What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-02 compared with 2022-02-28 · 458 added, 364 removed, 980 unchanged (46% of the section changed)

6 unchanged sentences

Consolidated Statements of Operations for the Years Ended December 31, 202 2 , 202 1 and 20 20

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 202 2 , 202 1 and 20 20

Consolidated Statements of Cash Flows for the Years Ended December 31, 202 2 , 202 1 and 20 20

7 unchanged sentences

We have audited the accompanying consolidated balance sheets of Stoneridge, Inc.

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, cash flows and shareholders’ equity for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements“).

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, cash flows and shareholders’ equity for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements“).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 28, 2022 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 2, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

10 unchanged sentences

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Product warranty and recall reserves

Description of the Matter

The Company's reserves for product warranty and recall totaled $9.8 million at December 31, 2021.

As described in Note 2 to the consolidated financial statements, the Company's reserve for product warranty and recall is based on several factors, including the historical trends of units sold and payment amounts, combined with the Company’s current understanding of existing warranty and recall claims.

Description of the Matter The Company's reserves for product warranty and recall totaled $13.5 million at December 31, 2022.

As described in Note 2 to the consolidated financial statements, the Company's reserve for product warranty and recall is based on several factors, including the historical trends of units sold and claim payment amounts, combined with the Company’s current understanding of existing warranty and recall claims.

The warranty liability requires a forecast of the resolution of existing claims as well as expected future claims on products previously sold.

Auditing the Company’s reserve for product warranty and recall is complex due to the measurement uncertainty associated with the estimate, management’s judgment in determining the cost and volume estimates used in the computation as well as volume and costing assumptions in determining the expected future claims on products previously sold.

How We Addressed the Matter in Our Audit

We evaluated the design and tested the operating effectiveness of the Company’s controls over the product warranty and recall process.

How We Addressed the Matter in Our Audit We evaluated the design and tested the operating effectiveness of the Company’s controls over the product warranty and recall process.

For example, we tested management review controls over the appropriateness of assumptions management used in the calculation and the completeness of warranty claims.

To evaluate the reserve for product warranty and recall, we performed audit procedures that included, among others, testing the completeness and accuracy of the underlying claims data and costs used in the computation of management’s estimate, performing inquiries of the Company’s quality control team, and obtaining a legal confirmation letter to evaluate the status and assessment of certain reserves.

To evaluate the reserve for product warranty and recall, we performed audit procedures that included, among others, testing the completeness and accuracy of the underlying claims data and costs used in the computation of management’s estimate, performing inquiries of the Company’s quality control team, and obtaining legal confirmation letters to evaluate the status and assessment of certain reserves.

We assessed the historical accuracy of management’s product warranty and recall reserves and performed sensitivity analyses of significant assumptions to evaluate the impact to the reserve that would result from changes in the assumptions.

1 unchanged sentence

We have served as the Company’s auditor since 2002.

February 28, 2022

March 2, 2023

STONERIDGE, INC.

5 unchanged sentences

Accounts receivable, less reserves of $ 962 and $ 1,443 , respectively

158,155 150,388

Inventories, net 152,580 138,115

4 unchanged sentences

Intangible assets, net 45,508 49,863

Goodwill 34,225 36,387

Operating lease right-of-use asset 13,762 18,343

1 unchanged sentence

Total long-term assets 242,554 254,575

Total assets $ 652,105 $ 665,399

LIABILITIES AND SHAREHOLDERS' EQUITY

12 unchanged sentences

Preferred Shares, without par value, 5,000 shares authorized, none issued

Common Shares, without par value, 60,000 shares authorized, 28,966 and 28,966 shares issued and 27,191 and 27,006 shares outstanding at June 30, 2021 and December 31, 2020, respectively, with no stated value

Common Shares, without par value, 60,000 shares authorized, 28,966 and 28,966 shares issued and 27,341 and 27,191 shares outstanding at December 31, 2022 and December 31, 2021, respectively, with no stated value

Additional paid-in capital 232,758 232,490

Common Shares held in treasury, 1,775 and 1,960 shares at June 30, 2021 and December 31, 2020, respectively, at cost

Common Shares held in treasury, 1,625 and 1,775 shares at December 31, 2022 and December 31, 2021, respectively, at cost

( 50,366 ) ( 55,264 )

Retained earnings 201,692 215,748

7 unchanged sentences

Year ended December 31, (in thousands, except per share data) 2022 2021 2020

Net sales $ 899,923 $ 770,462 $ 648,006

Costs and expenses:

2 unchanged sentences

Gain on sale of Canton Facility, net — ( 30,718 ) —

Gain on disposal of Non-core Product, net

Design and development 65,296 66,165 49,386

1 unchanged sentence

Interest expense, net 7,097 5,189 6,124

Equity in earnings of investee

Equity in loss (earnings) of investee 823 ( 3,658 ) ( 1,536 )

Other expense (income), net 5,711 1,444 ( 1,528 )

Income (loss) before income taxes

(Loss) income before income taxes ( 10,696 ) 12,436 ( 10,724 )

Provision (benefit) for income taxes 3,360 9,030 ( 2,774 )

Net income (loss)

Earnings (loss) per share:

Net (loss) income $ ( 14,056 ) $ 3,406 $ ( 7,950 )

(Loss) earnings per share:

Basic $ ( 0.52 ) $ 0.13 $ ( 0.29 )

Diluted $ ( 0.52 ) $ 0.12 $ ( 0.29 )

Weighted-average shares outstanding:

Basic 27,258 27,114 27,025

Diluted 27,258 27,416 27,025

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Year ended December 31, (in thousands) 2022 2021 2020

Net income (loss)

Net (loss) income $ ( 14,056 ) $ 3,406 $ ( 7,950 )

Other comprehensive (loss) income, net of tax:

Foreign currency translation (1)

( 6,171 ) ( 8,408 ) 2,677

Unrealized gain (loss) on derivatives (2)

53 1,019 ( 840 )

Other comprehensive (loss) income, net of tax ( 6,118 ) ( 7,389 ) 1,837

Comprehensive (loss) income

(1) Net of tax expense of $ 267 for the year ended December 31, 2021.

Comprehensive loss $ ( 20,174 ) $ ( 3,983 ) $ ( 6,113 )

_____________________________

(1) Net of tax expense of $ 514 and $ 267 for the years ended December 31, 2022 and 2021, respectively.

(2) Net of tax expense (benefit) of $ 14 , $ 271 and $( 223 ) for the years ended December 31, 2022, 2021 and 2020, respectively.

5 unchanged sentences

OPERATING ACTIVITIES:

Net income (loss)

Net (loss) income $ ( 14,056 ) $ 3,406 $ ( 7,950 )

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

Depreciation 26,687 27,823 27,309

Amortization, including accretion and write-off of deferred financing costs 8,055 6,648 5,926

Deferred income taxes ( 5,110 ) ( 511 ) ( 7,953 )

Earnings of equity method investee

Loss (earnings) of equity method investee 823 ( 3,658 ) ( 1,536 )

(Gain) loss on sale of fixed assets ( 241 ) ( 165 ) 185

Share-based compensation expense 5,942 5,960 5,888

Excess tax benefit related to share-based compensation expense

Excess tax deficiency (benefit) related to share-based compensation expense 543 ( 563 ) ( 46 )

Gain on sale of Canton Facility, net — ( 30,718 ) —

Gain on disposal of business and joint venture, net — ( 2,942 ) —

Gain on disposal of Non-core Products, net

Property, plant and equipment impairment charge 33 — 2,349

6 unchanged sentences

Accrued expenses and other liabilities 4,088 13,297 ( 5,483 )

Net cash (used for) provided by operating activities

Net cash provided by (used for) operating activities 6,806 ( 36,248 ) 28,641

INVESTING ACTIVITIES:

1 unchanged sentence

Proceeds from sale of fixed assets 158 268 127

Proceeds from settlement of net investment hedges 3,820 — —

Proceeds from disposal of business, net — 1,837 —

2 unchanged sentences

Investment in venture capital fund, net ( 950 ) ( 3,199 ) ( 1,550 )

Net cash provided by (used for) investing activities

Net cash (used for) provided by investing activities ( 28,581 ) 28,041 ( 33,885 )

FINANCING ACTIVITIES:

6 unchanged sentences

Repurchase of Common Shares to satisfy employee tax withholding ( 791 ) ( 2,665 ) ( 1,773 )

Net cash provided by (used for) financing activities

Net cash (used for) provided by financing activities ( 7,297 ) 22,876 6,513

Effect of exchange rate changes on cash and cash equivalents ( 1,677 ) ( 3,041 ) 3,247

11 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands) Number of

outstanding Number of

shares Additional

capital Common

in treasury Retained

earnings Accumulated

comprehensive

shareholders'

(in thousands)

BALANCE , DECEMBER 31, 2019 27,408 1,558 $ 225,607 $ ( 50,773 ) $ 206,542 $ ( 91,472 ) $ 289,904

Net loss — — — — ( 7,950 ) — ( 7,950 )

Unrealized loss on derivatives, net — — — — — ( 840 ) ( 840 )

4 unchanged sentences

Share-based compensation, net — — ( 1,198 ) — — — ( 1,198 )

Adoption of ASU 2019-12 (Note 2) — — — — 13,750 — 13,750

BALANCE DECEMBER 31, 2020 27,006 1,960 $ 234,409 $ ( 60,482 ) $ 212,342 $ ( 89,635 ) $ 296,634

Unrealized loss on derivatives, net

Net income — — $ — $ — $ 3,406 $ — $ 3,406

Unrealized gain on derivatives, net — — — — — 1,019 1,019

Currency translation adjustments — — — — — ( 8,408 ) ( 8,408 )

1 unchanged sentence

Repurchased Common Shares for treasury, net ( 80 ) 80 — 5,218 — — 5,218

Common Share repurchase program

Share-based compensation, net — — ( 1,919 ) — — — ( 1,919 )

Adoption of ASU 2019-12 (Note 2)

BALANCE DECEMBER 31, 2021 27,191 1,775 $ 232,490 $ ( 55,264 ) $ 215,748 $ ( 97,024 ) $ 295,950

Net loss — — $ — $ — $ ( 14,056 ) $ — $ ( 14,056 )

Unrealized gain on derivatives, net — — — — — 53 53

11 unchanged sentences

Stoneridge, Inc.

and its subsidiaries are global designers and manufacturers of highly engineered electrical and electronic components, modules and systems for the automotive, commercial, off-highway and agricultural vehicle markets.

and its subsidiaries are global designers and manufacturers of highly engineered electrical and electronic systems, components and modules for the automotive, commercial, off-highway and agricultural vehicle markets.

Summary of Significant Accounting Policies

4 unchanged sentences

The Company analyzes its ownership interests in accordance with Accounting Standards Codification (“ASC”) “Consolidations (Topic 810)” to determine whether they are a variable interest entity and, if so, whether the Company is the primary beneficiary.

The Company’s investment in Minda Stoneridge Instruments Ltd.

