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Item 1. Financial Statements

2022-04-26 compared with 2021-10-26 · 203 added, 368 removed, 339 unchanged (63% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

September 30,

2022 December 31,

1 unchanged sentence

Cash and cash equivalents $ 1,608,481 $ 1,708,955

Accounts receivable, net of allowances of $ 20,709 and $ 19,033 as of September 30, 2021 and December 31, 2020, respectively

Accounts receivable, net of allowances of $ 28,001 and $ 17,003 as of March 31, 2022 and December 31, 2021, respectively

693,568 653,438

4 unchanged sentences

Goodwill 3,555,369 3,502,063

Other intangible assets, net of accumulated amortization of $ 2,245,877 and $ 2,145,634 as of September 30, 2021 and December 31, 2020, respectively

Other intangible assets, net of accumulated amortization of $ 2,314,755 and $ 2,277,393 as of March 31, 2022 and December 31, 2021, respectively

907,315 946,731

17 unchanged sentences

Shareholders’ equity:

Ordinary shares, € 0.01 nominal value per share, 177,069 shares authorized, and 174,079 and 173,266 shares issued as of September 30, 2021 and December 31, 2020, respectively

Treasury shares, at cost, 15,631 shares as of September 30, 2021 and December 31, 2020

Ordinary shares, € 0.01 nominal value per share, 177,069 shares authorized, and 174,583 and 174,287 shares issued as of March 31, 2022 and December 31, 2021, respectively

Treasury shares, at cost, 17,576 and 16,438 shares as of March 31, 2022 and December 31, 2021, respectively

( 899,697 ) ( 832,439 )

8 unchanged sentences

(In thousands, except per share amounts)

For the three months ended For the nine months ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

For the three months ended

March 31, 2022 March 31, 2021

Net revenue $ 975,770 $ 942,528

18 unchanged sentences

(In thousands)

For the three months ended For the nine months ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

For the three months ended

March 31, 2022 March 31, 2021

Net income $ 22,441 $ 53,733

Other comprehensive income/(loss):

Other comprehensive income:

Cash flow hedges 2,850 14,278

Defined benefit and retiree healthcare plans 428 1,712

Other comprehensive income/(loss) 3,569 ( 1,182 ) 22,629 ( 20,669 )

Other comprehensive income 3,278 15,990

Comprehensive income $ 25,719 $ 69,723

3 unchanged sentences

(In thousands)

For the nine months ended

September 30, 2021 September 30, 2020

For the three months ended

March 31, 2022 March 31, 2021

Cash flows from operating activities:

7 unchanged sentences

Deferred income taxes ( 340 ) 130

Unrealized loss on derivative instruments and other 17,359 5,876

Acquisition-related compensation payments ( 7,500 ) —

Mark-to-market loss on equity investments, net 59,279 —

Unrealized (gain)/loss on derivative instruments and other ( 517 ) 8,797

Changes in operating assets and liabilities, net of the effects of acquisitions:

19 unchanged sentences

Payments of debt financing costs — ( 31,110 )

Net cash provided by financing activities 219,043 701,202

Net cash used in financing activities ( 56,976 ) ( 23,528 )

Net change in cash and cash equivalents ( 100,474 ) 31,946

Cash and cash equivalents, beginning of period 1,861,980 774,119

Cash and cash equivalents, beginning of year 1,708,955 1,861,980

Cash and cash equivalents, end of period $ 1,608,481 $ 1,893,926

5 unchanged sentences

Number Amount Number Amount

Balance as of June 30, 2021 174,005 $ 2,229 ( 15,631 ) $ ( 784,596 ) $ 1,789,863 $ 1,936,427 $ ( 30,475 ) $ 2,913,448

Surrender of shares for tax withholding — — ( 18 ) ( 1,039 ) — — — ( 1,039 )

Stock options exercised 34 — — — 1,290 — — 1,290

Vesting of restricted securities 58 1 — — — ( 1 ) — —

Retirement of ordinary shares ( 18 ) — 18 1,039 — ( 1,039 ) — —

Share-based compensation — — — — 7,396 — — 7,396

Net income — — — — — 84,959 — 84,959

Other comprehensive income — — — — — — 3,569 3,569

Balance as of September 30, 2021 174,079 $ 2,230 ( 15,631 ) $ ( 784,596 ) $ 1,798,549 $ 2,020,346 $ ( 26,906 ) $ 3,009,623

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, 2021 174,287 $ 2,232 ( 16,438 ) $ ( 832,439 ) $ 1,812,244 $ 2,132,257 $ ( 19,560 ) $ 3,094,734

2 unchanged sentences

Vesting of restricted securities 9 — — — — — — —

Repurchase of ordinary shares — — ( 1,138 ) ( 67,258 ) — — — ( 67,258 )

Retirement of ordinary shares ( 3 ) — 3 135 — ( 135 ) — —

2 unchanged sentences

Other comprehensive income — — — — — — 3,278 3,278

Balance as of September 30, 2021 174,079 $ 2,230 ( 15,631 ) $ ( 784,596 ) $ 1,798,549 $ 2,020,346 $ ( 26,906 ) $ 3,009,623

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 )

Stock options exercised 29 1 — — 1,090 — — 1,091

Vesting of restricted securities 2 — — — — — — —

Retirement of ordinary shares — — — 21 — ( 21 ) — —

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

Net income — — — — — 76,729 — 76,729

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

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

Balance as of March 31, 2022 174,583 $ 2,236 ( 17,576 ) $ ( 899,697 ) $ 1,831,497 $ 2,154,563 $ ( 16,282 ) $ 3,072,317

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

4 unchanged sentences

Vesting of restricted securities 12 — — — — — — —

Repurchase of ordinary shares — — ( 898 ) ( 35,175 ) — — — ( 35,175 )

Retirement of ordinary shares ( 4 ) — 4 221 — ( 221 ) — —

1 unchanged sentence

Net income — — — — — 53,733 — 53,733

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

Other comprehensive income — — — — — — 15,990 15,990

Balance as of March 31, 2021 173,533 $ 2,223 ( 15,631 ) $ ( 784,596 ) $ 1,775,320 $ 1,831,241 $ ( 33,545 ) $ 2,790,643

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 income, cash flows, and changes in shareholders' equity of Sensata Technologies Holding plc ("Sensata plc"), a public limited company incorporated under the laws of England and Wales, and its subsidiaries, collectively referred to as the "Company," "Sensata," "we," "our," or "us."

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 consolidated 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.

2 unchanged sentences

The accompanying financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the interim period results.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the "2020 Annual Report").

Securities and Exchange Commission (the "SEC") on February 10, 2022 (the "2021 Annual Report").

