UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2021~~March 31, 2022 or


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-10235

GENTEX CORPORATION

(Exact name of registrant as specified in its charter)


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

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

(616) 772-1800

(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.06 per share	GNTX	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: þ No: o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes: þ No: o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

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

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

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


Class						Shares Outstanding, ~~July 23, 2021~~April 22, 2022
Common Stock, $.06 Par Value						~~238,954,080~~234,459,296

GENTEX CORPORATION AND SUBSIDIARIES

For the Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022

FORM 10-Q

Index

PART I —FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements.

GENTEX CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021


		June 30, 2021 (Unaudited)		December 31, 2020 (Note)			March 31, 2022 (Unaudited)		December 31, 2021 (Note)
ASSETS	ASSETS					ASSETS
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	353,032,803	$	423,371,036	Cash and cash equivalents	$	279,708,413	$	262,311,670
Short-term investments	Short-term investments	13,798,827		27,164,369		Short-term investments	6,891,621		5,423,612
Accounts receivable, net	Accounts receivable, net	234,145,996		284,925,335		Accounts receivable, net	281,461,678		249,794,906
Inventories	Inventories	263,899,976		226,291,843		Inventories	362,736,521		316,267,442
Prepaid expenses and other	Prepaid expenses and other	59,698,574		17,577,981		Prepaid expenses and other	24,733,040		39,178,119
Total current assets	Total current assets	924,576,176		979,330,564		Total current assets	955,531,273		872,975,749

PLANT AND EQUIPMENT—NET	PLANT AND EQUIPMENT—NET	458,943,776		468,135,135		PLANT AND EQUIPMENT—NET	468,409,064		464,121,676

OTHER ASSETS	OTHER ASSETS					OTHER ASSETS
Goodwill	Goodwill	311,922,787		311,922,787		Goodwill	313,928,914		313,960,209
Long-term investments	Long-term investments	193,418,570		162,028,068		Long-term investments	175,824,026		207,693,147
Intangible assets, net	Intangible assets, net	251,213,561		249,748,127		Intangible assets, net	234,229,803		239,189,627
Patents and other assets, net	Patents and other assets, net	26,723,061		26,776,489		Patents and other assets, net	32,459,405		33,450,758
Total other assets	Total other assets	783,277,979		750,475,471		Total other assets	756,442,148		794,293,741

Total assets	Total assets	$	2,166,797,931	$	2,197,941,170	Total assets	$	2,180,382,485	$	2,131,391,166

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

CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable	Accounts payable	$	101,262,288	$	84,784,423	Accounts payable	$	140,887,194	$	98,342,928

Accrued liabilities	Accrued liabilities	95,134,329		92,952,434		Accrued liabilities	98,335,978		83,313,172
Total current liabilities	Total current liabilities	196,396,617		177,736,857		Total current liabilities	239,223,172		181,656,100

OTHER NON-CURRENT LIABILITIES	OTHER NON-CURRENT LIABILITIES	18,668,444		17,300,442		OTHER NON-CURRENT LIABILITIES	12,190,413		11,746,599

DEFERRED INCOME TAXES		35,413,881		38,960,743

Total liabilities	Total liabilities	250,478,942		233,998,042		Total liabilities	251,413,585		193,402,699

SHAREHOLDERS’ INVESTMENT	SHAREHOLDERS’ INVESTMENT					SHAREHOLDERS’ INVESTMENT
Common stock	Common stock	14,337,995		14,621,572		Common stock	14,068,640		14,186,450
Additional paid-in capital	Additional paid-in capital	859,678,392		852,771,508		Additional paid-in capital	881,371,438		879,413,385
Retained earnings	Retained earnings	1,038,037,564		1,089,698,996		Retained earnings	1,038,656,230		1,042,461,388
Accumulated other comprehensive income		4,265,038		6,851,052
Accumulated other comprehensive (loss) income						Accumulated other comprehensive (loss) income	(5,127,408)		1,927,244
Total shareholders’ investment	Total shareholders’ investment	1,916,318,989		1,963,943,128		Total shareholders’ investment	1,928,968,900		1,937,988,467
Total liabilities and shareholders’ investment	Total liabilities and shareholders’ investment	$	2,166,797,931	$	2,197,941,170	Total liabilities and shareholders’ investment	$	2,180,382,485	$	2,131,391,166

Note: The condensed consolidated balance sheet at December 31, ~~2020~~2021 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

GENTEX CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
NET SALES	NET SALES	$	428,005,026	$	229,925,556	$	911,729,865	$	683,687,281	NET SALES		$	468,250,776	$	483,724,839

COST OF GOODS SOLD	COST OF GOODS SOLD	276,408,285		185,980,748		576,832,956		483,154,994		COST OF GOODS SOLD		307,838,816		300,424,671
Gross profit	Gross profit	151,596,741		43,944,808		334,896,909		200,532,287		Gross profit		160,411,960		183,300,168

OPERATING EXPENSES:	OPERATING EXPENSES:									OPERATING EXPENSES:
Engineering, research and development	Engineering, research and development	29,059,058		28,992,968		56,711,139		58,608,390		Engineering, research and development		31,974,987		27,652,081
Selling, general & administrative	Selling, general & administrative	22,613,062		21,690,096		44,527,448		43,634,987		Selling, general & administrative		25,131,068		21,914,386
Total operating expenses	Total operating expenses	51,672,120		50,683,064		101,238,587		102,243,377		Total operating expenses		57,106,055		49,566,467

Income (Loss) from operations		99,924,621		(6,738,256)		233,658,322		98,288,910
Income from operations										Income from operations		103,305,905		133,733,701

OTHER INCOME
OTHER (LOSS) INCOME										OTHER (LOSS) INCOME
Investment income	Investment income	903,139		1,462,033		1,926,549		3,908,682		Investment income		788,316		1,023,410
Other income, net		987,959		1,404,196		1,497,584		1,205,030
Total other income		1,891,098		2,866,229		3,424,133		5,113,712
Other (loss) income, net										Other (loss) income, net		(798,810)		509,625
Total other (loss) income										Total other (loss) income		(10,494)		1,533,035

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		101,815,719		(3,872,027)		237,082,455		103,402,622
INCOME BEFORE PROVISION FOR INCOME TAXES										INCOME BEFORE PROVISION FOR INCOME TAXES		103,295,411		135,266,736

PROVISION FOR (BENEFIT FROM) INCOME TAXES		15,309,301		(1,497,994)		37,125,167		16,270,854
PROVISION FOR INCOME TAXES										PROVISION FOR INCOME TAXES		15,766,785		21,815,866

NET INCOME (LOSS)		$	86,506,418	$	(2,374,033)	$	199,957,288	$	87,131,768
NET INCOME										NET INCOME		$	87,528,626	$	113,450,870

EARNINGS (LOSS) PER SHARE: (1)
EARNINGS PER SHARE: (1)										EARNINGS PER SHARE: (1)
Basic	Basic	$	0.36	$	(0.01)	$	0.83	$	0.35	Basic		$	0.37	$	0.47
Diluted	Diluted	$	0.36	$	(0.01)	$	0.82	$	0.35	Diluted		$	0.37	$	0.46

Cash Dividends Declared per Share	Cash Dividends Declared per Share	$	0.120	$	0.120	$	0.240	$	0.240	Cash Dividends Declared per Share		$	0.120	$	0.120

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

GENTEX CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Net income (Loss)		$	86,506,418	$	(2,374,033)	$	199,957,288	$	87,131,768
Net income										Net income		$	87,528,626	$	113,450,870

Other comprehensive income (loss) before tax:	Other comprehensive income (loss) before tax:									Other comprehensive income (loss) before tax:
Foreign currency translation adjustments	Foreign currency translation adjustments	963,199		136,627		110,787		(555,463)		Foreign currency translation adjustments		(896,420)		(852,412)

Unrealized gains (losses) on debt securities, net		1,705,281		3,022,561		(3,413,672)		5,802,291
Unrealized (losses) gains on debt securities, net										Unrealized (losses) gains on debt securities, net		(7,795,230)		(5,118,953)

Other comprehensive income (loss), before tax	Other comprehensive income (loss), before tax	2,668,480		3,159,188		(3,302,885)		5,246,828		Other comprehensive income (loss), before tax		(8,691,650)		(5,971,365)

Income tax impact related to components of other comprehensive income (loss)	Income tax impact related to components of other comprehensive income (loss)	358,109		634,738		(716,871)		1,218,481		Income tax impact related to components of other comprehensive income (loss)		(1,636,998)		(1,074,980)

Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	2,310,371		2,524,450		(2,586,014)		4,028,347		Other comprehensive income (loss), net of tax		(7,054,652)		(4,896,385)

Comprehensive income	Comprehensive income	$	88,816,789	$	150,417	$	197,371,274	$	91,160,115	Comprehensive income		$	80,473,974	$	108,554,485

~~GENTEX CORPORATION AND SUBSIDIARIES~~

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT~~

~~For the Three Months Ended June 30, 2021 and 2020~~

Common
Stock
Shares Common
Stock
Amount Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total
Shareholders’
Investment
BALANCE AS OF APRIL 1, 2021 241,538,824 $ 14,492,329 $ 859,355,232 $ 1,085,178,486 $ 1,954,667 $ 1,960,980,714
Issuance of common stock from stock plan transactions 838,896 50,334 4,340,710 — — 4,391,044
Repurchases of common stock (3,411,131) (204,668) (10,745,063) (104,971,348) — (115,921,079)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock — — 6,727,513 — — 6,727,513
Dividends declared ($0.12 per share) — — — (28,675,992) — (28,675,992)
Net income — — — 86,506,418 — 86,506,418
Other comprehensive income — — — — 2,310,371 2,310,371
BALANCE AS OF JUNE 30, 2021 238,966,589 $ 14,337,995 $ 859,678,392 $ 1,038,037,564 $ 4,265,038 $ 1,916,318,989
BALANCE AS OF APRIL 1, 2020 244,865,658 $ 14,691,939 $ 801,388,454 $ 1,018,310,446 $ 214,794 $ 1,834,605,633
Issuance of common stock from stock plan transactions 746,112 44,767 8,310,437 — — 8,355,204
Issuance of common stock related to acquisitions 163,718 9,823 3,549,406 — — 3,559,229
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock — — 5,430,583 — — 5,430,583
Dividends declared ($0.12 per share) — — — (29,493,653) — (29,493,653)
Net loss — — — (2,374,033) — (2,374,033)
Other comprehensive income — — — — 2,524,450 2,524,450
BALANCE AS OF JUNE 30, 2020 245,775,488 $ 14,746,529 $ 818,678,880 $ 986,442,760 $ 2,739,244 $ 1,822,607,413

GENTEX CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT

For the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~


														Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Shareholders’ Investment
BALANCE AS OF JANUARY 1, 2022													BALANCE AS OF JANUARY 1, 2022	236,440,840	$	14,186,450	$	879,413,385	$	1,042,461,388	$	1,927,244	$	1,937,988,467
Issuance of common stock from stock plan transactions													Issuance of common stock from stock plan transactions	476,688	28,601		3,295,546		—		—		3,324,147

Repurchases of common stock													Repurchases of common stock	(2,440,190)	(146,411)		(8,125,830)		(62,979,781)		—		(71,252,022)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock													Stock-based compensation expense related to stock options, employee stock purchases and restricted stock	—	—		6,788,337		—		—		6,788,337
Dividends declared ($0.12 per share)													Dividends declared ($0.12 per share)	—	—		—		(28,354,003)		—		(28,354,003)
Net income													Net income	—	—		—		87,528,626		—		87,528,626
Other comprehensive loss													Other comprehensive loss	—	—		—		—		(7,054,652)		(7,054,652)
BALANCE AS OF MARCH 31, 2022													BALANCE AS OF MARCH 31, 2022	234,477,338	$	14,068,640	$	881,371,438	$	1,038,656,230	$	(5,127,408)	$	1,928,968,900
		Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Investment
BALANCE AS OF JANUARY 1, 2021	BALANCE AS OF JANUARY 1, 2021	243,692,869	$	14,621,572	$	852,771,508	$	1,089,698,996	$	6,851,052	$	1,963,943,128	BALANCE AS OF JANUARY 1, 2021	243,692,869	$	14,621,572	$	852,771,508	$	1,089,698,996	$	6,851,052	$	1,963,943,128
Issuance of common stock from stock plan transactions	Issuance of common stock from stock plan transactions	1,439,916	86,395		13,570,489		—		—		13,656,884		Issuance of common stock from stock plan transactions	601,020	36,061		9,229,779		—		—		9,265,840

Repurchases of common stock	Repurchases of common stock	(6,166,196)	(369,972)		(19,285,763)		(193,958,107)		—		(213,613,842)		Repurchases of common stock	(2,755,065)	(165,304)		(8,540,700)		(88,986,759)		—		(97,692,763)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock	Stock-based compensation expense related to stock options, employee stock purchases and restricted stock	—	—		12,622,158		—		—		12,622,158		Stock-based compensation expense related to stock options, employee stock purchases and restricted stock	—	—		5,894,645		—		—		5,894,645
Dividends declared ($0.24 per share)		—	—		—		(57,660,613)		—		(57,660,613)
Dividends declared ($0.12 per share)													Dividends declared ($0.12 per share)	—	—		—		(28,984,621)		—		(28,984,621)
Net income	Net income	—	—		—		199,957,288		—		199,957,288		Net income	—	—		—		113,450,870		—		113,450,870
Other comprehensive loss	Other comprehensive loss	—	—		—		—		(2,586,014)		(2,586,014)		Other comprehensive loss	—	—		—		—		(4,896,385)		(4,896,385)
BALANCE AS OF June 30, 2021		238,966,589	$	14,337,995	$	859,678,392	$	1,038,037,564	$	4,265,038	$	1,916,318,989

