RESULTS OF OPERATIONS:



THIRD QUARTER 2020 VERSUS THIRD QUARTER 2019
Net Sales. Net sales for the third quarter of 2020 decreased by $3.1 million or
1% when compared with the third quarter of 2019.
Automotive net sales for the third quarter of 2020 were $464.7 million, compared
with automotive net sales of $464.3 million in the third quarter of 2019.
Automotive net sales were strong during the third quarter of 2020 despite the 3%
quarter over quarter decrease in interior auto-dimming mirror unit shipments,
which strength was primarily driven by ongoing revenue growth of the Company's
Full Display Mirror® product. The 3% decrease in automotive mirror unit
shipments in the third quarter of 2020 to 10.6 million units compared with 10.8
million units in the third quarter of 2019, was driven primarily by a 5% quarter
over quarter decrease in international auto-dimming mirror unit shipments,
stemming largely from the COVID-19 pandemic and related shutdowns.

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

                                                    Three Months Ended September 30,                                             Nine Months Ended September 30,
                                        2020                         2019                   % Change                2020                         2019                   % Change
North American Interior Mirrors         2,234                        2,139                     4%                   5,040                        6,571                    (23)%
North American Exterior Mirrors         1,404                        1,412                    (1)%                  3,093                        3,961                    (22)%
Total North American Mirror Units       3,638                        3,551                     2%                   8,133                       10,532                    (23)%

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

Total Interior Mirrors                  7,174                        7,328                    (2)%                 16,709                       22,356                    (25)%
Total Exterior Mirrors                  3,385                        3,513                    (4)%                 10,121                        9,986                     1%
Total Auto-Dimming Mirror Units        10,559                       10,841                    (3)%                 26,830                       32,342                    (17)%

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



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

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

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reductions, which had a negative impact of approximately 200 - 250 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 2020 decreased by 5% or $1.6 million when compared with
the third quarter of 2019, primarily due to reductions in wages and
discretionary spending as a result of the structural cost reductions that took
place in the second quarter 2020.

Selling, general and administrative ("S, G & A") expenses decreased by 5% or
$1.2 million for the third quarter of 2020 compared to the third quarter of
2019. S, G & A expenses remained at 5% of net sales in the third quarter of
2020, similar to the third quarter of 2019. S, G, & A expenses decreased on a
quarter over quarter basis primarily due to reductions in wages and
discretionary spending.

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

Total Other Income. Total other income for the third quarter of 2020 increased
by $0.6 million when compared with the third quarter of 2019.
Provision for Income Taxes. The effective tax rate was 18.1% and income tax
expense of $25.8 million in the third quarter of 2020 compared to a 15.0%
effective tax rate and income tax expense of $19.7 million for the same quarter
of 2019. 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 2020 was $117.1 million, up from
a net income of $111.9 million the third quarter of 2019.
Earnings Per Share. The Company had earnings per diluted share for the third
quarter of 2020 of $0.48 which compared to earnings per diluted share of $0.44
for the third quarter of 2019.

NINE MONTHS ENDED SEPTEMBER 30, 2020 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 2019
Net Sales. Net Sales for the nine months ended September 30, 2020 decreased by
$256.7 million or 18% when compared with the same period in 2019.
Automotive net sales for the first nine months of 2020 were $1.13 billion, down
18% compared with automotive net sales of $1.38 billion for the first nine
months of 2019, driven by a 17% period over period decrease in automotive mirror
unit shipments. North American automotive mirror shipments in the nine months
ended September 30, 2020 decreased 23% to 8.1 million units compared with the
same period in 2019.
Cost of Goods Sold. As a percentage of net sales, cost of goods sold increased
to 66.4% for the first nine months of 2020, versus 62.8% in the same period last
year. The period over period decrease in the gross profit margin was primarily
the result of the Company's inability to leverage fixed overhead during the
second quarter of 2020 as a result of COVID-19 related shutdowns and decreases
in demand, as well as annual customer price reductions, which were partially
offset by improvements in product mix related to Full Display Mirror® as well as
purchasing cost reductions and structural cost reductions. On a period over
period basis, the inability to leverage fixed overhead had a negative impact of
approximately 200 - 300 basis points, and annual customer price reductions had
an additional negative impact of approximately 150 - 200 basis points, each on
gross margin. Purchasing cost reductions, product mix improvements, and
structural cost reductions each independently had a positive impact on gross
margin on a period over period basis of approximately 50 - 100 basis points.
Operating Expenses. E, R & D expenses for the nine months ended September 30,
2020 increased 1% or $0.6 million when compared with the same period last year.
The increase was primarily due to severance

