What changed in this filing

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Item 1. Financial Statements

2020-10-27 compared with 2020-07-28 · 320 added, 355 removed, 329 unchanged (67% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

September 30,

2020 December 31,

Current assets:

Cash and cash equivalents $ 1,610,191 $ 774,119

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

Accounts receivable, net of allowances of $ 17,151 and $ 15,129 as of September 30, 2020 and December 31, 2019, respectively

565,184 557,874

Inventories 438,188 506,678

Prepaid expenses and other current assets 100,316 126,981

1 unchanged sentence

Property, plant and equipment, net 807,092 830,998

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

Goodwill 3,117,569 3,093,598

Other intangible assets, net of accumulated amortization of $ 2,137,916 and $ 2,039,436 as of September 30, 2020 and December 31, 2019, respectively

715,797 770,904

Deferred income tax assets 29,714 21,150

Other assets 175,443 152,217

Total assets $ 7,559,494 $ 6,834,519

Liabilities and shareholders’ equity

13 unchanged sentences

Shareholders’ equity:

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

Ordinary shares, € 0.01 nominal value per share, 177,069 shares authorized, and 172,875 and 172,561 shares issued, as of September 30, 2020 and December 31, 2019, respectively

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

( 784,596 ) ( 749,421 )

Additional paid-in capital 1,741,538 1,725,091

7 unchanged sentences

(In thousands, except per share amounts)

For the three months ended

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

For the three months ended For the nine months ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Net revenue $ 788,313 $ 849,715 $ 2,139,087 $ 2,603,940

Operating costs and expenses:

5 unchanged sentences

Total operating costs and expenses 661,468 703,583 1,955,511 2,167,773

Operating (loss)/income

Operating income 126,845 146,132 183,576 436,167

Interest expense, net ( 44,129 ) ( 39,556 ) ( 124,340 ) ( 118,417 )

(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:

Other, net 9,194 ( 7,560 ) ( 1,511 ) ( 7,925 )

Income before taxes 91,910 99,016 57,725 309,825

Provision for income taxes 15,181 28,341 15,106 80,649

Net income $ 76,729 $ 70,675 $ 42,619 $ 229,176

Basic net income per share $ 0.49 $ 0.44 $ 0.27 $ 1.42

Diluted net income per share $ 0.49 $ 0.44 $ 0.27 $ 1.41

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

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Comprehensive (Loss)/Income

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

For the three months ended

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:

For the three months ended For the nine months ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Net income $ 76,729 $ 70,675 $ 42,619 $ 229,176

Other comprehensive (loss)/income:

Cash flow hedges

( 2,197 ) 6,917 ( 26,698 ) 12,331

Defined benefit and retiree healthcare plans

1,015 83 6,029 249

Other comprehensive (loss)/income ( 1,182 ) 7,000 ( 20,669 ) 12,580

Comprehensive (loss)/income

Comprehensive income $ 75,547 $ 77,675 $ 21,950 $ 241,756

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

2 unchanged sentences

(In thousands)

For the six months ended

June 30, 2020

June 30, 2019

For the nine months ended

September 30, 2020 September 30, 2019

Cash flows from operating activities:

Net (loss)/income

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

Net Income $ 42,619 $ 229,176

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

Depreciation 94,216 84,354

Amortization of debt issuance costs 5,026 5,573

Share-based compensation 14,212 15,188

Loss on debt financing — 4,364

Amortization of intangible assets 98,397 108,079

Deferred income taxes ( 11,600 ) 20,313

Loss on litigation judgment

Unrealized loss on derivative instruments and other 5,876 23,545

1 unchanged sentence

Accounts receivable, net ( 5,205 ) ( 12,119 )

Inventories 71,207 ( 7,192 )

Prepaid expenses and other current assets 15,689 4,281

1 unchanged sentence

Income taxes payable ( 23,806 ) 2,028

Other ( 2,354 ) ( 3,971 )

Net cash provided by operating activities 293,338 433,527

2 unchanged sentences

Additions to property, plant and equipment and capitalized software ( 79,939 ) ( 123,206 )

Investment in debt and equity securities ( 24,794 ) ( 9,950 )

Other 10,717 4,947

Net cash used in investing activities ( 158,468 ) ( 160,524 )

2 unchanged sentences

Payment of employee restricted stock tax withholdings ( 2,335 ) ( 6,953 )

Proceeds from borrowings on Revolving Credit Facility

Proceeds from borrowings on debt 1,150,000 450,000

Payments on debt ( 406,568 ) ( 461,190 )

9 unchanged sentences

(In thousands)

Ordinary Shares

Treasury Shares

Retained Earnings

Comprehensive

Shareholders’

Balance as of March 31, 2020

Ordinary Shares Treasury Shares Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity

Number Amount Number Amount

Balance as of June 30, 2020 172,844 $ 2,215 ( 15,631 ) $ ( 784,596 ) $ 1,735,826 $ 1,579,931 $ ( 39,971 ) $ 2,493,405

Surrender of shares for tax withholding — — — ( 21 ) — — — ( 21 )

3 unchanged sentences

Share-based compensation — — — — 4,622 — — 4,622

Net income — — — — — 76,729 — 76,729

Other comprehensive loss — — — — — — ( 1,182 ) ( 1,182 )

Balance as of June 30, 2020

Ordinary Shares

Treasury Shares

Retained Earnings

Comprehensive

Shareholders’

Balance as of September 30, 2020 172,875 $ 2,216 ( 15,631 ) $ ( 784,596 ) $ 1,741,538 $ 1,656,639 $ ( 41,153 ) $ 2,574,644

Ordinary Shares Treasury Shares Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity

Number Amount Number Amount

Balance as of December 31, 2019 172,561 $ 2,212 ( 14,733 ) $ ( 749,421 ) $ 1,725,091 $ 1,616,357 $ ( 20,484 ) $ 2,573,755

5 unchanged sentences

Share-based compensation — — — — 14,212 — — 14,212

Net income — — — — — 42,619 — 42,619

Other comprehensive loss — — — — — — ( 20,669 ) ( 20,669 )

Balance as of September 30, 2020 172,875 $ 2,216 ( 15,631 ) $ ( 784,596 ) $ 1,741,538 $ 1,656,639 $ ( 41,153 ) $ 2,574,644

Ordinary Shares Treasury Shares Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity

Number Amount Number Amount

Balance as of June 30, 2019 172,325 $ 2,209 ( 10,986 ) $ ( 567,615 ) $ 1,710,711 $ 1,492,356 $ ( 20,598 ) $ 2,617,063

Ordinary Shares

Treasury Shares

Retained Earnings

Comprehensive

Shareholders’

Balance as of March 31, 2019

Surrender of shares for tax withholding — — ( 4 ) ( 175 ) — — — ( 175 )

4 unchanged sentences

Share-based compensation — — — — 2,763 — — 2,763

Other comprehensive loss

Balance as of June 30, 2019

Ordinary Shares

Treasury Shares

Retained Earnings

Comprehensive

Shareholders’

Net income — — — — — 70,675 — 70,675

Other comprehensive income — — — — — — 7,000 7,000

Balance as of September 30, 2019 172,427 $ 2,211 ( 13,084 ) $ ( 665,263 ) $ 1,716,682 $ 1,562,856 $ ( 13,598 ) $ 2,602,888

Ordinary Shares Treasury Shares Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity

Number Amount Number Amount

Balance as of December 31, 2018 171,719 $ 2,203 ( 7,571 ) $ ( 399,417 ) $ 1,691,190 $ 1,340,636 $ ( 26,178 ) $ 2,608,434

5 unchanged sentences

Share-based compensation — — — — 15,188 — — 15,188

Net income — — — — — 229,176 — 229,176

Other comprehensive income — — — — — — 12,580 12,580

Balance as of June 30, 2019

Balance as of September 30, 2019 172,427 $ 2,211 ( 13,084 ) $ ( 665,263 ) $ 1,716,682 $ 1,562,856 $ ( 13,598 ) $ 2,602,888

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

2 unchanged sentences

Basis of Presentation

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 reflect the financial position, results of operations, comprehensive 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.

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

7 unchanged sentences

Revenue Recognition

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

Sensing Solutions

Performance Sensing

Sensing Solutions

The following table presents net revenue disaggregated by segment and end market for the three months ended September 30, 2020 and 2019:

For the three months ended September 30, 2020 For the three months ended September 30, 2019

Performance Sensing Sensing Solutions Total Performance Sensing Sensing Solutions Total

Automotive $ 456,200 $ 7,801 $ 464,001 $ 493,675 $ 10,738 $ 504,413

124,736 — 124,736 134,918 — 134,918

Industrial — 87,174 87,174 — 83,718 83,718

Appliance and HVAC (2)

— 47,618 47,618 — 49,724 49,724

Aerospace — 31,740 31,740 — 41,962 41,962

Other — 33,044 33,044 — 34,980 34,980

Total $ 580,936 $ 207,377 $ 788,313 $ 628,593 $ 221,122 $ 849,715

________________________

(1) Heavy vehicle and off-road

(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

The following table presents net revenue disaggregated by segment and end market for the nine months ended September 30, 2020 and 2019:

For the nine months ended September 30, 2020 For the nine months ended September 30, 2019

Performance Sensing Sensing Solutions Total Performance Sensing Sensing Solutions Total