(“MSIL”) for the years ended December 31, 2020 and 2019 has been determined to be an unconsolidated entity, and therefore was accounted for under the equity method of accounting based on the Company’s 49 % ownership in MSIL.

The Company sold its equity interest in MSIL on December 30, 2021.

Prior to the sale of our investment in Minda Stoneridge Instruments Ltd.

(“MSIL”) on December 30, 2021, the Company accounted for its 49 % ownership in MSIL under the equity method of accounting.

Accounting Estimates

8 unchanged sentences

Revenues are principally generated from the automotive, commercial, off-highway and agricultural vehicle markets.

The Company’s largest customers are Volvo and VW Group, primarily related to the Electronics reportable segment and accounted for the following percentages of consolidated net sales:

The Company’s largest customers are PACCAR and Volvo, primarily related to the Electronics reportable segment and accounted for the following percentages of consolidated net sales:

2022 2021 2020

PACCAR 15 % 6 % 4 %

Volvo 11 % 9 % 8 %

Accounts receivable are recorded at the invoice price, net of an estimate of allowance for doubtful accounts and other reserves.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Allowance for Doubtful Accounts

7 unchanged sentences

Excess inventories are quantities of items that exceed anticipated sales or usage for a reasonable period.

The Company has guidelines for calculating provisions for excess inventories based on the number of months of inventories on hand compared to anticipated sales or usage.

The Company has guidelines for calculating provisions for excess inventories based on the number of months of inventories on

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

hand compared to anticipated sales or usage.

Management uses its judgment to forecast sales or usage and to determine what constitutes a reasonable period.

1 unchanged sentence

Inventories consist of the following:

December 31 2022 2021

Raw materials $ 121,983 $ 107,034

4 unchanged sentences

Inventory valued using the average cost method was $ 12,584 and $ 10,176 at December 31, 2022 and 2021, respectively.

Long Term Supply Commitment

In 2022, the Company entered into a long term supply agreement with a supplier for the purchase of certain electronic semiconductor components through December 31, 2026.

Pursuant to the agreement, the Company paid a $ 1,000 capacity deposit in 2022 and is obligated to pay an additional $ 1,000 capacity deposit in 2023.

The capacity deposit is recognized in prepaid and other current assets on our consolidated balance sheet.

This long term supply agreement requires the Company to purchase minimum annual volumes while requiring the supplier to sell these components at a fixed price.

The Company purchased $ 1,174 of these components during the year ended December 31, 2022.

The Company is required to purchase $ 5,871 , $ 7,828 , $ 10,764 and $ 10,764 of components in each of the years 2023 through 2026, respectively.

Pre-production Costs Related to Long-term Supply Arrangements

3 unchanged sentences

Capitalized pre-production costs were $ 19,539 and $ 16,292 at December 31, 2022 and 2021, respectively, and were recorded as a component of prepaid expenses and other current assets on the consolidated balance sheets.

Disposal of Non-Core Products

On April 1, 2019, the Company entered into an Asset Purchase Agreement by and among the Company, the Company’s wholly owned subsidiary, Stoneridge Control Devices, Inc.

(“SCD”), and Standard Motor Products, Inc.

On the same day pursuant to the Asset Purchase Agreement, in exchange for $ 40,000 (subject to a post-closing inventory adjustment which was a payment to SMP of $ 1,573 ) and the assumption of certain liabilities, the Company and SCD sold to SMP, product lines and assets related to certain non-core switches and connectors (the “Non-core Products”).

On April 1, 2019, the Company and SMP also entered into certain ancillary agreements, including a transition services agreement, a contract manufacturing agreement and a supply agreement, pursuant to which the Company provided and was compensated for certain manufacturing, transitional, and administrative and support services to SMP on a short-term basis.

The products related to the Non-core Products were manufactured in Juarez, Mexico and Canton, Massachusetts,

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

and include ball switches, ignition switches, rotary switches, courtesy lamps, toggle switches, headlamp switches and other related components.

On April 1, 2019, the Company’s Control Devices segment recognized net sales and costs of goods sold (“COGS”) of $ 4,160 and $ 2,775 , respectively, for the one-time sale of Non-core Product finished goods inventory and a gain on disposal of $ 33,921 , net for the sale of fixed assets, intellectual property and customer lists associated with the Non-core Products less transaction costs.

The Company recognized transaction costs associated with the disposal of Control Devices’ Non-core Products of $ 322 within selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2019.

The Company received $ 21 and $ 1,824 for services provided pursuant to the transition services agreement which were recognized as a reduction in SG&A for the years ended December 31, 2020 and 2019, respectively.

Pursuant to the contract manufacturing agreement, the Company recognized sales and operating income for the production of Non-core Products of $ 26,304 and $ 1,458 for the year ended December 31, 2019, respectively.

The Company also received $ 745 for reimbursement of retention and facility costs from SMP pursuant to the contract manufacturing agreement which was recognized as a reduction to SG&A for the year ended December 31, 2019.

There were no Non-core Product net sales for the years ended December 31, 2021 or 2020.

Non-core Products net sales and operating income, including sales to SMP pursuant to the contract manufacturing agreement, were $ 41,560 and $ 4,831 for the year ended December 31, 2019, respectively.

Disposal of Particulate Matter Sensor Business

8 unchanged sentences

The sale of the Gen 2 assets occurred during November 2021, upon completion of the Company’s supply commitments to certain customers.

The Company and SMP also entered into certain ancillary agreements, including a contract manufacturing agreement, a transitional services agreement, and a supply agreement, pursuant to which the Company will provide and be compensated for certain manufacturing, transitional, administrative and support services to SMP on a short-term basis.

On March 8, 2021 the Company’s Control Devices segment recognized net sales and cost of goods sold of $ 971 and $ 898 , respectively, for the one-time sale of Gen 1 inventory and a gain on disposal of $ 740 for the sale of Gen 1 fixed assets less transaction costs of $ 60 within SG&A during the three months ended March 31, 2021.

The Company and SMP also entered into certain ancillary agreements, including a contract manufacturing agreement, a transitional services agreement, and a supply agreement, pursuant to which the Company provided and was compensated for certain manufacturing, transitional, administrative and support services to SMP on a short-term basis.

On March 8, 2021 the Company’s Control Devices segment recognized net sales and cost of goods sold ("COGS") of $ 971 and $ 898 , respectively, for the one-time sale of Gen 1 inventory and a gain on disposal of $ 740 for the sale of Gen 1 fixed assets less transaction costs of $ 60 within selling, general and administrative ("SG&A") during the three months ended March 31, 2021.

Pursuant to the contract manufacturing agreement, the Company produced and sold PM sensor Gen 1 finished goods inventory to SMP for net sales of $ 8,042 in the year ended December 31, 2021.

In addition, the Company received $ 783 for services provided pursuant to the transition services agreement which were recognized as a reduction in SG&A for the year ended December 31, 2021.

PM sensor Gen 1 net sales, including sales of $ 8,042 to SMP pursuant to the contract manufacturing agreement and the sale of Gen 1 inventory components of $ 2,283 and operating income were $ 12,592 and $ 1,415 , respectively, for the year ended December 31, 2021.

PM sensor Gen 1 net sales and operating income were $ 8,814 and $ 1,090 , respectively, for the year ended December 31, 2020.

PM sensor Gen 1 net sales and operating loss were $ 10,951 and $ 438 , respectively, for the year ended December 31, 2019.

The Company completed the PM sensor Gen 2 product supply commitments and ended production on September 23, 2021.

In November 2021, the Company’s Control Devices segment recognized proceeds of $ 786 and a gain on disposal of $ 408 for the sale of the Gen 2 fixed assets within SG&A, for the year ended December 31, 2021.

In addition, the Company received $ 308 and

STONERIDGE, INC.

2 unchanged sentences

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

$ 783 for services provided pursuant to the transition services agreement which were recognized as a reduction in SG&A for the years ended December 31, 2022 and 2021, respectively.

PM sensor Gen 1 net sales and operating income were $ 8,814 and $ 1,090 , respectively, for the year ended December 31, 2020.

The Company completed the PM sensor Gen 2 product supply commitments and ended production on September 23, 2021.

Sale of Canton Facility

9 unchanged sentences

Property, plant and equipment are recorded at cost and consist of the following:

December 31 2022 2021

Land and land improvements $ 3,030 $ 3,064

2 unchanged sentences

Office furniture and fixtures 9,100 8,701

Tooling 42,950 41,391

Information technology 32,584 30,454

Vehicles 783 741

Leasehold improvements 5,199 5,592

3 unchanged sentences

Property, plant and equipment, net $ 104,643 $ 107,901

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Depreciation is provided using the straight-line method over the estimated useful lives of the assets.

1 unchanged sentence

Depreciable lives within each property classification are as follows:

Buildings and improvements

10 - 40 years

Machinery and equipment

Office furniture and fixtures

Information technology

Leasehold improvements

shorter of lease term or 3 - 10 years

Buildings and improvements 10 - 40 years

Machinery and equipment 3 - 10 years

Office furniture and fixtures 3 - 10 years

Tooling 2 - 7 years

Information technology 3 - 7 years

Vehicles 3 - 7 years

Leasehold improvements shorter of lease term or 3 - 10 years

Maintenance and repair expenditures that are not considered improvements and do not extend the useful life of the property, plant and equipment are charged to expense as incurred.

1 unchanged sentence

When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss on the disposition is recorded in the consolidated statements of operations as a component of SG&A expenses.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Impairment of Long-Lived or Finite-Lived Assets

19 unchanged sentences

Goodwill is not amortized, but instead is tested for impairment at least annually, or earlier when events and circumstances indicate that it is more likely than not that such assets have been impaired, by applying a fair value-based test.

In conducting our annual impairment assessment testing, we first perform a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount.

If not, no further goodwill impairment testing is performed.

If it is more likely than not that a reporting unit’s fair value is less than its carrying amount, or if we elect not to perform a qualitative assessment of a reporting unit, we then compare the fair value of the reporting unit to the related net book value.

If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized.

In conducting our annual impairment assessment testing, we first perform a qualitative assessment of whether it is

STONERIDGE, INC.

2 unchanged sentences

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

more likely than not that a reporting unit’s fair value is less than its carrying amount.

If not, no further goodwill impairment testing is performed.

If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized.

The Company utilizes an income statement approach to estimate the fair value of a reporting unit and a market valuation approach to further support this analysis.

16 unchanged sentences

Other intangible assets, net at December 31, 2022 and 2021 consisted of the following:

As of December 31, 2021

As of December 31, 2022 Acquisition

cost Accumulated

amortization Net

Customer lists $ 44,394 $ ( 23,355 ) $ 21,039

Tradenames 16,430 ( 7,761 ) 8,669

Technology and patents 12,921 ( 10,100 ) 2,821

Capitalized software development 15,591 ( 2,612 ) 12,979

As of December 31, 2020

Total $ 89,336 $ ( 43,828 ) $ 45,508

As of December 31, 2021 Acquisition

cost Accumulated

amortization Net

Customer lists $ 45,000 $ ( 20,240 ) $ 24,760

Tradenames 16,016 ( 6,655 ) 9,361

Technology and patents 12,855 ( 8,922 ) 3,933

Capitalized software development 12,433 ( 624 ) 11,809

Other intangible assets, net at December 31, 2021 for customer lists, tradenames, technology and capitalized software development include $ 19,480 , $ 4,084 , $ 1,590 and $ 8,635 , respectively, related to the Electronics segment.