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related costs incurred in the second quarter of 2020 and staffing levels in the
first six months of 2020, which were partially offset by lower overall expense
levels as a result of the COVID-19 pandemic.
S, G & A expenses for the first nine months of 2020 increased 3% or $2.2 million
when compared with the same period last year, primarily due to severance related
costs, wages and benefits, other resources associated with mitigation of the
impacts of the global COVID-19 pandemic, and increased legal and professional
fees associated with acquisitions of new technology described in   Note 16

of


the financial statements included in this Form 10-Q.
Total Other Income. Total other income for the nine months ended September 30,
2020 was $9.2 million compared with $9.1 million for the same period last year.
Provision for Income Taxes. The effective tax rate was 17.1% for the nine months
ended September 30, 2020 compared to 15.9% for the same period of 2019.
Net Income. Net income for the nine months ended September 30, 2020 decreased by
$120.9 million or 37% to $204.2 million versus $325.1 million in the same period
last year, due to the lower net sales and the corresponding decrease in gross
profit, as well as the increases in operating expenses described above.
Earnings Per Share. The Company had earnings per diluted share for the nine
months ended September 30, 2020 of $0.82 which compared to earnings per diluted
share of $1.26 for the nine months ended September 30, 2019, primarily as a
result of the COVID-19 pandemic and the related shutdowns as explained above.

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FINANCIAL CONDITION:
The Company's cash and cash equivalents as of September 30, 2020 were $400.5
million, which increased $104.2 million compared to $296.3 million as of
December 31, 2019. The increase was primarily due to cash flows from operations
and the draw-down of $75 million on the Company's line of credit during the
first quarter of 2020 (as described in   Note 9   of the financial statements
included in this Form 10-Q), which was partially offset by share repurchases,
dividend payments, capital expenditures, and repayment of $50 million on the
line of credit during the nine months ended September 30, 2020.
Short-term investments as of September 30, 2020 were $52.6 million, down from
$140.4 million as of December 31, 2019, and long-term investments were $159.0
million as of September 30, 2020, compared to $139.9 million as of December 31,
2019. Changes in the investment balances were primarily driven by changes in
fixed income investment maturities within the investment portfolio.
Accounts receivable as of September 30, 2020 increased approximately $33.0
million compared to December 31, 2019, primarily due to the increase in sales
during the most recently completed quarter. As of September 30, 2020, all of the
Company's material tier one and OEM customers continue to be in good standing.
Inventories as of September 30, 2020 were $233.4 million, compared to
$248.9 million as of December 31, 2019, primarily due to decreases in finished
goods and raw materials on hand. Throughout 2020, the Company's purchasing and
supply chain teams have had to manage through supply chain stresses, which have
included managing rolling shutdowns in the Company's supplier base, managing
run-out situations on certain components, working through the second quarter
order reductions, and now meeting rebounding demand that occurred in the third,
and is expected to occur in the fourth, quarter of 2020.

