THIRD QUARTER 2021 VERSUS THIRD QUARTER 2020
Net Sales. Net sales for the third quarter of 2021 decreased by $75.0 million or
16% when compared with the third quarter of 2020.
Automotive net sales for the third quarter of 2021 were $391.3 million, compared
with automotive net sales of $464.7 million in the third quarter of 2020.
Auto-dimming mirror unit shipments by the Company decreased 7% during the
quarter, compared to the third quarter of 2020.

The below table represents the Company's auto-dimming mirror unit shipments for
the three and nine months ended September 30, 2021, and 2020 (in thousands).
                                                      Three Months Ended September 30,                                           Nine Months Ended September 30,
                                         2021                         2020                   % Change               2021                        2020                   % Change
North American Interior Mirrors          1,897                        2,234                    (15)%                5,843                       5,040                     16%
North American Exterior Mirrors          1,355                        1,404                    (4)%                 4,345                       3,093                     40%
Total North American Mirror Units        3,252                        3,638                    (11)%               10,188                       8,133                     25%

International Interior Mirrors           4,629                        4,940                    (6)%                15,219                      12,889                     18%
International Exterior Mirrors           1,928                        1,981                    (3)%                 6,605                       5,191                     27%
Total International Mirror Units         6,557                        6,921                    (5)%                21,823                      18,080                     21%

Total Interior Mirrors                   6,526                        7,174                    (9)%                21,062                      17,928                     17%
Total Exterior Mirrors                   3,283                        3,385                    (3)%                10,949                       8,285                     32%
Total Auto-Dimming Mirror Units          9,809                       10,559                    (7)%                32,011                      26,213                     22%

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



Other net sales were $8.3 million in the third quarter of 2021, a decrease of
17%, compared to $10.0 million in the third quarter of 2020. This decrease is in
large part attributable to a 34% quarter over quarter decline in variable
dimmable aircraft windows sales, which decreased to $2.4 million in the third
quarter of 2021 from $3.6 million in the third quarter of 2020. Fire protection
sales decreased by 8% in the third quarter of 2021 to $5.9 million, compared to
$6.4 million in the third quarter of 2020.

Cost of Goods Sold. As a percentage of net sales, cost of goods sold increased
to 64.7% in the third quarter of 2021 versus 60.3% in the third quarter of 2020.
Compared to the third quarter of 2020, gross margin was primarily impacted by
the lower sales levels stemming from the 23% quarter over quarter decline in
light vehicle production the Company's primary regions. Gross margin was also
negatively impacted by customer price reductions and increases in freight and
other supply chain related costs. On a quarter over quarter basis, the fixed
overhead leverage had a negative impact of approximately 250 - 300 basis points
on the gross margin. Customer price reductions and increases in freight and
other supply chain costs each had a negative impact of approximately 150 - 200
basis points. These impacts were partially offset by price reductions on raw
materials and product mix, which each had a positive impact of approximately 150
- 200 basis points on gross margin on a quarter over quarter basis.

Operating Expenses. Engineering, research and development ("E, R & D") expenses
for the third quarter of 2021 increased by $1.9 million when compared with the
third quarter of 2020.
.
Selling, general and administrative ("S, G & A") expenses increased by 7% or
$1.4 million for the third quarter of 2021 compared to the third quarter of
2020. S, G & A expenses were 6% of net sales in the third quarter of 2021,
compared to 5% of net sales in the third quarter of 2020. S, G, & A expenses
increased on a quarter over quarter basis primarily due to increases in wages
and selling expenses.

Total operating expenses were $52.7 million in the third quarter of 2021, which increased by 7% or $3.4 million, from $49.4 million in the third quarter of 2020.

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Total Other Income. Total other income for the third quarter of 2021 decreased
by $2.3 million when compared with the third quarter of 2020.
Provision for Income Taxes. The effective tax rate was 14.7% for, and an income
tax expense of $13.2 million was recorded in, the third quarter of 2021 compared
to an income tax expense of $25.8 million for the same quarter of 2020.
Typically, effective tax rates for the Company differ from statutory federal
income tax rates, due to provisions for state and local income taxes, permanent
tax differences, research and development tax credits and the foreign-derived
intangible income tax deduction.
Net Income. Net income for the third quarter of 2021 was $76.7 million, compared
to net income of $117.1 million the third quarter of 2020. The decrease in net
income was driven by the quarter over quarter change in sales, gross margins,
and operating profits.
Earnings Per Share. The Company had earnings per diluted share for the third
quarter of 2021 of $0.32, compared to earnings per diluted share of $0.48 for
the third quarter of 2020.