Total $ 86,304 $ ( 36,441 ) $ 49,863

Other intangible assets, net at December 31, 2022 for customer lists, tradenames, technology and patents, and capitalized software development include $ 16,521 , $ 3,589 , $ 575 and $ 10,218 , respectively, related to the Electronics segment.

Customer lists, tradenames and technology of $ 4,518 , $ 5,080 and $ 2,173 , respectively, related to the Stoneridge Brazil segment at December 31, 2022.

Capitalized software development and technology of $ 3,174 and $ 85 , respectively, related to the Control Devices segment at December 31, 2021.

Capitalized software development and patents of $ 2,761 and $ 73 , respectively, related to the Control Devices segment at December 31, 2022.

STONERIDGE, INC.

6 unchanged sentences

The Company recognized $ 7,003 , $ 6,006 and $ 5,420 of amortization expense related to intangible assets in 2022, 2021 and 2020, respectively.

Amortization expense is included as a component of Overhead and SG&A on the consolidated statements of operations.

Amortization expense is included as a component of COGS, SG&A and design and development ("D&D") on the consolidated statements of operations.

Annual amortization expense for intangible assets is estimated to be approximately $ 8,000 for the year 2023 and approximately $ 7,600 for the years 2024 through 2027.

6 unchanged sentences

Product warranty and recall obligations 9,040 6,752

37,985 44,671

Total accrued expenses and other current liabilities $ 66,040 $ 70,139

_____________________________

(A) “Other” is comprised of miscellaneous accruals, none of which individually contributed a significant portion of the total.

5 unchanged sentences

In making such a determination, the Company considers all available positive and negative evidence, including future release of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations.

Certain deferred tax assets are dependent on future taxable income to be realized.

Release of some or all of a valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

1 unchanged sentence

To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established or is required to pay amounts in excess of the liability, the Company’s effective tax rate in a given financial statement period may be affected.

The Tax Cuts and Jobs Act of 2017 (“Tax Legislation”) created a provision known as Global Intangible Low-Taxed Income (“GILTI”) that imposes a tax on certain earnings of foreign subsidiaries.

The Company has made an accounting policy election to reflect GILTI taxes, if any, as a current period tax expense when incurred.

The Company adjusts this liability in the period in which an uncertain tax position is effectively settled, the statute of limitations expires for the relevant taxing authority to examine the tax position, or more information becomes available.

The Company has made an accounting policy election to reflect global intangible low-taxed income (“GILTI”) taxes, if any, as a current period tax expense when incurred.

Currency Translation

2 unchanged sentences

Adjustments resulting from translation of financial statements are reflected as a component of accumulated other comprehensive loss in the Company’s consolidated balance sheets.

Foreign currency transactions are remeasured into the functional currency using translation rates in effect at the time of the transaction with the resulting adjustments included on the consolidated statements of operations within other expense (income), net.

These foreign currency transaction losses (gains), including the impact of hedging activities, were $ 5,534 , $ 2,037 and $( 997 ) for the years ended December 31, 2022, 2021 and 2020, respectively.

STONERIDGE, INC.

2 unchanged sentences

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

These foreign currency transaction losses (gains), including the impact of hedging activities, were $ 2,037 , $( 997 ) and $ 372 for the years ended December 31, 2021, 2020 and 2019, respectively.

Revenue Recognition and Sales Commitments

17 unchanged sentences

These accruals are based on several factors including past experience, production changes, industry developments and various other considerations.

Our estimate is based on historical trends of units sold and claim payment amounts, combined with our current understanding of the status of existing claims and discussions with our customers.

The key factors in our estimate are the stated or implied warranty period, the customer source, customer policy decisions regarding warranties and customers seeking to holding the Company responsible for their product warranties.

Our estimate is based on historical trends of units sold and claim payment amounts, combined with our current understanding of the status of existing claims, forecasts of the resolution of existing claims, expected future claims on products sold and commercial discussions with our customers.

The key factors in our estimate are the warranty period and the customer source.

The Company can provide no assurances that it will not experience material claims or that it will not incur significant costs to defend or settle such claims beyond the amounts accrued.

9 unchanged sentences

Product warranty and recall at end of period $ 13,477 $ 9,846

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Design and Development Costs

4 unchanged sentences

The Company incurred and was reimbursed for contracted research and development costs of $ 23,784 , $ 15,849 and $ 19,302 for the years ended December 31, 2022, 2021 and 2020, respectively.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Share-Based Compensation

11 unchanged sentences

The Company accounts for Common Shares held in treasury under the cost method (applied on a FIFO basis) and includes such shares as a reduction of total shareholders’ equity.

Earnings (Loss) Per Share

Basic earnings (loss) per share was computed by dividing net income (loss) by the weighted-average number of Common Shares outstanding for each respective period.

Diluted earnings per share was calculated by dividing net income (loss) by the weighted-average of all potentially dilutive Common Shares that were outstanding during the periods presented.

(Loss) Earnings Per Share

Basic (loss) earnings per share was computed by dividing net (loss) income by the weighted-average number of Common Shares outstanding for each respective period.

Diluted earnings per share was calculated by dividing net (loss) income by the weighted-average of all potentially dilutive Common Shares that were outstanding during the periods presented.

However, for all periods in which the Company recognized a net loss, the Company did not recognize the effect of the potential dilutive securities as their inclusion would be anti-dilutive.

Potential dilutive shares of 372,937 for the year ended December 31, 2020 were excluded from diluted loss per share because the effect would have been anti-dilutive.

Actual weighted-average Common Shares outstanding used in calculating basic and diluted net income per share were as follows:

Potential dilutive shares of 232,458 and 372,937 for the years ended December 31, 2022 and December 31, 2020, respectively, were excluded from diluted loss per share because the effect would have been anti-dilutive.

Actual weighted-average Common Shares outstanding used in calculating basic and diluted net (loss) income per share were as follows:

Year ended December 31, 2022 2021 2020

2 unchanged sentences

Diluted weighted-average Common Shares outstanding 27,258,456 27,415,534 27,024,571

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

There were 767,593 , 580,116 and 752,784 performance-based right to receive Common Shares outstanding at December 31, 2022, 2021 and 2020.

3 unchanged sentences

Deferred financing cost amortization and debt discount accretion, for the years ended December 31, 2022, 2021 and 2020 was $ 1,051 , $ 643 and $ 506 , respectively, and is included as a component of interest expense, net in the consolidated statements of operations.

In 2019, the Company capitalized $ 1,366 of deferred financing costs as a result of entering into the 2019 Credit Facility.

In connection with the 2019 Credit Facility, the Company wrote off a portion of the previously recorded deferred financing costs of $ 275 in interest expense, net during the year ended December 31, 2019.

In 2020, the Company capitalized an additional $ 1,079 of deferred financing costs as a result of entering into Amendment No.

In 2020, the Company capitalized $ 1,086 of deferred financing costs as a result of entering into Amendment No.

1 to the Credit Facility.

In 2022, the Company capitalized $ 484 of deferred financing costs as a result of entering into Amendment No.

3 to the Credit Facility.

In connection with Amendment No.

3, the Company wrote off a portion of the previously recorded deferred financing costs of $ 365 in interest expense, net during the year ended December 31, 2022.

See Note 5 to the consolidated financial statements for additional details regarding the Credit Facility and related deferred financing costs.

1 unchanged sentence

Deferred financing costs, net, were $ 996 and $ 1,563 , as of December 31, 2022 and 2021, respectively.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Equity and Changes in Accumulated Other Comprehensive Loss by Component

6 unchanged sentences

The remaining $ 10,000 of the Prepayment Amount was recorded as a reduction to shareholders’ equity as an unsettled forward contract indexed to our Common Shares.

The Company excluded the potential share impact of the remaining shares from the computation of diluted earnings per share as these Common Shares are anti-dilutive for year ended December 31, 2019.

On February 25, 2020, the Bank notified the Company that it terminated early its commitment pursuant the ASR Agreement and would deliver 364,604 Common Shares on February 27, 2020 based on the volume weighted average price of our Common Shares during the term set forth in the ASR Agreement.

The Bank’s notice of early termination and the subsequent delivery of Common Shares represents the final settlement of the Company’s share repurchase program pursuant to the accelerated share repurchase agreement.

The Bank’s notice of early termination and the subsequent delivery of Common Shares represented the final settlement of the Company’s share repurchase program pursuant to the accelerated share repurchase agreement.

These Common Shares became treasury shares and were recorded as a $ 10,000 reduction to shareholders’ equity as Common Shares held in treasury with the offset of $ 10,000 to additional paid-in capital.

2 unchanged sentences

Repurchases could also be made under Rule 10b-18 plans, which permit Common Shares to be repurchased through pre-determined criteria.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

On March 3, 2020, under the new repurchase program the Company entered into a 10b-18 Agreement Letter (the “10b-18 Agreement”), with the Bank to purchase Company Common Shares, under purchasing conditions of Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 10b-18”), for up to $ 5,000 .

2 unchanged sentences

In April 2020, the Company announced that it was temporarily suspending the share repurchase program in response to uncertainty surrounding the duration and magnitude of the impact of COVID-19.

The 2020 repurchase program authorization expired during the third quarter of 2021 and no additional shares will be repurchased under this program.

This repurchase program authorization expired during the third quarter of 2021 and no additional shares were repurchased.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss for the years ended December 31, 2022 and 2021 were as follows:

on derivatives

translation Unrealized

on derivatives Total

Balance at January 1, 2022 $ ( 97,203 ) $ 179 $ ( 97,024 )

4 unchanged sentences

Balance at January 1, 2021 $ ( 88,795 ) $ ( 840 ) $ ( 89,635 )

Other comprehensive income (loss) before reclassifications

Other comprehensive (loss) income before reclassifications ( 8,408 ) 859 ( 7,549 )

Amounts reclassified from accumulated other comprehensive loss — 160 160

Net other comprehensive income (loss), net of tax

Net other comprehensive (loss) income, net of tax ( 8,408 ) 1,019 ( 7,389 )

Balance at December 31, 2021 $ ( 97,203 ) $ 179 $ ( 97,024 )

14 unchanged sentences

The adoption of this standard did not have an impact on the Company’s consolidated results of operations and cash flows.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Recently Issued Accounting Standards Not Yet Adopted as of December 31, 2022

7 unchanged sentences

generally this occurs with the transfer of control of our products and services, which is usually when the parts are shipped or delivered to the customer’s premises.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.

Revenue is measured as the amount of consideration we expect to receive in exchange for

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

transferring goods or providing services.