Accounts payable as of September 30, 2020 decreased approximately $7.3 million
to $90.2 million when compared to December 31, 2019, primarily driven by lower
purchases from suppliers in the quarter, lower levels of capital expenditures
and less discretionary spending during the quarter.
Accrued liabilities as of September 30, 2020 increased approximately
$46.9 million compared to December 31, 2019, primarily due to an increase in
accrued salaries and wages, accrued severance liabilities, and tax liabilities
due to timing of certain wage and tax payments.
The current portion of long-term debt as of September 30, 2020 increased
$25.0 million compared to December 31, 2019. This is a result of the draw-down
of $75.0 million on the Company's $150 million line of credit during the first
quarter of 2020, of which $50 million was paid off during the third quarter. See
  Note 9   of the financial statements included in this Form 10-Q for additional
details.
Cash flow from operating activities for the nine months ended September 30, 2020
decreased $54.9 million to $329.0 million, compared with $383.9 million during
the same nine month period last year, primarily due to lower net income, which
was partially offset by changes in working capital.
Capital expenditures for the nine months ended September 30, 2020 were
approximately $37.0 million, compared with approximately $58.3 million for the
same nine month period last year, as a result of spending containment
strategies.
The Company believes its existing and planned facilities are currently suitable,
adequate, and have the capacity required for current and near-term planned
business. Nevertheless, the Company continues to evaluate longer term facility
needs.
The Company estimates that it currently has building capacity to manufacture
approximately 33 - 36 million interior mirror units annually and approximately
14 - 17 million exterior mirror units annually, based on current product mix.
The Company evaluates equipment capacity on an ongoing basis and adds equipment
as needed.
Management considers the current working capital and long-term investments, in
addition to internally generated cash flow, its Credit Agreement, and credit
worthiness, to be sufficient to cover anticipated cash needs for the foreseeable
future considering its contractual obligations and commitments.

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


                         September 30, 2020       December 31, 2019
Working Capital         $       738,829,396      $      778,530,092
Long Term Investments           159,011,362             139,909,323
Total                   $       897,840,758      $      918,439,415



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

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

BUSINESS UPDATE



For the third quarter of 2020, the Company reported net sales of $474.6 million,
which was a decrease of 1% compared to net sales of $477.8 million in the third
quarter of 2019. The Company's decrease of 1% in net sales was in comparison to
global light vehicle production levels that dropped 4% for the third quarter of
2020 when compared to the third quarter of 2019. However, the light vehicle
production declines were even more severe in Europe and the Japan/Korea markets,
which each experienced a 8% quarter over quarter reduction, which was partially
offset by the China market increase of 11%, while North America remained
relatively flat. The Company's main revenue generating markets are North
America, Europe, and Japan/Korea which were collectively down 5% quarter over
quarter. The Company's overall revenue out-performance in comparison to
production declines in the Company's primary underlying markets was largely due
to the relative success of the Full Display Mirror®.

Interior and exterior auto-dimming mirrors and advanced electronic features were
launched on 23 net new nameplates during the third quarter of 2020, net of
previously announced losses. Of these new launches in the third quarter of 2020,
approximately 50% contained advanced features, which was primarily driven by
HomeLink®, Integrated Toll Module®, and Full Display Mirror®.

Despite challenging economic conditions created by the COVID-19 pandemic, the
base inside auto-dimming mirror launches included new models in all of the
Company's major markets, while advanced feature launches were led by new models
for both HomeLink®, Integrated Toll Module®, and Full Display Mirror®.

PRODUCT UPDATE



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

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

In the first quarter of 2020, the Company announced Aston Martin at CES, and
began shipping to Mitsubishi, as OEMs for Full Display Mirror®. As of the third
quarter of 2020, the Company is shipping production Full Display Mirrors® to
eight automaker customers, which are General Motors, Subaru, Toyota, Nissan,
Jaguar Land Rover, Mitsubishi, Aston Martin, and FCA. As of the end of the third
quarter of 2020, the Company is shipping Full Display Mirror® on 50 nameplates,
of which 18 nameplates were launched during 2020. The second quarter launch of
the Full Display Mirror® for the Toyota Harrier was the first Full Display
Mirror® to launch with Digital Video Recording ("DVR") capability. This mirror
and system launched in the Japan market, and combine the superior functionality
of the Full Display Mirror® with the added capability to record video from the
rearward facing and forward-facing cameras simultaneously. Per OEM request, the
data is stored to an SD storage card. This integrated solution provides
consumers with the features they want, while allowing the OEM to control the
integration and execution in the vehicle. The Company remains confident that
on-going discussions with certain other customers, in the future, may cause such
customers to consider adding the Full Display Mirror® into their product
road-map for future vehicles.

