What changed in this filing

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Item 1. Financial Statements

2023-05-02 compared with 2022-11-01 · 155 added, 358 removed, 399 unchanged (56% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

September 30,

2023 December 31,

1 unchanged sentence

Cash and cash equivalents $ 1,034,134 $ 1,225,518

Accounts receivable, net of allowances of $ 33,828 and $ 17,003 as of September 30, 2022 and December 31, 2021, respectively

Accounts receivable, net of allowances of $ 23,675 and $ 24,246 as of March 31, 2023 and December 31, 2022, respectively

759,752 742,382

4 unchanged sentences

Goodwill 3,902,862 3,911,224

Other intangible assets, net of accumulated amortization of $ 2,361,199 and $ 2,277,393 as of September 30, 2022 and December 31, 2021, respectively

Other intangible assets, net of accumulated amortization of $ 2,393,587 and $ 2,352,813 as of March 31, 2023 and December 31, 2022, respectively

959,469 999,722

17 unchanged sentences

Shareholders’ equity:

Ordinary shares, € 0.01 nominal value per share, 177,069 shares authorized, and 174,983 and 174,287 shares issued as of September 30, 2022 and December 31, 2021, respectively

Treasury shares, at cost, 21,615 and 16,438 shares as of September 30, 2022 and December 31, 2021, respectively

Ordinary shares, € 0.01 nominal value per share, 177,069 shares authorized, and 175,298 and 175,207 shares issued as of March 31, 2023 and December 31, 2022, respectively

Treasury shares, at cost, 22,781 and 22,781 shares as of March 31, 2023 and December 31, 2022, respectively

( 1,124,713 ) ( 1,124,713 )

1 unchanged sentence

Retained earnings 2,452,858 2,383,341

Accumulated other comprehensive income/(loss) 4,187 ( 19,560 )

Accumulated other comprehensive loss ( 13,064 ) ( 16,264 )

Total shareholders' equity 3,193,492 3,110,807

4 unchanged sentences

(In thousands, except per share amounts)

For the three months ended For the nine months ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

For the three months ended

March 31, 2023 March 31, 2022

Net revenue $ 998,175 $ 975,770

18 unchanged sentences

(In thousands)

For the three months ended For the nine months ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

For the three months ended

March 31, 2023 March 31, 2022

Net income $ 86,417 $ 22,441

8 unchanged sentences

(In thousands)

For the nine months ended

September 30, 2022 September 30, 2021

For the three months ended

March 31, 2023 March 31, 2022

Cash flows from operating activities:

10 unchanged sentences

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

Unrealized loss on derivative instruments and other 40,702 17,359

Unrealized loss/(gain) on derivative instruments and other 3,107 ( 517 )

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

11 unchanged sentences

Proceeds from the sale of business, net of cash sold 14,000 —

Other 152 3,919

Net cash used in investing activities ( 22,882 ) ( 90,853 )

2 unchanged sentences

Payment of employee restricted stock tax withholdings ( 123 ) ( 135 )

Proceeds from borrowings on debt 500,000 1,001,875

Payments on debt ( 250,944 ) ( 2,931 )

2 unchanged sentences

Payments of debt financing costs ( 308 ) —

Net cash (used in)/provided by financing activities ( 288,885 ) 219,043

Net cash used in financing activities ( 265,390 ) ( 56,976 )

Net change in cash and cash equivalents ( 191,384 ) ( 100,474 )

5 unchanged sentences

(In thousands)

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

Number Amount Number Amount

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

Surrender of shares for tax withholding — — ( 6 ) ( 257 ) — — — ( 257 )

Stock options exercised 45 — — — 1,883 — — 1,883

Vesting of restricted securities 20 1 — — — ( 1 ) — —

Cash dividends paid — — — — — ( 17,046 ) — ( 17,046 )

Repurchase of ordinary shares — — ( 2,346 ) ( 98,446 ) — — — ( 98,446 )

Retirement of ordinary shares ( 6 ) — 6 257 — ( 257 ) — —

Share-based compensation — — — — 8,441 — — 8,441

Net income — — — — — 140,253 — 140,253

Other comprehensive income — — — — — — 10,906 10,906

Balance as of September 30, 2022 174,983 $ 2,240 ( 21,615 ) $ ( 1,077,041 ) $ 1,852,249 $ 2,287,683 $ 4,187 $ 3,069,318