BALANCE AS OF JANUARY 1, 2020		251,277,515	$	15,076,651	$	807,928,139	$	1,116,372,133	$	(1,289,103)	$	1,938,087,820
Issuance of common stock from stock plan transactions		1,353,287	81,198		15,629,494		—		—		15,710,692
Issuance of common stock related to acquisitions		163,718	9,823		3,549,406		—		—		3,559,229
Repurchases of common stock		(7,019,032)	(421,143)		(20,214,812)		(158,183,629)		—		(178,819,584)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock		—	—		11,786,653		—		—		11,786,653
Dividends declared ($0.24 per share)		—	—		—		(58,877,512)		—		(58,877,512)
Net income		—	—		—		87,131,768		—		87,131,768
Other comprehensive income		—	—		—		—		4,028,347		4,028,347
BALANCE AS OF June 30, 2020		245,775,488	$	14,746,529	$	818,678,880	$	986,442,760	$	2,739,244	$	1,822,607,413
BALANCE AS OF MARCH 31, 2021													BALANCE AS OF MARCH 31, 2021	241,538,824	$	14,492,329	$	859,355,232	$	1,085,178,486	$	1,954,667	$	1,960,980,714

GENTEX CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~


		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	Net income	$	199,957,288	$	87,131,768	Net income	$	87,528,626	$	113,450,870
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	51,497,665		53,437,698		Depreciation and amortization	24,711,500		25,599,131
(Gain) on disposal of assets	(Gain) on disposal of assets	(19,891)		(155,229)		(Gain) on disposal of assets	(33,982)		(2,391)
Loss on disposal of assets	Loss on disposal of assets	133,036		88,357		Loss on disposal of assets	11,067		131,490
(Gain) on sale of investments	(Gain) on sale of investments	(969,971)		(1,023,683)		(Gain) on sale of investments	(367,879)		(486,433)
Loss on sale of investments	Loss on sale of investments	192,346		72,871		Loss on sale of investments	704,214		41,681
Change in deferred income taxes	Change in deferred income taxes	(3,546,862)		(2,176,462)		Change in deferred income taxes	—		(1,544,501)
Stock-based compensation expense related to employee stock options, employee stock purchases and restricted stock	Stock-based compensation expense related to employee stock options, employee stock purchases and restricted stock	12,622,158		15,960,362		Stock-based compensation expense related to employee stock options, employee stock purchases and restricted stock	6,788,337		5,894,645

Change in operating assets and liabilities:	Change in operating assets and liabilities:					Change in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	50,784,339		64,981,864		Accounts receivable, net	(31,666,772)		7,253,692
Inventories	Inventories	(37,608,133)		(10,710,548)		Inventories	(46,469,079)		(6,768,464)
Prepaid expenses and other	Prepaid expenses and other	(41,394,722)		14,230,026		Prepaid expenses and other	16,082,077		768,229
Accounts payable	Accounts payable	16,477,865		(37,452,944)		Accounts payable	42,968,193		22,277,513
Accrued liabilities, excluding dividends declared and short-term debt	Accrued liabilities, excluding dividends declared and short-term debt	4,117,051		6,068,104		Accrued liabilities, excluding dividends declared and short-term debt	15,702,241		24,233,539
Net cash provided by operating activities	Net cash provided by operating activities	252,242,169		190,452,184		Net cash provided by operating activities	115,958,543		190,849,001

CASH FLOWS (USED FOR) FROM INVESTING ACTIVITIES:
CASH FLOWS USED FOR INVESTING ACTIVITIES:						CASH FLOWS USED FOR INVESTING ACTIVITIES:
Activity in available-for-sale securities:	Activity in available-for-sale securities:					Activity in available-for-sale securities:
Sales proceeds	Sales proceeds	34,250,068		5,607,634		Sales proceeds	37,158,611		15,019,323
Maturities and calls	Maturities and calls	16,685,000		90,017,368		Maturities and calls	1,000,000		2,000,000
Purchases	Purchases	(71,596,074)		(52,650,769)		Purchases	(15,889,063)		(31,379,609)
Plant and equipment additions	Plant and equipment additions	(31,352,443)		(28,828,066)		Plant and equipment additions	(23,892,169)		(12,599,388)
Proceeds from sale of plant and equipment	Proceeds from sale of plant and equipment	99,850		200,475		Proceeds from sale of plant and equipment	33,740		17,744
Acquisition of businesses, net of cash acquired	Acquisition of businesses, net of cash acquired	(12,023,440)		(7,031,827)		Acquisition of businesses, net of cash acquired	—		(12,023,440)
Increase in other assets	Increase in other assets	(458,637)		(3,886,518)		Increase in other assets	(455,419)		(1,643,884)
Net cash (used for) provided by investing activities		(64,395,676)		3,428,297
Net cash used for investing activities						Net cash used for investing activities	(2,044,300)		(40,609,254)

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

Issuance of common stock from stock plan transactions	Issuance of common stock from stock plan transactions	13,656,884		15,710,692		Issuance of common stock from stock plan transactions	3,324,147		9,265,840
Cash dividends paid	Cash dividends paid	(58,227,768)		(58,281,727)		Cash dividends paid	(28,589,625)		(29,243,108)
Repurchases of common stock	Repurchases of common stock	(213,613,842)		(178,819,584)		Repurchases of common stock	(71,252,022)		(97,692,763)

Net cash (used for) financing activities	Net cash (used for) financing activities	(258,184,726)		(146,390,619)		Net cash (used for) financing activities	(96,517,500)		(117,670,032)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(70,338,233)		47,489,862
NET INCREASE IN CASH AND CASH EQUIVALENTS						NET INCREASE IN CASH AND CASH EQUIVALENTS	17,396,743		32,569,715

CASH AND CASH EQUIVALENTS, beginning of period	CASH AND CASH EQUIVALENTS, beginning of period	423,371,036		296,321,622		CASH AND CASH EQUIVALENTS, beginning of period	262,311,670		423,371,036

CASH AND CASH EQUIVALENTS, end of period	CASH AND CASH EQUIVALENTS, end of period	$	353,032,803	$	343,811,484	CASH AND CASH EQUIVALENTS, end of period	$	279,708,413	$	455,940,751

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

The unaudited condensed consolidated financial statements included herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's ~~2020~~2021 annual report on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only a normal and recurring nature, necessary to present fairly the financial position of the Company as of ~~June 30, 2021,~~March 31, 2022, and the results of operations and cash flows for the interim periods presented.

(2) Goodwill and Other Intangible Assets

Goodwill represents the cost of an acquisition in excess of the fair values assigned to identifiable net assets acquired. The Company recorded Goodwill ofof: $307.4 million as part of the HomeLink® acquisition in ~~2013 and recorded an additional~~2013; $3.7 million ~~in Goodwill~~ as part of the acquisition of Vaporsens, Inc. ("Vaporsens") ~~that occurred~~ in the second quarter of ~~2020 and an additional $0.9~~2020; $0.2 million as part of the acquisition of Air-Craftglass Production BV ("Air-Craftglass") in ~~Goodwill~~the third quarter of 2020; $1.0 million as a part of the acquisition of Argil, Inc. ("Argil") ~~during~~in the fourth quarter of ~~2020.~~2020; and $2.0 million as part of the acquisition of Guardian Optical Technologies ("Guardian") in the first quarter of 2021. The carrying value of Goodwill as of both ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was ~~$311.9~~$313.9 million and $314.0 million, respectively, as set forth in the table below:


	Carrying Amount
Balance as of December 31, ~~2020~~2021	$	~~311,922,787~~313,960,209
Acquisitions	0—
Divestitures	0—
Impairments	0—
Other	0 (31,295)
Balance as of ~~June 30, 2021~~March 31, 2022	$	~~311,922,787~~313,928,914

In addition to annual impairment testing, which is performed as of the first day of the fourth quarter, the Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value of goodwill or other intangible assets thus resulting in the need for interim impairment testing, including long-term revenue growth projections, profitability, discount rates, recent market valuations from transactions by comparable companies, volatility in the Company's market capitalization, and general industry, market and macroeconomic conditions. The impact of COVID-19, the recent microchip shortage, supply chain constraints, and labor shortages were again considered in the most recently completed quarter, but did not indicate the need for interim impairment testing.

The Company also acquired In-Process Research & Development ("I P R & D") as part of the ~~acquisition of Vaporsens that occurred in the second quarter of 2020, the acquisition of Air-Craftglass Production BV ("Air-Craftglass") in the third quarter of 2020,~~acquisitions of: Vaporsens; Air-Craftglass; Argil; and ~~the acquisition of Argil in the fourth quarter of 2020,~~Guardian, each of which has been previously disclosed. ~~The Company also acquired Guardian Optical Technologies ("Guardian") in the first quarter of 2021. See~~ ~~Note 15~~ ~~for more information on the Guardian transaction.~~

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

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of ~~June 30,~~March 31, 2022:


Other Intangible Assets	Gross		Accumulated Amortization		Net		Assumed Useful Life
Gentex Patents	$	39,290,691	$	(26,730,389)	$	12,560,302	Various
Vaporsens Technology Licenses	351,290		(67,367)		283,923		Various

Other Intangible Assets
HomeLink® Trade Names and Trademarks	$	52,000,000	$	—	$	52,000,000	Indefinite
HomeLink® Technology	180,000,000		(127,500,000)		52,500,000		12 years
Existing Customer Platforms	43,000,000		(36,550,000)		6,450,000		10 years
Exclusive Licensing Agreement	96,000,000		—		96,000,000		Indefinite
Vaporsens In-Process R&D	11,000,000		—		11,000,000		Indefinite
Argil In-Process R&D	6,278,132		—		6,278,132		Indefinite
Air-Craftglass In-Process R&D	1,507,778		—		1,507,778		Indefinite
Guardian Trade Names	1,302,844		—		1,302,844		Indefinite
Guardian In-Process R&D	7,191,049		—		7,191,049		Indefinite
Total Other Intangible Assets	$	398,279,803	$	(164,050,000)	$	234,229,803

Total Patents & Other Intangible Assets	$	437,921,784	$	(190,847,756)	$	247,074,028

As of December 31, 2021:


Other Intangible Assets	Gross		Accumulated Amortization		Net		Assumed Useful Life
Gentex Patents	$	39,362,187	$	(26,506,155)	$	12,856,032	Various
Vaporsens Technology Licenses	351,290		(50,107)		301,183		Various

Other Intangible Assets
HomeLink® Trade Names and Trademarks	$	52,000,000	$	—	$	52,000,000	Indefinite
HomeLink® Technology	180,000,000		(123,750,000)		56,250,000		12 years
Existing Customer Platforms	43,000,000		(35,475,000)		7,525,000		10 years
Exclusive Licensing Agreement	96,000,000		—		96,000,000		Indefinite
Vaporsens In-Process R&D	11,000,000		—		11,000,000		Indefinite
Argil In-Process R&D	6,278,132		—		6,278,132		Indefinite
Air-Craftglass In-Process R&D	1,507,778		—		1,507,778		Indefinite
Guardian Trade Names	1,384,857		—		1,384,857		Indefinite
Guardian In-Process R&D	7,243,860		—		7,243,860		Indefinite
Total Other Intangible Assets	$	398,414,627	$	(159,225,000)	$	239,189,627

Total Patents & Other Intangible Assets	$	438,128,104	$	(185,781,262)	$	252,346,842

Amortization expense on patents and intangible assets was approximately $5.5 million during the three months ended March 31, 2022, and approximately $5.6 million for the same period ended March 31, 2021.

Excluding the impact of any future acquisitions, the Company estimates amortization expense for the year ending December 31, 2022 to be approximately $22 million annually, for the year ending December 31, 2023 to be approximately $20 million, for the year ending December 31, 2024 to be approximately $16

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other Intangible Assets Gross Accumulated Amortization Net Assumed Useful Life
Gentex Patents $ 38,860,181 $ (25,402,803) $ 13,457,378 Various
Vaporsens Technology Licenses 333,850 (58,232) 275,618 Various
Other Intangible Assets
HomeLink® Trade Names and Trademarks
$ 52,000,000 $ — $ 52,000,000 Indefinite
HomeLink® Technology
180,000,000 (116,250,000) 63,750,000 12 years
Existing Customer Platforms 43,000,000 (33,325,000) 9,675,000 10 years
Exclusive Licensing Agreement 96,000,000 — 96,000,000 Indefinite
Vaporsens In-Process R&D 11,000,000 — 11,000,000 Indefinite
Argil In- Process R&D 6,278,132 — 6,278,132 Indefinite
Air-Craftglass In-Process R&D 1,250,000 — 1,250,000 Indefinite
Guardian In-Process R&D 11,260,429 — 11,260,429 Indefinite
Total Other Intangible Assets $ 400,788,561 $ (149,575,000) $ 251,213,561
Total Patents & Other Intangible Assets $ 439,982,592 $ (175,036,035) $ 264,946,557

~~As of December 31, 2020:~~

Other Intangible Assets Gross Accumulated Amortization Net Assumed Useful Life
Gentex Patents $ 38,625,292 $ (24,528,853) $ 14,096,439 Various
Vaporsens Technology Licenses 300,985 (38,856) 262,129 Various
Other Intangible Assets
HomeLink® Trade Names and Trademarks
$ 52,000,000 $ — $ 52,000,000 Indefinite
HomeLink® Technology
180,000,000 (108,750,000) 71,250,000 12 years
Existing Customer Platforms 43,000,000 (31,175,000) 11,825,000 10 years
Exclusive Licensing Agreement 96,000,000 — 96,000,000 Indefinite
    Vaporsens In-Process R&D 11,000,000 — 11,000,000 Indefinite
    Argil In-Process R&D 6,278,132 — 6,278,132 Indefinite
    Air-Craftglass In-Process R&D 1,394,995 — 1,394,995 Indefinite
Total Other Intangible Assets $ 389,673,127 $ (139,925,000) $ 249,748,127
Total Patents & Other Intangible Assets $ 428,599,404 $ (164,492,709) $ 264,106,695

~~Amortization expense on patents and intangible assets was approximately $5.6~~ million, and ~~$11.2 million during the three and six months ended June 30, 2021, respectively, compared to approximately $5.6 million and $11.2 million~~ for ~~the same periods ended June 30, 2020, respectively.~~

~~Excluding the impact of any future acquisitions, the Company estimates amortization expense for each of~~ the years ending December 31, ~~2021~~2025 and ~~2022~~December 31, 2026 to be approximately~~$22 millionannually, for the year ending December 31, 2023 to be approximately$19 million, for the year ending December 31, 2024 to be approximately$16 million~~, ~~and for the year ending December 31, 2025 to be approximately$12 million~~. $12 million.