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

On March 31, 2014, the Alliance of Automobile Manufacturers petitioned the
National Highway Traffic Safety Administration ("NHTSA") to allow automakers to
use cameras as an option to replace conventional rearview mirrors within the
United States. 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

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NHTSA is seeking additional information is because research conducted by NHTSA
and others between 2006 and 2017 has consistently shown that prototype and
preproduction camera-based rear visibility systems can exhibit safety-relevant
performance issues.
On October 18, 2019, a petition for temporary exemption from FMVSS 111 submitted
by Audi of America was published requesting NHTSA to grant a two-year exemption
to sell up to 2,500 vehicles for each twelve month period (up to 5,000 vehicles)
that are equipped with camera monitoring systems and do not include FMVSS 111
compliant outside mirrors.
In July 2016, a revision to UN-ECE Regulation 46 was published with an effective
date of June 18, 2016, which allows for CMS to replace mirrors in Japan and
European countries. Since January 2017, camera monitoring systems are also
permitted as an alternative to replace mirrors in the Korean market.
Notwithstanding the foregoing, the Company continues to believe rearview mirrors
provide a robust, simple and cost effective means to view the surrounding areas
of a vehicle and remain the primary safety function for rear vision today.
Cameras when used as the primary rear vision delivery mechanism have some
inherent limitations such as: electrical failure; cameras being blocked or
obstructed; depth perception challenges; and viewing angles of the camera.
Nonetheless, the Company continues designing and manufacturing not only rearview
mirrors, but CMOS imagers and video displays as well. The Company believes that
combining video displays with mirrors may well provide a more robust product by
addressing all driving conditions in a single solution that can be controlled by
the driver. As noted, the Company is currently 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.
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 3rd party software into the vehicle's
computer network. The Company also continues to work on providing HomeLink®
applications for alternative automobile and vehicle types which include but are
not limited to motorcycles, mopeds, snowmobiles, tractors, combines, lawn
mowers, loaders, bulldozers, road-graders, backhoes and golf carts. The Company
further continues to work with compatibility partners for HomeLink® applications
in 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 of the HomeLink® brand and products. In
2017, the Company began its first volume production shipments of HomeLink® units
on vehicles for the China market.

In January 2016, the Company announced a partnership with TransCore to provide
automobile manufacturers with a vehicle-integrated tolling solution that enables
motorists to drive on nearly all U.S. toll roads without a traditional toll tag
on the windshield. Currently more than 75 percent of new car registrations are
in states with toll roads with over 50 million drivers accessing these roads
each year. The Company signed an exclusive agreement, in the ordinary course of
business, to integrate TransCore's toll module technology. 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

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

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

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

In January 2018, the Company also announced that an agreement had been signed,
in the ordinary course of business, to participate in a round of financing with
Yonomi, the Company's partner in home automation technology. The Company is
working with Yonomi as a home automation aggregation partner and the Company has
developed an app and cloud infrastructure known as HomeLink Connect®. 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.

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

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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.

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

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

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

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

OTHER



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

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

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



The Company believes that its patents and trade secrets provide it with a
competitive advantage in dimmable devices, electronics and other 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 forecasts for light vehicle production for the fourth quarter and
full year 2020 are based on IHS Markit's mid-October 2020 forecasts for light
vehicle production in North America, Europe, China, and Japan/Korea. Based on
this information, light vehicle production in the Company's primary markets are
expected to be down 2% for the fourth quarter of 2020 versus the same quarter
last year. For calendar year 2020, light vehicle production in the Company's
primary markets is expected to be down 16% when compared to calendar year 2019.
Fourth quarter 2020, and calendar years 2020 and 2021, forecasted vehicle
production volumes are shown below:

                                        Light Vehicle Production (per IHS

Markit Automotive mid-October light vehicle production forecast)

(in Millions)