The transaction price will include estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur.

Incidental items that are not significant in the context of the contract are recognized as expense.

The expected costs associated with our base warranties continue to be recognized as expense when the products are sold.

The expected costs associated with our base warranties are recognized as expense when the products are sold.

Customer returns only occur if products do not meet the specifications of the contract and are not connected to any repurchase obligations of the Company.

7 unchanged sentences

This segment includes product lines such as actuators, sensors, switches and connectors.

We sell these products principally to the automotive market in the North American, European, and Asia Pacific regions.

To a lesser extent, we also sell these products to the commercial vehicle and agricultural markets in the North American, European and Asia Pacific regions.

We sell these products principally to the automotive market in the North American and Asia Pacific regions.

To a lesser extent, we also sell these products to the commercial vehicle and agricultural markets in the North American and Asia Pacific regions.

Our customers included in these markets primarily consist of original equipment manufacturers (“OEM”) and companies supplying components directly to the OEMs (“Tier 1 supplier”).

Our Electronics segment designs and manufactures driver information systems, camera-based vision systems, connectivity and compliance products and electronic control units.

Our Electronics segment designs and manufactures driver information systems, vision and safety systems, connectivity and compliance products and electronic control units.

These products are sold principally to the commercial vehicle market primarily through our OEM and aftermarket channels in the European, North American and Asia Pacific regions.

The camera-based vision systems and related products are sold principally to the commercial vehicle and off-highway vehicle markets in the European and North American regions.

The vision and safety systems are sold principally to the commercial vehicle and off-highway vehicle markets in the European and North American regions.

Stoneridge Brazil.

Our Stoneridge Brazil segment (“SRB”) primarily serves the South American region and specializes in the design, manufacture and sale of vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, in-vehicle audio and infotainment devices and telematics solutions.

Stoneridge Brazil sells its products through the aftermarket distribution channel, to factory authorized dealer installers, also referred to as original equipment services, directly to OEMs and through mass merchandisers.

In addition, monitoring services and tracking devices are sold directly to corporate customers and individual consumers.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following tables disaggregate our revenue by reportable segment and geographical location (1) for the periods ended December 31, 2022, 2021 and 2020:

Control Devices

Stoneridge Brazil

Control Devices Electronics Stoneridge Brazil Consolidated

Year ended December 31, 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020

1 unchanged sentence

South America — — — — — — 52,230 56,777 47,663 52,230 56,777 47,663

Europe — 12,681 29,679 347,129 248,468 184,579 — — — 347,129 261,149 214,258

Asia Pacific 50,788 60,569 50,930 4,848 5,023 4,627 — — — 55,636 65,592 55,557

Total net sales $ 342,596 $ 355,775 $ 342,576 $ 505,097 $ 357,910 $ 257,767 $ 52,230 $ 56,777 $ 47,663 $ 899,923 $ 770,462 $ 648,006

4 unchanged sentences

The performance obligation does not exist until a customer release is received for a specific number of parts.

The majority of the parts sold to OEM and Tier 1 supplier customers are customized to the specific customer, with the exception of camera-based vision systems (“CMS”) that are common across all customers (CMS for OEMs are customized but sales are not yet material).

The majority of the parts sold to OEM and Tier 1 supplier customers are customized to the specific customer, with the exception of camera monitoring systems (“CMS”) sold through our aftermarket channel that are common across all customers.

The transaction price is equal to the contracted price per part and there is no expectation of material variable consideration in the transaction price.

2 unchanged sentences

Certain customer contracts contain an enforceable right to payment if the customer terminates the contract for convenience and therefore are recognized over time using the cost to complete input method.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Our aftermarket products are focused on meeting the demand for repair and replacement parts, compliance parts and accessories and are sold primarily to aftermarket distributors and mass retailers in our South American, European and North American markets.

12 unchanged sentences

The Company had no material contract assets, contract liabilities or capitalized contract acquisition costs as of December 31, 2022 or 2021.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Minda Stoneridge Instruments Ltd.

2 unchanged sentences

The investment was accounted for under the equity method of accounting.

The Company’s investment in MSIL, recorded as a component of investments and other long-term assets, net on the consolidated balance sheets, was $ 13,547 as of December 31, 2020.

The Company’s investment in MSIL, recorded as a component of investments and other long-term assets, net on the consolidated balance sheet as of December 31, 2020 was $ 13,547 .

Equity in earnings of MSIL included in the consolidated statements of operations were $ 1,776 and $ 1,477 for the years ended December 31, 2021 and 2020, respectively.

2 unchanged sentences

On May 16, 2017, the Company acquired the remaining 26 % noncontrolling interest in Stoneridge Brazil.

As part of the acquisition agreement, the Company will be required to pay additional earn-out consideration based on Stoneridge Brazil’s financial performance in 2021.

The final earn-out consideration of $ 7,351 will be paid in the second quarter of 2022.

As part of the acquisition agreement, the Company was required to pay additional earn-out consideration based on Stoneridge Brazil’s financial performance in 2021.

The final earn-out consideration of $ 8,272 was paid in the second quarter of 2022.

See Note 10 for the fair value and foreign currency adjustments of the earn-out consideration for the current and prior periods.

4 unchanged sentences

The Company’s $ 10,000 investment in the Autotech Fund II will be contributed over the expected ten year life of the fund.

The Company contributed $ 3,450 to and received $ 251 in distributions from the Autotech Fund II during the year ended December 31, 2021.

The Company contributed $ 950 to the Autotech Fund II during the year ended December 31, 2022.

The Company contributed $ 3,450 to and received $ 251 in distributions from the Autotech Fund II during the year ended December 31, 2021.

The Company has a 6.5 % interest in Autotech Fund II.

The Company recognized earnings of $ 1,882 and $ 59 during the years ended December 31, 2021 and 2020, respectively.

The Autotech Fund II investment recorded in investments and other long-term assets, net in the consolidated balance sheet was $ 8,517 and $ 3,436 as of December 31, 2021 and 2020, respectively.

Interest rates at

The Company recognized loss (earnings) of $ 823 , $( 1,882 ) and $( 59 ) during the years ended December 31, 2022, 2021 and 2020, respectively.

The Autotech Fund II investment recorded in investments and other long-term assets, net in the consolidated balance sheets was $ 8,644 and $ 8,517 as of December 31, 2022 and 2021, respectively.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

2022 December 31,

2021 Interest rates at

December 31, 2022 Maturity

Revolving Credit Facility

Credit Facility

Stoneridge Brazil short-term obligations

Credit Facility $ 167,802 $ 163,957 6.29 % June 2024

Sweden short-term credit line — 2,099

Suzhou short-term credit line

4.00 % - 4.30 %

May 2022 - October 2022

Suzhou short-term credit line 1,450 3,149 3.70 % June 2023

Total debt 1,450 5,248

current portion ( 1,450 ) ( 5,248 )

Total long-term debt, net $ — $ —

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Revolving Credit Facility

On June 5, 2019, the Company entered into the Fourth Amended and Restated Credit Agreement (the “Credit Facility”).

The Credit Facility provides for a $ 400,000 senior secured revolving credit facility and it replaced and superseded the Third Amended and Restated Credit Agreement that provided for a $ 300,000 revolving credit facility.

The Credit Facility has an accordion feature which allows the Company to increase the availability by up to $ 150,000 upon the satisfaction of certain conditions and includes a letter of credit subfacility, swing line subfacility and multicurrency subfacility.

The Credit Facility provided for a $ 400,000 senior secured revolving credit facility (which, as described below in the discussion of Amendment No.

3 to the Credit Facility was amended to be a $ 300,000 credit commitment) and it replaced and superseded the Third Amended and Restated Credit Agreement that provided for a $ 300,000 revolving credit facility.

The Credit Facility had an accordion feature which allowed the Company to increase the availability by up to $ 150,000 upon the satisfaction of certain conditions and includes a letter of credit subfacility, swing line subfacility and multicurrency subfacility.

The Credit Facility has a termination date of June 5, 2024 .

7 unchanged sentences

Amendment No.

1 provided for certain covenant relief and restrictions during the “Covenant Relief Period” (the period ending on the date that the Company delivers a compliance certificate for the quarter ending June 30, 2021 in form and substance satisfactory to the administrative agent).

1 provided for certain covenant relief and restrictions during the “Covenant Relief Period” (the period ending on the date that the Company delivered a compliance certificate for the quarter ending June 30, 2021 in form and substance satisfactory to the administrative agent).

The Covenant Relief Period ended on August 14, 2021.

7 unchanged sentences

• a Permitted Acquisition (as defined) could not be consummated unless otherwise approved in writing by the required lenders.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Amendment No.

1 unchanged sentence

As of December 31, 2022, Specified Hedge Borrowings were $ 50,000 .

The Company capitalized an additional $ 1,086 of deferred financing costs as a result of entering into Amendment No.

The Company capitalized $ 1,086 of deferred financing costs as a result of entering into Amendment No.

On December 17, 2021, the Company entered into Amendment No.

2 unchanged sentences

2 implemented non-LIBOR interest reference rates for borrowings in euros and British pounds.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Due to the ongoing impacts of the COVID-19 pandemic and supply chain disruptions on the Company’s end-markets and the resulting financial impacts on the Company, on February 28, 2022, the Company entered into Amendment No.

1 unchanged sentence

Amendment No.

3 reduces the total revolving credit commitments from $ 400.0 million to $ 300.0 million and the maximum permitted amount of swing loans from $ 40.0 million to $ 30.0 million.

3 reduced the total revolving credit commitments from $ 400.0 million to $ 300.0 million and the maximum permitted amount of swing loans from $ 40.0 million to $ 30.0 million.

Amendment No.

1 unchanged sentence

During the Specified Period:

● the maximum net leverage ratio is changed to 4.0 x for the year ended December 31, 2021, suspended for the quarters ending March 31, 2022 through September 30, 2022 and cannot exceed 4.75 to 1.00 for the quarter ended December 31, 2022 or 3.50 to 1.00 for the quarter ended March 31, 2023;

● the minimum interest coverage ratio of 3.50 is reduced to 2.50 for the quarter ended March 31, 2022, 2.25 for the quarter ended June 30, 2022 and 3.00 for the quarters ended September 30, 2022 and December 31, 2022;

• the maximum net leverage ratio was changed to 4.00 to 1.00 for the year ended December 31, 2021, suspended for the quarters ending March 31, 2022 through September 30, 2022 and could not exceed 4.75 to 1.00 for the quarter ended December 31, 2022 or 3.50 to 1.00 for the quarter ended March 31, 2023;

• the minimum interest coverage ratio of 3.50 was reduced to 2.50 for the quarter ended March 31, 2022, 2.25 for the quarter ended June 30, 2022 and 3.00 for the quarters ended September 30, 2022 and December 31, 2022;

• an additional condition to drawing on the Credit Facility has been added that restricts borrowings if the Company’s total of 100 % of domestic and 65 % of foreign cash and cash equivalents exceeds $ 70.0 million;

• there are certain additional restrictions on Restricted Payments (as defined);

● a Permitted Acquisition (as defined) may not be consummated unless the net leverage ratio is below 3.50 x during the Specified Period.

