What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-02-13 · 717 added, 521 removed, 1423 unchanged (47% of the section changed)

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Report of Independent Registered Public Accounting Firm (PCAOB ID:

R eport of Independent Registered Public Accounting F irm (PCAOB ID:

Consolidated Balance Sheets

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

Sensata Technologies Holding plc

To the shareholders and the Board of Directors of Sensata Technologies Holding plc

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sensata Technologies Holding plc (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, cash flows and changes in shareholders’ equity for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

We have audited the accompanying consolidated balance sheet of Sensata Technologies Holding plc and subsidiaries (the "Company") as of December 31, 2023, the related consolidated statements of operations, comprehensive income, cash flows and changes in shareholders' equity, for the year ended December 31, 2023, and the related notes and the schedules listed in the Index at Item 15(a) (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2024 expressed an adverse opinion on the Company's internal control over financial reporting because of material weaknesses identified.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill - Insights and Dynapower Reporting Units - Refer to Notes 2 and 11 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

The Company determined the fair value of the Insights and Dynapower reporting units using the discounted cash flow model.

For the Dynapower reporting unit, the Company also used the market approach.

The determination of fair value using the discounted cash flow model requires management to make significant estimates and assumptions related to forecasts of future revenues, earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, discount rate, and terminal growth rate.

The determination of the fair value using the market approach requires management to make significant assumptions related to EBITDA multiples.

Changes in these assumptions could have a significant impact on the fair value of the reporting units and the amount of any goodwill impairment recognized.

As a result of this evaluation, the Insights reporting unit’s carrying value exceeded its fair value and the Company recorded an impairment charge of $321.7 million during the fourth quarter of 2023, representing its entire goodwill balance.

The fair value of the Dynapower reporting unit exceeded the carrying value as of the annual goodwill impairment date.

Given the significant estimates and assumptions management made to estimate the fair value of the Insights and Dynapower reporting units, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the forecasts of future revenues and EBITDA margins, estimate of the discount rates, and the selection of the terminal growth rate and EBITDA multiples required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenues, EBITDA margins and multiples, and the selection of discount rates and terminal growth rate for the Insights and Dynapower reporting units included the following, among others:

• Evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.

• Evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results, (2) internal communications to management, and (3) external information.

• With the assistance of our fair value specialists, we evaluated the reasonableness of:

◦ the discount rates and terminal growth rate, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rates and terminal rate selected by management.

◦ the EBITDA multiples, including testing the underlying source information and mathematical accuracy of the calculations, and comparing the multiples selected by management to its guideline companies for the Dynapower reporting unit.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

February 29, 2024

We have served as the Company's auditor since 2023.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Sensata Technologies Holding plc

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sensata Technologies Holding plc (the Company) as of December 31, 2022, the related consolidated statements of operations, comprehensive income, cash flows and changes in shareholders’ equity for each of the two years in the period ended December 31, 2022, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 13, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill - Quantitative Impairment Assessment

Description of the Matter As of December 31, 2022, the Company’s goodwill balance was $3.9 billion.

The Company’s goodwill is initially assigned to its reporting units as of the acquisition date.

As discussed in Note 2 of the consolidated financial statements, goodwill is tested for impairment at the reporting unit level.

The Company evaluated goodwill for impairment as of October 1, 2022, and used the quantitative method to assess their goodwill for impairment.

Auditing management’s quantitative goodwill impairment test involved a high degree of auditor judgment due to the significant estimation required to determine the fair value of each reporting unit.

In particular, the fair value estimate for certain reporting units was sensitive to significant assumptions such as the long-range forecasts, the selection of discount rates, and the estimation of the multiples or long-term growth rates used in valuing the terminal year which are affected by expectations about future market or economic conditions, which led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management's significant assumptions as outlined above, used in determining the fair value of these reporting units.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s quantitative goodwill impairment review process.

For example, we tested controls over management’s review of the data used in their valuation models and reviewed significant assumptions discussed above used in determining the reporting unit fair values.

To test the estimated fair value of the Company’s reporting units, with the assistance of our valuation professionals, our audit procedures included, among others, assessing fair value methodologies and testing the significant assumptions discussed above.

We compared the significant assumptions used by management to current industry and economic trends, the Company’s historical trends with consideration given to changes in the Company’s business, customer base or product mix and other relevant factors.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions.

We also evaluated the reconciliation of the estimated aggregate fair value of the reporting units to the Company’s market capitalization.

Income Taxes – Uncertain Tax Positions

Description of the Matter As discussed in Note 7, at December 31, 2022, the Company had approximately $224.6 million of unrecognized tax benefits associated with uncertain tax positions.

Uncertainty in a tax position may arise as tax laws are subject to interpretation.

The Company uses significant judgment in (1) determining whether a tax position’s technical merits are more-likely-than-not to be sustained and (2) measuring the amount of tax benefit that qualifies for recognition.

Auditing the recognition and measurement of tax positions related to uncertain tax positions involved significant auditor judgment and use of tax professionals with specialized skills and knowledge because both the recognition and measurement of the tax positions are complex, highly judgmental and based on interpretations of tax laws and legal rulings.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to identify and record the reserve for uncertain tax positions.

For example, we tested controls over management’s evaluation of the technical merits of tax positions and identification of uncertain tax positions and the controls to measure the benefit of those tax positions, including management’s review of the inputs and calculations of unrecognized tax benefits resulting from uncertain tax positions.

To test the amounts recorded as uncertain tax positions we involved our tax professionals to evaluate the technical merits of the Company’s income tax positions.

Our procedures included, among others, evaluating income tax technical analysis or other third-party advice obtained by the Company and inspecting correspondence from the relevant tax authorities.

We also applied our knowledge and experience with the application of federal, foreign and state income tax laws to evaluate the Company’s accounting for those tax positions.

We analyzed the Company’s assumptions and data used to determine the amount of tax benefit to recognize and tested the accuracy of the calculations.