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

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

Number Amount Number Amount

4 unchanged sentences

Cash dividends paid — — — — — ( 16,777 ) — ( 16,777 )

Repurchase of ordinary shares — — ( 5,177 ) ( 244,602 ) — — — ( 244,602 )

Retirement of ordinary shares ( 2 ) — 2 123 — ( 123 ) — —

2 unchanged sentences

Other comprehensive income — — — — — — 3,200 3,200

Balance as of September 30, 2022 174,983 $ 2,240 ( 21,615 ) $ ( 1,077,041 ) $ 1,852,249 $ 2,287,683 $ 4,187 $ 3,069,318

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, 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

Balance as of March 31, 2023 175,298 $ 2,243 ( 22,781 ) $ ( 1,124,713 ) $ 1,876,168 $ 2,452,858 $ ( 13,064 ) $ 3,193,492

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

4 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

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

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

6 unchanged sentences

GAAP for complete financial statements.

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.

The accompanying interim 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, 2022, filed with the U.S.

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

Securities and Exchange Commission on February 13, 2023 (the "2022 Annual Report").

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

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

New Accounting Standards

1 unchanged sentence

Revenue Recognition

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

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

The following table presents net revenue disaggregated by segment and end market for the three months ended March 31, 2023 and 2022:

For the three months ended March 31, 2023 For the three months ended March 31, 2022

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, 2022 For the nine months ended September 30, 2021

Performance Sensing Sensing Solutions Total Performance Sensing Sensing Solutions Total

Automotive $ 1,533,865 $ 27,833 $ 1,561,698 $ 1,543,121 $ 33,003 $ 1,576,124

HVOR 685,241 — 685,241 619,709 — 619,709

Industrial — 385,470 385,470 — 302,758 302,758

Appliance and HVAC — 168,427 168,427 — 185,896 185,896

Aerospace — 109,617 109,617 — 99,847 99,847

Other — 104,133 104,133 — 101,875 101,875

Total $ 2,219,106 $ 795,480 $ 3,014,586 $ 2,162,830 $ 723,379 $ 2,886,209

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, 2022 and 2021:

For the three months ended For the nine months ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

The following table presents the components of non-cash compensation expense related to our equity awards for the three months ended March 31, 2023 and 2022:

For the three months ended

March 31, 2023 March 31, 2022

Stock options $ 119 $ 307

1 unchanged sentence

Share-based compensation expense $ 7,206 $ 6,540

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 nine months ended September 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)

583 N/A $ 49.97

Various executives and employees PRSU (3)

420 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 September 2025.

(3) These PRSUs vest on various dates between April 2025 and September 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 and nine months ended September 30, 2022 and 2021:

For the three months ended For the nine months ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Q2 2020 Global Restructure Program charges $ — $ 3,098 $ — $ 8,752

Other restructuring and other charges, net

The following table presents the components of restructuring and other charges, net for the three months ended March 31, 2023 and 2022:

For the three months ended

March 31, 2023 March 31, 2022

Severance costs, net $ 4,213 $ 587

Facility and other exit costs 225 1,048

Gain on sale of Qinex Business ( 135,112 ) — ( 135,112 ) —

Gain on sale of business ( 5,877 ) —

Acquisition-related compensation arrangements (1)

2 unchanged sentences

___________________________________

(1) Primarily includes, in the three and nine months ended September 30, 2022, transaction-related charges to sell the Qinex Business, partially offset in the nine months ended September 30, 2022 by gains related to changes in the fair value of acquisition-related contingent consideration amounts.

Refer to Note 16:

Acquisitions and Divestitures for additional information.

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

Q2 2020 Global Restructure Program Other Total

(1) We have reclassified acquisition-related compensation arrangements for the three months ended March 31, 2022 from the "other" caption within restructuring and other charges, net, to correspond to current period presentation.

(2) The three months ended March 31, 2022 primarily includes gains related to changes in the fair value of acquisition-related contingent consideration amounts.

The following table presents a rollforward of our severance liability for the three months ended March 31, 2023:

Balance as of December 31, 2022 $ 8,617

2 unchanged sentences

Foreign currency remeasurement 139

Balance as of September 30, 2022 $ 634 $ 7,612 $ 8,246

The severance liability as of September 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 nine months ended September 30, 2022 and 2021:

For the three months ended For the nine months ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Currency remeasurement (loss)/gain on net monetary assets $ ( 12,583 ) $ ( 324 ) $ ( 26,740 ) $ 187

Balance as of March 31, 2023 $ 7,334

The severance liability as of March 31, 2023 and December 31, 2022 was entirely recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets.