• a Permitted Acquisition (as defined) may not be consummated unless the net leverage ratio is below 3.50 to 1.00 during the Specified Period.

Amendment No.

2 unchanged sentences

3 also incorporates hardwired mechanics to permit a future replacement of LIBOR as the interest reference rate without lender consent.

The Company capitalized $ 484 of deferred financing costs as a result of entering into Amendment No.

In connection with Amendment No.

3, the Company wrote off a portion of the previously recorded deferred financing costs of $ 365 in interest expense, net during the year ended December 31, 2022.

Due to continued supply chain disruptions and macroeconomic challenges on the Company’s end-markets and the resulting financial impacts on the Company, on March 1, 2023, the Company entered into Amendment No.

4 to the Fourth Amended and Restated Credit Agreement (“Amendment No.

Amendment No.

4 provides for certain financial covenant relief and additional covenant restrictions during the “Amendment No.

4 Specified Period” (the period from March 1, 2023 until the date that the Company delivers a compliance certificate for the quarter ending September 30, 2023 in form and substance satisfactory to the administrative agent).

During the Amendment No.

4 Specified Period:

• the maximum net leverage ratio was changed to 4.75 to 1.00 for the quarter ended March 31, 2023 and 4.25 to 1.00 for the quarter ended June 30, 2023;

• the minimum interest coverage ratio of 3.50 was reduced to 3.00 for the quarters ended March 31, 2023 and June 30, 2023;

• drawing on the Credit Facility continues to be restricted if the Company’s total of 100 % of domestic and 65 % of foreign cash and cash equivalents exceeds $ 70.0 million;

• there continue to be certain additional restrictions on Restricted Payments (as defined);

• consistent with Amendment No.

3, a Permitted Acquisition (as defined) may not be consummated unless the net leverage ratio is below 3.50 to 1.00 during the Amendment No.

4 Specified Period.

Borrowings outstanding on the Credit Facility were $ 167,802 and $ 163,957 at December 31, 2022 and 2021, respectively.

The Company was in compliance with all credit facility covenants at December 31, 2021, as a result of Amendment No.

3, and at December 31, 2020.

As a result of the amendments, the Company was in compliance with all credit facility covenants at December 31, 2022 and 2021.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company also had outstanding letters of credit of $ 1,626 and $ 1,698 at December 31, 2022 and 2021, respectively.

Stoneridge Brazil maintained short-term notes used for working capital purposes during 2021 and 2020 which had fixed or variable interest rates.

There were no borrowings outstanding on these notes at December 31, 2021.

The Company’s wholly-owned subsidiary located in Sweden, has an overdraft credit line which allows overdrafts on the subsidiary’s bank account up to a daily maximum level of 20,000 Swedish krona, or $ 2,213 and $ 2,435 at December 31, 2021 and 2020, respectively.

At December 31, 2021 there was 18,973 Swedish krona, or $ 2,099 , outstanding on this overdraft credit line.

The Company’s wholly-owned subsidiary located in Stockholm, Sweden, has an overdraft credit line which allows overdrafts on the subsidiary’s bank account up to a daily maximum level of 20,000 Swedish krona, or $ 1,922 and $ 2,213 at December 31, 2022 and 2021, respectively.

At December 31, 2022 there were no borrowings outstanding on this overdraft credit line.

At December 31, 2021, there was 18,973 Swedish krona, or $ 2,099 , outstanding on this overdraft credit line.

During the year ended December 31, 2022, the subsidiary borrowed 380,652 Swedish krona, or $ 36,574 , and repaid 399,625 Swedish krona, or $ 38,397 .

The Company’s wholly-owned subsidiary located in Suzhou, China, has two credit lines (the “Suzhou credit line”) which allow up to a maximum borrowing level of 50,000 Chinese yuan, or $ 7,871 and $ 7,663 at December 31, 2021 and 2020, respectively.

The Company’s wholly-owned subsidiary located in Suzhou, China (the "Suzhou subsidiary"), has lines of credit (the “Suzhou credit line”) which allow up to a maximum borrowing level of 20,000 Chinese yuan, or $ 2,900 at December 31, 2022 and 50,000 Chinese yuan, or $ 7,871 at December 31, 2021.

At December 31, 2022 and 2021 there was $ 1,450 and $ 3,149 , respectively, in borrowings outstanding on the Suzhou credit line with weighted-average interest rates of 3.70 % and 4.15 %, respectively.

1 unchanged sentence

In addition, the Suzhou subsidiary has a bank acceptance draft line of credit which facilitates the extension of trade payable payment terms by 180 days.

This bank acceptance draft line of credit allows up to a maximum borrowing level of 15,000 Chinese yuan, or $ 2,361 and $ 2,299 , at December 31, 2021 and 2020, respectively.

The bank acceptance draft line of credit allows up to a maximum borrowing level of 60,000 Chinese yuan, or $ 8,699 at December 31, 2022 and 15,000 Chinese yuan, or $ 2,361 , at December 31, 2021.

There was $ 1,998 and $ 2,182 utilized on the Suzhou bank acceptance draft line of credit at December 31, 2022 and 2021, respectively.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Suzhou bank acceptance draft line of credit is included on the consolidated balance sheet within accounts payable.

At December 31, 2022, the future maturities of the Credit Facility and debt were as follows:

Year ended December 31,

Total $ 169,252

The income tax expense (benefit) included in the accompanying consolidated statement of operations represents federal, state and foreign income taxes.

The components of income (loss) before income taxes and the (benefit) provision for income taxes consist of the following:

The components of (loss) income before income taxes and the provision (benefit) for income taxes consist of the following:

Year ended December 31, 2022 2021 2020

Income before income taxes:

Total income before income taxes

Provision for income taxes:

(Loss) income before income taxes:

Domestic $ ( 11,944 ) $ 11,596 $ ( 25,403 )

Foreign 1,248 840 14,679

Total (loss) income before income taxes $ ( 10,696 ) $ 12,436 $ ( 10,724 )

Provision (benefit) for income taxes:

Federal $ 435 $ — $ ( 3 )

State and foreign 8,035 9,542 5,182

Total current expense $ 8,470 $ 9,542 $ 5,179

Federal $ ( 3,282 ) $ 714 $ ( 8,512 )

State and foreign ( 1,828 ) ( 1,226 ) 559

Total deferred benefit ( 5,110 ) ( 512 ) ( 7,953 )

Total income tax expense

Total income tax expense (benefit) $ 3,360 $ 9,030 $ ( 2,774 )

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

A summary of the differences between the statutory federal income tax rate of 21.0% and the consolidated provision for income taxes is shown below.

1 unchanged sentence

Statutory U.S.

federal income tax provision (benefit)

federal income tax (benefit) provision $ ( 2,246 ) $ 2,612 $ ( 2,252 )

State income taxes, net of federal tax benefit 495 942 ( 647 )

6 unchanged sentences

Unremitted earnings on foreign subsidiaries ( 898 ) 835 86

Non-deductible expenses 657 740 498

Compensation and benefits 774 358 362

Other 409 ( 649 ) ( 560 )

Provision (benefit) for income taxes $ 3,360 $ 9,030 $ ( 2,774 )

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Significant components of the Company’s deferred tax assets and liabilities were as follows:

1 unchanged sentence

Deferred tax assets:

Inventories $ 1,479 $ 1,692

Employee compensation and benefits 2,078 2,420

3 unchanged sentences

Tax credit carryforwards 20,802 24,173

Capitalized research and development 4,785 —

Lease liability 2,817 3,712

Other 1,213 647

Gross deferred tax assets 58,827 51,360

5 unchanged sentences

Right-of-use-assets ( 2,595 ) ( 3,493 )

Other ( 4,991 ) ( 5,021 )

Gross deferred tax liabilities ( 19,680 ) ( 21,516 )

Net deferred tax assets $ 20,651 $ 15,328

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The balance sheet classification of our net deferred tax asset is shown below:

6 unchanged sentences

Based on the Company’s review of both positive and negative evidence regarding the realizability of deferred tax assets at December 31, 2022, a valuation allowance is recorded against certain deferred tax assets based upon the conclusion that it was more likely than not they would not be realized.

Certain deferred tax assets are dependent on future taxable income to be realized.

The Company has net operating loss carry forwards of $ 48,430 and $ 73,553 for state and foreign tax jurisdictions, respectively.

The state net operating losses expire from 2030 - 2041 or have indefinite lives and the foreign net operating losses expire from 2022 - 2026 or have indefinite lives.

The state net operating losses expire from 2023-2041 and the foreign net operating losses expire from 2023-2027 or have indefinite lives.

The Company has general business and foreign tax credit carry forwards of $ 19,055 , $ 1,083 and $ 664 for U.S.

1 unchanged sentence

federal general business credits, if unused, begin to expire in 2026, and the state and foreign tax credits expire at various times.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following is a reconciliation of the Company’s total gross unrecognized tax benefits:

2022 2021 2020

Balance as of January 1 $ 2,891 $ 3,449 $ 3,449

Tax positions related to the current year:

Additions — — —

Tax positions related to the prior years:

Reductions — — —

Expirations of statutes of limitation ( 346 ) ( 558 ) —

Balance as of December 31 $ 2,545 $ 2,891 $ 3,449

At December 31, 2021, the Company has classified $ 2,891 as a reduction to non-current deferred income tax assets.

The Company has classified its uncertain tax positions as a reduction to non-current deferred income tax assets.

If the Company’s tax positions are sustained by the taxing authorities in favor of the Company, the amount that would affect the Company’s effective tax rate is approximately $ 2,545 and $ 2,891 at December 31, 2022 and 2021, respectively.

The Company classifies interest expense and, if applicable, penalties which could be assessed related to unrecognized tax benefits as a component of income tax expense.

For the years ended December 31, 2021, 2020 and 2019, the Company recognized approximately $ 0 , $ 0 and $( 5 ) of gross interest and penalties, respectively.

For the years ended December 31, 2022, 2021 and 2020, the Company recognized no expense related to interest and penalties.

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act of 2022, which, among other things, implemented a 15% minimum tax on financial statement income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy.

Based on its current analysis of the provisions, the Company does not believe this legislation will have a material impact on our results of operations, but the Company is continuing to evaluate the implications.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company conducts business globally and, as a result, files income tax returns in the U.S.

2 unchanged sentences

The following table summarizes the open tax years for each jurisdiction:

Open Tax Years

Jurisdiction Open Tax Years

Federal 2017 - 2022

Argentina 2017 - 2022

Brazil 2015 - 2022

China 2018 - 2022

France 2019 - 2022

Germany 2019 - 2022

Italy 2017 - 2022

Mauritius 2019 - 2022

Mexico 2017 - 2022

Netherlands 2018 - 2022

Sweden 2017 - 2022

United Kingdom 2021 - 2022

7 unchanged sentences

For these short-term leases, the Company recognizes the lease payments in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the leases identified, right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

12 unchanged sentences

Total lease cost $ 6,279 $ 6,977

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Balance sheet information related to leases is as follows:

6 unchanged sentences

As of December 31, 2022

Thereafter 1,979

Total future minimum lease payments $ 16,547

5 unchanged sentences

Weighted-average discount rate 5.67 % 5.56 %

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Other information:

14 unchanged sentences

The amendment to the 2016 Plan brought the total Common Shares available for issuance to 2,900,000 .

