STONERIDGE INC 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE ​ ​ ​ Consolidated Financial Statements: Page Report of Independent Registered Public Accounting Firm ​ 41 Consolidated Balance Sheets as of December 31, 2020 and 2019 ​ 44 Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018 ​ 45 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018 ​ 46 Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018 ​ 47 Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2020, 2019 and 2018 ​ 48 Notes to Consolidated Financial Statements ​ 49 ​ ​ ​ Financial Statement Schedule: ​ ​ Schedule II – Valuation and Qualifying Accounts ​ 83 ​ ​ 40 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Stoneridge, Inc. ​ Opinion on the Financial Statements ​ We have audited the accompanying consolidated balance sheets of Stoneridge, Inc. and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, cash flows and shareholders’ equity for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements“). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 24, 2021 expressed an unqualified opinion thereon. ​ Basis for Opinion ​ These financial statements are the responsibility of the Company‘s management. Our responsibility is to express an opinion on the Company‘s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 41 Table of Contents ​ Critical Audit Matters ​ The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ ​ ​ ​ ​ Product warranty and recall reserves Description of the Matter ​ The Company's reserves for product warranty and recall totaled $12.7 million at December 31, 2020. As described in Note 2 to the consolidated financial statements, the Company's reserve for product warranty and recall is based on several factors, including the historical trends of units sold and payment amounts, combined with the Company’s current understanding of existing warranty and recall claims. The warranty liability requires a forecast of the resolution of existing claims as well as expected future claims on products previously sold. ​ Auditing the Company’s reserve for product warranty and recall is complex due to the measurement uncertainty associated with the estimate, management’s judgment in determining the cost and volume estimates used in the computation as well as volume and costing assumptions in determining the expected future claims on products previously sold. ​ ​ How We Addressed the Matter in Our Audit ​ We evaluated the design and tested the operating effectiveness of the Company’s controls over the product warranty and recall process. For example, we tested management review controls over the appropriateness of assumptions management used in the calculation and the completeness of warranty claims. ​ To evaluate the reserve for product warranty and recall, we performed audit procedures that included, among others, testing the completeness and accuracy of the underlying claims data and costs used in the computation of management’s estimate, performing inquiries of the Company’s quality control team, and obtaining a legal confirmation letter to evaluate the status and assessment of certain reserves. We assessed the historical accuracy of management’s product warranty and recall reserves and performed sensitivity analyses of significant assumptions to evaluate the impact to the reserve that would result from changes in the assumptions. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 42 Table of Contents ​ ​ ​ ​ ​ Description of the Matter ​ ​ Valuation of earn-out consideration ​ As discussed in Notes 4 and 10 of the consolidated financial statements, in 2017 the Company acquired the remaining 26% noncontrolling interest in Stoneridge Brazil for $1.5 million in cash along with earn-out consideration. The Company will be required to pay additional earn-out consideration, which is not capped, based on Stoneridge Brazil’s financial performance in either 2020 or 2021. The estimated fair value of the Stoneridge Brazil earn-out consideration, which approximated $5.8 million as of December 31, 2020, is based on discounted cash flows utilizing forecasted earnings before taxes, interest, depreciation, and amortization. Auditing management’s estimate of the fair value of the earn-out consideration was complex and highly judgmental due to the significant estimation required. In particular, the fair value estimate was sensitive to significant assumptions such as forecasted sales, expected operating income, and the discount rate. ​ ​ ​ ​ ​ ​ ​ How we addressed the matter in our audit ​ We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for measuring the Stoneridge Brazil earn-out consideration. This included testing management review controls over projected financial information over the Stoneridge Brazil business and other key inputs to the calculation. ​ To test the estimated fair value of the Company’s earn-out consideration, we performed audit procedures that included, among others, testing the significant assumptions discussed above and the underlying data used by the Company in its calculation. We compared the significant assumptions used by management to current industry and economic trends, changes to the company’s customer base or product mix and other relevant factors. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the calculated earn-out consideration that would result from changes in the assumptions. We also involved a valuation specialist to assist in our evaluation of the significant assumptions in the Company’s calculation, including the discount rate used in the fair value estimate. ​ ​ /s/Ernst & Young LLP ​ We have served as the Company‘s auditor since 2002. ​ ​ ​ Detroit, MI February 24, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 43 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (in thousands) 2020 2019 ​ ​ ​ ​ ​ ​ ​ ASSETS ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 73,919 ​ $ 69,403 Accounts receivable, less reserves of $ 817 and $ 1,289 , respectively ​ ​ 136,745 ​ ​ 138,564 Inventories, net ​ ​ 90,548 ​ ​ 93,449 Prepaid expenses and other current assets ​ ​ 33,452 ​ ​ 29,850 Total current assets ​ ​ 334,664 ​ ​ 331,266 Long-term assets: ​ ​ ​ ​ ​ ​ Property, plant and equipment, net ​ ​ 119,324 ​ ​ 122,483 Intangible assets, net ​ ​ 55,394 ​ ​ 58,122 Goodwill ​ ​ 39,104 ​ ​ 35,874 Operating lease right-of-use asset ​ ​ 18,944 ​ ​ 22,027 Investments and other long-term assets, net ​ ​ 53,978 ​ ​ 32,437 Total long-term assets ​ ​ 286,744 ​ ​ 270,943 Total assets ​ $ 621,408 ​ $ 602,209 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND SHAREHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Current portion of debt ​ $ 7,673 ​ $ 2,672 Accounts payable ​ ​ 86,103 ​ ​ 80,701 Accrued expenses and other current liabilities ​ ​ 52,272 ​ ​ 55,223 Total current liabilities ​ ​ 146,048 ​ ​ 138,596 Long-term liabilities: ​ ​ ​ ​ ​ ​ Revolving credit facility ​ ​ 136,000 ​ ​ 126,000 Long-term debt, net ​ ​ - ​ ​ 454 Deferred income taxes ​ ​ 12,935 ​ ​ 12,530 Operating lease long-term liability ​ ​ 15,434 ​ ​ 17,971 Other long-term liabilities ​ ​ 14,357 ​ ​ 16,754 Total long-term liabilities ​ ​ 178,726 ​ ​ 173,709 Shareholders' equity: ​ ​ ​ ​ ​ ​ Preferred Shares, without par value, 5,000 shares authorized, none issued ​ ​ - ​ ​ - Common Shares, without par value, 60,000 shares authorized, 28,966 and 28,966 shares issued and 27,006 and 27,408 shares outstanding at December 31, 2020 and 2019, respectively, with no stated value ​ ​ - ​ ​ - Additional paid-in capital ​ ​ 234,409 ​ ​ 225,607 Common Shares held in treasury, 1,960 and 1,558 shares at December 31, 2020 and 2019, respectively, at cost ​ ​ ( 60,482 ) ​ ​ ( 50,773 ) Retained earnings ​ ​ 212,342 ​ ​ 206,542 Accumulated other comprehensive loss ​ ​ ( 89,635 ) ​ ​ ( 91,472 ) Total shareholders' equity ​ ​ 296,634 ​ ​ 289,904 Total liabilities and shareholders' equity ​ $ 621,408 ​ $ 602,209 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 44 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (in thousands, except per share data) ​ ​ 2020 2019 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ ​ $ 648,006 ​ $ 834,289 ​ $ 866,199 Costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of goods sold ​ ​ ​ 493,810 ​ ​ 620,556 ​ ​ 609,568 Selling, general and administrative ​ ​ ​ 112,474 ​ ​ 123,853 ​ ​ 138,553 Gain on disposal of Non-core Products, net ​ ​ ​ - ​ ​ ( 33,599 ) ​ ​ - Design and development ​ ​ ​ 49,386 ​ ​ 52,198 ​ ​ 51,074 Operating (loss) income ​ ​ ​ ( 7,664 ) ​ ​ 71,281 ​ ​ 67,004 Interest expense, net ​ ​ ​ 6,124 ​ ​ 4,324 ​ ​ 4,720 Equity in earnings of investee ​ ​ ​ ( 1,536 ) ​ ​ ( 1,578 ) ​ ​ ( 2,038 ) Other (income) expense, net ​ ​ ​ ( 1,528 ) ​ ​ 142 ​ ​ ( 736 ) (Loss) income before income taxes ​ ​ ​ ( 10,724 ) ​ ​ 68,393 ​ ​ 65,058 (Benefit) provision for income taxes ​ ​ ​ ( 2,774 ) ​ ​ 8,102 ​ ​ 11,210 Net (loss) income ​ ​ $ ( 7,950 ) ​ $ 60,291 ​ $ 53,848 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Loss) earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ $ ( 0.29 ) ​ $ 2.17 ​ $ 1.90 Diluted ​ ​ $ ( 0.29 ) ​ $ 2.13 ​ $ 1.85 Weighted-average shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ ​ 27,025 ​ ​ 27,792 ​ ​ 28,402 Diluted ​ ​ ​ 27,025 ​ ​ 28,270 ​ ​ 29,080 ​ The accompanying notes are an integral part of these consolidated financial statements . ​ 45 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (in thousands) ​ 2020 ​ ​ 2019 ​ 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss) income ​ $ ( 7,950 ) ​ ​ $ 60,291 ​ $ 53,848 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss), net of tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation ​ ​ 2,677 ​ ​ ​ ( 5,428 ) ​ ​ ( 16,627 ) Unrealized (loss) gain on derivatives (1) ​ ​ ( 840 ) ​ ​ ​ ( 292 ) ​ ​ 435 Other comprehensive income (loss), net of tax ​ ​ 1,837 ​ ​ ​ ( 5,720 ) ​ ​ ( 16,192 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive (loss) income ​ $ ( 6,113 ) ​ ​ $ 54,571 ​ $ 37,656 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Net of tax (benefit) expense of $( 223 ) , $( 78 ) and $ 156 for the years ended December 31, 2020, 2019 and 2018, respectively. ​ The accompanying notes are an integral part of these consolidated financial statements . ​ 46 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (in thousands) 2020 2019 2018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss) income ​ $ ( 7,950 ) ​ $ 60,291 ​ $ 53,848 Adjustments to reconcile net income to net cash provided by (used for) operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation ​ ​ 27,309 ​ ​ 24,904 ​ ​ 22,786 Amortization, including accretion and write-off of deferred financing costs ​ ​ 5,926 ​ ​ 6,579 ​ ​ 6,731 Deferred income taxes ​ ​ ( 7,953 ) ​ ​ 5,586 ​ ​ 2,552 Earnings of equity method investee ​ ​ ( 1,536 ) ​ ​ ( 1,578 ) ​ ​ ( 2,038 ) Loss (gain) on sale of fixed assets ​ ​ 185 ​ ​ ( 98 ) ​ ​ 333 Share-based compensation expense ​ ​ 5,888 ​ ​ 6,191 ​ ​ 5,632 Excess tax benefit related to share-based compensation expense ​ ​ ( 46 ) ​ ​ ( 1,289 ) ​ ​ ( 1,584 ) Gain on disposal of Non-core Products, net ​ ​ - ​ ​ ( 33,599 ) ​ ​ - Property, plant and equipment impairment charge ​ ​ 2,349 ​ ​ - ​ ​ - Intangible impairment charge ​ ​ - ​ ​ - ​ ​ 202 Change in fair value of earn-out contingent consideration ​ ​ ( 3,196 ) ​ ​ 2,308 ​ ​ 213 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ ​ 4,164 ​ ​ ( 1,353 ) ​ ​ ( 3,575 ) Inventories, net ​ ​ 4,000 ​ ​ ( 15,653 ) ​ ​ ( 10,002 ) Prepaid expenses and other assets ​ ​ 1,342 ​ ​ ( 8,898 ) ​ ​ 2,291 Accounts payable ​ ​ 3,642 ​ ​ ( 6,980 ) ​ ​ 11,054 Accrued expenses and other liabilities ​ ​ ( 5,483 ) ​ ​ ( 11,906 ) ​ ​ ( 7,671 ) Net cash provided by operating activities ​ ​ 28,641 ​ ​ 24,505 ​ ​ 80,772 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INVESTING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital expenditures, including intangibles ​ ​ ( 32,462 ) ​ ​ ( 39,467 ) ​ ​ ( 29,027 ) Proceeds from sale of fixed assets ​ ​ 127 ​ ​ 382 ​ ​ 111 Insurance proceeds for fixed assets ​ ​ - ​ ​ - ​ ​ 1,403 Proceeds from disposal of Non-core Products ​ ​ - ​ ​ 34,386 ​ ​ - Investment in venture capital fund ​ ​ ( 1,550 ) ​ ​ ( 1,600 ) ​ ​ ( 437 ) Net cash used for investing activities ​ ​ ( 33,885 ) ​ ​ ( 6,299 ) ​ ​ ( 27,950 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FINANCING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving credit facility borrowings ​ ​ 71,500 ​ ​ 112,000 ​ ​ 27,500 Revolving credit facility payments ​ ​ ( 61,500 ) ​ ​ ( 82,000 ) ​ ​ ( 52,500 ) Proceeds from issuance of debt ​ ​ 41,104 ​ ​ 2,208 ​ ​ 415 Repayments of debt ​ ​ ( 36,749 ) ​ ​ ( 1,587 ) ​ ​ ( 5,071 ) Earn-out consideration cash payment ​ ​ - ​ ​ ( 3,394 ) ​ ​ - Other financing costs ​ ​ ( 1,074 ) ​ ​ ( 1,366 ) ​ ​ - Common Share repurchase program ​ ​ ( 4,995 ) ​ ​ ( 50,000 ) ​ ​ - Repurchase of Common Shares to satisfy employee tax withholding ​ ​ ( 1,773 ) ​ ​ ( 4,119 ) ​ ​ ( 4,214 ) Net cash provided by (used for) financing activities ​ ​ 6,513 ​ ​ ( 28,258 ) ​ ​ ( 33,870 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash and cash equivalents ​ ​ 3,247 ​ ​ ( 1,637 ) ​ ​ ( 3,863 ) Net change in cash and cash equivalents ​ ​ 4,516 ​ ​ ( 11,689 ) ​ ​ 15,089 Cash and cash equivalents at beginning of period ​ ​ 69,403 ​ ​ 81,092 ​ ​ 66,003 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents at end of period ​ $ 73,919 ​ $ 69,403 ​ $ 81,092 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 5,620 ​ $ 4,401 ​ $ 4,997 Cash (received) paid for income taxes, net ​ $ ( 254 ) ​ $ 12,222 ​ $ 13,213 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of non-cash activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ Adoption of ASU 2019-12 (Note 2) ​ $ 13,750 ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these consolidated financial statements . 47 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ Common ​ Number of ​ Additional ​ Common ​ ​ ​ other ​ Total ​ ​ Shares ​ treasury ​ paid-in ​ Shares held ​ Retained ​ comprehensive ​ shareholders' (in thousands) outstanding shares capital in treasury earnings loss equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ BALANCE DECEMBER 31, 2017 28,180 786 $ 228,486 $ ( 7,118 ) $ 92,264 $ ( 69,560 ) $ 244,072 Net income — — ​ — ​ — ​ 53,848 ​ — ​ 53,848 Unrealized gain on derivatives, net — — ​ — ​ — ​ — ​ 435 ​ 435 Currency translation adjustments — — ​ — ​ — ​ — ​ ( 16,627 ) ​ ( 16,627 ) Issuance of Common Shares 461 ( 461 ) ​ — ​ — ​ — ​ — ​ — Repurchased Common Shares for treasury, net ( 153 ) 153 ​ — ​ ( 1,762 ) ​ — ​ — ​ ( 1,762 ) Share-based compensation, net ​ — ​ — ​ ​ 3,161 ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,161 Cumulative effect of an accounting change — — ​ — ​ — ​ 139 ​ — ​ 139 BALANCE DECEMBER 31, 2018 28,488 478 ​ $ 231,647 ​ $ ( 8,880 ) ​ $ 146,251 ​ $ ( 85,752 ) ​ $ 283,266 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income — — ​ — ​ — ​ 60,291 ​ — ​ 60,291 Unrealized loss on derivatives, net — — ​ — ​ — ​ — ​ ( 292 ) ​ ( 292 ) Currency translation adjustments — — ​ — ​ — ​ — ​ ( 5,428 ) ​ ( 5,428 ) Issuance of Common Shares 407 ( 407 ) ​ — ​ — ​ — ​ — ​ — Repurchased Common Shares for treasury, net ( 137 ) 137 ​ — ​ ( 1,893 ) ​ — ​ — ​ ( 1,893 ) Common Share repurchase program ( 1,350 ) 1,350 ​ ( 10,000 ) ​ ( 40,000 ) ​ — ​ — ​ ( 50,000 ) Share-based compensation, net ​ — ​ — ​ ​ 3,960 ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,960 BALANCE DECEMBER 31, 2019 27,408 1,558 ​ $ 225,607 ​ $ ( 50,773 ) ​ $ 206,542 ​ $ ( 91,472 ) ​ $ 289,904 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss — — ​ — ​ — ​ ( 7,950 ) ​ — ​ ( 7,950 ) Unrealized loss on derivatives, net — — ​ — ​ — ​ — ​ ( 840 ) ​ ( 840 ) Currency translation adjustments — — ​ — ​ — ​ — ​ 2,677 ​ 2,677 Issuance of Common Shares 285 ( 285 ) ​ — ​ — ​ — ​ — ​ — Repurchased Common Shares for treasury, net ( 80 ) 80 ​ — ​ 5,286 ​ — ​ — ​ 5,286 Common Share repurchase program ( 607 ) 607 ​ 10,000 ​ ( 14,995 ) ​ — ​ — ​ ( 4,995 ) Share-based compensation, net ​ — ​ — ​ ​ ( 1,198 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,198 ) Adoption of ASU 2019-12 (Note 2) ​ — — ​ — ​ — ​ 13,750 ​ — ​ 13,750 BALANCE DECEMBER 31, 2020 27,006 1,960 ​ $ 234,409 ​ $ ( 60,482 ) ​ $ 212,342 ​ $ ( 89,635 ) ​ $ 296,634 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these consolidated financial statements . ​ ​ 48 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) 1. Organization and Nature of Business Stoneridge, Inc. and its subsidiaries are global designers and manufacturers of highly engineered electrical and electronic components, modules and systems for the automotive, commercial, off-highway, motorcycle and agricultural vehicle markets. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include the accounts of Stoneridge, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). Intercompany transactions and balances have been eliminated in consolidation. The Company analyzes its ownership interests in accordance with Accounting Standards Codification (“ASC”) “Consolidations (Topic 810)” to determine whether they are a variable interest entity and, if so, whether the Company is the primary beneficiary. The Company’s investment in Minda Stoneridge Instruments Ltd. (“MSIL”) for the years ended December 31, 2020, 2019 and 2018 has been determined to be an unconsolidated entity, and therefore is accounted for under the equity method of accounting based on the Company’s 49 % ownership in MSIL. Accounting Estimates The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including certain self-insured risks and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Because actual results could differ from those estimates, the Company revises its estimates and assumptions as new information becomes available. Cash and Cash Equivalents The Company’s cash and cash equivalents include actively traded money market funds with short-term investments in marketable securities, primarily U.S. government securities. Cash and cash equivalents are stated at cost, which approximates fair value, due to the highly liquid nature and short-term duration of the underlying securities with original maturities of 90 days or less. Accounts Receivable and Concentration of Credit Risk Revenues are principally generated from the automotive, commercial, off-highway, motorcycle and agricultural vehicle markets. The Company’s largest customers are Ford Motor Company and Volvo, primarily related to the Control Devices and Electronics reportable segments and accounted for the following percentages of consolidated net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 2020 2019 2018 Ford Motor Company ​ 11 % ​ 11 % ​ 12 % Volvo ​ 8 % ​ 8 % ​ 8 % ​ Accounts receivable are recorded at the invoice price, net of an estimate of allowance for doubtful accounts and other reserves. 49 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Allowance for Doubtful Accounts The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific allowance for doubtful accounts is recorded against amounts due to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. Additionally, the Company reviews historical trends for collectability in determining an estimate for its allowance for doubtful accounts. If economic circumstances change substantially, estimates of the recoverability of amounts due to the Company could be reduced by a material amount. The Company does not have collateral requirements with its customers. Inventories Inventories are valued at the lower of cost (using either the first-in, first-out (“FIFO”) or average cost methods) or net realizable value. The Company evaluates and adjusts as necessary its excess and obsolescence reserve on a quarterly basis. Excess inventories are quantities of items that exceed anticipated sales or usage for a reasonable period. The Company has guidelines for calculating provisions for excess inventories based on the number of months of inventories on hand compared to anticipated sales or usage. Management uses its judgment to forecast sales or usage and to determine what constitutes a reasonable period. Inventory cost includes material, labor and overhead. Inventories consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ December 31 2020 2019 Raw materials ​ $ 67,775 ​ $ 66,357 Work-in-progress ​ ​ 7,005 ​ ​ 5,582 Finished goods ​ ​ 15,768 ​ ​ 21,510 Total inventories, net ​ $ 90,548 ​ $ 93,449 ​ Inventory valued using the FIFO method was $ 82,308 and $ 82,910 at December 31, 2020 and 2019, respectively. Inventory valued using the average cost method was $ 8,240 and $ 10,539 at December 31, 2020 and 2019, respectively. Pre-production Costs Related to Long-term Supply Arrangements Engineering, research and development and other design and development costs for products sold on long-term supply arrangements are expensed as incurred unless the Company has a contractual guarantee for reimbursement from the customer which are capitalized as pre-production costs. Costs for molds, dies and other tools used to make products sold on long-term supply arrangements for which the Company either has title to the assets or has the noncancelable right to use the assets during the term of the supply arrangement are capitalized in property, plant and equipment and amortized to cost of sales over the shorter of the term of the arrangement or over the estimated useful lives of the assets, typically three to seven years . Costs for molds, dies and other tools used to make products sold on long-term supply arrangements for which the Company has a contractual guarantee to a lump sum reimbursement from the customer are capitalized either as a component of prepaid expenses and other current assets or an investment and other long term assets, net within the consolidated balance sheets. Capitalized pre-production costs were $ 14,259 and $ 7,666 at December 31, 2020 and 2019, respectively. At December 31, 2020 and 2019, $ 14,259 and $ 7,544 , respectively, were recorded as a component of prepaid expenses and other current assets on the consolidated balance sheets while the remaining amounts were recorded as a component of investments and other long-term assets, net. 50 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Disposal of Non-Core Products On April 1, 2019, the Company entered into an Asset Purchase Agreement by and among the Company, the Company’s wholly owned subsidiary, Stoneridge Control Devices, Inc. (“SCD”), and Standard Motor Products, Inc. (“SMP”). On the same day pursuant to the APA, in exchange for $ 40,000 (subject to a post-closing inventory adjustment which was a payment to SMP of $ 1,573 ) and the assumption of certain liabilities, the Company and SCD sold to SMP, product lines and assets related to certain non-core switches and connectors (the “Non-core Products”). On April 1, 2019, the Company and SMP also entered into certain ancillary agreements, including a transition services agreement, a contract manufacturing agreement and a supply agreement, pursuant to which the Company provided and was compensated for certain manufacturing, transitional, and administrative and support services to SMP on a short-term basis. The products related to the Non-core Products were manufactured in Juarez, Mexico and Canton, Massachusetts, and include ball switches, ignition switches, rotary switches, courtesy lamps, toggle switches, headlamp switches and other related components. ​ On April 1, 2019, the Company’s Control Devices segment recognized net sales and costs of goods sold (“COGS”) of $ 4,160 and $ 2,775 , respectively, for the one-time sale of Non-core Product finished goods inventory and a gain on disposal of $ 33,921 ,net for the sale of fixed assets, intellectual property and customer lists associated with the Non-core Products less transaction costs. The Company recognized transaction costs associated with the disposal of Control Devices’ Non-core Products of $ 322 within selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2019. ​ The Company received $ 21 and $ 1,824 for services provided pursuant to the transition services agreement which were recognized as a reduction in SG&A for the years ended December 31, 2020 and 2019, respectively. Pursuant to the contract manufacturing agreement, the Company recognized sales and operating income for the production of Non-core Products of $ 26,304 and $ 1,458 for the year ended December 31, 2019, respectively. The Company also received $ 745 for reimbursement of retention and facility costs from SMP pursuant to the contract manufacturing agreement which was recognized as a reduction to SG&A for the year ended December 31, 2019. ​ There were no Non-core Product net sales for the year ended December 31, 2020. Non-core Products net sales and operating income, including sales to SMP pursuant to the contract manufacturing agreement, were $ 41,560 and $ 4,831 for the year ended December 31, 2019, respectively, and $ 44,537 and $ 9,086 for the year ended December 31, 2018, respectively. ​ On June 17, 2020, the Company and SMP terminated the transition services agreement and the contract manufacturing agreement. ​ Acquisitions Orlaco On January 31, 2017, Stoneridge B.V., an indirect wholly-owned subsidiary of Stoneridge, Inc., acquired Exploitatiemaatschappij Berghaaf B.V. (“Orlaco”). Orlaco designs, manufactures and sells camera-based vision systems, monitors and related products primarily to the heavy off-road machinery, commercial vehicle, lifting crane and warehousing and logistics industries. Stoneridge and Orlaco jointly developed the MirrorEye camera monitor system, which is a vision-based system solution to improve the safety and fuel economy of commercial vehicles. The MirrorEye camera monitor system integrates Orlaco’s vision processing technology and Stoneridge’s driver information capabilities as well as the combined software capabilities of both businesses. The acquisition of Orlaco enhanced the Stoneridge’s Electronics segment global technical capabilities in vision systems and facilitated entry into new markets. The aggregate consideration for the Orlaco acquisition was € 74,939 ($ 79,675 ), which included customary estimated adjustments to the purchase price. The Company paid € 67,439 ($ 71,701 ) in cash. The purchase price was subject to certain customary adjustments set forth in the purchase agreement. The Company was required to pay an additional amount up to € 7,500 as contingent consideration (“earn-out consideration”) if certain performance targets are achieved during the first two years. See Note 10 for additional details on the Orlaco contingent consideration. The Company’s statement of operations included $ 369 of expense for the fair value adjustment for earn-out consideration in SG&A expenses for the years ended December 31, 2018. 51 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) The Orlaco earn-out consideration reached the capped amount of € 7,500 as of the quarter ended March 31, 2018 due to actual performance exceeding forecasted performance and remained at the capped amount until it was paid in March 2019. The earn-out consideration obligation related to Orlaco of $ 8,474 was paid in March 2019 and recorded in the consolidated statement of cash flows within operating and financing activities in the amounts of $ 5,080 and $ 3,394 , respectively, for the year ended December 31, 2019. Property, Plant and Equipment ​ Property, plant and equipment are recorded at cost and consist of the following: ​ ​ ​ ​ ​ ​ ​ December 31 2020 2019 Land and land improvements ​ $ 4,447 ​ $ 4,550 Buildings and improvements ​ ​ 39,784 ​ ​ 39,263 Machinery and equipment ​ ​ 253,563 ​ ​ 226,076 Office furniture and fixtures ​ ​ 9,993 ​ ​ 9,708 Tooling ​ ​ 40,967 ​ ​ 76,933 Information technology ​ ​ 28,491 ​ ​ 32,410 Vehicles ​ ​ 654 ​ ​ 614 Leasehold improvements ​ ​ 5,198 ​ ​ 4,588 Construction in progress ​ ​ 19,744 ​ ​ 17,312 Total property, plant, and equipment ​ ​ 402,841 ​ ​ 411,454 Less: accumulated depreciation ​ ​ ( 283,517 ) ​ ​ ( 288,971 ) Property, plant and equipment, net ​ $ 119,324 ​ $ 122,483 ​ Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $ 27,309 , $ 24,904 and $ 22,786 , respectively. Depreciable lives within each property classification are as follows: ​ ​ ​ ​ ​ Buildings and improvements ​ 10 - 40 years Machinery and equipment ​ ​ 3 - 10 years Office furniture and fixtures ​ ​ 3 - 10 years Tooling ​ ​ 2 - 7 years Information technology ​ ​ 3 - 7 years Vehicles ​ ​ 3 - 7 years Leasehold improvements ​ ​ shorter of lease term or 3 - 10 years ​ Maintenance and repair expenditures that are not considered improvements and do not extend the useful life of the property, plant and equipment are charged to expense as incurred. Expenditures for improvements and major renewals are capitalized. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss on the disposition is recorded in the consolidated statements of operations as a component of SG&A expenses. 52 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Impairment of Long-Lived or Finite-Lived Assets The Company reviews the carrying value of its long-lived assets and finite-lived intangible assets for impairment when events or circumstances indicate that their carrying value may not be recoverable. Factors the Company considers important that could trigger testing of the related asset groups for an impairment include current period operating or cash flow losses combined with a history of operating or cash flow losses, a projection or forecast that demonstrates continuing losses, significant adverse changes in the business climate within a particular business or current expectations that a long-lived asset will be sold or otherwise disposed of significantly before the end of its estimated useful life. To test for impairment, the estimated undiscounted cash flows expected to be generated from the use and disposal of the asset or asset group is compared to its carrying value. An asset group is established by identifying the lowest level of cash flows generated by the group of assets that are largely independent of cash flows of other assets. If cash flows cannot be separately and independently identified for a single asset, we will determine whether an impairment has occurred for the group of assets for which we can identify projected cash flows. If these undiscounted cash flows are less than their respective carrying values, an impairment charge would be recognized to the extent that the carrying values exceed estimated fair values. The estimation of undiscounted cash flows and fair value requires us to make assumptions regarding future operating results over the life of the asset or the life of the primary asset in the asset group. The results of the impairment testing are dependent on these estimates which require judgment. The occurrence of certain events, including changes in economic and competitive conditions, could impact cash flows eventually realized and management’s ability to accurately assess whether an asset is impaired. On May 19, 2020, the Company committed to the strategic exit of its Control Devices particulate matter (“PM”) sensor product line. As a result of the strategic exit of the PM sensor product line the Company determined an impairment indicator existed and performed a recoverability test of the related long-lived assets. The Company identified that there are two asset groups comprised of PM sensor fixed assets at the Company’s Lexington, Ohio and Tallinn, Estonia facilities. As a result of the recoverability test performed, the Company determined that the undiscounted cash flows did not exceed the carrying value of the PM sensor fixed assets at the Company’s Tallinn, Estonia facility. As such, an impairment loss of $ 2,326 was recorded based on the difference between the fair value and the carrying value of the assets. The Company used the income approach to determine the fair value of the PM sensor fixed assets at the Tallinn, Estonia facility. During the year ended December 31, 2020, the impairment loss of $ 2,326 was recorded on the Company’s consolidated statement of operations within SG&A expense. Goodwill and Other Intangible Assets Goodwill The total purchase price associated with acquisitions is allocated to the acquisition date fair values of identifiable assets acquired and liabilities assumed with the excess purchase price assigned to goodwill. Goodwill was $ 39,104 and $ 35,874 at December 31, 2020 and 2019, respectively, all of which relates to the Electronics segment. Goodwill is not amortized, but instead is tested for impairment at least annually, or earlier when events and circumstances indicate that it is more likely than not that such assets have been impaired, by applying a fair value-based test. In conducting our annual impairment assessment testing, we first perform a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If not, no further goodwill impairment testing is performed. If it is more likely than not that a reporting unit’s fair value is less than its carrying amount, or if we elect not to perform a qualitative assessment of a reporting unit, we then compare the fair value of the reporting unit to the related net book value. If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized. 53 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) The Company utilizes an income statement approach to estimate the fair value of a reporting unit and a market valuation approach to further support this analysis. The income approach is based on projected debt-free cash flow which is discounted to the present value using discount factors that consider the timing and risk of cash flows. We believe that this approach is appropriate because it provides a fair value estimate based on the reporting unit’s expected long-term operating cash flow performance. This approach also mitigates the impact of cyclical trends that occur in the industry. Fair value is estimated using internally developed forecasts, as well as commercial and discount rate assumptions. The discount rate used is the value-weighted average of our estimated cost of equity and of debt (“cost of capital”) derived using both known and estimated customary market metrics. Our weighted average cost of capital is adjusted to reflect a risk factor, if necessary. Other significant assumptions include terminal value growth rates, terminal value margin rates, future capital expenditures and changes in future working capital requirements. While there are inherent uncertainties related to the assumptions used and to management’s application of these assumptions to this analysis, we believe that the income statement approach provides a reasonable estimate of the fair value of a reporting unit. The market valuation approach is used to further support our analysis. There was no impairment of goodwill for the years ended December 31, 2020, 2019 or 2018. Goodwill and changes in the carrying amount of goodwill for the Electronics segment for the years ended December 31, 2020 and 2019 were as follows: ​ ​ ​ ​ ​ ​ ​ Balance at January 1, 2020 ​ $ 35,874 Currency