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

2 unchanged sentences

Revenue Recognition

The following tables presents net revenue disaggregated by segment and end market for the three and nine months ended September 30, 2021 and 2020:

For the three months ended September 30, 2021 For the three months ended September 30, 2020

The following table presents net revenue disaggregated by segment and end market for the three months ended March 31, 2022 and 2021:

For the three months ended March 31, 2022 For the three months ended March 31, 2021

Performance Sensing Sensing Solutions Total Performance Sensing Sensing Solutions Total

10 unchanged sentences

(2) Heating, ventilation and air conditioning

For the nine months ended September 30, 2021 For the nine months ended September 30, 2020

Performance Sensing Sensing Solutions Total Performance Sensing Sensing Solutions Total

Automotive $ 1,543,121 $ 33,003 $ 1,576,124 $ 1,180,402 $ 23,316 $ 1,203,718

HVOR 619,709 — 619,709 354,430 — 354,430

Industrial — 302,758 302,758 — 247,037 247,037

Appliance and HVAC — 185,896 185,896 — 136,703 136,703

Aerospace — 99,847 99,847 — 101,057 101,057

Other — 101,875 101,875 — 96,142 96,142

Total $ 2,162,830 $ 723,379 $ 2,886,209 $ 1,534,832 $ 604,255 $ 2,139,087

Share-Based Payment Plans

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, 2021 and 2020:

For the three months ended For the nine months ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

The following table presents the components of non-cash compensation expense related to our equity awards for the three months ended March 31, 2022 and 2021:

For the three months ended

March 31, 2022 March 31, 2021

Stock options $ 307 $ 460

1 unchanged sentence

Share-based compensation expense $ 6,540 $ 5,099

Equity Awards

At our Annual General Meeting held on May 27, 2021, our shareholders approved the Sensata Technologies Holding plc 2021 Equity Incentive Plan (the "2021 Equity Plan"), which replaced the Sensata Technologies Holding plc First Amended and Restated 2010 Equity Incentive Plan (the "2010 Equity Plan").

The 2021 Equity Plan is substantially similar to the 2010 Equity Plan with some updates based on changes in law and current practices.

The purpose of the 2021 Equity Plan is to promote the long-term growth, profitability, and interests of the Company and its shareholders by aiding us in attracting and retaining employees, officers, consultants, advisors, and non-employee directors capable of assuring our future success.

All awards granted subsequent to this approval were made under the 2021 Equity Plan.

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 2021 Equity Plan and 2010 Equity Plan during the nine months ended September 30, 2021:

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

Directors RSU (1)(5)

27 N/A $ 58.63

Various executives and employees RSU (2)(4)

373 N/A $ 58.37

Various executives and employees PRSU (3)(4)

236 0.0 % - 200.0 %

________________________

(1) These RSUs cliff vest one year from the grant date (May 2022).

(2) These RSUs 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 February 2024 and August 2024.

(3) These PRSUs vest on various dates between April 2024 and May 2024.

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

(4) Primarily granted under the 2010 Equity Plan.

(5) Primarily granted under the 2021 Equity Plan.

Restructuring and Other Charges, Net

On June 30, 2020, in response to the potential long-term impact of the global financial and health crisis caused by the coronavirus ("COVID-19") pandemic on our business, we committed to a plan to reorganize our business (the “Q2 2020 Global Restructure Program”), consisting of voluntary and involuntary reductions-in-force and certain site closures.

The Q2 2020 Global Restructure Program was commenced in order to align our cost structure to the then anticipated future demand outlook, and as of September 30, 2021, we have completed all actions contemplated thereunder, with approximately 840 positions impacted.

Since inception of the Q2 2020 Global Restructure Program, we have recognized cumulative costs of $ 33.2 million, of which $ 28.4 million related to severance charges and $ 4.8 million related to facility and exit costs.

As of September 30, 2021, we have a liability of approximately $ 7.5 million related to actions taken under this plan.

We expect to settle these remaining liabilities with cash on hand.

Restructuring actions taken under the Q2 2020 Global Restructure Program impacted our business segments and corporate functions as follows:

Reductions-in-Force Site Closures

(Dollars in millions) Positions Minimum Maximum Minimum Maximum

Performance Sensing 170 $ 9.3 $ 10.0 $ 3.0 $ 4.0

Sensing Solutions 280 8.0 8.0 3.0 4.0

Corporate and other (1)

390 9.7 11.0 — —

Total 840 $ 27.0 $ 29.0 $ 6.0 $ 8.0

___________________________________

(1) The majority of these positions relate to engineering and manufacturing operations, which are allocated to corporate and other.

However, these restructuring actions will benefit the results of Performance Sensing and Sensing Solutions as well.

Charges recognized in the three and nine months ended September 30, 2021 and 2020 resulting from the Q2 2020 Global Restructure Program are presented by impacted segment below.

However, as discussed in Note 17:

Segment Reporting , restructuring and other charges, net are excluded from segment operating income.

For the three months ended For the nine months ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Performance Sensing $ 1,106 $ — $ 1,909 $ 7,609

Sensing Solutions 1,992 — 5,132 7,181

Corporate and other — — 1,711 9,330

Restructuring and other charges $ 3,098 $ — $ 8,752 $ 24,120

Approximately $ 1.3 million and $ 3.0 million of these charges in the three and nine months ended September 30, 2021, respectively, relate to site closures in Sensing Solutions.

Approximately $ 0.9 million and $ 1.2 million of these charges in the three and nine months ended September 30, 2021, respectively, relate to site closures in Performance Sensing.

None of the charges recognized in 2020 relate to site closures.

The following table presents the components of restructuring and other charges, net for the three and nine months ended September 30, 2021 and 2020:

For the three months ended For the nine months ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

The following table presents the components of restructuring and other charges, net for the three months ended March 31, 2022 and 2021:

For the three months ended

March 31, 2022 March 31, 2021

Q2 2020 Global Restructure Program charges

$ 3,098 $ — $ 8,752 $ 24,120

Other restructuring charges

Other restructuring and other charges, net

Severance costs, net 587 186

133 206 726 4,103

Facility and other exit costs 1,048 666

( 3,427 ) ( 11,148 ) ( 1,354 ) 3,551

Restructuring and other charges, net $ 13,733 $ 4,582

________________________

(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.

(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.

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 intellectual property litigation in the second quarter of 2020.

The following table presents a rollforward of the severance portion of our restructuring obligations for the nine months ended September 30, 2021.

(1) Primarily includes expenses related to acquisition-related incentive compensation, partially offset by a gain resulting from reduction of the liability for contingent consideration for Spear Power Systems ("Spear").

Refer to Note 16:

Acquisitions for additional information.

The following table presents a rollforward of the severance portion of our restructuring obligations for the three months ended March 31, 2022.