We also evaluated the Company’s income tax disclosures included in Note 7 in relation to these matters.

Accounting for Acquisitions – Valuation of Identified Intangibles

Description of the Matter As described in Note 21 to the consolidated financial statements, the Company completed the acquisition of DP Acquisition Corp ("Dynapower") for an aggregate cash purchase price of $577.5 million in 2022.

The transaction was accounted for as a business combination.

The allocation of purchase price is preliminary and is subject to revision as the final valuations are completed.

Auditing the Company's accounting for its acquisition of Dynapower was complex due to the significant estimation required by management in determining the fair value of identifiable intangible assets of $164.4 million, which principally consisted of completed technologies, customer relationships, and tradename assets.

The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business.

The Company used the income approach to measure the completed technologies, customer relationships, and tradenames intangible assets.

The significant assumptions used to estimate the fair value of these intangible assets included the expected discounted future net cash flows generated by each asset.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's process for valuing intangible assets acquired in business combinations.

For example, we tested controls over the appropriateness of the valuation model, assumptions management used and the completeness and accuracy of the data underlying the valuation of the completed technologies, customer relationships and tradenames intangible assets.

To test the estimated fair value of the completed technologies, customer relationships and tradenames intangible assets, our audit procedures included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data supporting the significant assumptions and estimates used by the Company in the valuations.

We tested significant assumptions through a combination of procedures, as applicable for each assumption, including comparing them to current and forecasted industry trends, as well as to the historical results of the acquired business and other guideline companies within the same industry.

With the assistance of our valuation specialists, we evaluated the methodology used by the Company and significant assumptions included in the fair value estimates.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2005.

We have served as the Company's auditor from 2005 to 2023.

Boston, Massachusetts

February 13, 2023

February 13, 2023, except for notes 3 and 20, as to which the date is February 29, 2024

SENSATA TECHNOLOGIES HOLDING PLC

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Current liabilities:

Current portion of long-term debt, finance lease and other financing obligations $ 256,471 $ 6,833

Current portion of long-term debt and finance lease obligations

$ 2,276 $ 256,471

Accounts payable 482,301 531,572

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Pension and other post-retirement benefit obligations 38,178 36,086

Finance lease and other financing obligations, less current portion 24,742 26,564

Finance lease obligations, less current portion

22,949 24,742

Long-term debt, net 3,373,988 3,958,928

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Retained earnings 2,295,604 2,383,341

Accumulated other comprehensive loss ( 16,264 ) ( 19,560 )

Accumulated other comprehensive income/(loss)

9,962 ( 16,264 )

Total shareholders' equity 2,996,276 3,110,807

Total liabilities and shareholders' equity $ 7,680,987 $ 8,756,220

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

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

SENSATA TECHNOLOGIES HOLDING PLC

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Amortization of intangible assets 173,860 153,787 134,129

Goodwill impairment charge

Restructuring and other charges, net 54,500 ( 66,700 ) 14,942

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Operating income 181,676 670,139 633,240

Interest expense, net ( 178,819 ) ( 179,291 ) ( 171,757 )

Interest expense

( 182,184 ) ( 195,565 ) ( 182,582 )

Interest income

31,324 16,746 3,291

Other, net ( 12,974 ) ( 94,618 ) ( 40,032 )

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Provision for income taxes

Net income 310,685 363,580 164,286

Basic net income per share $ 2.00 $ 2.30 $ 1.04

Diluted net income per share $ 1.99 $ 2.28 $ 1.04

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

21,751 86,017 50,337

Net (loss)/income

$ ( 3,909 ) $ 310,685 $ 363,580

Basic net (loss)/income per share

$ ( 0.03 ) $ 2.00 $ 2.30

Diluted net (loss)/income per share

$ ( 0.03 ) $ 1.99 $ 2.28

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

SENSATA TECHNOLOGIES HOLDING PLC

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2023 2022 2021

Net income $ 310,685 $ 363,580 $ 164,286

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

Net (loss)/income

$ ( 3,909 ) $ 310,685 $ 363,580

Other comprehensive income, net of tax:

Cash flow hedges 1,848 ( 1,166 ) 23,564

Defined benefit and retiree healthcare plans 3,430 4,462 6,411

Other comprehensive (loss)/income 3,296 29,975 ( 29,051 )

Cumulative translation adjustment

Other comprehensive income

26,226 3,296 29,975

Comprehensive income $ 22,317 $ 313,981 $ 393,555

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

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

SENSATA TECHNOLOGIES HOLDING PLC

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Cash flows from operating activities:

Net income $ 310,685 $ 363,580 $ 164,286

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

Net (loss)/income

$ ( 3,909 ) $ 310,685 $ 363,580

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

Depreciation 133,105 127,184 124,959

Amortization of debt issuance costs 6,772 6,969 6,858

Goodwill impairment charge

Gain on sale of business ( 5,877 ) ( 135,112 ) —

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Deferred income taxes ( 54,159 ) ( 781 ) ( 5,270 )

Acquisition-related compensation payments ( 23,500 ) ( 15,630 ) —

Mark-to-market loss on equity investments, net 75,569 — —

Loss on equity investments, net

Unrealized loss on derivative instruments and other 35,986 34,309 13,837

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Other ( 14,119 ) ( 13,881 ) ( 6,533 )

Acquisition-related compensation payments ( 22,620 ) ( 23,500 ) ( 15,630 )

Net cash provided by operating activities 456,675 460,593 554,151

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Net cash (used in)/provided by financing activities ( 1,016,559 ) ( 353,460 ) 174,918

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents ( 717,414 ) ( 483,437 ) ( 153,025 )

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Cash paid for income taxes $ 95,473 $ 68,768 $ 66,642

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

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

SENSATA TECHNOLOGIES HOLDING PLC

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Comprehensive

Loss Total Shareholders' Equity

(Loss)/Income

Total Shareholders' Equity

Number Amount Number Amount

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Net income — — — — — 363,580 — 363,580

