Amounts recorded for the cash flow hedges in other comprehensive ~~loss~~income (loss) and in net income for the three months ended ~~March 31~~September 30 are as follows:

Amounts recorded for the cash flow hedges in other comprehensive income (loss) and in net income for the nine months ended September 30 are as follows:

Gains and losses reclassified from other comprehensive income (loss) into net income were recognized in cost of goods sold in the Company's condensed consolidated statements of operations.

The net deferred loss of ~~$60~~$83 on the cash flow hedge derivatives will be reclassified from other comprehensive income (loss) to the condensed consolidated statements of operations through December 2016.

The ~~following table presents the~~ Company’s assets and liabilities ~~that~~ are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of the inputs used. Fair values estimated using Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Fair values estimated using Level 2 inputs, other than quoted prices, are observable for the asset or liability, either directly or indirectly and include among other things, quoted prices for similar assets or liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable. For forward currency contracts, inputs include foreign currency exchange rates. Fair values estimated using Level 3 inputs consist of significant unobservable inputs.

The Company did not have any financial assets or liabilities fair valued using Level 1 or Level 3 inputs at September 30, 2016 or December 31, 2015. The fair value of financial assets using Level 2 inputs related to forward currency contracts were $163 and $474 at September 30, 2016 and December 31, 2015, respectively. The fair value of financial liabilities using Level 2 inputs related to forward currency contracts were $259 and $93 at September 30, 2016 and December 31, 2015, respectively.

Compensation expense for share-based compensation arrangements, which is recognized in the condensed consolidated statements of operations as a component of selling, general and administrative expenses, was ~~$960~~$1,699 and $1,264 for the three months ended ~~March 31,~~September 30, 2016 and 2015, respectively. For the nine months ended September 30, 2016 total share-based compensation was $4,587 compared to ~~$3,325~~$5,746 for the ~~three~~nine months ended ~~March 31,~~September 30, 2015.

The nine months ended September 30, 2016 included $545 related to the modification of the retirement notice provisions of certain awards. The nine months ended September 30, 2015 ~~which~~ included $2,225 from the accelerated vesting in connection with the retirement of the Company’s former President and Chief Executive Officer.

Debt consisted of the following at ~~March 31,~~September 30, 2016 and December 31, 2015:

On November 2, 2007, the Company entered into an asset-based credit facility, which permits borrowing up to a maximum level of $100,000. The Company entered into an Amended and Restated Credit and Security Agreement and a Second Amended and Restated Credit and Security Agreement on September 20, 2010 and December 1, 2011, respectively.

On September 12, 2014, the Company entered into a Third Amended and Restated Credit Agreement (the “Amended Agreement” or “Credit Facility”). The Amended Agreement provides for a $300,000 revolving credit facility, which replaced the Company’s existing $100,000 asset-based credit facility and includes a letter of credit subfacility, swing line subfacility and multicurrency subfacility. The Amended Agreement also has an accordion feature which allows the Company to increase the availability by up to $80,000 upon the satisfaction of certain conditions.The Amended Agreement extended the termination date to September 12, 2019 from December 1, 2016. On March 26, 2015, the Company entered into Amendment No. 1 ~~(the “Amendment”)~~ to the Amended Agreement which modified the definition of Consolidated EBITDA to allow for the add back of cash premiums and other non-cash charges related to the amendment and restatement of the Amended Agreement and the early extinguishment of the Company’s 9.5% Senior Secured Notes. Consolidated EBITDA is used in computing the Company’s leverage ratio and interest coverage ratio which are covenants within the Amended Agreement. On February 23, 2016, the Company entered into Amendment No. 2 to the Amended Agreement which amended and waived any default or potential defaults with respect to the pledging as collateral additional shares issued by a wholly owned subsidiary and newly issued shares associated with the formation of a new subsidiary. On August 12, 2016, the Company entered into Amendment No. 3 (the “Amendment”) to the Amended Agreement which extended of the expiration date of the Agreement by two years to September 12, 2021, increased the borrowing sub-limit for the Company’s foreign subsidiaries by $30,000 to $80,000, increased the basket of permitted loans and investments in foreign subsidiaries by $5,000 to $30,000, and provided additional flexibility to the Company for certain permitted corporate transactions involving its foreign subsidiaries as defined in the Agreement. As a result of Amendment No. 3, the Company capitalized deferred financing costs of $339, which will be amortized over the remaining term of the Credit Facility.

Borrowings under the Amended Agreement ~~will~~ bear interest at either the Base Rate, as defined, or the LIBOR Rate, at the Company’s option, plus the applicable margin as set forth in the Amended Agreement. The Company is also subject to a commitment fee ranging from 0.20% to 0.35% based on the Company’s leverage ratio. The ~~agreement governing the Credit Facility~~Amended Agreement requires the Company to maintain a maximum leverage ratio of 3.00 to 1.00, and a minimum interest coverage ratio of 3.50 to 1.00 and places a maximum annual limit on capital expenditures. The Amended Agreement also contains other affirmative and negative covenants and events of default that are customary for credit arrangements of this type including covenants which place restrictions and/or limitations on the Company’s ability to borrow money, make capital expenditures and pay dividends. Borrowings outstanding on the Credit Facility decreased from $100,000 at ~~both March 31, 2016 and~~ December 31, 2015 ~~were $100,000.~~to $87,000 at September 30, 2016 as a result of an unplanned partial repayment made against the Credit Facility during the three months ended September 30, 2016.

The Company was in compliance with all ~~credit facility~~Credit Facility covenants at ~~March 31,~~September 30, 2016 and December 31, 2015.

PST maintains several short-term obligations and long-term notes used for working capital purposes which have fixed annual interest rates. The weighted-average interest rates of short-term and long-term debt of PST at ~~March 31,~~September 30, 2016 were ~~16.0%~~11.1% and ~~7.3%~~13.2%, respectively. Depending on the specific note, interest is payable either monthly or annually. Principal ~~payments~~repayments on PST debt at ~~March 31,~~September 30, 2016 are as follows: ~~$16,503~~$9,710 from ~~April~~October 2016 through ~~March~~September 2017, ~~$1,400~~$963 from ~~April~~October 2017 through December 2017, ~~$1,082~~$3,972 in 2018, ~~$1,058~~$2,566 in 2019, ~~$363~~$398 in 2020 and ~~$303~~$365 in 2021.

~~The Company~~PST was in compliance with all debt covenants at ~~March 31,~~September 30, 2016 and December 31, 2015.

The Company's wholly-owned subsidiary located in Stockholm, Sweden, has an overdraft credit line which allows overdrafts on the subsidiary's bank account up to a maximum level of 20,000 Swedish krona, or ~~$2,464~~$2,333 and $2,369, at ~~March 31,~~September 30, 2016 and December 31, 2015, respectively. At ~~March 31,~~September 30, 2016 and December 31, 2015, there was no balance outstanding on this bank account.

Basic earnings ~~(loss)~~ per share was computed by dividing net income ~~(loss)~~ by the weighted-average number of Common Shares outstanding for each respective period. Diluted earnings ~~(loss)~~ per share was calculated by dividing net income ~~(loss)~~ by the weighted-average of all potentially dilutive Common Shares that were outstanding during the periods presented.

Weighted-average Common Shares outstanding used in calculating basic and diluted earnings ~~(loss)~~ per share were as follows:

Performance-based restricted Common Shares outstanding at ~~March 31,~~September 30, 2016 and ~~March 31,~~ 2015 were 0 and ~~234,450,~~134,250, respectively. There were also ~~803,100~~843,140 and ~~710,235~~573,885 performance-based right to receive Common Shares outstanding at ~~March 31,~~September 30, 2016 and 2015, respectively. These performance-based restricted and right to receive Common Shares are included in the computation of diluted earnings per share based on the number of Common Shares that would be issuable if the end of the quarter were the end of the contingency period.

Changes in accumulated other comprehensive loss for the three months ended ~~March 31,~~September 30, 2016 and 2015 were as follows:

Changes in accumulated other comprehensive loss for the nine months ended September 30, 2016 and 2015 were as follows:

In the ordinary course of business, the Company is subject to a broad range of claims and legal proceedings that relate to contractual allegations, product liability, tax audits, patent infringement, employment-related matters and environmental matters. The Company establishes accruals for matters which it believes that losses are probable and can be reasonably estimable. Although it is not possible to predict with certainty the outcome of these matters, the Company is of the opinion that the ultimate resolution of these matters will not have a material adverse effect on its consolidated results of operations or financial position.

As a result of environmental studies performed at the Company’s former facility located in Sarasota, Florida, the Company became aware of soil and groundwater contamination at the site. The Company engaged an environmental engineering consultant to assess the level of contamination and to develop a remediation and monitoring plan for the site. Soil remediation at the site was completed during the year ended December 31, 2010. As the remedial action plan has been approved by the Florida Department of Environmental Protection, groundwater remediation began in the fourth quarter of 2015. During the three and nine months ended ~~March 1,~~September 30, 2016 and 2015, environmental remediation costs incurred were immaterial. At ~~March 31,~~September 30, 2016 and December 31, 2015, the Company accrued a remaining undiscounted liability of ~~$505~~$488 and $532, respectively, related to future remediation costs. At ~~March 31,~~September 30, 2016 and December 31, 2015, ~~$441~~$396 and $469, respectively, was recorded as a component of accrued expenses and other current liabilities onin the condensed consolidated balance sheets while the remaining amount was recorded as a component of other long-term liabilities. A majority of the costs associated with the recorded liability will be incurred at the start of the groundwater remediation which is expected to begin in November 2016, with the balance relating to monitoring costs to be incurred over multiple years. The recorded liability is based on assumptions in the remedial action plan. Although the Company sold the Sarasota facility and related property in December 2011, the liability to remediate the site contamination remains the responsibility of the Company. Due to the ongoing site remediation, the closing terms of the sale agreement included a requirement for the Company to maintain a $2,000 letter of credit for the benefit of the buyer.

The Company has a legal proceeding,Verde v. Stoneridge, Inc. et al., currently pending in the United States District Court for the Eastern District of Texas, Cause No. 6:14-cv-00225- KNM. The plaintiff filed this putative class action against the Company and others on March 26, 2014. The plaintiff alleges that the Company was involved in the vertical chain of manufacture, distribution, and sale of a control device (“CD”) that was incorporated into a Dodge Ram truck purchased by Plaintiff in 2006. Plaintiff alleges that the Company breached express warranties and indemnification provisions by supplying a defective CD that was not capable of performing its intended function. The putative class consists of all Texas residents who own manual transmission Chrysler vehicles model years ~~1994–~~1997–2007 equipped with the subject CD. Plaintiff seeks recovery of economic loss damages incurred by him and the putative class members associated with inspecting and replacing the allegedly defective CD, as well as attorneys’ fees and costs. Plaintiff filed ~~his~~a motion for class certification seeking to certify a class of Texas residents who own or lease certain automobiles sold by Chrysler from ~~1998–~~1997–2007. Plaintiff alleges this putative class would include approximately 120,000 people. In the motion for class certification, the Plaintiff states that damages are no more than $1 per person. A hearing on the Plaintiff’s motion for class certification was held on November 16, 2015, and the United States District Court has not yet ruled on class certification. On April 8, 2016, the Magistrate Judge granted the Company’s motion for partial summary judgment dismissing the Plaintiff’s indemnification claim; that ruling was later adopted by the United States District ~~Court has not yet ruled on whether to adopt the Magistrate Judge’s ruling.~~ Court.