Q2 2020 Global Restructure Program Other Total

Balance at December 31, 2020 $ 10,842 $ 4,037 $ 14,879

Balance as of December 31, 2021 $ 3,853 $ 3,380 $ 7,233

Charges, net of reversals — 587 587

1 unchanged sentence

Foreign currency remeasurement ( 6 ) 12 6

Balance at September 30, 2021 $ 7,514 $ 1,514 $ 9,028

The severance liability as of September 30, 2021 was entirely recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheet.

The following table presents the components of other, net for the three and nine months ended September 30, 2021 and 2020:

For the three months ended For the nine months ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Currency remeasurement (loss)/gain on net monetary assets $ ( 324 ) $ 5,422 $ 187 $ 5,878

Balance as of March 31, 2022 $ 892 $ 2,849 $ 3,741

The severance liability as of March 31, 2022 was entirely recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheet.

The following table presents the components of other, net for the three months ended March 31, 2022 and 2021:

For the three months ended

March 31, 2022 March 31, 2021

Currency remeasurement loss on net monetary assets $ ( 67 ) $ ( 1,477 )

Loss on foreign currency forward contracts ( 1,243 ) ( 958 )

(Loss)/gain on commodity forward contracts ( 6,495 ) 6,138 ( 6,462 ) 5,990

Loss on debt refinancing — — ( 30,066 ) —

Gain/(loss) on commodity forward contracts 9,424 ( 1,153 )

Loss on debt financing — ( 30,066 )

Mark-to-market loss on investments, net ( 59,279 ) —

Net periodic benefit cost, excluding service cost ( 755 ) ( 2,410 )

1 unchanged sentence

Other, net $ ( 50,456 ) $ ( 39,397 )

The following table presents the provision for income taxes for the three and nine months ended September 30, 2021 and 2020:

For the three months ended For the nine months ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

The following table presents the provision for income taxes for the three months ended March 31, 2022 and 2021:

For the three months ended

March 31, 2022 March 31, 2021

Provision for income taxes $ 7,588 $ 20,281

The increase in total tax for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily due to the increase in income before taxes.

The increase in total tax for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was predominantly due to the increase in income before taxes as impacted by the mix of profits in the various jurisdictions in which we operate as well as the nonrecurrence of the benefit recognized in the first quarter of 2020 as a result of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").

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

federal government enacted the CARES Act on March 27, 2020.

Federal limitations on interest deductions were reduced in connection with this legislation, and we recognized 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 decrease in total tax for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was predominantly related to the overall decrease in income before taxes, driven in part by the mark-to-market loss on our investment in Quanergy as discussed in Note 14:

Fair Value Measures .

The provision for income taxes consists of (1) current tax expense, which relates primarily to our profitable operations in tax jurisdictions with limited or no net operating loss carryforwards and withholding taxes related to management fees, royalties, and the repatriation of foreign earnings;

2 unchanged sentences

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, 2021 and 2020 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, 2021 September 30, 2020 September 30, 2021 September 30, 2020

For the three months ended March 31, 2022 and 2021 the weighted-average ordinary shares outstanding used to calculate basic and diluted net income per share were as follows:

For the three months ended

March 31, 2022 March 31, 2021

Basic weighted-average ordinary shares outstanding 157,422 157,764

4 unchanged sentences

These potential ordinary shares were as follows:

For the three months ended For the nine months ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

For the three months ended

March 31, 2022 March 31, 2021

Anti-dilutive shares excluded 4 6

Contingently issuable shares excluded 1,002 950

The following table presents the components of inventories as of September 30, 2021 and December 31, 2020:

September 30, 2021 December 31, 2020

The following table presents the components of inventories as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

Finished goods $ 222,375 $ 201,424

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 September 30, 2021 and 2020 were as follows:

Plans Non-U.S.

Defined Benefit Retiree Healthcare Defined Benefit Total

2021 2020 2021 2020 2021 2020 2021 2020

Service cost $ — $ — $ 2 $ 2 $ 725 $ 777 $ 727 $ 779

Interest cost 167 206 21 37 405 294 593 537

Expected return on plan assets ( 226 ) ( 292 ) — — ( 177 ) ( 177 ) ( 403 ) ( 469 )

Amortization of net loss 243 311 — ( 1 ) 461 257 704 567

Amortization of prior service (credit)/cost — — ( 159 ) ( 196 ) 3 2 ( 156 ) ( 194 )

Loss on settlement 315 31 — — — 785 315 816

Loss on curtailment — — — 249 — — — 249

Net periodic benefit cost/(credit) $ 499 $ 256 $ ( 136 ) $ 91 $ 1,417 $ 1,938 $ 1,780 $ 2,285

The components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the nine months ended September 30, 2021 and 2020 were as follows:

The following table presents the components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the three months ended March 31, 2022 and 2021:

Plans Non-U.S.

7 unchanged sentences

Loss on settlement 290 1,565 — — — — 290 1,565

Loss on curtailment — — — 249 — — — 249

Net periodic benefit cost/(credit) $ 349 $ 1,860 $ ( 52 ) $ ( 136 ) $ 1,416 $ 1,666 $ 1,713 $ 3,390

1 unchanged sentence

Refer to Note 6:

Our long-term debt, finance lease, and other financing obligations as of September 30, 2021 and December 31, 2020 consisted of the following:

Maturity Date September 30, 2021 December 31, 2020

The following table presents the components of long-term debt, finance lease and other financing obligations as of March 31, 2022 and December 31, 2021:

Maturity Date March 31, 2022 December 31, 2021

Term Loan September 20, 2026 $ 450,308 $ 451,465

10 unchanged sentences

4.0 % Senior Notes

February 15, 2031 750,000 750,000

4.0 % Senior Notes

April 15, 2029 1,000,000 1,000,000

discount, net of premium ( 5,652 ) ( 9,605 )

debt discount, net of premium ( 4,763 ) ( 5,207 )

deferred financing costs ( 25,410 ) ( 26,682 )

4 unchanged sentences

Finance lease and other financing obligations, less current portion $ 26,347 $ 26,564

Revolving Credit Facility

As of September 30, 2021, we had $ 416.1 million available under our $ 420.0 million revolving credit facility (the "Revolving Credit Facility"), net of $ 3.9 million of obligations in respect of outstanding letters of credit issued thereunder.

As of March 31, 2022, we had $ 416.1 million available under our $ 420.0 million revolving credit facility (the "Revolving Credit Facility"), net of $ 3.9 million of obligations in respect of outstanding letters of credit issued thereunder.

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

As of September 30, 2021, no amounts had been drawn against these outstanding letters of credit.

6.25% Senior Notes redemption

On February 3, 2021, we announced that we intended to redeem in full the $ 750.0 million aggregate principal amount outstanding on our 6.25 % senior notes due 2026 (the "6.25% Senior Notes").

