What changed in this filing

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Item 1. Financial Statements

2020-07-28 compared with 2020-04-29 · 296 added, 148 removed, 388 unchanged (53% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowances of $15,832 and $15,129 as of March 31, 2020 and December 31, 2019, respectively

Accounts receivable, net of allowances of $17,655 and $15,129 as of June 30, 2020 and December 31, 2019, respectively

Prepaid expenses and other current assets

1 unchanged sentence

Property, plant and equipment, net

Other intangible assets, net of accumulated amortization of $2,072,227 and $2,039,436 as of March 31, 2020 and December 31, 2019, respectively

Other intangible assets, net of accumulated amortization of $2,105,318 and $2,039,436 as of June 30, 2020 and December 31, 2019, respectively

Deferred income tax assets

14 unchanged sentences

Shareholders’ equity:

Ordinary shares, €0.01 nominal value per share, 177,069 shares authorized, and 172,596 and 172,561 shares issued, as of March 31, 2020 and December 31, 2019, respectively

Treasury shares, at cost, 15,631 and 14,733 shares as of March 31, 2020 and December 31, 2019, respectively

Ordinary shares, €0.01 nominal value per share, 177,069 shares authorized, and 172,844 and 172,561 shares issued, as of June 30, 2020 and December 31, 2019, respectively

Treasury shares, at cost, 15,631 and 14,733 shares as of June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

8 unchanged sentences

For the three months ended

March 31, 2020

March 31, 2019

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Operating costs and expenses:

5 unchanged sentences

Total operating costs and expenses

Operating income

Operating (loss)/income

Interest expense, net

Income before taxes

(Benefit from)/provision for income taxes

Basic net income per share:

Diluted net income per share:

(Loss)/income before taxes

Provision for/(benefit from) income taxes

Net (loss)/income

Basic net (loss)/income per share:

Diluted net (loss)/income per share:

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

3 unchanged sentences

For the three months ended

March 31, 2020

March 31, 2019

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Net (loss)/income

Other comprehensive (loss)/income, net of tax:

7 unchanged sentences

(In thousands)

For the three months ended

March 31, 2020

March 31, 2019

For the six months ended

June 30, 2020

June 30, 2019

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss)/income

Adjustments to reconcile net (loss)/income to net cash provided by operating activities:

Amortization of debt issuance costs

17 unchanged sentences

Payment of employee restricted stock tax withholdings

Proceeds from borrowings on Revolving Credit Facility

Payments on debt

1 unchanged sentence

Payments of debt and equity issuance costs

Net cash used in financing activities

Net cash provided by/(used in) financing activities

Net change in cash and cash equivalents

10 unchanged sentences

Shareholders’

Balance as of March 31, 2020

Surrender of shares for tax withholding

Stock options exercised

Vesting of restricted securities

Retirement of ordinary shares

Share-based compensation

Other comprehensive loss

Balance as of June 30, 2020

Ordinary Shares

Treasury Shares

Retained Earnings

Comprehensive

Shareholders’

Balance as of December 31, 2019

6 unchanged sentences

Other comprehensive loss

Balance as of June 30, 2020

Ordinary Shares

Treasury Shares

Retained Earnings

Comprehensive

Shareholders’

Balance as of March 31, 2019

Surrender of shares for tax withholding

Stock options exercised

Vesting of restricted securities

Repurchase of ordinary shares

Retirement of ordinary shares

Share-based compensation

Other comprehensive loss

Balance as of June 30, 2019

Ordinary Shares

11 unchanged sentences

Other comprehensive income

Balance as of March 31, 2019

Balance as of June 30, 2019

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

3 unchanged sentences

The accompanying unaudited condensed consolidated financial statements reflect the financial position, results of operations, comprehensive (loss)/income , cash flows, and changes in shareholders' equity of Sensata Technologies Holding plc, a public limited company incorporated under the laws of England and Wales, and its wholly-owned subsidiaries, collectively referred to as the "Company," "Sensata," "we," "our," or "us."

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States (" U.S.

") generally accepted accounting principles (" GAAP ") for interim financial information and the instructions to Form 10-Q.