Other comprehensive loss — — — — — — ( 29,051 ) ( 29,051 )

Other comprehensive income — — — — — — 29,975 29,975

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

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Vesting of restricted securities 522 6 — — — ( 6 ) — —

Cash dividends paid — — — — — ( 51,072 ) — ( 51,072 )

Repurchase of ordinary shares — — ( 6,343 ) ( 292,274 ) — — — ( 292,274 )

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Share-based compensation — — — — 29,994 — — 29,994

Net income — — — — — 310,685 — 310,685

Other comprehensive loss — — — — — — 3,296 3,296

— — — — — ( 3,909 ) — ( 3,909 )

Other comprehensive income

— — — — — — 26,226 26,226

Balance as of December 31, 2023

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

175,832 $ 2,249 ( 25,090 ) $ ( 1,213,160 ) $ 1,901,621 $ 2,295,604 $ 9,962 $ 2,996,276

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

SENSATA TECHNOLOGIES HOLDING PLC

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

We are a global industrial technology company that develops, manufactures, and sells sensors and sensor-rich solutions, electrical protection components and systems, and other products that are used in mission-critical systems and applications that create valuable business insights for our customers and end users.

We are a global industrial technology company that develops, manufactures, and sells sensors and sensor-rich solutions, electrical protection components and systems, and other products.

Our sensors are used by our customers to translate a physical parameter, such as pressure, temperature, position, or location of an object, into electronic signals that our customers’ products and solutions can act upon.

These actionable insights lead to products that are safer, cleaner, more efficient, more electrified, and increasingly more connected.

Our electrical protection portfolio (which includes both components and systems) is comprised of various switches, fuses, battery management systems, inverters, energy storage systems, high-voltage distribution units, controllers, and software, and includes high-voltage contactors and other products embedded within systems to maximize their efficiency and performance and ensure safety.

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Segment Reporting for additional information related to each of our segments.

Effective February 1, 2024, we combined our Automotive and Heavy vehicle and off-road ("HVOR") businesses to better leverage core capabilities and prioritize product focus into one business, Vehicles, under the Performance Sensing reportable segment.

The Sensing Solutions reportable segment will benefit from organizing our predominantly shorter-cycle businesses together, by allowing us to scale core capabilities and better serve our customers.

We are still evaluating what impact this reorganization will have on our reportable segments, operating segments, and reporting units in the first quarter of 2024.

Basis of Presentation

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generally accepted accounting principles ("GAAP") and present separately our financial position, results of operations, comprehensive income, cash flows, and changes in shareholders’ equity.

In the year ended December 31, 2023, we presented interest income on the consolidated statements of operations separate from interest expense.

Previously, interest income had been included in interest expense, net.

Accordingly, we reclassified interest income to a separate caption in each of the years ended December 31, 2022 and 2021 in the consolidated statements of operations to conform to current period presentation.

All intercompany balances and transactions have been eliminated.

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However, in certain cases, pre-production activities are a performance obligation in a customer purchase order, and revenue is recognized when the performance obligation is satisfied.

Customer arrangements do not involve post-installation or post-sale testing and acceptance.

Customer arrangements rarely involve post-installation or post-sale testing and acceptance.

Our standard terms of sale provide our customers with a warranty against faulty workmanship and the use of defective materials, which is not considered a distinct performance obligation in accordance with FASB ASC Topic 606.

Depending on the product, we generally provide such warranties for a period of three years after the date we ship the product to our original equipment manufacturer ("OEM") customers or for a period of twelve months after the date the customer resells our product to the end consumer, whichever comes first.

Depending on the product, we generally provide such warranties for a period of three years after the date we ship the product to our original equipment manufacturer customers or for a period of twelve months after the date the customer resells our product to the end consumer, whichever comes first.

Our liability associated with this warranty is, at our option, to repair the product, replace the product, or provide the customer with a credit.

We do not offer separately priced extended warranty or product maintenance contracts.

We do not generally offer separately priced extended warranty or product maintenance contracts.

We also sell products to customers under negotiated agreements or where we have accepted the customer’s terms of purchase.

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In accordance with FASB ASC Topic 718, compensation expense associated with share-based awards subject to cliff vesting must be recognized on a straight-line basis.

For awards without performance conditions that are subject to graded vesting, companies have the option to recognize compensation expense either

on a straight-line or accelerated basis.

For awards without performance conditions that are subject to graded vesting, companies have the option to recognize compensation expense either on a straight-line or accelerated basis.

We have elected to recognize compensation expense for these awards on a straight-line basis.

However, awards that are subject to both graded vesting and performance conditions must be expensed on an accelerated basis.

Restricted securities are valued using the closing price of our ordinary shares on the New York Stock Exchange (the "NYSE") on the grant date.

We grant restricted securities for which vesting is contingent only upon service conditions, those that are also subject to performance conditions, and, beginning in fiscal year 2023, those that are subject to conditions based on the attainment of certain market criteria relative to peer companies (the latter referred to as "Market PRSUs").

The fair value of Market PRSUs is estimated at grant date using a Monte Carlo simulation, which requires the use of various assumptions, including the stock price volatility, dividend rate, and risk-free interest rate as of the valuation date corresponding to the length of time remaining in the performance period.

All other restricted securities are valued using the closing price of our ordinary shares on the New York Stock Exchange (the "NYSE") on the grant date.

Certain of our restricted securities include performance conditions, which require us to estimate the probable outcome of the performance condition.

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Financial Instruments

Our material financial instruments include derivative instruments, debt instruments, equity investments, and trade accounts receivable.

Our material financial instruments include derivative instruments, debt instruments, equity investments, trade accounts receivable, and trade accounts payable.