On February 15, 2021, the “make-whole” premium with respect to the 6.25% Senior Notes expired.

Accordingly, we reflected the 6.25% Senior Notes as a current liability on our consolidated balance sheet as of December 31, 2020.

We redeemed the 6.25% Senior Notes on March 5, 2021 in accordance with the terms of the indenture under which the 6.25% Senior Notes were issued and the terms of the notice of redemption at a redemption price equal to 103.125 % of the aggregate

principal amount of the outstanding 6.25% Senior Notes, plus accrued and unpaid interest to (but not including) the redemption date.

In addition to the $ 750.0 million aggregate principal amount outstanding, at redemption we paid the $ 23.4 million premium and $ 2.6 million accrued interest.

4.0% Senior Notes

On March 29, 2021, our indirect, wholly-owned subsidiary, Sensata Technologies B.V.

("STBV"), completed the issuance and sale of $ 750.0 million aggregate principal amount of 4.0 % senior notes due 2029 (the "4.0% Senior Notes").

The 4.0% Senior Notes were issued under an indenture dated as of March 29, 2021 among STBV, as issuer, The Bank of New York Mellon, as trustee (the "Trustee"), and our guarantor subsidiaries (the "Guarantors") named therein (the "4.0% Senior Notes Indenture").

The 4.0% Senior Notes Indenture contains covenants that limit the ability of STBV and its subsidiaries to, among other things:

engage in sale and leaseback transactions;

with respect to any subsidiary of STBV, incur indebtedness without such subsidiary’s guaranteeing the 4.0% 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 4.0% Senior Notes Indenture.

The 4.0% Senior Notes bear interest at 4.0 % per year and mature on April 15, 2029.

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

The 4.0% Senior Notes are guaranteed by each of STBV's wholly-owned subsidiaries that is a borrower or guarantor under the senior secured credit facilities (the "Senior Secured Credit Facilities") of STBV's wholly-owned subsidiary Sensata Technologies, Inc.

("STI") and the issuer or a guarantor under our existing senior notes as follows:

STBV's 4.875% Senior Notes due 2023, 5.625% Senior Notes due 2024, and 5.0% Senior Notes due 2025;

and STI's 4.375% Senior Notes due 2030 and 3.75% Senior Notes due 2031.

At any time, and from time to time, prior to April 15, 2024, STBV may redeem the 4.0% Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 4.0% 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 April 15, 2024, STBV may redeem the 4.0% 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 April 15, Price

2024 102.000 %

2025 101.000 %

2026 and thereafter 100.000 %

In addition, at any time prior to April 15, 2024, STBV may redeem up to 40 % of the principal amount of the outstanding 4.0% Senior Notes (including additional 4.0% Senior Notes, if any, that may be issued after March 29, 2021) with the net cash proceeds of certain equity offerings at a redemption price (expressed as a percentage of principal amount) of 104.00 %, 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 4.0% Senior Notes (including additional 4.0% Senior Notes, if any) remains outstanding immediately after each such redemption.

Upon the occurrence of certain changes in control, each holder of the 4.0% Senior Notes will have the right to require STBV to repurchase the 4.0% 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, STBV may, at its option, redeem the 4.0% 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, premium, if any, and all Additional Amounts (as defined in the 4.0% Senior Notes Indenture), if any, then due and which will become due on the date of redemption.

On April 8, 2021, STBV completed the issuance and sale of an additional $ 250.0 million in aggregate principal amount of 4.0% Senior Notes (the “Additional Notes”).

The Additional Notes were priced at 100.75 % and were issued pursuant to the 4.0% Senior Notes Indenture, as supplemented by the First Supplemental Indenture, dated as of April 8, 2021, among STBV, the Guarantors, and the Trustee.

The Additional Notes are consolidated and form a single class with the $ 750.0 million aggregate principal amount of 4.0% Senior Notes issued by STBV on March 29, 2021 (the “Initial Notes”).

The Additional Notes have the same terms as the Initial Notes, other than with respect to the date of issuance and the issue price.

We intend to use the net proceeds from the issuance and sale of the 4.0% Senior Notes and the Additional Notes for general corporate purposes, which may include working capital, capital expenditures, the acquisition of other companies, businesses, or assets, strategic investments, the refinancing or repayment of debt, and share repurchases.

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 2020 Annual Report.

In the nine months ended September 30, 2021, in connection with the redemption of the 6.25% Senior Notes, we recognized a loss of $ 30.1 million, which included $ 23.4 million in premiums paid, with the remaining loss representing write-off of debt discounts and deferred financing costs.

In addition, in connection with the issuance of the 4.0% Senior Notes, we recognized $ 9.6 million of deferred financing costs, which are presented as a reduction of long-term debt on our condensed consolidated balance sheets and $ 1.7 million of issuance premiums, which are presented as an addition to long-term debt on our condensed consolidated balance sheets.

As of March 31, 2022, no amounts had been drawn against these outstanding letters of credit.

In the three months ended March 31, 2021, in connection with the redemption of $ 750.0 million aggregate principal amount of 6.25 % senior notes due 2026 (the "6.25% Senior Notes"), we recognized a loss of $ 30.1 million, which included $ 23.4 million in premiums paid, with the remaining loss representing write-off of debt discounts and deferred financing costs.

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 September 30, 2021 and December 31, 2020, accrued interest totaled $ 64.7 million and $ 53.6 million, respectively.

As of March 31, 2022 and December 31, 2021, accrued interest totaled $ 63.1 million and $ 45.1 million, respectively.

Commitments and Contingencies

We are regularly involved in a number of claims and litigation matters that arise in the ordinary course of business.

Although it is not feasible to predict the outcome of these matters, based upon our experience and current information known to us, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our results of operations, financial position, and/or cash flows.

Shareholders' Equity

Ordinary and Treasury Shares

Our authorized share capital consists of 177,069 ordinary shares with a nominal value of € 0.01 per share.

Treasury Shares

From time to time, our Board of Directors has authorized various share repurchase programs, which may be modified or terminated by the 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 September 30, 2021.

On April 2, 2020, we announced a temporary suspension of this share repurchase program.

We intend to resume our share repurchase program in the fourth quarter.

On January 20, 2022, we announced that our Board of Directors had authorized a new $ 500.0 million ordinary share repurchase program (the “January 2022 Program”), which replaced the previous $ 500.0 million program approved in July 2019, which had availability of $ 254.5 million as of December 31, 2021.