Accordingly, these interim financial statements do not include all of the information and note disclosures required by U.S.

3 unchanged sentences

dollar (" USD ") and share amounts presented, except per share amounts, are stated in thousands, unless otherwise indicated.

Certain reclassifications have been made to prior periods to conform to current period presentation.

New Accounting Standards

1 unchanged sentence

Revenue Recognition

The following table presents net revenue disaggregated by segment and end market for the three months ended March 31, 2020 and 2019 :

For the three months ended March 31, 2020

For the three months ended March 31, 2019

The following tables present net revenue disaggregated by segment and end market for the three and six months ended June 30, 2020 and 2019 :

For the three months ended June 30, 2020

For the three months ended June 30, 2019

Performance Sensing

6 unchanged sentences

(2) Heating, ventilation and air conditioning

For the six months ended June 30, 2020

For the six months ended June 30, 2019

Performance Sensing

Sensing Solutions

Performance Sensing

Sensing Solutions

Appliance and HVAC

Share-Based Payment Plans

The following table presents the components of non-cash compensation expense related to our equity awards for the three months ended March 31, 2020 and 2019 .

The following table presents the components of non-cash compensation expense related to our equity awards for the three and six months ended June 30, 2020 and 2019 .

For the three months ended

March 31, 2020

March 31, 2019

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Stock options

1 unchanged sentence

Share-based compensation expense

Equity Awards

We granted the following restricted stock units (" RSU s" and each, an " RSU ") and performance-based restricted stock units (" PRSU s" and each, a " PRSU ") under the Sensata Technologies Holding p lc First Amended and Restated 2010 Equity Incentive Plan during the six months ended June 30, 2020 :

Awards Granted To:

Type of Award

Number of Units Granted (in thousands)

Percentage of PRSUs Awarded That May Vest

Weighted- Average Grant Date Fair Value

Various executives and employees

0.0% - 172.5%

__________________________

These RSU s generally cliff vest between one year and three years from the grant date (various dates between April 2021 and March 2023).

Beginning in April 2020, we began granting RSU s that vest ratably over three years, one-third per year beginning on the first anniversary of the grant date.

These RSU s will fully vest on various dates between April 2023 and June 2023.

These PRSU s vest on various dates between April 2023 and June 2023.

The number of units that ultimately vest is dependent on the achievement of certain performance criteria.

Restructuring and Other Charges, Net

The following table presents the components of restructuring and other charges, net for the three months ended March 31, 2020 and 2019 :

During the three months ended June 30, 2020 , we analyzed the potential long-term impact of the global financial and health crisis caused by the coronavirus pandemic (" COVID-19 ") on our business and, as a result, committed to a plan to reorganize our business (the “ Q2 2020 Global Restructure Program ”).

The Q2 2020 Global Restructure Program , consisting of voluntary and involuntary reductions-in-force and certain site closures , was commenced in order to align our cost structure to the demand levels that we anticipate over the coming quarters.

The majority of the actions under the Q2 2020 Global Restructure Program are expected to be completed on or before June 30, 2021 .

The reductions-in-force, which are subject to the laws and regulations of the countries in which the actions are planned, are expected to impact approximately 980 positions.

Over the life of the Q2 2020 Global Restructure Program , we expect to incur restructuring charges of between $ 35.0 million and $ 39.0 million related to reductions-in-force and between $ 8.0 million and $ 10.0 million related to site closures.

We expect to settle these charges with cash on hand.

We expect these restructuring charges to impact our business segments and corporate functions as follows:

Reductions-in-Force

Site Closures

(Dollars in millions)

Performance Sensing

Sensing Solutions

Corporate and other

Amounts accrued in the three months ended June 30, 2020 related to the Q2 2020 Global Restructure Program are detailed by segment below.

All charges related to this program incurred in the three months ended June 30, 2020 were related to severance costs and recorded in restructuring and other charges, net.