Automotive $ 1,180,402 $ 23,316 $ 1,203,718 $ 1,483,986 $ 32,838 $ 1,516,824

354,430 — 354,430 429,151 — 429,151

Industrial — 247,037 247,037 — 272,177 272,177

Appliance and HVAC

— 136,703 136,703 — 157,260 157,260

Aerospace — 101,057 101,057 — 129,843 129,843

Other — 96,142 96,142 — 98,685 98,685

Total $ 1,534,832 $ 604,255 $ 2,139,087 $ 1,913,137 $ 690,803 $ 2,603,940

Share-Based Payment Plans

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

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

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

For the three months ended For the nine months ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Stock options $ 179 $ 1,499 $ 2,721 $ 4,987

2 unchanged sentences

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 :

We granted the following restricted stock units ("RSUs" and each, an "RSU") and performance-based restricted stock units ("PRSUs" and each, a "PRSU") under the Sensata Technologies Holding plc First Amended and Restated 2010 Equity Incentive Plan during the nine months ended September 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

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 RSU (1)

10 N/A $ 36.67

Directors RSU (1)

39 N/A $ 36.45

Various executives and employees RSU (2)

748 N/A $ 28.37

Various executives and employees PRSU (3)

401 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.

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

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

These RSUs will fully vest on various dates between April 2023 and September 2023.

(3) These PRSUs vest on various dates between April 2023 and September 2023.

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

7 unchanged sentences

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

Reductions-in-Force

Site Closures

(Dollars in millions)

Reductions-in-Force Site Closures

(Dollars in millions) Positions Minimum Maximum Minimum Maximum

Performance Sensing 214 $ 12.6 $ 13.7 $ 3.0 $ 4.0

1 unchanged sentence

Corporate and other 431 12.2 13.4 — —

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.

Total 980 $ 35.0 $ 38.0 $ 8.0 $ 10.0

Charges recognized in the nine months ended September 30, 2020 related to the Q2 2020 Global Restructure Program are presented by segment below.

All charges related to severance costs and were recorded in restructuring and other charges, net.

For the nine months ended September 30, 2020

Performance Sensing $ 7,609

2 unchanged sentences

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

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

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

For the three months ended For the nine months ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Q2 2020 Global Restructure Program charges

$ — $ — $ 24,120 $ —

Other restructuring charges

Severance costs, net (1)

206 5,549 4,103 23,035

Facility and other exit costs 423 208 423 245

( 11,148 ) 664 3,551 4,760

Restructuring and other charges, net $ ( 10,519 ) $ 6,421 $ 32,197 $ 28,040

___________________________________

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.

(1) Severance costs, net (excluding those related to the Q2 2020 Global Restructure Program) for the nine months ended September 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 nine months ended September 30, 2019 included termination benefits provided in connection with workforce reductions of manufacturing, engineering, and administrative positions including the elimination of certain positions related to site consolidations.

Severance costs, net for the three months ended September 30, 2019 also included $ 6.5 million of termination benefits provided under a one-time benefit arrangement related to the shutdown and relocation of an operating site in Germany.

Severance costs, net for the nine months ended September 30, 2019 also included approximately $ 12.7 million of benefits provided under a voluntary retirement incentive program offered to a limited number of eligible employees in the U.S.

(2) In the three months ended September 30, 2020, we settled a patent infringement case brought by Wasica Finance GmbH ("Wasica") against Schrader, and released $ 11.7 million of the related liability, which is presented in restructuring and other charges, net.

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

For the nine months ended September 30, 2020, this release largely offset a charge of $ 12.1 million resulting from a prejudgment interest-related award granted by the court on behalf of Wasica in the three months ended June 30, 2020.

Other charges in the three and nine months ended September 30, 2020 and 2019 primarily related to deferred compensation incurred in connection with the acquisition of GIGAVAC, LLC.

The following table presents a rollforward of the severance portion of our restructuring obligations for the nine months ended September 30, 2020.

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

Q2 2020 Global Restructure Program Other Total

Balance at December 31, 2019 $ — $ 14,779 $ 14,779

Charges, net of reversals 24,120 4,103 28,223

Payments ( 11,601 ) ( 12,972 ) ( 24,573 )

Foreign currency remeasurement 333 ( 224 ) 109

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

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

Balance at September 30, 2020 $ 12,852 $ 5,686 $ 18,538

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

For the three months ended For the nine months ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Currency remeasurement gain/(loss) on net monetary assets $ 5,422 $ ( 6,031 ) $ 5,878 $ ( 8,492 )

(Loss)/gain on foreign currency forward contracts ( 1,060 ) 1,289 ( 4,424 ) 2,806

Gain on commodity forward contracts 6,138 1,786 5,990 2,807

Loss on debt refinancing — ( 4,364 ) — ( 4,364 )

Net periodic benefit cost, excluding service cost

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

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.