Similarly,Royal v. Stoneridge, Inc. et al. is another legal proceeding currently pending in the United States District Court for the Western District of Oklahoma, ~~Cause~~Case No. 5:14-cv-01410-F. Plaintiffs filed this putative class action against the Company, Stoneridge Control Devices, Inc., and others on December 19, 2014. Plaintiffs allege that the Company was involved in the vertical chain of manufacture, distribution, and sale of a CD that was incorporated into Dodge Ram trucks purchased by Plaintiffs between 1999 and 2006. Plaintiffs allege that the Company and Stoneridge Control Devices, Inc. breached various express and implied warranties, including the implied warranty of merchantability. Plaintiffs also seek indemnity from the Company and Stoneridge Control Devices, Inc. The putative class consists of all owners of vehicles equipped with the subject CD, which includes various Dodge Ram trucks and other manual transmission vehicles manufactured from 1997–2007, which Plaintiffs allege is more than one million vehicles. Plaintiffs seek recovery of economic loss damages associated with inspecting and replacing the allegedly defective CD, diminished value of the subject CDs and the trucks in which they were installed, and attorneys’ fees and costs. The amount of compensatory or other damages sought by Plaintiffs and the putative class members is unknown. On January 12, 2016, the United States District Court granted in part the Company’s and Stoneridge Control Devices, Inc.’s motions ~~for summary judgment,~~to dismiss, and dismissed four of the Plaintiffs’ five claims against the Company and Stoneridge Control Devices, Inc. Plaintiffs ~~have~~ filed a motion for reconsideration of the United States District Court’s ruling, which ~~remains pending.~~was denied. The Company is vigorously defending itself against the Plaintiffs’ allegations, and has and will continue to challenge the claims as well as class action certification. The Company believes the likelihood of loss is not probable or reasonably estimable, and therefore no liability has been recorded for these claims at ~~March 31,~~September 30, 2016.

In September 2013, two legal proceedings were initiated by Actia Automotive (“Actia”) in a French court (the tribunal de grande instance de Paris) alleging infringement of its patents by the Company’s Electronics segment. The euro (“€”) and U.S. dollar equivalent (“$”) that Actia iswas seeking has been €7,000 ($~~8,000)~~7,900) for each claim for injunctive relief and monetary damages resulting from such alleged infringement. The Company ~~believes~~believed that its products did not infringe on any of the patents claimed by Actia, and the claims ~~are~~were without merit. The Company is vigorously ~~defending~~defended itself against these allegations, and ~~it has~~ challenged certain Actia patents in the European Patent Office. In September 2015, the French court ruled in favor of the Company on one claim, which iswas subject to appeal by Actia. ~~There have~~However, on July 28, 2016 the Company reached a settlement with Actia with regard to both claims. Under the settlement the Company agreed to forego a payment by Actia of €50 ($56) that had been ~~no significant changes~~ordered by the French Court and Actia agreed (i) not to appeal the French court’s ruling against it on the first claim and (ii) to dismiss its infringement claims against the Company with respect to the ~~facts~~second claim. Under the settlement Actia agreed not to enforce any of the patents in question against the Company, or the Company’s successors and ~~circumstances related to the remaining claim for the three months ended March 31, 2016. The Company believes the likelihood of loss is not probable between its defenses~~assigns. As a result this matter has been settled and ~~challenges to Actia’s patents. As such,~~ no liability has been recorded for these claims at ~~March 31,~~September 30, 2016.

On May 24, 2013, the State Revenue Services of São Paulo issued a tax deficiency notice against PST claiming that the vehicle tracking and monitoring services it provides should be classified as communication services, and therefore subject to the State Value Added Tax – ICMS. The State Revenue Services assessment imposed the 25.0% ICMS tax on all revenues of PST related to the vehicle tracking and monitoring services rendered during the period from January 2009 through December 2010. The Brazilian real (“R$”) and U.S. dollar equivalent (“$”) of the aggregate tax assessment is approximately R$92,500 ($~~26,000)~~28,500) which is comprised of Value Added Tax – ICMS of R$13,200 ($~~3,700),~~4,100) interest of R$11,400 ($~~3,200)~~3,500) and penalties of R$67,900 ($~~19,100)~~20,900).

The Company believes that the vehicle tracking and monitoring services are non-communication services, as defined under Brazilian tax law, subject to the municipal ISS tax, not communication services subject to state ICMS tax as claimed by the State Revenue Services of São Paulo. PST has, and will continue to collect the municipal ISS tax on the vehicle tracking and monitoring services in compliance with Brazilian tax law and will defend its tax position. PST has received a legal opinion that the merits of the case are favorable to PST, determining among other things that the imposition on the subsidiary of the State ICMS by the State Revenue Services of São Paulo is not in accordance with the Brazilian tax code. Management believes, based on the legal opinion of the Company’s Brazilian legal counsel and the results of the Brazil Administrative Court's ruling in favor of another vehicle tracking and monitoring company related to the tax deficiency notice it received, the likelihood of loss is not probable although it may take years to resolve. As a result of the above, as of ~~March 31,~~September 30, 2016 and December 31, 2015, no accrual has been recorded with respect to the tax assessment. An unfavorable judgment on this issue for the years assessed and for subsequent years could result in significant costs to PST and adversely affect its results of operations. There have been no significant changes to the facts and circumstances related to this notice for the three or nine months ended ~~March 31,~~September 30, 2016.

In addition, PST has civil, labor and other tax contingencies for which the likelihood of loss is deemed to be reasonably possible, but not probable, by the Company’s legal advisors in Brazil. As a result, no provision has been recorded with respect to these contingencies, which amounted to R$~~26,700~~34,600 ($~~7,500)~~10,700) and R$25,400 ($6,500) at ~~March 31,~~September 30, 2016 and December 31, 2015, respectively. An unfavorable outcome on these contingencies could result in significant cost to PST and adversely affect its results of operations.

Amounts accrued for product warranty and recall claims are established based on the Company's best estimate of the amounts necessary to settle existing and future claims on products sold as of the balance sheet dates. These accruals are based on several factors including past experience, production changes, industry developments and various other considerations including insurance coverage. The Company can provide no assurances that it will not experience material claims or that it will not incur significant costs to defend or settle such claims beyond the amounts accrued or beyond what the Company may recover from its suppliers. The current portion of product warranty and recall is included as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets. Product warranty and recall included ~~$2,076~~$2,293 and $1,973 of a long-term liability at ~~March 31,~~September 30, 2016 and December 31, 2015, respectively, which is included as a component of other long-term liabilities in the condensed consolidated balance sheets.

The following provides a reconciliation of changes in product warranty and recall liability:

~~(11)~~In March 2016, the Company announced the relocation of its corporate headquarters from Warren, Ohio to Novi, Michigan which will primarily occur during the fourth quarter of 2016. As a result, the Company incurred relocation costs of $726 and $998 for the three and nine months ended September 2016, respectively. The relocation costs incurred included employee retention, relocation, severance, recruiting, duplicate wages and professional fees.

In April 2016, the Company entered into a long-term lease agreement for its new corporate headquarters. The Company establishes assets and liabilities for the estimated construction costs incurred under build-to-suit lease arrangements to the extent the Company was involved in the construction of structural improvements or takes construction risk prior to the commencement of a lease. As of September 30, 2016, the Company recorded a non-cash build-to-suit lease asset under construction of $4,322 (within Prepaid and other currents assets) and a corresponding obligation (within accrued expenses and other current liabilities) in the condensed consolidated balance sheet.

Also, the Company concluded that the Warren, Ohio headquarter building, which had a net book value of $481 at September 30, 2016 and is actively marketed for sale, met the criteria for held for sale accounting treatment. As such, it was reclassified from Property, plant and equipment, net to Prepaid and other current assets at September 30, 2016.

The Company regularly evaluates the performance of its businesses and cost structures, including personnel, and makes necessary changes thereto in order to optimize its results. The Company also evaluates the required skill sets of its personnel and periodically makes strategic changes. As a consequence of these actions, the Company incurs severance related costs which are referred to as business realignment charges.

Business realignment charges by reportable segment were as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Electronics^(A)	$	-	$	317	$	1,180	$	317
PST^(B)		211		403		1,242		403
Unallocated Corporate^(C)		-		309		-		309
Total business realignment charges	$	211	$	1,029	$	2,422	$	1,029

17(A)

Severance costs for the nine months ended September 30, 2016 related to selling, general and administrative (“SG&A”) and design and development (“D&D”) were $196 and $984, respectively. Severance costs for both the three and nine months ended September 30, 2015 related to SG&A and D&D were $102 and $215, respectively.

(B)

Severance costs for the three months ended September 30, 2016 related to cost of goods sold (“COGS”) and SG&A were $20 and $191, respectively. Severance costs for the nine months ended September 30, 2016 related to COGS, SG&A and D&D were $307, $819 and $116, respectively. Severance costs for both the three and nine months ended September 30, 2015 related to COGS, SG&A and D&D were $172, $117 and $114, respectively.

(C)

Severance costs for both the three and nine months ended September 30, 2015 related to SG&A were $309.

Business realignment charges classified by statement of operations line item were as follows:

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Cost of goods sold	$	20	$	171	$	307	$	171
Selling, general and administrative		191		529		1,015		529
Design and development		-		329		1,100		329
Total business realignment charges	$	211	$	1,029	$	2,422	$	1,029

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise indicated)

(Unaudited)

~~Business realignment charges by reportable segment were as follows:~~

Three months ended March 31 2016
Electronics^(A) 1,180
PST^(B) 722
Total business realignment charges $ 1,902

~~(A)~~

~~Severance costs related to selling, general and administrative and design and development were $196 and $984, respectively.~~

~~(B)~~

~~Severance costs related to cost of goods sold, selling, general and administrative and design and development were $179, $468 and $75, respectively.~~

~~Business realignment charges classified by statement of operations line item were as follows:~~

Three months ended March 31 2016
Cost of goods sold $ 179
Selling, general and administrative 664
Design and development 1,059
Total business realignment charges $ 1,902

~~There were no business realignment charges recorded for the three months ended March 31, 2015.~~

~~(12)~~(13) Income Taxes

The Company computes its consolidated income tax provision each quarter based on a projected annual effective tax rate, as required. The Company is required to reduce deferred tax assets by a valuation allowance if, based on all available evidence, it is considered more likely than not that some portion or all of the benefit of the deferred tax assets will not be realized in future periods. The Company also records the income tax impact of certain discrete, unusual or infrequently occurring items including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur.

When a company maintains a valuation allowance in a particular jurisdiction, no net income tax expense or (benefit) will typically be provided on income (loss) for that jurisdiction on an annual basis. Jurisdictions with projected income that maintain a valuation allowance typically will form part of the projected annual effective tax rate calculation discussed above. However, jurisdictions with a projected loss for the year that maintain a valuation allowance are excluded from the projected annual effective income tax rate calculation. Instead, the income tax for these jurisdictions is computed separately.

The actual year to date income tax expense (benefit) is the product of the most current projected annual effective income tax rate and the actual year to date pre-tax income (loss) adjusted for any discrete tax items. The income tax expense (benefit) for a particular quarter is the difference between the year to date calculation of income tax expense (benefit) and the year to date calculation for the prior quarter.

Therefore, the actual effective income tax rate during a particular quarter can vary significantly based upon the jurisdictional mix and timing of actual earnings compared to projected annual earnings, permanent items, earnings for those jurisdictions that maintain a valuation allowance, tax associated with jurisdictions excluded from the projected annual effective income tax rate calculation and discrete items.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in thousands, except per share data, unless otherwise indicated)~~

~~(Unaudited)~~

The Company recognized an income tax expense of ~~$845~~$919 and ~~$147~~$32 from continuing operations for federal, state and foreign income taxes for the three months ended ~~March 31,~~September 30, 2016 and 2015, respectively. The increase in income tax expense for the three months ended ~~March 31,~~September 30, 2016 compared to the same period for 2015 was primarily due to the increase in consolidated earnings. ~~In addition,~~Also, income tax expense increased due to ~~the PST~~PST’s operating loss which generated a benefit for the ~~first~~third quarter of 2015, however, due to the valuation allowance position taken in the fourth quarter of 2015, no longer provides a tax benefit in 2016. The effective tax rate increased to ~~12.2%~~8.4% in the ~~first~~third quarter of 2016 from ~~6.5%~~0.4% in the ~~first~~third quarter of 2015 primarily due to ~~the PST loss which, due to~~ a full valuation allowance on PST’s loss that negatively ~~impacts~~impacted the effective tax rate. The impact of PST on the effective tax rate was partially offset by ~~income from~~the continued strong performance of the U.S. operations which, due to a full valuation allowance, positively ~~impacts~~impacted the effective tax rate.