Performance Sensing

Sensing Solutions

Corporate and other

Restructuring and other charges, net

The following table presents the components of restructuring and other charges, net for the three and six months ended June 30, 2020 and 2019 :

For the three months ended

March 31, 2020

March 31, 2019

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Q2 2020 Global Restructure Program charges

Other restructuring charges

Severance costs, net (1)

Facility and other exit costs

Restructuring and other charges, net

___________________________________

Severance costs, net for the three months ended March 31, 2020 were primarily related to termination benefits arising from the shutdown and relocation of an operating site in Northern Ireland.

Severance costs for the three months ended March 31, 2019 were primarily related to limited workforce reductions of manufacturing, engineering, and administrative positions.

Other charges in the three months ended March 31, 2020 and 2019 were primarily related to deferred compensation incurred in connection with the acquisition of GIGAVAC, LLC.

The following table presents changes to the severance portion of our restructuring liability during the three months ended March 31, 2020 :

Severance costs, net (excluding those related to the Q2 2020 Global Restructure Program ) for the six months ended June 30, 2020 were related to termination benefits arising from the shutdown and relocation of an operating site in Northern Ireland.

Severance costs, net for the three and six months ended June 30, 2019 were primarily related to benefits provided for under a voluntary retirement incentive program offered to a limited number of eligible employees in the U.S.

Other charges in the three and six months ended June 30, 2020 were primarily related to a $ 12.1 million pre-judgment interest-related award granted by the court on behalf of the plaintiffs, Wasica Finance GmbH ("Wasica"), in connection with a patent infringement case against Schrader.

Refer to Note 12, "Commitments and Contingencies," for additional information related to this matter.

Other charges in the three and six months ended June 30, 2019 were primarily related to deferred compensation incurred in connection with the acquisition of GIGAVAC, LLC (" GIGAVAC ").

The following table presents a rollforward of the severance portion of our restructuring liabilities during the six months ended June 30, 2020 .

The only charges that were incurred under the Q2 2020 Global Restructure Program related to severance.

The components of our other restructuring liabilities not related to severance were immaterial.

All balances at June 30, 2020 are recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets.

Q2 2020 Global Restructure Program

Other Severance

Balance at December 31, 2019

1 unchanged sentence

Foreign currency remeasurement

Balance at March 31, 2020

The following table presents the components of other, net for the three months ended March 31, 2020 and 2019 :

Balance at June 30, 2020

The following table presents the components of other, net for the three and six months ended June 30, 2020 and 2019 :

For the three months ended

March 31, 2020

March 31, 2019

Currency remeasurement gain on net monetary assets

(Loss)/gain on foreign currency forward contracts

(Loss)/gain on commodity forward contracts

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Currency remeasurement (loss)/gain on net monetary assets

Gain/(loss) on foreign currency forward contracts

Gain/(loss) on commodity forward contracts

Net periodic benefit cost, excluding service cost

The following table presents the (benefit from)/provision for income taxes for the three months ended March 31, 2020 and 2019 :

The following table presents the provision for/(benefit from) income taxes for the three and six months ended June 30, 2020 and 2019 :

For the three months ended

March 31, 2020

March 31, 2019

(Benefit from)/provision for income taxes

The decrease in total tax from the prior period was predominantly related to the overall decrease in income before tax as impacted by the mix of profits in the various jurisdictions in which we operate.

In response to the global financial and health crisis caused by the coronavirus pandemic ("COVID-19"), the U.S.

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Provision for/(benefit from) income taxes

The decrease in total tax from the prior periods was predominantly related to the overall decrease in income before tax as impacted by the mix of profits in the various jurisdictions in which we operate.

In response to the global financial and health crisis caused by COVID-19 , the U.S.

federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (the " CARES Act ") on March 27, 2020.

Federal limitations on interest deductions were reduced in connection with this legislation, and we recorded a deferred tax benefit of

$ 7.5 million in the three months ended March 31, 2020 , as we were able to utilize additional interest expense that was previously subject to a valuation allowance.

The (benefit from)/provision for income taxes consists of:

Federal limitations on interest deductions were reduced in connection with this legislation, and we recorded a deferred tax benefit of $ 7.5 million in the three months ended March 31, 2020, as we were able to utilize additional interest expense that was previously subject to a valuation allowance.

