What changed in this filing

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Item 1. Financial Statements

2022-08-01 compared with 2022-04-26 · 279 added, 144 removed, 398 unchanged (52% of the section changed)

6 unchanged sentences

Cash and cash equivalents $ 1,558,578 $ 1,708,955

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

Accounts receivable, net of allowances of $ 26,448 and $ 17,003 as of June 30, 2022 and December 31, 2021, respectively

743,048 653,438

4 unchanged sentences

Goodwill 3,534,438 3,502,063

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

Other intangible assets, net of accumulated amortization of $ 2,351,560 and $ 2,277,393 as of June 30, 2022 and December 31, 2021, respectively

904,929 946,731

17 unchanged sentences

Shareholders’ equity:

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

Ordinary shares, € 0.01 nominal value per share, 177,069 shares authorized, and 174,924 and 174,287 shares issued as of June 30, 2022 and December 31, 2021, respectively

Treasury shares, at cost, 19,269 and 16,438 shares as of June 30, 2022 and December 31, 2021, respectively

( 978,595 ) ( 832,439 )

8 unchanged sentences

(In thousands, except per share amounts)

For the three months ended

March 31, 2022 March 31, 2021

For the three months ended For the six months ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Net revenue $ 1,020,548 $ 992,660 $ 1,996,318 $ 1,935,188

18 unchanged sentences

(In thousands)

For the three months ended

March 31, 2022 March 31, 2021

For the three months ended For the six months ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Net income $ 34,841 $ 112,916 $ 57,282 $ 166,649

8 unchanged sentences

(In thousands)

For the three months ended

March 31, 2022 March 31, 2021

For the six months ended

June 30, 2022 June 30, 2021

Cash flows from operating activities:

9 unchanged sentences

Mark-to-market loss on equity investments, net 71,100 —

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

Unrealized loss on derivative instruments and other 20,669 12,700

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

17 unchanged sentences

Payments on debt ( 5,664 ) ( 757,889 )

Dividends paid ( 17,225 ) —

Payments to repurchase ordinary shares ( 144,279 ) —

Payments of debt financing costs ( 2,313 ) ( 33,032 )

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

Net cash (used in)/provided by financing activities ( 162,481 ) 220,963

Net change in cash and cash equivalents ( 150,377 ) ( 211 )

7 unchanged sentences

Number Amount Number Amount

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

Surrender of shares for tax withholding — — ( 148 ) ( 7,442 ) — — — ( 7,442 )

Stock options exercised 39 — — — 1,229 — — 1,229

Vesting of restricted securities 450 5 — — — ( 5 ) — —

Cash dividends paid — — — — — ( 17,225 ) — ( 17,225 )

Repurchase of ordinary shares — — ( 1,693 ) ( 78,898 ) — — — ( 78,898 )

Retirement of ordinary shares ( 148 ) ( 2 ) 148 7,442 — ( 7,440 ) — —

Share-based compensation — — — — 9,199 — — 9,199

Net income — — — — — 34,841 — 34,841

Other comprehensive income — — — — — — 9,563 9,563

Balance as of June 30, 2022 174,924 $ 2,239 ( 19,269 ) $ ( 978,595 ) $ 1,841,925 $ 2,164,734 $ ( 6,719 ) $ 3,023,584

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 459 5 — — — ( 5 ) — —

Cash dividends paid — — — — — ( 17,225 ) — ( 17,225 )

Repurchase of ordinary shares — — ( 2,831 ) ( 146,156 ) — — — ( 146,156 )

3 unchanged sentences

Other comprehensive income — — — — — — 12,841 12,841

Balance as of June 30, 2022 174,924 $ 2,239 ( 19,269 ) $ ( 978,595 ) $ 1,841,925 $ 2,164,734 $ ( 6,719 ) $ 3,023,584

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

Number Amount Number Amount

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

Surrender of shares for tax withholding — — ( 132 ) ( 7,727 ) — — — ( 7,727 )