As of March 31, 2022, $ 449.5 million remained available for repurchase under the January 2022 Program.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss for the nine months ended September 30, 2021 were as follows:

The following table presents the components of accumulated other comprehensive loss for the three months ended March 31, 2022:

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

Balance at December 31, 2020 $ ( 6,733 ) $ ( 42,802 ) $ ( 49,535 )

Balance as of December 31, 2021 $ 16,831 $ ( 36,391 ) $ ( 19,560 )

Other comprehensive income before reclassifications, net of tax 7,965 — 7,965

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Other comprehensive income 2,850 428 3,278

Balance at September 30, 2021 $ 11,918 $ ( 38,824 ) $ ( 26,906 )

The amounts reclassified from accumulated other comprehensive loss for the three and nine months ended September 30, 2021 and 2020 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

Balance as of March 31, 2022 $ 19,681 $ ( 35,963 ) $ ( 16,282 )

The following table presents the amounts reclassified from accumulated other comprehensive loss for the three months ended March 31, 2022 and 2021:

For the three months ended March 31, Affected Line in Condensed Consolidated Statements of Operations

Component 2022 2021

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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 September 30, 2021 and December 31, 2020 are shown in the below table.

The fair values of our assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 are shown in the below table.

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Foreign currency forward contracts $ 29,063 $ 25,112

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Derivative Instruments and Hedging Activities for additional information related to our forward contracts.

As of December 31, 2021, we held a $ 50.0 million investment in Quanergy Systems, Inc.

("Quanergy") Series B Preferred Stock.

This equity investment did not have a readily determinable fair value and it was held using the measurement alternative prescribed in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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 identical or similar investments of the same issuer.

On June 22, 2021, Quanergy announced that it had entered into a definitive business combination agreement with CITIC Capital Acquisition Corp ("CITIC") (NYSE:

On July 16, 2021, CITIC filed a Registration Statement on Form S-4 with the SEC, the effectiveness of which was a condition to closing of the business combination.

At December 31, 2021, we assessed our investment in Quanergy based on the proposed terms of the business combination agreement and concluded that there were no indicators of impairment.

On January 6, 2022, the related Registration Statement on Form S-4 was declared effective by the SEC.

An Extraordinary General Meeting of shareholders of CITIC was held on January 31, 2022, at which time the business combination was approved.

The business combination closed on February 8, 2022.

Beginning on February 9, 2022, the combined company, which retained the name "Quanergy Systems, Inc.," was listed on the New York Stock Exchange (the "NYSE") under the ticker symbol QNGY.

Upon closing of the business combination, our investment in Quanergy comprised the following:

• 5.0 million common shares, which represented the conversion of our $ 50 million Series B Preferred Stock investment (at a $ 10 per share implied valuation);

• 750,000 unregistered common shares, representing a $ 7.5 million private investment in public equity ("PIPE") contribution;

• 2.5 million common shares (the "Warrant Shares"), representing the conversion of 2.5 million warrants provided by Quanergy as up-front consideration for a four-year technical and marketing support agreement (the "Support Agreement").

The 5.75 million common share investment in Quanergy (excluding the Warrant Shares) have a historical cost basis of $ 57.5 million.

The Warrant Shares were converted at a share price of $ 7.05 per share (the closing market price on February 8, 2022), or approximately $ 17.6 million, which was recorded as deferred income.

Refer to below discussion for additional details on the Support Agreement.

Refer to the below table for a summary of our investment in Quanergy as of March 31, 2022,

February 8, 2022, and December 31, 2021, which is presented in other assets on our consolidated balance sheets as of March 31, 2022 and December 31, 2021.

March 31, 2022 February 8, 2022 December 31, 2021

Series B Preferred Stock $ — $ — $ 50,000

Common shares 9,200 50,000 —

PIPE investment 1,380 7,500 —

Warrant Shares 4,575 17,600 —

Total equity investment in Quanergy $ 15,155 $ 75,100 $ 50,000

For the three months ended March 31, 2022

Mark-to-market loss $ 59,945

The mark-to-market loss presented in the table above is presented in other, net, and is the result of the decline in Quanergy share price to $ 1.84 per share on March 31, 2022.

In exchange for the Warrant Shares, we entered into the Support Agreement, whereby we agreed to provide technical and marketing assistance to Quanergy for a term of four years from the effective date of February 8, 2022.

We will recognize the consideration ($ 17.6 million) for the Support Agreement on a straight-line basis over the term of the agreement.

We recognized approximately $ 0.7 million of income in the three months ended March 31, 2022 and will recognize approximately $ 1.1 million of income each quarter through the end of the term of the Support Agreement.

Measured on a Nonrecurring Basis

We evaluated our goodwill and other indefinite-lived intangible assets for impairment as of October 1, 2021 and determined that they were not impaired.

During the nine months ended September 30, 2021, no events or changes in circumstances occurred that would have triggered the need for an additional impairment review of these assets.

In the third quarter of 2021, we reorganized our Sensing Solutions operating segment, moving the portion of our electrical protection product category that includes high voltage contactors, inverters, and battery management systems from the industrial business unit to a new business unit, Clean Energy Solutions.

We have concluded that this reorganization has not impacted our reportable or operating segment evaluations.

Clean Energy Solutions will focus on electric vehicle infrastructure, energy storage, smart grid, and renewable energy applications.

The reorganization was effective beginning July 1, 2021.

We evaluated our goodwill and other indefinite-lived intangible assets for impairment before and after the reorganization and determined that they were not impaired.

During the three months ended March 31, 2022, 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 September 30, 2021 and December 31, 2020.

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, 2022 and December 31, 2021.

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Carrying Value (1)

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$ 1,000,000 $ 942,500 $ 1,000,000 $ 1,022,500

4.0 % Senior Notes

___________________________________

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

(1) Excluding any related debt discounts, premiums, 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 Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 321, Investments - Equity Securities .

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.

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 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, 2021 December 31, 2020

Quanergy $ 50,000 $ 50,000

March 31, 2022 December 31, 2021

Quanergy Systems, Inc.

Other 15,000 15,000

Total $ 15,000 $ 65,000

On June 22, 2021, Quanergy Systems, Inc.

("Quanergy") announced that it had entered into a definitive business combination agreement with CITIC Capital Acquisition Corp (NYSE:

Upon closing of the business combination, which is expected to be in the fourth quarter of 2021, subject to customary closing conditions and the effectiveness of a Registration Statement on Form S-4, the combined company is expected to be listed on the New York Stock Exchange ("NYSE") under the ticker symbol QNGY.

We have assessed our investment in Quanergy based on the proposed terms of the business combination agreement and concluded that there were no indicators of impairment as of September 30, 2021.

Subsequent to closing, we will mark our investment to market each reporting period.

___________________________________

(1) As of March 31, 2022, Quanergy is no longer classified as an equity investment without a readily determinable fair value.

See additional discussion under the heading Quanergy elsewhere in this Note.