NINE MONTHS ENDED SEPTEMBER 30, 2021 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 2020
Net Sales. Net Sales for the nine months ended September 30, 2021 increased by
$153.0 million or 13% when compared with the same period in 2020.
Automotive net sales for the first nine months of 2021 were $1.3 billion, up 14%
compared with automotive net sales of $1.13 billion million for the first nine
months of 2020, driven by a 22% period over period increase in automotive mirror
unit shipments. North American automotive mirror shipments in the nine months
ended September 30, 2021 increased 25% to 10.2 million units compared with the
same period in 2020.
Cost of Goods Sold. As a percentage of net sales, cost of goods sold decreased
to 63.7% for the first nine months of 2021, versus 66.4% in the same period last
year. The period over period increase in the gross profit margin was primarily
the result of the Company's better leverage of fixed overhead, positive
structural cost savings put in place during the second quarter of 2020, and
purchasing cost reductions. These improvements in gross margin were partially
offset by annual customer price reductions. On a period over period basis,
better fixed overhead leverage had a positive impact of approximately 300 - 350
basis points on gross margin, and the savings as a result of structural cost
reductions that took place in the second quarter of 2020 had a positive impact
of approximately 150 - 200 basis points on gross margin. Purchasing cost
reductions had a positive impact of approximately 50 - 100 basis points on gross
margin on a period over period basis. These positive impacts were partially
offset by annual customer price reductions, which had a negative impact of
approximately 150 - 200 basis points on gross margin on a period over period
basis.
Operating Expenses. E, R & D for the nine months ended September 30, 2021 were
$86.5 million, compared with $86.4 million for the same period last year.
S, G & A for the first nine months of 2021 increased 3.5% or $2.3 million when
compared with the same period last year. In the first nine months of 2021, the
Company recognized S, G & A savings from the structural cost savings put in
place in the second quarter of 2020, but those savings were mostly offset by
increases in wages and selling expenses, professional fees, and outbound freight
costs. A lack of international travel and the cancellation of most
industry-based trade shows due to the COVID-19 pandemic also impacted operating
expenses for both nine month periods.
Total Other Income. Total other income for the nine months ended September 30,
2021 was $5.2 million compared with $9.2 million for the same period last year.
Provision for Income Taxes. The effective tax rate was 15.4% for the nine months
ended September 30, 2021 compared to 17.1% for the same period of 2020.
Net Income. Net income for the nine months ended September 30, 2021 increased by
$72.4 million or 35% to $276.6 million versus $204.2 million in the same period
last year. The increase in net income was driven

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by the period over period increase in sales, higher gross profits, and the
continued operating leverage as a result of the structural cost savings that
were put in place during the second quarter of 2020.
Earnings Per Share. The Company had earnings per diluted share for the nine
months ended September 30, 2021 of $1.15 which compared to earnings per diluted
share of $0.82 for the nine months ended September 30, 2020. The increase in
earnings per share is primarily due to the higher net income but also positively
impacted by a lower diluted share count when compared to the same period of
2020.

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FINANCIAL CONDITION:
The Company's cash and cash equivalents as of September 30, 2021 were $270.0
million, which decreased $153.4 million compared to $423.4 million as of
December 31, 2020. The decrease was primarily due to share repurchases, dividend
payments and capital expenditures, which were partially offset by cash flows
from operations, during the nine months ended September 30, 2021.
Short-term investments as of September 30, 2021 were $6.9 million, down from
$27.2 million as of December 31, 2020, and long-term investments were $204.7
million as of September 30, 2021, compared to $162.0 million as of December 31,
2020. Changes in the investment balances were primarily driven by maturities of
investments and additional investment purchases during the nine months ended
September 30, 2021.
Accounts receivable as of September 30, 2021 decreased approximately $43.7
million compared to December 31, 2020, primarily due to the timing of sales
during the most recently completed nine months. As of September 30, 2021, all of
the Company's material tier one and OEM customers continue to be in good
standing.
Inventories as of September 30, 2021 were $292.6 million, compared to
$226.3 million as of December 31, 2020, primarily due to increases in raw
materials.