translation ​ ​ 3,230 Balance at December 31, 2020 ​ $ 39,104 ​ ​ ​ ​ ​ Balance at January 1, 2019 ​ $ 36,717 Currency translation ​ ​ ( 843 ) Balance at December 31, 2019 ​ $ 35,874 ​ The Company’s cumulative goodwill impairment loss since inception was $ 300,083 at December 31, 2020 and 2019, which includes Stoneridge Brazil’s goodwill impairment in 2014 and goodwill impairment recorded by the Company’s Control Devices segment in 2008 and 2004. Other Intangible Assets Other intangible assets, net at December 31, 2020 and 2019 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Acquisition ​ Accumulated ​ ​ ​ As of December 31, 2020 cost amortization Net Customer lists ​ $ 48,339 ​ $ ( 18,530 ) ​ $ 29,809 Tradenames ​ ​ 17,201 ​ ​ ( 6,290 ) ​ ​ 10,911 Technology ​ ​ 13,799 ​ ​ ( 8,079 ) ​ ​ 5,720 Capitalized software development ​ ​ 8,954 ​ ​ - ​ ​ 8,954 Total ​ $ 88,293 ​ $ ( 32,899 ) ​ $ 55,394 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Acquisition ​ Accumulated ​ ​ ​ As of December 31, 2019 cost amortization Net Customer lists ​ $ 50,750 ​ $ ( 17,466 ) ​ $ 33,284 Tradenames ​ ​ 20,041 ​ ​ ( 6,687 ) ​ ​ 13,354 Technology ​ ​ 15,231 ​ ​ ( 7,353 ) ​ ​ 7,878 Capitalized software development ​ ​ 3,606 ​ ​ - ​ ​ 3,606 Total ​ $ 89,628 ​ $ ( 31,506 ) ​ $ 58,122 ​ 54 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Other intangible assets, net at December 31, 2020 for customer lists, tradenames, technology and capitalized software development include $ 23,004 , $ 4,678 , $ 2,759 and $ 6,330 , respectively, related to the Electronics segment. Customer lists, tradenames and technology of $ 6,804 , $ 6,234 and $ 2,863 , respectively, related to the Stoneridge Brazil segment at December 31, 2020. Capitalized software development and technology of $ 2,623 and $ 98 respectively, related to the Control Devices segment at December 31, 2020. The Company designs and develops software that will be embedded into certain products and sold to customers. Software development costs are capitalized after the software product development reaches technological feasibility and until the software product becomes available for general release to customers. These intangible assets will be amortized using the straight-line method over estimated useful lives generally ranging from three to seven years . The Company recognized $ 5,399 , $ 5,955 and $ 6,406 of amortization expense related to intangible assets in 2020, 2019 and 2018, respectively. Amortization expense is included as a component of SG&A on the consolidated statements of operations. Annual amortization expense for intangible assets is estimated to be approximately $ 5,200 for the years 2021 and 2022 and approximately $4,300 for the year 2023 through 2025 . The weighted-average remaining amortization period is approximately 10 years . For the year ended December 31, 2018, the Company recognized $ 202 of intangible impairment charge related to the Electronics segment customer lists as a result of the European Aftermarket restructuring as discussed in Note 13. There were no intangible impairment charges for the years ended December 31, 2020 or 2019. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ As of December 31 2020 2019 Compensation related liabilities ​ $ 21,852 ​ $ 19,566 Product warranty and recall obligations ​ ​ 9,044 ​ ​ 7,685 Other (A) ​ ​ 21,376 ​ ​ 27,972 Total accrued expenses and other current liabilities ​ $ 52,272 ​ $ 55,223 (A) “Other” is comprised of miscellaneous accruals, none of which individually contributed a significant portion of the total. Income Taxes The Company accounts for income taxes using the liability method. Deferred income taxes reflect the tax consequences on future years of differences between the tax basis of assets and liabilities and their financial reporting amounts. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not to occur. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. Deferred tax assets are recognized to the extent that these assets are more likely than not to be realized (See Note 6). In making such a determination, the Company considers all available positive and negative evidence, including future release of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. Release of some or all of a valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The Company’s policy is to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established or is required to pay amounts in excess of the liability, the Company’s effective tax rate in a given financial statement period may be affected. The Tax Cuts and Jobs Act of 2017 (“Tax Legislation”) created a provision known as Global Intangible Low-Taxed Income (“GILTI”) that imposes a tax on certain earnings of foreign subsidiaries. The Company has made an accounting policy election to reflect GILTI taxes, if any, as a current period tax expense when incurred. 55 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Currency Translation The financial statements of foreign subsidiaries, where the local currency is the functional currency, are translated into U.S. dollars using exchange rates in effect at the period end for assets and liabilities and average exchange rates during each reporting period for the results of operations. Adjustments resulting from translation of financial statements are reflected as a component of accumulated other comprehensive loss in the Company’s consolidated balance sheets. Foreign currency transactions are remeasured into the functional currency using translation rates in effect at the time of the transaction with the resulting adjustments included on the consolidated statements of operations within other (income) expense, net. These foreign currency transaction (gains) losses, including the impact of hedging activities, were $( 997 ), $ 372 and $( 487 ) for the years ended December 31, 2020, 2019 and 2018, respectively. Revenue Recognition and Sales Commitments The Company recognizes revenue when obligations under the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our products and services, which is usually when the parts are shipped or delivered to the customer’s premises. The Company recognizes monitoring service revenues over time, as the services are provided to customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The transaction price will include estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. Incidental items that are not significant in the context of the contract are recognized as expense. The Company collects certain taxes and fees on behalf of government agencies and remits such collections on a periodic basis. The taxes are collected from customers but are not included in net sales. Estimated returns are based on historical authorized returns. The Company often enters into agreements with its customers at the beginning of a given vehicle’s expected production life. Once such agreements are entered into, it is the Company’s obligation to fulfill the customers’ purchasing requirements for the entire production life of the vehicle. These agreements are subject to potential renegotiation from time to time, which may affect product pricing. See Note 3 for additional disclosure. Shipping and Handling Costs Shipping and handling costs are included in COGS on the consolidated statements of operations. Product Warranty and Recall Reserves Amounts accrued for product warranty and recall claims are established based on the Company’s best estimate of the amounts necessary to settle existing and future claims on products sold as of the balance sheet dates. These accruals are based on several factors including past experience, production changes, industry developments and various other considerations. Our estimate is based on historical trends of units sold and claim payment amounts, combined with our current understanding of the status of existing claims and discussions with our customers. The key factors in our estimate are the stated or implied warranty period, the customer source, customer policy decisions regarding warranties and customers seeking to holding the Company responsible for their product warranties. The Company can provide no assurances that it will not experience material claims or that it will not incur significant costs to defend or settle such claims beyond the amounts accrued. The current portion of the product warranty and recall reserve is included as a component of accrued expenses and other current liabilities on the consolidated balance sheets. Product warranty and recall includes $ 3,647 and $ 3,111 of a long-term liability at December 31, 2020 and 2019, respectively, which is included as a component of other long-term liabilities on the consolidated balance sheets. The following provides a reconciliation of changes in the product warranty and recall reserve: ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 2020 2019 Product warranty and recall at beginning of period ​ $ 10,796 ​ $ 10,494 Accruals for warranties established during period ​ ​ 5,898 ​ ​ 7,131 Aggregate changes in pre-existing liabilities due to claim developments ​ ​ 1,794 ​ ​ 1,037 Settlements made during the period ​ ​ ( 6,297 ) ​ ​ ( 7,600 ) Foreign currency translation ​ ​ 500 ​ ​ ( 266 ) Product warranty and recall at end of period ​ $ 12,691 ​ $ 10,796 ​ 56 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Design and Development Costs Expenses associated with the development of new products, and changes to existing products, other than capitalized software development costs, are charged to expense as incurred, and are included in the Company’s consolidated statements of operations as a separate component of costs and expenses. These product development costs amounted to $ 49,386 , $ 52,198 and $ 51,074 for the years ended December 31, 2020, 2019 and 2018, respectively, or 7.6 %, 6.3 % and 5.9 % of net sales for these respective periods. Research and Development Activities The Company enters into research and development contracts with certain customers, which generally provide for reimbursement of costs. The Company incurred and was reimbursed for contracted research and development costs of $ 19,302 , $ 15,096 and $ 16,540 for the years ended December 31, 2020, 2019 and 2018, respectively. Share-Based Compensation At December 31, 2020, the Company had two types of share-based compensation plans: (1) 2016 Long-Term Incentive Plan for employees and (2) the 2018 Amended and Restated Directors’ Restricted Shares Plan, for non-employee directors. See Note 8 for additional details on share-based compensation plans. Total compensation expense recognized as a component of SG&A expense on the consolidated statements of operations for share-based compensation arrangements was $ 5,888 , $ 6,191 and $ 5,632 for the years ended December 31, 2020, 2019 and 2018, respectively. The 2020 and 2019 amounts included accelerated expense associated with the retirement of eligible employees and the 2018 amount included the forfeiture of certain grants associated with employee resignations. There was no share-based compensation expense capitalized in inventory during 2020, 2019 or 2018. Share-based compensation expense is calculated using estimated volatility and forfeitures based on historical data, future expectations and the expected term of the share-based compensation awards. Financial Instruments and Derivative Financial Instruments Financial instruments, including derivative financial instruments, held by the Company include cash and cash equivalents, accounts receivable, accounts payable, long-term debt, interest rate swap agreement and foreign currency forward contracts. The carrying value of cash and cash equivalents, accounts receivable and accounts payable is considered to be representative of fair value because of the short maturity of these instruments. See Note 10 for fair value disclosures of the Company’s financial instruments. Common Shares Held in Treasury The Company accounts for Common Shares held in treasury under the cost method (applied on a FIFO basis) and includes such shares as a reduction of total shareholders’ equity. (Loss) Earnings Per Share Basic (loss) earnings per share was computed by dividing net (loss) income by the weighted-average number of Common Shares outstanding for each respective period. Diluted earnings per share was calculated by dividing net (loss) income by the weighted-average of all potentially dilutive Common Shares that were outstanding during the periods presented. However, for all periods in which the Company recognized a net loss, the Company did not recognize the effect of the potential dilutive securities as their inclusion would be anti-dilutive. Potential dilutive shares of 372,937 for the year ended December 31, 2020 were excluded from diluted loss per share because the effect would have been anti-dilutive. 57 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Actual weighted-average Common Shares outstanding used in calculating basic and diluted net income per share were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 2019 2018 Basic weighted-average Common Shares outstanding ​ 27,024,571 ​ 27,791,799 ​ 28,402,227 Effect of dilutive shares ​ - ​ 478,296 ​ 677,599 Diluted weighted-average Common Shares outstanding ​ 27,024,571 ​ 28,270,095 ​ 29,079,826 ​ There were 752,784 , 566,337 and 628,220 performance-based right to receive Common Shares outstanding at December 31, 2020, 2019 and 2018. These performance-based restricted and right to receive Common Shares are included in the computation of diluted earnings per share based on the number of Common Shares that would be issuable if the end of the year were the end of the contingency period. Deferred Financing Costs, net Deferred financing costs are amortized over the life of the related financial instrument using the straight-line method, which approximates the effective interest method. Deferred finance cost amortization and debt discount accretion, for the years ended December 31, 2020, 2019 and 2018 was $ 506 , $ 624 and $ 326 , respectively, and is included as a component of interest expense, net in the consolidated statements of operations. In 2019, the Company capitalized $ 1,366 of deferred financing costs as a result of entering into the 2019 Credit Facility. In connection with the 2019 Credit Facility, the Company wrote off a portion of the previously recorded deferred financing costs of $ 275 in interest expense, net during the year ended December 31, 2019. In 2020, the Company capitalized an additional $ 1,079 of deferred financing costs as a result of entering into Amendment No. 1 to the 2019 Credit Facility. See Note 5 to the consolidated financial statements for additional details regarding the 2019 Credit Facility and related deferred financing costs.The Company has elected to continue to present deferred financing costs related to the Credit Facility within long-term assets in the Company’s consolidated balance sheets. Deferred financing costs, net, were $ 2,187 and $ 1,625 , as of December 31, 2020 and 2019, respectively. Equity and Changes in Accumulated Other Comprehensive Loss by Component Common Share Repurchase ​ On October 26, 2018, the Company’s Board of Directors authorized the Company to repurchase up to $ 50,000 of Common Shares. Thereafter, on May 7, 2019, the Company entered into a Master Confirmation (the “Master Confirmation”) and a Supplemental Confirmation, together with the Master Confirmation, the Accelerated Share Repurchase Agreement (“ASR Agreement”), with Citibank N.A. (the “Bank”) to purchase Company Common Shares for a payment of $ 50,000 (the “Prepayment Amount”). Under the terms of the ASR Agreement, on May 7, 2019, the Company paid the Prepayment Amount to the Bank and received on May 8, 2019 an initial delivery of 1,349,528 Company Common Shares, which is approximately 80 % of the total number of Company Common Shares expected to be repurchased under the ASR Agreement based on the closing price of the Company’s Common Shares on May 7, 2019. These Common Shares became treasury shares and were recorded as a $ 40,000 reduction to shareholder’s equity. The remaining $ 10,000 of the Prepayment Amount was recorded as a reduction to shareholders’ equity as an unsettled forward contract indexed to our Common Shares. The Company excluded the potential share impact of the remaining shares from the computation of diluted earnings per share as these Common Shares are anti-dilutive for year ended December 31, 2019. ​ On February 25, 2020, the Bank notified the Company that it terminated early its commitment pursuant the ASR Agreement and would deliver 364,604 Common Shares on February 27, 2020 based on the volume weighted average price of our Common Shares during the term set forth in the ASR Agreement. The Bank’s notice of early termination and the subsequent delivery of Common Shares represents the final settlement of the Company’s share repurchase program pursuant to the accelerated share repurchase agreement. These Common Shares became treasury shares and were recorded as a $ 10,000 reduction to shareholders’ equity as Common Shares held in treasury with the offset of $ 10,000 to additional paid-in capital. ​ On February 24, 2020, the Company’s Board of Directors authorized a new repurchase program of $ 50,000 for the repurchase of the Company’s outstanding Common Shares over the next 18 months . The repurchases may be made from time to time in either open market transactions or in privately negotiated transactions. Repurchases may also be made under Rule 10b-18 plans, which permit Common Shares to be repurchased through pre-determined criteria. 