(3) Investments

~~GENTEX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The Company follows the provisions of Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures, for its financial assets and liabilities, and for its non-financial assets and liabilities subject to fair value measurements. ASC 820 provides a framework for measuring the fair value of assets and liabilities. This framework is intended to provide increased consistency in how fair value determinations are made under various existing accounting standards that permit, or in some cases, require estimates of fair-market value. This standard also expanded financial statement disclosure requirements with respect to a company’s use of fair-value measurements, including the effect of such measurements on earnings. The cost of securities sold is based on the specific identification method.

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

The Company's certificates of deposit are classified as available for sale and are considered as Level 1 assets. These investments are carried at cost, which approximates fair value.

The Company also periodically makes technology investments in certain non-consolidated third-parties. These equity investments are accounted for in accordance with ASC 321, Investments - Equity Securities. Equity investments that do not have readily determinable fair values, and where the Company has not identified any observable events that would cause adjustment of the valuation to date, are then held at cost. These technology investments totaled approximately ~~$9.0~~$18.6 million and ~~$4.0~~$16.8 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. These investments are classified within Long-Term Investments in the consolidated balance sheets.

Assets or liabilities that have recurring fair value measurements are shown below as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:

As of March 31, 2022:


			Fair Value Measurements at Reporting Date Using
	Total as of		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	March 31, 2022		(Level 1)		(Level 2)		(Level 3)
Cash & Cash Equivalents	$	279,708,413	$	279,708,413	$	—	$	—
Short-Term Investments:
Certificate of Deposit	753,625		753,625		—		—
Corporate Bonds	2,001,860		—		2,001,860		—

Municipal Bonds	1,251,802		—		1,251,802		—
Other	2,884,333		2,884,333		—		—
Long-Term Investments:
Asset Backed Securities	24,781,272		—		24,781,272		—
Certificate of Deposit	1,767,238		1,767,238		—		—
Corporate Bonds	41,177,112		—		41,177,112		—
Government Securities	38,685,508		—		38,685,508		—
Municipal Bonds	50,853,579		—		50,853,579		—


Total	$	443,864,742	$	285,113,609	$	158,751,133	$	—

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of ~~June 30,~~December 31, 2021:


			Fair Value Measurements at Reporting Date Using
	Total as of		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	December 31, 2021		(Level 1)		(Level 2)		(Level 3)
Cash & Cash Equivalents	$	262,311,670	$	262,311,670	$	—	$	—
Short-Term Investments:
Certificate of Deposit	1,507,770		1,507,770		—		—
Corporate Bonds	2,018,440		—		2,018,440		—
Government Securities	—		—		—		—
Municipal Bonds	—		—		—		—
Other	1,897,402		1,897,402		—		—
Long-Term Investments:
Asset-backed Securities	25,799,513		—		25,799,513		—
Certificate of Deposit	2,056,710		2,056,710		0		—
Corporate Bonds	40,354,929		—		40,354,929		—
Governmental Securities	47,944,036		—		47,944,036		—
Municipal Bonds	74,720,480		—		74,720,480		—
Total	$	458,610,950	$	267,773,552	$	190,837,398	$	—

The amortized cost, unrealized gains and losses, and market value of investment securities are shown as of March 31, 2022 and December 31, 2021:

Fair Value Measurements at Reporting Date Using
Total as of
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable
Inputs
Significant
Unobservable
Inputs
Description June 30, 2021 (Level 1) (Level 2) (Level 3)
Cash & Cash Equivalents $ 353,032,803 $ 353,032,803 $ 0 $ 0
Short-Term Investments:
Certificate of Deposit 1,511,377 1,511,377 0 0
Corporate Bonds 2,020,280 0 2,020,280 0
Government Securities 602,016 0 602,016 0
Municipal Bonds 7,951,512 0 7,951,512 0
Other 1,713,642 1,713,642 0 0
Long-Term Investments:
Asset Backed Securities 29,174,900 0 29,174,900 0
Certificate of Deposit 2,599,960 2,599,960 0 0
Corporate Bonds 27,966,498 0 27,966,498 0
Government Securities 35,738,826 0 35,738,826 0
Municipal Bonds 88,934,125 0 88,934,125 0
Total $ 551,245,939 $ 358,857,782 $ 192,388,157 $ 0

As of March 31, 2022:


			Unrealized
	Cost		Gains		Losses		Market Value
Short-Term Investments:
Certificate of Deposit	$	751,354	$	2,600	$	(329)	$	753,625
Corporate Bonds	1,996,774		5,086		—		2,001,860

Municipal Bonds	1,250,203		1,599		—		1,251,802
Other	2,884,333		—		—		2,884,333
Long-Term Investments:
Asset Backed Securities	25,406,929		—		(625,657)		24,781,272
Certificate of Deposit	1,750,000		19,888		(2,650)		1,767,238
Corporate Bonds	43,589,074		—		(2,411,962)		41,177,112
Government Securities	40,547,178		—		(1,861,670)		38,685,508
Municipal Bonds	52,501,468		254,830		(1,902,719)		50,853,579
Total	$	170,677,313	$	284,003	$	(6,804,987)	$	164,156,329

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of December 31, ~~2020:~~2021:
Fair Value Measurements at Reporting Date Using
Total as of
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable
Inputs
Significant
Unobservable
Inputs
Description December 31, 2020 (Level 1) (Level 2) (Level 3)
Cash & Cash Equivalents $ 423,371,036 $ 423,371,036 $ 0 $ 0
Short-Term Investments:
Certificate of Deposit 1,516,693 1,516,693 0 0
Corporate Bonds 7,155,600 0 7,155,600 0
Government Securities 6,678,450 0 6,678,450 0
Municipal Bonds 10,284,765 0 10,284,765 0
Other 1,528,861 1,528,861 0 0
Long-Term Investments:
Asset-backed Securities 37,924,537 0 37,924,537 0
Certificate of Deposit 3,645,520 3,645,520 0 0
Corporate Bonds 9,024,035 0 9,024,035 0
Municipal Bonds 107,407,831 0 107,407,831 0
Total $ 608,537,328 $ 430,062,110 $ 178,475,218 $ 0

~~The amortized cost, unrealized gains and losses, and market value of investment securities are shown as of June 30, 2021 and December 31, 2020:~~

~~As of June 30, 2021:~~
Unrealized
Cost Gains Losses Market Value
Short-Term Investments:
Certificate of Deposit $ 1,502,822 $ 10,107 $ (1,552) $ 1,511,377
Corporate Bonds 2,013,237 7,043 0 2,020,280
Government Securities 601,784 232 0 602,016
Municipal Bonds 7,926,891 24,621 0 7,951,512
Other 1,713,642 0 0 1,713,642
Long-Term Investments:
Asset Backed Securities 29,690,643 69,718 (585,461) 29,174,900
Certificate of Deposit 2,502,449 97,511 0 2,599,960
Corporate Bonds 27,724,234 362,001 (119,737) 27,966,498
Government Securities 35,656,412 90,333 (7,919) 35,738,826
Municipal Bonds 84,595,949 6,309,593 (1,971,417) 88,934,125
Total $ 193,928,063 $ 6,971,159 $ (2,686,086) $ 198,213,136

~~GENTEX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~As of December 31, 2020:~~


				Unrealized									Unrealized
		Cost		Gains		Losses		Market Value			Cost		Gains		Losses		Market Value
Short-Term Investments:	Short-Term Investments:									Short-Term Investments:
Certificate of Deposit	Certificate of Deposit	$	1,502,187	$	14,506	$	0	$	1,516,693	Certificate of Deposit	$	1,500,543	$	7,227	0		$	1,507,770
Corporate Bonds	Corporate Bonds	7,084,638		70,962		0		7,155,600		Corporate Bonds	1,994,639		23,801		—		2,018,440
Government Securities	Government Securities	6,635,132		43,318		0		6,678,450		Government Securities	0		0		—		—
Municipal Bonds	Municipal Bonds	10,160,376		124,389		0		10,284,765		Municipal Bonds	—		0		0		—
Other	Other	1,528,861		0		0		1,528,861		Other	1,897,402		0		0		1,897,402
Long-Term Investments:	Long-Term Investments:									Long-Term Investments:
Asset-backed Securities	Asset-backed Securities	37,681,113		800,802		(557,378)		37,924,537		Asset-backed Securities	26,352,630		34,771		(587,888)		25,799,513
Certificate of Deposit	Certificate of Deposit	3,503,898		141,622		0		3,645,520		Certificate of Deposit	2,001,714		54,996		—		2,056,710
Corporate Bonds	Corporate Bonds	8,595,020		429,015		0		9,024,035		Corporate Bonds	40,716,866		168,416		(530,353)		40,354,929

Government Securities										Government Securities	48,385,672		55,939		(497,575)		47,944,036
Municipal Bonds	Municipal Bonds	100,776,325		6,635,428		(3,922)		107,407,831		Municipal Bonds	72,175,568		2,747,964		(203,052)		74,720,480

Total	Total	$	177,467,550	$	8,260,042	$	(561,300)	$	185,166,292	Total	$	195,025,034	$	3,093,114	$	(1,818,868)	$	196,299,280

Unrealized losses on investments as of ~~June 30, 2021,~~March 31, 2022, are as follows:


		Aggregate Unrealized Losses		Aggregate Fair Value of Investments			Aggregate Unrealized Losses		Aggregate Fair Value of Investments
Loss duration of less than one year	Loss duration of less than one year	$	2,274,743	$	40,341,064	Loss duration of less than one year	$	5,817,906	$	135,887,611
Loss duration of greater than one year	Loss duration of greater than one year	411,342		1,956,482		Loss duration of greater than one year	987,081		10,371,045
Total	Total	$	2,686,085	$	42,297,546	Total	$	6,804,987	$	146,258,656

Unrealized losses on investments as of December 31, ~~2020,~~2021, are as follows:


		Aggregate Unrealized Losses		Aggregate Fair Value of Investments			Aggregate Unrealized Losses		Aggregate Fair Value of Investments
Loss duration of less than one year	Loss duration of less than one year	$	561,300	$	12,317,187	Loss duration of less than one year	$	1,244,053	$	94,417,123
Loss duration of greater than one year	Loss duration of greater than one year	0		0		Loss duration of greater than one year	574,815		6,875,230
Total	Total	$	561,300	$	12,317,187	Total	$	1,818,868	$	101,292,353

Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The guidance modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. The Company utilized the guidance provided by ASC 326 to determine whether any of the available-for-sale debt securities held by the Company were impaired. ~~NaN~~No investments were considered to be impaired during the periods presented. The Company has the intention and current ability to hold its debt investments until ~~the~~any amortized cost basis has been recovered.

Fixed income securities as of ~~June 30, 2021~~March 31, 2022 have contractual maturities as follows:


Due within one year	$	~~12,085,185~~4,007,287
Due between one and five years	~~42,578,597~~96,407,502
Due over five years	~~141,835,712~~60,857,208
	$	~~196,499,494~~161,271,997

1312

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

4) Inventories

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


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Raw materials	Raw materials	$	179,304,938	$	151,688,455	Raw materials	$	260,985,427	$	235,014,277
Work-in-process	Work-in-process	35,083,146		32,791,675		Work-in-process	37,592,293		34,032,164
Finished goods	Finished goods	49,511,892		41,811,713		Finished goods	64,158,801		47,221,001
Total Inventory	Total Inventory	$	263,899,976	$	226,291,843	Total Inventory	$	362,736,521	$	316,267,442

(5) Earnings Per Share

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

The following table sets forth the computation of basic and diluted net income per common share under the two-class method for the three months ended March 31, 2022 and March 31, 2021:


	Three Months Ended March 31,
		2022		2021
Basic Earnings Per Share
Net Income		$	87,528,626	$	113,450,870
Less: Dividends and undistributed earnings allocated to participating securities		1,360,047		1,671,188
Net Income available to common shareholders		$	86,168,579	$	111,779,682

Basic weighted average shares outstanding		232,151,296		239,559,370
Net Income per share - Basic		$	0.37	$	0.47

Diluted Earnings Per Share
Allocation of Net Income used in basic computation		$	86,168,579	$	111,779,682
Reallocation of undistributed earnings		2,500		10,883
Net Income available to common shareholders - Diluted		$	86,171,079	$	111,790,565

Number of shares used in basic computation		232,151,296		239,559,370
Additional weighted average dilutive common stock equivalents		638,515		2,133,781
Diluted weighted average shares outstanding		232,789,811		241,693,151

Net Income per share - Diluted		$	0.37	$	0.46

Shares related to stock plans not included in diluted average common shares outstanding because their effect would be anti-dilutive		1,572,223		271,383

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table sets forth the computation of basic and diluted net income per common share under the two-class method for the three and six months ended June 30, 2021 and June 30, 2020 respectively:
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Basic Earnings (Loss) Per Share
Net Income (Loss) $ 86,506,418 $ (2,374,033) $ 199,957,288 $ 87,131,768
Less: Dividends and undistributed earnings allocated to participating securities 1,324,767 439,327 2,974,367 1,245,275
Net Income (Loss) available to common shareholders $ 85,181,651 $ (2,813,360) $ 196,982,921 $ 85,886,493
Basic weighted average shares outstanding 238,602,197 241,684,323 238,198,668 243,983,276
Net Income (Loss) per share - Basic $ 0.36 $ (0.01) $ 0.83 $ 0.35
Diluted Earnings (Loss) Per Share
Allocation of Net Income (Loss) used in basic computation $ 85,181,651 $ (2,813,360) $ 196,982,921 $ 85,886,493
Reallocation of undistributed earnings 3,980 0 10,464 1,697
Net Income (Loss) available to common shareholders - Diluted $ 85,185,631 $ (2,813,360) $ 196,993,385 $ 85,888,190
Number of shares used in basic computation 238,602,197 241,684,323 238,198,668 243,983,276
Additional weighted average dilutive common stock equivalents 1,130,301 0 1,218,528 1,085,380
Diluted weighted average shares outstanding 239,732,498 241,684,323 239,417,196 245,068,656
Net Income (Loss) per share - Diluted $ 0.36 $ (0.01) $ 0.82 $ 0.35
Shares related to stock plans not included in diluted average common shares outstanding because their effect would be anti-dilutive 270,475 1,636,661 137,484 428,948

(6) Stock-Based Compensation Plans

As of ~~June 30, 2021,~~March 31, 2022, the Company had 2 equity incentive plans, which include the Gentex Corporation 2019 Omnibus Incentive Plan ("2019 Omnibus Plan"), and an employee stock purchase plan. Those plans and any prior material amendments thereto have previously been approved by shareholders.