Under the 2016 Plan, as of December 31, 2021, the Company has granted 2,261,121 share units, of which 911,616 were time-based with cliff vesting using the straight-line method and 1,349,505 were performance-based.

Under the 2016 Plan, as of December 31, 2022, the Company has granted 2,905,947 share units, of which

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1,194,460 were time-based with cliff vesting using the straight-line method and 1,711,487 were performance-based.

As of December 31, 2022, 871,369 of the shares granted have been forfeited.

There are 865,422 shares available to be granted under the 2016 Plan at December 31, 2022.

In 2022, 2021 and 2020, pursuant to the 2016 Plan, the Company granted time-based share units and performance-based performance shares.

The time-based share units cliff vest three years after the date of grant.

The majority of the time-based share units cliff vest three years after the date of grant.

The performance-based performance shares vest and are no longer subject to forfeiture upon the recipient remaining an employee of the Company for three years from the date of grant and, for a portion of the annual awards, upon the Company attaining certain targets of performance measured against a peer group’s three year performance in terms of total shareholder return and, for the remaining portion of the annual awards, upon achieving certain earnings per share targets and return on invested capital targets established by the Company during the performance period of the award.

The allocation of performance shares granted between total shareholder return, earnings per share and return on invested capital were as follows for the years ended December 31:

2022 2021 2020

Total shareholder return 45 % 45 % 45 %

4 unchanged sentences

In May 2018, the Company’s shareholders approved the 2018 Amended and Restated Director’s Restricted Shares Plan (the "2018 Director Share Plan") to increase the number of shares for issuance by 150,000 to 850,000 .

In May 2022, the Company's shareholders approved Amendment No.

1 to the 2018 Director Share Plan to increase the number of shares for issuance by 100,000 to 950,000 .

Under the 2018 Director Share Plan, the Company has cumulatively issued 797,011 restricted Common Shares.

1 unchanged sentence

Shares issued annually under the 2018 Director Share Plan are no longer subject to forfeiture one year after the date of grant.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Share Units and Performance Shares

4 unchanged sentences

The awards that use earnings per share and return on invested capital as the performance target are expensed beginning when it is probable that the Company will meet the underlying performance condition.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

A summary of the status of the Company’s non-vested share units and performance shares as of December 31, 2022 and the changes during the year then ended, are presented below:

Time-based awards

Performance-based awards

Time-based awards Performance-based awards

Share units Weighted-

average grant

date fair value Performance

shares Weighted-

average grant

date fair value

Non-vested as of December 31, 2020

Non-vested as of January 1, 2022 450,331 $ 26.55 578,985 $ 28.42

Granted 335,044 $ 18.71 361,982 $ 20.64

Vested ( 168,222 ) $ 27.12 ( 2,317 ) $ 22.70

Forfeited or cancelled ( 46,350 ) $ 20.17 ( 171,058 ) $ 31.75

1 unchanged sentence

A summary of the status of the Company’s non-vested share units and performance shares as of December 31, 2021 and the changes during the year then ended, are presented below:

Time-based awards

Performance-based awards

Time-based awards Performance-based awards

Share units Weighted-

average grant

date fair value Performance

shares Weighted-

average grant

date fair value

Non-vested as of December 31, 2019

Non-vested as of January 1, 2021 502,728 $ 21.89 752,783 $ 24.32

Granted 202,599 $ 35.13 215,936 $ 43.34

Vested ( 159,755 ) $ 22.52 ( 126,242 ) $ 29.61

Forfeited or cancelled ( 95,241 ) $ 26.96 ( 263,492 ) $ 28.35

5 unchanged sentences

As noted above, the Company has issued and outstanding performance-based share units that use different performance targets (total shareholder return, earnings per share and return on invested capital).

The excess tax benefit realized from the vesting of share units and performance shares of the share-based payment arrangements was $ 563 , $ 46 and $ 1,289 for the years ended December 31, 2021, 2020 and 2019, respectively.

The excess tax deficiency (benefit) realized from the vesting of share units and performance shares of the share-based payment arrangements was $ 543 , $( 563 ) and $( 46 ) for the years ended December 31, 2022, 2021 and 2020, respectively.

Employee Benefit Plans

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company has certain defined contribution profit sharing and 401(k) plans covering substantially all of its employees in the United States and Europe.

8 unchanged sentences

Derivative Instruments and Hedging Activities

On December 31, 2021, the Company had open Mexican peso-denominated foreign currency forward contracts and net investment hedges of our euro-denominated subsidiary.

On December 31, 2022, the Company had no open foreign currency forward contracts.

The Company used foreign currency forward contracts solely for hedging and not for speculative purposes during 2022 and 2021.

Management believes that its use of these instruments to reduce risk is in the Company’s best interest.

The counterparties to these financial instruments are financial institutions with investment grade credit ratings.

Management believes that its

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

use of these instruments to reduce risk is in the Company’s best interest.

The counterparties to these financial instruments have been financial institutions with investment grade credit ratings.

Foreign Currency Exchange Rate Risk

2 unchanged sentences

Net Investment Hedges

During 2021 the Company entered into two cross-currency swaps, designated as net investment hedges, with notional values of $ 25,000 each and maturities in August 2026 and August 2028 .

These swaps hedge a portion of the net investment in a certain euro-denominated subsidiary.

The Company has elected to assess hedge effectiveness under the spot method.

Accordingly, periodic changes in the fair value of the derivative instruments attributable to factors other than spot exchange rate variability are excluded from the measurement of hedge ineffectiveness and reported directly in earnings each reporting period.

The change in fair value of these derivative instruments is recorded in cumulative translation adjustment, which is a component of accumulated other comprehensive loss in the consolidated balance sheets.

When the related currency translation adjustment is required to be reclassified, usually upon the sale or liquidation of the investment, the gain or loss included in accumulated other comprehensive loss is recorded in earnings and reflected in other expense (income), net in the consolidated statements of operations.

Upon settlement, cash flows attributable to derivatives designated as net investment hedges will be classified as investing activities in the consolidated statements of cash flows.

During 2021, the Company entered into two cross-currency swaps, designated as net investment hedges, with notional values of $ 25,000 each that were scheduled to mature in August 2026 and August 2028.

These swaps hedged a portion of the net investment in a euro-denominated subsidiary.

As a result of favorable market conditions, on May 5, 2022, the Company unwound the two net investment hedges and recognized a net gain of $ 3,716 , which was recorded on the Company’s consolidated statement of operations as a component of other expense, net for the second quarter ended June 30, 2022 .

The cash received from the settlement of these swaps of $ 3,820 was classified in investing activities in the consolidated statement of cash flows.

In the fourth quarter ended December 31, 2022, the Company determined it had incorrectly recognized the net gain in the consolidated statement of operations and reclassified the net gain of $ 3,716 to other comprehensive (loss) income, net of tax and accumulated other comprehensive loss.

This item would have increased the loss for the three-months ended June 30, 2022, six-months ended June 30, 2022 and nine-months ended September 30, 2022 by $ 0.10 per share and recording the item in the three-months ended December 31, 2022 decreased the income per share by $ 0.10 .

The Company assessed the materiality of this matter from a qualitative and quantitative perspective and concluded that the impact of the error is not material to the current or previous quarterly results.

The Company elected to assess hedge effectiveness of the net investment hedges under the spot method.

Accordingly, periodic changes in the fair value of the derivative instruments attributable to factors other than spot exchange rate variability were excluded from the measurement of hedge ineffectiveness and reported directly in earnings each reporting period.

The change in fair value of these derivative instruments was recorded in cumulative translation adjustment, which is a component of accumulated other comprehensive loss in the consolidated balance sheets.

The Company had no outstanding net investment hedges as of December 31, 2022.

Cash Flow Hedges

The Company entered into foreign currency forward contracts to hedge the euro and Mexican peso currencies during 2020 and the Mexican peso currency during 2021.

The Company entered into foreign currency forward contracts to hedge the Mexican peso currency in 2022 and 2021.

These forward contracts were executed to hedge forecasted transactions and have been accounted for as cash flow hedges.

As such, gains and losses on derivatives qualifying as cash flow hedges are recorded in accumulated other comprehensive income, to the extent that hedges are effective, until the underlying transactions are recognized in earnings.

Unrealized amounts in accumulated other comprehensive income will fluctuate based on changes in the fair value of hedge derivative contracts at each reporting period.

As such, gains and losses on derivatives qualifying as cash flow hedges are recorded in accumulated other comprehensive loss, to the extent that hedges are effective, until the underlying transactions are recognized in earnings.

Unrealized amounts in accumulated other comprehensive loss will fluctuate based on changes in the fair value of hedge derivative contracts at each reporting period.

The cash flow hedges were highly effective.

The effectiveness of the transactions has been and will be measured on an ongoing basis using regression analysis and forecasted future purchases of the currency.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

In certain instances, the foreign currency forward contracts may not qualify for hedge accounting or are not designated as hedges and, therefore, are marked-to-market with gains and losses recognized in the Company’s consolidated statements of operations as a component of other expense (income), net.

At December 31, 2021, all of the Company’s foreign currency forward contracts were designated as cash flow hedges.

During 2022, all of the Company’s foreign currency forward contracts were designated as cash flow hedges.

The Company’s foreign currency forward contracts offset a portion of the gains and losses on the underlying foreign currency denominated transactions as follows:

4 unchanged sentences

Mexican peso-denominated Foreign Currency Forward Contracts – Cash Flow Hedges

The Company holds Mexican peso-denominated foreign currency forward contracts with a notional amount at December 31, 2021 of $ 23,923 which expire ratably on a monthly basis from January 2022 to December 2022.

The notional amount at December 31, 2020 related to Mexican peso-denominated foreign currency forward contracts was $ 1,242 .

The Company evaluated the effectiveness of the Mexican peso-denominated foreign currency forward contracts held as of December 31, 2021 and the year then ended, and concluded that the hedges were effective.

The Company held Mexican peso-denominated foreign currency forward contracts which expired ratably on a monthly basis from January 2022 to December 2022.

The notional amounts at December 31, 2022 and 2021 related to Mexican peso-denominated foreign currency forward contracts were $ 0 and $ 23,923 , respectively.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Interest Rate Risk

7 unchanged sentences

The difference between amounts to be received and paid under the Swap is recognized as a component of interest expense, net on the consolidated statements of operations.

The swap settlements increased interest expense by $ 651 and $ 433 for the years ended December 31, 2021 and 2020, respectively.

The swap settlements (reduced) increased interest expense, net by $( 156 ), $ 651 and $ 433 for the years ended December 31, 2022, 2021 and 2020, respectively.