Accounts payable as of September 30, 2021 increased approximately $15.7 million
to $100.5 million when compared to December 31, 2020, primarily driven by month
end payment timing.
Accrued liabilities as of September 30, 2021 decreased approximately
$1.0 million compared to December 31, 2020.
Cash flow from operating activities for the nine months ended September 30, 2021
decreased $29.7 million to $299.4 million, compared with $329.0 million during
the same nine month period last year, primarily due to changes in working
capital.
Capital expenditures for the nine months ended September 30, 2021 were
approximately $44.4 million, compared with approximately $37.0 million for the
same nine month period last year.
The Company believes its existing and planned facilities are currently suitable,
adequate, and have the capacity required for current and near-term planned
business. Nevertheless, the Company continues to evaluate longer term facility
needs.
The Company estimates that it currently has building capacity to manufacture
approximately 33 - 36 million interior mirror units annually and approximately
14 - 17 million exterior mirror units annually, based on current product mix.
The Company also evaluates equipment capacity on an ongoing basis and adds
equipment as needed.
Management considers the current working capital and long-term investments, in
addition to internally generated cash flow, its Credit Agreement, and credit
worthiness, to be sufficient to cover anticipated cash needs for the foreseeable
future considering its contractual obligations and commitments.
The following is a summary of working capital and long-term investments:
                         September 30, 2021       December 31, 2020
Working Capital         $       682,265,427      $      801,593,707
Long Term Investments           204,671,558             162,028,068
Total                   $       886,936,985      $      963,621,775



The Company has a previously announced share repurchase plan under which the
Board of Directors has authorized the repurchase of shares of the Company's
common stock, which remains a part of the broader publicly disclosed capital
allocation strategy. Future share repurchases may vary from time to time and
will take into account macroeconomic events (including the COVID-19 pandemic),
market trends, and other factors the Company deems appropriate (including the
market price of the stock, anti-dilutive effect of repurchases, and available
cash). As previously announced, the Company's Board of Directors authorized the
repurchase of an additional 25,000,000 shares under the plan. During the nine
months ended

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September 30, 2021, the Company repurchased 8,997,046 shares. The Company has 25,422,220 shares remaining under the plan as of September 30, 2021, as is further detailed in Part II, Item 2 of this Form 10-Q.

BUSINESS UPDATE



For the third quarter of 2021, the Company reported net sales of $399.6 million,
which was a decrease of 16% compared to net sales of $474.6 million in the third
quarter of 2020. On a quarter-over-quarter basis, global light vehicle
production in the Company's primary regions of Europe, North America,
Japan/Korea and China decreased 23% when compared to the third quarter of 2020.
Additionally, when compared to the mid-July 2021 IHS Markit light vehicle
production forecast in the Company's primary regions, actual light vehicle
production during the third quarter of 2021 declined in excess of 3.1 million
units, or 19%, as a result of the ongoing industry-wide part shortages and
global supply chain constraints. The largest shortfall in light vehicle
production for the third quarter of 2021 came from the European and North
American markets, which together, experienced actual light vehicle production
levels that declined by approximately 27% compared to the third quarter of 2020.
The reduction in light vehicle production compared to forecast was led by
several OEM customers that deploy high levels of the Company's product content,
including both interior and exterior auto-dimming mirrors and other electronic
features such as Full Display Mirror® and HomeLink®. The total impact to the
Company from the shortfall in vehicle production was a reduction in actual
mirror unit shipments of approximately 2.5 to 3 million mirrors versus the
Company's beginning of the quarter forecast.

When looking forward into the fourth quarter and into 2022, the Company believes that the overall demand for vehicles and its products should still provide opportunities for the Company to continue to outperform the underlying market.



In the third quarter of 2021, the Company had 12 net new launches of interior
and exterior auto-dimming mirrors and electronic features. Of these new
launches, 75% contained advanced features with Full Display Mirror® being the
primary driver. Also in the third quarter of 2021, there were several new base
inside auto-dimming mirror launches, and of these, 40% were for the China
domestic market.