~~(13)~~The Company recognized income tax expense (benefit) of $3,114 and $(202) from continuing operations for federal, state and foreign income taxes for the nine months ended September 30, 2016 and 2015, respectively. The increase in income tax expense for the nine months ended September 30, 2016 compared to the same period for 2015 was primarily due to the increase in consolidated earnings. In addition, income tax expense increased due to PST’s operating loss which generated a benefit for the first nine months of 2015, however, due to the valuation allowance position taken in the fourth quarter of 2015, no longer provides a tax benefit in 2016. The effective tax rate increased to 10.3% in the first nine months of 2016 from (1.3)% in the first nine months of 2015 primarily due to a full valuation allowance on PST’s loss that negatively impacted the effective tax rate. The impact of PST on the effective tax rate was partially offset by the continued strong performance of the U.S. operations which, due to a full valuation allowance, positively impacted the effective tax rate.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise indicated)

(Unaudited)

(14) Segment Reporting

Operating segments are defined as components of an enterprise that are evaluated regularly by the Company's chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company's chief operating decision maker is the chief executive officer.

The Company has three reportable segments, Control Devices, Electronics and PST, which also represent its operating segments. The Control Devices reportable segment produces sensors, switches, valves and actuators. The Electronics reportable segment produces electronic instrument clusters, electronic control units and driver information systems. The PST reportable segment designs and manufactures electronic vehicle security alarms, convenience accessories, vehicle tracking devices and monitoring services and in-vehicle audio and video devices.

The accounting policies of the Company's reportable segments are the same as those described in Note 2, “Summary of Significant Accounting Policies” of the Company's 2015 Form 10-K. The Company's management evaluates the performance of its reportable segments based primarily on revenues from external customers and operating income (loss). Inter-segment sales are accounted for on terms similar to those to third parties and are eliminated upon consolidation.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise indicated)

(Unaudited)

A summary of financial information by reportable segment is as follows:

Three months ended March 31	2016			2015
							Three months ended						Nine months ended
							September 30,						September 30,
							2016			2015			2016			2015
Net Sales:
Control Devices	$	92,368		$	79,870		$	103,700		$	87,030		$	304,957		$	251,299
Inter-segment sales		533			688			430			482			1,448			1,814
Control Devices net sales		92,901			80,558			104,130			87,512			306,405			253,113

Electronics		52,636			56,432			47,804			50,688			158,201			165,015
Inter-segment sales		7,027			4,966			9,495			6,567			24,706			17,651
Electronics net sales		59,663			61,398			57,299			57,255			182,907			182,666

PST		17,612			26,523			22,342			24,339			60,207			73,857
Inter-segment sales		-			-			-			-			-			-
PST net sales		17,612			26,523			22,342			24,339			60,207			73,857

Eliminations		(7,560	)		(5,654	)		(9,925	)		(7,049	)		(26,154	)		(19,465	)
Total net sales	$	162,616		$	162,825		$	173,846		$	162,057		$	523,365		$	490,171
Operating Income (Loss):
Control Devices	$	13,517		$	9,605		$	15,319		$	12,197		$	47,133		$	33,787
Electronics		3,820			3,424			3,735			2,767			12,050			9,413
PST		(3,117	)		(2,650	)		29			(640	)		(4,179	)		(5,881	)
Unallocated Corporate^(A)		(5,714	)		(7,253	)		(7,303	)		(5,377	)		(21,092	)		(17,831	)
Total operating income	$	8,506		$	3,126		$	11,780		$	8,947		$	33,912		$	19,488
Depreciation and Amortization:
Control Devices	$	2,309		$	2,459		$	2,561		$	2,346		$	7,345		$	7,132
Electronics		1,040			956			996			949			3,076			2,860
PST		1,850			2,687			2,307			2,282			6,388			7,421
Corporate		70			14			115			69			309			139
Total depreciation and amortization^(B)	$	5,269		$	6,116		$	5,979		$	5,646		$	17,118		$	17,552
Interest Expense, net:
Control Devices	$	61		$	85		$	56		$	81		$	172		$	246
Electronics		39			45			33			38			196			124
PST		750			420			934			839			2,686			2,063
Corporate		664			728			661			789			1,984			2,250
Total interest expense, net	$	1,514		$	1,278		$	1,684		$	1,747		$	5,038		$	4,683
Capital Expenditures:
Control Devices	$	2,727		$	4,035		$	3,229		$	3,953		$	9,260		$	11,835
Electronics		3,131			1,938			1,244			2,729			5,229			5,751
PST		854			1,373			640			1,477			2,516			4,889
Corporate		105			1,144			1,365			133			1,479			1,046
Total capital expenditures	$	6,817		$	8,490		$	6,478		$	8,292		$	18,484		$	23,521

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise indicated)

(Unaudited)

	March 31,			December 31,			September 30,			December 31,
	2016			2015			2016			2015
Total Assets:
Control Devices	$	145,383		$	127,649		$	157,208		$	127,649
Electronics		110,540			97,443			110,216			97,443
PST		105,181			100,143			111,935			100,143
Corporate^(C)		280,641			288,806			284,869			288,806
Eliminations		(248,019	)		(249,789	)		(250,626	)		(249,789	)
Total assets	$	393,726		$	364,252		$	413,602		$	364,252

(A)

Unallocated Corporate expenses include, among other items, finance, legal, human resources and information technology costs as well as share-based compensation.

(B)

These amounts represent depreciation and amortization on property, plant and equipment and certain intangible assets.

(C)

Assets located at Corporate consist primarily of cash, intercompany loan receivables, equity investments and investments in subsidiaries.

The following table presents net sales and long-term assets for each of the geographic areas in which the Company operates:

Three months ended March 31	2016		2015
					Three months ended				Nine months ended
					September 30,				September 30,
					2016		2015		2016		2015
Net Sales:
North America	$	99,119	$	89,753	$	108,605	$	96,676	$	321,973	$	281,108
South America		17,612		26,523		22,342		24,339		60,207		73,857
Europe and Other		45,885		46,549		42,899		41,042		141,185		135,206
Total net sales	$	162,616	$	162,825	$	173,846	$	162,057	$	523,365	$	490,171

	September 30,		December 31,
	2016		2015
Long-term Assets:
North America	$	63,934	$	60,099
South America		63,925		56,943
Europe and Other		16,020		15,301
Total long-term assets	$	143,879	$	132,343

March 31, December 31,
2016 2015
Long-term Assets:
North America $ 60,547 $ 60,099
South America 60,799 56,943
Europe and Other 17,073 15,301
Total long-term assets $ 138,419 $ 132,343

~~(14)~~(15) Investments

Minda Stoneridge Instruments Ltd.

The Company has a 49% interest in Minda Stoneridge Instruments Ltd. (“Minda”), a company based in India that manufactures electronics, instrumentation equipment and sensors primarily for the motorcycle and commercial vehicle market. The investment is accounted for under the equity method of accounting. The Company's investment in Minda, recorded as a component of investments and other long-term assets, net on the condensed consolidated balance sheets, was ~~$7,067~~$7,846 and $6,929 at ~~March 31,~~September 30, 2016 and December 31, 2015, respectively. Equity in earnings of Minda included in the condensed consolidated statements of operations was ~~$143~~$307 and ~~$189,~~$160, for the three months ended ~~March 31,~~September 30, 2016 and 2015, respectively. Equity in earnings of Minda included in the condensed consolidated statements of operations was $603 and $492 for the nine months ended September 30, 2016 and 2015, respectively.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise indicated)

(Unaudited)

PST Eletrônica Ltda.

The Company has a 74% controlling interest in PST. Noncontrolling interest in PST increased to ~~$13,370~~$13,704 at ~~March 31,~~September 30, 2016 due to comprehensive income of ~~$60~~$394 resulting from a favorable change in foreign currency translation of ~~$1,190~~$2,403 partially offset by a proportionate share of its net loss of ~~$1,130~~$2,009 for the ~~three~~nine months ended ~~March 31,~~September 30, 2016. Noncontrolling interest in PST decreased to ~~$18,321~~$14,273 at ~~March 31,~~September 30, 2015 due to comprehensive loss of ~~$4,229~~$8,277 resulting from a proportionate share of its net loss of ~~$409~~$1,074 and an unfavorable change in foreign currency translation of ~~$3,820.~~$7,203 for the nine months ended September 30, 2015. Comprehensive loss related to PST noncontrolling interest was $(467) and $(4,080) for the three months ended September 30, 2016 and 2015, respectively.

PST has dividends payable declared in previous years to noncontrolling interest of $10,842 Brazilian real ($~~3,046)~~3,340) at ~~March 31,~~September 30, 2016.

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

Background

We are a global designer and manufacturer of highly engineered electrical and electronic components, modules and systems for the automotive, commercial, motorcycle, off-highway and agricultural vehicle markets.

Segments

We are primarily organized by products produced and markets served. Under this structure, our continuing operations have been reported utilizing the following segments:

Control Devices.This segment includes results of operations that manufacture sensors, switches, valves and actuators.

Electronics.This segment includes results of operations from the production of electronic instrument clusters, electronic control units and driver information systems.

PST.This segment includes results of operations that design and manufacture electronic vehicle alarms, convenience accessories, vehicle tracking devices and monitoring services and in-vehicle audio and video devices.

~~First~~Third Quarter Overview

Income from continuing operations attributable to Stoneridge. Inc. of ~~$7.2~~$10.3 million, or ~~$0.26~~$0.36 per diluted share for the three months ended ~~March 31,~~September 30, 2016 increased by ~~$4.7~~$2.8 million, or ~~$0.17~~$0.09 per diluted share from ~~$2.5~~$7.5 million, or ~~$0.09~~$0.27 per diluted share for the three months ended ~~March 31,~~September 30, 2015. The increase in income from continuing operations is primarily due to an increase in gross profit ~~primarily~~of $4.6 million related to higher sales in our Control Devices segment and lower material costs in our Electronics ~~segment~~and PST segments resulting from a favorable change in foreign currency exchange rates. ~~Also,~~This was partially offset by a $1.5 million increase in selling, general and administrative ~~expenses decreased due to the accelerated vesting of share-based awards~~costs primarily in ~~connection with the retirement of~~ our former President and Chief Executive Officer (“CEO”) in the first quarter of 2015 of $2.2 million. These were partially offset by 2016 business realignment charges related to our Electronics and PST segments of $1.2 million andunallocated corporate segment (which included $0.7 million ~~respectively,~~in costs associated with our headquarter relocation), and ~~higher~~a $0.9 million increase in income tax ~~expense of $0.7 million for the three months ended March 31, 2016.~~expense.

Net sales ~~decreased~~increased by ~~$0.2~~$11.8 million, or ~~0.1%~~7.3%, compared to the ~~first~~third quarter of 2015 as higher sales in our Control Devices segment were partially offset by lower sales in our PST and Electronics segments. The increase in sales in our Control Devices segment was primarily due to new product sales ~~and growth~~ in the North American automotive market ~~sales~~ while our PST ~~and Electronics~~ segment sales decreased due to ~~an unfavorable foreign currency translation~~weakness in the Brazilian economy and ~~lower sales volume.~~automotive market.

At ~~March 31,~~September 30, 2016 and December 31, 2015, we had cash and cash equivalents balances of ~~$48.4~~$50.6 million and $54.4 million, respectively. The decrease during the first ~~quarter~~nine months of 2016 was primarily due to ~~maintaining~~ higher working capital, ~~levels.~~capital expenditures and repayment of debt, which was partially offset by net income. At ~~March 31,~~September 30, 2016 and December 31, 2015 we had $87.0 million and $100.0 million, respectively, in borrowings outstanding on our $300.0 million Credit Facility.

Outlook

We expect ~~improved~~our financial performance to ~~continue throughout~~improve in the fourth quarter of 2016 compared to the fourth quarter of 2015 because of new product launches and savings from previously incurred business realignment activities.

We expect to continue to have significant ~~sales~~ growth in our North American automotive vehicle ~~market~~sales in 2016 related to new product launches ~~including~~primarily our shift by wire product byin our Control Devices segment. Also, the North American automotive vehicle market production is expected to increase to ~~18.2~~approximately 17.9 million units in 2016 (an increase from the 17.5 million units produced in 2015), which we expect to have a favorable effect on our Control Devices segment.