                                                                                                                                                    2021 vs 2020    2020 vs 2019
Region                          Q4 2020       Q4 2019       % Change           Calendar Year 2021   Calendar Year 2020   Calendar Year 2019           % Change        % Change
North America                    3.82          3.84               (1) %              15.90                13.00                16.32                         22  %          (20) %
Europe                           5.11          5.17               (1) %              18.97                16.37                21.14                         16  %          (23) %
Japan and Korea                  3.13          3.22               (3) %              11.83                11.08                13.11                          7  %          (15) %
China                            7.07          7.36               (4) %              24.18                22.84                24.67                          6  %           (7) %
Total Light Vehicle
Production                      19.13         19.59               (2) %              70.88                63.29                75.24                         12  %          (16) %



Based on this light vehicle production forecast and the structural changes that
the Company has made during 2020, the Company is updating previously provided
guidance estimates for the second half of 2020. Given the magnitude of changes
this year, the Company continues to believe that providing updated second half
guidance will provide a more accurate representation of the new cost structure
and financial performance for the remainder of 2020. Such guidance for the
second half of 2020 reflects the Company's best estimate of the impact of the
ongoing COVID-19 pandemic, as well as changes to the IHS Markit's estimates for
light vehicle production for the remainder of 2020.

Based on the aforementioned, the Company currently estimates that top line
revenue for the second half of calendar year 2020 will be between $940 and $960
million. Ongoing uncertainties remain around the impact of the COVID-19 pandemic
on customer demand and restrictions on operations. COVID-19 has created
unprecedented circumstances for the Company's industries, which included massive
changes to production levels at its customers, which occurred in a very short
time period. Beyond the impact of the COVID-19 pandemic, other ongoing
uncertainties remain including: light vehicle production levels; impacts of
already in place and potential additional future tariffs; impacts of regulation
changes; automotive plant shutdowns; supplier part shortages; vehicle sales
rates in Europe, Asia and North America; OEM strategies and cost pressures;
customer inventory management and the impact of potential automotive customer
(including their Tier 1 suppliers) and supplier bankruptcies; work stoppages;
etc., all of which could disrupt shipments to these customers and make
forecasting difficult.

Based on updated net sales guidance for the remainder of calendar year 2020, as
well as actual results for the first nine months of 2020 and anticipated product
mix, the Company has estimated that the gross margin will be between 39% and 40%
for the second half of calendar year 2020.

The Company is updating the guidance range for operating expenses, which include
E, R & D expenses and S, G & A expenses. The Company has estimated that its
operating expenses are now expected to be approximately $95 - $100 million for
the second half of calendar year 2020.

As part of the Company's renewed focus on optimizing its cost structure over the
remainder of the year, the Company now anticipates that capital expenditures for
the second half of calendar year 2020 will be approximately $25 - $30 million,
the majority of which will be equipment purchases. Capital expenditures in
calendar year 2020 are currently anticipated to be financed from current cash
and cash equivalents on hand and cash flows from operating activities.

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

The Company now estimates its effective annual tax rate for the second half of
calendar year 2020 to be in the range of 16% to 17%, which reflects the
anticipated lower discrete benefits from stock option exercises of the Company's
employees and reduced foreign-derived intangible income tax benefits due to
geographical mix changes within its customer base.
In accordance with the previously announced share repurchase plan, and provided
that business begins to return to more normalized levels, the Company will
consider the appropriateness of any share repurchases for the remainder of 2020.
This determination will take into account macroeconomic issues (including the
impact of the COVID-19 pandemic), market trends, and other factors that the
Company deems appropriate (including the market price of the stock,
anti-dilutive effect of repurchases, and available cash). As of September 30,
2020, the Company has 11.9 million shares remaining available for repurchase
under the previously announced share repurchase plan.
Additionally, based on the mid-October 2020 light vehicle production estimates
for 2021, the Company is re-introducing revenue guidance for 2021, 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 currently estimates
that revenue for calendar year 2021 will be approximately 15 - 20% higher than
estimated revenue in calendar year 2020.

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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, 2019.

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