The notional amounts and fair values of derivative instruments in the consolidated balance sheets were as follows:

Prepaid expenses

Accrued expenses and

Notional amounts (A)

and other current assets

Prepaid expenses

and other current assets Accrued expenses and

other current liabilities

6 unchanged sentences

Cross-currency swaps $ — $ 50,000 $ — $ 1,450 $ — $ —

_____________________________

(A) Notional amounts represent the gross contract of the derivatives outstanding in U.S.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Gross amounts recorded for the cash flow hedges in other comprehensive (loss) income and in net income (loss) for the years ended December 31 were as follows:

Gain (loss) reclassified from

Gross amounts recorded for the cash flow hedges in other comprehensive (loss) income and in net (loss) income for the years ended December 31 were as follows:

Gain (loss) recorded in other

other comprehensive income

comprehensive income (loss)

(loss) into net income (loss) (A)

comprehensive (loss) income Gain (loss) reclassified from other comprehensive (loss) income into net (loss) income (A)

2022 2021 2020 2022 2021 2020

Derivatives designated as cash flow hedges:

3 unchanged sentences

Cross-currency swaps $ 2,446 $ 1,270 — $ — $ — $ —

(A) Gains (losses) reclassified from comprehensive loss into net income (loss) recognized in COGS in the Company’s consolidated statements of operations for the years ended December 31, 2021, 2020 and 2019 were $ 341 , $( 1,146 ) and $ 695 , respectively.

Gains (losses) reclassified from other comprehensive loss into net income (loss) recognized in D&D in the Company’s consolidated statements of operations were $ 0 , $( 29 ) and $ 125 for the years ended December 31, 2021, 2020 and 2019, respectively.

Gains (losses) reclassified from other comprehensive loss into net income (loss) recognized in SG&A in the Company’s consolidated statements of operations were $ 107 , $( 324 ) and $ 0 for the years ended December 31, 2021, 2020 and 2019, respectively.

Losses reclassified from other comprehensive loss into net income (loss) recognized in interest expense, net in the Company’s consolidated statements of operations were $( 651 ) and $( 433 ) for the years ended December 31, 2021, and 2020, respectively.

For the year ended December 31, 2021, the total net gains on the foreign currency contract cash flow hedges of $ 730 are expected to be included in COGS, SG&A and D&D within the next 12 months.

Of the total net loss on the interest rate swap cash flow hedge, $ 468 of losses are expected to be included in interest expense, net within the next 12 months and $ 35 of losses are expected to be included in interest expense, net in subsequent periods.

_____________________________

(A) Gains (losses) reclassified from comprehensive loss into net (loss) income recognized in COGS in the Company’s consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 were $ 1,572 , $ 341 and $( 1,146 ), respectively.

Gains (losses) reclassified from other comprehensive loss into net (loss) income recognized in D&D in the Company’s consolidated statements of operations were $ 0 , $ 0 and $( 29 ) for the years ended December 31, 2022, 2021 and 2020, respectively.

Gains (losses) reclassified from other comprehensive loss into net (loss) income recognized in SG&A in the Company’s consolidated statements of operations were $ 504 , $ 107 and $( 324 ) for the years ended December 31, 2022, 2021 and 2020, respectively.

Gains (losses)

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

reclassified from other comprehensive loss into net (loss) income recognized in interest expense, net in the Company’s consolidated statements of operations were $ 156 , $( 651 ) and $( 433 ) for the years ended December 31, 2022, 2021 and 2020, respectively.

For the year ended December 31, 2022, the total net gains on the interest rate swap cash flow hedge of $ 294 are expected to be included in interest expense, net within the next 12 months.

Cash flows from derivatives used to manage foreign exchange and interest rate risks are classified as operating activities within the consolidated statements of cash flows.

7 unchanged sentences

Fair values estimated using Level 3 inputs consist of significant unobservable inputs.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of inputs used.

December 31, 2022 2021

Fair values estimated using

value Level 1

inputs Level 2

inputs Level 3

Financial assets carried at fair value:

1 unchanged sentence

Cross-currency swaps — — — — 1,450

Interest rate swap 294 — 294 — —

Total financial assets carried at fair value $ 294 $ — $ 294 $ — $ 2,180

8 unchanged sentences

Foreign currency adjustments 921 ( 527 )

Earn-out consideration cash payment ( 8,272 ) —

Balance at December 31 $ — $ 7,351

The Company will be required to pay the Stoneridge Brazil earn-out consideration based on Stoneridge Brazil’s financial performance in 2021.

The fair value of the Stoneridge Brazil earn-out consideration is based on earnings before interest, depreciation and amortization (“EBITDA”) in 2021 and was based on discounted cash flows utilizing forecasted EBITDA in 2020 using the key inputs of forecasted sales and expected operating income reduced by the market required rate of return.

The earn-out consideration obligation related to Stoneridge Brazil is recorded within accrued expenses and other current liabilities in the consolidated balance sheets as of December 31, 2021 and other long-term liabilities in the consolidated balance sheets as of December 31, 2020.

The change in fair value of the earn-out consideration for Stoneridge Brazil was due to updated financial performance projections and favorable foreign currency translation offset by the reduced time from the current period end to the payment date.

The change in fair value of the Stoneridge Brazil earn-out consideration was recorded in SG&A expense and the foreign currency impact was included in other expense (income), net in the consolidated statements of operations.

In March 2019, the Company paid earn-out consideration of $ 8,474 related to the January 2017 acquisition of Orlaco.

The payment was recorded in the consolidated statement of cash flows within operating and financing activities in the amounts of $ 5,080 and $ 3,394 , respectively, for the year ended December 31, 2019.

The Orlaco earn-out consideration expense was recognized in the years ended December 31, 2017 and 2018.

There were no transfers in or out of Level 3 from other levels in the fair value hierarchy for the year ended December 31, 2021.

No non-recurring fair value adjustments were required for nonfinancial assets for the years ended December 31, 2021 and 2020.

The Company was required to pay the Stoneridge Brazil earn-out consideration based on Stoneridge Brazil’s financial performance in 2021.

The fair value of the Stoneridge Brazil earn-out consideration was based on 2021 earnings before interest, taxes, depreciation and amortization (“EBITDA”).

The Stoneridge Brazil earn-out consideration obligation was recorded within accrued expenses and other current liabilities in the consolidated balance sheet as of December 31, 2021.

The earn-out consideration obligation of $ 8,272 was paid in April 2022 and recorded in the consolidated statement of cash flows within operating and financing activities in the amounts of $ 1,996 and $ 6,276 , respectively, for the year ended December 31, 2022.

STONERIDGE, INC.

2 unchanged sentences

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

The 2021 change in fair value of the earn-out consideration for Stoneridge Brazil was due to updated financial performance projections during 2021 and foreign currency translation fluctuations through settlement.

The change in fair value of the Stoneridge Brazil earn-out consideration was recorded in SG&A expense and the foreign currency impact was included in other expense, net in the consolidated statements of operations.

There were no transfers in or out of Level 3 from other levels in the fair value hierarchy for the year ended December 31, 2022.

No non-recurring fair value adjustments were required for nonfinancial assets for the years ended December 31, 2022 and 2021.

Impairment of Long-Lived Assets or Finite-Lived Assets

15 unchanged sentences

During the year ended December 31, 2020, the impairment loss of $ 2,326 was recorded on the Company’s consolidated statement of operations within SG&A expense.

The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement."

Commitments and Contingencies

6 unchanged sentences

A remedial action plan was approved by the Florida Department of Environmental Protection and ground water remediation began in the fourth quarter of 2015.

During the years ended December 31, 2021 and 2020 environmental remediation costs incurred were $ 391 and $ 128 , respectively, and were immaterial for the year ended December 31, 2019.

At December 31, 2021 and 2020, the Company had accrued an undiscounted liability of $ 216 and $ 180 respectively, related to future remediation costs which were recorded as a component of accrued expenses and other current liabilities on the consolidated balance sheets while the remaining amount as of December 31, 2021 was recorded as a component of other long-term liabilities.

During the years ended December 31, 2022, 2021 and 2020, the Company recognized expense of $ 0 , $ 407 and $ 225 , respectively, related to ground water remediation.

At December 31, 2022 and 2021, the Company had accruals of $ 246 and $ 391 respectively, related to future remediation costs.

At December 31, 2022 and 2021, $ 132 and $ 216 , respectively, were recorded as a component of accrued expenses and other current liabilities on the consolidated balance sheets while the remaining amounts as of December 31, 2022 and 2021 were recorded as a component of other long-term liabilities.

Costs associated with the recorded liability will be incurred to complete the groundwater remediation and monitoring.

The recorded liability is based on assumptions in the remedial action plan as well as estimates for future remediation activities.

Although the Company sold the Sarasota facility and related property in December 2011, the liability to remediate the site contamination remains the responsibility of the Company.

Due to the ongoing site remediation, the Company is currently required to maintain a $ 1,489 letter of credit for the benefit of the buyer.

STONERIDGE, INC.

2 unchanged sentences

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

liability is based on assumptions in the remedial action plan as well as estimates for future remediation activities.

Although the Company sold the Sarasota facility and related property in December 2011, the liability to remediate the site contamination remains the responsibility of the Company.

Due to the ongoing site remediation, the Company is currently required to maintain a $ 1,489 letter of credit for the benefit of the buyer.

The Company’s Stoneridge Brazil subsidiary has civil, labor and other tax contingencies (excluding income tax) for which the likelihood of loss is deemed to be reasonably possible, but not probable, by the Company’s legal advisors in Brazil.

As a result, no provision has been recorded with respect to these contingencies, which amounted to R$ 47,820 ($ 9,165 ) and R$ 46,530 ($ 8,338 ) at December 31, 2022 and 2021, respectively.

An unfavorable outcome on these contingencies could result in significant cost to the Company and adversely affect its results of operations.

An unfavorable outcome on these contingencies could result in significant cost to the Company and adversely affect its results of operations and cash flows.

On August 12, 2020, the Brazilian Administrative Counsel for Economic Defense (“CADE”) issued a ruling against Stoneridge Brazil for abuse of dominance and market foreclosure through its prior use of exclusivity provisions in agreements with its distributors.

1 unchanged sentence

The Company is challenging this ruling in Brazilian federal court to reverse this decision by the CADE tribunal.

Brazilian Indirect Tax

In 2019, the Company received judicial notification that the Superior Judicial Court of Brazil rendered a favorable decision on Stoneridge Brazil’s case granting the Company the right to recover, through offset of federal tax liabilities, amounts collected by the government from June 2010 to February 2017.

As a result, the Company recorded a pre-tax benefit of $ 6,473 in the year ended December 31, 2019.

The Brazilian tax authorities have sought clarification before the Supreme Court of Brazil (in a leading case involving another taxpayer) of certain matters that could affect the rights of Brazilian taxpayers regarding these credits.

The leading case was decided on May 13, 2021.