The following table presents the components of other, net for the three months ended March 31, 2023 and 2022:

For the three months ended

March 31, 2023 March 31, 2022

Currency remeasurement loss on net monetary assets $ ( 1,259 ) $ ( 67 )

Gain/(loss) on foreign currency forward contracts 184 ( 1,243 )

Loss on commodity forward contracts ( 5,773 ) ( 6,495 ) ( 14,603 ) ( 6,462 )

Gain on commodity forward contracts 1,899 9,424

Loss on debt financing ( 485 ) —

Mark-to-market loss on investments, net ( 4,035 ) — ( 75,135 ) —

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

Net periodic benefit cost, excluding service cost ( 971 ) ( 755 )

1 unchanged sentence

Other, net $ 1,392 $ ( 50,456 )

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

For the three months ended For the nine months ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

The following table presents the provision for income taxes for the three months ended March 31, 2023 and 2022:

For the three months ended

March 31, 2023 March 31, 2022

Provision for income taxes $ 23,726 $ 7,588

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, and (c) changes in withholding taxes on unremitted earnings.

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.

We recorded a partial valuation allowance against certain interest carryforwards in the U.S.

at both December 31, 2022 and December 31, 2021.

We are continually evaluating both the positive and negative evidence for this partial valuation allowance.

We believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed.

Release of the valuation allowance would result in the recognition of this deferred tax asset and a decrease to income tax expense for the period the release is recorded.

However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability and future utilization of this attribute that we are able to actually achieve.

Net Income per Share

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

For the three and nine months ended September 30, 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 nine months ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

For the three months ended March 31, 2023 and 2022 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, 2023 March 31, 2022

Basic weighted-average ordinary shares outstanding 152,518 157,422

4 unchanged sentences

These potential ordinary shares were as follows:

For the three months ended For the nine months ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

For the three months ended

March 31, 2023 March 31, 2022

Anti-dilutive shares excluded 381 4

Contingently issuable shares excluded 1,268 1,002

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

September 30,

The following table presents the components of inventories as of March 31, 2023 and December 31, 2022:

2023 December 31,

3 unchanged sentences

Inventories $ 658,562 $ 644,875

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 September 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 $ — $ — $ 2 $ 2 $ 958 $ 725 $ 960 $ 727

Interest cost 113 167 22 21 417 405 552 593

Expected return on plan assets ( 195 ) ( 226 ) — — ( 214 ) ( 177 ) ( 409 ) ( 403 )

Amortization of net loss/(gain) 226 243 ( 43 ) — 327 461 510 704

Amortization of prior service (credit)/cost — — ( 100 ) ( 159 ) 2 3 ( 98 ) ( 156 )

Loss on settlement 313 315 — — — — 313 315

Net periodic benefit cost/(credit) $ 457 $ 499 $ ( 119 ) $ ( 136 ) $ 1,490 $ 1,417 $ 1,828 $ 1,780

The following table presents the components of net periodic benefit cost/(credit) associated with our defined benefit and retiree healthcare plans for the nine months ended September 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 $ — $ — $ 6 $ 6 $ 2,896 $ 3,028 $ 2,902 $ 3,034

Interest cost 339 407 86 63 1,267 1,210 1,692 1,680

Expected return on plan assets ( 585 ) ( 678 ) — — ( 700 ) ( 534 ) ( 1,285 ) ( 1,212 )

Amortization of net loss/(gain) 593 1,045 ( 86 ) — 935 1,382 1,442 2,427

Amortization of prior service (credit)/cost — — ( 300 ) ( 477 ) 7 19 ( 293 ) ( 458 )

Loss on settlement 706 3,294 — — — — 706 3,294

Net periodic benefit cost/(credit) $ 1,053 $ 4,068 $ ( 294 ) $ ( 408 ) $ 4,405 $ 5,105 $ 5,164 $ 8,765

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 September 30, 2022 and December 31, 2021:

Maturity Date September 30,

The following table presents the components of long-term debt, finance lease and other financing obligations as of March 31, 2023 and December 31, 2022:

Maturity Date March 31,

2023 December 31,

Term Loan September 20, 2026 $ 447,992 $ 451,465

4.875 % Senior Notes

October 15, 2023 — 500,000

Term Loan (1)

September 20, 2026 $ 196,834 $ 446,834

5.625 % Senior Notes

17 unchanged sentences

Finance lease and other financing obligations, less current portion $ 24,471 $ 24,742

___________________________________

(1) On February 6, 2023, we prepaid $ 250.0 million of outstanding principal on our Term Loan balance.