PRODUCT UPDATE

Camera Systems

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

As of the second quarter of 2021, the Company is shipping production Full
Display Mirrors® to eleven different automaker customers, which are General
Motors, Subaru, Toyota, Nissan, Jaguar Land Rover, Mitsubishi, Aston Martin,
Stellantis, along with Maserati and Fiat, and Mercedes. As of the end of the
third quarter of 2021, the Company is shipping Full Display Mirror® on 60
nameplates. The second quarter 2020 launch of the Full Display Mirror® for the
Toyota Harrier was the first Full Display Mirror® to launch with Digital Video
Recording ("DVR") capability. This mirror and system launched in the Japan
market, and combine the superior functionality of the Full Display Mirror® with
the added capability to record video from

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the rearward facing and forward-facing cameras simultaneously. Per OEM request,
the data is stored to an SD storage card. This integrated solution provides
consumers with the features they want, while allowing the OEM to control the
integration and execution in the vehicle. The Company remains confident that
on-going discussions with certain other customers, in the future, may cause such
customers to consider adding the Full Display Mirror® into their product
road-map for future vehicles. As of the end of the third quarter of 2021 the
Company has been awarded Full Display Mirror® programs with 14 OEMs.

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

On March 31, 2014, the Alliance of Automobile Manufacturers petitioned the
National Highway Traffic Safety Administration ("NHTSA") to allow automakers to
use cameras as an option to replace conventional rearview mirrors within the
United States. At the annual SAE Government-Industry Meeting in January 2017,
NHTSA requested that SAE develop Recommended Procedures for test protocols and
performance criteria for CMS that would replace mirror systems on light vehicles
in the U.S. market. SAE assigned the task to the Driver Vision Committee, and
the SAE Driver Vision Committee created a CMS Task Force to draft the
Recommended Procedures. NHTSA published a report dated October 2018 related to
camera monitoring systems for outside mirror replacements. On October 10, 2019,
an Advanced Notice of Proposed Rulemaking (ANPRM) was published seeking public
comment on permitting camera-based rear visibility systems, as an alternative to
inside and outside rearview mirrors required under Federal motor vehicle safety
standard (FMVSS) No. 111, "Rear Visibility," which currently requires that
vehicles be equipped with rearview mirrors to provide drivers with a view of
objects that are to their side or to their side and rear. This ANPRM builds on
NHTSA's prior efforts to obtain supporting technical information, data, and
analysis on CMS so that the agency can determine whether these systems can
provide the same level of safety as the rearview mirrors currently required
under FMVSS No. 111. The ANPRM states that one reason NHTSA is seeking
additional information is because research conducted by NHTSA and others between
2006 and 2017 has consistently shown that prototype and preproduction
camera-based rear visibility systems can exhibit safety-relevant performance
issues.
On October 18, 2019, a petition for temporary exemption from FMVSS 111 submitted
by Audi of America was published requesting NHTSA to grant a two-year exemption
to sell up to 2,500 vehicles for each twelve month period (up to 5,000 vehicles)
that are equipped with camera monitoring systems and do not include FMVSS 111
compliant outside mirrors.
In July 2016, a revision to UN-ECE Regulation 46 was published with an effective
date of June 18, 2016, which allows for CMS to replace mirrors in Japan and
European countries. Since January 2017, camera monitoring systems are also
permitted as an alternative to replace mirrors in the Korean market.
Notwithstanding the foregoing, the Company continues to believe rearview mirrors
provide a robust, simple and cost effective means to view the surrounding areas
of a vehicle and remain the primary safety function for rear vision today.
Cameras when used as the primary rear vision delivery mechanism have some
inherent limitations such as: electrical failure; cameras being blocked or
obstructed; depth perception

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challenges; and viewing angles of the camera. Nonetheless, the Company continues
designing and manufacturing not only rearview mirrors, but CMOS imagers and
video displays as well. The Company believes that combining video displays with
mirrors may well provide a more robust product by addressing all driving
conditions in a single solution that can be controlled by the driver. As noted,
the Company is currently in production with a rear vision camera system that
streams rear video to a rearview-mirror-integrated display using the Company's
Full Display Mirror®. The Company's CMS solution uses three cameras to provide a
comprehensive view of the sides and rear of the vehicle. The Company also
continues development in the areas of imager performance, camera dynamic range,
lens design, image processing from the camera to the display, and camera lens
cleaning. The Company acknowledges that as such technology evolves over time,
such as cameras replacing mirrors and/or autonomous driving, there could be
increased competition.
SmartBeam® is the Company's proprietary high beam control system integrated into
its auto-dimming mirror. SmartBeam® Generation 4, which was developed using the
fourth generation of the Company's custom designed CMOS imager, has an advanced
feature set made possible by the high dynamic range of the imager including:
high beam assist; dynamic forward lighting with high beams constantly on; LED
matrix beam; and a variety of specific detection applications including tunnel,
fog and road type as well as certain lane tracking features to assist with
lighting control. The Company has the ability to package the control electronics
inside of its interior rearview mirrors with a self-calibrating camera attached
to the mirror mount with optimal mechanical packaging which also provides for
ease of service. In addition, the Company has long been integrating its camera
products to optimize performance by fusing with other systems on the vehicle,
including radar, navigation, steering and related modules provided by other
suppliers. This enables the Company to provide its customers with a highly
customizable solution that meets their unique needs and specifications.

