside of the control of management have so impacted the ability to achieve targets for the performance metrics (set in February of 2020 before the COVID-19 pandemic was widespread), that such performance metrics may not now properly incentivize and award officers of the Company as intended by the Compensation Committee and the Board of Directors. As such, the Compensation Committee has been assessing any potential changes to officer compensation to ensure the proper incentives for performance remain in place, as well as to recognize and reward officers for the benefit of the Company's shareholders and other stakeholders. The Compensation Committee has not yet made any decisions nor has it made any recommendations to the Board of Directors. With that said, the Compensation Committee will continue to discuss and consider whether changes to officer incentives are appropriate and necessary, whether any changes (such as adjustments to targets for performance metrics) can be done in an objective manner (so as to factor in external factors outside of management's control such as the percentage decline in light vehicle production), and how any such changes would be implemented.

PART II—OTHER INFORMATION

Item 1A. Risk Factors.

Information regarding risk factors appears in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part I – Item 2 of this Form 10-Q and in Part I – Item 1A – Risk Factors of the Company’s report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019. There have been no material changes ~~from~~to the risk factors previously disclosed in the Company’s report on Form 10-K for the year ended December 31, ~~2018, except to the extent~~2019, as described in Part I – Item 2 and Item 3 of this Form ~~10-Q.~~10-Q, and otherwise herein, as well as the addition of the following risk factor.

Automotive Industry and General Economic Risks

The COVID-19 pandemic has already significantly impacted worldwide economic and industry conditions and has had and may continue to have a material adverse effect on our business, financial condition, and/or results of operations. The COVID-19 pandemic began to materially impact the Company's operations late in the first quarter of 2020 and continues to affect our business, financial condition, and/or results of operations, by virtue of governmental authorities imposing mandatory closures, work-from-home orders, and social disntancing protocols, as well as voluntary closures and other restrictions. Even as restrictions have eased and production has resumed by our customers in large part, production volumes have been, and are expected to continue to be, volatile.

The full extent of the effect of the COVID-19 pandemic on the Company, our customers, our supply chain, and our industries still depends on future developments, which remain highly uncertain, including the duration and severity of the current outbreak, subsequent outbreaks, and resulting actions taken by the Company or the various governments to contain or mitigate the spread of the coronavirus. These actions have already included, and could include more, work stoppages, quarantines, shutdowns, shelter-in-place orders or other limitations, which already have and could continue to: materially adversely affect the Company's ability to adequately staff and maintain our operations; impair our ability to sustain existing levels of financial liquidity; and impact the Company's business, financial condition, and/or results of operations. Additionally, if the negative global economic effects caused by the COVID-19 pandemic continue, overall customer demand may continue to decrease, which could continue to have a material and adverse effect on the Company's business, financial condition, and/or results of operations.

While we cannot predict the duration and scope of the COVID-19 pandemic, the overall negative financial impact to the Company's business, financial condition, and/or results of operations has been material, is not fully known, and is expected to last for an extended period of time.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company has a previously announced share repurchase plan under which the Board of Directors has authorized the repurchase of shares of the Company's common stock, which remains a part of the broader publicly disclosed capital allocation strategy. During the third quarter of 2020, the Company repurchased 1,175,756 shares under the share repurchase plan. As previously disclosed, the Company ~~intends to continue~~will consider the appropriateness of continuing to repurchase additional shares of common stock in the future in support of the capital allocation strategy, but share repurchases may vary from time to time and will take into account macroeconomic events (including the COVID-19 pandemic), market trends, and other factors the Company deems appropriate (including the market price of the stock, anti-dilutive effect of repurchases, and available cash). During the nine months ended September 30, ~~2019,~~2020, the Company repurchased ~~11,369,224~~8,194,788 shares. The Company has ~~22,472,033~~11.9 million shares remaining under the plan as of September 30, ~~2019.~~2020.