The Company does not expect any impact to amounts previously recognized as a result of the Supreme Court decision.

Restructuring and Business Realignment

9 unchanged sentences

The expenses for the exit of the PM sensor line that relate to the Control Devices reportable segment include the following:

Accrual as of

January 1, 2021

December 31, 2021

Fixed asset impairment and

accelerated depreciation

Accrual as of January 1, 2022 2022 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2022

Employee termination benefits $ 35 $ — $ ( 35 ) $ — $ —

Other related costs — — — — —

Total $ 35 $ — $ ( 35 ) $ — $ —

Accrual as of January 1, 2021 2021 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2021

Fixed asset impairment and accelerated depreciation $ — $ 188 $ — $ ( 188 ) $ —

Employee termination benefits — 139 ( 104 ) — 35

Other related costs — 2,033 ( 2,033 ) — —

Total $ — $ 2,360 $ ( 2,137 ) $ ( 188 ) $ 35

STONERIDGE, INC.

3 unchanged sentences

Accrual as of

January 1, 2020

December 31, 2020

Fixed asset impairment and

accelerated depreciation

January 1, 2020 2020 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2020

Fixed asset impairment and accelerated depreciation $ — $ 3,326 $ — $ ( 3,326 ) $ —

Other related costs — 102 ( 102 ) — —

Total $ — $ 3,428 $ ( 102 ) $ ( 3,326 ) $ —

On January 10, 2019, the Company committed to a restructuring plan that resulted in the closure of the Canton, Massachusetts facility (“Canton Facility”) on March 31, 2020 and the consolidation of manufacturing operations at that site into other Company locations (“Canton Restructuring”).

2 unchanged sentences

As a result of the Canton Restructuring actions, the Company recognized expense of $ 0 , $ 13 and $ 2,978 for the years ended December 31, 2022 , 2021 and 2020, respectively, for employee severance and termination costs and other restructuring related costs.

For the year ended December 31, 2021 other restructuring related costs of $ 13 were recognized in D&D in the consolidated statement of operations.

For the year ended December 31, 2020 severance and other restructuring related costs of $ 1,659 , $ 551 and $ 768 were recognized in COGS, SG&A and D&D, respectively, in the consolidated statement of operations.

For the year ended December 31, 2021 severance and other restructuring related costs of $ 13 were recognized in D&D in the consolidated statement of operations.

For the year ended December 31, 2020 severance and other related restructuring costs of $ 1,659 , $ 551 and $ 768 were recognized in COGS, SG&A and D&D, respectively, in the consolidated statement of operations.

2 unchanged sentences

The expenses for the Canton Restructuring that relate to the Control Devices reportable segment include the following:

Accrual as of

January 1, 2021

December 31, 2021

Accrual as of January 1, 2022 2022 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2022

Employee termination benefits $ 93 $ — $ ( 93 ) $ — $ —

Other related costs — — — — —

Accrual as of

January 1, 2020

December 31, 2020

Total $ 93 $ — $ ( 93 ) $ — $ —

Accrual as of January 1, 2021 2021 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2021

Employee termination benefits $ 165 $ — $ ( 72 ) $ — $ 93

Other related costs — 13 ( 13 ) — —

Accrual as of

January 1, 2019

December 31, 2019

Total $ 165 $ 13 $ ( 85 ) $ — $ 93

Accrual as of January 1, 2020 2020 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2020

Employee termination benefits $ 2,636 $ 1,119 $ ( 3,590 ) $ — $ 165

Other related costs — 1,859 ( 1,859 ) — —

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Total $ 2,636 $ 2,978 $ ( 5,449 ) $ — $ 165

In the fourth quarter of 2018, the Company undertook restructuring actions for the Electronics segment affecting the European Aftermarket business and China operations.

2 unchanged sentences

As a result of these actions, the Company recognized expense of $ 0 , $ 290 and $ 2,400 respectively, for the years ended December 31, 2022, 2021 and 2020 for employee severance and termination costs, non-cash fixed asset charges for accelerated depreciation of fixed assets, contract termination costs and other related costs.

Electronics segment restructuring costs recognized in COGS, SG&A, and D&D in the consolidated statement of operations for the year ended December 31, 2021 were $ 37 , $ 210 and $ 43 , respectively.

Electronics segment restructuring costs recognized in COGS,

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

SG&A and D&D in the consolidated statement of operations for the year ended December 31, 2021 were $ 37 , $ 210 and $ 43 , respectively.

Electronics segment restructuring costs recognized in COGS, SG&A and D&D in the consolidated statement of operations for the year ended December 31, 2020 were $ 147 , $ 1,774 and $ 479 , respectively.

Electronics segment restructuring costs were recorded in SG&A in the consolidated statements of operations for the year ended December 31, 2019.

We do not expect to incur additional costs related to these Electronics segment restructuring actions.

The expenses for the restructuring activities that relate to the Electronics reportable segment include the following:

Accrual as of

2021 Charge to

Accrual as of

January 1, 2021

December 31, 2021

Employee termination benefits

Other related costs

Accrual as of

2020 Charge to

Accrual as of

January 1, 2020

December 31, 2020

Accrual as of January 1, 2021 2021 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2021

Employee termination benefits $ 227 $ 50 $ ( 277 ) $ — $ —

Contract termination costs

Other related costs — 240 ( 240 ) — —

Accrual as of

2019 Charge to

Accrual as of

January 1, 2019

December 31, 2019

Total $ 227 $ 290 $ ( 517 ) $ — $ —

Accrual as of January 1, 2020 2020 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2020

Employee termination benefits $ 52 $ 1,034 $ ( 859 ) $ — $ 227

Accelerated depreciation

Contract termination costs — 452 ( 452 ) — —

Other related costs — 914 ( 914 ) — —

Total $ 52 $ 2,400 $ ( 2,225 ) $ — $ 227

In addition to the specific restructuring activities, the Company regularly evaluates the performance of its businesses and cost structures, including personnel, and makes necessary changes thereto in order to optimize its results.

4 unchanged sentences

Control Devices (A)

$ — $ 192 $ 1,752

Electronics (B)

1 unchanged sentence

Unallocated Corporate (D)

190 1,138 361

Total business realignment charges $ 288 $ 1,392 $ 4,037

_____________________________

(A) Severance costs for the year ended December 31, 2021 related to SG&A were $ 192 .

Severance costs for the year ended December 31, 2020 related to COGS, D&D and SG&A were $ 724 , $ 283 and $ 745 respectively.

Severance costs for the year ended December 31, 2019 related to SG&A were $ 682 .

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(B) Severance costs (benefit) for the year ended December 31, 2021 related to COGS, SG&A and D&D were $ 1 , $( 7 ) and $ 9 , respectively.

Severance costs for the year ended December 31, 2020 related to COGS, D&D and SG&A were $ 383 , $ 402 and $ 905 respectively.

Severance costs for the year ended December 31, 2019 related to SG&A were $ 99 .

Severance costs for the year ended December 31, 2021 related to COGS and SG&A were $ 7 and $ 52 , respectively.

Severance costs for the year ended December 31, 2020 related to COGS and SG&A were $ 124 and $ 110 , respectively.

(D) Severance costs for the years ended December 31, 2022, 2021 and 2020 related to SG&A were $ 190 , $ 1,138 and $ 361 , respectively.

5 unchanged sentences

Total business realignment charges $ 288 $ 1,392 $ 4,037

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Segment Reporting

3 unchanged sentences

The Control Devices reportable segment produces actuators, sensors, switches and connectors.

The Electronics reportable segment produces driver information systems, camera-based vision systems, connectivity and compliance products and electronic control units.

The Stoneridge Brazil reportable segment designs and manufactures vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, in-vehicle audio and infotainment devices and telematics solutions.

The Electronics reportable segment produces driver information systems, vision and safety systems, connectivity and compliance products and electronic control units.

The accounting policies of the Company’s reportable segments are the same as those described in Note 2.

9 unchanged sentences

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

December 31, 2022 2021 2020

Control Devices $ 342,596 $ 355,775 $ 342,576

1 unchanged sentence

Control Devices net sales 345,315 359,276 348,051

Electronics 505,097 357,910 257,767

Inter-segment sales 28,709 26,192 24,027

3 unchanged sentences

Stoneridge Brazil net sales 52,262 56,777 47,663

Eliminations ( 31,460 ) ( 29,694 ) ( 29,502 )

Total net sales $ 899,923 $ 770,462 $ 648,006

1 unchanged sentence

Control Devices $ 23,917 $ 54,933 $ 22,072

Electronics 5,128 ( 12,502 ) ( 3,672 )

Stoneridge Brazil 3,150 995 3,766

Unallocated Corporate (A)

( 29,260 ) ( 28,015 ) ( 29,830 )

Total operating income (loss) $ 2,935 $ 15,411 $ ( 7,664 )

1 unchanged sentence

Control Devices $ 13,521 $ 15,351 $ 15,377

Electronics 13,913 12,487 10,501

Stoneridge Brazil 3,939 3,856 4,766

1 unchanged sentence

Total depreciation and amortization (B)

$ 33,691 $ 33,828 $ 32,730

Interest Expense (Income), net:

Control Devices $ 93 $ 132 $ 173

Electronics 1,009 462 320

Stoneridge Brazil ( 1,282 ) ( 1,353 ) ( 4 )

3 unchanged sentences

Control Devices $ 12,620 $ 9,154 $ 11,760

Electronics 10,479 9,735 11,617

Stoneridge Brazil 3,480 2,918 2,839

Unallocated Corporate (C)

653 1,142 1,444

Total capital expenditures $ 27,232 $ 22,949 $ 27,660

Total Assets:

Control Devices

Stoneridge Brazil

Corporate (C)

STONERIDGE, INC.

2 unchanged sentences

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

December 31, 2022 2021

Total Assets:

Control Devices $ 174,535 $ 181,968

Electronics 369,232 338,080

Stoneridge Brazil 60,861 59,100

Corporate (C)

419,469 438,175

Eliminations ( 371,992 ) ( 351,924 )

Total assets $ 652,105 $ 665,399

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

December 31, 2022 2021 2020

North America $ 444,928 $ 386,944 $ 330,528

2 unchanged sentences

Total net sales $ 899,923 $ 770,462 $ 648,006

December 31, 2022 2021

Long-term Assets:

3 unchanged sentences

Total long-term assets $ 242,554 $ 254,575

_____________________________

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

3 unchanged sentences

Credit Facility Amendment

On February 28, 2022, the Company entered into Amendment No.

On March 1, 2023, the Company entered into Amendment No.

4 to the Credit Facility.

2 unchanged sentences

The following schedule provides the activity for accounts receivable reserves and valuation allowance for deferred tax assets for the years ended December 31, 2022, 2021 and 2020 (in thousands):

period Charged to

expenses Write-offs Balance at

end of period

3 unchanged sentences

Year ended December 31, 2020 $ 1,289 $ 1,130 $ ( 1,602 ) $ 817

Net additions

Exchange rate

period Net additions

(expense) Exchange rate

items Balance at

end of period

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data