The provision for/(benefit from) income taxes consists of:

current tax expense, which relates primarily to our profitable operations in non- U.S.

1 unchanged sentence

deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to (1) the step-up in fair value of fixed and intangible assets acquired in connection with business combination transactions, (2) changes in net operating loss carryforwards, (3) changes in tax rates, and (4) changes in our assessment of the realizability of our deferred tax assets.

Net Income per Share

Basic and diluted net income per share are calculated by dividing net income by the number of basic and diluted weighted-average ordinary shares outstanding during the period.

For the three months ended March 31, 2020 and 2019 the weighted-average ordinary shares outstanding used to calculate basic and diluted net income per share were as follows:

Net (Loss)/Income per Share

Basic and diluted net (loss)/income per share are calculated by dividing net (loss)/income by the number of basic and diluted weighted-average ordinary shares outstanding during the period.

For the three and six months ended June 30, 2020 and 2019 the weighted-average ordinary shares outstanding used to calculate basic and diluted net (loss)/income per share were as follows:

For the three months ended

March 31, 2020

March 31, 2019

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Basic weighted-average ordinary shares outstanding

2 unchanged sentences

Diluted weighted-average ordinary shares outstanding

Net income and net income per share are presented in the condensed consolidated statements of operations.

Certain potential ordinary shares were excluded from our calculation of diluted weighted-average ordinary shares outstanding because either they would have had an anti–dilutive effect on net income per share or they related to equity awards that were contingently issuable for which the contingency had not been satisfied.

___________________________________

In the three and six months ended June 30, 2020 , potential ordinary shares of approximately 66 thousand and 200 thousand , respectively, related to stock options and approximately 353 thousand and 403 thousand , respectively, related to unvested restricted securities were excluded from the calculation of diluted weighted-average ordinary shares outstanding as a result of the net loss incurred in those periods.

Net (loss)/income and net (loss)/income per share are presented in the condensed consolidated statements of operations .

Certain potential ordinary shares were excluded from our calculation of diluted weighted-average ordinary shares outstanding because either they would have had an anti–dilutive effect on net (loss)/income per share or they related to equity awards that were contingently issuable for which the contingency had not been satisfied.

These potential ordinary shares were as follows:

For the three months ended

March 31, 2020

March 31, 2019

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Anti-dilutive shares excluded

Contingently issuable shares excluded

The following table presents the components of inventories as of March 31, 2020 and December 31, 2019 :

March 31, 2020

The following table presents the components of inventories as of June 30, 2020 and December 31, 2019 :

June 30, 2020

December 31, 2019

3 unchanged sentences

Pension and Other Post-Retirement Benefits

The components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the three months ended March 31, 2020 and 2019 were as follows:

The components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the three months ended June 30, 2020 and 2019 were as follows:

Defined Benefit

7 unchanged sentences

Net periodic benefit cost/(credit)

Components of net periodic benefit cost/(credit) other than service cost are presented in other, net.

The components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the six months ended June 30, 2020 and 2019 were as follows:

Defined Benefit

Retiree Healthcare

Defined Benefit

Interest cost

Expected return on plan assets

Amortization of net loss

Amortization of prior service (credit)/cost

Loss on settlement

Net periodic benefit cost/(credit)

Components of net periodic benefit cost/(credit) other than service cost are presented in other, net in the condensed consolidated statements of operations .

Refer to Note 6, " Other, Net ."

Our long-term debt and finance lease and other financing obligations as of March 31, 2020 and December 31, 2019 consisted of the following:

Our long-term debt, finance lease, and other financing obligations as of June 30, 2020 and December 31, 2019 consisted of the following:

Maturity Date

March 31, 2020

June 30, 2020

December 31, 2019

10 unchanged sentences

February 15, 2030

Revolving Credit Facility

March 27, 2024

deferred financing costs

4 unchanged sentences

Finance lease and other financing obligations, less current portion

As of March 31, 2020 there was $ 416.1 million available under our $ 420.0 million revolving credit facility (the "Revolving Credit Facility"), net of $ 3.9 million of obligations related to outstanding letters of credit issued thereunder.