Stock options exercised 208 3 — — 8,167 — — 8,170

Vesting of restricted securities 396 5 — — — ( 5 ) — —

Retirement of ordinary shares ( 132 ) ( 2 ) 132 7,727 — ( 7,725 ) — —

Share-based compensation — — — — 6,376 — — 6,376

Net income — — — — — 112,916 — 112,916

Other comprehensive income — — — — — — 3,070 3,070

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

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

8 unchanged sentences

Other comprehensive income — — — — — — 19,060 19,060

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

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

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

13 unchanged sentences

Revenue Recognition

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

The following table presents net revenue disaggregated by segment and end market for the three and six months ended June 30, 2022 and 2021:

For the three months ended June 30, 2022 For the three months ended June 30, 2021

Performance Sensing Sensing Solutions Total Performance Sensing Sensing Solutions Total

10 unchanged sentences

(2) Heating, ventilation and air conditioning

For the six months ended June 30, 2022 For the six months ended June 30, 2021

Performance Sensing Sensing Solutions Total Performance Sensing Sensing Solutions Total

Automotive $ 1,008,594 $ 19,217 $ 1,027,811 $ 1,055,080 $ 23,552 $ 1,078,632

HVOR 455,985 — 455,985 401,284 — 401,284

Industrial — 236,713 236,713 — 195,949 195,949

Appliance and HVAC — 116,500 116,500 — 123,103 123,103

Aerospace — 71,828 71,828 — 65,470 65,470

Other — 87,481 87,481 — 70,750 70,750

Total $ 1,464,579 $ 531,739 $ 1,996,318 $ 1,456,364 $ 478,824 $ 1,935,188

Share-Based Payment Plans

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

For the three months ended

March 31, 2022 March 31, 2021

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, 2022 and 2021:

For the three months ended For the six months ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Stock options $ 2 $ 305 $ 309 $ 765

1 unchanged sentence

Share-based compensation expense $ 9,199 $ 6,376 $ 15,739 $ 11,475

Equity Awards

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 2021 Equity Incentive Plan during the six months ended June 30, 2022:

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)

29 N/A $ 46.30

Various executives and employees RSU (2)

518 N/A $ 50.72

Various executives and employees PRSU (3)

349 0.0 % - 200.0 %

____________________________________

(1) These RSUs cliff vest one year from the grant date (May 2023).

(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 January 2025 and June 2025.

(3) These PRSUs vest on various dates between April 2025 and June 2025.

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

Restructuring and Other Charges, Net

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

For the three months ended

March 31, 2022 March 31, 2021

The following table presents the components of restructuring and other charges, net for the three and six months ended June 30, 2022 and 2021:

For the three months ended For the six months ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Q2 2020 Global Restructure Program charges $ — $ 3,830 $ — $ 5,654

2 unchanged sentences

Facility and other exit costs 1,241 625 2,289 1,291

11,656 167 23,754 2,073

Restructuring and other charges, net $ 12,897 $ 5,029 $ 26,630 $ 9,611

___________________________________

(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").

(1) Primarily includes expenses related to compensation arrangements entered into concurrent with the closing of acquisitions, partially offset by gains relating to changes in the fair value of acquisition-related contingent consideration amounts.

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.

Acquisitions and Divestitures for additional information.

The following table presents a rollforward of the severance portion of our restructuring obligations for the six months ended June 30, 2022.

Q2 2020 Global Restructure Program Other Total

3 unchanged sentences

Foreign currency remeasurement ( 14 ) ( 159 ) ( 173 )

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 )

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

Balance as of June 30, 2022 $ 821 $ 2,425 $ 3,246

The severance liability as of June 30, 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 and six months ended June 30, 2022 and 2021:

For the three months ended For the six months ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Currency remeasurement (loss)/gain on net monetary assets $ ( 14,090 ) $ 1,988 $ ( 14,157 ) $ 511

Gain/(loss) on foreign currency forward contracts 3,165 ( 1,419 ) 1,922 ( 2,377 )

(Loss)/gain on commodity forward contracts ( 18,254 ) 1,186 ( 8,830 ) 33

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

3 unchanged sentences

Other, net $ ( 39,240 ) $ 1,012 $ ( 89,696 ) $ ( 38,385 )

