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XBRL
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q 
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020 or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number: 0-10235
GENTEX CORPORATION
(Exact name of registrant as specified in its charter)
Michigan
38-2030505
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
600 N. Centennial
Zeeland
Michigan49464
(Address of principal executive offices)
(Zip Code)
(616) 772-1800
(Registrant’s telephone number, including area code)
________________________________________________________

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.06 per shareGNTXNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes:  þ    No:  o 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes:  þ    No:  o 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes:    No:   þ
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes:  o No:  o
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Shares Outstanding, October 23, 2020
Common Stock, $.06 Par Value
245,056,522

1


GENTEX CORPORATION AND SUBSIDIARIES
For the Three and Nine Months Ended September 30, 2020
FORM 10-Q
Index

Part I - Financial Information
Page
Item 1.
Item 2.
Item 3.
Item 4.
Part II - Other Information
Item 1A.
Item 2.
Item 6.


2


PART I —FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements.
GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2020 and December 31, 2019
September 30, 2020 (Unaudited)
December 31, 2019
(Note)
ASSETS
CURRENT ASSETS
Cash and cash equivalents$400,499,542 $296,321,622 
Short-term investments52,578,480 140,384,053 
Accounts receivable, net268,457,875 235,410,326 
Inventories233,358,102 248,941,855 
Prepaid expenses and other20,424,567 29,319,036 
Total current assets975,318,566 950,376,892 
PLANT AND EQUIPMENT—NET474,019,432 498,316,100 
OTHER ASSETS
Goodwill311,216,556 307,365,845 
Long-term investments159,011,362 139,909,323 
Intangible assets, net247,911,399 250,375,000 
Patents and other assets, net24,997,791 22,460,033 
Total other assets743,137,108 720,110,201 
Total assets$2,192,475,106 $2,168,803,193 
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Accounts payable$90,246,791 $97,553,917 
Current portion of long-term debt25,000,000  
Accrued liabilities121,242,379 74,292,883 
Total current liabilities236,489,170 171,846,800 
OTHER NON-CURRENT LIABILITIES15,071,701 7,414,424 
DEFERRED INCOME TAXES45,301,936 51,454,149 
Total liabilities296,862,807 230,715,373 
SHAREHOLDERS’ INVESTMENT
Common stock14,703,703 15,076,651 
Additional paid-in capital830,408,683 807,928,139 
Retained earnings1,046,052,853 1,116,372,133 
Accumulated other comprehensive income (loss)4,447,060 (1,289,103)
Total shareholders’ investment1,895,612,299 1,938,087,820 
Total liabilities and shareholders’ investment$2,192,475,106 $2,168,803,193 

Note: The condensed consolidated balance sheet at December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
3


GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 2020 and 2019
 
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
NET SALES
$474,638,584 $477,761,417 $1,158,325,866 $1,415,061,768 
COST OF GOODS SOLD
286,401,872 297,440,131 769,556,865 888,558,373 
Gross profit188,236,712 180,321,286 388,769,001 526,503,395 
OPERATING EXPENSES:
Engineering, research and development27,812,730 29,398,725 86,421,121 85,847,249 
Selling, general & administrative21,571,093 22,786,881 65,206,080 63,019,167 
Total operating expenses49,383,823 52,185,606 151,627,201 148,866,416 
Income from operations138,852,889 128,135,680 237,141,800 377,636,979 
OTHER INCOME
Investment income1,825,257 3,353,510 5,733,939 8,756,638 
Other income, net2,218,852 90,323 3,423,881 376,983 
Total other income4,044,109 3,443,833 9,157,820 9,133,621 
INCOME BEFORE PROVISION FOR INCOME TAXES142,896,998 131,579,513 246,299,620 386,770,600 
PROVISION FOR INCOME TAXES25,804,396 19,681,661 42,075,250 61,633,712 
NET INCOME$117,092,602 $111,897,852 $204,224,370 $325,136,888 
EARNINGS PER SHARE: (1)
Basic$0.48 $0.44 $0.83 $1.27 
Diluted$0.48 $0.44 $0.82 $1.26 
Cash Dividends Declared per Share$0.120 $0.115 $0.360 $0.345 
(1) Earnings Per Share has been adjusted to exclude the portion of net income allocated to participating securities as a result of share-based payment awards.