( 1,506 ) ( 272 ) ( 8,403 ) ( 846 )

Other 200 32 ( 552 ) 164

Other, net $ 9,194 $ ( 7,560 ) $ ( 1,511 ) $ ( 7,925 )

The following table presents the provision for income taxes for the three and nine months ended September 30, 2020 and 2019:

For the three months ended For the nine months ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Provision for income taxes $ 15,181 $ 28,341 $ 15,106 $ 80,649

The decrease in total tax from the prior periods was predominantly related to the overall decrease in income before taxes 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.

1 unchanged sentence

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:

The provision for 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 (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

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

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 and nine months ended September 30, 2020 and 2019 the weighted-average ordinary shares outstanding used to calculate basic and diluted net income per share were as follows:

For the three months ended For the nine months ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Basic weighted-average ordinary shares outstanding 157,220 160,458 157,335 161,774

2 unchanged sentences

Diluted weighted-average ordinary shares outstanding 157,979 161,308 157,990 162,769

___________________________________

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.

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.

These potential ordinary shares were as follows:

For the three months ended

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

For the three months ended For the nine months ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Anti-dilutive shares excluded 1,680 1,381 1,868 1,251

Contingently issuable shares excluded 1,183 767 1,010 679

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

June 30, 2020

December 31, 2019

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

September 30, 2020 December 31, 2019

Finished goods $ 162,186 $ 197,531

1 unchanged sentence

Raw materials 185,885 205,140

Inventories $ 438,188 $ 506,678

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 June 30, 2020 and 2019 were as follows:

Defined Benefit

Retiree Healthcare

Defined Benefit

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

Plans Non-U.S.

Defined Benefit Retiree Healthcare Defined Benefit Total

2020 2019 2020 2019 2020 2019 2020 2019

Service cost $ — $ — $ 2 $ 2 $ 777 $ 715 $ 779 $ 717

Interest cost 206 394 37 48 294 332 537 774

Expected return on plan assets

( 292 ) ( 442 ) — — ( 177 ) ( 175 ) ( 469 ) ( 617 )

Amortization of net loss 311 242 ( 1 ) 7 257 191 567 440

1 unchanged sentence

Loss on settlement 31 — — — 785 — 816 —

Loss on curtailment — — 249 — — — 249 —

Net periodic benefit cost/(credit) $ 256 $ 194 $ 91 $ ( 270 ) $ 1,938 $ 1,065 $ 2,285 $ 989

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

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

Plans Non-U.S.

Defined Benefit Retiree Healthcare Defined Benefit Total

2020 2019 2020 2019 2020 2019 2020 2019

Service cost $ — $ — $ 7 $ 6 $ 2,485 $ 2,078 $ 2,492 $ 2,084

Interest cost 679 1,192 110 154 1,005 1,008 1,794 2,354

3 unchanged sentences

Loss on settlement 4,363 — — — 2,344 — 6,707 —

Loss on curtailment — — 249 — — — 249 —

Net periodic benefit cost/(credit) $ 4,930 $ 580 $ ( 205 ) $ ( 792 ) $ 6,170 $ 3,142 $ 10,895 $ 2,930

1 unchanged sentence

Refer to Note 6, "Other, Net."

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

June 30, 2020

December 31, 2019

September 20, 2026

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

Maturity Date September 30, 2020 December 31, 2019

Term Loan September 20, 2026 $ 457,254 $ 460,725

4.875 % Senior Notes

8 unchanged sentences

February 15, 2030 450,000 450,000

Revolving Credit Facility

March 27, 2024

3.75 % Senior Notes

February 15, 2031 750,000 —

discount ( 10,143 ) ( 11,758 )

deferred financing costs ( 29,404 ) ( 24,452 )

1 unchanged sentence

Long-term debt, net

$ 3,963,076 $ 3,219,885

Finance lease and other financing obligations $ 30,778 $ 31,098

1 unchanged sentence

Finance lease and other financing obligations, less current portion $ 28,360 $ 28,810

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.

Revolving Credit Facility

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

On August 17, 2020, we repaid these borrowings using a portion of the proceeds from issuance of the 3.75 % Senior Notes, as detailed below.

As of September 30, 2020, we had $ 416.1 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 June 30, 2020 , no amounts had been drawn against these outstanding letters of credit.

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

3.75 % Senior Notes

On August 17, 2020, our indirect, wholly-owned subsidiary, Sensata Technologies, Inc.

("STI"), completed the issuance and sale of $ 750.0 million aggregate principal amount of 3.75 % senior notes due 2031 (the " 3.75 % Senior Notes").

A portion of the proceeds of the issuance of the 3.75 % Senior Notes was used to repay approximately $ 400.0 million of outstanding borrowings under the Revolving Credit Facility as well as to pay fees and expenses in connection with the offering of the 3.75 % Senior Notes and related transactions.