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

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

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

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Connected Car
The Company's HomeLink® products are the auto industry's most widely used and
trusted car-to-home communication system, with an estimated 50 million units on
the road. The system consists of two or three in-vehicle buttons that can be
programmed to operate garage doors, security gates, home lighting, and other
radio-frequency-controlled devices. During the first quarter of 2017, the
Company demonstrated the next generation of HomeLink®, commonly referred to as
HomeLink Connect® which uses both RF and wireless cloud-based connectivity to
deliver complete vehicle-to-home automation. With HomeLink Connect®, a HomeLink®
button press communicates with the HomeLink Connect® app on the user's
smartphone. The app contains predefined, user-programmed actions, from single
device operations to entire home automation scenes. The app, in turn,
communicates to the home's smart hub over the cloud activates the appropriate
devices, including security systems, door locks, thermostats, lighting, and
other home automation devices, providing comprehensive vehicle-to-home
automation. The ability to prepare the home for arrival or departure can occur
with one button press. For the automaker, it allows them to offer a
customizable, yet proven solution without the engineering effort or security
concerns associated with integrating third party software into the vehicle's
computer network. The Company also continues to work on providing HomeLink®
applications for alternative automobile and vehicle types which include but are
not limited to motorcycles, mopeds, snowmobiles, tractors, combines, lawn
mowers, loaders, bulldozers, road-graders, backhoes and golf carts. In May 2021,
the Company announced the Volkswagen as the first automaker to offer Bluetooth®
enabled mirror for home automation that works in conjunction with HomeLink
Connect®. The Company further continues to work with compatibility partners for
HomeLink® applications in newer markets like China. The unique attributes of the
China market allow for potential different use cases of these products and offer
the potential for additional growth opportunities for the HomeLink® brand and
products. In 2017, the Company began its first volume production shipments of
HomeLink® units on vehicles for the China market.

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

The Company has its first OEM award of ITM® with Audi. Currently, the Company is
shipping ITM® on 9 platforms, which are: the A4, A5, A6, A7, Q5, Q7, Q8, e-tron,
and the e-tron Sportback. The Company expects further ITM® nameplate launches
with Audi throughout 2022 and 2023. During the third quarter of 2021, the
Company began shipping ITM® to a second OEM customer, Mercedes, on the EQS
model. In April 2020, the Company was honored with an Automotive News PACE Award
for its ITM® product, which recognizes automotive suppliers for superior
innovation, technological advancement, and business performance.

Further, the Company has previously announced an embedded biometric solution for
vehicles that leverages iris scanning technology to create a secure environment
in the vehicle. There are many use cases for authentication, which range from
vehicle security to start functionality to personalization of mirrors, music,
seat location and temperature, to the ability to control transactions not only
for the ITM® system, but also the ride sharing car of the future. The Company
believes iris recognition is among the most secure forms of biometric
identification, with a false acceptance rate as low as one in 10 million, far
superior to facial, voice, and other biometric systems. The Company's future
plans include integrating biometric

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authentication with HomeLink® and HomeLink Connect®. The biometric system will
allow HomeLink® to provide added security and convenience for multiple drivers
by activating the unique home automation presets of different authorized users.
The Company announced in January 2018 that it completed an exclusive licensing
agreement, in the ordinary course of business, with Fingerprint Cards AB to
deploy its ActiveIRIS® iris-scanning biometric technology in automotive
applications.