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

The following table presents the provision for income taxes for the three and six months ended June 30, 2022 and 2021:

For the three months ended For the six months ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Provision for income taxes $ 20,020 $ 7,638 $ 27,608 $ 27,919

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;

and (2) deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to (a) book versus tax basis in intangible assets, (b) changes in net operating loss carryforwards, (c) changes in tax rates, and (d) changes in our assessment of the realizability of our deferred tax assets.

and (2) deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to (a) book versus tax basis in intangible assets, (b) changes in net operating loss carryforwards, and (c) changes in withholding taxes on unremitted earnings.

Other items impacting deferred tax expense include changes in tax rates and changes in our assessment of the realizability of our deferred tax assets.

Net Income per Share

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

For the three months ended March 31, 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

For the three and six months ended June 30, 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 For the six months ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Basic weighted-average ordinary shares outstanding 156,477 158,208 156,950 157,986

4 unchanged sentences

These potential ordinary shares were as follows:

For the three months ended

March 31, 2022 March 31, 2021

For the three months ended For the six months ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Anti-dilutive shares excluded 1,426 8 715 7

Contingently issuable shares excluded 1,383 1,089 1,192 1,020

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

March 31, 2022 December 31, 2021

The following table presents the components of inventories as of June 30, 2022 and December 31, 2021:

2022 December 31,

Finished goods $ 223,919 $ 201,424

3 unchanged sentences

Pension and Other Post-Retirement Benefits

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:

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 June 30, 2022 and 2021:

Plans Non-U.S.

4 unchanged sentences

Expected return on plan assets ( 195 ) ( 226 ) — — ( 242 ) ( 179 ) ( 437 ) ( 405 )

Amortization of net loss 141 401 — — 278 459 419 860

Amortization of net loss/(gain) 226 401 ( 43 ) — 330 462 513 863

Amortization of prior service (credit)/cost — — ( 100 ) ( 159 ) 3 13 ( 97 ) ( 146 )

1 unchanged sentence

Net periodic benefit cost/(credit) $ 247 $ 1,709 $ ( 123 ) $ ( 136 ) $ 1,499 $ 2,022 $ 1,623 $ 3,595

The following table presents the components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the six months ended June 30, 2022 and 2021:

Plans Non-U.S.

Defined Benefit Retiree Healthcare Defined Benefit Total

2022 2021 2022 2021 2022 2021 2022 2021

Service cost $ — $ — $ 4 $ 4 $ 1,938 $ 2,303 $ 1,942 $ 2,307

Interest cost 226 240 64 42 850 805 1,140 1,087

Expected return on plan assets ( 390 ) ( 452 ) — — ( 486 ) ( 357 ) ( 876 ) ( 809 )

Amortization of net loss/(gain) 367 802 ( 43 ) — 608 921 932 1,723

Amortization of prior service (credit)/cost — — ( 200 ) ( 318 ) 5 16 ( 195 ) ( 302 )

Loss on settlement 393 2,979 — — — — 393 2,979

Net periodic benefit cost/(credit) $ 596 $ 3,569 $ ( 175 ) $ ( 272 ) $ 2,915 $ 3,688 $ 3,336 $ 6,985

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

Refer to Note 6:

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

The following table presents the components of long-term debt, finance lease and other financing obligations as of June 30, 2022 and December 31, 2021:

Maturity Date June 30,

2022 December 31,

Term Loan September 20, 2026 $ 449,150 $ 451,465

18 unchanged sentences

Finance lease and other financing obligations, less current portion $ 25,623 $ 26,564

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.

Our debt consists of secured credit facilities and various tranches of senior unsecured notes.

Refer to Note 14:

Debt of our 2021 Annual Report for additional information related to our existing indebtedness.

Secured Credit Facilities

On June 23, 2022, certain of our indirect, wholly-owned subsidiaries, including Sensata Technologies, Inc.

("STI"), Sensata Technologies Intermediate Holding B.V.

("STIHBV"), and Sensata Technologies B.V.