The 3.75 % Senior Notes were issued under an indenture dated as of August 17, 2020 among STI, as issuer, The Bank of New York Mellon, as trustee, and our guarantor subsidiaries named therein (the "3.75% Senior Notes Indenture").

The 3.75% Senior Notes Indenture contains covenants that limit the ability of our indirect, wholly-owned subsidiary, Sensata Technologies B.V.

("STBV") and its subsidiaries (including STI) to, among other things:

engage in sale and leaseback transactions;

with respect to any subsidiary of STBV (other than STI), incur indebtedness without such subsidiary’s guaranteeing the 3.75 % Senior Notes;

or consolidate, merge with, or sell, assign, convey, transfer, lease, or otherwise dispose of all or substantially all of their properties or assets to, another person.

These covenants are subject to important exceptions and qualifications set forth in the 3.75% Senior Notes Indenture.

The 3.75 % Senior Notes bear interest at 3.75 % per year and mature on February 15, 2031.

Interest is payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2021.

The 3.75 % Senior Notes are guaranteed by STBV and all of the subsidiaries of STBV (other than STI) that guarantee the obligations of (1) STI under its senior secured credit facilities and 4.375 % Senior Notes due 2030, (2) STBV under the 4.875 % Senior Notes due 2023, 5.625 % Senior Notes due 2024, and 5.0 % Senior Notes due 2025, and (3) Sensata Technologies UK Financing Co.

plc under the 6.25 % Senior Notes due 2026.

At any time, and from time to time, prior to February 15, 2026, STI may redeem the 3.75 % Senior Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount of the 3.75 % Senior Notes being redeemed, plus a “make whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

At any time on or after February 15, 2026, STI may redeem the 3.75 % Senior Notes, in whole or in part, at the following prices (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, up to but excluding the redemption date.

Period beginning February 15, Price

2026 101.875 %

2027 100.938 %

2028 and thereafter 100.000 %

In addition, at any time prior to August 15, 2023, STI may redeem up to 40 % of the principal amount of the outstanding 3.75 % Senior Notes (including additional 3.75 % Senior Notes, if any) with the net cash proceeds of certain equity offerings at a redemption price (expressed as a percentage of principal amount) of 103.75 %, plus accrued and unpaid interest, if any, up to but excluding the redemption date, provided that at least 60 % of the aggregate principal amount of the 3.75 % Senior Notes (including additional 3.75 % Senior Notes, if any) remains outstanding immediately after each such redemption.

Upon the occurrence of certain changes in control, each holder of the 3.75 % Senior Notes will have the right to require STI to repurchase the 3.75 % Senior Notes at 101 % of their principal amount plus accrued and unpaid interest, if any, up to but excluding the date of repurchase.

Upon changes in certain tax laws or treaties, or any change in the official application, administration, or interpretation thereof, STI may, at its option, redeem the 3.75 % Senior Notes, in whole but not in part, at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, up to but excluding the redemption date, and all Additional Amounts (as defined in the 3.75% Senior Notes Indenture), if any, then due and which will become due on the date of redemption.

Accounting for Debt Financing Transactions

We account for our debt financing transactions as disclosed in Note 2, "Significant Accounting Policies" of the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.

In connection with of the issuance of the 3.75 % Senior Notes, we recognized $ 8.4 million of deferred financing costs, which are presented as a reduction of long-term debt on our condensed consolidated balance sheets.

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

As of September 30, 2020 and December 31, 2019, accrued interest totaled $ 50.4 million and $ 42.8 million, respectively.

Commitments and Contingencies

We are a defendant in a lawsuit, Wasica Finance Gmbh et al v.

We were a defendant in a lawsuit, Wasica Finance Gmbh et al v.

Schrader International Inc.

et al, Case No.

13-1353-CPS, U.S.D.C., Delaware, in which the claimant alleges infringement of their patent (US 5,602,524) in connection with certain of our tire pressure monitoring system products.

The patent in question has expired, and as a result, the claimant seeks damages for past alleged infringement with interest and costs.

The asserted patent is the U.S.

13-1353-CPS, U.S.D.C., Delaware , in which the claimant alleged infringement of their patent (US 5,602,524) in connection with certain of our tire pressure monitoring system products.

The patent in question has expired, and as a result, the claimant sought damages for past alleged infringement with interest and costs.

The asserted patent was the U.S.

counterpart of a German patent that had been previously asserted against Schrader.

Schrader succeeded in proving that German patent to be invalid.

On February 14, 2020 , the federal jury trial related to this lawsuit concluded, and the jury found Schrader International Inc.

liable for damages in the amount of $ 31.2 million .

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.

On February 14, 2020, a jury found us 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.

On July 6, 2020, the court awarded an additional $ 12.1 million for plaintiffs and against us for prejudgment interest-related damages, and as a result, 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.