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

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

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

Dimmable Devices

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

Medical



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

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OTHER



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

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

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

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

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

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OUTLOOK



The Company's most recent forecasts for light vehicle production for the fourth
quarter of 2021, and full years 2021 and 2022 are based on the mid-October 2021
IHS Markit light vehicle production forecast for light vehicle production in
North America, Europe, Japan/Korea and China. Fourth quarter of 2021, and
calendar years 2021 and 2022 forecasted light vehicle production volumes are
shown below:
                               Light Vehicle Production (per IHS Markit

Automotive mid-October light vehicle production forecast)


                                                                          (in Millions)
                                                                                                                                            2022 vs     2021 vs
                                                                                                                                             2021        2020
Region                   Q4 2021      Q4 2020      % Change           Calendar Year 2022   Calendar Year 2021   Calendar Year 2020         % Change    % Change
North America             3.20         3.85             (17) %              15.24                13.00                13.02                     17  %        -  %
Europe                    4.04         5.24             (23) %              18.60                16.02                16.57                     16  %       (3) %
Japan and Korea           2.66         3.23             (18) %              11.29                10.76                11.21                      5  %       (4) %
China                     6.28         7.82             (20) %              24.50                23.28                23.59                      5  %       (1) %
Total Light Vehicle
Production               16.18        20.14             (20) %              69.63                63.06                64.39                     10  %       (2) %



Based on the aforementioned light vehicle production forecast and the results
for the first nine months of 2021, the Company has provided updated guidance for
the second half of 2021 as shown below, which replaces all previous guidance
given. This guidance includes manual adjustments to the Company's forecasts as a
result of customer order changes and the Company's estimates of the impact that
global supply constraints will have on overall light vehicle production. The
Company has also updated its cost and profitability model to include impacts
stemming from these expected lower vehicle production levels, elevated raw
material prices, freight expenses and labor costs. In addition, over the last
several quarters, the Company has been closely monitoring the tariff discussions
between the US and the EU with respect to EU Regulation 2018/0886, which was
scheduled to go into effect on June 1, 2021. The EU, however, suspended the
implementation until November 30, 2021 as part of on-going discussions. The
Company remains hopeful that a trade agreement can be reached before this date
so that the increased tariffs do not take effect. The guidance for the second
half of 2021 is as follows, which does not take into account the aforementioned
potential increased tariff costs:

•Revenue is expected to be between $770 million and $840 million
•Gross Margin is expected to be between 35% and 36%
•Operating Expenses are expected to be approximately $105 to $108 million
•Estimated Annual Tax Rate, which assumes no changes to the statutory rate, is
expected to be between 15% and 16%
•Capital Expenditures are expected to be between $50 and $60 million
•Depreciation and Amortization is expected to be between $48 and $52 million

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

In accordance with the previously announced share repurchase plan, the Company
continue to will consider the appropriateness of any share repurchases for the
remainder of 2021. This determination will take into account macroeconomic
issues (including the impact of the COVID-19 pandemic and industry-wide parts
shortages and global supply chain constraints), market trends, and other factors
that the Company deems appropriate (including the market price of the stock,
anti-dilutive effect of repurchases, tax rates, and

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available cash). As previously announced, the Company's Board of Directors
authorized the repurchase of an additional 25,000,000 shares under the plan. As
of September 30, 2021, the Company has 25.4 million shares remaining available
for repurchase under the previously announced share repurchase plan.
Additionally, based on the mid-October 2021 light vehicle production estimates
for 2022, the Company is providing revenue guidance for 2022, despite the fact
that there continues to be significant uncertainty regarding macroeconomic
conditions, underlying overall consumer demand for light vehicles worldwide, and
the continued impact from the COVID-19 pandemic. The Company estimates that
revenue for calendar year 2022 will be approximately 15% - 20% higher than the
updated 2021 estimated revenue estimates of $1.68 - $1.75 billion.

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CRITICAL ACCOUNTING POLICIES:
The preparation of the Company's consolidated condensed financial statements
contained in this report, which have been prepared in accordance with accounting
principles generally accepted in the United States, requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. On an ongoing basis, management evaluates
these estimates. Estimates are based on historical experience and/or on various
other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that may not be readily apparent from other
sources. Historically, actual results have not been materially different from
the Company's estimates. However, actual results may differ from these estimates
under different assumptions or conditions.
The Company has identified critical accounting policies used in determining
estimates and assumptions in the amounts reported in its Management's Discussion
and Analysis of Financial Condition and Results of Operations in its Annual
Report on Form 10-K for the fiscal year ended December 31, 2020.

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