4


GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three and Nine Months Ended September 30, 2020 and 2019
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net Income$117,092,602 $111,897,852 $204,224,370$325,136,888
Other comprehensive income before tax:
Foreign currency translation adjustments1,823,667 (1,623,102)1,268,204 (1,799,789)
Unrealized (losses) gains on debt securities, net(146,647)457,438 5,655,644 3,338,762 
Other comprehensive income (loss), before tax1,677,020 (1,165,664)6,923,848 1,538,973 
Income tax impact related to components of other comprehensive income(30,796)96,062 1,187,685 701,140 
Other comprehensive income (loss), net of tax1,707,816 (1,261,726)5,736,163 837,833 
Comprehensive Income$118,800,418 $110,636,126 $209,960,533 $325,974,721 

5


GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
For the Three Months Ended September 30, 2020 and 2019
Common 
Stock
Shares
Common 
Stock
Amount
Additional 
Paid-In
Capital
Retained 
Earnings
Accumulated 
Other
Comprehensive
Income (Loss)
Total 
Shareholders’
Investment
BALANCE AS OF JULY 1, 2020245,775,488 $14,746,529 $818,678,880 $986,442,760 $2,739,244 $1,822,607,413 
Issuance of common stock from stock plan transactions461,983 27,719 7,938,770 — — 7,966,489 
Repurchases of common stock(1,175,756)(70,545)(3,515,510)(28,074,807)— (31,660,862)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock— — 7,306,543 — — 7,306,543 
Dividends declared ($0.12 per share)
— — — (29,407,702)— (29,407,702)
Net income— — — 117,092,602 — 117,092,602 
Other comprehensive income— — — — 1,707,816 1,707,816 
BALANCE AS OF SEPTEMBER 30, 2020245,061,715 $14,703,703 $830,408,683 $1,046,052,853 $4,447,060 $1,895,612,299 
BALANCE AS OF JULY 1, 2019254,779,119 $15,286,747 $777,238,253 $1,111,310,014 $499,221 $1,904,334,235 
Issuance of common stock from stock plan transactions1,771,463 106,287 26,180,774 — — 26,287,061 
Repurchases of common stock(3,569,577)(214,174)(9,744,945)(86,665,884)— (96,625,003)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock— — 5,788,286 — — 5,788,286 
Dividends declared ($0.115 per share)
— — — (29,092,442)— (29,092,442)
Net income— — — 111,897,852 — 111,897,852 
Other comprehensive loss— — — — (1,261,726)(1,261,726)
BALANCE AS OF SEPTEMBER 30, 2019252,981,005 $15,178,860 $799,462,368 $1,107,449,540 $(762,505)$1,921,328,263 


6


GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
For the Nine Months Ended September 30, 2020 and 2019

Common 
Stock
Shares
Common 
Stock
Amount
Additional 
Paid-In
Capital
Retained 
Earnings
Accumulated 
Other
Comprehensive
Income (Loss)
Total 
Shareholders’
Investment
BALANCE AS OF JANUARY 1, 2020251,277,515 $15,076,651 $807,928,139 $1,116,372,133 $(1,289,103)$1,938,087,820 
Issuance of common stock from stock plan transactions1,815,270 108,917 23,568,264 — — 23,677,181 
Issuance of common stock related to acquisitions163,718 9,823 3,549,406 — — 3,559,229 
Repurchases of common stock(8,194,788)(491,688)(23,730,322)(186,258,436)— (210,480,446)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock— — 19,093,196 — — 19,093,196 
Dividends declared ($0.36 per share)
— — — (88,285,214)— (88,285,214)
Net income— — — 204,224,370 — 204,224,370 
Other comprehensive income— — — — 5,736,163 5,736,163 
BALANCE AS OF SEPTEMBER 30, 2020245,061,715 $14,703,703 $830,408,683 $1,046,052,853 $4,447,060 $1,895,612,299 
BALANCE AS OF JANUARY 1, 2019259,328,613 $15,559,717 $745,324,144 $1,102,468,137 $(1,600,338)$1,861,751,660 
Issuance of common stock from stock plan transactions5,021,616 301,297 67,920,578 — 68,221,875 
Repurchases of common stock(11,369,224)(682,154)(29,709,788)(232,371,433)— (262,763,375)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock— — 15,927,434 — — 15,927,434 
Dividends declared ($0.345 per share)
— — — (87,784,052)— (87,784,052)
Net income— — — 325,136,888 — 325,136,888 
Other comprehensive income— — — — 837,833 837,833 
BALANCE AS OF SEPTEMBER 30, 2019252,981,005 $15,178,860 $799,462,368 $1,107,449,540 $(762,505)$1,921,328,263 