The following is a summary of share repurchase activity during each quarter of the nine months ended September 30, ~~2019:~~2020:

Issuer Purchase of Equity Securities
Period Total Number of Shares Purchased

Weighted
Average Price Paid Per Share
Total Number of Shares Purchased As Part of a Publicly Announced Plan or Program Maximum Number of Shares That May Yet Be Purchased Under the Plan or Program
January 2019 75,001 21.42 75,001 33,766,256
February 2019 2,499,850 20.24 2,499,850 31,266,406
March 2019 2,150,087 20.49 2,150,087 29,116,319
1st Quarter 2019 Total 4,724,938 20.37 4,724,938
April 2019 240,037 23.07 240,037 28,876,282
May 2019 1,858,307 22.20 1,858,307 27,017,975
June 2019 976,365 23.64 976,365 26,041,610
2nd Quarter 2019 Total 3,074,709 22.72 3,074,709
July 2019 380,220 27.22 380,220 25,661,390
August 2019 1,828,442 26.69 1,828,442 23,832,948
September 2019 1,360,915 27.54 1,360,915 22,472,033
3rd Quarter 2019 Total 3,569,577 27.07 3,569,577
2019 Total 11,369,224 23.11 11,369,224 22,472,033


Issuer Purchase of Equity Securities
Period	Total Number of Shares Purchased	Weighted Average Price Paid Per Share	Total Number of Shares Purchased As Part of a Publicly Announced Plan or Program	Maximum Number of Shares That May Yet Be Purchased Under the Plan or Program
January 2020	—	—	—	20,065,319
February 2020	1,945,036	29.40	1,945,036	18,120,283
March 2020	5,073,996	23.97	5,073,996	13,046,287
1st Quarter 2020 Total	7,019,032	25.48	7,019,032




2nd Quarter 2020 Total	—		—	13,046,287

July 2020	125,110	27.07	125,110	12,921,177
August 2020	525,295	27.38	525,295	12,395,882
September 2020	525,351	26.44	525,351	11,870,531
3rd Quarter 2020 Total	1,175,756	26.93	1,175,756


2020 Total	8,194,788	25.68	8,194,788	11,870,531

As of September 30, ~~2019~~2020 the Company has repurchased ~~124,527,695~~135,129,197 shares at a total cost of ~~$1,804,879,295~~$2,084,067,848 under its share repurchase plan or as otherwise previously disclosed.

Item 6. Exhibits.


See Exhibit Index on Page 3641

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GENTEX CORPORATION

Date:

November ~~1, 2019~~5, 2020

/s/ Steven R. Downing

Steven R. Downing

President and Chief Executive Officer

(Principal Executive Officer) on behalf of Gentex Corporation

Date:

November ~~1, 2019~~5, 2020

/s/ Kevin C. Nash

Kevin C. Nash

Vice President, Finance, Chief Financial Officer and Treasurer

(Principal Financial Officer and Principal Accounting Officer) on behalf of Gentex Corporation

EXHIBIT INDEX


Exhibit No.						Description


















































































10						~~Speciman Form of Gentex Corporation Non-Employee Director Restricted Stock Agreement~~
31.1						Certificate of the Chief Executive Officer of Gentex Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
31.2						Certificate of the Chief Financial Officer of Gentex Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32						Certificate of the Chief Executive Officer and Chief Financial Officer of Gentex Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						Inline XBRL Taxonomy Extension Schema
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase

3641


Part I - Financial Information			Page
Item 1.	Unaudited Consolidated Financial Statements	3
	Unaudited Condensed Consolidated Balance Sheets	3
	Unaudited Condensed Consolidated Statements of Income	4
	Unaudited Condensed Consolidated Statements of Comprehensive Income	5
	Unaudited Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2224
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3236
Item 4.	Controls and Procedures	3236

Part II - Other Information
Item 1A.	Risk Factors	3439
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3439
Item 6.	Exhibits	3440
	Signatures	3540
	Exhibit Index	3641


	Aggregate Unrealized Losses		Aggregate Fair Value
Less than one year	$	17,927	$	10,055,721
Greater than one year	—		—
Total	$	17,927	$	10,055,721