The parties executed and closed a Litigation Settlement & License Agreement on September 18, 2020 to settle the matter for $ 31.6 million.

As a result of this settlement, in the three months ended September 30, 2020, we recognized a gain of $ 11.7 million, presented in restructuring and other charges, net.

The lawsuit was formally dismissed by the District Court (D.

Del) on September 22, 2020, and the U.S.

Court of Appeals for the Federal Circuit on September 24, 2020.

Shareholders' Equity

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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 six months ended June 30, 2020 were as follows:

Cash Flow Hedges

Defined Benefit and Retiree Healthcare Plans

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

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

Accumulated Other Comprehensive Loss

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

Cash Flow Hedges Defined Benefit and Retiree Healthcare Plans Accumulated Other Comprehensive Loss

Balance at December 31, 2019 $ 16,546 $ ( 37,030 ) $ ( 20,484 )

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

Other comprehensive loss before reclassifications, net of tax ( 17,815 ) — ( 17,815 )

Reclassifications from accumulated other comprehensive loss, net of tax ( 8,883 ) 6,029 ( 2,854 )

Other comprehensive (loss)/income ( 26,698 ) 6,029 ( 20,669 )

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

Balance at September 30, 2020 $ ( 10,152 ) $ ( 31,001 ) $ ( 41,153 )

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

For the three months ended September 30, For the nine months ended September 30, Affected Line in Condensed Consolidated Statements of Operations

Component 2020 2019 2020 2019

Derivative instruments designated and qualifying as cash flow hedges:

Foreign currency forward contracts

Net revenue (1)

Foreign currency forward contracts

Cost of revenue (1)

Total, before taxes

(Loss)/income before taxes

Income tax effect

Provision for/(benefit from) income taxes

Total, net of taxes

Net (loss)/income

Defined benefit and retiree healthcare plans

Other, net (2)

Income tax effect

Provision for/(benefit from) income taxes

Total, net of taxes

Net (loss)/income

Foreign currency forward contracts $ ( 625 ) $ ( 7,615 ) $ ( 13,640 ) $ ( 17,327 ) Net revenue (1)

Foreign currency forward contracts 3,371 ( 968 ) 1,796 ( 2,037 ) Cost of revenue (1)

Total, before taxes 2,746 ( 8,583 ) ( 11,844 ) ( 19,364 ) Income before taxes

Income tax effect ( 687 ) 1,760 2,961 3,970 Provision for income taxes

Total, net of taxes $ 2,059 $ ( 6,823 ) $ ( 8,883 ) $ ( 15,394 ) Net income

Defined benefit and retiree healthcare plans $ 1,438 $ 115 $ 8,150 $ 362 Other, net (2)

Income tax effect ( 423 ) ( 32 ) ( 2,121 ) ( 113 ) Provision for income taxes

Total, net of taxes $ 1,015 $ 83 $ 6,029 $ 249 Net income

__________________________

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Measured on a Recurring Basis

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.

The fair values of our assets and liabilities measured at fair value on a recurring basis as of September 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.

June 30, 2020

December 31, 2019

September 30, 2020 December 31, 2019

Foreign currency forward contracts $ 5,601 $ 23,561

Commodity forward contracts 7,266 3,623

Total $ 12,867 $ 27,184

Foreign currency forward contracts $ 16,919 $ 1,959

Commodity forward contracts 870 462

Total $ 17,789 $ 2,421

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

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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 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 .

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

During the three months September 30, 2020, no events or changes in circumstances occurred that would have triggered the need for an additional impairment review of these assets.

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 June 30, 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 September 30, 2020 and December 31, 2019.

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

June 30, 2020

December 31, 2019

Carrying Value (1)

September 30, 2020 December 31, 2019

Carrying Value (1)

Fair Value Carrying Value (1)

Term Loan $ 457,254 $ 452,681 $ 460,725 $ 464,181

4.875 % Senior Notes

$ 500,000 $ 525,000 $ 500,000 $ 532,500

5.625 % Senior Notes

$ 400,000 $ 429,000 $ 400,000 $ 444,000

5.0 % Senior Notes

$ 700,000 $ 749,000 $ 700,000 $ 759,500

6.25 % Senior Notes

$ 750,000 $ 776,250 $ 750,000 $ 808,125

4.375 % Senior Notes

Revolving Credit Facility

$ 450,000 $ 469,125 $ 450,000 $ 457,875

3.75 % Senior Notes

$ 750,000 $ 744,375 $ — $ —

___________________________________

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

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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

Refer to the table below for the carrying values of equity investments using the measurement alternative, which are presented as a component of other assets in the condensed consolidated balance sheets.

September 30, 2020 December 31, 2019

Quanergy Systems, Inc.