7


GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2020 and 2019
20202019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$204,224,370 $325,136,888 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization78,489,026 79,331,513 
(Gain) on disposal of assets(281,542)(148,376)
Loss on disposal of assets146,195 495,697 
(Gain) on sale of investments(1,504,757)(593,351)
Loss on sale of investments143,370  
Change in deferred income taxes(9,559,993)2,189,818 
Stock-based compensation expense related to employee stock options, employee stock purchases and restricted stock23,266,906 15,927,434 
Change in operating assets and liabilities:
Accounts receivable, net(32,832,997)(39,570,916)
Inventories15,659,539 (13,395,196)
Prepaid expenses and other8,934,297 (2,729,945)
Accounts payable(7,389,582)2,499,481 
Accrued liabilities, excluding dividends declared and short-term debt49,749,418 14,797,251 
Net cash provided by operating activities329,044,250 383,940,298 
CASH FLOWS (USED FOR) INVESTING ACTIVITIES:
Activity in available-for-sale securities:
Sales proceeds15,559,590 57,087,935 
Maturities and calls117,172,368 9,714,000 
Purchases(59,933,780)(66,360,636)
Plant and equipment additions(37,048,073)(58,322,472)
Proceeds from sale of plant and equipment331,465 1,937,207 
Acquisition of businesses, net of cash acquired(8,043,217) 
Increase in other assets(3,326,783)(3,111,644)
Net cash (used for) investing activities24,711,570 (59,055,610)
CASH FLOWS (USED FOR) FINANCING ACTIVITIES:
Proceeds from borrowings on Credit Agreement75,000,000  
Repayment of borrowings on Credit Agreement(50,000,000) 
Issuance of common stock from stock plan transactions23,677,181 68,221,875 
Cash dividends paid(87,774,635)(87,217,383)
Repurchases of common stock(210,480,446)(262,763,375)
Net cash (used for) financing activities(249,577,900)(281,758,883)
NET INCREASE IN CASH AND CASH EQUIVALENTS104,177,920 43,125,805 
CASH AND CASH EQUIVALENTS, beginning of period296,321,622 217,025,278 
CASH AND CASH EQUIVALENTS, end of period$400,499,542 $260,151,083 

8


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



(1)    Basis of Presentation

The unaudited condensed consolidated financial statements included herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's 2019 annual report on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only a normal and recurring nature, necessary to present fairly the financial position of the Company as of September 30, 2020, and the results of operations and cash flows for the interim periods presented.

(2)    Adoption of New Accounting Pronouncements

Effective January 1, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings in the period of adoption. Based on the insignificant impact of this ASU on the Company's financial statements, a cumulative-effect adjustment to retained earnings was not deemed necessary. The standard requires a change in the measurement approach for credit losses on financial assets measured on an amortized cost basis from an incurred loss method to an expected loss method, thereby eliminating the requirement that a credit loss be considered probable to impact the valuation of a financial asset measured on an amortized cost basis. The standard requires the measurement of expected credit losses to be based on relevant information about past events, including historical experience, current conditions, and a reasonable and supportable forecast that affects the collectability of the related financial asset. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. The adoption of this standard did not have a material impact on the Company's consolidated balance sheet, consolidated income statement, or consolidated statement of cash flows.


(3)    Goodwill and Other Intangible Assets

Goodwill represents the cost of an acquisition in excess of the fair values assigned to identifiable net assets acquired. The Company recorded Goodwill of $307.4 million as part of the HomeLink® acquisition in 2013 and recorded an additional $3.9 million in Goodwill as part of the acquisition of Vaporsens that occurred in the second quarter of 2020. See Note 16 for more information on the Vaporsens transaction. The carrying value of Goodwill as of September 30, 2020 and December 31, 2019 was $311.2 million and $307.4 million, respectively.


Carrying Amount
Balance as of December 31, 2019$307,365,845 
Acquisitions3,850,711 
Divestitures 
Impairments 
Other  
Balance as of September 30, 2020$311,216,556 


9


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


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

The Company also acquired In-Process Research & Development as part of the acquisition of Vaporsens that occurred in the second quarter of 2020 and the acquisition of Air-Craftglass Production BV ("Air-Craftglass") in the third quarter of 2020. See Note 16 for more information on these transactions.