Accordingly, that portion of the principal balance outstanding on the Term Loan has been presented as current portion of long-term debt on our consolidated balance sheet as of December 31, 2022.

On April 25, 2023, we announced that we intend to pay down the remaining balance on the Term Loan in the second quarter of 2023.

Accordingly, the remaining principal balance outstanding on the Term Loan has been presented as current portion of long-term debt on our condensed consolidated balance sheet as of March 31, 2023.

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

1 unchanged sentence

Debt of our 2022 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 September 30, 2022, we had $ 746.1 million available under the Revolving Credit Facility, net of $ 3.9 million of obligations in respect of outstanding letters of credit issued thereunder.

As of March 31, 2023, we had $ 746.1 million available under our $ 750.0 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, 2022, no amounts had been drawn against these outstanding letters of credit.

5.875 % Senior Notes

On August 29, 2022, STBV completed the issuance and sale of $ 500.0 million aggregate principal amount of 5.875 % senior notes due 2030 (the " 5.875 % Senior Notes").

The 5.875 % Senior Notes were issued under an indenture dated as of August 29, 2022 among STBV, as issuer, The Bank of New York Mellon, as trustee, and our guarantor subsidiaries named therein (the " 5.875 % Senior Notes Indenture").

The 5.875 % 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 5.875 % 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 5.875 % Senior Notes Indenture.

The 5.875 % Senior Notes bear interest at 5.875 % per year and mature on September 1, 2030.

Interest is payable semi-annually on September 1 and March 1 of each year, commencing on March 1, 2023.

The 5.875 % 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 STI and an issuer or a guarantor under our existing senior notes as follows:

STBV's 5.625 % Senior Notes due 2024, 5.0 % Senior Notes due 2025, and 4.0 % Senior Notes due 2029;

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 September 1, 2025, STBV may redeem the 5.875 % Senior Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount of the 5.875 % 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 September 1, 2025, STBV may redeem the 5.875 % 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 September 1, Price

2025 102.398 %

2026 101.469 %

2027 and thereafter 100.000 %

In addition, at any time prior to September 1, 2025, STBV may redeem up to 40 % of the principal amount of the outstanding 5.875 % Senior Notes (including additional 5.875 % Senior Notes, if any) with the net cash proceeds of certain equity offerings at a redemption price (expressed as a percentage of principal amount) of 105.875 %, 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 5.875 % Senior Notes (including additional 5.875 % Senior Notes, if any) remains outstanding immediately after each such redemption.

Upon the occurrence of certain changes in control, each holder of the 5.875 % Senior Notes will have the right to require STBV to repurchase the 5.875 % 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 5.875 % 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 5.875 % Senior Notes Indenture), if any, then due and which will become due on the date of redemption.

4.875 % Senior Notes Redemption

On August 29, 2022, we announced that we intended to redeem in full the $ 500.0 million aggregate principal amount outstanding on our 4.875 % senior notes due 2023 (the " 4.875 % Senior Notes").

We redeemed the 4.875 % Senior Notes on September 28, 2022 in accordance with the terms of the indenture under which the 4.875 % Senior Notes were issued and the terms of the notice of redemption at a price of 101.0 % of the aggregate principal amount of the outstanding 4.875 % Senior Notes (which includes the applicable premium), plus accrued and unpaid interest to (but not including) the redemption date.

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 2021 Annual Report.

In the nine months ended September 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 three months ended September 30, 2022, in connection with the issuance of the 5.875 % Senior Notes, we capitalized $ 5.9 million of deferred financing costs, which are presented on the condensed consolidated balance sheets as a reduction of long-term debt.

In connection with the redemption of the 4.875 % Senior Notes, we recognized a loss of $ 5.5 million, presented in other, net, related to the redemption premium of $ 5.0 million and the write-off of unamortized deferred financing costs and debt discounts.

In the nine months ended September 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.

As of March 31, 2023, no amounts had been drawn against these outstanding letters of credit.

Accrued Interest

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

As of September 30, 2022 and December 31, 2021, accrued interest totaled $ 54.9 million and $ 45.1 million, respectively.

As of March 31, 2023 and December 31, 2022, accrued interest totaled $ 54.4 million and $ 50.1 million, respectively.