Lithium Balance

$ 50,000 $ 50,000

Other 15,000 3,700

Total $ 65,000 $ 53,700

Derivative Instruments and Hedging Activities

Hedges of Foreign Currency Risk

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)

Effective Date(s)

Maturity Date(s)

Index (Exchange Rates)

Weighted-Average Strike Rate

For the three and nine months ended September 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 September 30, 2020, we estimated that $ 10.5 million of net losses will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending September 30, 2021.

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

(in millions) Effective Date(s) Maturity Date(s) Index (Exchange Rates) Weighted-Average Strike Rate Hedge

Designation (1)

June 26, 2020

July 31, 2020

Euro ("EUR") to USD

Not designated

Various from August 2018 to June 2020

Variance from July 2020 to May 2022

Cash flow hedge

June 23, 2020

July 31, 2020

USD to Chinese Renminbi ("CNY")

Not designated

Various from December 2019 to January 2020

Various from July to December 2020

Cash flow hedge

June 26, 2020

July 31, 2020

USD to Japanese Yen ("JPY")

Not designated

Various from August 2018 to June 2020

Various from July 2020 to May 2022

USD to Korean Won ("KRW")

Cash flow hedge

June 25, 2020

July 30, 2020

USD to Malaysian Ringgit ("MYR")

Not designated

June 26, 2020

July 31, 2020

USD to Mexican Peso ("MXN")

Not designated

Various from August 2018 to June 2020

Various from July 2020 to May 2022

Cash flow hedge

June 26, 2020

July 31, 2020

British Pound Sterling ("GBP") to USD

Not Designated

Various from August 2018 to June 2020

Various from July 2020 to May 2022

Cash flow hedge

305.8 EUR Various from November 2018 to September 2020 Various from October 2020 to September 2022 Euro ("EUR") to USD 1.16 USD Cash flow hedge

509.0 CNY September 25, 2020 October 30, 2020 USD to Chinese Renminbi ("CNY") 6.87 CNY Not designated

330.6 CNY Various from December 2019 to January 2020 Various from October to December 2020 USD to CNY 7.01 CNY Cash flow hedge

700.0 JPY September 28, 2020 October 30, 2020 USD to Japanese Yen ("JPY") 105.43 JPY Not designated

18,310.5 KRW Various from November 2018 to September 2020 Various from October 2020 to September 2022 USD to Korean Won ("KRW") 1,172.15 KRW Cash flow hedge

10.0 MYR September 25, 2020 October 30, 2020 USD to Malaysian Ringgit ("MYR") 4.16 MYR Not designated

193.0 MXN September 28, 2020 October 30, 2020 USD to Mexican Peso ("MXN") 22.34 MXN Not designated

2,991.8 MXN Various from November 2018 to September 2020 Various from October 2020 to September 2022 USD to MXN 22.38 MXN Cash flow hedge

7.0 GBP September 28, 2020 October 30, 2020 British Pound Sterling ("GBP") to USD 1.29 USD Not Designated

47.8 GBP Various from November 2018 to September 2020 Various from October 2020 to September 2022 GBP to USD 1.28 USD Cash flow hedge

_________________________

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Hedges of Commodity Risk

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

Weighted-Average Strike Price Per Unit

743,321 troy oz.

July 2020 - June 2022

7,095 troy oz.

July 2020 - June 2022

183,689 pounds

July 2020 - June 2022

2,543,429 pounds

July 2020 - June 2022

1,915,045 pounds

July 2020 - June 2022

7,071 troy oz.

July 2020 - June 2022

As of September 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 :

Commodity Notional Remaining Contracted Periods Weighted-Average Strike Price Per Unit

Silver 672,759 troy oz.

October 2020 - August 2022 $ 18.39

Gold 6,562 troy oz.

October 2020 - August 2022 $ 1,623.38

Nickel 157,338 pounds October 2020 - August 2022 $ 6.26

Aluminum 2,027,231 pounds October 2020 - August 2022 $ 0.85

Copper 1,666,157 pounds October 2020 - August 2022 $ 2.66

Platinum 6,660 troy oz.

October 2020 - August 2022 $ 893.48

Palladium 752 troy oz.

October 2020 - August 2022 $ 1,799.61

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 June 30, 2020 and December 31, 2019 :

Asset Derivatives

Liability Derivatives

Balance Sheet Location

June 30, 2020

December 31, 2019

Balance Sheet Location

June 30, 2020

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 September 30, 2020 and December 31, 2019:

Asset Derivatives Liability Derivatives

Balance Sheet Location September 30, 2020 December 31, 2019 Balance Sheet Location September 30, 2020 December 31, 2019

Derivatives designated as hedging instruments

Foreign currency forward contracts

Prepaid expenses and other current assets

Accrued expenses and other current liabilities

Foreign currency forward contracts

Other long-term liabilities

Foreign currency forward contracts Prepaid expenses and other current assets $ 3,420 $ 20,957 Accrued expenses and other current liabilities $ 13,309 $ 1,055