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

As of September 30, 2020:
Other Intangible AssetsGrossAccumulated AmortizationNetAssumed Useful Life
Gentex Patents$38,011,452 $(23,982,357)$14,029,095 Various
Vaporsens Technology Licenses292,943 (35,002)257,941 Various
Other Intangible Assets
HomeLink® Trade Names and Trademarks
$52,000,000 $— $52,000,000 Indefinite
HomeLink® Technology
180,000,000 (105,000,000)75,000,000 12 years
Existing Customer Platforms43,000,000 (30,100,000)12,900,000 10 years
Exclusive Licensing Agreement96,000,000 — 96,000,000 Indefinite
Vaporsens In-Process R&D11,000,000 — 11,000,000 Indefinite
Air-Craftglass In-Process R&D1,011,399 — 1,011,399 Indefinite
Total Other Intangible Assets$383,011,399 $(135,100,000)$247,911,399 
Total Patents & Other Intangible Assets$421,315,794 $(159,117,359)$262,198,435 

As of December 31, 2019:

Other Intangible Assets
Gross
Accumulated Amortization
Net
Assumed Useful Life
Gentex Patents
$37,328,963 $(22,491,010)$14,837,953 Various
Other Intangible Assets
HomeLink® Trade Names and Trademarks
$52,000,000 $— $52,000,000 Indefinite
HomeLink® Technology
180,000,000 (93,750,000)86,250,000 12 years
Existing Customer Platforms43,000,000 (26,875,000)16,125,000 10 years
Exclusive Licensing Agreement
96,000,000 — 96,000,000 Indefinite
Total Other Intangible Assets$371,000,000 $(120,625,000)$250,375,000 
Total Patents & Other Intangible Assets$408,328,963 $(143,116,010)$265,212,953 

10


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Amortization expense on patents and intangible assets was approximately $5.6 million and $16.8 million during the three and nine months ended September 30, 2020, respectively, compared to approximately $5.6 million and $16.8 million for the same periods ended September 30, 2019, respectively.

Excluding the impact of any future acquisitions, the Company estimates amortization expense for each of the years ending December 31, 2020 and 2021 to be approximately $22 million annually, for the year ending December 31, 2022 to be approximately $21 million, for the year ending December 31, 2023 to be approximately $19 million, and for the year ending December 31, 2024 to be approximately $16 million.


(4)    Investments
The Company follows the provisions of Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures, for its financial assets and liabilities, and for its non-financial assets and liabilities subject to fair value measurements. ASC 820 provides a framework for measuring the fair value of assets and liabilities. This framework is intended to provide increased consistency in how fair value determinations are made under various existing accounting standards that permit, or in some cases, require estimates of fair-market value. This standard also expanded financial statement disclosure requirements with respect to a company’s use of fair-value measurements, including the effect of such measurements on earnings. The cost of securities sold is based on the specific identification method.
The Company determines the fair value of its government securities, asset-backed securities, municipal bonds, and corporate bonds by utilizing monthly valuation statements that are provided by its broker. The broker determines the investment valuation by utilizing the bid price in the market and also refers to third party sources to validate valuations, and as such are classified as Level 2 assets.
The Company's certificates of deposit are classified as available for sale and are considered as Level 1 assets. These investments are carried at cost, which approximates fair value.

The Company also periodically makes technology investments in certain non-consolidated third-parties. These equity investments are accounted for in accordance with ASC 321, Investments - Equity Securities. Equity investments that do not have readily determinable fair values, and where the Company has not identified any observable events that would cause adjustment of the valuation to date, such equity investments are held at cost. These technology investments totaled approximately $8.6 million and $9.0 million as of September 30, 2020 and December 31, 2019, respectively. These investments are classified within Long-Term Investments in the consolidated balance sheet. 
Assets or liabilities that have recurring fair value measurements are shown below as of September 30, 2020 and December 31, 2019:










11


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


As of September 30, 2020:
Fair Value Measurements at Reporting Date Using
Total as of
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable
Inputs
Significant
Unobservable
Inputs
Description
September 30, 2020(Level 1)(Level 2)(Level 3)
Cash & Cash Equivalents
$400,499,542 $400,499,542 $ $ 
Short-Term Investments:
Certificate of Deposit1,270,465 1,270,465   
Corporate Bonds14,105,245  14,105,245  
Government Securities23,235,183  23,235,183  
Municipal Bonds11,025,844  11,025,844  
Other2,941,743 2,941,743   
Long-Term Investments:
Asset Backed Securities42,012,670  42,012,670  
Certificate of Deposit3,913,968 3,913,968   
Corporate Bonds8,975,930  8,975,930  
Government Securities    
Municipal Bonds95,487,532  95,487,532  
Total$603,468,122 $408,625,718 $194,842,404 $ 