Derivative financial instruments

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The accounting for changes in the fair value of our cash flow hedges depends on whether we have elected to designate the derivative as a hedging instrument for accounting purposes and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

In accordance with FASB ASC Topic 815, both the effective and ineffective portions of changes in the fair value of derivatives designated and qualifying as cash flow hedges are recognized in accumulated other comprehensive loss and are subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings.

In accordance with FASB ASC Topic 815, both the effective and ineffective portions of changes in the fair value of derivatives designated and qualifying as cash flow hedges are recognized in accumulated other comprehensive income/(loss) and are subsequently reclassified into earnings in the period in which the hedged forecasted

transaction affects earnings.

Changes in the fair value of derivative instruments that are not designated as accounting hedges are recognized immediately in other, net.

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Shareholders' Equity and Note 19:

Derivative Instruments and Hedging Activities for additional information related to the reclassification of amounts from accumulated other comprehensive loss into earnings.

Derivative Instruments and Hedging Activities for additional information related to the reclassification of amounts from accumulated other comprehensive income/(loss) into earnings.

We present the cash flows arising from our derivative financial instruments in a manner consistent with the presentation of cash flows that relate to the underlying hedged items.

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Debt issuance costs and premiums or discounts are amortized over the term of the respective financing arrangement using the effective interest method.

Amortization of these amounts is included as a component of interest expense, net in the consolidated statements of operations.

Amortization of these amounts is included as a component of interest expense in the consolidated statements of operations.

In accounting for debt financing transactions, we apply the provisions of FASB ASC Subtopic 470-50, Modifications and Extinguishments .

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Refer to Note 18:

Fair Value Measures for additional information related to our measurement of financial instruments, including equity investments.

Fair Value Measures for additional information related to our measurement of equity investments.

Trade accounts receivable

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We estimate an allowance for credit losses on trade accounts receivable at an amount that represents our estimated expected credit losses over the lifetime of our receivables.

Our contract terms generally require the customer to make payment shortly after (that is, less than one year) the shipment date.

Our largest customer accounted for approximately 6 % of our net revenue for the year ended December 31, 2022.

terms generally require the customer to make payment shortly after (that is, less than one year) the shipment date.

For each of the years ended December 31, 2023, 2022, and 2021, our largest customer accounted for approximately 6 % of our net revenue.

Trade accounts payable

Trade accounts payable represent liabilities for products provided to us by suppliers prior to the end of the financial year that are unpaid.

Trade accounts payable represent short term liabilities as they are due within one year.

They are recognized at invoiced amounts and do not bear interest.

Allowance for Losses on Receivables

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In the event a disposal group meets the definition of a business, goodwill is allocated to the disposal group based on the relative fair value of the disposal group to the retained portion of the related reporting unit.

We have the option to first assess qualitative factors to determine whether a quantitative analysis must be performed.

The objective of a qualitative analysis is to assess whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

We have the option to first assess qualitative factors to determine whether a quantitative goodwill impairment analysis must be performed.

The objective of a qualitative goodwill impairment analysis is to assess whether it is more likely than not that the

fair value of a reporting unit is less than its carrying value.

We make this assessment based on macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and other relevant factors as applicable.

If we elect not to use this option, or if we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we prepare a discounted cash flow analysis to determine whether the carrying value of reporting unit exceeds its estimated fair value.

If the carrying value of a reporting unit exceeds its estimated fair value, we recognize an impairment of goodwill for the amount of this excess, in accordance with the guidance in FASB ASC Topic 350.

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Reviews are regularly performed to determine whether facts or circumstances exist that indicate that the carrying values of our definite-lived intangible assets are impaired.

If we determine that such facts or circumstances exist, we estimate the recoverability of these assets by comparing the projected undiscounted net cash flows associated with these assets to their respective carrying values.

If the sum of the projected undiscounted net cash flows is less than the carrying value of an asset, the impairment charge is measured as the excess of the carrying value over the fair value of that asset.

If we determine that such facts or circumstances exist, we estimate the recoverability of the related asset or asset group (at the lowest level of identifiable cash flows) by comparing the projected undiscounted net cash flows associated with this asset or asset group to its carrying value.

If the sum of the projected undiscounted net cash flows is less than the carrying value of an asset or asset group, the impairment charge is measured as the excess of the carrying value over the fair value of that asset or asset group.

We determine fair value by using the appropriate income approach valuation methodology, depending on the nature of the definite-lived intangible asset.

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Significant judgment is required in evaluating whether our tax positions meet this two-step process.

The more-likely-than-not recognition threshold must be met in each reporting period to support continued recognition of any tax benefits claimed, both in the current year, as well as any year which remains open for review by the relevant tax authority at the balance sheet date.

The more-likely-

than-not recognition threshold must be met in each reporting period to support continued recognition of any tax benefits claimed, both in the current year, as well as any year which remains open for review by the relevant tax authority at the balance sheet date.

Penalties and interest related to uncertain tax positions may be classified as either income taxes or another expense line item in the consolidated statements of operations.

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We review these assumptions annually.

The discount rate reflects the current rate at which the pension and other post-retirement liabilities could be effectively settled, considering the timing of expected payments for plan participants.

It is used to discount the estimated future obligations of the plans to the present value of the liability reflected in the financial statements.

In estimating this rate in countries that have a market of high-quality, fixed-income investments, we consider rates of return on these investments included in various bond indices, adjusted to eliminate the effects of call provisions and differences in the timing and amounts of cash outflows related to the bonds.

In other countries where a market of high-quality, fixed-income investments does not exist, we estimate the discount rate using government bond yields or long-term inflation rates.

The expected return on plan assets reflects the average rate of earnings expected on the funds invested to provide for the benefits included in the projected benefit obligation.

To determine the expected return on plan assets, we use the fair value of plan assets and consider the historical returns earned by similarly invested assets, the rates of return expected on plan assets in the future, and our investment strategy and asset mix with respect to the plans’ funds.

Changes to benefit obligations may also be initiated by a settlement or curtailment.