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

Readers should refer to Note 5 of the consolidated financial statements in the Company's Annual Report on Form 10-K for the calendar year ended December 31, ~~2020,~~2021, for additional information related to the Prior Plans.

~~GENTEX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The Company recognized total compensation expense for share-based payments of ~~$6,727,513~~$6,788,337 for the three months ended~~June 30, 2021, and total compensation expense for share-based payments of $12,622,158 for the six months ended June 30, 2021.~~ March 31, 2022. The Company recognized compensation expense for share-based payments of ~~$9,641,353and $15,960,362~~$5,894,645 for the three ~~and six~~ months ended ~~June 30, 2020, respectively.~~March 31, 2021. A portion of the compensation cost for share based payment awards is capitalized as part of inventory.

2019 Omnibus Incentive Plan

The purpose of the 2019 Omnibus Incentive Plan is to attract and retain employees, officers, and directors of the Company and its subsidiaries and to motivate and provide such persons incentives and rewards for performance. Pursuant to the terms of the Plan, each type of award counts against the available shares based on a predetermined conversion rate (shown in the table below). As of ~~June 30, 2021, 5,735,302~~March 31, 2022, 7,751,391 share awards have been ~~granted~~made under the ~~Plan.~~Plan, resulting in ~~14,332,742~~18,990,474 shares granted of the 45,000,000 total shares available to be issued under the Plan. The shares issued are presented net of shares from canceled/expired options and shares.


		Shares Granted	Conversion Rate	Total Shares Under 2019 Omnibus Plan		Shares Granted	Conversion Rate	Total Shares Under 2019 Omnibus Plan
Non-Qualified Stock Options	Non-Qualified Stock Options	2,925,681	1.00	2,925,681	Non-Qualified Stock Options	4,078,488	1.00	4,078,488
Restricted Stock / Performance Shares		2,809,621	4.06	11,407,061
Restricted Stock					Restricted Stock	3,072,533	4.06	12,474,484
Performance Shares					Performance Shares	600,370	4.06	2,437,502
Total	Total	5,735,302		14,332,742	Total	7,751,391		18,990,474

Employee Stock Options

Under the 2019 Omnibus Plan and the Employee Stock Option Plan, the option exercise price equals the stock’s market price on the date of grant. The options vest after one to five years, and expire after five to ten years. As of ~~June 30, 2021,~~March 31, 2022, there was ~~$8,999,790~~$9,068,470 of unearned compensation cost associated with stock options granted under the 2019 Omnibus Incentive Plan and the Employee Stock Option Plan, which is expected to be recognized over the remaining vesting periods.

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

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Dividend Yield (1)
1.86 % 1.99 % 1.88 % 2.01 %
Expected volatility (2)
27.68 % 27.91 % 27.76 % 27.21 %
Risk-free interest rate (3)
0.87 % 0.29 % 0.90 % 0.33 %
Expected term of options (years) (4)
4.15 4.16 4.15 4.16
Weighted-avg. grant date fair value $6.32 $4.67 $6.58 $4.24

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Three Months Ended March 31,
		2022		2021
Dividend Yield (1)		1.80	%	1.90	%
Expected volatility (2)		28.16	%	27.85	%
Risk-free interest rate (3)		2.42	%	0.92	%
Expected term of options (years) (4)		4.15		4.14
Weighted-avg. grant date fair value		$6.38		$6.85

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

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

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

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

Restricted Shares

Restricted shares awarded under the 2019 Omnibus Plan and the Second Restricted Stock Plan entitle the shareholder to all rights of common stock ownership except that the shares may not be sold, transferred, pledged, exchanged or otherwise disposed of during the restriction period. The restriction period is determined by the Compensation Committee, appointed by the Board of Directors, but may not exceed ten years under the terms of such plans. As of ~~June 30, 2021,~~March 31, 2022, the Company had unearned stock-based compensation of ~~$50,874,177~~$46,976,947 associated with the restricted stock grants issued under the 2019 Omnibus Plan and the prior plan. The unearned stock-based compensation related to these grants is being amortized

~~GENTEX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

to compensation expense over the applicable restriction periods. ~~Amortization expense from restricted stock in the three months ended June 30, 2021 was $4,459,401and amortization~~Compensation expense from restricted stock grants in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 was ~~$8,762,376.~~. ~~Amortization~~$5,290,805. Compensation expense from restricted stock grants ~~for~~in the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 was ~~$7,580,492 and $11,905,749, respectively, which included $4,148,477 of severance related expense for the second quarter of 2020.~~

$4,302,975.

Performance Shares

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

As of ~~June 30, 2021,~~March 31, 2022, the Company had unearned stock-based compensation of ~~$9,456,469~~$9,620,235 associated with these performance share grants. The unearned stock-based compensation related to these grants is being amortized to compensation expense over the applicable performance periods. ~~Amortization expense from performance share grants in the three and six months ended June 30, 2021 was $701,524 and $805,754, respectively.~~ ~~Amortization expense from performance share grants in the three and six months ended June 30, 2020 was $563,783 and $957,560, respectively.~~

Employee Stock Purchase Plan

The Company has an employee stock purchase plan covering 2,000,000 shares of common stock. Under the plan, the Company sells shares at 85% of the stock’s market price at date of purchase. Under ASC 718, Compensation - Stock Compensation, the 15% discounted value is recognized as compensation expense. As of ~~June 30, 2021,~~March 31, 2022, the Company has issued ~~1,423,819~~1,576,179 shares under this plan.

(7) Comprehensive Income

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

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

1715

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Foreign currency translation adjustments:
Balance at beginning of period $ (83,367) $ (3,076,679) $ 769,045 $ (2,384,589)
Other Comprehensive income (loss) before reclassifications 963,199 136,627 110,787 (555,463)
Net current-period change 963,199 136,627 110,787 (555,463)
Balance at end of period 879,832 (2,940,052) 879,832 (2,940,052)
Unrealized gains on available-for-sale debt securities:
Balance at beginning of period 2,038,034 3,291,473 6,082,007 1,095,486
Other Comprehensive income (loss) before reclassifications 1,610,141 3,109,755 (2,082,477) 5,334,951
Amounts reclassified from accumulated other comprehensive income (262,969) (721,932) (614,324) (751,141)
Net current-period change 1,347,172 2,387,823 (2,696,801) 4,583,810
Balance at end of period 3,385,206 5,679,296 3,385,206 5,679,296
Accumulated other comprehensive income, end of period $ 4,265,038 $ 2,739,244 $ 4,265,038 $ 2,739,244
The following table presents the net changes in the Company's accumulated other comprehensive income by component (all amounts shown are net of tax):


	Three Months Ended March 31,
		2022		2021
Foreign currency translation adjustments:
Balance at beginning of period		$	920,589	$	769,045
Other Comprehensive loss before reclassifications		(896,420)		(852,412)

Net current-period change		(896,420)		(852,412)
Balance at end of period		24,169		(83,367)

Unrealized gains on available-for-sale debt securities:
Balance at beginning of period		1,006,655		6,082,007
Other Comprehensive loss before reclassifications		(6,423,937)		(3,692,619)
Amounts reclassified from accumulated other comprehensive income		265,705		(351,354)
Net current-period change		(6,158,232)		(4,043,973)
Balance at end of period		(5,151,577)		2,038,034







Accumulated other comprehensive (loss) income, end of period		$	(5,127,408)	$	1,954,667

The following table presents details of reclassifications out of accumulated other comprehensive (loss) income for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


Details about Accumulated Other Comprehensive Income Components	Details about Accumulated Other Comprehensive Income Components	Amounts Reclassified from Other Comprehensive Income								Affected Line item in the Statement of Consolidated Income	Details about Accumulated Other Comprehensive Income Components		Amounts Reclassified from Other Comprehensive (Loss) Income					Affected Line item in the Consolidated Statements of Income
		Three Months Ended June 30,				Six Months Ended June 30,						Three Months Ended March 31,
		2021		2020		2021		2020						2022		2021
Unrealized gains on available-for-sale debt securities
Realized gain on sale of securities		$	332,872	$	913,838	$	777,625	$	950,812	Investment income
Unrealized (losses) gains on available-for-sale debt securities											Unrealized (losses) gains on available-for-sale debt securities
Realized (loss) gain on sale of securities											Realized (loss) gain on sale of securities			$	(336,335)	$	444,752	Investment income
Provision for income taxes	Provision for income taxes	(69,903)		(191,906)		(163,301)		(199,671)		Provision for (Benefit from) income taxes	Provision for income taxes			70,630		(93,398)		Provision for income taxes
Total net reclassifications for the period	Total net reclassifications for the period	$	262,969	$	721,932	$	614,324	$	751,141	Net of tax	Total net reclassifications for the period			$	(265,705)	$	351,354	Net of tax

(8) Debt and Financing Arrangements

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

Pursuant to this Credit Agreement, the Company has access to a $150 million senior revolving credit facility (“Revolver”). Under the terms of the Credit Agreement, the Company is entitled to further request an additional aggregate principal amount of up to $100 million, subject to the satisfaction of certain conditions. In addition, the Company is entitled to the benefit of swing loans from amounts otherwise available under the Revolver in the aggregate principal amount of up to $20 million and to request Letters of Credit from amounts otherwise available under the Revolver in the aggregate principle amount up to $20 million, both subject to certain conditions. The obligations of the Company under the Credit Agreement are not secured, but are subject to certain covenants. As of March 31, 2022, there was 0 outstanding balance on the Revolver. The Revolver expires on October 15, 2023.

1816

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~but are subject to certain covenants. As of June 30, 2021, there was 0 outstanding balance on the Revolver. The Revolver expires on October 15, 2023.~~

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

As of ~~June 30, 2021,~~March 31, 2022, the Company is in compliance with its covenants under the Credit Agreement.

(9) Equity

The decrease in common stock during the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, was primarily due to the repurchases of ~~6.2~~2.4 million shares, partially offset by the issuance of ~~1.4~~0.5 million shares of the Company’s common stock, net of cancellations, under the Company’s stock-based compensation plans. The total net decrease was ~~4.7~~2.0 million shares.

The Company recorded a cash dividend of $0.120 per share during the ~~second~~first quarter of ~~2021~~2022 as compared to a cash dividend of $0.120 per share during the ~~second~~first quarter of ~~2020.~~2021. The ~~second~~first quarter ~~2021~~2022 dividend of ~~$28.7~~$28.1 million was declared on ~~June 7, 2021,~~March 3, 2022, and was paid on ~~July 21, 2021.~~April 20, 2022.

(10) Contingencies

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

(11) Segment Reporting

The Company's automotive segment develops and manufactures digital vision and connected car products and electronics, including: automatic-dimming rearview mirrors with and without electronic features; non-auto dimming rearview mirrors with and without electronic features; and other electronics. The Company also develops and manufactures variably dimming windows and laminate products for the aerospace industry and fire protection products for the commercial construction industry. In 2020, the Company acquired Vaporsens, which specializes in nanofiber chemical sensing. These three non-automotive segments are combined into the "Other" segment as shown below. In first quarter of 2021, the Company acquired Guardian, which is combined in the Automotive Segment below. Further information in regards to the Guardian transaction is included in Note 15 of the financial statements.


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Revenue:	Revenue:									Revenue:
Automotive Products	Automotive Products	$	420,622,653	$	222,067,846	$	896,240,089	$	661,923,434	Automotive Products		$	457,952,554	$	475,617,436
Other	Other	7,382,373		7,857,710		15,489,776		21,763,847		Other		10,298,222		8,107,403
Total	Total	$	428,005,026	$	229,925,556	$	911,729,865	$	683,687,281	Total		$	468,250,776	$	483,724,839
Income (Loss) from operations:	Income (Loss) from operations:									Income (Loss) from operations:
Automotive Products	Automotive Products	$	101,790,310	$	(6,054,235)	$	236,458,363	$	94,721,308	Automotive Products		$	103,475,509	$	134,668,052
Other	Other	(1,865,689)		(684,021)		(2,800,041)		3,567,602		Other		(169,604)		(934,351)
Total	Total	$	99,924,621	$	(6,738,256)	$	233,658,322	$	98,288,910	Total		$	103,305,905	$	133,733,701

1917

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(12) Income Taxes

The effective tax rate was ~~15.7%~~15.3% in the ~~six~~three months ended ~~June 30, 2021, consistent with the~~March 31, 2022, compared to an effective tax rate of ~~15.7%~~16.1% for the same period in ~~2020.~~2021. Generally, effective tax rates for these periods differ from statutory federal income tax rates, due to provisions for state and local income taxes, permanent tax differences, and the foreign-derived intangible income tax deduction and research and development tax credits.