(“STBV”), entered into an amendment (the “Eleventh Amendment”) to (i) the credit agreement, dated as of May 12, 2011 (as amended, supplemented, waived, or otherwise modified, the “Credit Agreement”), and (ii) the Foreign Guaranty, dated as of May 12, 2011.

Among other changes to the Credit Agreement, the Eleventh Amendment (i) increased the aggregate principal amount of the revolving credit facility under the Credit Agreement (the "Revolving Credit Facility") to $ 750.0 million;

(ii) extended the maturity date of the Revolving Credit Facility to June 23, 2027 (which could be accelerated to June 22, 2026 if, prior to June 22, 2026, the term loan under the Credit Agreement (the "Term Loan") is not refinanced with a maturity date that is on or after June 23, 2027);

(iii) released the Foreign Guarantors (as defined in the Credit Agreement), excluding STBV, from their obligations to guarantee the obligations of STI and the other Loan Parties (as defined in the Credit Agreement) relating to the Revolving Credit Facility and certain related obligations, subject to an obligation to reinstate such guaranties under certain conditions;

(iv) replaced the LIBOR-based interest rates referenced by the Credit Agreement regarding revolving credit loans to (a) for revolving credit loans denominated in U.S.

dollars, an interest rate based on the secured overnight financing rate ("SOFR") published by the Federal Reserve Bank of New York and (b) for revolving credit loans denominated in pounds sterling, an interest rate based on the Sterling Overnight Index Average ("SONIA");

and (v) certain of the operational and restrictive covenants and other terms and conditions of the Credit Agreement were modified to provide STI and its affiliates increased flexibility and permissions thereunder.

As of June 30, 2022, we had $ 746.1 million available under our $ 750.0 million 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 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.

As of June 30, 2022, no amounts had been drawn against these outstanding letters of credit.

Accounting for Debt Financing Transactions

In the six months ended June 30, 2022, in connection with the entry into the Eleventh Amendment, we recognized $ 2.6 million of deferred financing costs, which are presented as a reduction of long-term debt on our condensed consolidated balance sheets.

In the six months ended June 30, 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 March 31, 2022 and December 31, 2021, accrued interest totaled $ 63.1 million and $ 45.1 million, respectively.

As of June 30, 2022 and December 31, 2021, accrued interest totaled $ 44.5 million and $ 45.1 million, respectively.

Commitments and Contingencies

2 unchanged sentences

Shareholders' Equity

Cash Dividends

On May 25, 2022, we paid a cash dividend of $ 0.11 per share, or $ 17.2 million in aggregate, to shareholders of record as of May 11, 2022.

Treasury Shares

1 unchanged sentence

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.

As of June 30, 2022, $ 370.6 million remained available for repurchase under the January 2022 Program.

Accumulated Other Comprehensive Loss

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

The following table presents the components of accumulated other comprehensive loss for the six months ended June 30, 2022:

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

3 unchanged sentences

Other comprehensive income 12,033 808 12,841

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

Balance as of June 30, 2022 $ 28,864 $ ( 35,583 ) $ ( 6,719 )

The following table presents the amounts reclassified from accumulated other comprehensive loss for the three and six months ended June 30, 2022 and 2021:

For the three months ended June 30, For the six months ended June 30, Affected Line in Condensed Consolidated Statements of Operations

Component 2022 2021 2022 2021

15 unchanged sentences

Measured on a Recurring Basis

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

The fair values of our derivative assets and liabilities measured at fair value on a recurring basis as of June 30, 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.

March 31, 2022 December 31, 2021

2022 December 31,

Foreign currency forward contracts $ 45,074 $ 25,112

7 unchanged sentences

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 .

("Quanergy") Series B Preferred Stock (the "Series B Investment").

The Series B Investment did not have a readily determinable fair value and 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.

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

On July 16, 2021, CITIC filed a Registration Statement on Form S-4 (together with subsequent amendments, the "SPAC Form S-4") with the SEC, the effectiveness of which was a condition to closing of the business combination (the "SPAC Merger").

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

On January 6, 2022, the SPAC 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 SPAC Merger was approved.