To enhance our financial flexibility given the general uncertainty associated with COVID-19 , we withdrew $ 400.0 million of our $ 420.0 million revolving credit facility (the " Revolving Credit Facility ") on April 1, 2020 .

As of June 30, 2020 , we had $ 16.1 million available under the Revolving Credit Facility , net of $ 3.9 million of obligations related to outstanding letters of credit issued thereunder.

Outstanding letters of credit are issued primarily for the benefit of certain operating activities.

As of March 31, 2020 , no amounts had been drawn against these outstanding letters of credit.

In order to enhance our financial flexibility in light of COVID-19, we executed a $ 400.0 million drawdown on the Revolving Credit Facility on April 1, 2020 .

As of June 30, 2020 , no amounts had been drawn against these outstanding letters of credit.

Accrued Interest

Accrued interest associated with our outstanding debt is included as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets.

As of March 31, 2020 and December 31, 2019 , accrued interest totaled $ 47.1 million and $ 42.8 million , respectively.

As of June 30, 2020 and December 31, 2019 , accrued interest totaled $ 43.4 million and $ 42.8 million , respectively.

Commitments and Contingencies

9 unchanged sentences

liable for damages in the amount of $ 31.2 million .

As a result, we recorded a loss of $ 29.2 million in the three months ended March 31, 2020 through cost of revenue.

We continue to deny any wrongdoing, have filed post-trial motions, and intend to appeal the jury's decision, including any final circuit court order against us.

As of March 31, 2020 , we have recorded an accrual of $ 31.2 million related to this matter in other long-term liabilities, based on timing of expected payment if our appeal is unsuccessful.

We recorded a loss of $ 29.2 million in the three months ended March 31, 2020 in cost of revenue.

On July 6, 2020 , the court awarded an additional $ 12.1 million for plaintiffs and against us for pre-judgment interest-related damages.

In the three months ended June 30, 2020 , we recorded a loss of $ 12.1 million through restructuring and other charges, net, to reflect the court's order.

We continue to deny any wrongdoing in this matter and intend to appeal this ruling along with the court's pre-judgment interest award.

As of June 30, 2020 , we have recorded an accrual of $ 43.3 million related to this matter in other long-term liabilities, based on timing of expected payment if our appeal is unsuccessful.

Shareholders' Equity

Treasury Shares

From time to time, our Board of Directors has authorized various share repurchase programs.

The authorized amount of our various share repurchase programs may be modified or terminated by our Board of Directors at any time.

We currently have an authorized $ 500.0 million share repurchase program under which approximately $ 302.3 million remained available as of March 31, 2020 .

On April 2, 2020 , we announced a temporary suspension of this share repurchase program to enhance our financial flexibility in light of the uncertainties surrounding COVID-19.

From time to time, our Board of Directors has authorized various share repurchase programs, which may be modified or terminated by our Board at any time.

We currently have an authorized $ 500.0 million share repurchase program under which approximately $ 302.3 million remained available as of June 30, 2020 .

On April 2, 2020 , we announced a temporary suspension of this share repurchase program, which will continue to remain on hold until end market conditions show greater improvement and stability.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss for the three months ended March 31, 2020 were as follows:

The components of accumulated other comprehensive loss for the six months ended June 30, 2020 were as follows:

Cash Flow Hedges

2 unchanged sentences

Balance at December 31, 2019

Other comprehensive loss before reclassifications, net of tax

Other comprehensive (loss)/income before reclassifications, net of tax

Reclassifications from accumulated other comprehensive loss, net of tax

Other comprehensive (loss)/income

Balance at March 31, 2020

The details of the amounts reclassified from accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019 are as follows:

For the three months ended March 31,

Balance at June 30, 2020

The amounts reclassified from accumulated other comprehensive loss for the three and six months ended June 30, 2020 and 2019 were as follows:

For the three months ended June 30,

For the six months ended June 30,

Affected Line in Condensed Consolidated Statements of Operations

Derivative instruments designated and qualifying as cash flow hedges:

4 unchanged sentences

Total, before taxes

Income before taxes

(Loss)/income before taxes

Income tax effect

(Benefit from)/provision for income taxes

Provision for/(benefit from) income taxes

Total, net of taxes

Net (loss)/income

Defined benefit and retiree healthcare plans

1 unchanged sentence

Income tax effect

(Benefit from)/provision for income taxes

Provision for/(benefit from) income taxes

Total, net of taxes

Net (loss)/income

__________________________

3 unchanged sentences

Measured on a Recurring Basis

The fair values of our assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 are shown in the below table.