58 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) ​ On March 3, 2020, under the new repurchase program the Company entered into a 10b-18 Agreement Letter (the “10b-18 Agreement”), with the Bank to purchase Company Common Shares, under purchasing conditions of Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 10b-18”), for up to $ 5,000 . Under the terms of the 10b-18 Agreement, commencing March 3, 2020 and ending March 6, 2020, the Company received delivery of a total of 242,634 Company Common Shares for the amount of $ 4,995 . These Common Shares became treasury shares and were recorded as a $ 4,995 reduction to shareholders’ equity as Common Shares held in treasury. In April 2020, the Company announced that it was temporarily suspending the share repurchase program in response to uncertainty surrounding the duration and magnitude of the impact of COVID-19. ​ Accumulated Other Comprehensive Loss ​ Changes in accumulated other comprehensive loss for the years ended December 31, 2020 and 2019 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ Unrealized ​ ​ ​ ​ ​ currency ​ gain (loss) ​ ​ ​ ​ translation on derivatives Total Balance at January 1, 2020 ​ $ ( 91,472 ) ​ $ - ​ $ ( 91,472 ) Other comprehensive income (loss) before reclassifications ​ ​ 2,677 ​ ​ ( 2,366 ) ​ ​ 311 Amounts reclassified from accumulated other comprehensive loss ​ ​ - ​ ​ 1,526 ​ ​ 1,526 Net other comprehensive income (loss), net of tax ​ ​ 2,677 ​ ​ ( 840 ) ​ ​ 1,837 Balance at December 31, 2020 ​ $ ( 88,795 ) ​ $ ( 840 ) ​ $ ( 89,635 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at January 1, 2019 ​ $ ( 86,044 ) ​ $ 292 ​ $ ( 85,752 ) Other comprehensive (loss) income before reclassifications ​ ​ ( 5,428 ) ​ ​ 355 ​ ​ ( 5,073 ) Amounts reclassified from accumulated other comprehensive loss ​ ​ - ​ ​ ( 647 ) ​ ​ ( 647 ) Net other comprehensive loss, net of tax ​ ​ ( 5,428 ) ​ ​ ( 292 ) ​ ​ ( 5,720 ) Balance at December 31, 2019 ​ $ ( 91,472 ) ​ $ - ​ $ ( 91,472 ) ​ Recently Adopted Accounting Standards In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The amendments in this update remove certain exceptions of Topic 740 including: exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or gain from other items; exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. There are also additional areas of guidance in regards to: franchise and other taxes partially based on income and the interim recognition of enactment of tax laws and rate changes. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. The Company adopted this standard prospectively as of January 1, 2020 using the modified retrospective basis. The impact of the adoption was a reduction to deferred tax liabilities and an increase to retained earnings of $ 13,750 on the consolidated balance sheet as of December 31, 2020. The adoption of this standard did not have an impact on the Company’s consolidated results of operations and cash flows. ​ 59 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The guidance in ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted this standard prospectively as of January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. ​ In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The guidance in ASU 2018-13 changes disclosure requirements related to fair value measurements as part of the disclosure framework project. The disclosure framework project aims to improve the effectiveness of disclosures in the notes to the financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. This guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted this standard as of January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. ​ In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments”, which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. ASU 2016-13 is effective for public business entities for annual periods beginning after December 15, 2019. The guidance allows for various methods for measuring expected credit losses. The Company has elected to apply a historical loss rate based on historical write-offs by region, adjusted for current economic conditions and forecasts about future economic conditions that are reasonable and supportable. The Company adopted this standard as of January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted as of December 31, 2020 In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance in ASU 2020-04 provides temporary optional expedient and exceptions to the guidance in U.S. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”) (also known as the “reference rate reform”). The guidance allows companies to elect not to apply certain modification accounting requirements to contracts affected by the reference rate reform, if certain criteria are met. The guidance will also allow companies to elect various optional expedients which would allow them to continue to apply hedge accounting for hedging relationships affected by the reference rate reform, if certain criteria are met. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. As of December 31, 2020, the Company has not yet had contracts modified due to rate reform. ​ 3. Revenue Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our products and services, which is usually when the parts are shipped or delivered to the customer’s premises. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The transaction price will include estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. Incidental items that are not significant in the context of the contract are recognized as expense. The expected costs associated with our base warranties continue to be recognized as expense when the products are sold. Customer returns only occur if products do not meet the specifications of the contract and are not connected to any repurchase obligations of the Company. 60 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) The Company does not have any financing components or significant payment terms as payment occurs shortly after the point of sale. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue. Amounts billed to customers related to shipping and handling costs are included in net sales in the consolidated statements of operations. Shipping and handling costs associated with outbound freight after control over a product is transferred to the customer are accounted for as a fulfillment cost and are included in cost of sales. ​ Revenue by Reportable Segment Control Devices. Our Control Devices segment designs and manufactures products that monitor, measure or activate specific functions within a vehicle. This segment includes product lines such as actuators, sensors, switches and connectors. We sell these products principally to the automotive market in the North American, European, and Asia Pacific regions. To a lesser extent, we also sell these products to the commercial vehicle and agricultural markets in the North American, European and Asia Pacific regions. Our customers included in these markets primarily consist of original equipment manufacturers (“OEM”) and companies supplying components directly to the OEMs (“Tier 1 supplier”). Electronics. Our Electronics segment designs and manufactures driver information systems, camera-based vision systems, connectivity and compliance products and electronic control units. These products are sold principally to the commercial vehicle market primarily through our OEM and aftermarket channels in the European and North American regions, and to a lesser extent, the Asia Pacific region. The camera-based vision systems and related products are sold principally to the off-highway vehicle market in the European and North American regions. Stoneridge Brazil. Our Stoneridge Brazil segment (also referred to as “PST” in prior filings) primarily serves the South American region and specializes in the design, manufacture and sale of vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, in-vehicle audio and infotainment devices and telematics solutions. Stoneridge Brazil sells its products through the aftermarket distribution channel, to factory authorized dealer installers, also referred to as original equipment services, directly to OEMs and through mass merchandisers. In addition, monitoring services and tracking devices are sold directly to corporate customers and individual consumers. ​ The following tables disaggregate our revenue by reportable segment and geographical location (1) for the periods ended December 31, 2020, 2019 and 2018: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Control Devices ​ Electronics ​ Stoneridge Brazil ​ Consolidated Year ended December 31 2020 2019 ​ 2018 2020 2019 ​ 2018 2020 2019 ​ 2018 2020 2019 2018 Net Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ North America ​ $ 261,967 ​ $ 365,010 ​ $ 395,148 ​ $ 68,561 ​ $ 92,623 ​ $ 85,363 ​ $ - ​ $ - ​ $ - ​ $ 330,528 ​ $ 457,633 ​ $ 480,511 South America ​ - ​ - ​ - ​ - ​ - ​ - ​ 47,663 ​ 67,534 ​ 80,175 ​ 47,663 ​ 67,534 ​ 80,175 Europe ​ 29,679 ​ 22,467 ​ 14,727 ​ 184,579 ​ 236,994 ​ 255,400 ​ - ​ - ​ - ​ 214,258 ​ 259,461 ​ 270,127 Asia Pacific ​ 50,930 ​ 44,083 ​ 31,422 ​ 4,627 ​ 5,578 ​ 3,964 ​ - ​ - ​ - ​ 55,557 ​ 49,661 ​ 35,386 Total net sales ​ $ 342,576 ​ $ 431,560 ​ $ 441,297 ​ $ 257,767 ​ $ 335,195 ​ $ 344,727 ​ $ 47,663 ​ $ 67,534 ​ $ 80,175 ​ $ 648,006 ​ $ 834,289 ​ $ 866,199 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Company sales based on geographic location are where the sale originates not where the customer is located. Performance Obligations ​ For OEM and Tier 1 supplier customers, the Company typically enters into contracts with its customers to provide serial production parts that consist of a set of documents including, but not limited to, an award letter, master purchase agreement and master terms and conditions. For each production product, the Company enters into separate purchase orders that contain the product specifications and an agreed-upon price. The performance obligation does not exist until a customer release is received for a specific number of parts. The majority of the parts sold to OEM and Tier 1 suppliers are specifically customized to the specific customer, with the exception of off-highway products that are common across all customers. The transaction price is equal to the contracted price per part and there is no expectation of material variable consideration in the transaction price. For most customer contracts, the Company does not have an enforceable right to payment at any time prior to when the parts are shipped or delivered to the customer; therefore, the Company recognizes revenue at the point in time it satisfies a performance obligation by transferring control of a part to the customer. Certain customer contracts contain an enforceable right to payment if the customer terminates the contract for convenience and therefore are recognized over time using the cost to complete input method. ​ 61 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Our aftermarket products are focused on meeting the demand for repair and replacement parts, compliance parts and accessories and are sold primarily to aftermarket distributors and mass retailers in our South American, European and North American markets. Aftermarket products have one type of performance obligation which is the delivery of aftermarket parts and spare parts. For aftermarket customers, the Company typically has standard terms and conditions for all customers. In addition, aftermarket products have alternative use as they can be sold to multiple customers. Revenue for aftermarket part production contracts is recognized at a point in time when the control of the parts transfer to the customer which is based on the shipping terms. Aftermarket contracts may include variable consideration related to discounts and rebates and is included in the transaction price upon recognizing the product revenue. ​ A small portion of the Company’s sales are comprised of monitoring services that include both monitoring devices and fees to individual, corporate, fleet and cargo customers in our Stoneridge Brazil segment. These monitoring service contracts are generally not capable of being distinct and are accounted for as a single performance obligation. We recognize revenue for our monitoring products and services contracts over the life of the contract. There is no variable consideration associated with these contracts. The Company has the right to consideration from a customer in the amount that corresponds directly with the value to the customer of the Company’s performance to date. Therefore the Company recognizes revenue over time using the practical expedient ASC 606-10-55-18 in the amount the Company has a “right to invoice” rather than selecting an output or input method. ​ Contract Balances The Company had no material contract assets, contract liabilities or capitalized contract acquisition costs as of December 31, 2020 or 2019. 4. Investments Minda Stoneridge Instruments Ltd. The Company has a 49 % equity interest in MSIL, a company based in India that manufactures electronics, instrumentation equipment and sensors primarily for the motorcycle, commercial vehicle and automotive markets. The investment is accounted for under the equity method of accounting. The Company’s investment in MSIL, recorded as a component of investments and other long-term assets, net on the consolidated balance sheets, was $ 13,547 and $ 12,701 as of December 31, 2020 and 2019, respectively. Equity in earnings of MSIL included in the consolidated statements of operations were $ 1,477 , $ 1,578 and $ 2,038 for the years ended December 31, 2020, 2019 and 2018, respectively. PST Eletrônica Ltda. The Company had a 74 % controlling interest in Stoneridge Brazil from December 31, 2011 through May 15, 2017. On May 16, 2017, the Company acquired the remaining 26 % noncontrolling interest in Stoneridge Brazil. As part of the acquisition agreement, the Company will be required to pay additional earn-out consideration, which is not capped, based on Stoneridge Brazil’s financial performance in either 2020 or 2021. See Note 10 for the fair value and foreign currency adjustments of the earn-out consideration for the current and prior periods. Stoneridge Brazil had dividends payable to former noncontrolling interest holders of Brazilian real (“R$”) 24,154 ($ 6,010 ) as of December 31, 2019. The dividends payable balance included monetary correction of R$ 3,703 ($ 921 ) as of December 31, 2019, based on the Brazilian National Extended Consumer Price inflation index (“IPCA”). The dividend payable related to Stoneridge Brazil was recorded within other current liabilities on the consolidated balance sheet as of December 31, 2019. These dividends were paid in January 2020. 62 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Other Investments In December 2018, the Company entered into an agreement to make a $ 10,000 investment in a fund (“Autotech Fund II”) managed by Autotech Ventures (“Autotech”), a venture capital firm focused on ground transportation technology which is accounted for under the equity method of accounting. The Company’s $ 10,000 investment in the Autotech Fund II will be contributed over the expected ten year life of the fund. The Company contributed $ 1,550 and $ 1,600 to the Autotech Ventures fund during the years ended December 31, 2020 and 2019, respectively. The Company has a 6.7 % interest in Autotech Fund II. The Company recognized earnings (loss) of $ 59 and $( 211 ) during the years ended December 31, 2020 and 2019, respectively. The Autotech Fund II investment recorded in investments and other long-term assets, net in the consolidated balance sheet was $ 3,436 and $ 1,827 as of December 31, 2020 and 2019, respectively. 