Foreign currency forward contracts Other assets 2,171 2,530 Other long-term liabilities 3,567 428

Total $ 5,591 $ 23,487 $ 16,876 $ 1,483

Derivatives not designated as hedging instruments

Commodity forward contracts

Prepaid expenses and other current assets

Accrued expenses and other current liabilities

Commodity forward contracts

Other long-term liabilities

Foreign currency forward contracts

Prepaid expenses and other current assets

Accrued expenses and other current liabilities

Commodity forward contracts Prepaid expenses and other current assets $ 5,876 $ 3,069 Accrued expenses and other current liabilities $ 451 $ 394

Commodity forward contracts Other assets 1,390 554 Other long-term liabilities 419 68

Foreign currency forward contracts Prepaid expenses and other current assets 10 74 Accrued expenses and other current liabilities 43 476

Total $ 7,276 $ 3,697 $ 913 $ 938

These fair value measurements were 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 June 30, 2020 and 2019 :

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 income for the three months ended September 30, 2020 and 2019:

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

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

2020 2019 2020 2019

Foreign currency forward contracts

$ ( 12,666 ) $ 19,797 Net revenue $ 625 $ 7,615

Foreign currency forward contracts

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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

hedging instruments Amount of Gain/(Loss) Recognized in Net Income Location of Gain/(Loss) Recognized in Net Income

Commodity forward contracts $ 6,138 $ 1,786 Other, net

Foreign currency forward contracts $ ( 1,060 ) $ 1,289 Other, net

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 income for the nine months ended September 30, 2020 and 2019:

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 (Loss)/Income

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

2020 2019 2020 2019

Foreign currency forward contracts

$ ( 6,076 ) $ 30,124 Net revenue $ 13,640 $ 17,327

Foreign currency forward contracts

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Derivatives not designated as

hedging instruments

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

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

Commodity forward contracts

Foreign currency forward contracts

hedging instruments Amount of Gain/(Loss) Recognized in Net Income Location of Gain/(Loss) Recognized in Net Income

Commodity forward contracts $ 5,990 $ 2,807 Other, net

Foreign currency forward contracts $ ( 4,424 ) $ 2,806 Other, net

Credit Risk Related Contingent Features

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 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.

We have agreements with 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 September 30, 2020, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $ 17.9 million.

As of September 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.

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.

In 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.

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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, 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.

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 or 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.

1 unchanged sentence

However, this measure should be considered in addition to, and not as a substitute for, or superior to, operating income or other measures of financial performance prepared in accordance with U.S.

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 and six months ended June 30, 2020 and 2019 (recast to reflect realignment of performance measures as discussed above):

For the three months ended

For the six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

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" of the audited consolidated financial statements and notes thereto 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 and nine months ended September 30, 2020 and 2019 (recast to reflect realignment of performance measures as discussed above):

For the three months ended For the nine months ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Performance Sensing $ 580,936 $ 628,593 $ 1,534,832 $ 1,913,137

8 unchanged sentences

Restructuring and other charges, net 10,519 ( 6,421 ) ( 32,197 ) ( 28,040 )

Operating (loss)/income

Operating income 126,845 146,132 183,576 436,167

Interest expense, net ( 44,129 ) ( 39,556 ) ( 124,340 ) ( 118,417 )

(Loss)/income before taxes

Other, net 9,194 ( 7,560 ) ( 1,511 ) ( 7,925 )

Income before taxes $ 91,910 $ 99,016 $ 57,725 $ 309,825

Cautionary Statements Concerning Forward-Looking Statements

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• 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 ");

• 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;

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• security breaches, cyber theft of our intellectual property, and other disruptions to our information technology infrastructure, or improper disclosure of confidential, personal, or proprietary data;

foreign currency risks, changes in socio-economic conditions, or changes to monetary and fiscal policies;

• foreign currency risks, changes in socioeconomic conditions, or changes to monetary and fiscal policies;

• our level of indebtedness, or our inability to meet debt service obligations or comply with the covenants contained in the credit agreement and senior notes indentures;

1 unchanged sentence

• risks related to the potential for goodwill impairment;

the impact of challenges by taxing authorities of our historical and future tax positions or our allocation of taxable income among our subsidiaries, and challenges to the sovereign taxation regimes of EU member states by the European Commission and the Organization for Economic Co-operation and Development;

• the impact of challenges by taxing authorities of our historical and future tax positions or our allocation of taxable income among our subsidiaries, unfavorable developments in taxation sentiments in countries where we do business, and challenges to the sovereign taxation regimes of EU member states by the European Commission and the Organization for Economic Co-operation and Development;

• changes to, or inability to comply with, various regulations, including tax laws, import/export regulations, anti-bribery laws, environmental, health, and safety laws, and other governmental regulations;

7 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