A settlement of a defined benefit obligation is an irrevocable transaction that relieves us (or the plan) of primary responsibility for the defined benefit obligation and eliminates significant risks related to the obligation and the assets used to carry out the settlement.

The settlement of all or more than a minor portion of the pension obligation constitutes an event that requires recognition of all or part of the net actuarial gains or losses deferred in accumulated other comprehensive income/(loss).

Our policy is to apply settlement accounting to the extent our year-to date settlements for a given plan exceed the sum of our forecasted full year service cost and interest cost for that particular plan.

A curtailment is an event that significantly reduces the expected years of service of active employees or eliminates for a significant number of employees the accrual of defined benefits for some or all of their future service.

The curtailment accounting provisions are applied on a plan-by-plan basis.

The total gain or loss resulting from a curtailment is the sum of two distinct elements:

(1) prior service cost write-off and (2) curtailment gain or loss.

Our policy is that a curtailment event represents one for which we expect a 10% (or greater) reduction in future years of service or an elimination of the accrual of defined benefits for some or all of the future services of 10% (or greater) of the plan's participants.

Contributions made to pension and other post-retirement benefit plans are presented as a component of operating cash flows within the consolidated statements of cash flows.

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Inventories are stated at the lower of cost or estimated net realizable value.

The cost of raw materials, work-in-process, and finished goods is determined based on a first-in, first-out basis and includes material, labor, and applicable manufacturing overhead.

The cost of raw materials, work-in-process, and finished goods is determined based on a first-in, first-out basis and includes material, labor, and applicable manufacturing

We conduct quarterly inventory reviews for salability and obsolescence, and inventories considered unlikely to be sold are adjusted to net realizable value.

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Inventories for additional information related to our inventory balances.

Property, Plant and Equipment and Other Capitalized Costs

PP&E is stated at cost, and in the case of plant and equipment, is depreciated on a straight-line basis over its estimated economic useful life.

The depreciable lives of plant and equipment are as follows:

Buildings and improvements 2 – 40 years

Machinery and equipment 2 – 15 years

Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated economic useful lives of the improvements.

Amortization of leasehold improvements is included in depreciation expense.

Assets held under finance leases are recognized at the lower of the present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease.

Depreciation expense associated with finance leases is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease, unless ownership is transferred by the end of the lease or there is a bargain purchase option, in which case the asset is depreciated, normally on a straight-line basis, over the useful life that would be assigned if the asset were owned.

Expenditures for maintenance and repairs are charged to expense as incurred, whereas major improvements that increase asset values and extend useful lives are capitalized.

Refer to Note 10:

Property, Plant and Equipment, Net for additional information related to our PP&E balances.

We account for leases in accordance with the guidance in FASB ASC Topic 842, Leases .

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Net cash flows from operating activities include (1) interest on finance lease liabilities and (2) payments arising from operating leases.

Net cash flows from financing activities include repayments of the principal portion of finance lease liabilities.

Net cash flows from financing activities include payments of the principal portion of finance lease liabilities.

We also lease certain vehicles and equipment, which generally have a term of one year or less.

We have elected to account for leases with a term of one year or less (short-term leases) using a method similar to the operating lease model under FASB ASC Topic 840, Leases (i.e., they are not recorded on the consolidated balance sheets) as permitted by FASB ASC Topic 842.

We have elected to not record leases with a term of one year or less (short-term leases) on the consolidated balance sheets as permitted by FASB ASC Topic 842.

Refer to Note 17:

Leases for additional information related to amounts recognized in the consolidated financial statements related to our leases.

Long-Lived Assets

Property, Plant and Equipment, Net

PP&E is stated at historical cost, which for certain qualifying assets includes capitalized interest.

In the case of plant and equipment, the historical cost is depreciated on a straight-line basis over its estimated economic useful life.

The depreciable lives of plant and equipment are as follows:

Buildings and improvements 2 – 40 years

Machinery and equipment 2 – 15 years

Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated economic useful lives of the improvements.

Amortization of leasehold improvements is included in depreciation expense.

Expenditures for maintenance and repairs are charged to expense as incurred, whereas major improvements that increase asset values and extend useful lives are capitalized.

Refer to Note 10:

Property, Plant and Equipment, Net for additional information related to our PP&E balances.

Leases - Right of Use Assets

Assets held under finance leases are recognized at the lower of the present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease.

Depreciation expense associated with leases is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease, unless ownership is transferred by the end of the lease or there is a bargain purchase option, in which case the asset is depreciated, normally on a straight-line basis, over the useful life that would be assigned if the asset were owned.

Evaluation of long-lived assets for impairment

We periodically re-evaluate the carrying values and estimated useful lives of long-lived assets (including lease right-of-use assets) whenever events or changes in circumstances indicate that the carrying values of these assets may not be recoverable.

We use estimates of undiscounted net cash flows from long-lived assets to determine whether the carrying values of such assets or asset groups are recoverable over the assets’ remaining useful lives.

These estimates include assumptions about our future performance and the performance of the end markets we serve.

If an asset or asset group is determined to be impaired, the impairment is the amount by which its carrying value exceeds its fair value.

These evaluations are performed at a level where discrete net cash flows may be attributed to either an individual asset or a group of assets.

Foreign Currency

Our reporting currency is the USD.

We derive a significant portion of our net revenue from markets outside of the U.S.

For financial reporting purposes, the functional currency of almost all of our subsidiaries is the USD because of the significant influence of the USD on our operations.

In certain instances, we enter into transactions that are denominated in a currency other than the USD.

At the date that such transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction is measured and recorded in USD using the exchange rate in effect at that date.

At each balance sheet date, recorded monetary balances denominated in a currency other than USD are adjusted to USD using the exchange rate at the balance sheet date, with gains or losses recognized in other, net in the consolidated statements of operations.

The impact of currency translation adjustment for subsidiaries with a functional currency other than USD is not material.