5. Debt ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rates at ​ ​ Year ended December 31 2020 2019 December 31, 2020 Maturity Revolving Credit Facility ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Credit Facility ​ $ 136,000 ​ $ 126,000 ​ 2.85 % ​ June 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Debt ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stoneridge Brazil short-term obligations ​ ​ 1,561 ​ ​ - ​ 5.64 % - 8.80 % ​ June 2021 - November 2021 Stoneridge Brazil long-term notes ​ ​ - ​ ​ 972 ​ ​ ​ ​ Sweden short-term credit line ​ ​ 1,591 ​ ​ - ​ 2.60 % ​ January 2021 Suzhou short-term credit line ​ ​ 4,521 ​ ​ 2,154 ​ 3.85 % - 5.00 % ​ September 2021 Total debt ​ ​ 7,673 ​ ​ 3,126 ​ ​ ​ ​ Less: current portion ​ ​ ( 7,673 ) ​ ​ ( 2,672 ) ​ ​ ​ ​ Total long-term debt, net ​ $ - ​ $ 454 ​ ​ ​ ​ ​ Revolving Credit Facility On June 5, 2019, the Company entered into the Fourth Amended and Restated Credit Agreement (the “2019 Credit Facility”). The 2019 Credit Facility provides for a $ 400,000 senior secured revolving credit facility and it replaced and superseded the Third Amended and Restated Credit Agreement that provided for a $300,000 revolving credit facility. The 2019 Credit Facility has an accordion feature which allows the Company to increase the availability by up to $ 150,000 upon the satisfaction of certain conditions and includes a letter of credit subfacility, swing line subfacility and multicurrency subfacility. The 2019 Credit Facility has a termination date of June 5, 2024. In 2019, the Company capitalized $ 1,366 of deferred financing costs as a result of entering into the 2019 Credit Facility. In connection with the 2019 Credit Facility, the Company wrote off a portion of the previously recorded deferred financing costs of $ 275 in interest expense, net during the year ended December 31, 2019. Borrowings under the 2019 Credit Facility bear interest at either the Base Rate or the LIBOR rate, at the Company’s option, plus the applicable margin as set forth in the 2019 Credit Facility. The 2019 Credit Facility contains certain financial covenants that require the Company to maintain less than a maximum leverage ratio and more than a minimum interest coverage ratio. ​ The 2019 Credit Facility contains customary affirmative covenants and representations. The 2019 Credit Facility also contains customary negative covenants, which, among other things, are subject to certain exceptions, including restrictions on (i) indebtedness, (ii) liens, (iii) liquidations, mergers, consolidations and acquisitions, (iv) disposition of assets or subsidiaries, (v) affiliate transactions, (vi) creation or ownership of certain subsidiaries, partnerships and joint ventures, (vii) continuation of or change in business, (viii) restricted payments, (ix) prepayment of subordinated and junior lien indebtedness, (x) restrictions in agreements on dividends, intercompany loans and granting liens on the collateral, (xi) loans and investments, (xii) sale and leaseback transactions, (xiii) changes in organizational documents and fiscal year and (xiv) transactions with respect to bonding subsidiaries. The 2019 Credit Facility contains customary events of default, subject to customary thresholds and exceptions, including, among other things, (i) non-payment of principal and non-payment of interest and fees, (ii) a material inaccuracy of a representation or warranty at the time made, (iii) a failure to comply with any covenant, subject to customary grace periods in the case of certain affirmative covenants, (iv) cross default of other debt, final judgments and other adverse orders in excess of $ 30,000 , (v) any loan document shall cease to be a legal, valid and binding agreement, (vi) certain uninsured losses or proceedings against assets with a value in excess of $ 30,000 , (vii) ERISA events, (viii) a change of control, or (ix) bankruptcy or insolvency proceedings. 63 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) ​ Due to the expected impact of the COVID-19 pandemic on the Company’s end-markets and the resulting expected financial impacts to the Company, on June 26, 2020, the Company entered into a Waiver and Amendment No. 1 to the Fourth Amended and Restated Credit Agreement (“Amendment No. 1”). Amendment No. 1 provides for certain covenant relief and restrictions during the “Covenant Relief Period” (the period ending on the date that the Company delivers a compliance certificate for the quarter ending June 30, 2021 in form and substance satisfactory to the administrative agent). During the Covenant Relief Period: ​ ● the maximum net leverage ratio is suspended; ● the calculation of the minimum interest coverage ratio will exclude second quarter 2020 financial results effective for the quarters ended September 30, 2020 through March 31, 2021; ● the minimum interest coverage ratio of 3.50 is reduced to 2.75 and 3.25 for the quarters ended December 31, 2020 and March 31, 2021, respectively; ● the Company’s liquidity may not be less than $ 150,000 ; ● the Company’s aggregate amount of cash and cash equivalents cannot exceed $ 130,000 ; ● there are certain restrictions on Restricted Payments (as defined); and ● a Permitted Acquisition (as defined) may be not consummated unless otherwise approved in writing by the required lenders. ​ Amendment No. 1 changes the leverage based LIBOR pricing grid through the maturity date and also provides for a LIBOR floor of 50 basis points on outstanding borrowings excluding any Specified Hedge Borrowings (as defined) which remain subject to a LIBOR floor of 0 basis points. As of December 31, 2020, Specified Hedge Borrowings were $ 50,000 . ​ The Company capitalized an additional $ 1,079 of deferred financing costs as a result of entering into Amendment No. 1. ​ Borrowings outstanding on the 2019 Credit Facility, were $ 136,000 and $ 126,000 at December 31, 2020 and 2019, respectively. The Company was in compliance with all credit facility covenants at December 31, 2020 and 2019. The Company also had outstanding letters of credit of $ 1,720 and $ 1,768 at December 31, 2020 and 2019, respectively. Debt Stoneridge Brazil maintains short-term notes used for working capital purposes which have fixed or variable interest rates. The weighted-average interest rate of Stoneridge Brazil short-term debt at December 31, 2020 was 6.79 %. Depending on the specific note, interest is payable either monthly or annually. Principal repayments of $ 1,561 on Stoneridge Brazil debt at December 31, 2020 are due in 2021. In December 2019, Stoneridge Brazil established an overdraft credit line which allowed overdrafts on Stoneridge Brazil’s bank account up to a maximum level of R$ 5,000 , or $ 1,244 , at December 31, 2019. There was no balance outstanding on the overdraft credit line as of December 31, 2019. During the year ended December 31, 2020, the subsidiary borrowed and repaid R$ 7,150 , or $ 1,306 , prior to terminating the overdraft credit line. ​ The Company’s wholly-owned subsidiary located in Sweden, has an overdraft credit line which allows overdrafts on the subsidiary’s bank account up to a daily maximum level of 20,000 Swedish krona, or $ 2,435 and $ 2,136 at December 31, 2020 and 2019, respectively. At December 31, 2020 there was 13,072 Swedish krona, or $ 1,591 , outstanding on this overdraft credit line. At December 31, 2019, there was no balance outstanding on this overdraft credit line. During the year ended December 31, 2020, the subsidiary borrowed 312,921 Swedish krona, or $ 38,092 , and repaid 299,849 Swedish krona, or $ 36,501 . 64 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) The Company’s wholly-owned subsidiary located in Suzhou, China, has two credit lines (the “Suzhou credit line”) which allow up to a maximum borrowing level of 50,000 Chinese yuan, or $ 7,663 at December 31, 2020, and 40,000 Chinese yuan, or $ 5,746 at December 31, 2019. At December 31, 2020 and 2019 there was $ 4,521 and $ 2,154 , respectively, in borrowings outstanding on the Suzhou credit line with weighted-average interest rates of 4.32 % and 4.80 %, respectively. The Suzhou credit line is included on the consolidated balance sheet within current portion of debt. In addition, the Suzhou subsidiary has a bank acceptance draft line of credit which facilitates the extension of trade payable payment terms by 180 days. This bank acceptance draft line of credit allows up to a maximum borrowing level of 15,000 Chinese yuan, or $ 2,299 and $ 2,154 , at December 31, 2020 and 2019, respectively. There was $ 414 and $ 150 utilized on the Suzhou bank acceptance draft line of credit at December 31, 2020 and 2019, respectively. At December 31, 2020, the future maturities of the Credit Facility and debt were as follows: ​ ​ ​ ​ ​ Year ended December 31 ​ ​ 2021 ​ $ 7,673 2022 ​ ​ - 2023 ​ ​ - 2024 ​ ​ 136,000 2025 ​ ​ - Total ​ $ 143,673 ​ ​ 6. Income Taxes The income tax (benefit) expense included in the accompanying consolidated statement of operations represents federal, state and foreign income taxes. The components of (loss) income before income taxes and the (benefit) provision for income taxes consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 2020 2019 2018 (Loss) income before income taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ ( 25,403 ) ​ $ 30,464 ​ $ 32,907 Foreign ​ ​ 14,679 ​ ​ 37,929 ​ ​ 32,151 Total (loss) income before income taxes ​ $ ( 10,724 ) ​ $ 68,393 ​ $ 65,058 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Current: ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ $ ( 3 ) ​ $ ( 4,384 ) ​ $ 2,370 State and foreign ​ ​ 5,182 ​ ​ 6,900 ​ ​ 6,288 Total current expense ​ $ 5,179 ​ $ 2,516 ​ $ 8,658 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred: ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ $ ( 8,512 ) ​ $ 6,780 ​ $ 3,788 State and foreign ​ ​ 559 ​ ​ ( 1,194 ) ​ ​ ( 1,236 ) Total deferred (benefit) provision ​ ​ ( 7,953 ) ​ ​ 5,586 ​ ​ 2,552 Total income tax (benefit) provision ​ $ ( 2,774 ) ​ $ 8,102 ​ $ 11,210 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 65 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) A summary of the differences between the statutory federal income tax rate of 21.0% and the consolidated provision for income taxes is shown below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 ​ 2020 ​ 2019 ​ 2018 ​ Statutory U.S. federal income tax (benefit) provision ​ $ ( 2,252 ) ​ $ 14,363 ​ $ 13,662 ​ State income taxes, net of federal tax benefit ​ ​ ( 647 ) ​ ​ 152 ​ ​ 95 ​ Tax credits and incentives ​ ​ ( 2,791 ) ​ ​ ( 6,297 ) ​ ​ ( 5,159 ) ​ Foreign tax rate differential ​ ​ 90 ​ ​ 1,347 ​ ​ 710 ​ Impact of change in enacted tax law ​ ​ 1,108 ​ ​ 993 ​ ​ ( 848 ) ​ Change in valuation allowance ​ ​ 2,174 ​ ​ ( 138 ) ​ ​ ( 1,922 ) ​ U.S. tax on foreign earnings ​ ​ ( 433 ) ​ ​ ( 3,373 ) ​ ​ 664 ​ Compensation and benefits ​ ​ 362 ​ ​ ( 469 ) ​ ​ 839 ​ Other (A) ​ ​ ( 385 ) ​ ​ 1,524 ​ ​ 3,169 ​ (Benefit) provision for income taxes ​ $ ( 2,774 ) ​ $ 8,102 ​ $ 11,210 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (A) The amount for 2018 includes the impact of reducing tax attributes due to legal entity consolidation which is completely offset with change in valuation allowance. ​ Significant components of the Company’s deferred tax assets and liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ As of December 31 2020 2019 Deferred tax assets: ​ ​ ​ ​ ​ ​ Inventories ​ $ 1,858 $ 2,254 Employee compensation and benefits ​ 2,306 2,105 Accrued liabilities and reserves ​ 3,649 3,211 Property, plant and equipment ​ 943 552 Tax loss carryforwards ​ 12,307 7,536 Tax credit carryforwards ​ 22,949 15,448 Lease liability ​ ​ 4,199 ​ ​ 4,768 Other ​ 897 582 Gross deferred tax assets ​ 49,108 36,456 Less: Valuation allowance ​ ( 10,237 ) ( 8,586 ) Deferred tax assets less valuation allowance ​ 38,871 27,870 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Property, plant and equipment ​ ( 2,400 ) ( 2,071 ) Intangible assets ​ ( 13,630 ) ( 14,846 ) Outside basis difference in foreign subsidiary ​ ​ - ​ ​ ( 13,750 ) Right-of-use-assets ​ ( 4,076 ) ( 4,695 ) Other ​ ( 4,793 ) ( 375 ) Gross deferred tax liabilities ​ ( 24,899 ) ( 35,737 ) Net deferred tax assets (liabilities) ​ $ 13,972 $ ( 7,867 ) ​ The balance sheet classification of our net deferred tax asset (liability) is shown below: ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 2020 2019 Long-term deferred tax assets ​ $ 26,907 ​ $ 4,663 Long-term deferred tax liabilities ​ ​ ( 12,935 ) ​ ​ ( 12,530 ) Net deferred tax assets (liabilities) ​ $ 13,972 ​ $ ( 7,867 ) ​ The Company adopted ASU 2019-12,Income Taxes: Simplifying the Accounting for Income Taxes. As a result, the Company reversed a deferred tax liability of $ 13,750 related to its Stoneridge Brazil subsidiary that was previously a foreign equity method investment. The impact of adoption was recognized in retained earnings. ​ 66 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) The Company has recognized deferred taxes related to foreign withholding taxes and the expected foreign currency impact upon repatriation from foreign subsidiaries not considered indefinitely reinvested. At December 31, 2020, the aggregate undistributed earnings of our foreign subsidiaries amounted to $ 52,715 . Based on the Company’s review of both positive and negative evidence regarding the realizability of deferred tax assets at December 31, 2020, a valuation allowance is recorded against certain deferred tax assets based upon the conclusion that it was more likely than not they would not be realized. The Company generated federal net operating loss of $ 15,801 in 2020. The Company has net operating loss carry forwards of $ 74,474 and $ 30,991 for state and foreign tax jurisdictions, respectively. Federal net operating loss carryover is indefinite and be carried back for 5 years. The state net operating losses expire from 2024 - 2040 or have indefinite lives and the foreign net operating losses expire from 2021 - 2025 or have indefinite lives. The Company has general business and foreign tax credit carry forwards of $ 19,810 , $ 1,792 and $ 1,348 for U.S. federal, state and foreign jurisdictions, respectively. The U.S. federal general business credits, if unused, begin to expire in 2025 , and the state and foreign tax credits expire at various times. The following is a reconciliation of the Company’s total gross unrecognized tax benefits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 2019 2018 Balance as of January 1 ​ $ 3,449 ​ $ 3,481 ​ $ 3,645 Tax positions related to the current year: ​ ​ ​ ​ ​ ​ ​ ​ ​ Additions ​ ​ - ​ ​ - ​ ​ - Tax positions related to the prior years: ​ ​ ​ ​ ​ ​ ​ ​ ​ Reductions ​ ​ - ​ ​ ( 32 ) ​ ​ ( 165 ) Expirations of statutes of limitation ​ ​ - ​ ​ - ​ ​ 1 Balance as of December 31 ​ $ 3,449 ​ $ 3,449 ​ $ 3,481 ​ At December 31, 2020, the Company has classified $ 3,449 as a reduction to non-current deferred income tax assets. If the Company’s tax positions are sustained by the taxing authorities in favor of the Company, the amount that would affect the Company’s effective tax rate is approximately $ 3,449 at December 31, 2020 and 2019. The Company classifies interest expense and, if applicable, penalties which could be assessed related to unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2020, 2019 and 2018, the Company recognized approximately $ 0 , $( 5 ) and $( 13 ) of gross interest and penalties, respectively. The Company conducts business globally and, as a result, files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The following table summarizes the open tax years for each jurisdiction: ​ ​ ​ ​ ​ Jurisdiction Open Tax Years U.S. Federal ​ ​ 2017 - 2020 Argentina ​ ​ 2015 - 2020 Brazil ​ ​ 2014 - 2020 China ​ ​ 2017 - 2020 France ​ ​ 2017 - 2020 Germany ​ ​ 2016 - 2020 Italy ​ ​ 2015 - 2020 Mexico ​ ​ 2015 - 2020 Netherlands ​ ​ 2017 - 2020 Spain ​ ​ 2016 - 2020 Sweden ​ ​ 2015 - 2020 United Kingdom ​ ​ 2019 - 2020 ​ ​ 67 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) 7. Leases Lessee ​ The Company has various cancelable and noncancelable leased assets within all segments, which include certain properties, vehicles and equipment of which are all classified as operating leases. Payments for these leases are generally fixed; however, several of our leases are composed of variable lease payments including index-based payments or inflation-based payments based on a Consumer Price Index (“CPI”) or other escalators. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. ​ Under Leases (Topic 842), the Company determines an arrangement is a lease when we have the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Other than the leases that we have already identified, we are not aware of any material leases that have not yet commenced. For leases that have a calculated lease term of 12 months or less and do not include an option to purchase the underlying asset which we are reasonably certain to exercise, the Company has made the policy election to not apply the recognition requirements in Leases (Topic 842). For these short-term leases, the Company recognizes the lease payments in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. ​ For the leases identified, right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, the Company used the calculated incremental borrowing rate based on the information available at the implementation date, and going forward at the commencement date, in determining the present value of lease payments. The Company will use the implicit rate when readily determinable. The ROU asset includes the carrying amount of the lease liability, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. The Company’s lease terms may include options to extend or terminate the lease and such options are included in the lease term when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease expenses are recognized within COGS, SG&A and design and development (“D&D”) costs in the consolidated statements of operations. The Company has made the policy election to account for lease and non-lease components as a single lease component for all of its leases. ​ As a result of the Company’s election to apply the modified retrospective transition method at the effective date of the standard, information prior to January 1, 2019 has not been restated and continues to be reported under the accounting standards in effect for the period (ASC Topic 840). ​ The components of lease expense are as follows: ​ ​ ​ ​ ​ ​ Year ended December 31 ​ 2020 ​ 2019 Operating lease cost $ 5,330 $ 5,740 Short-term lease cost ​ 665 ​ 529 Variable lease cost ​ 614 ​ 363 Total lease cost $ 6,609 $ 6,632 ​ ​ ​ ​ ​ ​ Balance sheet information related to leases is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31 ​ 2020 ​ 2019 Assets: ​ ​ ​ ​ Operating lease right-of-use assets $ 18,944 $ 22,027 ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ Operating lease current liability, included in other current liabilities $ 4,271 $ 4,556 Operating lease long-term liability ​ 15,434 ​ 17,971 Total leased liabilities $ 19,705 $ 22,527 ​ ​ ​ ​ ​ ​ 68 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Maturities of operating lease liabilities are as follows: ​ ​ ​ ​ ​ ​ ​ As of December 31 ​ 2020 