(13) Revenue

The following table shows the Company’s Automotive revenue and Other Products revenue disaggregated by geographical location for Automotive Products for the three ~~and six~~ month periods ended ~~June 30,2021~~March 31, 2022 and ~~June 30, 2020:~~March 31, 2021:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
Revenue	Revenue	2021		2020		2021		2020		Revenue		2022		2021
Automotive Products	Automotive Products									Automotive Products
U.S.	U.S.	$	135,857,058	$	55,849,461	$	282,282,375	$	191,431,379	U.S.		$	142,193,971	$	146,425,317
Germany	Germany	58,935,672		23,866,009		128,350,856		96,651,733		Germany		67,565,320		69,415,184
Japan	Japan	54,160,515		37,333,947		108,064,110		88,470,880		Japan		54,762,488		53,903,595
Mexico	Mexico	28,589,143		13,589,601		60,335,131		59,540,082		Mexico		32,135,079		31,745,988
Other	Other	143,080,265		91,428,828		317,207,617		225,829,360		Other		161,295,696		174,127,352
Total Automotive Products	Total Automotive Products	$	420,622,653	$	222,067,846	$	896,240,089	$	661,923,434	Total Automotive Products		$	457,952,554	$	475,617,436
Other Products (U.S.)	Other Products (U.S.)	7,382,373		7,857,710		15,489,776		21,763,847		Other Products (U.S.)		10,298,222		8,107,403
Total Revenue	Total Revenue	$	428,005,026	$	229,925,556	$	911,729,865	$	683,687,281	Total Revenue		$	468,250,776	$	483,724,839

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

The following table disaggregates the Company’s Automotive revenue and Other revenue by major source for the three ~~and six~~ month periods ended ~~June 30, 2021~~March 31, 2022 and ~~June 30, 2020:~~March 31, 2021:
Three Months Ended June 30, Six Months Ended June 30,
Revenue 2021 2020 2021 2020
Automotive Segment
Automotive Mirrors & Electronics $ 390,074,655 $ 210,600,540 $ 825,581,585 $ 611,685,854
HomeLink Modules* 30,547,998 11,467,306 70,658,504 50,237,580
Total Automotive Products $ 420,622,653 $ 222,067,846 $ 896,240,089 $ 661,923,434
Other Segment
Fire Protection Products 6,319,662 4,837,540 12,123,820 11,006,291
Windows Products 1,062,711 3,020,170 3,365,956 10,757,557
Total Other $ 7,382,373 $ 7,857,710 $ 15,489,776 $ 21,763,848
*Excludes HomeLink revenue where HomeLink electronics are integrated into interior auto-dimming mirrors.


	Three Months Ended March 31,
Revenue		2022		2021
Automotive Segment
Automotive Mirrors & Electronics		$	423,626,489	$	435,506,930
HomeLink Modules*		34,326,065		40,110,506
Total Automotive Products		$	457,952,554	$	475,617,436

Other Segment
Fire Protection Products		8,447,686		5,804,158
Aerospace Products		1,850,536		2,303,245
Total Other		$	10,298,222	$	8,107,403

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

2018

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(14) Leases

The Company has operating leases for ~~corporate~~certain sales and engineering offices, ~~warehouses,~~as well as other vehicles and ~~other~~ equipment, which are included within "Plant and Equipment - Net" section of the Condensed Consolidated Balance Sheets. The leases have remaining lease terms of 1 year to 54 years. The weighted average remaining lease term for operating leases as of ~~June 30, 2021~~March 31, 2022 was 2 years, with a weighted average discount rate of ~~1.1%~~3.1%.

Future minimum lease payments for operating leases as of ~~June 30, 2021~~March 31, 2022 were as follows:


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

2021 (excluding the six months ended June 30, 2021)		$	774,897
2022		1,046,545
2022 (excluding the three months ended March 31, 2022)				2022 (excluding the three months ended March 31, 2022)	$	1,013,318
2023	2023	430,533		2023	921,600
2024	2024	38,075		2024	159,826
2025	2025	6,369		2025	7,102
Thereafter		127
2026				2026	430

Total future minimum lease payments	Total future minimum lease payments	2,296,546		Total future minimum lease payments	2,102,276
Less imputed interest	Less imputed interest	(12,135)		Less imputed interest	(25,959)
Total	Total	$	2,284,411	Total	$	2,076,317


Reported as of ~~June 30, 2021~~March 31, 2022

Accrued Liabilities	$	~~1,384,444~~1,300,709
Other Non-Current Liabilities	~~899,967~~775,608
Total	$	~~2,284,411~~2,076,317

(15) Acquisition

~~(15) Acquisitions~~

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

Air-Craftglass is now a 100% owned subsidiary of the Company, and is classified within the “Other” segment. The assets acquired and liabilities assumed as a part of this stock purchase were recorded at fair value on the acquisition date. The Company accounted for the acquisition under the provisions of FASB ASC Topic 805, ~~Business Combinations~~. There were 0 revenues of the business of Air-Craftglass which were included in the Company’s condensed consolidated statements of income and comprehensive income for the year to date period ended June 30, 2021.

On December 14, 2020, the Company acquired the stock of Argil for $3.7 million, which was in addition to the previous $4.2 million cash equity investment by the Company in Argil. The Company funded the

~~GENTEX CORPORATION AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

acquisition with a cash payment from cash on hand. Argil specializes in electrochromic technology and research and development, which the Company anticipates using to complement and expand its product offerings and leverage for manufacturing efficiencies. The Company is still in the process of verifying data and finalizing information related to the valuation and recording of identifiable intangible assets, deferred taxes, net working capital, and the resulting effects on the amount of recorded goodwill. The Company expects to finalize these matters within the measurement period, which is currently expected to remain open through the fourth quarter of 2021.

Argil is now a 100% owned subsidiary of the Company, and has been classified within the “Automotive” segment. The assets acquired and liabilities assumed as part of this stock purchase were recorded at fair value on the acquisition date. The Company accounted for the acquisition under the provisions of FASB ASC Topic 805, ~~Business Combinations~~. There were 0 revenues of the business of Argil which were included in the Company’s condensed consolidated statement of income and comprehensive income for the year to date period ended June 30, 2021.

On March 3, 2021 the Company acquired Guardian for approximately $12.0 million.Guardian is an Israeli research and development company that specializes in in-cabin sensing technologies for the automotive industry. The Company funded the acquisition with ~~a cash payment from~~ cash on hand. The ~~Company is still in the~~valuation process of verifying data and finalizing information related to the valuation and recording of identifiable intangible assets, deferred taxes, net working capital, and the resulting effects on the amount of recorded goodwill. The Company expects to finalize these matters within the measurement period, which is currently expected to remain open throughwas completed during the fourth quarter of 2021.

Guardian is now a 100% owned subsidiary of the Company as Gentex Technologies (Israel), LTD, and is classified within the Automotive segment. The Company accounted for the acquisition under the provisions of FASB ASC Topic 805, Business Combinations. There were 0 revenues of the business of Guardian which were included in the Company’s condensed consolidated statement of income and comprehensive income for the year to date period ended June 30, 2021.

~~The following table summarizes the fair values of the assets acquired, and the liabilities assumed, as of the acquisition date of March 3, 2021:~~


	~~Fair Value~~
~~Current Assets~~	$	~~32,000~~
~~Personal Property~~	~~15,000~~
~~In-Process R&D~~	~~10,945,367~~
~~Deferred Tax Asset~~	~~1,049,073~~
~~Total Net Assets Acquired~~	$	~~12,041,440~~

Through June 30, 2021, the Company has incurred acquisition-related costs of approximately $350,000, which has been expensed as incurred in the "Selling, general & administrative" section of its Condensed Consolidated Income Statement.

2219

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

~~SECOND QUARTER~~

THREE MONTHS ENDED MARCH 31, 2022 VERSUS THREE MONTHS ENDED MARCH 31, 2021 ~~VERSUS SECOND QUARTER 2020~~

Net Sales. Net ~~sales~~Sales for the ~~second quarter of 2021 increased~~three months ended March 31, 2022 decreased by~~$198.1~~ $15.5 millionor ~~86%~~3% when compared with the ~~second quarter of 2020.~~same period in 2021.

Automotive net sales for the ~~second quarter~~first three months of ~~2021~~2022 were ~~$420.6~~$458.0 million, down 4% compared with automotive net sales of ~~$222.1~~$475.6 million for the first three months of 2021, driven by a 7% quarter over quarter decrease in automotive mirror unit shipments. International automotive mirror shipments in the ~~second quarter of 2020. Auto-dimming mirror unit shipments grew 98% during~~three months ended March 31, 2022 decreased 10% to 7.4 million units compared with the ~~quarter, highlighted by 140% growth~~same period in ~~exterior-mirror unit shipments, in each case compared to the second quarter of 2020.~~

2021.

The below table represents the Company's auto-dimming mirror unit shipments for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022, and 2021 ~~and 2020~~ (in thousands).

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 % Change 2021 2020 % Change
North American Interior Mirrors 1,873 787 138% 3,946 2,806 41%
North American Exterior Mirrors 1,497 455 229% 2,990 1,689 77%
Total North American Mirror Units 3,370 1,242 171% 6,936 4,495 54%
International Interior Mirrors 4,811 2,916 65% 10,590 7,948 33%
International Exterior Mirrors 2,240 1,102 103% 4,676 3,211 46%
Total International Mirror Units 7,052 4,018 76% 15,266 11,159 37%
Total Interior Mirrors 6,684 3,703 81% 14,535 10,754 35%
Total Exterior Mirrors 3,738 1,557 140% 7,666 4,900 56%
Total Auto-Dimming Mirror Units 10,422 5,260 98% 22,202 15,654 42%


	Three Months Ended March 31,
		2022	2021	% Change
North American Interior Mirrors		2,161	2,073	4%
North American Exterior Mirrors		1,461	1,493	(2)%
Total North American Mirror Units		3,623	3,566	2%

International Interior Mirrors		5,087	5,779	(12)%
International Exterior Mirrors		2,293	2,436	(6)%
Total International Mirror Units		7,380	8,215	(10)%

Total Interior Mirrors		7,248	7,852	(8)%
Total Exterior Mirrors		3,755	3,929	(4)%
Total Auto-Dimming Mirror Units		11,003	11,780	(7)%

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

~~Other net sales were~~ ~~$7.4 million in the second quarter of 2021, a decrease of 6%,~~ ~~compared to $7.9 million in the second quarter of 2020.~~This decrease is in large part attributable to a 65% quarter over quarter decline in variable dimmable aircraft windows sales, which decreased to $1.1 million in the second quarter of 2021 from $3.0 million in the second quarter of 2020. Fire protection sales increased by 31% in the second quarter of 2021 to $6.3 million, compared to $4.8 million in the second quarter of 2020.

Cost of Goods Sold. As a percentage of net sales, cost of goods sold ~~decreased~~increased to ~~64.6%~~65.7% for the first three months of 2022, versus 62.1% in the ~~second~~same quarter of 2021 versus 80.9% in the second quarter of 2020. Compared to the COVID-19 impacted second quarter of 2020, gross margins improved due to the higher sales levels, significantly better overhead leverage, the structural cost savings put in place during 2020, and positive product mix on alast year. The quarter over quarter ~~basis.~~decrease in the gross profit margin was primarily the result of raw material cost increases, elevated freight expenses, labor cost increases in response to a tight labor market, and annual customer price reductions. On a quarter over quarter basis, ~~the fixed overhead leverage~~raw material increases had a ~~positive~~negative impact of approximately 1,000 basis points (10 percentage points) on the gross margin, and the savings as a result of structural cost reductions that took place in the second quarter of 2020 had a positive impact of approximately 200 - 300150-200 basis points on gross margin. ~~The above-referenced positive product mix~~Both freight expenses and labor cost increases each had a ~~positive~~separate negative impact on gross margin of approximately 50 - 100 basis points. Annual customer price reductions had a negative impact of approximately 100 - 150 basis points on gross margin on a quarter over quarter basis. ~~These positive impacts were partially offset by annual customer price reductions, which had a negative impact of approximately 150 basis points on gross margin on a quarter over quarter basis.~~

Operating ~~Expenses~~.Expenses. Engineering, research, and development expenses ("E, R & D") ~~expenses~~ for the ~~second~~three months ended March 31, 2022 were $32.0 million, compared with $27.7 million for the same quarter last year. The 16% increase in E, R & D in the first quarter of 2022 compared to the first quarter of 2021 was primarily due to additional staffing and professional fees, related to new product development and the ongoing product re-designs necessary to mitigate electronics part shortages.

Selling, general, and administrative expenses ("S, G & A") for the first three months of 2022 increased ~~by $0.1~~15% or $3.2 million when compared with the ~~second~~same quarter ~~of 2020.~~

~~Selling, general and administrative ("S, G & A") expenses increased by 4% or $0.9 million for the second quarter of 2021 compared to the second quarter of 2020.~~last year. This increase in S, G & A ~~expenses were 5% of net sales~~ in the ~~second~~first quarter of 2022 compared to the first quarter of 2021 ~~compared to 9% of net sales in the second quarter of 2020. S, G, & A expenses increased on a quarter over quarter basis~~was primarily due to increases in ~~wages~~outbound freight expenses and ~~selling~~the return of in-person customer meetings and trade show related expenses.

~~Total operating expenses were $51.7 million in the second quarter of 2021, which increased by 2% or $1.0 million, from $50.7 million in the second quarter of 2020.~~

Total Other (Loss) Income. Total other (loss) income for the ~~second quarter of 2021 decreased by $1.0~~three months ended March 31, 2022 was a loss less than $0.1 million, ~~when~~ compared with ~~the second quarter of 2020.~~

~~Provision for Income Taxes.The effective tax rate was 15.0% for, and an income tax expense of $15.3 million was recorded in, the second quarter of 2021 compared to an income tax benefit~~a gain of $1.5 million for the same quarter last year.