The North American commercial vehicle market is expected to decline for the remainder of 2016 ~~while~~compared to the first nine months of 2016. The European commercial vehicle market is forecasted to ~~remain at approximately~~have a modest increase for the ~~same level with 2015.~~remainder of 2016 compared to the first nine months of 2016.

Our PST segment revenues and operating performance continue to be adversely impacted by weakness of the Brazilian economy and automotive market, and ~~was~~has been negatively impacted by unfavorable foreign currency translation. In ~~April~~October 2016, the International Monetary Fund (IMF) ~~lowered its forecasts for~~forecasted the Brazil gross domestic product (“GDP”) to decline ~~3.8%~~3.3% in 2016 and ~~then remain level~~increase 0.5% in 2017. Based on the forecasted negative GDP growth of the Brazilian economy in 2016, PST’s sales and earnings expectations continue to be moderated. AsBecause there is significant uncertainty regarding the timing and magnitude of a recovery in the Brazilian economy and automotive market, ~~PST~~the Company continues to realign ~~its~~PST’s cost structure to mitigate the effect on earnings and cash flows of possible continued weakened product demand and unfavorable foreign currency exchange rates.

We regularly evaluate the performance of our businesses and their cost structures, including personnel, and make necessary changes thereto in order to optimize our results. We also evaluate the required skill sets of our personnel and periodically make strategic changes. As a consequence of these actions, we incur severance related costs which we refer to as business realignment charges.

A significant portion of our sales are outside of the United States. These sales are generated by our non-U.S. based operations, and therefore, movements in foreign currency exchange rates can have a significant effect on our results of operations, which are presented in U.S. dollars. A significant portion of our raw materials purchased by our Electronics and PST segments are denominated in U.S. dollars, and therefore movements in foreign currency exchange rates can also have a significant effect on our results of operations. While the U.S. dollar strengthened significantly against the Swedish krona, euro and Brazilian real in 2015 increasing our material costs and reducing our reported results, the U.S. dollar weakened against these currencies in the first ~~quarter~~nine months of 2016.

Because of the competitive nature of the markets we serve, we face pricing pressures from our customers in the ordinary course of business. In response to these pricing pressures we have been able to effectively manage our production costs by the combination of lowering certain costs and limiting the increase of others, the net impact of which has not been material. However, if we are unable to effectively manage production costs in the future to mitigate future pricing pressures, our results of operations would be adversely affected.

In March 2016, we announced the relocation of our corporate headquarters from Warren, Ohio to Novi, Michigan, which will occur primarily during the ~~third and~~ fourth ~~quarters~~quarter of 2016. As a result, the Company will incur relocation costs of approximately ~~$2.0~~$2.8 million to ~~$2.5~~$3.4 million including employee retention, relocation, severance, recruiting, ~~relocation~~duplicate wages and professional fees. The new headquarters will expand our presence in the Detroit metropolitan area and improve access to key customers, decision makers and influencers in the automotive and commercial vehicle markets that we serve. In connection with the relocation, the Company is eligible for a Michigan Business Development Program grant of up to $1.4 million based upon the number of new jobs created in Michigan, along with talent services and training support from Oakland County Michigan Works!. ~~Also, the city of Novi has offered support in the form of property tax abatements.~~

Three Months Ended ~~March 31,~~September 30, 2016 Compared to Three Months Ended ~~March 31,~~September 30, 2015

Condensed consolidated statements of operations as a percentage of net sales are presented in the following table (in thousands):

											Dollar													Dollar
											increase /													increase /
Three months ended March 31	2016					2015					(decrease)
Three months ended September 30														2016					2015					(decrease)
Net sales	$	162,616		100.0	%	$	162,825		100.0	%	$	(209	)	$	173,846		100.0	%	$	162,057		100.0	%	$	11,789
Costs and expenses:
Cost of goods sold		117,455		72.2			119,177		73.2			(1,722	)		124,098		71.4			116,912		72.1			7,186
Selling, general and administrative		25,772		15.9			30,742		18.9			(4,970	)		27,817		16.0			26,331		16.2			1,486
Design and development		10,883		6.7			9,780		6.0			1,103			10,151		5.8			9,867		6.1			284

Operating income		8,506		5.2			3,126		1.9			5,380			11,780		6.8			8,947		5.6			2,833
Interest expense, net		1,514		0.9			1,278		0.8			236			1,684		1.0			1,747		1.1			(63	)
Equity in earnings of investee		(143	)	(0.1	)		(189	)	(0.1	)		46			(307	)	(0.2	)		(160	)	(0.1	)		(147	)
Other (income) expense, net		181		0.1			(213	)	(0.2	)		394
Other income, net															(497	)	(0.3	)		(83	)	-			(414	)
Income before income taxes from continuing operations		6,954		4.3			2,250		1.4			4,704			10,900		6.3			7,443		4.6			3,457
Income tax expense from continuing operations		845		0.5			147		0.1			698			919		0.5			32		-			887
Income from continuing operations		6,109		3.8			2,103		1.3			4,006			9,981		5.8			7,411		4.6			2,570
Loss from discontinued operations		-		-			(168	)	(0.1	)		168			-		-			(113	)	(0.1	)		113

Net income		6,109		3.8			1,935		1.2			4,174			9,981		5.8			7,298		4.5			2,683
Net loss attributable to noncontrolling interest		(1,130	)	(0.7	)		(409	)	(0.2	)		(721	)		(303	)	(0.1	)		(69	)	-			(234	)
Net income attributable to Stoneridge, Inc.	$	7,239		4.5	%	$	2,344		1.4	%	$	4,895		$	10,284		5.9	%	$	7,367		4.5	%	$	2,917

Net Sales.Net sales for our reportable segments, excluding inter-segment sales, are summarized in the following table (in thousands):

									Dollar			Percent											Dollar			Percent
									increase /			increase /											increase /			increase /
Three months ended March 31	2016				2015				(decrease)			(decrease)
Three months ended September 30															2016				2015				(decrease)			(decrease)
Control Devices	$	92,368	56.8	%	$	79,870	49.0	%	$	12,498			15.6	%	$	103,700	59.7	%	$	87,030	53.7	%	$	16,670			19.2	%
Electronics		52,636	32.4			56,432	34.7			(3,796	)		(6.7	)		47,804	27.4			50,688	31.3			(2,884	)		(5.7	)
PST		17,612	10.8			26,523	16.3			(8,911	)		(33.6	)		22,342	12.9			24,339	15.0			(1,997	)		(8.2	)
Total net sales	$	162,616	100.0	%	$	162,825	100.0	%	$	(209	)		(0.1	)%	$	173,846	100.0	%	$	162,057	100.0	%	$	11,789			7.3	%

Our Control Devices segment net sales increased primarily due to new product sales and growth in the North American automotive market of ~~$11.9~~$18.3 million and new ~~product~~program sales and ~~higher~~increased sales volume in ~~our commercial vehicle~~the China automotive market of ~~$1.0~~$1.4 million during the ~~first~~third quarter of 2016, which were offset by a decrease in ~~agricultural sales volume~~commercial vehicle and various other markets of ~~$0.2 million.~~$1.6 million and $0.8 million, respectively.

Our Electronics segment net sales ~~decreased primarily due to~~declined as the increase in sales volume in our European commercial vehicle products of $3.0 million was more than offset by a decrease in sales volume inof our North American commercial vehicle and European off-highway vehicle products of ~~$2.9~~$3.4 million and $1.2 million, respectively, and an unfavorable foreign currency translation of ~~$0.8~~$1.2 million.

Our PST segment net sales decreased primarily due ~~an unfavorable foreign currency translation which reduced sales by $7.1 million, or 26.6% as well as lower product volume as a result of~~to continued weakness in the Brazilian economy and automotive ~~market.~~market which was partially offset by a favorable foreign currency translation that increased sales by $2.0 million, or 8.2%. PST’s monitoring service sales modestly increased but was more than offset by a decline in product sales volume.

Net sales by geographic location are summarized in the following table (in thousands):

									Dollar			Percent											Dollar			Percent
									increase /			increase /											increase /			increase /
Three months ended March 31	2016				2015				(decrease)			(decrease)
Three months ended September 30															2016				2015				(decrease)			(decrease)
North America	$	99,119	61.0	%	$	89,753	55.1	%	$	9,366			10.4	%	$	108,605	62.5	%	$	96,676	59.7	%	$	11,929			12.3	%
South America		17,612	10.8			26,523	16.3			(8,911	)		(33.6	)		22,342	12.9			24,339	15.0			(1,997	)		(8.2	)
Europe and Other		45,885	28.2			46,549	28.6			(664	)		(1.4	)		42,899	24.6			41,042	25.3			1,857			4.5
Total net sales	$	162,616	100.0	%	$	162,825	100.0	%	$	(209	)		(0.1	)%	$	173,846	100.0	%	$	162,057	100.0	%	$	11,789			7.3	%

The increase in North American net sales was primarily attributable to new product sales and growth in our ~~Control Devices~~ North American automotive market of ~~$11.9~~$18.3 million, which was partially offset by decreased sales volume in our ~~Electronics~~ North American commercial vehicle market and various other markets of ~~$2.9 million.~~$5.0 million and $0.8 million, respectively. The decrease in net sales in South America was primarily due to ~~an unfavorable foreign currency translation and lower PST~~a decrease in product sales volume as a result of continued weakness in the Brazilian economy and automotive ~~market.~~market which was partially offset by a favorable foreign currency translation. The ~~decrease~~increase in net sales in Europe and Other was primarily due to an increase in sales volume of our European commercial vehicle products of $3.0 million and new program sales and increased sales volume in our China automotive market of $1.4 million, which were partially offset by a sales volume decrease of our European off-highway vehicle products of $1.2 million as well as an unfavorable foreign currency translation of ~~$0.8~~$1.2 million.

Cost of Goods Sold and Gross Margin. Cost of goods sold ~~decreased~~increased by ~~1.4%~~6.1% primarily related to ~~a favorable change~~an increase in ~~foreign currency exchange rates~~net sales in our Control Devices segment. Our gross margin improved by 0.7% to 28.6% for the third quarter of 2016 compared to 27.9% for the third quarter of 2015 primarily due to lower material costs in our Electronics ~~segment which decreased its direct material costs.~~and PST segments. Our material cost as a percentage of net sales decreased by 0.7% to ~~51.1%~~50.7% for the ~~first~~third quarter of 2016 compared to ~~51.6%~~51.4% for the ~~first~~third quarter of ~~2015. As~~2015 while our aggregated labor and overhead costs as a ~~result, our gross margin increased by 1.0% to 27.8% for the first quarter~~percentage of ~~2016 compared to 26.8% for the first quarter of 2015.~~sales remained level. The lower direct material costs in our Electronics ~~segment~~and PST segments were partially offset by higher direct material costs in our ~~PST~~Control Devices segment ~~due~~related to ~~unfavorable movement~~a change in ~~foreign currency exchange rates.~~product mix.

Our Control Devices segment gross margin ~~increased primarily due to~~decreased as the benefit of increased sales ~~levels.~~was more than offset by higher warranty related costs and was negatively impacted by an unfavorable mix of products sold.

Our Electronics segment gross margin ~~increased~~improved primarily due to lower material costs resulting from a movement in foreign currency exchange rates.

Our PST segment gross margin ~~decreased as sales price increases were more than offset by higher~~increased due to lower direct material costs ~~lower~~related to a favorable movement in foreign currency exchange rates, but was negatively impacted by a decrease in sales ~~volume and business realignment charges of $0.2 million.~~volume.