2021 $ 4,873 2022 ​ 3,862 2023 ​ 3,627 2024 ​ 3,208 2025 ​ 2,444 Thereafter ​ 5,707 Total future minimum lease payments $ 23,721 Less: imputed interest ​ ( 4,016 ) Total lease liabilities $ 19,705 ​ ​ ​ ​ Weighted-average remaining lease term and discount rate for operating leases is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31 ​ 2020 ​ 2019 ​ Weighted-average remaining lease term (in years) 6.33 ​ 6.71 ​ Weighted-average discount rate ​ 5.77 % 5.75 % ​ ​ ​ ​ ​ ​ ​ Other information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 ​ 2020 ​ 2019 Operating cash flows: ​ ​ ​ ​ Cash paid related to operating lease obligations $ 5,550 $ 5,558 Non-cash activity: ​ ​ ​ ​ Right-of-use assets obtained in exchange for ​ ​ ​ ​ operating lease obligations $ 822 $ 6,065 ​ ​ ​ Lessor ​ The Company, as lessor, has entered into a lease with a third-party lessee effective July 1, 2020, of its Canton, Massachusetts facility. In conjunction with the Canton restructuring plan outlined in Note 13, the Company ceased operations at this facility in March 2020. The Company recognizes lease income on a straight-line basis over the lease term, and the leased asset is included in property, plant and equipment, net in the consolidated balance sheet and depreciated to its estimated residual value over the remaining useful life of the assets. The carrying value of the leased facility is comprised of land of $ 1,225 and building and building improvements of $ 9,635 , with accumulated depreciation of $ 7,637 as of December 31, 2020. The lease includes two optional extension terms of five years each. The Company recognized, in its Control Devices segment, operating and variable lease income from leases in our consolidated statements of operations of $ 674 and $ 199 , respectively for the year ended December 31, 2020. ​ Maturities of future minimum lease payments to be received are as follows: ​ ​ ​ ​ As of December 31 ​ 2020 2021 $ 1,544 2022 ​ 1,582 2023 ​ 1,622 2024 ​ 1,662 2025 ​ 1,704 Thereafter ​ 3,083 Total future minimum lease payments to be received $ 11,197 ​ ​ ​ ​ ​ ​ 69 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) 8. Share-Based Compensation Plans In May 2016, the Company’s shareholders approved the 2016 Long-Term Incentive Plan (the “2016 Plan”) and reserved 1,800,000 Common Shares (of which the maximum number of Common Shares which may be issued). In May 2020, the Company’s shareholders approved an amendment to the 2016 Plan to increase by 1,100,000 the number of Common Shares authorized for issuance. The amendment to the 2016 Plan brought the total Common Shares available for issuance to 2,900,000 . Under the 2016 Plan, as of December 31, 2020, the Company has granted 1,868,930 share units, of which 735,361 were time-based with cliff vesting using the straight-line method and 1,133,569 were performance-based. There are 1,326,299 shares available to be granted under the 2016 Plan at December 31, 2020. ​ In 2020, 2019 and 2018, pursuant to the 2016 Plan, the Company granted time-based share units and performance-based performance shares. The time-based share units cliff vest three years after the date of grant. The performance-based performance shares vest and are no longer subject to forfeiture upon the recipient remaining an employee of the Company for three years from the date of grant and, for a portion of the annual awards, upon the Company attaining certain targets of performance measured against a peer group’s three year performance in terms of total shareholder return and, for the remaining portion of the annual awards, upon achieving certain earnings per share targets and return on invested capital targets established by the Company during the performance period of the award. The allocation of performance shares granted between total shareholder return, earnings per share and return on invested capital were as follows for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 2019 2018 ​ Total shareholder return ​ 45 % 45 % 55 % Earnings per share ​ 36 % 36 % 45 % Return on invested capital ​ 18 % 18 % - % ​ In April 2005, the Company adopted the Directors’ Restricted Shares Plan (the “Director Share Plan”) and reserved 500,000 Common Shares for issuance under the Director Share Plan. In May 2013, shareholders approved an amendment to the Director Share Plan to increase the number of shares for issuance by 200,000 to 700,000 . In May 2018, the Company’s shareholders approved the 2018 Amended and Restated Director’s Restricted Shares Plan (the “2018 Director Share Plan”) to increase the number of shares for issuance by 150,000 to 850,000 . Under the 2018 Director Share Plan, the Company has cumulatively issued 718,467 restricted Common Shares. As such, there are 131,533 restricted Common Shares available to be issued on December 31, 2020. Shares issued annually under the 2018 Director Share Plan are no longer subject to forfeiture one year after the date of grant. Share Units and Performance Shares The fair value of the non-vested time-based share unit awards was calculated using the market value of the Common Shares on the date of issuance. The weighted-average grant-date fair value of time-based share units granted during the years ended December 31, 2020, 2019 and 2018 was $ 17.78 , $ 30.01 and $ 24.69 , respectively. The fair value of the non-vested performance-based performance share awards with a performance condition requiring the Company to obtain certain earnings per share and return on invested capital targets were estimated using the market value of the shares on the date of grant. The fair value of non-vested performance-based performance share awards with a market condition requiring the Company to obtain a total shareholder return target relative to a group of peer companies was estimated using a Monte Carlo valuation model taking into consideration the probability of achievement using multiple simulations. The awards that use earnings per share and return on invested capital as the performance target are expensed beginning when it is probable that the Company will meet the underlying performance condition. 70 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) A summary of the status of the Company’s non-vested share units and performance shares as of December 31, 2020 and the changes during the year then ended, are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time-based awards ​ Performance-based awards ​ ​ ​ ​ Weighted- ​ ​ ​ Weighted- ​ ​ ​ ​ average grant ​ Performance ​ average grant ​ Share Units date fair value Shares date fair value Non-vested as of December 31, 2019 ​ 361,834 ​ $ 25.84 ​ 566,336 ​ $ 28.97 Granted ​ 306,161 ​ $ 17.78 ​ 409,686 ​ $ 17.10 Vested ​ ( 128,144 ) ​ $ 22.13 ​ ( 145,569 ) ​ $ 22.08 Forfeited or cancelled ​ ( 37,123 ) ​ $ 25.37 ​ ( 77,670 ) ​ $ 24.37 Non-vested as of December 31, 2020 ​ 502,728 ​ $ 21.89 ​ 752,783 ​ $ 24.32 ​ A summary of the status of the Company’s non-vested share units and performance shares as of December 31, 2019 and the changes during the year then ended, are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time-based awards ​ Performance-based awards ​ ​ ​ ​ Weighted- ​ ​ ​ ​ Weighted- ​ ​ ​ ​ average grant ​ Performance ​ average grant ​ Share Units date fair value Shares date fair value Non-vested as of December 31, 2018 ​ 419,996 ​ $ 19.64 ​ 628,220 ​ $ 21.41 Granted ​ 184,645 ​ $ 30.01 ​ 250,858 ​ $ 34.17 Vested ​ ( 196,404 ) ​ $ 17.08 ​ ( 236,902 ) ​ $ 14.92 Forfeited or cancelled ​ ( 46,403 ) ​ $ 23.70 ​ ( 75,840 ) ​ $ 27.42 Non-vested as of December 31, 2019 ​ 361,834 ​ $ 25.84 ​ 566,336 ​ $ 28.97 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2020, total unrecognized compensation cost related to non-vested time-based share units granted was $ 4,297 . That cost is expected to be recognized over a weighted-average period of 1.40 years. For the years ended December 31, 2020, 2019 and 2018, the total fair value of awards vested was $ 5,288 , $ 12,376 and $ 12,577 , respectively. As of December 31, 2020, total unrecognized compensation cost related to non-vested performance shares granted was $ 628 for shares probable to vest. That cost is expected to be recognized over a weighted-average period of 1.45 years dependent upon the achievement of performance conditions. As noted above, the Company has issued and outstanding performance-based share units that use different performance targets (total shareholder return, earnings per share and return on invested capital). The excess tax benefit realized from the vesting of share units and performance shares of the share-based payment arrangements was $ 46 , $ 1,289 and $ 1,584 for the years ended December 31, 2020, 2019 and 2018, respectively. ​ 9. Employee Benefit Plans The Company has certain defined contribution profit sharing and 401(k) plans covering substantially all of its employees in the United States and Europe. The Company provides matching contributions to the Company’s 401(k) plan. Company contributions are generally discretionary. For the years ended December 31, 2020, 2019 and 2018, expenses related to these plans amounted to $ 3,812 , $ 4,260 and $ 3,520 , respectively. 71 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) 10. Financial Instruments and Fair Value Measurements Financial Instruments A financial instrument is cash or a contract that imposes an obligation to deliver or conveys a right to receive cash or another financial instrument. The carrying values of cash and cash equivalents, accounts receivable and accounts payable are considered to be representative of fair value because of the short maturity of these instruments. The fair value of debt approximates the carrying value of debt, due to the variable interest rate on the 2019 Credit Facility and the maturity of the remaining outstanding debt. Derivative Instruments and Hedging Activities On December 31, 2020, the Company had open Mexican peso-denominated foreign currency forward contracts. The Company used foreign currency forward contracts solely for hedging and not for speculative purposes during 2020 and 2019. Management believes that its use of these instruments to reduce risk is in the Company’s best interest. The counterparties to these financial instruments are financial institutions with investment grade credit ratings. Foreign Currency Exchange Rate Risk The Company conducts business internationally and, therefore, is exposed to foreign currency exchange rate risk. The Company uses derivative financial instruments as cash flow hedges to manage its exposure to fluctuations in foreign currency exchange rates by reducing the effect of such fluctuations on foreign currency denominated intercompany transactions, inventory purchases and other foreign currency exposures. The Company hedged the euro and Mexican peso currencies during 2020 and 2018 and, during 2019, the Company hedged only the Mexican peso. In addition, the Company hedged the U.S. dollar against the Swedish krona and euro on behalf of its European subsidiaries in 2018. These forward contracts were executed to hedge forecasted transactions and have been accounted for as cash flow hedges. As such, gains and losses on derivatives qualifying as cash flow hedges are recorded in accumulated other comprehensive income, to the extent that hedges are effective, until the underlying transactions are recognized in earnings. Unrealized amounts in accumulated other comprehensive income will fluctuate based on changes in the fair value of hedge derivative contracts at each reporting period. The cash flow hedges were highly effective. The effectiveness of the transactions has been and will be measured on an ongoing basis using regression analysis and forecasted future purchases of the currency. In certain instances, the foreign currency forward contracts may not qualify for hedge accounting or are not designated as hedges and, therefore, are marked-to-market with gains and losses recognized in the Company’s consolidated statements of operations as a component of other (income) expense, net. At December 31, 2020, all of the Company’s foreign currency forward contracts were designated as cash flow hedges. The Company’s foreign currency forward contracts offset a portion of the gains and losses on the underlying foreign currency denominated transactions as follows: Euro-denominated Foreign Currency Forward Contracts – Cash Flow Hedges At December 31, 2017, the Company held foreign currency forward contracts with an underlying notional amount of $ 1,486 to reduce the exposure related to the Company’s euro-denominated intercompany loans. There were no contracts entered into as of December 31, 2020, 2019 or 2018 as these contracts were settled in December 2018. This euro-denominated foreign currency forward contract was not designated as a hedging instrument. For the year ended December 31, 2018, the Company recognized a gain of $ 73 in the consolidated statements of operations as a component of other (income) expense, net related to the euro-denominated contract. U.S. dollar-denominated Foreign Currency Forward Contracts – Cash Flow Hedges The Company entered into U.S. dollar-denominated currency contracts on behalf of one of its European Electronics subsidiaries, whose functional currency is the euro, and expired ratably on a monthly basis during 2020. There were no such contracts at December 31, 2019. 72 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Mexican peso-denominated Foreign Currency Forward Contracts – Cash Flow Hedges The Company holds Mexican peso-denominated foreign currency forward contracts with a notional amount at December 31, 2020 of $ 1,242 which expire ratably on a monthly basis from January 2021 to March 2021. There were no open Mexican peso-denominated foreign currency forward contracts at December 31, 2019. The Company evaluated the effectiveness of the Mexican peso-denominated foreign currency forward contracts held as of December 31, 2020 and the year then ended, and concluded that the hedges were effective. Interest Rate Risk Interest Rate Risk – Cash Flow Hedge On February 18, 2020, the Company entered into a floating-to-fixed interest rate swap agreement (the “Swap”) with a notional amount of $ 50,000 to hedge its exposure to interest payment fluctuations on a portion of its 2019 Credit Facility borrowings. The Swap was designated as a cash flow hedge of the variable interest rate obligation under the Company's 2019 Credit Facility that has a current balance of $ 136,000 at December 31, 2020. Accordingly, the change in fair value of the Swap is recognized in accumulated other comprehensive income (loss). The Swap agreement requires monthly settlements on the same days that the 2019 Credit Facility interest payments are due and has a maturity date of March 10, 2023, which is prior to the 2019 Credit Facility maturity date of June 4, 2024. Under the Swap terms, the Company pays a fixed interest rate and receives a floating interest rate based on the one-month LIBOR, with a floor. The critical terms of the Swap are aligned with the terms of the 2019 Credit Facility, resulting in no hedge ineffectiveness. The difference between amounts to be received and paid under the Swap is recognized as a component of interest expense, net on the consolidated statements of operations. The swap settlements increased interest expense by $ 433 for the year ended December 31, 2020. ​ The notional amounts and fair values of derivative instruments in the consolidated balance sheets were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prepaid expenses ​ Accrued expenses and ​ ​ Notional amounts (A) ​ and other current assets ​ other current liabilities December 31 2020 2019 2020 2019 2020 2019 Derivatives designated as hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flow hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Forward currency contracts ​ $ 1,242 ​ $ - ​ $ 255 ​ $ - ​ $ - ​ $ - Interest rate swap ​ $ 50,000 ​ $ - ​ $ - ​ $ - ​ $ 1,318 ​ $ - (A) Notional amounts represent the gross contract of the derivatives outstanding in U.S. dollars. ​ Gross amounts recorded for the cash flow hedges in other comprehensive income (loss) and in net (loss) income for the years ended December 31 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain (loss) reclassified from ​ ​ Gain (loss) recorded in other ​ other comprehensive income ​ ​ comprehensive income (loss) ​ (loss) into net (loss) income (A) ​ 2020 2019 2018 2020 2019 2018 Derivatives designated as cash flow hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Forward currency contracts ​ $ ( 1,244 ) ​ $ 450 $ 1,967 ​ $ ( 1,499 ) ​ $ 820 $ 1,376 Interest rate swap ​ $ ( 1,751 ) ​ $ - $ - ​ $ ( 433 ) ​ $ - $ - (A) Gains (losses) reclassified from comprehensive income (loss) into net (loss) income recognized in COGS in the Company’s consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018 were $( 1,146 ), $ 695 and $ 1,259 , respectively. Gains (losses) reclassified from other comprehensive income (loss) into net (loss) income recognized in D&D in the Company’s consolidated statements of operations were $( 29 ), $ 125 and $ 117 for the years ended December 31, 2020, 2019 and 2018, respectively. Gains (losses) reclassified from other comprehensive income (loss) into net (loss) income recognized in SG&A in the Company’s consolidated statements of operations were $( 324 ) , $ 0 and $ 0 for the years ended December 31, 2020, 2019 and 2018, respectively. ​ 73 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) For the year ended December 31, 2020, the total net gain on the foreign currency contract cash flow hedges of $ 255 is expected to be included in COGS, SG&A and D&D within the next 12 months. Of the total net loss on the interest rate swap cash flow hedge, $ 591 of loss is expected to be included in interest expense, net within the next 12 months and $ 727 of losses are expected to be included in interest expense, net in subsequent periods. Cash flows from derivatives used to manage foreign exchange and interest rate risks are classified as operating activities within the consolidated statements of cash flows. The Company has measured the ineffectiveness of the forward currency contracts and any amounts recognized in the consolidated financial statements were immaterial for the years ended December 31, 2020, 2019 and 2018. Fair Value Measurements Certain assets and liabilities held by the Company are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of the inputs used. Fair values estimated using Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Fair values estimated using Level 2 inputs, other than quoted prices, are observable for the asset or liability, either directly or indirectly and include among other things, quoted prices for similar assets or liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable. For forward currency contracts, inputs include foreign currency exchange rates. For the interest rate swap, inputs include LIBOR. Fair values estimated using Level 3 inputs consist of significant unobservable inputs. The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of inputs used. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31 ​ ​ ​ ​ 2020 ​ 2019 ​ ​ ​ ​ ​ Fair values estimated using ​ ​ ​ ​ ​ ​ Fair ​ Level 1 ​ Level 2 ​ Level 3 ​ ​ ​ ​ value inputs inputs inputs Fair value Financial assets carried at fair value: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Forward currency contract ​ $ 255 ​ $ - ​ $ 255 ​ $ - ​ $ - Total financial assets carried at fair value ​ $ 255 ​ $ - ​ $ 255 ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial liabilities carried at fair value: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate swap ​ $ 1,318 ​ $ - ​ $ 1,318 ​ $ - ​ $ - Earn-out consideration ​ ​ 5,813 ​ ​ - ​ ​ - ​ ​ 5,813 ​ ​ 12,011 Total financial liabilities carried at fair value ​ $ 7,131 ​ $ - ​ $ 1,318 ​ $ 5,813 ​ $ 12,011 ​ ​ The following table sets forth a summary of the change in fair value of the Company’s Level 3 financial liabilities related to earn-out consideration that are measured at fair value on a recurring basis. ​ ​ ​ ​ ​ ​ ​ ​ ​ Stoneridge Brazil Total Balance at December 31, 2019 ​ $ 12,011 ​ $ 12,011 Change in fair value ​ ​ ( 3,196 ) ​ ​ ( 3,196 ) Foreign currency adjustments ​ ​ ( 3,002 ) ​ ​ ( 3,002 ) Balance at December 31, 2020 ​ $ 5,813 ​ $ 5,813 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Orlaco Stoneridge Brazil Total Balance at December 31, 2018 ​ $ 8,602 ​ $ 10,070 ​ $ 18,672 Change in fair value ​ ​ - ​ ​ 2,308 ​ ​ 2,308 Foreign currency adjustments ​ ​ ( 128 ) ​ ​ ( 367 ) ​ ​ ( 495 ) Earn-out consideration cash payment ​ ​ ( 8,474 ) ​ ​ - ​ ​ ( 8,474 ) Balance at December 31, 2019 ​ $ - ​ $ 12,011 ​ $ 12,011 ​ 74 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) The Company will be required to pay the Stoneridge Brazil earn-out consideration, which is not capped, based on Stoneridge Brazil’s financial performance in either 2020 or 2021. The fair value of the Stoneridge Brazil earn-out consideration is based on discounted cash flows utilizing forecasted earnings before interest, depreciation and amortization (“EBITDA”) in 2020 or 2021 using the key inputs of forecasted sales and expected operating income reduced by the market required rate of return. The former Stoneridge Brazil owners may choose either the 2020 or 2021 financial performance period to be used to determine the earn-out consideration payment. The former Stoneridge Brazil owners must choose the 2020 financial performance period by March 31, 2021 otherwise the 2021 financial performance period will automatically be used. The Company has assigned a zero probability that the former owners will choose the 2020 performance period given Stoneridge Brazil’s financial performance has been negatively impacted by COVID-19. As such, the earn-out fair value assumes 2021 financial performance will be the basis for the earn-out consideration obligation. The earn-out consideration obligation related to Stoneridge Brazil is recorded within other long-term liabilities in the consolidated balance sheets as of December 31, 2020 and 2019. The change in fair value of the earn-out consideration for Stoneridge Brazil was due to updated financial performance projections and favorable foreign currency translation offset by the reduced time from the current period end to the payment date. The change in fair value of the Stoneridge Brazil earn-out consideration was recorded in SG&A expense and the foreign currency impact was included in other (income) expense, net in the consolidated statements of operations. The fair value of the Orlaco earn-out consideration was based on a Monte Carlo simulation utilizing forecasted EBITDA for the 2017 and 2018 earn-out period as well as a growth rate reduced by the market required rate of return. The Orlaco earn-out consideration reached the capped amount of € 7,500 as of the quarter ended March 31, 2018 due to actual performance exceeding forecasted performance and remained at the capped amount until it was paid out in March 2019. The payment of the Orlaco earn-out consideration of $ 8,474 was paid in March 2019 and recorded in the consolidated statement of cash flows within operating and financing activities in the amounts of $ 5,080 and $ 3,394 , respectively, for the year ended December 31, 2019. There were no transfers in or out of Level 3 from other levels in the fair value hierarchy for the year ended December 31, 2020. No non-recurring fair value adjustments were required for nonfinancial assets for the years ended December 31, 2020 and 2019. Impairment of Long-Lived Assets or Finite-Lived Assets ​ The Company reviews the carrying value of its long-lived assets and finite-lived intangible assets for impairment when events or circumstances indicate that their carrying value may not be recoverable. Factors the Company considers important that could trigger testing of the related asset groups for an impairment include current period operating or cash flow losses combined with a history of operating or cash flow losses, a projection or forecast that demonstrates continuing losses, significant adverse changes in the business climate within a particular business or current expectations that a long-lived asset will be sold or otherwise disposed of significantly before the end of its estimated useful life. To test for impairment, the estimated undiscounted cash flows expected to be generated from the use and disposal of the asset or asset group is compared to its carrying value. An asset group is established by identifying the lowest level of cash flows generated by the group of assets that are largely independent of cash flows of other assets. If cash flows cannot be separately and independently identified for a single asset, we will determine whether an impairment has occurred for the group of assets for which we can identify projected cash flows. If these undiscounted cash flows are less than their respective carrying values, an impairment charge would be recognized to the extent that the carrying values exceed estimated fair values. The estimation of undiscounted cash flows and fair value requires us to make assumptions regarding future operating results over the life of the asset or the life of the primary asset in the asset group. The results of the impairment testing are dependent on these estimates which require judgment. The occurrence of certain events, including changes in economic and competitive conditions, could impact cash flows eventually realized and management’s ability to accurately assess whether an asset is impaired. ​ 75 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) On May 19, 2020, the Company committed to the strategic exit of its Control Devices particulate matter (“PM”) sensor product line. As a result of the strategic exit of the PM sensor product line the Company determined an impairment indicator existed and performed a recoverability test of the related long-lived assets. The Company identified that there are two asset groups comprised of PM sensor fixed assets at the Company’s Lexington, Ohio and Tallinn, Estonia facilities. As a result of the recoverability test performed, the Company determined that the undiscounted cash flows did not exceed the carrying value of the PM sensor fixed assets at the Company’s Tallinn, Estonia facility. As such, an impairment loss of $ 2,326 was recorded based on the difference between the fair value and the carrying value of the assets. The Company used the income approach to determine the fair value of the PM sensor fixed assets at the Tallinn, Estonia facility. During the year ended December 31, 2020, the impairment loss of $ 2,326 was recorded on the Company’s condensed consolidated statement of operations within SG&A expense. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." ​ 11. Commitments and Contingencies From time to time we are subject to various legal actions and claims incidental to our business, including those arising out of breach of contracts, product warranties, product liability, patent infringement, regulatory matters and employment-related matters. The Company establishes accruals for matters which it believes that losses are probable and can be reasonably estimated. Although it is not possible to predict with certainty the outcome of these matters, the Company is of the opinion that the ultimate resolution of these matters will not have a material adverse effect on its consolidated results of operations or financial position. As a result of environmental studies performed at the Company’s former facility located in Sarasota, Florida, the Company became aware of soil and groundwater contamination at this site. The Company engaged an environmental engineering consultant to assess the level of contamination and to develop a remediation and monitoring plan for the site. Soil remediation at the site was completed during the year ended December 31, 2010. Upon approval of the remedial action plan by the Florida Department of Environmental Protection, ground water remediation began in the fourth quarter of 2015. During the year ended December 31, 2020 environmental remediation costs incurred were $ 128 and were immaterial for the years ended December 31, 2019 and 2018. At December 31, 2020 and 2019, the Company had accrued an undiscounted liability of $ 180 and $ 82 , respectively, related to future remediation costs which were recorded as a component of accrued expenses and other current liabilities on the consolidated balance sheets. Costs associated with the recorded liability will be incurred to complete the groundwater remediation and monitoring. The recorded liability is based on assumptions in the remedial action plan. Although the Company sold the Sarasota facility and related property in December 2011, the liability to remediate the site contamination remains the responsibility of the Company. Due to the ongoing site remediation, the Company is currently required to maintain a $ 1,489 letter of credit for the benefit of the buyer. The Company’s Stoneridge Brazil subsidiary has civil, labor and other tax contingencies (excluding income tax) for which the likelihood of loss is deemed to be reasonably possible, but not probable, by the Company’s legal advisors in Brazil. As a result, no provision has been recorded with respect to these contingencies, which amounted to R$ 43,736 ($ 8,416 ) and R$ 29,700 ($ 7,300 ) at December 31, 2020 and 2019, respectively. An unfavorable outcome on these contingencies could result in significant cost to the Company and adversely affect its results of operations. On August 12, 2020, the Brazilian Administrative Counsel for Economic Defense (“CADE”) issued a ruling against Stoneridge Brazil for abuse of dominance and market foreclosure through its prior use of exclusivity provisions in agreements with its distributors. The CADE tribunal imposed a R $ 7,995 ( $ 1,538 ) fine which is included in the reasonably possible contingencies noted above. The Company is challenging this ruling in Brazilian federal court to reverse this decision by the CADE tribunal. ​ Insurance Recoveries The Company incurred losses and incremental costs related to the damage to assets caused by a storm at its Mexican production facility in the fourth quarter of 2016 and pursued recovery of such costs under applicable insurance policies. As of December 31, 2020, the claims have been resolved and the case has been closed with our insurance providers. 76 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Loss recoveries related to the damage of inventory and incremental costs included in COGS were not significant for the years ended December 31, 2020, 2019 and 2018, and there were no loss recoveries and insurance gain contingencies related to the damage of property, plant and equipment included within SG&A expense. As of December 31, 2017, the Company had confirmation of the open insurance claim and recorded a receivable of $ 1,644 . The cash payment was subsequently received in January 2018. Cash proceeds related to the damage of inventory and incremental costs were $ 241 for the year ended December 31, 2018 and were included in cash flows from operating activities. Cash proceeds related to the damage of property, plant and equipment of $ 1,403 for the year ended December 31, 2018 were included in cash flows from investing activities. Cash proceeds received during the year ended December 21, 2019 were immaterial and there were no cash proceeds received during the year ended December 31, 2020. Brazilian Indirect Tax In March 2017, the Supreme Court of Brazil issued a decision concluding that a certain state value added tax should not be included in the calculation of federal gross receipts taxes. The decision reduced Stoneridge Brazil’s gross receipts tax prospectively and, potentially, retrospectively. In April 2019, the Company received judicial notification that the Superior Judicial Court of Brazil rendered a favorable decision on Stoneridge Brazil’s case granting the Company the right to recover, through offset of federal tax liabilities, amounts collected by the government from June 2010 to February 2017. Based on the Company’s determination that these tax credits will be used prior to expiration, we recorded a pre-tax benefit of $ 6,473 as a reduction to SG&A expense which is inclusive of related interest income of $ 2,392 , net of applicable professional fees of $ 990 in the year ended December 31, 2019. In January 2020, the Company received administrative approval and is now offsetting eligible federal tax with these tax credits. ​ The Brazilian tax authorities have sought clarification before the Supreme Court of Brazil (in a leading case involving another taxpayer) of certain matters that could affect the rights of Brazilian taxpayers regarding these credits. The timing for a decision is uncertain due to the COVID-19 pandemic. If the Brazilian tax authorities challenge our rights to these credits, we may become subject to new litigation that could impact the amount ultimately realized by Stoneridge Brazil. ​ 12. Headquarter Relocation and Consolidation During the fourth quarter of 2016, the Company relocated its corporate headquarters from Warren, Ohio to Novi, Michigan and consolidated its other corporate functions into one location. As a result, the Company incurred headquarter relocation costs recorded within SG&A expense, which included employee retention and relocation expense of $ 269 for the year ended December 31, 2018. There were no headquarter relocation costs incurred in 2020 or 2019. In connection with the headquarter relocation, the Company was approved for a Michigan Business Development Program grant of up to $ 1,400 based upon the number of new jobs created in Michigan through 2022. As a result of the attainment of certain milestones, grant income of $ 429 and $ 312 was recognized during the years ended December 31, 2019 and 2018, respectively, within SG&A expense in the consolidated statements of operations. There was no grant income recognized during the year ended December 31, 2020. 13. Restructuring and Business Realignment On May 19, 2020, the Company committed to the strategic exit of its Control Devices particulate matter (“PM”) sensor product line. The decision to exit the PM sensor product line was made after consideration of the decline in the market outlook for diesel passenger vehicles, the current and expected profitability of the product line and the Company’s strategic focus on aligning resources with the greatest opportunities. The Company expects the exit from the PM sensor product line to be completed in the fourth quarter of 2021. As a result of the PM sensor restructuring actions, the Company recognized expense of $ 3,428 for the year ended December 31, 2020 for non-cash fixed asset charges, including impairment and accelerated depreciation of PM sensor related fixed assets and other related costs. For the year ended December 31, 2020 restructuring related costs of $ 817 and $ 2,611 were recognized in COGS and SG&A, respectively. The estimated range of additional cost of the plan to exit the PM sensor product line, that will impact the Control Devices segment, is approximately $ 2,800 and $ 6,330 and is related to employee severance and termination costs, contract terminations costs, other related costs such as potential commercial and supplier settlements and accelerated depreciation. We anticipate that these costs will be incurred through the fourth quarter of 2021. 