For financial reporting purposes, the functional currency of all of our subsidiaries has historically been the USD because of the significant influence of the USD on our operations.

Effective October 1, 2023, the functional currency of the Company's wholly-owned subsidiaries in China changed to the Chinese Renminbi ("CNY").

In certain instances, our subsidiaries enter into transactions that are denominated in a currency other than their functional currency.

At the date that such transaction is recognized, each asset, liability, revenue, expense, gain, or loss arising from the transaction is measured and recorded in the functional currency using the exchange rate in effect at that date.

At each balance sheet date, recorded monetary balances denominated in a currency other than the functional currency are adjusted to the functional currency using the exchange rate at the balance sheet date, with gains or losses recognized in other, net in the consolidated statements of operations.

For subsidiaries with a functional currency other than the USD, we translate the subsidiary financial statements from their functional currency to USD in accordance with FASB ASC Topic 830, Foreign Currency Matters.

According to FASB ASC Topic 830, all assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period.

The resulting translation adjustments are reported as cumulative translation adjustment ("CTA"), which is a component of other comprehensive income (or loss) and as a separate component of accumulated other comprehensive income/(loss) on the consolidated balance sheets in accordance with FASB ASC Topic 220, Income Statement - Reporting Comprehensive Income .

Cash and Cash Equivalents

Cash comprises cash on hand.

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of change in value, and have original maturities of three months or less.

We have established guidelines relative to diversification and maturities of our cash balances that maximize both security and liquidity of our funds.

These guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates.

As of December 31, 2023 and 2022, most of our cash and cash equivalents balances exceeded federally insured limits and could be at risk of loss.

Recently issued accounting standards:

There have been no recently issued accounting standards that have been adopted in the current period or will be adopted in future periods that have had or are expected to have a material impact on our consolidated financial position or results of operations.

In November 2023, the FASB issued Accounting Standards Update ("ASU") No.

2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures , to improve disclosures about a public entity's reportable segments.

This guidance requires that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss and an amount for "other segment items" included in the determination of segment operating income.

The guidance also requires that a public entity provide all annual disclosures about a reportable segment's profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting , in interim periods, and that a public entity provide the title and position of the chief operating decision maker.

Other requirements of the guidance are not expected to be material.

There is no change to the guidance for identification or aggregation of operating or reportable segments.

2023-07 will be effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The guidance must be applied retrospectively to all prior periods presented.

We will adopt the guidance in FASB ASU No.

2023-07 on January 1, 2024 and will include the required new annual and quarterly disclosures in our Annual Report on Form 10-K for the period ended December 31, 2024 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2025, respectively.

In December 2023, the FASB issued ASU No.

2023-09, Income taxes (Topic 740):

Improvements to Income Tax Disclosures , to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

The guidance also includes certain other amendments to improve the effectiveness of income tax disclosures.

For public business entities, the standard is effective for annual periods beginning after December 15, 2024.

We are currently evaluating the impact on our income tax related disclosures.

Revenue Recognition

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Our standard terms of sale provide our customers with a warranty against faulty workmanship and the use of defective materials.

We do not offer separately priced extended warranty or product maintenance contracts.

We do not generally offer separately priced extended warranty or product maintenance contracts.

Refer to Note 2:

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Industrial (1)

— — — 597,502 581,806 460,567 597,502 581,806 460,567

Appliance and HVAC (2)

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__________________________

(1) Heavy vehicle and off-road

(1) Effective April 1, 2023, we moved our material handling products from the HVOR operating segment (in the Performance Sensing reportable segment) to the Sensing Solutions operating segment to align with new management reporting.

The amounts previously reported in the tables above for the years ended December 31, 2022 and 2021 have been retrospectively recast to reflect this change.

(2) Heating, ventilation, and air conditioning

In addition, refer to Note 20:

Refer to Note 20:

Segment Reporting for a presentation of net revenue disaggregated by product category and geographic region.

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

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

The purpose of the 2021 Equity Plan is to promote the long-term growth, profitability, and interests of the Company and its shareholders by aiding us in attracting and retaining

employees, officers, consultants, advisors, and non-employee directors capable of assuring our future success.

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

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We grant restricted stock unit ("RSU") and performance-based restricted stock unit ("PRSU") awards.

We no longer grant stock option awards, with the last grants of option awards made in the year ended December 31, 2019.

Throughout this Annual Report on Form 10-K, RSU and PRSU awards are often referred to collectively as "restricted securities." Share-based compensation awards granted prior to May 27, 2021 were made under the 2010 Equity Plan, with all subsequent awards granted under the 2021 Equity Plan.

For option and RSU awards, vesting is typically subject only to service conditions.

We also have stock option awards outstanding, but we have not granted such awards since the year ended December 31, 2019.

Throughout this Annual Report on Form 10-K, RSU and PRSU awards are often referred to collectively as "restricted securities."

For option and RSU awards, vesting is typically only subject to service conditions, although they include continued vesting provisions for retirement-eligible employees.

For PRSU awards, vesting is also subject to service conditions, however the number of awarded units that ultimately vest also depends on the attainment of certain predefined performance criteria.

Our awards include continued vesting provisions for retirement-eligible employees.

A summary of stock option activity for the years ended December 31, 2022, 2021, and 2020 is presented in the table below (amounts have been calculated based on unrounded shares, accordingly, certain amounts may not appear to recalculate due to the effect of rounding):

In the year ended December 31, 2023, we began granting certain Market PRSUs with market performance conditions.

These PRSUs are valued using the Monte Carlo simulation.

Refer to Note 2:

Significant Accounting Policies for additional information.