Selling, General and Administrative (“SG&A”).SG&A expenses ~~decreased~~increased by ~~$5.0~~$1.5 million compared to the ~~first~~third quarter of 2015 ~~due to lower SG&A costs in our PST segment~~ primarily due to ~~foreign currency translation~~higher costs related to the corporate headquarter relocation (including employee retention, relocation, severance, recruiting and duplicate wages) totaling $0.7 million as well as higher wages, share-based compensation (partially resulting from ~~movement~~the modification of the retirement notice provisions of certain awards) and professional fees in ~~foreign currency exchange rates. Also,~~our unallocated corporate segment. This increase was partially offset by a slight decrease in SG&A expenses in our unallocated corporate segment decreased due to lower share-based compensation of $2.2 million incurred in connection with accelerated vesting associated with the retirement of our former President and CEO of $2.2 million in the first quarter of 2015. SG&A expenses in our Electronics segment decreased slightly due to a favorable change in foreign currency exchange rates. Partially offsetting this decrease was higher professional fees and other expenses related to unallocated corporate and an increase in total SG&A business realignment charges of $0.7 million related to ourControl Devices, Electronics and PST segments, ~~for the first quarter~~a portion of ~~2016.~~which relates to business realignment charges which decreased by $0.3 million.

Design and Development (“D&D”).D&D costs increased by ~~$1.1~~$0.3 million primarily due to ~~business realignment charges in our Electronics segment and development~~higher costs related to new product launches in our Control Devices ~~segment. Business realignment charges related to our Electronics~~segment and ~~PST segments were $1.0 million for the first quarter of 2016. The increase in~~ product development costs ~~was~~in our Electronics segment which were partially offset by lower employee costs in our PST segment ~~due to~~as a ~~favorable movement in foreign currency exchange rates.~~result of business realignment actions.

Operating Income.Operating income (loss) is summarized in the following table by continuing reportable segment (in thousands):

							Dollar			Percent									Dollar			Percent
							increase /			increase /									increase /			increase /
Three months ended March 31	2016			2015			(decrease)			(decrease)
Three months ended September 30													2016			2015			(decrease)			(decrease)
Control Devices	$	13,517		$	9,605		$	3,912			40.7	%	$	15,319		$	12,197		$	3,122			25.6	%
Electronics		3,820			3,424			396			11.6			3,735			2,767			968			35.0
PST		(3,117	)		(2,650	)		(467	)		(17.6	)		29			(640	)		669			104.5
Unallocated corporate		(5,714	)		(7,253	)		1,539			21.2			(7,303	)		(5,377	)		(1,926	)		(35.8	)
Operating income	$	8,506		$	3,126		$	5,380			172.1	%	$	11,780		$	8,947		$	2,833			31.7	%

Our Control Devices segment operating income increased primarily due to an increase in sales which was partially offset by higher D&D ~~costs~~and warranty related ~~to new product launches.~~costs.

Our Electronics segment operating income increased despite lower sales primarily due to lower material and SG&A costs, which were partially offset by ~~an increase in business realignment charges of $1.2 million for the first quarter of 2016.~~higher D&D costs.

Our PST segment operating performance ~~decreased~~improved primarily due to lower D&D costs resulting from business realignment ~~charges of $0.7~~actions and higher gross profit from lower material costs and a $0.2 million ~~for~~decrease in business realignment costs. PST’s improved operating performance is expected to continue in the ~~first~~fourth quarter of 2016. Sales price increases were substantially offset by higher material costs resulting from an unfavorable movement in foreign currency exchange rates and lower sales volume as a result of continued weakness in the Brazilian economy and automotive market.

Our unallocated corporate operating loss ~~decreased~~increased primarily due to ~~lower~~costs related to the corporate headquarter relocation as well as higher wages, share-based compensation ~~expense as the prior period included expense for the acceleration of the vesting associated with the retirement of our President~~ and ~~CEO of $2.2 million. This decrease was partially offset by higher~~ professional ~~fees and other expenses.~~fees.

Operating income (loss) by geographic location is summarized in the following table (in thousands):

							Dollar			Percent								Dollar		Percent
							increase /			increase /								increase /		increase /
Three months ended March 31	2016			2015			(decrease)			(decrease)
Three months ended September 30													2016		2015			(decrease)		(decrease)
North America	$	8,339		$	3,865		$	4,474			115.8	%	$	8,852	$	7,714		$	1,138		14.8	%
South America		(3,117	)		(2,650	)		(467	)		(17.6	)		29		(640	)		669		104.5
Europe and Other		3,284			1,911			1,373			71.8			2,899		1,873			1,026		54.8
Operating income	$	8,506		$	3,126		$	5,380			172.1	%	$	11,780	$	8,947		$	2,833		31.7	%

Our North American operating results ~~increased~~improved primarily due to increased sales in the North American automotive market, which were partially offset by higher ~~D&D costs.~~wages, share-based compensation, professional fees and costs related to the headquarter relocation. The ~~decrease in~~improved performance in South America was primarily due to ~~an unfavorable change in foreign currency exchange rates,~~ lower ~~sales volume~~D&D employee costs resulting from business realignment actions, higher gross profit resulting from lower material costs and ~~$0.7~~a $0.2 million decrease in business realignment ~~charges.~~costs. Our operating results in Europe and Other ~~increased~~improved due primarily to lower material costs resulting from a favorable movement in foreign currency exchange rates ~~offset by lower~~and higher sales ~~volume~~of European commercial vehicle and ~~an increase in D&D costs resulting from business realignment charges.~~China automotive products.

Interest Expense, net. Interest expense, net ~~increased~~decreased by ~~$0.2~~$0.1 million compared to the prior year ~~first~~third quarter primarily due to a ~~higher weighted-average~~lower interest rate related to our ~~PST debt.~~Credit Facility.

Equity in Earnings of Investee. Equity earnings for Minda were ~~$0.1~~$0.3 million and $0.2 million for the three months ended ~~March 31,~~September 30, 2016 and 2015, respectively. The ~~slight~~ increase in ~~sales over~~Minda’s income from operations compared to the prior period was ~~more than~~partially offset by ~~higher operating costs and~~ an unfavorable change in foreign currency exchange rates.

Other ~~(Income) Expense,~~Income, net. We record certain foreign currency transaction and forward currency hedge contract (gains) losses as a component of other ~~(income) expense,~~income, net on the condensed consolidated statement of operations. Other ~~expense,~~income, net increased by $0.4 million to ~~$0.1~~$0.5 million for the ~~first~~third quarter of 2016 ~~compared~~primarily due to ~~$(0.2) million for the first quarter of 2015 due to~~an increase in foreign currency gains and several other items. The favorable change in certain foreign currency exchange rates in our unallocated corporate and Electronics segments were partially offset by an unfavorable change in ~~certain~~ foreign currency exchange rates ~~primarily related to the Argentinian peso.~~in our PST segment.

Expense ~~(Benefit)~~ for Income Taxes from Continuing Operations. We recognized income tax expense of ~~$0.8~~$0.9 million and less than $0.1 million from continuing operations for federal, state and foreign income taxes for the ~~first~~third quarter of 2016 and 2015, respectively. The increase in income tax expense for the three months ended ~~March 31,~~September 30, 2016 compared to the same period for 2015 was primarily due to the increase in consolidated earnings. ~~In addition,~~Also, income tax expense increased due to the PST operating loss which generated a benefit for the ~~first~~third quarter of 2015, however, due to the valuation allowance position taken in the fourth quarter of 2015, no longer provides a tax benefit in 2016. The effective tax rate increased to ~~12.2%~~8.4% in the ~~first~~third quarter of 2016 from ~~6.5%~~0.4% in the ~~first~~third quarter of 2015 primarily due to ~~the PST loss which, due to~~ a full valuation allowance on PST’s loss that negatively ~~impacts~~impacted the effective tax rate. The impact of PST on the effective tax rate was partially offset by ~~income from~~the continued strong performance of our U.S. operations which, due to a full valuation allowance, positively ~~impacts~~impacted the effective tax rate.

We will continue to maintain a full valuation allowance on our U.S. deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. As a result of the sale of the Wiring business and debt refinancing during the second half of 2014 and actual and anticipated earnings of the U.S. operations, we believe that there is a reasonable possibility that additional positive evidence may continue to develop in the near term that may allow us to reach a conclusion that some or all of the valuation allowance on our U.S. deferred tax assets will no longer be needed. Reversal of some or all of the U.S. valuation allowance would result in the recognition of certain deferred tax assets and an income tax benefit in the period the reversal is recorded. However, the exact timing and amount of a valuation allowance reversal depends upon the level of profitability that we are able to actually achieve.

Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

Condensed consolidated statements of operations as a percentage of net sales are presented in the following table (in thousands):

Dollar
increase /
Nine months ended September 30 2016 2015 (decrease)
Net sales $ 523,365 100.0 % $ 490,171 100.0 % $ 33,194
Costs and expenses:
Cost of goods sold 375,705 71.8 355,432 72.5 20,273
Selling, general and administrative 82,836 15.8 85,555 17.5 (2,719 )
Design and development 30,912 5.9 29,696 6.0 1,216

Operating income 33,912 6.5 19,488 4.0 14,424
Interest expense, net 5,038 0.9 4,683 1.0 355
Equity in earnings of investee (603 ) (0.1 ) (492 ) (0.1 ) (111 )
Other income, net (722 ) (0.1 ) (343 ) (0.1 ) (379 )
Income before income taxes from continuing operations 30,199 5.8 15,640 3.2 14,559
Income tax expense (benefit) from continuing operations 3,114 0.6 (202 ) - 3,316
Income from continuing operations 27,085 5.2 15,842 3.2 11,243
Loss from discontinued operations - - (226 ) - 226
Net income 27,085 5.2 15,616 3.2 11,469
Net loss attributable to noncontrolling interest (2,009 ) (0.4 ) (1,074 ) (0.2 ) (935 )
Net income attributable to Stoneridge, Inc. $ 29,094 5.6 % $ 16,690 3.4 % $ 12,404
Net Sales.Net sales for our reportable segments, excluding inter-segment sales, are summarized in the following table (in thousands):
Dollar Percent
increase / increase /
Nine months ended September 30 2016 2015 (decrease) (decrease)
Control Devices $ 304,957 58.3 % $ 251,299 51.2 % $ 53,658 21.4 %
Electronics 158,201 30.2 165,015 33.7 (6,814 ) (4.1 )%
PST 60,207 11.5 73,857 15.1 (13,650 ) (18.5 )%
Total net sales $ 523,365 100.0 % $ 490,171 100.0 % $ 33,194 6.8 %
Our Control Devices segment net sales increased primarily due to new product sales and growth in the North American automotive market of $54.8 million and new program sales and increased sales volume in the China automotive market of $3.5 million, which were partially offset by a decrease in various other markets of $2.1 million and our North American commercial vehicle market of $0.5 million during the first nine months of 2016.
Our Electronics segment net sales decreased primarily due to a decrease in sales volume in our North American commercial vehicle products of $9.6 million, an unfavorable foreign currency translation of $1.7 million and a decrease in our European off-highway vehicle products of $0.9 million, which were partially offset by an increase in sales volume in our European commercial vehicle products of $5.9 million.