Provision for Income Taxes. The effective tax rate was 15.3% for the three months ended March 31, 2022 compared to 16.1% for the same period of ~~2020. Typically,~~2021. Generally, effective tax rates for ~~the Company~~these periods differ from statutory federal income tax rates, due to provisions for state and local income taxes, permanent tax differences, ~~research and development tax credits~~ and the foreign-derived intangible income tax ~~deduction.~~

~~Net Income.~~Net income for the second quarter of 2021 was $86.5 million, compared to a net loss of $2.4 million the second quarter of 2020. The increase in net income was driven by the quarter over quarter increase in sales, gross margins,deduction and ~~operating profits.~~

~~Earnings (Loss) Per Share.~~ The Company had earnings per diluted share for the second quarter of 2021 of $0.36, compared to a loss per diluted share of $0.01 for the second quarter of 2020. The increase in earnings per diluted share was the result of higher net income compared to the second quarter of 2020.

~~SIX MONTHS ENDED JUNE 30, 2021 VERSUS SIX MONTHS ENDED JUNE 30, 2020~~

~~Net Sales.~~ ~~Net Sales for the six months ended June 30, 2021increased by $228.0 million or 33% when compared with the same period in 2020.~~

Automotive net sales for the first six months of 2021 were $896.2 million, up 35% compared with automotive net sales of $661.9 million for the first six months of 2020, driven by a 42% period over period increase in automotive mirror unit shipments. North American automotive mirror shipments in the six months ended June 30, 2021 increased 54% to 6.9 million units compared with the same period in 2020.

~~Cost of Goods Sold.~~ As a percentage of net sales, cost of goods sold decreased to 63.3% for the first six months of 2021, versus 70.7% in the same period last year. The period over period increase in the gross profit margin was primarily the result of the Company's better leverage of fixed overhead, positive structural cost savings put in place during the second quarter of 2020,research and purchasing cost reductions. These improvements in gross margin were partially offset by annual customer price reductions. On a period over period basis, better fixed overhead leverage had a positive impact of approximately 400 - 450 basis points on gross margin, and the savings as a result of structural cost reductions that took place in the second quarter of 2020 had a positive impact of approximately 200 - 250 basis points on gross margin. Purchasing cost reductions had a positive impact of approximately 50 - 100 basis points on gross margin, each on a period over period basis. These positive impacts were partially offset by annual customer price reductions, which had a negative impact of approximately 150 - 200 basis points on gross margin on a period over period basis.

~~Operating Expenses.~~ E, R & D for the six months ended June 30, 2021 decreased 3% or $1.9 million when compared with the same period last year. The decrease in E, R & D was primarily due reductions in wages and discretionary spending stemming from the structural cost reductions put in place in the second quarter of 2020.

S, G & A for the first six months of 2021 increased 2.0% or $0.9 million when compared with the same period last year. In the first six months of 2021, the Company recognized S, G & A savings from the structural cost savings put in place in the second quarter of 2020, but those savings were mostly offset by increases in professional fees and outbound freight costs. A lack of international travel and the cancellation of all industry-based trade shows due to the COVID-19 pandemic also impacted operating expenses.

~~Total Other Income.~~ ~~Total other income for the six months ended June 30, 2021 was $3.4 million compared with $5.1 million for the same period last year.~~

~~Provision for Income Taxes.~~ ~~The effective~~development tax ~~rate was 15.7% for the six months ended June 30, 2021 compared to 15.7% for the same period of 2020.~~credits.

Net Income. Net income for the ~~six~~three months ended ~~June 30, 2021 increased~~March 31, 2022 decreased by ~~$112.8~~$25.9 million or ~~129%~~23% to ~~$200.0~~$87.5 million versus ~~$87.1~~$113.5 million in the same ~~period~~quarter last year.The ~~increase~~decrease in net income was ~~driven by~~primarily the ~~period~~result of the quarter over ~~period increase~~quarter changes in sales, ~~improved product mix, higher~~ gross margins and ~~the continued~~ operating ~~leverage as a result of the structural cost savings that were put in place during the second quarter of 2020.~~profits.

Earnings Per Share. The Company had earnings per diluted share for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 of ~~$0.82~~$0.37 which compared to earnings per diluted share of ~~$0.35~~$0.46 for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The ~~increase~~quarter of quarter decrease in earnings per share is primarily due to the ~~result of the higher~~lower net income, ~~and~~but was positively impacted by a lower diluted share count when compared to the ~~second~~same quarter of ~~2020.~~2021.

2521

FINANCIAL CONDITION:

The Company's cash and cash equivalents as of ~~June 30, 2021~~March 31, 2022 were ~~$353.0~~$279.7 million, which ~~decreased $70.3~~increased $17.4 million compared to ~~$423.4~~$262.3 million as of December 31, ~~2020.~~2021. The ~~decrease~~increase was primarily due to cash flows from operations, which was partially offset by share repurchases, dividend payments and capital expenditures, ~~which were partially offset by cash flows from operations,~~ during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Short-term investments as of ~~June 30, 2021~~March 31, 2022 were~~$13.8~~ $6.9 million,~~down~~ up from ~~$27.2~~$5.4 millionas of December 31, ~~2020,~~2021, and long-term investments were ~~$193.4~~$175.8 millionas of ~~June 30, 2021,~~March 31, 2022, compared to ~~$162.0~~$207.7 millionas of December 31, ~~2020.~~2021. Changes in the investment balances were primarily driven by maturities of investments, ~~and~~which were partially offset by additional investment purchases during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Accounts receivable as of ~~June 30, 2021 decreased~~March 31, 2022 increased approximately ~~$50.8~~$31.7 million compared to December 31, ~~2020,~~2021, primarily due to the timing of sales during the most recently completed ~~six~~three months. As of ~~June 30, 2021,~~March 31, 2022, all of the Company's material tier one and OEM customers continue to be in good standing.

Inventories as of ~~June 30, 2021~~March 31, 2022 were~~$263.9~~ $362.7 million, compared to ~~$226.3~~$316.3 million as of December 31, ~~2020,~~2021, primarily due to increases in raw materials and finished goods.

Accounts payable as of ~~June 30, 2021~~March 31, 2022 increasedapproximately~~$16.5~~ $42.5 millionto~~$101.3~~ $140.9 millionwhen compared to December 31, ~~2020,~~2021, primarily driven by month end payment timing.

Accrued liabilities as of ~~June 30, 2021~~March 31, 2022 increased approximately ~~$2.2~~$15.0 million compared to December 31, ~~2020,~~2021, primarily due to an increase in accrued salaries and ~~wages.~~wages, as well as accrued income taxes.

Cash flow from operating activities for the ~~six~~three months ended ~~June 30, 2021 increased $61.8~~March 31, 2022 decreased $74.9 million to ~~$252.2~~$116.0 million, compared with ~~$190.5~~$190.8 million during the same ~~six~~three month period last year, primarily due ~~to increased~~decreases in net income and changes in working capital.

Capital expenditures for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 were approximately ~~$31.4~~$23.9 million, compared with approximately ~~$28.8~~$12.6 million for the same ~~six~~three month period last year.

The Company believes its existing and planned facilities are currently suitable, adequate, and have the capacity required for current and near-term planned business. Nevertheless, the Company continues to evaluate longer term facility needs. In the first quarter of 2022, the Company began construction on a 342,000 square-foot manufacturing facility located at a 140 acre site in Zeeland, Michigan, where the Company previously performed master planning and completed land infrastructure improvements. The total cost of the building project is expected to be approximately $75 - $85 million and will be funded with cash and cash equivalents on hand. The facility is expected to be operational in the fourth quarter of 2023.

The Company estimates that it currently has building capacity to manufacture approximately 3334 - 3637 million interior mirror units annually and approximately 1415 - 1718 million exterior mirror units annually, based on current product mix. The Company also evaluates equipment capacity on an ongoing basis and adds equipment as needed.

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

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


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Working Capital	Working Capital	$	728,179,559	$	801,593,707	Working Capital	$	716,308,101	$	691,319,649
Long Term Investments	Long Term Investments	193,418,570		162,028,068		Long Term Investments	175,824,026		207,693,147
Total	Total	$	921,598,129	$	963,621,775	Total	$	892,132,127	$	899,012,796

The Company has a previously announced share repurchase plan under which the Board of Directors has authorized the repurchase of shares of the Company's common stock, which remains a part of the broader publicly disclosed capital allocation strategy. Future share repurchases may vary from time to time and will take into account macroeconomic events (including the COVID-19 ~~pandemic)~~pandemic, industry-wide parts

shortages, and global supply chain constraints), market trends, and other factors the Company deems appropriate (including the market price of the stock, anti-dilutive effect of repurchases, and available cash). ~~At a recent meeting, the Company's Board of Directors authorized the repurchase of an additional 25,000,000 shares under the plan.~~ During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, the Company repurchased ~~6,166,196~~2,440,190 shares.The Company has ~~28,253,070~~22,383,878 shares remaining under the plan as of ~~June 30, 2021,~~March 31, 2022, as is further detailed in Part II, Item 2 of this Form 10-Q.

BUSINESS UPDATE

For the ~~second~~first quarter of ~~2021,~~2022, the Company reported net sales of ~~$428.0~~$468.3 million, ~~which was an increase of 86%~~ compared to net sales of ~~$229.9~~$483.7 million in the ~~second~~first quarter of ~~2020. On a quarter-over-quarter basis,~~2021. For the first quarter of 2022, global light vehicle production decreased approximately 5% when compared to the first quarter of 2021. Additionally, light vehicle production in the Company's primary ~~regions~~markets of ~~Europe,~~ North America, Europe and Japan/Korea, declined by 11% on a quarter over quarter basis. These declines were primarily a result of the ongoing industry-wide component shortages and ~~China increased 36%~~global supply chain constraints. Additionally, when compared to the ~~COVID-19 impacted second quarter of 2020. However, when compared to the mid-April 2021~~mid-January 2022 IHS Markit light vehicle production forecast in the ~~Company's~~Company’s primary regions, actual light vehicle production induring the ~~second~~first quarter of ~~2021~~2022 declined approximately 1.1 million units, or 7% as a result of industry-wide part shortages and global supply chain constraints. The largest deviation from the forecasted production within the quarter came in North America, which saw an actual light vehicle production decline in excess of 15% compared to the mid-April 2021 forecast. The reduction in light vehicle production compared to forecast was led by certain OEM customers that deploy high levels of the Company's product content, including both interior and exterior auto-dimming mirrors and other electronic features such as Full Display Mirror® ~~and HomeLink~~®4%. In total, the impact from the shortfall in vehicle production compared to forecast, led to an estimated mirror unit shipment reduction of approximately 2 million units versus the Company's beginning of the quarter expectations.

The Company's initial forecast for the second quarter was for sales to be one of the largest quarters in the Company's history, but the continual changes in releases and orders resulted in the push out of approximately 2 million units. The unit shipment changes were most severe in North America where the Company's dollar content per vehicle is above the corporate average. When looking forward into the second ~~half of the year~~quarter and into ~~2022,~~2023, the Company believes that the overall demand for vehicles and its products should still provide opportunities for the Company to continue to outperform the underlying market.

In the ~~second~~first quarter of ~~2021,~~2022, the Company had ~~29 total~~21 net new launches of interior and exterior auto-dimming mirrors and electronic features. OfAlso in the first quarter of 2022, there were several new base inside auto-dimming mirror launches, and of these, ~~new launches, 45% contained advanced features with Full Display Mirror~~® ~~being~~60% were for the ~~primary driver.~~China domestic market.

PRODUCT UPDATE

Camera Systems

The Full Display Mirror® began production in the fourth quarter of 2015. Current automotive design trends are yielding vehicles with small rear windows that are often further obstructed by headrests, passengers, and roof support pillars which can significantly hinder the mirror’s rearward view. The Company's Full Display Mirror® is an intelligent rear vision system that uses a custom, internally or externally mounted video camera and mirror-integrated video display to optimize a vehicle driver’s rearward view. This rear vision system consists of a hybrid Full Display Mirror® that offers bi-modal functionality. In mirror mode, the product functions as an auto-dimming rearview mirror which means that during nighttime driving, digital light sensors talk to one another via a microprocessor to automatically darken the mirror when glare is detected. With the flip of a switch, the mirror enters display mode, and a clear, bright display appears through the mirror’s reflective surface, providing a wide, unobstructed rearward view. The bi-modality of the Full Display Mirror® is essential, because in the event of any failure of the camera or display, the product is able to function as a mirror, which meets long-standing safety requirements in the automotive industry. In addition, the driver has the ability to switch between modes to accommodate usage preferences for various weather conditions, lighting conditions, and driving tasks.

As of the ~~second~~first quarter of ~~2021,~~2022, the Company is shipping production Full Display Mirrors® to ~~nine~~thirteen different automaker customers, which are General Motors, Subaru, Toyota, Nissan, Jaguar Land Rover, Mitsubishi, Aston Martin, Stellantis, along with Maserati and ~~Maserati.~~Fiat, Mercedes, Ferrari, and Ford. As of the end of the ~~second~~first quarter of ~~2021,~~2022, the Company is shipping Full Display Mirror® on ~~56 nameplates, and is forecasting at least 10 new vehicle nameplate launches for the second half of 2021.~~70 nameplates. The second quarter 2020 launch of the Full Display Mirror® for the Toyota Harrier was the first Full Display Mirror® to launch with Digital Video Recording ("DVR") capability. This mirror and system launched in the Japan market, and combine the superior functionality of the Full Display Mirror® with the added capability to record video from the rearward facing and forward-facing cameras simultaneously. Per OEM request, the data is stored to an SD storage card. This integrated solution provides consumers with the features they want, while allowing the OEM to control the integration and execution in the vehicle. The Company remains confident that on-going discussions with certain other customers, in the future, may cause such customers to consider adding the Full Display Mirror® into their

product road-map for future vehicles. As of the end of the ~~second~~first quarter of ~~2021~~2022, the Company has been awarded Full Display Mirror® programs with 14 OEMs.