The fair values of our assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019 are shown in the below table.

All fair value measures presented are categorized in Level 2 of the fair value hierarchy.

March 31, 2020

June 30, 2020

December 31, 2019

3 unchanged sentences

Commodity forward contracts

Refer to Note 15, " Derivative Instruments and Hedging Activities ," for additional information related to our forward contracts.

Measured on a Nonrecurring Basis

We evaluated our goodwill and other indefinite-lived intangible assets for impairment as of October 1, 2019 and determined that they were not impaired.

As of March 31, 2020 , we have assessed the market impact of COVID-19, including the resulting impact on our forecasts, and have determined that our intangible assets (including goodwill) were not impaired as of March 31, 2020 .

As of June 30, 2020 , we have assessed the current and expected market impact of COVID-19 , including the impact on our forecasts, and have determined that our intangible assets (including goodwill) were not impaired as of June 30, 2020 .

Financial Instruments Not Recorded at Fair Value

The following table presents the carrying values and fair values of financial instruments not recorded at fair value in the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 .

The following table presents the carrying values and fair values of financial instruments not recorded at fair value in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019 .

All fair value measures presented are categorized in Level 2 of the fair value hierarchy.

March 31, 2020

June 30, 2020

December 31, 2019

6 unchanged sentences

4.375% Senior Notes

Revolving Credit Facility

___________________________________

(1) Excluding any related debt discounts and deferred financing costs.

Cash and cash equivalents are carried at cost, which approximates fair value because of their short-term nature.

In addition to the above, we hold certain equity investments that do not have readily determinable fair values for which we use the measurement alternative prescribed in FASB ASC Topic 321 , Investments - Equity Securities.

Such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

There were no impairments or changes resulting from observable transactions for any of these investments, and no adjustments have been made to their carrying values.

Refer to the table below for a detail of the carrying values of these investments, each of which are presented in other assets.

March 31, 2020

Such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

There were no impairments or changes resulting from observable transactions for any of these investments, and no adjustments were made to their carrying values.

Refer to the table below for a detail of the carrying values of these investments, each of which were included as a component of other assets in the condensed consolidated balance sheets.

June 30, 2020

December 31, 2019

3 unchanged sentences

Hedges of Foreign Currency Risk

For the three months ended March 31, 2020 and 2019 , amounts excluded from the assessment of effectiveness of our foreign currency forward contracts that are designated as cash flow hedges were not material.

As of March 31, 2020 , we estimate that $ 3.5 million of net gains will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending March 31, 2021 .

As of March 31, 2020 , we had the following outstanding foreign currency forward contracts:

For the three and six months ended June 30, 2020 and 2019 , amounts excluded from the assessment of effectiveness of our foreign currency forward contracts that are designated as cash flow hedges were not material.

As of June 30, 2020 , we estimated that $ 5.5 million of net losses will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending June 30, 2021 .

As of June 30, 2020 , we had the following outstanding foreign currency forward contracts:

(in millions)

4 unchanged sentences

Designation (1)

March 27, 2020

April 30, 2020

June 26, 2020

July 31, 2020

Euro ("EUR") to USD

Not designated

Various from May 2018 to March 2020

Various from April 2020 to February 2022

Various from August 2018 to June 2020

Variance from July 2020 to May 2022

Cash flow hedge

March 26, 2020

April 30, 2020

June 23, 2020

July 31, 2020

USD to Chinese Renminbi ("CNY")

1 unchanged sentence

Various from December 2019 to January 2020

Various from April to December 2020

Various from July to December 2020

Cash flow hedge

March 27, 2020

April 30, 2020

June 26, 2020

July 31, 2020

USD to Japanese Yen ("JPY")