The SPAC Merger 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

Upon closing of the SPAC Merger, our investment in Quanergy comprised the following:

• 5.0 million common shares, which represented the conversion of the $ 50.0 million Series B Investment (at a $ 10.00 per common share implied valuation);

• 750 thousand common shares, purchased in exchange for a $ 7.5 million contribution as part of a private investment in public equity ("PIPE") subscription agreement;

• 2.5 million warrants (the "Warrants"), each of which represent the right to purchase one common share at a price of $ 0.01 per share, received from 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 (including the investment in the PIPE) has a historical cost basis of $ 57.5 million.

The fair value of the Warrants was determined to be equal to their intrinsic value at closing of the SPAC Merger in accordance with the guidance in FASB ASC Topic 815, Derivatives and Hedging .

At closing of the SPAC Merger, the common shares underlying the Warrants were valued at $ 7.05 per share (the closing market price on February 8, 2022).

The intrinsic value of the Warrants, reflecting the $ 0.01 exercise price, was $ 17.6 million, which was recorded as deferred income.

A summary of our investment in Quanergy is presented in the table below, as of June 30, 2022 (at $ 0.41 per share), March 31, 2022 (at $ 1.84 per share), February 8, 2022 (at $ 7.05 per share), and December 31, 2021.

Our investment in Quanergy is presented in other assets on our condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021.

2022 March 31,

2022 February 8,

2022 December 31,

Series B Investment $ — $ — $ — $ 50,000

Common shares (1)

3,075 9,200 50,000 —

PIPE investment 308 1,380 7,500 —

Warrant Shares 4,575 17,600 —

— 4,575 17,600 —

Total equity investment in Quanergy $ 3,383 $ 15,155 $ 75,100 $ 50,000

For the three months ended March 31, 2022

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(1) In the three months ended June 30, 2022, we converted the Warrants into common shares.

Accordingly, as of June 30, 2022, we had 7.5 million common shares outstanding (excluding the PIPE investment), compared to 5.0 million common shares outstanding as of March 31, 2022.

For the three and six months ended June 30, 2022, we recorded losses (presented in in other, net on our condensed consolidated statements of operations) to adjust the carrying value of our aggregate investment in Quanergy to its fair value at June 30, 2022 as follows:

For the three months ended June 30, 2022 For the six months ended June 30, 2022

Mark-to-market loss $ ( 11,772 ) $ ( 71,717 )

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.

As noted above, in exchange for the Warrants, we entered into the Support Agreement, whereby we agreed to provide technical and business development services to Quanergy for a term of four years from the effective date of February 8, 2022.

This transaction is an exchange of noncash consideration for services and was accounted for under FASB ASC Topic 845, Nonmonetary Transactions , using the fair value of the Warrants at February 8, 2022 ($ 17.6 million) as the measure of compensation received.

We have deferred this consideration and are recognizing it in earnings on a straight-line basis over the term of the agreement (48 months).

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 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.

No events or changes in circumstances occurred in the six months ended June 30, 2022 that would have triggered the need for an additional impairment review of our goodwill and other indefinite-lived intangible 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 March 31, 2022 and December 31, 2021.

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, 2022 and December 31, 2021.

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Carrying Value (1)

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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.

March 31, 2022 December 31, 2021

2022 December 31,

Quanergy Systems, Inc.

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

(1) As of June 30, 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.

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Hedges of Foreign Currency Risk

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:

For the three and six months ended June 30, 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 June 30, 2022, we estimated that $ 34.8 million of net gains will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending June 30, 2023.