Commitments and Contingencies

3 unchanged sentences

Cash Dividends

On August 24, 2022, we paid a cash dividend of $ 0.11 per share, or $ 17.0 million in aggregate, to shareholders of record as of August 10, 2022.

On February 22, 2023, we paid a cash dividend of $ 0.11 per share, or $ 16.8 million in aggregate, to shareholders of record as of February 8, 2023.

On April 13, 2023, we announced that our Board of Directors approved a quarterly dividend of $ 0.12 per share, payable on May 24, 2023 to shareholders of record as of May 10, 2023.

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.

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 September 30, 2022, $ 272.2 million remained available for repurchase under the January 2022 Program.

Accumulated Other Comprehensive Income/(Loss)

The following table presents the components of accumulated other comprehensive income/(loss) for the nine months ended September 30, 2022:

Cash Flow Hedges Defined Benefit and Retiree Healthcare Plans Accumulated Other Comprehensive Income/(Loss)

We did not repurchase any ordinary shares under this program in the three months ended March 31, 2023.

In the three months ended March 31, 2022, we repurchased 1.1 million ordinary shares under the January 2022 Program.

As of March 31, 2023, $ 224.5 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, 2023:

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

Balance as of December 31, 2022 $ 15,665 $ ( 31,929 ) $ ( 16,264 )

Other comprehensive income before reclassifications, net of tax 8,992 — 8,992

Reclassifications from accumulated other comprehensive income/(loss), net of tax ( 26,075 ) 1,385 ( 24,690 )

Reclassifications from accumulated other comprehensive loss, net of tax ( 6,185 ) 393 ( 5,792 )

Other comprehensive income 2,807 393 3,200

Balance as of September 30, 2022 $ 39,193 $ ( 35,006 ) $ 4,187

The following table presents the amounts reclassified from accumulated other comprehensive income/(loss) for the three and nine months ended September 30, 2022 and 2021:

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, 2023 $ 18,472 $ ( 31,536 ) $ ( 13,064 )

The following table presents the amounts reclassified from accumulated other comprehensive loss for the three months ended March 31, 2023 and 2022:

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

Component 2023 2022

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(1) Refer to Note 14:

Derivative Instruments and Hedging Activities for additional information on amounts to be reclassified from accumulated other comprehensive income/(loss) in future periods.

(2) Refer to Note 10:

Pension and Other Post-Retirement Benefits for additional information on net periodic benefit cost/(credit).

Derivative Instruments and Hedging Activities for additional information on amounts to be reclassified from accumulated other comprehensive loss in future periods.

Fair Value Measures

Measured on a Recurring Basis

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

September 30,

The fair values of our derivative assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 are shown in the below table.

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

2023 December 31,

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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 (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 (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 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.

The following table presents a summary of our investment in Quanergy, presented in other assets on our condensed consolidated balance sheets, at certain dates since December 31, 2021:

September 30,

2022 June 30,

2022 February 8,

2022 December 31,

Price per share (1)

$ 0.21 $ 0.41 $ 7.05 N/A

Total shares of Quanergy held, including Warrants (in millions) (1)

8.25 8.25 8.25 N/A

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

Common shares (2)

1,553 3,075 50,000 —

PIPE investment 155 308 7,500 —

Total equity investment in Quanergy $ 1,708 $ 3,383 $ 75,100 $ 50,000

___________________________________

(1) Represents common share price and shares held, unadjusted for a 1-to-20 reverse stock split effective after market close on October 6, 2022.

Upon execution of the reverse stock split, our holdings of Quanergy common stock (including the PIPE investment) declined to approximately 0.4 million shares, with no impact on fair value.

The split-adjusted stock price after close of business on September 30, 2022 was $ 4.14 per share.

Beginning October 7, 2022, Quanergy common stock began trading on a split-adjusted basis.

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

Accordingly, as of September 30, 2022, we had 7.5 million common shares outstanding (excluding the PIPE investment), compared to 5.0 million common shares outstanding as of February 8, 2022.

The following table presents a summary of recorded losses related to our equity investment in Quanergy, presented in other, net on our condensed consolidated statements of operations:

For the three months ended September 30, 2022 For the nine months ended September 30, 2022

Mark-to-market loss $ ( 1,675 ) $ ( 73,392 )

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).

As of March 31, 2023 and December 31, 2022, we also held cash equivalents of $ 653.3 million and $ 860.0 million, respectively, consisting of U.S.