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

On March 31, 2014, the Alliance of Automobile Manufacturers petitioned the National Highway Traffic Safety Administration ("NHTSA") to allow automakers to use cameras as an option to replace conventional rearview mirrors within the United States. At the annual SAE Government-Industry Meeting in January 2017, NHTSA requested that SAE develop Recommended Procedures for test protocols and performance criteria for CMS that would replace mirror systems on light vehicles in the U.S. market. SAE assigned the task to the Driver Vision Committee, and the SAE Driver Vision Committee created a CMS Task Force to draft the Recommended Procedures. NHTSA published a report dated October 2018 related to camera monitoring systems for outside mirror replacements. On October 10, 2019, an Advanced Notice of Proposed Rulemaking (ANPRM) was published seeking public comment on permitting camera-based rear visibility systems, as an alternative to inside and outside rearview mirrors required under Federal motor vehicle safety standard (FMVSS) No. 111, “Rear Visibility,” which currently requires that vehicles be equipped with rearview mirrors to provide drivers with a view of objects that are to their side or to their side and rear. This ANPRM builds on NHTSA's prior efforts to obtain supporting technical information, data, and analysis on CMS so that the agency can determine whether these systems can provide the same level of safety as the rearview mirrors currently required under FMVSS No. 111. The ANPRM states that one reason NHTSA is seeking additional information is because research conducted by NHTSA and others between 2006 and 2017 has consistently shown that prototype and preproduction camera-based rear visibility systems can exhibit safety-relevant performance issues.

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

In July 2016, a revision to UN-ECE Regulation 46 was published with an effective date of June 18, 2016, which allows for CMS to replace mirrors in Japan and European countries. Since January 2017, camera monitoring systems are also permitted as an alternative to replace mirrors in the Korean market. Notwithstanding the foregoing, the Company continues to believe rearview mirrors provide a robust, simple and cost effective means to view the surrounding areas of a vehicle and remain the primary safety function for rear vision today. Cameras when used as the primary rear vision delivery mechanism have some inherent limitations such as: electrical failure; cameras being blocked or obstructed; depth perception challenges; and viewing angles of the camera. Nonetheless, the Company continues designing and manufacturing not only rearview mirrors, but CMOS imagers and video displays as well. The Company believes that combining video displays with mirrors may well provide a more robust product by addressing all driving conditions in a single solution that can be controlled by the driver. As noted, the Company is

~~currently~~has been in production with ~~a rear vision camera system that streams rear video to a rearview-mirror-integrated display using~~ the Company's Full Display Mirror®. since 2015 and has, in the ordinary course of business, been awarded programs with fourteen (14) OEM customers. The Company is currently shipping production Full Display Mirrors® to thirteen automaker customers. The Company's CMS solution uses three

cameras to provide a comprehensive view of the sides and rear of the ~~vehicle.~~vehicle while still providing the traditional safety of interior and exterior mirrors, which mirrors continue to function when cameras are obstructed or are not functioning. The Company previously announced a CMS development program with Aston Martin. The Company has also previously announced that the Company continues development in the areas of imager performance, camera dynamic range, lens design, image processing from the camera to the display, and camera lens cleaning. The Company acknowledges that as such technology evolves over time, such as cameras replacing mirrors and/or autonomous driving, there ~~could~~will be increased competition.

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

The European New Car Assessment Program ("Euro NCAP") provides an incentive for automobiles sold in Europe to apply safety technologies that include driver assist features such as lane detection, vehicle detection, and pedestrian detection as standard equipment. Euro NCAP compliant driver assist systems are also capable of including high beam assist as a function. The increased application of Euro NCAP on European vehicles has had the effect of replacing, and could potentially continue replacing, the Company's SmartBeam® application on these vehicles.

On December 8, 2015 NHTSA proposed changes to the NHTSA's 5-Star Safety Ratings for new vehicles (also known as the New Car Assessment Program or NCAP) and initiated a comment period. The proposed changes will, for the first time, encompass assessment of crash-avoidance technologies, which includes lower beam headlamp performance, semi-automatic headlamp switching, and blind spot detection. NHTSA initially intended to implement the enhancements in NCAP in 2018 beginning with model year 2019 vehicles. The NCAP implementation has been delayed. Under these proposed changes, the Company believes that its SmartBeam® technology will qualify with the semi-automatic headlamp NCAP rating system, and that its SmartBeam® technology and exterior mirrors with blind spot alert lighting can be included in a system that qualifies with the lower beam headlamp performance and blind spot detection NCAP rating system, respectively. On October 16, 2019, NHTSA issued a press release comparing NCAP to other regions’ version of NCAP, identified new technologies that are not currently included in NCAP, and suggested Congress legislatively direct actions to improve NCAP. In March 2020, HR 6256 was introduced, which would require NHTSA to update NCAP. There are multiple bills being discussed in both the U.S. House of Representatives and the U.S. Senate that relate to NCAP.

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

As noted, on October 10, 2019, an Advanced Notice of Proposed Rulemaking ("ANPRM") was published seeking public comment on permitting camera-based rear visibility systems, as an alternative to inside and

outside rearview mirrors required under FMVSS No. 111, “Rear Visibility,” which currently requires that vehicles be equipped with rearview mirrors to provide drivers with a view of objects that are to their side or to their side and rear. This ANPRM builds on NHTSA's prior efforts to obtain supporting technical information, data, and analysis on CMS so that the agency can determine whether these systems can provide the same level of safety as the rearview mirrors currently required under FMVSS No. 111. The ANPRM states that one reason NHTSA is seeking additional information is because research conducted by NHTSA and others between 2006 and 2017 has consistently shown that prototype and preproduction camera-based rear visibility systems can exhibit safety-relevant performance issues.

On February 1, 2022, NHTSA signed a Final Rule to allow for adaptive driving beam headlights and such Final Rule is awaiting publication in the Federal Registrar. The Company believes its adaptive SmartBeam® (dynamic lighting system), which has been manufactured and sold for many years in jurisdictions outside the United States, will be permitted under the NHTSA Final Rule.

Connected Car

The Company's HomeLink® products are the auto industry's most widely used and trusted car-to-home communication system, with an estimated 50 million units on the road. The system consists of two or three

in-vehicle buttons that can be programmed to operate garage doors, security gates, home lighting, and other radio-frequency-controlled devices. During the first quarter of 2017, the Company demonstrated the next generation of HomeLink®, commonly referred to as HomeLink Connect® which uses both RF and wireless cloud-based connectivity to deliver complete vehicle-to-home automation. With HomeLink Connect®, a HomeLink® button press communicates with the HomeLink Connect® app on the user’s smartphone. The app contains predefined, user-programmed actions, from single device operations to entire home automation scenes. The app, in turn, communicates to the home’s smart hub over the cloud activates the appropriate devices, including security systems, door locks, thermostats, lighting, and other home automation devices, providing comprehensive vehicle-to-home automation. The ability to prepare the home for arrival or departure can occur with one button press. For the automaker, it allows them to offer a customizable, yet proven solution without the engineering effort or security concerns associated with integrating third party software into the vehicle’s computer network. The Company also continues to work on providing HomeLink® applications for alternative automobile and vehicle types which include but are not limited to motorcycles, mopeds, snowmobiles, tractors, combines, lawn mowers, loaders, bulldozers, road-graders, backhoes and golf carts. In May 2021, the Company announced the Volkswagen as the first automaker to offer Bluetooth® enabled mirror for home automation that works in conjunction with HomeLink Connect®. The Company further continues to work with compatibility partners for HomeLink® applications in newer markets like China. The unique attributes of the China market allow for potential different use cases of these products and offer the potential for additional growth opportunities for the HomeLink® brand and products. In 2017, the Company began its first volume production shipments of HomeLink® units on vehicles for the China market.

In January 2016, the Company announced a partnership with TransCore to provide automobile manufacturers with a vehicle-integrated tolling solution that enables motorists to drive on nearly all U.S. toll roads without a traditional toll tag on the windshield. Currently more than 75 percent of new car registrations are in states with toll roads with over 50 million drivers accessing these roads each year. The Company signed an exclusive agreement, in the ordinary course of business, to integrate TransCore's toll module technology. In January 2017, the Company signed an extension of its agreement, in the ordinary course of business, which enables the Company to offer the Integrated Toll Module system in Canada and Mexico. In September 2019, the Company signed a new agreement with TransCore, in the ordinary course of business, which extended the term of the partnership. The interior mirror is the optimal location for a vehicle-integrated toll transponder and it eliminates the need to affix multiple toll tags to the windshield and helps automakers seamlessly integrate toll collection into the car. Since the Integrated Toll Module® or ITM® enables travel across almost all United States toll roads, and others in North America, motorists would no longer need multiple toll tags for different regions of the country or to manage multiple toll accounts. The Company's vehicle-integrated solution simplifies and expedites local, regional, and national travel. ITM® provides transportation agencies with an interoperability solution without costly infrastructure changes to the thousands of miles of toll lanes throughout North America. The Company believes that this product could potentially represent another growth opportunity over the next several years.

The Company has its first OEM award of ITM® with Audi. Currently, the Company is shipping ITM® on 911 platforms, which are: the A4, A5, A6, A7, A8, Q5, Q5 Sportback, Q7, Q8, e-tron, and the e-tron Sportback. The Company expects further ITM® nameplate launches with Audi throughout 2022 and ~~2023, as well as~~2023. During the ~~initial launch~~third quarter of 2021, the Company began shipping ITM® ~~at its~~to a second ~~OEM. The launch is targeted to begin production shipments in~~OEM customer, Mercedes, on the ~~second half of calendar year 2021.~~EQS model. In April 2020, the Company was honored with an Automotive News PACE Award for its ITM®

product, which recognizes automotive suppliers for superior innovation, technological advancement, and business performance.

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

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

In November 2020, the Company announced a partnership, in the ordinary course of business, with PayByCar™, to pursue compatibility between the Company's Integrated Toll Module and PayByCar's innovative payment solution that allows drivers to use their smartphones and toll transponder to fuel up at certain gas stations without using cash or a credit card. Compatibility between these two technologies can help to grow each company's respective consumer base while introducing new users to the benefits of the transactional vehicle.

In January 2021, the Company announced a partnership, in the ordinary course of business, with Simplenight to provide drivers and vehicle occupants with access to enhanced mobile capability for booking personalized entertainment and lifestyle experiences in addition to everyday purchases. Simplenight delivers a customizable and robust platform that enables brands to globally offer real-time book-ability across multiple categories such as dining, accommodations, attractions, events, gas, parking, shopping and more. The platform is unique in that it is designed to seamlessly integrate into automaker infotainment and navigation systems, as well as mobile applications and voice assistants. Simplenight can be integrated into the Company's current and future connected vehicle technologies, including HomeLink®, the automotive industry’s leading car-to-home automation system. HomeLink® consists of vehicle-integrated buttons that can be programmed to operate a myriad of home automation devices. Integration of Simplenight into the Company's HomeLink Connect® app is underway and will allow users to program their HomeLink® buttons and control cloud-based devices from their vehicles.

Dimmable Devices

The Company previously announced that it is providing variably dimmable windows for the Boeing 787 Dreamliner series of aircraft. The Company continues to work with other aircraft manufacturers that have an interest in this technology regarding potential additional programs. In January 2019, the Company announced that its latest generation of dimmable aircraft windows will be offered as optional content on the new Boeing 777X. During the third quarter of 2019, the first production shipments of variably dimmable windows were made to Boeing for the 777X program. In January 2020, the Company announced that Airbus will also be offering the Company's dimmable aircraft windows on an aircraft with production ~~starting~~having began in the fourth quarter of 2021.

Medical

In January 2020 the Company unveiled an innovative lighting technology for medical applications that was co-developed with Mayo Clinic. This new lighting concept represents the collaboration of a global, high-technology electronics company with a world leader in health care. The Company's new intelligent lighting system combines ambient room lighting with camera-controlled, adaptive task lighting to optimize illumination for surgical and patient-care environments. The system was developed over an 18 month period of collaboration between Company engineers and Mayo Clinic surgeons, scientists, and operating room staff. The teams researched, designed, and rapidly iterated multiple prototypes in order to develop unique features intended to address major gaps in current surgical lighting solutions. In ~~2021,~~2022, the Company

continues to further develop and work on the intelligent medical lighting system in order to assess system performance and work toward obtaining any necessary approvals.

OTHER

Automotive revenues represent approximately ~~98%~~97% - 99% of the Company's total revenue, consisting of interior and exterior electrochromic automatic-dimming rearview mirrors and automotive electronics.