A summary of stock option activity for the year ended December 31, 2023 is presented in the table below:

Number of Options (thousands) Weighted-Average

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Balance as of December 31, 2023

Forfeited or expired ( 15 ) $ 49.93

Exercised ( 707 ) $ 38.07 $ 14,264

Balance as of December 31, 2021 2,135 $ 43.11 3.9 $ 39,660

Forfeited or expired ( 36 ) $ 50.45

Exercised ( 572 ) $ 38.80 $ 8,265

Balance as of December 31, 2022 1,527 $ 44.55 3.3 $ 1,802

1,267 $ 45.58 2.6 $ 0

Options vested and exercisable as of December 31, 2023

1,267 $ 45.58 2.6 $ 0

Vested and expected to vest as of December 31, 2023

A summary of the status of our unvested options as of December 31, 2022 and of the changes during the year then ended is presented in the table below (amounts have been calculated based on unrounded shares, accordingly, certain amounts may not appear to recalculate due to the effect of rounding):

Number of Options (thousands) Weighted-Average Grant-Date Fair Value

Balance as of December 31, 2021 194 $ 18.40

Vested during the year ( 119 ) $ 12.01

Forfeited during the year ( 4 ) $ 13.68

Balance as of December 31, 2022 71 $ 29.46

The fair value of stock options that vested during the years ended December 31, 2022, 2021, and 2020 was $ 1.4 million, $ 2.5 million, and $ 4.4 million, respectively.

1,267 $ 45.58 2.6 $ 0

Aggregate intrinsic value of options exercised in the years ended December 31, 2023, 2022, and 2021 was $ 1.7 million, $ 8.3 million and $ 14.3 million, respectively.

Option awards granted to employees generally vest 25 % per year over four years from the grant date.

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For options granted in or after April 2019, the same terms apply, except that in the event of termination due to a qualified retirement, options not yet vested will continue to vest and will expire ten years from the grant date.

We did no t grant any options in the years ended December 31, 2022, 2021 or 2020.

Restricted Securities

Starting in April 2020, we grant RSU awards that vest ratably over three years and PRSU awards that cliff vest three years after the grant date.

Previously, we granted RSU and PRSU awards each of which cliff vested three years after the grant date.

We grant RSU awards that vest one-third on the annual anniversary of the grant for three years and PRSU awards that cliff vest three years after the grant date.

In the event of a qualifying termination, any unvested restricted securities that would have otherwise vested within the next six months vest in full on the termination date, and in the event of termination by reason of a covered retirement, any unvested restricted securities remain outstanding on the termination date and subject to continued vesting.

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0.0 % to 172.5 %

0.0 % to 200.0 %

(Awards in thousands) RSU Awards Granted Weighted-Average

Fair Value Market PRSU Awards Granted (2)

Weighted-Average

Fair Value PRSU Awards Granted Weighted-Average

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The amounts presented within this table do not reflect our current assessment of the probable outcome of vesting based on the achievement or expected achievement of performance conditions.

(2) Approximately 50 percent of these awards represent Market PRSUs that will be evaluated relative to the performance of certain peers as defined in the award agreement.

The number of units that ultimately vest (in April 2026 and July 2026) will be from 0 % to 150 %, depending on achievement of these performance criteria.

The fair value of Market PRSUs was estimated on the date of grant (April 1, 2023) using a Monte Carlo simulation pricing model.

Significant Accounting Policies for further discussion of this model and key assumptions and inputs.

The key assumptions used in estimating the grant-date fair value of Market PRSUs for the year ended December 31, 2023 are presented in the table below:

For the year ended December 31, 2023

Expected term (years)

Risk free interest rate

Dividend yield

Stock price on valuation date

Expected volatility

There were no Market PRSUs granted in the years ended December 31, 2022 and 2021.

Compensation expense for the year ended December 31, 2023 reflects our estimate of the probable outcome of the performance conditions associated with the PRSU awards granted in the years ended December 31, 2023, 2022, and 2021.

A summary of activity related to outstanding restricted securities for the years ended December 31, 2022, 2021, and 2020 is presented in the table below (amounts have been calculated based on unrounded shares, accordingly, certain amounts may not appear to recalculate due to the effect of rounding):

A summary of activity related to outstanding unvested restricted securities for the year ended December 31, 2023 is presented in the table below (amounts have been calculated based on unrounded shares, accordingly, certain amounts may not appear to recalculate due to the effect of rounding):

Restricted Securities (thousands) Weighted-Average

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Balance as of December 31, 2023 1,596 $ 50.51

Granted 659 $ 58.21

Forfeited ( 348 ) $ 41.00

Vested ( 469 ) $ 38.36

Balance as of December 31, 2021 1,521 $ 43.31

Granted 1,043 $ 49.53

Forfeited ( 287 ) $ 46.96

Vested ( 522 ) $ 42.40

Balance as of December 31, 2022 1,755 $ 46.68

Aggregate intrinsic value information for restricted securities as of December 31, 2022, 2021, and 2020 is presented below:

As of December 31,

2022 2021 2020

Outstanding $ 70,941 $ 93,830 $ 88,534

Expected to vest $ 55,235 $ 69,798 $ 58,675

The weighted-average remaining periods over which the restrictions will lapse as of December 31, 2022, 2021, and 2020 are as follows:

The fair value of restricted securities that vested during the years ended December 31, 2023, 2022, and 2021 was $ 34.7 million, $ 22.1 million, and $ 18.0 million, respectively.

The weighted-average remaining periods (in years) over which the restrictions will lapse as of December 31, 2023, 2022, and 2021 are as follows:

As of December 31,

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Recognition (years)

Options $ 1,687 0.1

Restricted securities 33,767 1.6

Total unrecognized compensation expense $ 38,226

Restructuring and Other Charges, Net

Q2 2020 Global Restructure Program

In the year ended December 31, 2020, in response to the potential long-term impact of the global financial and health crisis caused by the COVID-19 pandemic on our business, we committed to a plan to reorganize our business (the “Q2 2020 Global Restructure Program”), consisting of voluntary and involuntary reductions-in-force and certain site closures.

The Q2 2020 Global Restructure Program was commenced in order to align our cost structure to the then-anticipated future demand outlook.