Government Treasury money market funds that are categorized in Level 1 of the fair value hierarchy.

Measured on a Nonrecurring Basis

We evaluated our goodwill and other indefinite-lived intangible assets for impairment as of October 1, 2022 and determined that they were not impaired.

No events or changes in circumstances occurred in the nine months ended September 30, 2022 that would have triggered the need for an additional impairment review of our goodwill and other indefinite-lived intangible assets.

In July 2022, we sold various assets and liabilities comprising our semiconductor test and thermal business (collectively, the “Qinex Business”).

Refer to Note 16:

Acquisitions and Divestitures for additional information.

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

No events or changes in circumstances occurred in the three months ended March 31, 2023 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 September 30, 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 March 31, 2023 and December 31, 2022.

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Carrying Value (1)

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$ 500,000 $ 490,625 $ 500,000 $ 473,750

5.875 % Senior Notes

___________________________________

(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 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,

2022 December 31,

Quanergy Systems, Inc.

Other 15,000 15,000

Total $ 15,000 $ 65,000

___________________________________

(1) As of September 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.

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

As of March 31, 2023 and December 31, 2022, we held a $ 15.0 million equity investment using the measurement alternative, which is presented as a component of other assets in the condensed consolidated balance sheets.

There were no impairments or changes resulting from observable transactions for this investment in the three months ended March 31, 2023 and 2022 and no adjustments have been made to its carrying value as of March 31, 2023 and December 31, 2022.

Derivative Instruments and Hedging Activities

Hedges of Foreign Currency Risk

For the three and nine months ended September 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 September 30, 2022, we estimated that $ 46.4 million of net gains will be reclassified from accumulated other comprehensive income/(loss) to earnings during the twelve-month period ending September 30, 2023.

As of September 30, 2022, we had the following outstanding foreign currency forward contracts:

For the three months ended March 31, 2023 and 2022, 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, 2023, we estimated that $ 21.8 million of net gains will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending March 31, 2024.

As of March 31, 2023, 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)

32.0 EUR September 28, 2022 October 31, 2022 Euro ("EUR") to USD 0.96 USD Not designated

364.7 EUR Various from October 2020 to September 2022 Various from October 2022 to September 2024 EUR to USD 1.13 USD Cash flow hedge

471.0 CNY September 27, 2022 October 31, 2022 USD to Chinese Renminbi ("CNY") 7.14 CNY Not designated

378.1 CNY Various from October 2021 to March 2022 Various from October to December 2022 USD to CNY 6.47 CNY Cash flow hedge

21,673.3 KRW Various from November 2020 to September 2022 Various from October 2022 to August 2024 USD to Korean Won ("KRW") 1,208.00 KRW Cash flow hedge

23.0 MYR September 27, 2022 October 31, 2022 USD to Malaysian Ringgit ("MYR") 4.63 MYR Not designated

266.0 MXN September 28, 2022 October 31, 2022 USD to Mexican Peso ("MXN") 20.43 MXN Not designated

3,525.3 MXN Various from October 2020 to September 2022 Various from October 2022 to September 2024 USD to MXN 22.20 MXN Cash flow hedge

10.0 GBP September 28, 2022 October 31, 2022 British Pound Sterling ("GBP") to USD 1.06 USD Not Designated

60.2 GBP Various from October 2020 to September 2022 Various from October 2022 to September 2024 GBP to USD 1.29 USD Cash flow hedge

20.0 EUR March 29, 2023 April 28, 2023 Euro ("EUR") to USD 1.09 USD Not designated

364.3 EUR Various from April 2021 to March 2023 Various from April 2023 to March 2025 EUR to USD 1.10 USD Cash flow hedge

474.0 CNY March 28, 2023 April 28, 2023 USD to Chinese Renminbi ("CNY") 6.85 CNY Not designated

530.0 CNY Various in January 2023 Various from April 2023 to September 2023 USD to CNY 6.76 CNY Cash flow hedge

609.0 JPY March 29, 2023 April 28, 2023 USD to Japanese Yen ("JPY") 131.83 JPY Not designated

19,364.0 KRW Various from June 2021 to March 2023 Various from April 2023 to February 2025 USD to Korean Won ("KRW") 1,248.39 KRW Cash flow hedge