Our PST segment net sales decreased primarily due to an unfavorable foreign currency translation which reduced sales by $7.9 million, or 10.7%, and lower product volume as a result of continued weakness in the Brazilian economy and automotive market while monitoring service sales volume modestly increased.
Net sales by geographic location are summarized in the following table (in thousands):
Dollar Percent
increase / increase /
Nine months ended September 30 2016 2015 (decrease) (decrease)
North America $ 321,973 61.5 % $ 281,108 57.3 % $ 40,865 14.5 %
South America 60,207 11.5 73,857 15.1 (13,650 ) (18.5 )%
Europe and Other 141,185 27.0 135,206 27.6 5,979 4.4 %
Total net sales $ 523,365 100.0 % $ 490,171 100.0 % $ 33,194 6.8 %
The increase in North American net sales was primarily attributable to new product sales and growth in the North American automotive market of $54.8 million, which was partially offset by decreased sales volume in the North American commercial vehicle market of $9.6 million and decreased sales in various other markets of $2.1 million. The decrease in net sales in South America was due to an unfavorable foreign currency translation as well as lower product sales volume as a result of continued weakness in the Brazilian economy and automotive market. The increase in net sales in Europe and Other was primarily due to an increase in sales volume of our European commercial vehicle products of $5.9 million and new program sales and increased sales volume in our China automotive market of $3.5 million, which were partially offset by an unfavorable foreign currency translation of $1.7 million and lower sales of European off-highway vehicle products of $0.9 million.
Cost of Goods Sold and Gross Margin. Cost of goods sold increased by 5.7% primarily related to an increase in sales in our Control Devices segment. Our gross margin improved by 0.7% to 28.2% for the first nine months of 2016 compared to 27.5% for the first nine months of 2015. Our material cost as a percentage of net sales increased by 0.1% to 51.5% for the first nine months of 2016 compared to 51.4% for the first nine months of 2015 while aggregated labor and overhead costs as a percentage of sales improved by 0.8% due to increased sales and a change in product mix in our Control Devices segment. The lower material costs in our Electronics and PST segments due to a favorable change in foreign currency exchange rates were offset by higher direct material costs as a percentage of sales in our Control Devices segment due to a change in mix of products sold.
Our Control Devices segment gross margin improved slightly primarily due to the benefit of increased sales levels which was partially offset by higher warranty related costs and was negatively impacted by an unfavorable change in mix of products sold.
Our Electronics segment gross margin improved primarily due to lower material costs resulting from a favorable movement in foreign currency exchange rates.
Our PST segment gross margin improved due to lower material costs resulting from a favorable movement in foreign currency exchange rates, which was partially offset by lower sales volume and a $0.1 million increase in business realignment charges.
Selling, General and Administrative. SG&A expenses decreased by $2.7 million compared to the first nine months of 2015 as lower SG&A costs in our PST and Electronics segments were partially offset by higher SG&A costs in our unallocated corporate segment. PST SG&A costs decreased primarily due to lower employee costs as a result of business realignment actions, lower selling related expenses and professional fees and from movement in foreign currency exchange rates, which were partially offset by a $0.7 million increase in business realignment costs. SG&A expenses in our Electronics segment decreased primarily due from movement in foreign currency exchange rates. Unallocated corporate SG&A costs increased due to costs associated with the corporate headquarter relocation (including employee retention, relocation, severance, recruiting, other professional fees and duplicate wages) totaling $1.0 million as well as higher wages, incentive-based compensation (as a result of improved financial performance) and consulting fees. These higher unallocated corporate SG&A costs were partially offset by lower share-based compensation expense as the additional expense related to modification of the retirement notice provisions of certain share-based awards of $0.5 million for the first nine months of 2016 were more than offset by $2.2 million of expense for the acceleration of the vesting associated with the retirement of our President and Chief Executive Officer (“CEO”) during the first nine months of 2015.

Design and Development.D&D costs increased by $1.2 million primarily due to development costs related to new product launches in our Control Devices segment as well as higher product development costs and business realignment charges in our Electronics segment. Business realignment charges related to our Electronics segment increased by $0.8 million during the first nine months of 2016 compared to 2015. This increase in D&D costs in our Control Devices and Electronics segments was partially offset by lower employee costs as a result of business realignment actions, lower product design costs and movement in foreign currency exchange rates in our PST segment.
Operating Income.Operating income (loss) is summarized in the following table by continuing reportable segment (in thousands):
Dollar Percent
increase / increase /
Nine months ended September 30 2016 2015 (decrease) (decrease)
Control Devices $ 47,133 $ 33,787 $ 13,346 39.5 %
Electronics 12,050 9,413 2,637 28.0 %
PST (4,179 ) (5,881 ) 1,702 28.9 %
Unallocated corporate (21,092 ) (17,831 ) (3,261 ) (18.3 )%
Operating income $ 33,912 $ 19,488 $ 14,424 74.0 %
Our Control Devices segment operating income increased primarily due to an increase in sales, which was partially offset by higher D&D costs related to new product launches and higher warranty related costs.
Our Electronics segment operating income increased primarily due to lower material costs, which was partially offset by a $0.9 million increase in business realignment charges and lower sales during the first nine months of 2016 compared to 2015.
Our PST segment operating performance improved primarily due to lower SG&A and D&D expenses due to business realignment actions, lower selling expenses and professional fees. These were partially offset by lower gross profit resulting from lower product sales volume as well as an increase in business realignment charges of $0.8 million for the first nine months of 2016 compared to 2015.
Our unallocated corporate operating loss increased primarily due to higher costs associated with the corporate headquarter relocation as well as higher wages, incentive-based compensation and professional fees. These were partially offset by lower share-based compensation expense because the first nine months of 2015 included $2.2 million of expense for the acceleration of the vesting associated with the retirement of our President and CEO while the first nine months of 2016 had $0.5 million of expense related to the modification of the retirement notice provisions of certain awards.
Operating income (loss) by geographic location is summarized in the following table (in thousands):
Dollar Percent
increase / increase /
Nine months ended September 30 2016 2015 (decrease) (decrease)
North America $ 27,303 $ 19,310 $ 7,993 41.4 %
South America (4,179 ) (5,881 ) 1,702 (28.9 )%
Europe and Other 10,788 6,059 4,729 78.0 %
Operating income $ 33,912 $ 19,488 $ 14,424 74.0 %
32
Our North American operating results improved primarily due to increased sales in the North American automotive market which was partially offset by higher SG&A expenses in our unallocated corporate segment and higher D&D and warranty related costs in our Control Devices segment. The improvement in performance in South America was primarily due to lower SG&A and D&D employee expenses resulting from business realignment actions, lower selling costs and professional fees which was partially offset by lower gross profit resulting from lower product sales volume and a $0.8 million increase in business realignment costs. Our results in Europe and Other improved as higher D&D costs, an increase in product development and business realignment charges were more than offset by higher gross profit benefiting from lower material costs as well as lower SG&A expenses.
Interest Expense, net. Interest expense, net increased by $0.4 million compared to the prior year first nine months primarily due to a higher weighted-average interest rate related to our PST debt.
Equity in Earnings of Investee. Equity earnings for Minda were $0.6 million and $0.5 million for the nine months ended September 30, 2016 and 2015, respectively. The increase in Minda’s income from operations compared to the prior period was partially offset by an unfavorable change in foreign currency exchange rates.
Other Income, net. We record certain foreign currency transaction and forward currency hedge contract (gains) losses as a component of other income, net on the condensed consolidated statement of operations. Other income, net increased by $0.4 million compared to the first nine months of 2015 due to an increase in foreign currency gains and several other items. The favorable change in foreign currency exchange rates in our unallocated corporate and Electronics segments were partially offset by an unfavorable change in foreign currency exchange rates in our PST segment.
Expense (Benefit) for Income Taxes from Continuing Operations. We recognized income tax expense (benefit) of $3.1 million and $(0.2) million from continuing operations for federal, state and foreign income taxes for the first nine months of 2016 and 2015, respectively. The increase in income tax expense for the nine months ended September 30, 2016 compared to the same period for 2015 was primarily due to the increase in consolidated earnings. Also, income tax expense increased due to the PST operating loss which generated a benefit for the first nine months of 2015, however, due to the valuation allowance position taken in the fourth quarter of 2015, no longer provides a tax benefit in 2016. The effective tax rate increased to 10.3% in the first nine months of 2016 from (1.3)% in the first nine months of 2015 primarily due to a full valuation allowance on PST’s loss that negatively impacted the effective tax rate. The impact of PST on the effective tax rate was partially offset by the continued strong performance of our U.S. operations which, due to a full valuation allowance, positively impacted the effective tax rate.
We will continue to maintain a full valuation allowance on our U.S. deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. As a result of the sale of the Wiring business and debt refinancing during the second half of 2014 and actual and anticipated earnings of the U.S. operations, we believe that there is a reasonable possibility that additional positive evidence may continue to develop in the near term that may allow us to reach a conclusion that some or all of the valuation allowance on our U.S. deferred tax assets will no longer be needed. Reversal of some or all of the U.S. valuation allowance would result in the recognition of certain deferred tax assets and an income tax benefit in the period the reversal is recorded. However, the exact timing and amount of a valuation allowance reversal depends upon the level of profitability that we are able to actually achieve.
33
Liquidity and Capital Resources

Summary of Cash Flows (in thousands):
Dollar
increase /
Three months ended March 31 (in thousands) 2016 2015 (decrease)
Net cash provided by (used for):
Operating activities $ 1,132 $ (4,279 ) $ 5,411
Investing activities (6,736 ) (8,473 ) 1,737
Financing activities (1,238 ) (4,388 ) 3,150
Effect of exchange rate changes on cash and cash equivalents 854 (2,012 ) 2,866
Net change in cash and cash equivalents $ (5,988 ) $ (19,152 ) $ 13,164
Dollar
increase /
Nine months ended September 30 (in thousands) 2016 2015 (decrease)
Net cash provided by (used for):
Operating activities $ 37,017 $ 17,133 $ 19,884
Investing activities (17,832 ) (25,167 ) 7,335
Financing activities (22,718 ) (3,802 ) (18,916 )
Effect of exchange rate changes on cash and cash equivalents (268 ) (1,896 ) 1,628
Net change in cash and cash equivalents $ (3,801 ) $ (13,732 ) $ 9,931

Cash provided by operating activities, which includes cash flows from the Wiring discontinued operations in 2015, increased primarily due to lower working capital movement and an increase in net income. Our receivable terms and collections rates have remained consistent between periods presented.

Net cash used for investing activities decreased primarily due to lower capital expenditures in the current period. Also, there were payments related to the sale of the Wiring business in the prior period which did not recur in 2016.

Net cash used for financing activities ~~decreased~~increased primarily due to an unplanned partial repayment of our Credit Facility and lower ~~repayments of debt~~PST borrowings incurred in the current period.

As outlined in Note 7 to our condensed consolidated financial statements, our Credit Facility permits borrowing up to a maximum level of $300.0 million which includes an accordion feature which allows the Company to increase the availability by up to $80.0 million upon the satisfaction of certain conditions. This variable rate facility provides the flexibility to refinance other outstanding debt or finance acquisitions through September ~~2019.~~2021. The Credit Facility contains certain financial covenants that require the Company to maintain less than a maximum leverage ratio and more than a minimum interest coverage ratio. The Credit Facility also contains affirmative and negative covenants and events of default that are customary for credit arrangements of this type including covenants which place restrictions and/or limitations on the Company’s ability to borrow money, make capital expenditures and pay dividends. The Credit Facility had an outstanding balance of ~~$100.0~~$87.0 million at ~~March 31,~~September 30, 2016. The Company was in compliance with all covenants at ~~March 31,~~September 30, 2016. The covenants included in our Credit Facility to date have not and are not expected to limit our financing flexibility.

PST maintains several short-term obligations and long-term loans used for working capital purposes. At ~~March 31,~~September 30, 2016, there was ~~$20.7~~$18.0 million of PST debt outstanding. ~~Principal payments~~Scheduled principal repayments on PST debt at ~~March 31,~~September 30, 2016 ~~are~~were as follows: ~~$16.5~~$9.7 million from ~~April 2015~~October 2016 to ~~March~~September 2017, ~~$1.4~~$1.0 million from ~~April~~October 2017 to December 2017, ~~$1.1~~$4.0 million in 2018, ~~$1.0~~$2.6 million in 2019, $0.4 million in 2020 and $0.3 million in 2021.
28

The Company's wholly owned subsidiary located in Stockholm, Sweden, has an overdraft credit line which allows overdrafts on the subsidiary's bank account up to a maximum level of 20.0 million Swedish krona, or ~~$2.5~~$2.3 million, at ~~March 31,~~September 30, 2016. At ~~March 31,~~September 30, 2016, there were no overdrafts on the bank account.

Due to the deterioration of the Brazilian economy and automotive market in 2015 and first ~~quarter~~nine months of 2016, PST had lower earnings and cash flows. Also, PST has experienced slower customer payments of receivables, which combined with lower earnings has made its liquidity more challenging. As such, PST has and continues to evaluate and utilize several funding sources including factoring receivables and short-term loans from banks to provide necessary funding.

Although the Company's notes and credit facilities contain various covenants, the violation of which would limit or preclude their use or accelerate the maturity, the Company has not experienced and does not expect these covenants to restrict our financing flexibility. The Company has been and expects to continue to remain in compliance with these covenants during the term of the notes and credit facilities.