Not designated

Various from May 2018 to March 2020

Various from April 2020 to February 2022

Various from August 2018 to June 2020

Various from July 2020 to May 2022

USD to Korean Won ("KRW")

Cash flow hedge

March 26, 2020

April 30, 2020

June 25, 2020

July 30, 2020

USD to Malaysian Ringgit ("MYR")

Not designated

March 27, 2020

April 30, 2020

June 26, 2020

July 31, 2020

USD to Mexican Peso ("MXN")

Not designated

Various from May 2018 to March 2020

Various from April 2020 to February 2022

Various from August 2018 to June 2020

Various from July 2020 to May 2022

Cash flow hedge

March 27, 2020

April 30, 2020

June 26, 2020

July 31, 2020

British Pound Sterling ("GBP") to USD

Not Designated

Various from May 2018 to March 2020

Various from April 2020 to February 2022

Various from August 2018 to June 2020

Various from July 2020 to May 2022

Cash flow hedge

3 unchanged sentences

Hedges of Commodity Risk

As of March 31, 2020 , we had the following outstanding commodity forward contracts, none of which were designated for hedge accounting treatment in accordance with FASB ASC Topic 815, Derivatives and Hedging :

As of June 30, 2020 , we had the following outstanding commodity forward contracts, none of which were designated for hedge accounting treatment in accordance with FASB ASC Topic 815 , Derivatives and Hedging :

Remaining Contracted Periods

1 unchanged sentence

743,321 troy oz.

April 2020 - February 2022

July 2020 - June 2022

7,095 troy oz.

April 2020 - February 2022

July 2020 - June 2022

183,689 pounds

April 2020 - February 2022

July 2020 - June 2022

2,543,429 pounds

April 2020 - February 2022

July 2020 - June 2022

1,915,045 pounds

April 2020 - February 2022

July 2020 - June 2022

7,071 troy oz.

April 2020 - February 2022

July 2020 - June 2022

Financial Instrument Presentation

The following table presents the fair values of our derivative financial instruments and their classification in the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 :

The following table presents the fair values of our derivative financial instruments and their classification in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019 :

Asset Derivatives

1 unchanged sentence

Balance Sheet Location

March 31, 2020

June 30, 2020

December 31, 2019

Balance Sheet Location

March 31, 2020

June 30, 2020

December 31, 2019

14 unchanged sentences

Accrued expenses and other current liabilities

These fair value measurements are all categorized within Level 2 of the fair value hierarchy.

The following tables present the effect of our derivative financial instruments on the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive (loss)/income for the three months ended March 31, 2020 and 2019 :

These fair value measurements were all categorized within Level 2 of the fair value hierarchy.

Derivatives designated as

hedging instruments

Amount of Deferred (Loss)/Gain Recognized in Other Comprehensive (Loss)/Income

Location of Net Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Net (Loss)/Income

Amount of Net Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Net (Loss)/Income

Foreign currency forward contracts

Cost of revenue

Derivatives not designated as

hedging instruments

Amount of Gain/(Loss) Recognized in Net (Loss)/Income

Location of Gain/(Loss) Recognized in Net (Loss)/Income

Commodity forward contracts

Foreign currency forward contracts

Derivatives designated as

hedging instruments

Amount of Deferred Gain/(Loss) Recognized in Other Comprehensive (Loss)/Income

Location of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income

Amount of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income

Location of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net (Loss)/Income

Amount of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net (Loss)/Income

Foreign currency forward contracts

3 unchanged sentences

hedging instruments

Amount of (Loss)/Gain Recognized in Net Income

Location of (Loss)/Gain Recognized in Net Income

Amount of (Loss)/Gain Recognized in Net (Loss)/Income

Location of (Loss)/Gain Recognized in Net (Loss)/Income

Commodity forward contracts

2 unchanged sentences

We have agreements with certain of our derivative counterparties that contain a provision whereby if we default on our indebtedness and repayment of the indebtedness has been accelerated by the lender, then we could also be declared in default on our derivative obligations.

As of March 31, 2020 , the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $ 29.3 million .

As of March 31, 2020 , we had no t posted any cash collateral related to these agreements.