Derivative Instruments and Hedging Activities

Hedges of Foreign Currency Risk

For the three and nine months ended September 30, 2021 and 2020, 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, 2021, we estimated that $ 14.0 million of net gains will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending September 30, 2022.

As of September 30, 2021, we had the following outstanding foreign currency forward contracts:

For the three months ended March 31, 2022 and 2021, 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, 2022, we estimated that $ 23.7 million of net gains will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending March 31, 2023.

As of March 31, 2022, 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)

13.0 EUR September 28, 2021 October 29, 2021 Euro ("EUR") to USD 1.17 USD Not designated

383.8 EUR Various from November 19, 2019 to September 23, 2021 Various from October 29, 2021 to September 29, 2023 EUR to USD 1.19 USD Cash flow hedge

881.0 CNY September 27, 2021 October 29, 2021 USD to Chinese Renminbi ("CNY") 6.49 CNY Not designated

260.4 CNY Various from November 5, 2020 to January 5, 2021 Various from 10/19/21 to December 31, 2021 USD to CNY 6.68 CNY Cash flow hedge

518.0 JPY September 28, 2021 October 29, 2021 USD to Japanese Yen ("JPY") 111.59 JPY Not designated

21,416.7 KRW Various from November 19, 2019 to September 23, 2021 Various from October 29, 2021 to August 31, 2023 USD to Korean Won ("KRW") 1,149.75 KRW Cash flow hedge

26.0 MYR September 27, 2021 October 29, 2021 USD to Malaysian Ringgit ("MYR") 4.19 MYR Not designated

408.0 MXN September 28, 2021 October 29, 2021 USD to Mexican Peso ("MXN") 20.39 MXN Not designated

3,290.0 MXN Various from November 19, 2019 to September 23, 2019 Various from October 29, 2021 to September 29, 2023 USD to MXN 22.28 MXN Cash flow hedge

3.2 GBP September 28, 2021 October 29, 2021 British Pound Sterling ("GBP") to USD 1.35 USD Not Designated

52.4 GBP Various from November 19, 2019 to September 23, 2021 Various from October 29, 2021 to September 29, 2023 GBP to USD 1.34 USD Cash flow hedge

15.0 EUR March 29, 2022 April 29, 2022 Euro ("EUR") to USD 1.11 USD Not designated

349.6 EUR Various from May 2020 to March 2022 Various from April 2022 to March 2024 EUR to USD 1.19 USD Cash flow hedge

1,170.0 CNY Various in March 2022 Various in April 2022 USD to Chinese Renminbi ("CNY") 6.38 CNY Not designated

1,134.3 CNY Various from October 2021 to March 2022 Various from April 2022 to December 2022 USD to CNY 6.44 CNY Cash flow hedge

684.0 JPY March 29, 2022 April 28, 2022 USD to Japanese Yen ("JPY") 122.02 JPY Not designated

24,400.0 KRW Various from May 2020 to March 2022 Various from April 2022 to February 2024 USD to Korean Won ("KRW") 1,170.98 KRW Cash flow hedge

24.0 MYR March 28, 2022 April 29, 2022 USD to Malaysian Ringgit ("MYR") 4.21 MYR Not designated

259.0 MXN March 29, 2022 April 29, 2022 USD to Mexican Peso ("MXN") 20.05 MXN Not designated

3,477.3 MXN Various from May 2020 to March 2022 Various from April 2022 to March 2024 USD to MXN 22.11 MXN Cash flow hedge

52.4 GBP Various from May 2020 to March 2022 Various from April 2022 to March 2024 British Pound Sterling ("GBP") to USD 1.36 USD Cash flow hedge

_________________________

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Hedges of Commodity Risk

As of September 30, 2021, 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 March 31, 2022, 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 1,109,868 troy oz.

October 2021 - September 2023 $ 24.68

April 2022 - February 2024 $ 24.72

Gold 8,380 troy oz.

October 2021 - September 2023 $ 1,822.43

Nickel 247,207 pounds October 2021 - September 2023 $ 7.91

Aluminum 3,482,343 pounds October 2021 - September 2023 $ 1.06

Copper 4,355,707 pounds October 2021 - September 2023 $ 4.01

April 2022 - February 2024 $ 1,833.55

Nickel 250,238 pounds April 2022 - February 2024 $ 8.69

Aluminum 3,851,210 pounds April 2022 - February 2024 $ 1.17

Copper 7,740,838 pounds April 2022 - February 2024 $ 4.30

Platinum 11,588 troy oz.

October 2021 - September 2023 $ 1,032.88

April 2022 - February 2024 $ 1,045.40

Palladium 1,408 troy oz.

October 2021 - September 2023 $ 2,434.27

April 2022 - February 2024 $ 2,383.12

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 September 30, 2021 and December 31, 2020:

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, 2022 and December 31, 2021:

Asset Derivatives Liability Derivatives

Balance Sheet Location September 30, 2021 December 31, 2020 Balance Sheet Location September 30, 2021 December 31, 2020

Balance Sheet Location March 31, 2022 December 31, 2021 Balance Sheet Location March 31, 2022 December 31, 2021

Derivatives designated as hedging instruments

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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 income for the three months ended September 30, 2021 and 2020:

Derivatives designated as

hedging instruments Amount of Deferred Gain/(Loss) Recognized in Other Comprehensive Income/(Loss) Location of Net (Loss)/Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income Amount of Net (Loss)/Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income

2021 2020 2021 2020

Foreign currency forward contracts $ 9,379 $ ( 12,666 ) Net revenue $ ( 1,976 ) $ 625

Foreign currency forward contracts $ ( 3,832 ) $ 7,021 Cost of revenue $ 3,557 $ ( 3,371 )

Derivatives not designated as

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

Commodity forward contracts $ ( 6,495 ) $ 6,138 Other, net

Foreign currency forward contracts $ ( 2,414 ) $ ( 1,060 ) Other, net

Derivatives designated as

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

2022 2021 2022 2021

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Derivatives not designated as

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

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

Commodity forward contracts $ 9,424 $ ( 1,153 ) Other, net

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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, 2021, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $ 12.1 million.

As of September 30, 2021, we had no t posted any cash collateral related to these agreements.

As of March 31, 2022, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $ 5.5 million.

As of March 31, 2022, 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.

Xirgo Technologies, LLC

On February 11, 2021, we entered into a securities purchase agreement (the "Xirgo SPA") to acquire all of the outstanding equity interests of Xirgo Technologies, LLC ("Xirgo"), a leading provider of telematics and data insight, headquartered in Camarillo, California.

The transaction contemplated by the Xirgo SPA closed on April 1, 2021 for an aggregate cash purchase price of $ 401.7 million, subject to certain post-closing items.

The purchase price is net of $ 7.0 million related to employee retention, reflected in operating cash flows.