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

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

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

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

3228

OUTLOOK

The Company’s most recent forecasts for light vehicle production for the second ~~half~~quarter of ~~2021,~~2022, and full years ~~2021~~2022 and ~~2022~~2023 are based on the ~~mid-July 2021~~mid-April 2022 IHS Markit light vehicle production forecast for light vehicle production in North America, Europe, Japan/Korea and China. Second ~~half~~quarter of 2021, and calendar years ~~2021~~2022 and ~~2022~~2023 forecasted light vehicle production volumes are shown below:


Light Vehicle Production (per IHS Markit Automotive mid-July light vehicle production forecast)
Light Vehicle Production (per IHS Markit Automotive mid-April light vehicle production forecast)													Light Vehicle Production (per IHS Markit Automotive mid-April light vehicle production forecast)
(in Millions)	(in Millions)												(in Millions)
Region	Region	2h 2021	2h 2020	% Change		Calendar Year 2022	Calendar Year 2021	Calendar Year 2020	2022 vs 2021 % Change		2021 vs 2020 % Change		Region	Q2 2022	Q2 2021	% Change		Calendar Year 2023	Calendar Year 2022	Calendar Year 2021	2023 vs 2022 % Change		2022 vs 2021 % Change
North America	North America	7.83	7.87	(1)	%	17.03	14.63	13.02	16	%	12	%	North America	3.59	3.19	13	%	16.49	14.75	13.05	12	%	13	%
Europe	Europe	9.11	9.61	(5)	%	20.29	18.05	16.57	12	%	9	%	Europe	3.98	4.14	(4)	%	18.31	16.49	15.89	11	%	4	%
Japan and Korea	Japan and Korea	6.04	6.15	(2)	%	12.40	11.81	11.21	5	%	5	%	Japan and Korea	2.84	2.75	3	%	11.76	11.36	10.88	4	%	4	%
China	China	13.26	14.24	(7)	%	26.60	24.98	23.59	6	%	6	%	China	5.50	5.79	(5)	%	26.94	24.63	24.84	9	%	(1)	%
Total Light Vehicle Production	Total Light Vehicle Production	36.24	37.87	(4)	%	76.32	69.47	64.39	10	%	8	%	Total Light Vehicle Production	15.91	15.87	—	%	73.50	67.23	64.66	9	%	4	%

Based on the aforementioned light vehicle production forecastand the results for the first ~~six~~three months of ~~2021,~~2022, the Company ~~has~~is making no changes to its previously provided guidance for ~~the second half of 2021~~calendar year 2022 as shown below. This guidance includes manual adjustments to the Company's forecasts as a result of customer order changes due to part shortages that have impacted the second quarter and will likely continue to impact demand in the second half of this year and perhaps even into 2022. The Company has also updated the cost and profitability model to include impacts due to elevated raw material prices, freight expenses and labor costs. In addition, over the last several quarters, the Company has been closely monitoring the tariff discussions between the US and the EU with respect to EU Regulation 2018/0886, which was scheduled to go into effect on June 1, 2021. The EU, however, suspended the implementation until November 30, 2021 as part of on-going discussions. The Company remains hopeful that a trade agreement can be reached before this date so that the increased tariffs do not take effect. The guidance for the second half of 2021 is a follows, which does NOT take into account the aforementioned potential increased tariff costs:

•Revenue is expected to be between ~~$970 million~~$1.87 and ~~$1.07~~$2.02 billion

•Gross Margin is expected to be between ~~37.5%~~35% and ~~38.5%~~36%

•Operating Expenses are expected to be approximately ~~$105~~$230 to ~~$110~~$240 million

•Estimated Annual Tax Rate, which assumes no changes to the statutory rate, is expected to be between ~~16%~~15% and ~~18%~~17%

•Capital Expenditures are expected to be between ~~$50~~$150 and ~~$60~~$175 million

•Depreciation and Amortization is expected to be between ~~$54~~$100 and ~~$59~~$110 million

Ongoing uncertainties remain around the impact of the COVID-19 pandemic on customer demand and restrictions on operations. COVID-19 has created unprecedented circumstances for the Company's industries, which have included ~~massive~~significant changes to production levels at its customers that occurred in a very short time ~~period.~~period, electronic suppliers failure to meet the Company's orders by having significant changes to production levels that can occur in a very short period of time that limits the Company's production of finished goods, and the ongoing shutdowns in China. Beyond the impact of the COVID-19 pandemic, other ongoing uncertainties remain including: light vehicle production levels; industry-wide parts shortages and global supply chain constraints; impacts of already in place and potential additional future tariffs; impacts of regulation changes; automotive plant shutdowns; vehicle sales rates in Europe, Asia and North America; OEM strategies and cost pressures; customer inventory management and the impact of potential automotive customer (including their Tier 1 suppliers) and supplier bankruptcies; work stoppages; etc., all of which could disrupt shipments to these customers and make forecasting difficult.

In accordance with the previously announced share repurchase plan, the Company ~~continue to~~ will consider the appropriateness of ~~any~~continuing to repurchase additional shares of common stock in the future in support of the capital allocation strategy, but share repurchases ~~for the remainder of 2021. This determination~~may vary from time to time and will take into account macroeconomic ~~issues~~events (including ~~the impact of~~ the COVID-19 pandemic and ~~industry-wide parts shortages and global~~shutdowns related to the microchip shortage as well as other supply chain constraints), market trends, and other factors ~~that~~ the Company deems appropriate (including the market price of the stock, anti-dilutive effect of repurchases, ~~tax rates,~~ and available cash). ~~At a recent meeting, the Company's Board of Directors authorized the repurchase of an~~

~~additional 25,000,000 shares under the plan.~~ As of ~~June 30, 2021,~~March 31, 2022, the Company has ~~28.3~~22.4 million shares remaining available for repurchase under the previously announced share repurchase plan.

Additionally, based on the ~~mid-July 2021~~mid-April 2022 light vehicle production estimates for ~~2022,~~2023, the Company is providing revenue guidance for ~~2022,~~2023, despite the fact that there continues to be ~~significant~~ uncertainty regarding macroeconomic conditions, underlying overall consumer demand for light vehicles worldwide, and the continued impact from the COVID-19 pandemic. The Company ~~estimates~~continues to estimate that revenue for calendar year ~~2022~~2023 will be approximately ~~10%~~15% - ~~15%~~20% higher than the 2022 estimated revenue ~~in calendar year 2021.~~estimates of $1.87 - $2.02 billion. As noted above, continuing uncertainties make forecasting difficult.

3429

CRITICAL ACCOUNTING POLICIES:

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

The Company has identified critical accounting policies used in determining estimates and assumptions in the amounts reported in its Management’s Discussion and Analysis of Financial Condition and Results of Operations in its Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

Item 3. Quantitative And Qualitative Disclosures About Market Risk.

The Company is subject to market risk exposures of varying correlations and volatilities, including foreign exchange rate risk and interest rate risk. Fluctuating interest rates could negatively impact the Company's financial performance due to realized losses on the sale of fixed income investments and/or recognized losses due to impairment of available for sale securities (mark-to-market adjustments). ~~During~~For the quarter ended ~~June 30, 2021,~~March 31, 2022, any material changes in risk factors that were disclosed in the Company's report on Form 10-K for the year ended December 31, ~~2020~~2021 are set forth herein.

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

Item 4. Controls And Procedures.

Evaluation of Disclosure Controls and Procedures.

Under the supervision of, and with the participation of management, the Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~June 30, 2021,~~March 31, 2022, and have concluded that as of that date, the Company's disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended ~~June 30, 2021~~March 31, 2022 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

SAFE HARBOR STATEMENT:

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

autonomous driving); our ability to be awarded new business; continued uncertainty in pricing negotiations with ~~customers;~~customers and suppliers; loss of business from increased competition; changes in strategic relationships; customer bankruptcies or divestiture of customer brands; fluctuation in vehicle production schedules (including the impact of customer employee strikes); changes in product mix; raw material and other supply shortages; labor shortages, ~~and global~~ supply chain ~~constraints; supply chain~~constraints and disruptions; our dependence ofon information systems; higher raw material, fuel, energy and other costs; unfavorable fluctuations in currencies or interest rates in the regions in which we operate; costs or difficulties related to the integration and/or ability to maximize the value of any new or acquired technologies and businesses; changes in regulatory conditions; warranty and recall claims and other litigation and customer reactions thereto; possible adverse results of pending or future litigation or infringement claims; changes in tax laws; import and export duty and tariff rates in or with the countries with which we conduct business; negative impact of any governmental investigations and associated litigation including securities litigation relating to the conduct of our business; the length and severity of the COVID-19 (coronavirus) pandemic, including its impact across our business on demand, operations, and the global supply chain. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made.

The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or the rules of the NASDAQ Global Select Market. Accordingly, any forward-looking statement should be read in conjunction with the additional information about risks and uncertainties identified under the heading “Risk Factors” in the Company’s latest Form 10-K and Form 10-Q filed with the SEC, which risks and uncertainties now include the impacts of COVID-19 (coronavirus) pandemic and ~~industry-wide parts shortages and global~~ supply chain ~~contraints~~constraints that have affected, are affecting, and will continue to affect, general economic and industry conditions, customers, suppliers, and the regulatory environment in which the Company operates. Includes content supplied by IHS Markit Light Vehicle Production Forecast of ~~July 16, 2021~~April 18, 2022 (http://www.gentex.com/forecast-disclaimer).

PART II—OTHER INFORMATION

Item 1A. Risk Factors.

Information regarding risk factors appears in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part I – Item 2 of this Form 10-Q and in Part I – Item 1A – Risk Factors of the Company’s report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. There have been no material changes to the risk factors previously disclosed in the Company’s report on Form 10-K for the year ended December 31, ~~2020, as~~2021, except to the extent described in Part I – Item 2 and Item 3 of this Form 10-Q, and otherwise ~~herein, as well as the following revised risk factor:~~

~~SUPPLY CHAIN DISRUPTIONS~~

As a result of just-in-time supply chains within our business and the automotive industry, disruptions in our supply chain have occurred, are occurring, and are expected to continue to occur due to the COVID-19 pandemic and industry-wide parts shortages and global supply chain constraints. Disruptions can also occur due to natural disasters, other pandemics, work stoppages, strikes, bankruptcy, etc. Such circumstances have disrupted, are disrupting, and will continue to disrupt our shipments to automakers and Tier 1 customers, which adversely affects our business, financial condition, and/or results of operations.herein.

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

The Company has a previously announced share repurchase plan under which the Board of Directors has authorized the repurchase of shares of the Company's common stock, which remains a part of the broader publicly disclosed capital allocation strategy. During the ~~second~~first quarter of ~~2021,~~2022, the Company repurchased ~~3,411,131~~2.4 million shares under the share repurchase plan. As previously disclosed, the Company will consider the appropriateness of continuing to repurchase additional shares of common stock in the future in support of the capital allocation strategy, but share repurchases may vary from time to time and will take into account macroeconomic events (including the COVID-19 pandemic and shutdowns related to the ~~Microchip shortage)~~microchip shortage as well as other supply chain constraints), market trends, and other factors the Company deems appropriate (including the market price of the stock, anti-dilutive effect of repurchases, and available cash).

~~At a recent meeting,~~As previously announced, the Company's Board of Directors recently authorized the repurchase of an additional 25,000,000 shares under the plan. After the Company repurchased ~~6,166,196~~2,440,190 shares during the first ~~six~~three months of ~~2021,~~2022, the Company has ~~28.3~~22.4 million shares remaining under the plan as of ~~June 30, 2021.~~March 31, 2022.

The following is a summary of share repurchase activity during each month of the quarter ended ~~June 30, 2021:~~March 31, 2022:
Issuer Purchase of Equity Securities
Period Total Number of Shares Purchased

Weighted
Average Price Paid Per Share
Total Number of Shares Purchased As Part of a Publicly Announced Plan or Program Maximum Number of Shares That May Yet Be Purchased Under the Plan or Program
January 2021 — — — 9,419,266
February 2021 1,005,009 35.27 1,005,009 8,414,257
March 2021 1,750,056 35.57 1,750,056 6,664,201
1st Quarter 2021 Total 2,755,065 35.46 2,755,065
April 2021 250,000 35.66 250,000 6,414,201
May 2021 1,175,144 34.90 1,175,144 30,239,057
June 2021 1,985,987 33.23 1,985,987 28,253,070
2nd Quarter 2021 Total 3,411,131 33.98 3,411,131
2021 Total 6,166,196 34.64 6,166,196 28,253,070


Issuer Purchase of Equity Securities
Period	Total Number of Shares Purchased	Weighted Average Price Paid Per Share	Total Number of Shares Purchased As Part of a Publicly Announced Plan or Program	Maximum Number of Shares That May Yet Be Purchased Under the Plan or Program
January 2022	—	—	—	24,824,068
February 2022	490,021	30.63	490,021	24,334,047
March 2022	1,950,169	28.84	1,950,169	22,383,878
1st Quarter 2022 Total	2,440,190	29.20	2,440,190












2022 Total	2,440,190	29.20	2,440,190	22,383,878

As of ~~June 30, 2021~~March 31, 2022 the Company has repurchased ~~143,746,658~~149,615,850 shares at a total cost of ~~$2,375,681,751~~$2,558,006,127 under its share repurchase plan or as otherwise previously disclosed.

Item 6. Exhibits.


See Exhibit Index on Page 3934

SIGNATURES

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


		GENTEX CORPORATION


Date:	~~August~~May 5, ~~2021~~2022	/s/ Steven R. Downing
		Steven R. Downing
		President and Chief Executive Officer
		(Principal Executive Officer) on behalf of Gentex Corporation

Date:	~~August~~May 5, ~~2021~~2022	/s/ Kevin C. Nash
		Kevin C. Nash
		Vice President, Finance, Chief Financial Officer and Treasurer
		(Principal Financial Officer and Principal Accounting Officer) on behalf of Gentex Corporation

3834

EXHIBIT INDEX


Exhibit No.						Description


























































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


Part I - Financial Information		Page
Item 1.	Unaudited Condensed Consolidated Financial Statements	3
	Unaudited Condensed Consolidated Balance Sheets	3
	Unaudited Condensed Consolidated Statements of Income	4
	Unaudited Condensed Consolidated Statements of Comprehensive Income	5
	Unaudited Condensed Consolidated Statements of Shareholders' Investment	6
	Unaudited Condensed Consolidated Statements of Cash Flows	87
	Notes to Unaudited Condensed Consolidated Financial Statements	98
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2320
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3530
Item 4.	Controls and Procedures	3630

Part II - Other Information
Item 1A.	Risk Factors	3732
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3732
Item 6.	Exhibits	3832
	Signatures	3832
	Exhibit Index	3934