As of June 30, 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)

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

21.0 EUR June 28, 2022 July 29, 2022 Euro ("EUR") to USD 1.05 USD Not designated

358.9 EUR Various from August 2020 to June 2022 Various from July 2022 to June 2024 EUR to USD 1.17 USD Cash flow hedge

388.0 CNY June 27, 2022 July 29, 2022 USD to Chinese Renminbi ("CNY") 6.70 CNY Not designated

756.2 CNY Various from October 2021 to March 2022 Various from July 2022 to December 2022 USD to CNY 6.46 CNY Cash flow hedge

60.0 JPY June 28, 2022 July 29, 2022 USD to Japanese Yen ("JPY") 135.93 JPY Not designated

24,760.0 KRW Various from August 2020 to June 2022 Various from July 2022 to May 2024 USD to Korean Won ("KRW") 1,191.72 KRW Cash flow hedge

22.0 MYR June 27, 2022 July 29, 2022 USD to Malaysian Ringgit ("MYR") 4.40 MYR Not designated

70.0 MXN June 28, 2022 July 29, 2022 USD to Mexican Peso ("MXN") 20.13 MXN Not designated

3,458.7 MXN Various from August 2020 to June 2022 Various from July 2022 to June 2024 USD to MXN 22.15 MXN Cash flow hedge

10.0 GBP June 28, 2022 July 29, 2022 British Pound Sterling ("GBP") to USD 1.22 USD Not Designated

60.0 GBP Various from August 2020 to June 2022 Various from July 2022 to June 2024 GBP to USD 1.33 USD Cash flow hedge

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Hedges of Commodity Risk

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 :

As of June 30, 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:

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

Silver 1,092,999 troy oz.

April 2022 - February 2024 $ 24.72

July 2022 - May 2024 $ 24.58

Gold 8,443 troy oz.

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

July 2022 - May 2024 $ 1,862.15

Nickel 273,088 pounds July 2022 - May 2024 $ 9.94

Aluminum 4,353,117 pounds July 2022 - May 2024 $ 1.23

Copper 8,450,120 pounds July 2022 - May 2024 $ 4.32

Platinum 12,141 troy oz.

April 2022 - February 2024 $ 1,045.40

July 2022 - May 2024 $ 1,023.00

Palladium 1,429 troy oz.

April 2022 - February 2024 $ 2,383.12

July 2022 - May 2024 $ 2,344.77

Financial Instrument Presentation

The following table presents the fair values of our derivative financial instruments and their classification in the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021:

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, 2022 and December 31, 2021:

Asset Derivatives Liability Derivatives

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

Balance Sheet Location June 30,

2022 December 31,

2021 Balance Sheet Location June 30,

2022 December 31,

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 March 31, 2022 and 2021:

Derivatives designated as

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Derivatives not designated as

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

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

Commodity forward contracts $ ( 18,254 ) $ 1,186 Other, net

Foreign currency forward contracts $ 3,165 $ ( 1,419 ) Other, net

Derivatives designated as

hedging instruments Amount of Deferred Gain 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

Foreign currency forward contracts $ 33,778 $ 12,446 Net revenue $ 13,740 $ ( 7,840 )

Foreign currency forward contracts $ 1,380 $ 3,383 Cost of revenue $ 5,232 $ 2,767

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 $ ( 8,830 ) $ 33 Other, net

Foreign currency forward contracts $ 1,922 $ ( 2,377 ) Other, net

Credit Risk Related Contingent Features

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 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.

As of June 30, 2022, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $ 18.6 million.

As of June 30, 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.

Acquisitions and Divestitures

Spear Power Systems

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.

On November 19, 2021, we acquired all of the equity interests of Spear Power Systems ("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 a contingent consideration arrangement whereby we may be required to pay up to an additional $ 30.0 million to the selling shareholders.

Using a present value technique, we estimated the acquisition-date fair value of the contingent consideration arrangement to be $ 8.6 million, which is reflected in the aggregate purchase price.

As of June 30, 2022, having evaluated updated financial forecasts, we determined that the fair value of the contingent consideration arrangement was $ 0.0 million .

Changes to the fair value of this contingent consideration arrangement, subsequent to its acquisition-date fair value, are recognized in earnings and presented 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.

As of June 30, 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.

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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.

("SmartWitness"), a privately held innovator of video telematics technology for heavy- and light-duty fleets, for an aggregate purchase price of $ 206.4 million, including $ 204.2 million of cash paid at closing, 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.

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.

As of June 30, 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.

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("Elastic M2M") for an aggregate cash purchase price of $ 51.4 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.

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

in fiscal years 2022 and 2023.