25.0 MYR March 28, 2023 April 28, 2023 USD to Malaysian Ringgit ("MYR") 4.37 MYR Not designated

20.0 MXN March 29, 2023 April 28, 2023 USD to Mexican Peso ("MXN") 18.23 MXN Not designated

3,616.3 MXN Various from April 2021 to March 2023 Various from April 2023 to March 2025 USD to MXN 21.76 MXN Cash flow hedge

6.3 GBP March 29, 2023 April 28, 2023 British Pound Sterling ("GBP") to USD 1.23 USD Not Designated

57.6 GBP Various from April 2021 to March 2023 Various from April 2023 to March 2025 GBP to USD 1.24 USD Cash flow hedge

___________________________________

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Hedges of Commodity Risk

As of September 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:

As of March 31, 2023, 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 869,069 troy oz.

October 2022 to July 2024 $ 23.89

April 2023 to January 2025 $ 22.84

Gold 7,119 troy oz.

October 2022 to July 2024 $ 1,861.62

Nickel 255,206 pounds October 2022 to July 2024 $ 10.27

Aluminum 4,225,448 pounds October 2022 to July 2024 $ 1.23

Copper 8,124,126 pounds October 2022 to July 2024 $ 4.23

April 2023 to January 2025 $ 1,875.71

Nickel 207,887 pounds April 2023 to January 2025 $ 11.24

Aluminum 3,904,000 pounds April 2023 to January 2025 $ 1.21

Copper 7,591,333 pounds April 2023 to January 2025 $ 4.03

Platinum 9,563 troy oz.

October 2022 to July 2024 $ 1,000.80

April 2023 to January 2025 $ 969.95

Palladium 1,237 troy oz.

October 2022 to July 2024 $ 2,291.99

April 2023 to January 2025 $ 2,100.68

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, 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 March 31, 2023 and December 31, 2022:

Asset Derivatives Liability Derivatives

Balance Sheet Location September 30,

Balance Sheet Location March 31,

2023 December 31,

2021 Balance Sheet Location September 30,

2022 Balance Sheet Location March 31,

2023 December 31,

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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, 2022 and 2021:

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

2022 2021 2022 2021

Foreign currency forward contracts $ 35,324 $ 9,379 Net revenue $ 14,909 $ ( 1,976 )

Foreign currency forward contracts $ ( 5,204 ) $ ( 3,832 ) Cost of revenue $ 1,260 $ 3,557

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 $ ( 5,773 ) $ ( 6,495 ) Other, net

Foreign currency forward contracts $ 6,178 $ ( 2,414 ) Other, net

Derivatives designated as

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

2023 2022 2023 2022

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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 $ 1,899 $ 9,424 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, 2022, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $ 27.8 million.

As of September 30, 2022, we had no t posted any cash collateral related to these agreements.

As of March 31, 2023, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $ 13.3 million.

As of March 31, 2023, 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 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 September 30, 2022, having evaluated updated financial forecasts, and have determined that the fair value of the contingent consideration arrangement as of September 30, 2022 is $ 0.0 million , which is unchanged from its fair value as of June 30, 2022.

Accordingly, a gain of $ 8.6 million for the nine months ended September 30, 2022 was recognized in earnings and presented in restructuring and other charges, net.

We are integrating Spear into the Sensing Solutions reportable segment.

As of September 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.

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 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 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 September 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.

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 $ 51.6 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 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 nine months ended September 30, 2022, we recognized $ 2.0 million and $ 20.4 million, respectively, of that acquisition-related incentive compensation.

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, which was pending the completion of certain technical milestones in fiscal year 2022 and achievement of financial targets in fiscal years 2022 and 2023.

All technical milestones were completed in fiscal year 2022.

As of December 31, 2022, we had recognized $ 24.7 million of this acquisition-related incentive compensation.

In three months ended March 31, 2023, we recognized an additional $ 3.3 million of this 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 nine months ended September 30, 2022, which is reflected as an operating cash outflow on our condensed consolidated statement of cash flows.

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 was 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.

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We are integrating Elastic M2M into the 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:

The allocation of the purchase price related to this acquisition was finalized in the three months ended March 31, 2023.

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

Net working capital, excluding cash $ 35

5 unchanged sentences

Fair value of net assets acquired $ 51,618

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 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.

In connection with the preliminary 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 preliminary estimated fair values, and weighted-average lives:

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)

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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.

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

We are integrating Dynapower into our Sensing Solutions reportable segment.