Our future results could also be adversely affected by unfavorable changes in foreign currency exchange rates. We have significant foreign denominated transaction exposure in certain locations, especially in Brazil, Argentina, Mexico, Sweden, Estonia and China. We have entered into foreign currency forward contracts to reduce our exposure related to certain foreign currency fluctuations. See Note 65 to the condensed consolidated financial statements for additional details. Our future results could also be unfavorably affected by increased commodity prices as commodity fluctuations impact the cost of our raw material purchases.

At ~~March 31,~~September 30, 2016, we had a cash and cash equivalents balance of approximately ~~$48.4~~$50.6 million, of which ~~$22.0~~$18.2 million was held in the United States and ~~$26.4~~$32.4 million was held in foreign locations. The decrease from $54.4 million at December 31, 2015 was due to repayment of debt, higher working capital and capital expenditures ~~to support~~which were offset by net income during the ~~launch~~first nine months of ~~new products, repayment of debt and the repurchase of common shares to satisfy employee tax withholding obligations.~~2016.

Commitments and Contingencies

See Note 10 to the condensed consolidated financial statements for disclosures of the Company’s commitments and contingencies.

Seasonality

Our Control Devices and Electronics segments are not typically affected by seasonality, however the demand for our PST segment consumer products is typically higher in the second half of the year, the fourth quarter in particular.

Critical Accounting Policies and Estimates

The Company's critical accounting policies, which include management's best estimates and judgments, are included in Part II, Item 7, to the consolidated financial statements of the Company's 2015 Form 10-K. These accounting policies are considered critical as disclosed in the Critical Accounting Policies and Estimates section of Management's Discussion and Analysis of the Company's 2015 Form 10-K because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates.

Information regarding other significant accounting policies is included in Note 2 to our consolidated financial statements in Item 8 of Part II of the Company’s 2015 Form 10-K.

Inflation and International Presence

Given the current economic conditions of countries and recent fluctuations in certain foreign currency exchange rates and commodity prices, we believe that a negative change in such items could significantly affect our profitability.
29

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk presented within Part II, Item 7A of the Company's 2015 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of ~~March 31,~~September 30, 2016, an evaluation was performed under the supervision and with the participation of the Company's management, including the principal executive officer (“PEO”) and principal financial officer (“PFO”), of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management, including the PEO and PFO, concluded that the Company's disclosure controls and procedures were effective as of ~~March 31,~~September 30, 2016.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting during the three months ended ~~March 31,~~September 30, 2016 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II–OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in certain legal actions and claims primarily arising in the ordinary course of business. Although it is not possible to predict with certainty the outcome of these matters, we do not believe that any of the litigation in which we are currently engaged, either individually or in the aggregate, will have a material adverse effect on our business, consolidated financial position or results of operations. We are subject to a tax assessment in Brazil related to value added taxes on vehicle tracking and monitoring services for which the likelihood of loss is not probable although it may take years to resolve. In addition, we are subject to litigation regarding patent infringement. We are also subject to the risk of exposure to product liability claims in the event that the failure of any of our products causes personal injury or death to users of our products as well as product warranty and recall claims. There can be no assurance that we will not experience any material losses related to product liability, warranty or recall claims. In addition, if any of our products prove to be defective, we may be required to participate in a government-imposed or customer OEM-instituted recall involving such products. See additional details of these matters in Note 10 to the condensed consolidated financial statements.

Item 1A. Risk Factors

There have been no material changes with respect to risk factors previously disclosed in the Company's 2015 Form 10-K.

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

The following table presents information with respect to repurchases of Common Shares made by us during the three months ended March 31, 2016. These shares were delivered to us by employees as payment for the withholding taxes due upon vesting of restricted share awards:None.
30
Period Total number
of shares
purchased Average price
paid per share Total number of
shares purchased
as part of publicly
announced plans
or programs Maximum
number of
shares that may
yet be purchased
under the plans
or programs
1/1/16-1/31/16 - - N/A N/A
2/1/16-2/29/16 121,503 $ 11.06 N/A N/A
3/1/16-3/31/16 - - N/A N/A
Total 121,503

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

Reference is made to the separate, “Index to Exhibits,” filed herewith.
31

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.

STONERIDGE, INC.

Date:  ~~May 5,~~October 28, 2016 /s/ Jonathan B. DeGaynor

Jonathan B. DeGaynor
President and Chief Executive Officer
(Principal Executive Officer)

Date:  ~~May 5,~~October 28, 2016 /s/ ~~George E. Strickler~~Robert R. Krakowiak
~~George E. Strickler~~Robert R. Krakowiak
~~Executive Vice President,~~ Chief Financial Officer and Treasurer
(Principal Financial ~~and Accounting~~ Officer)

32
37

INDEX TO EXHIBITS

Exhibit
Number
Exhibit

10.1 Amendment No. ~~2 and Waiver~~3 to Third Amended and Restated Credit Agreement ~~dated February 23, 2016~~ (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on ~~February 24,~~August 17, 2016).
~~10.2~~
~~Stoneridge, Inc. Amended and Restated Long-Term Incentive Plan - 2016 Performance Shares Agreement, filed herewith.~~
~~10.3~~
~~Stoneridge, Inc. Amended and Restated Long-Term Incentive Plan - 2016 Share Units Agreement, filed herewith.~~

31.1 Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2
Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1
Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.2

Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
101 XBRL Exhibits:
101.INS XBRL Instance Document
101.SCH XBRL Schema Document
101.CAL XBRL Calculation Linkbase Document
101.DEF XBRL Definition Linkbase Document
101.LAB XBRL Labels Linkbase Document
101.PRE XBRL Presentation Linkbase Document
33

	Ohio		34-1598949
	(State or other jurisdiction of		(I.R.S. Employer
	incorporation or organization)		Identification No.)

	9400 East Market Street, Warren, Ohio		44484
	(Address of principal executive offices)		(Zip Code)

Large accelerated filer ¨	Accelerated filer x	Non-accelerated filer ¨	Smaller reporting company ¨
		(Do not check if a smaller reporting company)

	March 31,			December 31,			September 30,			December 31,
(in thousands)	2016			2015			2016			2015
	(Unaudited)						(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	48,373		$	54,361		$	50,560		$	54,361
Accounts receivable, less reserves of $1,159 and $1,066, respectively		112,649			94,937
Accounts receivable, less reserves of $1,563 and $1,066, respectively								122,286			94,937
Inventories, net		69,367			61,009			65,200			61,009
Prepaid expenses and other current assets		24,918			21,602			31,677			21,602
Total current assets		255,307			231,909			269,723			231,909

Long-term assets:
Property, plant and equipment, net		88,563			85,264			90,746			85,264
Intangible assets, net and goodwill		39,404			36,699			41,294			36,699
Investments and other long-term assets, net		10,452			10,380			11,839			10,380
Total long-term assets		138,419			132,343			143,879			132,343
Total assets	$	393,726		$	364,252		$	413,602		$	364,252

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Current portion of debt	$	16,827		$	13,905		$	9,901		$	13,905
Accounts payable		69,261			55,225			66,596			55,225
Accrued expenses and other current liabilities		38,799			38,920			50,032			38,920
Total current liabilities		124,887			108,050			126,529			108,050

Long-term liabilities:
Revolving credit facility		100,000			100,000			87,000			100,000
Long-term debt, net		4,206			4,458			8,264			4,458
Deferred income taxes		43,092			41,332			43,290			41,332
Other long-term liabilities		3,783			3,983			3,898			3,983
Total long-term liabilities		151,081			149,773			142,452			149,773

Shareholders' equity:
Preferred Shares, without par value, 5,000 shares authorized, none issued		-			-			-			-
Common Shares, without par value, 60,000 shares authorized, 28,958 and 28,907 shares issued and 27,838 and 27,912 shares outstanding at March 31, 2016 and December 31, 2015, respectively, with no stated value		-			-
Common Shares, without par value, 60,000 shares authorized, 28,966 and 28,907 shares issued and 27,843 and 27,912 shares outstanding at September 30, 2016 and December 31, 2015, respectively, with no stated value								-			-
Additional paid-in capital		200,350			199,254			203,976			199,254
Common Shares held in treasury, 1,120 and 995 shares at March 31, 2016 and December 31, 2015, respectively, at cost		(5,552	)		(4,208	)
Common Shares held in treasury, 1,123 and 995 shares at September 30, 2016 and December 31, 2015, respectively, at cost								(5,592	)		(4,208	)
Accumulated deficit		(24,866	)		(32,105	)		(3,011	)		(32,105	)
Accumulated other comprehensive loss		(65,544	)		(69,822	)		(64,456	)		(69,822	)
Total Stoneridge, Inc. shareholders' equity		104,388			93,119			130,917			93,119
Noncontrolling interest		13,370			13,310			13,704			13,310
Total shareholders' equity		117,758			106,429			144,621			106,429
Total liabilities and shareholders' equity	$	393,726		$	364,252		$	413,602		$	364,252

Three months ended March (in thousands)	2016			2015

Net income	$	6,109		$	1,935
Less: Loss attributable to noncontrolling interest		(1,130	)		(409	)
Net income attributable to Stoneridge, Inc.		7,239			2,344

Other comprehensive income (loss), net of tax attributable to Stoneridge, Inc.:
Foreign currency translation		4,728			(14,962	)
Benefit plan liability		-			(45	)
Unrealized gain (loss) on derivatives		(450	)		935
Other comprehensive income (loss), net of tax attributable to Stoneridge, Inc.		4,278			(14,072	)

Comprehensive income (loss) attributable to Stoneridge, Inc.	$	11,517		$	(11,728	)

	Three months ended						Nine months ended
	September 30,						September 30,
(in thousands)	2016			2015			2016			2015

Net income	$	9,981		$	7,298		$	27,085		$	15,616
Less: Net loss attributable to noncontrolling interest		(303	)		(69	)		(2,009	)		(1,074	)
Net income attributable to Stoneridge, Inc.		10,284			7,367			29,094			16,690

Other comprehensive income (loss), net of tax attributable to Stoneridge, Inc.:
Foreign currency translation		(638	)		(12,557	)		5,923			(24,497	)
Benefit plan liability		(84	)		-			(84	)		(45	)
Unrealized loss on derivatives		(64	)		(236	)		(473	)		(29	)
Other comprehensive income (loss), net of tax attributable to Stoneridge, Inc.		(786	)		(12,793	)		5,366			(24,571	)

Comprehensive income (loss) attributable to Stoneridge, Inc.	$	9,498		$	(5,426	)	$	34,460		$	(7,881	)

	(330) 856-2443
	Registrant's telephone number, including area code

INDEX		Page
PART I–FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of ~~March 31,~~September 30, 2016 (Unaudited) and December 31, 2015	3
	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended ~~March 31,~~September 30, 2016 and 2015	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Nine Months Ended ~~March 31,~~September 30, 2016 and 2015	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2016 and 2015	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2324
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3035
Item 4.	Controls and Procedures	3035

PART II–OTHER INFORMATION

Item 1.	Legal Proceedings	3036
Item 1A.	Risk Factors	3036
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3036
Item 3.	Defaults Upon Senior Securities	3136
Item 4.	Mine Safety Disclosures	3136
Item 5.	Other Information	3136
Item 6.	Exhibits	3136

Signatures		3237

Index to Exhibits		3338

Three months ended March 31, (in thousands, except per share data)	2016			2015
							Three months ended						Nine months ended
							September 30,						September 30,
(in thousands, except per share data)							2016			2015			2016			2015

Net sales	$	162,616		$	162,825		$	173,846		$	162,057		$	523,365		$	490,171

Costs and expenses:
Cost of goods sold		117,455			119,177			124,098			116,912			375,705			355,432
Selling, general and administrative		25,772			30,742			27,817			26,331			82,836			85,555
Design and development		10,883			9,780			10,151			9,867			30,912			29,696

Operating income		8,506			3,126			11,780			8,947			33,912			19,488

Interest expense, net		1,514			1,278			1,684			1,747			5,038			4,683
Equity in earnings of investee		(143	)		(189	)		(307	)		(160	)		(603	)		(492	)
Other (income) expense, net		181			(213	)
Other income, net								(497	)		(83	)		(722	)		(343	)