In three and six months ended June 30, 2022, we recognized $ 3.4 million and $ 18.4 million, respectively, of that acquisition-related incentive compensation.

This incentive compensation is recorded in restructuring and other charges, net.

We paid $ 15.0 million of this acquisition-related incentive compensation in the six months ended June 30, 2022, which is reflected as an operating cash outflow on our condensed consolidated statement of cash flows for the six months ended June 30, 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.

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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 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 $ ( 156 )

Goodwill 24,708

Other intangible assets 33,500

Deferred income tax liabilities ( 8,222 )

Fair value of net assets acquired, excluding cash and cash equivalents 49,830

Cash and cash equivalents 1,597

Fair value of net assets acquired $ 51,427

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

Acquisition Date Fair Value Weighted-Average Lives (years)

Acquired definite-lived intangible assets

Customer relationships $ 23,300 13

Completed technologies 10,200 10

Total definite-lived intangible assets acquired $ 33,500 12

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

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

These valuation methods incorporate assumptions including expected discounted future net 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.

The allocation of purchase price of Elastic M2M is preliminary and is based on management’s judgments after evaluating several factors, including preliminary valuation assessments of 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 of $ 24.7 million recognized as a result of this acquisition represents future economic benefits expected to arise from synergies from combining operations and the extension of existing customer relationships.

The goodwill recognized in this acquisition will not be deductible for tax purposes.

Dynapower Company, LLC

On April 22, 2022, we entered into a stock purchase agreement (the "SPA") to acquire all of the outstanding equity interests of Dynapower Company, LLC ("Dynapower"), 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.

Dynapower will be a foundational addition to our Clean Energy Solutions strategy and will complement our recent acquisitions of GIGAVAC, Lithium Balance, and Spear.

We expect to integrate Dynapower into our Sensing Solutions reportable segment.

The transaction contemplated by the SPA closed on July 12, 2022 for an aggregate purchase price of $ 580 million of cash consideration, subject to certain post-closing

Due to the recent closing of this acquisition, the initial accounting for this acquisition is incomplete, and we are not able to provide the disclosures otherwise required by FASB ASC Topic 805, Business Combinations .

Divestiture - Qinex Business

On May 27, 2022, we entered into an asset purchase agreement with Boyd Corporation to sell our semiconductor test and thermal business (the "Qinex Business") for total consideration of approximately $ 219.0 million, subject to working capital and other adjustments.

The transaction closed in July 2022.

The assets and liabilities of the Qinex Business constitute a disposal group that meets the held for sale criteria described in FASB ASC Topic 360, Property, Plant and Equipment as of June 30, 2022.

However, total assets held for sale of approximately $ 70 million (including allocated goodwill of approximately $ 45 million based on preliminary valuation assessments) and total liabilities held for sale of approximately $ 2 million were not deemed material for separate presentation on our condensed consolidated balance sheet as of June 30, 2022.

The final allocation of goodwill will be completed when the final valuations are completed.

We have not finalized the calculation of gain on the transaction but preliminarily expect it to be between approximately $ 125 million and $ 150 million.

The Qinex Business manufactures semiconductor burn-in test sockets and thermal control solutions and was formed through the combination of Sensata’s semiconductor interconnect business with Wells-CTI in 2012.

The Qinex Business is included in our Sensing Solutions segment (and Industrial Solutions reporting unit).

We allocated goodwill to the Qinex Business based on its fair value relative to the fair value of the remaining Industrial Solutions reporting unit.

We determined that the fair value of the Qinex Business, less costs to sell, exceeded the carrying amount of the related disposal group.

Segment Reporting

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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 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

For the three months ended For the six months ended

June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Performance Sensing $ 746,882 $ 741,852 $ 1,464,579 $ 1,456,364

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Subsequent Events

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.

In July 2022, we completed the sale of the Qinex Business and the acquisition of Dynapower.

Refer to Note 16:

Acquisitions and Divestitures for additional information on these transactions.

Cautionary Statements Concerning Forward-Looking Statements

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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.

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 or 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.

Risk Factors included 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