The product offerings and technology of Xirgo will augment our existing portfolio in advancing our Insights megatrend initiative.

We are integrating Xirgo into our Performance Sensing reportable segment.

The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed:

Net working capital, excluding cash $ 11,536

Property, plant and equipment 1,427

Goodwill 177,268

Other intangible assets 249,612

Other assets 508

Deferred income tax liabilities ( 45,506 )

Other long-term liabilities ( 292 )

Fair value of net assets acquired, excluding cash and cash equivalents 394,553

Cash and cash equivalents 7,117

Fair value of net assets acquired $ 401,670

The allocation of purchase price of Xirgo is preliminary, and is based on management’s judgments after evaluating several factors, including preliminary valuation assessments of tangible and intangible assets.

The final allocation of the purchase price to the assets acquired will be completed when the final valuations are completed.

The preliminary goodwill recognized as a result of this acquisition was approximately $ 177.3 million, which represents future economic benefits expected to arise from synergies from combining operations and the extension of existing customer relationships.

The amount of goodwill recognized that is expected to be deductible for tax purposes is not material.

In connection with the allocation of purchase price to the assets acquired and liabilities assumed, we identified certain definite-lived intangible assets.

The following table presents the acquired intangible assets, their estimated fair values, and weighted-average lives:

Acquisition Date Fair Value Weighted-Average Lives (years)

Acquired definite-lived intangible assets

Customer relationships $ 198,540 15

Completed technologies 44,130 10

Tradenames 6,930 11

Total definite-lived intangible assets acquired $ 249,612 14

The definite-lived intangible assets were valued using the income approach.

We used the relief-from-royalty method to value completed technologies and tradenames, and we used the multi-period excess earnings method to value customer relationships.

These valuation methods incorporate assumptions including expected discounted future cash flows resulting from either the future estimated after-tax royalty payments avoided as a result of owning the completed technologies or the future earnings related to existing customer relationships.

Spear Power Systems

On August 23, 2021, we entered into a securities purchase agreement ("SPA") to acquire all of the outstanding equity interests of Spear Power Systems ("Spear") for $ 100 million plus $ 30 million of contingent consideration.

Spear is headquartered in Grandview, Missouri, and is a leader in electrification solutions, developing next generation scalable lithium-ion battery storage systems for demanding land, sea, and air applications.

The transaction contemplated by this SPA is subject to clearance under the Hart-Scott-Rodino Act and other customary closing conditions, and is expected to be completed in the fourth quarter of 2021.

The acquisition of Spear advances Sensata’s electrification portfolio and strategy into new clean energy markets.

Spear expands on Sensata’s acquisition of Lithium Balance in battery management systems and provides energy storage solutions for original equipment manufacturers ("OEMs") and system integrators in fast-growing end markets that offer significant growth opportunities.

Spear will be integrated into our Sensing Solutions Segment.

On November 19, 2021, we acquired all of the equity interests of Spear, a leader in electrification solutions that supports our newly-established Clean Energy Solutions business unit, for an aggregate purchase price of $ 113.7 million, subject to certain post-closing items, including the discounted present value of contingent consideration.

As of March 31, 2022, the present value of this contingent consideration was $ 2.3 million.

Any gains or losses resulting from adjustments to contingent consideration are recorded in restructuring and other charges, net.

We are integrating Spear into the Sensing Solutions reportable segment.

As of March 31, 2022, the allocation of purchase price of Spear is preliminary and is based on management’s judgments after evaluating several factors, including preliminary valuation assessments of tangible and intangible assets.

The final allocation of the purchase price to the assets acquired will be completed when the final valuations are completed.

Refer to Note 21:

Acquisitions of the audited consolidated financial statements and notes thereto included in our 2021 Annual Report for detailed information regarding the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed as of December 31, 2021.

SmartWitness Holdings, Inc.

On October 4, 2021, we entered into an SPA to acquire all of the outstanding equity interests of SmartWitness Holdings, Inc.

("SmartWitness") for $ 191.4 million.

SmartWitness is headquartered in Schaumburg, Illinois and expands the capabilities of Sensata Insights into high growth video telematics applications, providing access to applications that will drive adoption of traditional and video telematics solutions.

SmartWitness will be integrated into the Performance Sensing reportable segment.

On November 19, 2021, we acquired all of the equity interests of SmartWitness Holdings, Inc.

("SmartWitness"), a privately held innovator of video telematics technology for heavy- and light-duty fleets, for an aggregate cash purchase price of $ 204.2 million, subject to certain post-closing items.

In addition to the aggregate purchase price, we paid $ 8.6 million of cash at closing related to an employee retention arrangement, which was reflected as an operating cash outflow on our consolidated statement of cash flows for the year ended December 31, 2021.

We are integrating SmartWitness into the Performance Sensing reportable segment.

As of March 31, 2022, the allocation of purchase price of SmartWitness is preliminary and is based on management’s judgments after evaluating several factors, including preliminary valuation assessments of tangible and intangible assets.

The final allocation of the purchase price to the assets acquired will be completed when the final valuations are completed.

Refer to Note 21:

Elastic M2M Inc.

On February 11, 2022, we acquired all of the equity interests of Elastic M2M Inc.

("Elastic M2M") for an aggregate cash purchase price of $ 51.2 million, subject to certain post-closing items.

In addition to the aggregate cash purchase price, the previous shareholders of Elastic M2M are entitled to up to $ 30.0 million additional acquisition-related incentive compensation, pending the completion of certain technical milestones in fiscal year 2022 and achievement of revenue targets in fiscal years 2022 and 2023.

In the first quarter of 2022, we determined that $ 15.0 million of that acquisition-related incentive compensation was earned as all of the technical milestones were achieved.

This amount is recorded in restructuring and other charges, net.

We paid $ 7.5 million of this acquisition-related incentive compensation in the three months ended March 31, 2022, which is reflected as an operating cash outflow on our condensed consolidated statement of cash flows for the three months ended March 31, 2022.

Elastic M2M is a privately-held innovator of connected intelligence for operational assets across heavy-duty transport, warehouse, supply chain and logistics, industrial, light-duty passenger car, and a variety of other industry segments.

Elastic M2M primarily serves telematics service providers and resellers, enabling them to leverage Elastic M2M’s cloud platform and analytics capabilities to deliver sensor-based operational insights to their end users.

This acquisition augments our cloud capabilities critical to delivering actionable sensor-based insights, an increasingly important capability in this fast-growing industry segment.

We are integrating Elastic M2M into the Performance Sensing reportable segment.

The purchase price of Elastic M2M has been primarily allocated to goodwill.

The preliminary valuation of intangible assets is not yet available.