Income before income taxes from continuing operations		6,954			2,250			10,900			7,443			30,199			15,640

Income tax expense from continuing operations		845			147
Income tax expense (benefit) from continuing operations								919			32			3,114			(202	)

Income from continuing operations		6,109			2,103			9,981			7,411			27,085			15,842

Loss from discontinued operations		-			(168	)		-			(113	)		-			(226	)

Net income		6,109			1,935			9,981			7,298			27,085			15,616

Net loss attributable to noncontrolling interest		(1,130	)		(409	)		(303	)		(69	)		(2,009	)		(1,074	)

Net income attributable to Stoneridge, Inc.	$	7,239		$	2,344		$	10,284		$	7,367		$	29,094		$	16,690

Earnings per share from continuing operations attributable to Stoneridge, Inc.:
Earnings per share from continuing operations attributable Stoneridge, Inc.:
Basic	$	0.26		$	0.10		$	0.37		$	0.27		$	1.05		$	0.62
Diluted	$	0.26		$	0.09		$	0.36		$	0.27		$	1.03		$	0.61

Loss per share attributable to discontinued operations:
Basic	$	-		$	(0.01	)	$	0.00		$	(0.01	)	$	0.00		$	(0.01	)
Diluted	$	-		$	(0.01	)	$	0.00		$	(0.01	)	$	0.00		$	(0.01	)

Earnings per share attributable to Stoneridge, Inc.:
Basic	$	0.26		$	0.09		$	0.37		$	0.26		$	1.05		$	0.61
Diluted	$	0.26		$	0.08		$	0.36		$	0.26		$	1.03		$	0.60

Weighted-average shares outstanding:
Basic		27,676			27,146			27,792			27,444			27,753			27,299
Diluted		28,156			27,893			28,359			28,008			28,266			27,927

Three months ended March 31 (in thousands)	2016			2015

OPERATING ACTIVITIES:
Net income	$	6,109		$	1,935
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation		4,542			5,128
Amortization, including accretion of debt discount		822			1,085
Deferred income taxes		320			301
Earnings of equity method investee		(143	)		(189	)
Loss on sale of fixed assets		(67	)		(14	)
Share-based compensation expense		960			3,325
Loss on disposal of Wiring business		-			168
Changes in operating assets and liabilities:
Accounts receivable, net		(15,456	)		(15,821	)
Inventories, net		(5,658	)		(8,347	)
Prepaid expenses and other assets		(2,977	)		(2,501	)
Accounts payable		13,932			11,938
Accrued expenses and other liabilities		(1,252	)		(1,287	)
Net cash provided by (used for) operating activities		1,132			(4,279	)

INVESTING ACTIVITIES:
Capital expenditures		(6,817	)		(8,490	)
Proceeds from sale of fixed assets		81			17
Net cash used for investing activities		(6,736	)		(8,473	)

FINANCING ACTIVITIES:
Proceeds from issuance of debt		2,922			2,073
Repayments of debt		(2,816	)		(5,245	)
Other financing costs		-			(35	)
Repurchase of Common Shares to satisfy employee tax withholding		(1,344	)		(1,181	)
Net cash used for financing activities		(1,238	)		(4,388	)

Effect of exchange rate changes on cash and cash equivalents		854			(2,012	)
Net change in cash and cash equivalents		(5,988	)		(19,152	)
Cash and cash equivalents at beginning of period		54,361			43,021

Cash and cash equivalents at end of period	$	48,373		$	23,869

Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,391		$	1,241
Cash paid for income taxes, net	$	549		$	760

Supplemental disclosure of non-cash operating and financing activities:
Bank payment of vendor payables under short-term debt obligations	$	704		$	582

Nine months ended September 30 (in thousands)	2016			2015

OPERATING ACTIVITIES:
Net income	$	27,085		$	15,616
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation		14,717			14,843
Amortization, including accretion of deferred financing costs		2,677			3,000
Deferred income taxes		714			202
Earnings of equity method investee		(603	)		(492	)
(Gain) loss on sale of fixed assets		(409	)		55
Share-based compensation expense		4,587			5,746
Loss on disposal of Wiring business		-			226
Changes in operating assets and liabilities:
Accounts receivable, net		(25,486	)		(17,768	)
Inventories, net		281			(15,028	)
Prepaid expenses and other assets		(5,879	)		(703	)
Accounts payable		13,991			9,459
Accrued expenses and other liabilities		5,342			1,977
Net cash provided by operating activities		37,017			17,133

INVESTING ACTIVITIES:
Capital expenditures		(18,484	)		(23,521	)
Proceeds from sale of fixed assets		652			53
Payments related to sale of Wiring business		-			(1,230	)
Business acquisition		-			(469	)
Net cash used for investing activities		(17,832	)		(25,167	)

FINANCING ACTIVITIES:
Revolving credit facility payment		(13,000	)		-
Proceeds from issuance of debt		13,317			19,116
Repayments of debt		(21,312	)		(20,015	)
Other financing costs		(339	)		(49	)
Repurchase of Common Shares to satisfy employee tax withholding		(1,384	)		(2,854	)
Net cash used for financing activities		(22,718	)		(3,802	)

Effect of exchange rate changes on cash and cash equivalents		(268	)		(1,896	)
Net change in cash and cash equivalents		(3,801	)		(13,732	)
Cash and cash equivalents at beginning of period		54,361			43,021

Cash and cash equivalents at end of period	$	50,560		$	29,289

Supplemental disclosure of cash flow information:
Cash paid for interest	$	4,573		$	4,539
Cash paid for income taxes, net	$	2,019		$	1,840

Supplemental disclosure of non-cash operating and financing activities:
Bank payment of vendor payables under short-term debt obligations	$	3,764		$	3,286

					Prepaid expenses
	Notional				and other current assets /					Accrued expenses and
	amounts^(A)				other long-term assets					other current liabilities
	March 31,		December 31,		March 31,			December 31,		March 31,		December 31,
	2016		2015		2016			2015		2016		2015
Derivatives designated as hedging instruments
Cash Flow Hedges:
Forward currency contracts	$	16,660	$	22,208	$	3		$	474	$	63	$	84

Derivatives not designated as hedging instruments
Forward currency contracts	$	1,730	$	1,647		-	��		-	$	5	$	9

	Gain (loss) recorded					Loss reclassified from						Loss recorded						Loss reclassified from
	in other comprehensive					other comprehensive income						in other comprehensive						other comprehensive income
	income (loss)					(loss) into net income						income (loss)						(loss) into net income
	2016			2015		2016			2015			2016			2015			2016			2015
Derivatives designated as cash flow hedges:
Forward currency contracts	$	(494	)	$	797	$	(44	)	$	(138	)	$	(129	)	$	(578	)	$	(65	)	$	(342	)
Total derivatives designated as cash flow hedges	$	(494	)	$	797	$	(44	)	$	(138	)	$	(129	)	$	(578	)	$	(65	)	$	(342	)

~~(A)~~	Fair values estimated using Level 1 inputs, which consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The Company did not have any recurring fair value estimates using Level 1 inputs at March 31, 2016 or December 31, 2015.

~~(B)~~	Fair values estimated using Level 2 inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly and include among other things, quoted prices for similar assets or liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable. For forward currency contracts, inputs include foreign currency exchange rates.

~~(C)~~	Fair values estimated using Level 3 inputs consist of significant unobservable inputs. The Company did not have any recurring fair value estimates using Level 3 inputs at March 31, 2016 or December 31, 2015.

							Interest rates at											Interest rates at
	March 31,			December 31,			March 31,					September 30,			December 31,			September 30,
	2016			2015			2016			Maturity		2016			2015			2016			Maturity
Revolving Credit Facility
Credit facility	$	100,000		$	100,000			1.69	%		September 2019	$	87,000		$	100,000			1.80	%	September 2021

Debt
PST short-term obligations		14,205			11,556			4.85% - 19.66	%		2016 - 2017		7,401			11,556			4.27% - 20.37	%	2016 - 2017
PST long-term notes		6,504			6,428			6.2% - 8.0	%		2017 - 2021		10,573			6,428			6.20% - 18.00	%	2017 - 2021
Other		324			379								191			379
Total debt		21,033			18,363								18,165			18,363
Less: current portion		(16,827	)		(13,905	)							(9,901	)		(13,905	)
Total long-term debt, net	$	4,206		$	4,458							$	8,264		$	4,458

	Foreign			Unrealized			Benefit
	currency			gain (loss)			plan
	translation			on derivatives			liability			Total
Balance at January 1, 2016	$	(70,296	)	$	390		$	84		$	(69,822	)

Other comprehensive income (loss) before reclassifications		4,728			(494	)		-			4,234
Amounts reclassified from accumulated other comprehensive loss		-			44			-			44
Net other comprehensive income (loss), net of tax		4,728			(450	)		-			4,278

Balance at March 31, 2016	$	(65,568	)	$	(60	)	$	84		$	(65,544	)

Balance at January 1, 2015	$	(45,603	)	$	1		$	129		$	(45,473	)

Other comprehensive income (loss) before reclassifications		(14,962	)		797			(45	)		(14,210	)
Amounts reclassified from accumulated other comprehensive loss		-			138			-			138
Net other comprehensive income (loss), net of tax		(14,962	)		935			(45	)		(14,072	)

Balance at March 31, 2015	$	(60,565	)	$	936		$	84		$	(59,545	)

													Dollar increase /
Nine months ended September 30				2016						2015			(decrease)
Net sales	$	523,365			100.0	%	$	490,171			100.0	%	$	33,194
Costs and expenses:
Cost of goods sold		375,705			71.8			355,432			72.5			20,273
Selling, general and administrative		82,836			15.8			85,555			17.5			(2,719	)
Design and development		30,912			5.9			29,696			6.0			1,216

Operating income		33,912			6.5			19,488			4.0			14,424
Interest expense, net		5,038			0.9			4,683			1.0			355
Equity in earnings of investee		(603	)		(0.1	)		(492	)		(0.1	)		(111	)
Other income, net		(722	)		(0.1	)		(343	)		(0.1	)		(379	)
Income before income taxes from continuing operations		30,199			5.8			15,640			3.2			14,559
Income tax expense (benefit) from continuing operations		3,114			0.6			(202	)		-			3,316
Income from continuing operations		27,085			5.2			15,842			3.2			11,243
Loss from discontinued operations		-			-			(226	)		-			226
Net income		27,085			5.2			15,616			3.2			11,469
Net loss attributable to noncontrolling interest		(2,009	)		(0.4	)		(1,074	)		(0.2	)		(935	)
Net income attributable to Stoneridge, Inc.	$	29,094			5.6	%	$	16,690			3.4	%	$	12,404

	STONERIDGE, INC.

Date: ~~May 5,~~October 28, 2016	/s/ Jonathan B. DeGaynor
	Jonathan B. DeGaynor President and Chief Executive Officer
	(Principal Executive Officer)

Date: ~~May 5,~~October 28, 2016	/s/ ~~George E. Strickler~~Robert R. Krakowiak
	~~George E. Strickler~~Robert R. Krakowiak
	~~Executive Vice President,~~ Chief Financial Officer and Treasurer
	(Principal Financial ~~and Accounting~~ Officer)

Exhibit Number	Exhibit

10.1	Amendment No. ~~2 and Waiver~~3 to Third Amended and Restated Credit Agreement ~~dated February 23, 2016~~ (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on ~~February 24,~~August 17, 2016).

~~10.2~~	~~Stoneridge, Inc. Amended and Restated Long-Term Incentive Plan - 2016 Performance Shares Agreement, filed herewith.~~

~~10.3~~	~~Stoneridge, Inc. Amended and Restated Long-Term Incentive Plan - 2016 Share Units Agreement, filed herewith.~~

31.1	Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2	Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1	Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.2	Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

	101	XBRL Exhibits:
	101.INS	XBRL Instance Document
	101.SCH	XBRL Schema Document
	101.CAL	XBRL Calculation Linkbase Document
	101.DEF	XBRL Definition Linkbase Document
	101.LAB	XBRL Labels Linkbase Document
	101.PRE	XBRL Presentation Linkbase Document