1 unchanged sentence

Net working capital, excluding cash $ 13,487

Property, plant and equipment 1,846

Goodwill 418,257

Other intangible assets 164,400

Net long-term other liabilities ( 38,483 )

Other assets 1,656

Deferred income tax liabilities ( 25,548 )

Other long-term liabilities ( 1,035 )

Fair value of net assets acquired, excluding cash and cash equivalents 573,063

3 unchanged sentences

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 $ 357.4 million, which represents future economic benefits expected to arise from synergies from combining operations and the extension of existing customer relationships.

The preliminary goodwill 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.

4 unchanged sentences

Customer relationships $ 37,000 13

Backlog 7,100 2

Completed technologies 86,100 12

5 unchanged sentences

Divestiture - Qinex Business

On May 27, 2022, we executed an asset purchase agreement (the "APA") whereby we agreed to sell the Qinex Business to LTI Holdi ngs, Inc.

On May 27, 2022, we executed an asset purchase agreement (the "APA") whereby we agreed to sell various assets and liabilities comprising our semiconductor test and thermal business (collectively, the "Qinex Business") to LTI Holdi ngs, Inc.

("LTI") in exchange for consideration of approximately $ 219.0 million, subject to working capital and other adjustments.

Concurrent with the execution of the APA, the parties entered into a Contract Manufacturing Agreement ("CMA") and a Transition Services Agreement ("TSA"), each for nominal consideration.

The CMA commenced at closing of the transaction ("Closing") and has a term of either six or nine months , depending on the manufacturing site.

LTI also has the option of extending each contract for an additional three months .

The period from Closing to the end of the CMA term (including extensions, if any) is referred to as the "Transition Period." The terms of the CMA require that we provide manufacturing and distribution services for the Transition Period.

The TSA commences at Closing and has a term that varies depending on the nature of the support services, ranging from one month to the entirety of the Transition Period.

The terms of the TSA require that we provide various forms of commercial, operational, and back-office support to LTI.

The CMA commenced at closing of the transaction ("Closing") and had a term of either six or nine months , depending on the manufacturing site.

LTI also had the option of extending each contract for an additional three months .

The period from Closing to the end of the CMA term (including extensions, if any) is referred to as the "Transition Period." The terms of the CMA required that we provide manufacturing and distribution services for the Transition Period.

The TSA commenced at Closing and had a term that varied depending on the nature of the support services, ranging from one month to the entirety of the Transition Period.

The terms of the TSA required that we provide various forms of commercial, operational, and back-office support to LTI.

As of March 31, 2023, the Transition Period has ended.

Closing occurred in July 2022, at which time assets of approximately $ 70 million (including allocated goodwill of $ 45 million) and liabilities of approximately $ 2 million transferred to LTI.

Transferred assets and liabilities excluded inventories and accounts payable, which will transfer to LTI at the end of the Transition Peri od.

We received cash consideration of $ 198.8 million at Closing, which is presented as an investing cash flow for the nine months ended September 30, 2022.

Cash consideration received at Closing excludes amounts held in escrow until various milestones are met through the Transition Period.

We received an additional $ 5.0 million in August 2022 following fulfillment of a portion of our TSA obligations, which is presented as an operating cash inflow.

In the three months ended September 30, 2022, we recognized a pre-tax gain of approximately $ 135.1 million.

In the three and nine months ended September 30, 2022, we recognized approximately $ 13.5 million and $ 15.6 million, respectively, of transaction-related charges to sell the Qinex Business.

Each of the gain on sale and transaction costs are presented in restructuring and other charges, net in our condensed consolidated statements of operations for the three and nine months ended September 30, 2022.

Refer to Note 5:

Restructuring and Other Charges, Net .

Transferred assets and liabilities excluded inventories and accounts payable, which transferred to LTI at the end of the Transition Peri od.

We received cash consideration of

$ 198.8 million at Closing and recognized a pre-tax gain of $ 135.1 million.

Cash consideration received at Closing excluded amounts held in escrow until various milestones were met through the Transition Period.

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.

12 unchanged sentences

Significant Accounting Policies of the audited consolidated financial statements and notes thereto included in our 2022 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 and nine months ended September 30, 2022 and 2021:

For the three months ended For the nine months ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

For the three months ended

March 31, 2023 March 31, 2022

Performance Sensing $ 751,525 $ 717,697

20 unchanged sentences

Risk Factors included in our 2022 Annual Report and as may be updated from time to time in Item 1A:

Risk Factors included 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 United States Securities and Exchange Commission.

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