We expect the preliminary valuation to be complete in the second quarter of 2022, at which time we will adjust the allocation to include definite-lived intangible assets.

The final allocation of the purchase price to the assets acquired will be completed when the final valuations are completed.

Segment Reporting

We operate in, and report financial information for, the following two reportable segments:

Performance Sensing and Sensing Solutions.

The Performance Sensing reportable segment consists of two operating segments, Automotive and HVOR, each of which meet the criteria for aggregation in FASB ASC Topic 280, Reportable Segments .

We present financial information for two reportable segments, Performance Sensing and Sensing Solutions.

The Performance Sensing reportable segment consists of two operating segments, Automotive and HVOR, which meet the criteria for aggregation in FASB ASC Topic 280, Segment Reporting .

The Sensing Solutions reportable segment is also an operating segment.

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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 recognized 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.

Corporate and other costs excluded from an operating (and reportable) 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.

We believe that segment operating income, as defined above, is an appropriate measure for evaluating the operating performance of our segments.

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:

The accounting policies of each of our operating and reportable segments are materially consistent with those described in Note 2:

Significant Accounting Policies of the audited consolidated financial statements and notes thereto included in our 2021 Annual Report.

The following table presents net revenue and segment operating income for the reportable segments and other operating results not allocated to the reportable segments for the three and nine months ended September 30, 2021 and 2020:

For the three months ended For the nine months ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

The following table presents net revenue and segment operating income for our reportable segments and other operating results not allocated to our reportable segments for the three months ended March 31, 2022 and 2021:

For the three months ended

March 31, 2022 March 31, 2021

Performance Sensing $ 717,697 $ 714,512

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Subsequent Events

On October 4, 2021, we entered into the SmartWitness SPA to acquire all of the outstanding equity interests of SmartWitness for $ 191.4 million.

Refer to Note 16:

Acquisitions for additional information.

On April 22, 2022, we signed a stock purchase agreement to acquire Dynapower Company, LLC ("Dynapower"), a leading provider of high-voltage power conversion solutions for clean energy segments, for an aggregate cash purchase price of $ 580 million, subject to working capital and other adjustments.

We expect to complete the acquisition in the third quarter of 2022, subject to regulatory approvals and other customary closing conditions.

We intend to fund the transaction using available cash on hand.

Dynapower is a leader in power conversion systems including inverters, converters, and rectifiers for renewable energy generation, green hydrogen production, electric vehicle charging stations, and microgrid applications, as well as industrial and

defense applications.

Dynapower also provides aftermarket sales and service to maintain its equipment in the field.

We are acquiring Dynapower as a foundational addition to our Clean Energy Solutions strategy and complement to our recent acquisitions of GIGAVAC, Lithium Balance, and Spear.

On April 26, 2022, we announced that our Board had declared a quarterly dividend of $ 0.11 per share, payable on May 25, 2022 to shareholders of record as of May 11, 2022.

Cautionary Statements Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q, including any documents incorporated by reference herein, includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable.

These forward-looking statements also relate to our future prospects, developments, and business strategies.

These forward-looking statements may be identified by terminology such as "may," "will," "could," "should," "expect," "anticipate," "believe," "estimate," "predict," "project," "forecast," "continue," "intend," "plan," and similar terms or phrases, or the negative of such terminology, including references to assumptions.

However, these terms are not the exclusive means of identifying such statements.

Forward-looking statements contained herein, or in other statements made by us, are made based on management’s expectations and beliefs concerning future events impacting us.

These statements are subject to uncertainties and other important factors relating to our operations and business environment, all of which are difficult to predict, and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by forward-looking statements.

Although we believe that our plans, intentions, and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurances that any of the events anticipated by these forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition.

We believe that the following important factors, among others (including those described in Item 1A:

Risk Factors , included in our 2020 Annual Report), could affect our future performance and the liquidity and value of our securities and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf:

• Future risks and existing uncertainties associated with the COVID-19 pandemic, which continues to have a significant adverse impact on our business and operations including:

(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, (vii) uncertainties associated with a protracted economic slowdown that could negatively affect the financial condition of our customers and suppliers, and (viii) uncertainties and volatility in the global capital markets;

• instability and changes in the global markets, including regulatory, political, economic, governmental, and military matters, such as the 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;

• losses and costs as a result of intellectual property, product liability, warranty, and recall claims;

• market acceptance of new product introductions and product innovations;

• inability to realize all of the revenue or achieve anticipated gross margins from products subject to existing purchase orders for which we are currently engaged in development;

• supplier interruption or non-performance, limiting our access to manufactured components or raw materials;

• risks related to the acquisition or disposition of businesses, or the restructuring of our business;

• labor disruptions or increased labor costs;

• competitive pressure from customers that could require us to reduce prices or result in reduced demand;

• 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;

• our ability to attract and retain key senior management and qualified technical, sales, and other personnel;

• 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;

• changes to current policies, such as trade tariffs, by various governments worldwide;

• 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, 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;

• risks related to our domicile in the U.K.

In addition, the extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments, such as the length and severity of the crisis, the potential resurgence of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

All forward-looking statements attributable to us or persons acting on our behalf speak only as of the date of this Quarterly Report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements contained in this Quarterly Report on Form 10-Q.

We undertake no obligation to update or revise forward-looking statements that may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

We urge readers to review carefully the risk factors described in our 2020 Annual Report and in the other documents that we file with the U.S.

Securities and Exchange Commission (the "SEC").

You can read these documents at www.sec.gov or on our website at www.sensata.com .

This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements may be identified by terminology such as "may," "will," "could," "should," "expect," "anticipate," "believe," "estimate," "predict," "project," "forecast," "continue," "intend," "plan," "potential," "opportunity," "guidance," and similar terms or phrases.

Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives, business and market outlook, megatrends, priorities, growth, shareholder value, capital expenditures, cash flows, demand for products and services, share repurchases, and Sensata’s strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic and operational plans and financial results.

These statements are subject to risks, uncertainties, and other important factors relating to our operations and business environment, and we can give no assurances that these forward-looking statements will prove to be correct.

A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements, including, but not limited to, risks related to public health crises, instability and changes in the global markets, supplier interruption or non-performance, the acquisition of disposition of businesses, adverse conditions or competition in the industries upon which we are dependent, intellectual property, product liability, warranty, and recall claims, market acceptance of new product introductions and product innovations, labor disruptions or increased labor costs, and changes in existing environmental or safety laws, regulations, and programs.

Investors and others should carefully consider the foregoing factors and other uncertainties, risks and potential events including, but not limited to, those described in Item 1A:

Risk Factors included in our 2021 Annual Report and as may be updated from time to time in Item 1A:

Risk Factors in our quarterly reports on Form 10-Q or other subsequent filings with the SEC.

All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.

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