As of June 30, 2020 , the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $ 18.5 million .

As of June 30, 2020 , we had no t posted any cash collateral related to these agreements.

If we breach any of the default provisions on any of our indebtedness as described above, we could be required to settle our obligations under the derivative agreements at their termination values.

On September 13, 2019, we completed one acquisition for approximately $ 30 million , net of cash acquired.

Segment Reporting

I n the three months ended June 30, 2020 , we altered the way we measure segment operating income in order to align with a change to the performance measures provided to and used by our chief operating decision maker for purposes of assessing performance and deciding how to allocate resources to each segment.

Whereas research and development ("R&D") and selling, general and administrative ("SG&A") expenses related to our megatrend initiatives were historically allocated to our operating segments, beginning in the second quarter these amounts are presented within corporate and other.

Prior period information has been recast to reflect this revised presentation.

We operate in, and report financial information for, the following two reportable segments, Performance Sensing and Sensing Solutions, each of which is also an operating segment.

Our operating segments are businesses that we manage as components of an enterprise, for which separate financial information is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and assess performance.

An operating segment’s performance is primarily evaluated based on segment operating income, which excludes amortization of intangible assets, restructuring and other charges, net, and certain corporate costs/credits not associated with the operations of the segment, including share-based compensation expense and a portion of depreciation expense associated with assets recorded in connection with acquisitions.

An operating segment’s performance is primarily evaluated based on segment operating income, which excludes amortization of intangible assets, restructuring and other charges, net, certain costs associated with our strategic megatrend initiatives, and certain corporate costs/credits not associated with the operations of the segment, including share-based compensation expense and a portion of depreciation expense associated with assets recorded in connection with acquisitions.

Corporate and other costs excluded from an operating segment’s performance are separately stated below and also include costs that are related to functional areas, such as finance, information technology, legal, and human resources.

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The accounting policies of each of our reporting segments are materially consistent with those in the summary of significant accounting policies as described in Note 2, "Significant Accounting Policies" included in our Annual Report on Form 10-K for the year ended December 31, 2019 .

The following table presents net revenue and segment operating income for the reported segments and other operating results not allocated to the reported segments for the three months ended March 31, 2020 and 2019 :

For the three months ended

March 31, 2020

March 31, 2019

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Performance Sensing

8 unchanged sentences

Restructuring and other charges, net

Operating income

Operating (loss)/income

Interest expense, net

Income before taxes

Subsequent Events

On April 2, 2020, we announced a series of actions taken in response to COVID-19.

These actions are designed to protect the health and safety of our employees, enable us to continue to serve critical customer needs, and further enhance our financial flexibility.

Actions taken to enhance our financial flexibility included a temporary suspension of our share repurchase program and a $ 400.0 million drawdown on the Revolving Credit Facility on April 1, 2020, leaving us with cash on hand of approximately $ 1.2 billion on that date.

(Loss)/income before taxes

Cautionary Statements Concerning Forward-Looking Statements

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(i) full or partial shutdowns of our facilities as mandated by government decrees, (ii) limited ability to adjust certain costs due to government actions, (iii) significant travel restrictions and “work-from-home” orders limiting the availability of our workforce, (iv) supplier constraints and supply-chain interruptions, (v) logistics challenges and limitations, (vi) reduced demand from certain customers, (vi) uncertainties associated with a protracted economic slowdown that could negatively affect the financial condition of our customers and suppliers, and (vii) uncertainties and volatility in the global capital markets;

business disruptions due to natural disasters or other disasters outside our control, such as the global coronavirus (COVID-19) pandemic.

instability and changes in the global markets, including regulatory, political, economic, governmental, and military matters, such as the recent exit of the United Kingdom (the "U.K.") from the European Union (the "EU");

business disruptions due to natural disasters or other disasters outside our control, such as the global COVID-19 pandemic.

instability and changes in the global markets, including regulatory, political, economic, governmental, and military matters, such as the recent exit of the United Kingdom (the " U.K.

") from the European Union (the " EU ");

adverse conditions or competition in the industries upon which we are dependent, including the automotive industry;

21 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-Q

Item 1. Financial Statements