77 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) The expenses for the exit of the PM sensor line that relate to the Control Devices reportable segment include the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrual as of ​ 2020 Charge ​ ​ Utilization ​ Accrual as of ​ ​ January 1, 2020 ​ to Expense ​ Cash ​ Non-Cash ​ December 31, 2020 Fixed asset impairment and accelerated depreciation ​ $ - ​ $ 3,326 ​ $ - ​ $ ( 3,326 ) ​ $ - Other related costs ​ ​ - ​ ​ 102 ​ ​ ( 102 ) ​ ​ - ​ ​ - Total ​ $ - ​ $ 3,428 ​ $ ( 102 ) ​ $ ( 3,326 ) ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ On January 10, 2019, the Company committed to a restructuring plan that resulted in the closure of the Canton, Massachusetts facility (“Canton Facility”) on by March 31, 2020 and the consolidation of manufacturing operations at that site into other Company locations (“Canton Restructuring”). Company management informed employees at the Canton Facility of this restructuring decision on January 11, 2019. The costs for the Canton Restructuring included employee severance and termination costs, contract terminations costs, professional fees and other related costs such as moving and set-up costs for equipment and costs to restore the engineering function previously located at the Canton Facility. As a result of the Canton Restructuring actions, the Company recognized expense of $ 2,978 and $ 12,530 for the years ended December 31, 2020 and 2019, respectively, for employee termination benefits and other restructuring related costs. For the year ended December 31, 2020 severance and other restructuring related costs of $ 1,659 , $ 551 and $ 768 were recognized in COGS, SG&A and D&D, respectively, in the consolidated statement of operations. For the year ended December 31, 2019 severance and other related restructuring costs of $ 7,625 , $ 1,526 and $ 3,379 were recognized in COGS, SG&A and D&D, respectively, in the consolidated statement of operations. The estimated additional cost of this restructuring plan, that will impact the Control Devices segment, is immaterial. The expenses for the Canton Restructuring that relate to the Control Devices reportable segment include the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrual as of ​ 2020 Charge ​ ​ Utilization ​ Accrual as of ​ ​ January 1, 2020 ​ to Expense ​ Cash ​ Non-Cash ​ December 31, 2020 Employee termination benefits ​ $ 2,636 ​ $ 1,119 ​ $ ( 3,590 ) ​ $ - ​ $ 165 Other related costs ​ ​ - ​ ​ 1,859 ​ ​ ( 1,859 ) ​ ​ - ​ ​ - Total ​ $ 2,636 ​ $ 2,978 ​ $ ( 5,449 ) ​ $ - ​ $ 165 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrual as of ​ 2019 Charge ​ ​ Utilization ​ Accrual as of ​ ​ January 1, 2019 ​ to Expense ​ Cash ​ Non-Cash ​ December 31, 2019 Employee termination benefits ​ $ - ​ $ 8,088 ​ $ ( 5,452 ) ​ $ - ​ $ 2,636 Other related costs ​ ​ - ​ ​ 4,442 ​ ​ ( 4,442 ) ​ ​ - ​ ​ - Total ​ $ - ​ $ 12,530 ​ $ ( 9,894 ) ​ $ - ​ $ 2,636 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In the fourth quarter of 2018, the Company undertook restructuring actions for the Electronics segment affecting the European Aftermarket business and China operations. In the second quarter of 2020, the Company finalized plans to move its European Aftermarket sales activities in Dundee, Scotland to a new location which resulted in incurring contract termination costs as well as employee severance and termination costs. In addition, the Company announced a restructuring program to transfer the European production of its controls product line to China. As a result of these actions, the Company recognized expense of $ 2,400 , $ 603 and $ 3,539 respectively, for the years ended December 31, 2020, 2019 and 2018 for employee severance and termination costs, contract termination costs, non-cash fixed asset charges for accelerated depreciation of fixed assets and other related costs. Electronics segment restructuring costs recognized in COGS, SG&A and D&D in the consolidated statement of operations for the year ended December 31, 2020 were $ 147 , $ 1,774 and $ 479 , respectively. Electronics segment restructuring costs were recorded in SG&A in the consolidated statements of operations for the year ended December 31, 2019. Excess and obsolete inventory write-offs of $ 823 were recognized in COGS for the year ended December 31, 2018 and all other restructuring costs were recognized in SG&A in the consolidated statement of operations. The Company expects to incur approximately $ 200 of additional restructuring costs related to the actions through the second quarter of 2021. 78 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) The expenses for the restructuring activities that relate to the Electronics reportable segment include the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrual as of ​ 2020 Charge to ​ ​ Utilization ​ Accrual as of ​ ​ January 1, 2020 ​ Expense ​ Cash ​ Non-Cash ​ December 31, 2020 Employee termination benefits ​ $ 52 ​ $ 1,034 ​ $ ( 859 ) ​ $ - ​ $ 227 Contract termination costs ​ ​ - ​ ​ 452 ​ ​ ( 452 ) ​ ​ - ​ ​ - Other related costs ​ ​ - ​ ​ 914 ​ ​ ( 914 ) ​ ​ - ​ ​ - Total ​ $ 52 ​ $ 2,400 ​ $ ( 2,225 ) ​ $ - ​ $ 227 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrual as of ​ 2019 Charge to ​ ​ Utilization ​ Accrual as of ​ ​ January 1, 2019 ​ Expense ​ Cash ​ Non-Cash ​ December 31, 2019 Employee termination benefits ​ $ 520 ​ $ ( 18 ) ​ $ ( 453 ) ​ $ 3 ​ $ 52 Accelerated depreciation ​ ​ - ​ ​ 289 ​ ​ - ​ ​ ( 289 ) ​ ​ - Contract termination costs ​ ​ 17 ​ ​ 9 ​ ​ ( 26 ) ​ ​ - ​ ​ - Other related costs ​ ​ 119 ​ ​ 323 ​ ​ ( 442 ) ​ ​ - ​ ​ - Total ​ $ 656 ​ $ 603 ​ $ ( 921 ) ​ $ ( 286 ) ​ $ 52 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrual as of ​ 2018 Charge to ​ ​ Utilization ​ Accrual as of ​ ​ January 1, 2018 ​ Expense ​ Cash ​ Non-Cash ​ December 31, 2018 Employee termination benefits ​ $ - ​ $ 1,939 ​ $ ( 1,419 ) ​ $ - ​ $ 520 Excess and obsolete inventory ​ ​ - ​ ​ 823 ​ ​ - ​ ​ ( 823 ) ​ ​ - Intangible impairment ​ ​ - ​ ​ 200 ​ ​ - ​ ​ ( 200 ) ​ ​ - Fixed asset impairment ​ ​ - ​ ​ 157 ​ ​ - ​ ​ ( 157 ) ​ ​ - Contract termination costs ​ ​ - ​ ​ 156 ​ ​ ( 139 ) ​ ​ - ​ ​ 17 Other related costs ​ ​ - ​ ​ 264 ​ ​ ( 145 ) ​ ​ - ​ ​ 119 Total ​ $ - ​ $ 3,539 ​ $ ( 1,703 ) ​ $ ( 1,180 ) ​ $ 656 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In addition to the specific restructuring activities, the Company regularly evaluates the performance of its businesses and cost structures, including personnel, and makes necessary changes thereto in order to optimize its results. The Company also evaluates the required skill sets of its personnel and periodically makes strategic changes. As a consequence of these actions, the Company incurs severance related costs which are referred to as business realignment charges. Business realignment charges by reportable segment were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 ​ 2020 2019 2018 Control Devices (A) ​ $ 1,752 ​ $ 682 ​ $ 169 Electronics (B) ​ ​ 1,690 ​ ​ 99 ​ ​ 63 Stoneridge Brazil (C) ​ ​ 234 ​ ​ - ​ ​ 478 Unallocated Corporate (D) ​ ​ 361 ​ ​ 1,048 ​ ​ - Total business realignment charges ​ $ 4,037 ​ $ 1,829 ​ $ 710 (A) Severance costs for the year ended December 31, 2020 related to COGS, D&D and SG&A were $ 724 , $ 283 and $ 745 , respectively. Severance costs for the year ended December 31, 2019 related to SG&A were $ 682 . Severance costs for the year ended December 31, 2018 related to D&D and SG&A were $ 128 and $ 41 , respectively. (B) Severance costs for the year ended December 31, 2020 related to COGS, D&D and SG&A were $ 383 , $ 402 and $ 905 , respectively. Severance costs for the year ended December 31, 2019 related to SG&A were $ 99 . Severance costs for the year ended December 31, 2018 related to SG&A were $ 63 . (C) Severance costs for the year ended December 31, 2020 related to COGS and SG&A were $ 124 and $ 110 , respectively. Severance costs for the year ended December 31, 2018 related to COGS, SG&A and D&D were $ 63 , $ 387 and $ 28 , respectively. (D) Severance costs for the years ended December 31, 2020 and 2019 related to SG&A were $ 361 and $ 1,048 , respectively. 79 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) Business realignment charges classified by statement of operations line item were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 ​ ​ 2020 ​ 2019 ​ 2018 Cost of goods sold ​ $ 1,231 ​ $ - ​ $ 63 Selling, general and administrative ​ ​ 2,121 ​ ​ 1,829 ​ ​ 491 Design and development ​ ​ 685 ​ ​ - ​ ​ 156 Total business realignment charges ​ $ 4,037 ​ $ 1,829 ​ $ 710 ​ ​ 14. Segment Reporting Operating segments are defined as components of an enterprise that are evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer. The Company has three reportable segments, Control Devices, Electronics and Stoneridge Brazil, which also represent its operating segments. The Control Devices reportable segment produces actuators, sensors, switches and connectors. The Electronics reportable segment produces driver information systems, camera-based vision systems, connectivity and compliance products and electronic control units. The Stoneridge Brazil reportable segment designs and manufactures vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, in-vehicle audio and infotainment devices and telematics solutions. The accounting policies of the Company’s reportable segments are the same as those described in Note 2. The Company’s management evaluates the performance of its reportable segments based primarily on revenues from external customers, capital expenditures and operating income. Inter-segment sales are accounted for on terms similar to those to third parties and are eliminated upon consolidation. The financial information presented below is for our three reportable operating segments and includes adjustments for unallocated corporate costs and intercompany eliminations, where applicable. Such costs and eliminations do not meet the requirements for being classified as an operating segment. Corporate costs include various support functions, such as accounting/finance, executive administration, human resources, information technology and legal. ​ 80 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) A summary of financial information by reportable segment is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 ​ 2020 2019 2018 Net Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ Control Devices ​ $ 342,576 ​ $ 431,560 ​ $ 441,297 Inter-segment sales ​ ​ 5,475 ​ ​ 6,438 ​ ​ 8,348 Control Devices net sales ​ ​ 348,051 ​ ​ 437,998 ​ ​ 449,645 Electronics ​ ​ 257,767 ​ ​ 335,195 ​ ​ 344,727 Inter-segment sales ​ ​ 24,027 ​ ​ 33,735 ​ ​ 37,126 Electronics net sales ​ ​ 281,794 ​ ​ 368,930 ​ ​ 381,853 Stoneridge Brazil ​ ​ 47,663 ​ ​ 67,534 ​ ​ 80,175 Inter-segment sales ​ ​ - ​ ​ 6 ​ ​ 2 Stoneridge Brazil net sales ​ ​ 47,663 ​ ​ 67,540 ​ ​ 80,177 Eliminations ​ ​ ( 29,502 ) ​ ​ ( 40,179 ) ​ ​ ( 45,476 ) Total net sales ​ $ 648,006 ​ $ 834,289 ​ $ 866,199 Operating (Loss) Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Control Devices ​ $ 22,072 ​ $ 73,327 ​ $ 64,191 Electronics ​ ​ ( 3,672 ) ​ ​ 25,006 ​ ​ 28,236 Stoneridge Brazil ​ ​ 3,766 ​ ​ 6,539 ​ ​ 4,989 Unallocated Corporate (A) ​ ​ ( 29,830 ) ​ ​ ( 33,591 ) ​ ​ ( 30,412 ) Total operating (loss) income ​ $ ( 7,664 ) ​ $ 71,281 ​ $ 67,004 Depreciation and Amortization: ​ ​ ​ ​ ​ ​ ​ ​ ​ Control Devices ​ $ 15,377 ​ $ 13,397 ​ $ 11,914 Electronics ​ ​ 10,501 ​ ​ 9,872 ​ ​ 8,982 Stoneridge Brazil ​ ​ 4,766 ​ ​ 6,338 ​ ​ 7,443 Unallocated Corporate ​ ​ 2,592 ​ ​ 1,252 ​ ​ 852 Total depreciation and amortization (B) ​ $ 33,236 ​ $ 30,859 ​ $ 29,191 Interest Expense, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ Control Devices ​ $ 343 ​ $ 811 ​ $ 76 Electronics ​ ​ 612 ​ ​ 350 ​ ​ 85 Stoneridge Brazil ​ ​ 29 ​ ​ 208 ​ ​ 824 Unallocated Corporate ​ ​ 5,140 ​ ​ 2,955 ​ ​ 3,735 Total interest expense, net ​ $ 6,124 ​ $ 4,324 ​ $ 4,720 Capital Expenditures: ​ ​ ​ ​ ​ ​ ​ ​ ​ Control Devices ​ $ 11,760 ​ $ 12,646 ​ $ 16,737 Electronics ​ ​ 11,617 ​ ​ 15,476 ​ ​ 5,965 Stoneridge Brazil ​ ​ 2,839 ​ ​ 5,003 ​ ​ 3,242 Unallocated Corporate (C) ​ ​ 1,444 ​ ​ 2,699 ​ ​ 3,083 Total capital expenditures ​ $ 27,660 ​ $ 35,824 ​ $ 29,027 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31 ​ 2020 2019 Total Assets: ​ ​ ​ ​ ​ ​ Control Devices ​ $ 194,433 ​ $ 191,491 Electronics ​ ​ 303,914 ​ ​ 285,027 Stoneridge Brazil ​ ​ 61,350 ​ ​ 89,393 Corporate (C) ​ ​ 390,851 ​ ​ 358,766 Eliminations ​ ​ ( 329,140 ) ​ ​ ( 322,468 ) Total assets ​ $ 621,408 ​ $ 602,209 ​ ​ ​ ​ ​ ​ ​ ​ 81 Table of Contents STONERIDGE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data, unless otherwise indicated) The following table presents net sales and long-term assets for the geographic areas in which the Company operates: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 ​ 2020 2019 2018 Net Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ North America ​ $ 330,528 ​ $ 457,633 ​ $ 480,511 South America ​ ​ 47,663 ​ ​ 67,534 ​ ​ 80,175 Europe and Other ​ ​ 269,815 ​ ​ 309,122 ​ ​ 305,513 Total net sales ​ $ 648,006 ​ $ 834,289 ​ $ 866,199 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31 ​ 2020 2019 Long-term Assets: ​ ​ ​ ​ ​ ​ North America ​ $ 110,330 ​ $ 87,430 South America ​ ​ 33,785 ​ ​ 52,518 Europe and Other ​ ​ 142,629 ​ ​ 130,995 Total long-term assets ​ $ 286,744 ​ $ 270,943 (A) Unallocated Corporate expenses include, among other items, accounting/finance, human resources, information technology and legal costs as well as share-based compensation. ​ (B) These amounts represent depreciation and amortization on property, plant and equipment and certain intangible assets. ​ (C) Assets located at Corporate consist primarily of cash, intercompany receivables, fixed and leased assets for the headquarter building, information technology assets, equity investments and investments in subsidiaries . ​ 15. Unaudited Quarterly Financial Data The following is a summary of quarterly results of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter ended 2020 December 31 September 30 June 30 March 31 Net sales ​ $ 189,731 ​ $ 175,764 ​ $ 99,545 ​ $ 182,966 Gross profit ​ ​ 49,550 ​ ​ 45,995 ​ ​ 13,254 ​ ​ 45,397 Operating income (loss) ​ ​ 5,673 ​ ​ 9,827 ​ ​ ( 26,823 ) ​ ​ 3,659 Income tax expense (benefit) ​ ​ 920 ​ ​ 1,814 ​ ​ ( 6,721 ) ​ ​ 1,213 Net income (loss) ​ ​ 3,580 ​ ​ 6,714 ​ ​ ( 21,734 ) ​ ​ 3,490 Earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic (A) ​ $ 0.13 ​ $ 0.25 ​ $ ( 0.81 ) ​ $ 0.13 Diluted (A) ​ $ 0.13 ​ $ 0.25 ​ $ ( 0.81 ) ​ $ 0.13 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter ended 2019 December 31 September 30 June 30 (B) March 31 Net sales ​ $ 190,365 ​ $ 203,386 ​ $ 222,241 ​ $ 218,297 Gross profit ​ ​ 44,198 ​ ​ 51,855 ​ ​ 56,827 ​ ​ 60,853 Operating income ​ ​ 1,073 ​ ​ 9,323 ​ ​ 49,186 ​ ​ 11,699 Income tax (benefit) expense ​ ​ ( 4,249 ) ​ ​ 1,450 ​ ​ 9,066 ​ ​ 1,835 Net income ​ ​ 4,209 ​ ​ 6,661 ​ ​ 39,764 ​ ​ 9,657 Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic (A) ​ $ 0.15 ​ $ 0.24 ​ $ 1.43 ​ $ 0.34 Diluted (A) ​ $ 0.15 ​ $ 0.24 ​ $ 1.41 ​ $ 0.33 (A) Earnings per share for the year may not equal the sum of the four historical quarters earnings per share due to changes in weighted-average basic and diluted shares outstanding. (B) The Company recognized a gain on disposal of Non-core Products in our Control Devices segment, net of $ 33,599 in the quarter ended June 30, 2019. See Note 2 to the Company’s consolidated financial statements for further information . ​ ​ 82 Table of Contents SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS ​ The following schedule provides the activity for accounts receivable reserves and valuation allowance for deferred tax assets for the years ended December 31, 2020, 2019 and 2018 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ Charged to ​ ​ ​ ​ ​ ​ ​ ​ beginning of ​ costs and ​ ​ ​ ​ Balance at ​ period expenses (income) Write-offs end of period Accounts receivable reserves: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2020 ​ $ 1,289 ​ $ 1,130 ​ $ ( 1,602 ) ​ $ 817 Year ended December 31, 2019 ​ ​ 1,243 ​ ​ 1,126 ​ ​ ( 1,080 ) ​ ​ 1,289 Year ended December 31, 2018 ​ ​ 1,109 ​ ​ 1,244 ​ ​ ( 1,110 ) ​ ​ 1,243 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net additions ​ Exchange rate ​ ​ ​ ​ ​ Balance at ​ charged to ​ fluctuations ​ ​ ​ ​ ​ beginning of ​ expense ​ and other ​ Balance at ​ period (benefit) items end of period Valuation allowance for deferred tax assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2020 ​ $ 8,586 ​ $ 2,174 ​ $ ( 523 ) ​ $ 10,237 Year ended December 31, 2019 ​ ​ 8,962 ​ ​ ( 138 ) ​ ​ ( 238 ) ​ ​ 8,586 Year ended December 31, 2018 ​ ​ 11,986 ​ ​ ( 1,922 ) ​ ​ ( 1,102 ) ​ ​ 8,962 ​ ​ Item 9. Changes In and Disagreements With Accountants On Accounting and Financial Disclosure. There have been no disagreements between the management of the Company and its Independent Registered Public Accounting Firm on any matter of accounting principles or practices of financial statement disclosures, or auditing scope or procedure.