As of December 31, 2019:
Fair Value Measurements at Reporting Date Using
Total as of
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable
Inputs
Significant
Unobservable
Inputs
Description
December 31, 2019(Level 1)(Level 2)(Level 3)
Cash & Cash Equivalents
$296,321,622 $296,321,622 $ $ 
Short-Term Investments:
Certificate of Deposit50,099,795 50,099,795   
Corporate Bonds29,219,685  29,219,685  
Government Securities58,432,823  58,432,823  
Other2,631,750 2,631,750   
Long-Term Investments:
Asset-backed Securities25,791,029  25,791,029  
Certificate of Deposit3,557,798 3,557,798  
Corporate Bonds22,815,998  22,815,998  
Governmental Securities6,088,190  6,088,190  
Municipal Bonds72,638,690  72,638,690  
Total$567,597,380 $352,610,965 $214,986,415 $ 

The amortized cost, unrealized gains and losses, and market value of investment securities are shown as of September 30, 2020 and December 31, 2019:



12


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


As of September 30, 2020:
Unrealized
Cost
Gains
Losses
Market Value
Short-Term Investments:
Certificate of Deposit$1,252,187 $18,278 $ $1,270,465 
Corporate Bonds13,970,360 134,885  14,105,245 
Government Securities23,105,527 129,656  23,235,183 
Municipal Bonds10,864,899 160,945  11,025,844 
Other2,941,743   2,941,743 
Long-Term Investments:
Asset Backed Securities41,521,603 1,086,633 (595,566)42,012,670 
Certificate of Deposit3,754,312 159,656  3,913,968 
Corporate Bonds8,598,910 377,020  8,975,930 
Municipal Bonds89,916,703 5,580,670 (9,841)95,487,532 
Total$195,926,244 $7,647,743 $(605,407)$202,968,580 


As of December 31, 2019:    
Unrealized
CostGainsLossesMarket Value
Short-Term Investments:
Certificate of Deposit$50,099,795 $ $ $50,099,795 
Corporate Bonds29,025,624 194,061  29,219,685 
Government Securities58,343,911 99,917 (11,005)58,432,823 
Other2,631,750   2,631,750 
Long-Term Investments:
Asset-backed Securities25,971,156  (180,127)25,791,029 
Certificate of Deposit3,500,000 58,808 (1,010)3,557,798 
Corporate Bonds22,306,130 509,868  22,815,998 
Government Securities6,012,705 75,485  6,088,190 
Municipal Bonds71,997,996 1,036,116 (395,422)72,638,690 
Total$269,889,067 $1,974,255 $(587,564)$271,275,758 

Unrealized losses on investments as of September 30, 2020, are as follows:
Aggregate Unrealized LossesAggregate Fair Value
Loss duration of less than one year$605,407 $24,572,356 
Loss duration of greater than one year  
       Total
$605,407 $24,572,356 

Unrealized losses on investments as of December 31, 2019, are as follows: 
Aggregate Unrealized Losses
Aggregate Fair Value
Loss duration of less than one year$587,564 $90,721,081 
Loss duration of greater than one year  
       Total
$587,564 $90,721,081 
13


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



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

Fixed income securities as of September 30, 2020 have contractual maturities as follows:
Due within one year
$49,192,972 
Due between one and five years
30,466,413 
Due over five years
113,325,115 
$192,984,500 

(5)    Inventories
Inventories consisted of the following at the respective balance sheet dates:
September 30, 2020December 31, 2019
Raw materials
$160,155,658 $164,974,553 
Work-in-process
30,308,212 33,069,255 
Finished goods
42,894,232 50,898,047 
Total Inventory
$233,358,102 $248,941,855 


(6)    Earnings Per Share

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

The following table sets forth the computation of basic and diluted net income per common share under the two-class method for the three and nine months ended September 30, 2020 and September 30, 2019:
14


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Basic Earnings Per Share
Net (Loss) Income$117,092,602 $111,897,852 $204,224,370 $325,136,888 
Less: Dividends and undistributed earnings allocated to participating securities1,697,281 1,389,659 2,906,048 3,699,548 
Net (Loss) Income available to common shareholders$115,395,321 $110,508,193 $201,318,322 $321,437,340 
Basic weighted average shares outstanding241,898,117 251,075,859 243,240,699 252,811,950 
Net (Loss) Income per share - Basic$0.48 $0.44 $0.83 $1.27 
Diluted Earnings Per Share