In the year ended December 31, 2021, we completed all actions contemplated thereunder, with approximately 840 positions impacted.

We recognized total cumulative costs of $ 33.2 million under the Q2 2020 Global Restructure Program, of which $ 28.4 million related to severance charges and $ 4.8 million related to facility and other exit costs.

Charges recognized in the year ended December 31, 2021 resulting from the Q2 2020 Global Restructure Program are presented by impacted segment below.

However, as discussed in Note 20:

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

There were no charges recognized in the years ended December 31, 2023 and 2022.

For the year ended December 31, 2021

Performance Sensing (1)

Sensing Solutions (1)

Corporate and other ( 1,362 )

Q2 2020 Global Restructure Program, net

___________________________________

(1) Of the amounts presented in the table for Performance Sensing and Sensing Solutions, approximately $ 1.2 million and $ 3.8 million, respectively, related to site closures.

In the year ended December 31, 2023, we committed to a plan to reorganize our business (the “Q3 2023 Plan”).

The Q3 2023 Plan, consisting of voluntary and involuntary reductions-in-force, site closures, and other cost-savings initiatives, was commenced to adjust our cost structure and business activities to better align with weaker market demand and continued economic uncertainty in many of our end markets and to take active measures to accelerate our margin recovery.

The reductions-in-force, which are subject to the laws and regulations of the countries in which the actions are planned, are expected to impact 466 positions.

Over the life of the Q3 2023 Plan, we expect to incur restructuring charges of between $ 20.5 million and $ 25.5 million, primarily related to reductions-in-force.

The majority of the actions under the Q3 2023 Plan are expected to be completed on or before June 30, 2024.

We expect to settle these charges with cash on hand.

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

(Dollars in thousands) Positions Minimum Maximum

Performance Sensing 157 $ 7,043 $ 8,495

Sensing Solutions 147 5,214 7,495

Corporate and other 162 8,243 9,510

Total 466 $ 20,500 $ 25,500

Restructuring charges recognized in the year ended December 31, 2023 resulting from the Q3 2023 Plan are presented by business segment and corporate functions below.

Severance Facility and other exit costs (1)

Performance Sensing $ 7,741 $ 237

Sensing Solutions 4,850 955

Corporate and other 9,712 —

Q3 2023 Plan total $ 22,303 $ 1,192

___________________________________

(1) Includes site closures

Spear Marine Business

On June 6, 2023, we announced that we had made the decision to exit the marine energy storage business (the "Marine Business") of Spear Power Systems (“Spear”).

The exit of the Spear Marine Business was the result of a change in strategy with respect to the business and involved ceasing sales, marketing, and business operations.

It resulted in the elimination of certain positions, primarily in the U.S.

and the closure of operations in Belgium.

The Spear Marine Business had been included in the Sensing Solutions reportable segment.

Exiting the Spear Marine Business resulted in charges in the year ended December 31, 2023, as presented in the table below:

Location For the year ended December 31, 2023

Accelerated amortization Amortization of intangible assets $ 13,527

Write-down of inventory Cost of revenue 10,479

Severance charges

Restructuring and other charges, net 1,159

Write-down of property, plant and equipment

Restructuring and other charges, net 2,002

Other charges, including contract termination costs Restructuring and other charges, net 11,335

Total $ 38,502

The following table presents the components of restructuring and other charges, net for the years ended December 31, 2023, 2022, and 2021:

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Q2 2020 Global Restructure Program, net (1)

Other restructuring charges

$ — $ — $ 7,120

Q3 2023 Plan, net (1)

Other restructuring and other charges, net

Severance costs, net (2)

7,849 19,112 4,504

Facility and other exit costs 600 5,464 2,433

Gain on sale of Qinex Business (1)

Gain on sale of business (3)

( 5,877 ) ( 135,112 ) —

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15,274 48,864 —

13,159 ( 5,028 ) 885

Restructuring and other charges, net $ 54,500 $ ( 66,700 ) $ 14,942

__________________________

(1) Refer to Note 21:

Acquisitions and Divestitures for additional information on the sale of various assets and liabilities comprising our semiconductor test and thermal business (collectively, the "Qinex Business").

(1) Includes net severance charges and facility and other exit costs related to the respective programs as detailed under the headings Q2 2020 Global Restructure Program and Q3 2023 Plan above.

(2) Each period presented includes severance charges, net of reversals, that do not represent the initiation of a larger restructuring plan.

The year ended December 31, 2023 includes severance charges incurred as a result of the exit of the Spear Marine Business as detailed under the heading Spear Marine Business above.

(3) The year ended December 31, 2022 includes the gain on sale of various assets and liabilities comprising our semiconductor test and thermal business (collectively, the "Qinex Business").

Refer to Note 21:

Acquisitions and Divestitures for additional information regarding our acquisition-related compensation arrangements.

Acquisitions and Divestitures for additional information.

(4) Acquisition-related compensation arrangements consist of incentive compensation to previous owners of companies we have acquired.

Payment is generally tied to technical and/or financial targets determined at the time of acquisition.

(5) Represents charges that are not included in one of the other classifications.

The year ended December 31, 2023 primarily includes charges related to the exit of the Spear Marine Business, as detailed under the heading Spear Marine Business above.

The year ended December 31, 2022 primarily includes transaction-related charges to sell the Qinex Business, partially offset by gains related to changes in the fair value of acquisition-related contingent consideration amounts.

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Acquisitions and Divestitures for additional information.

In the year ended December 31, 2020, we settled intellectual property litigation brought against August Cayman Company, Inc.

("Schrader”) by Wasica Finance GmbH ("Wasica") and released $ 11.7 million of the related liability, which is presented in restructuring and other charges, net.

This release largely offset a charge of $ 12.1 million resulting from a prejudgment interest-related award granted by the court on behalf of Wasica in fiscal year 2020.

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

The Q2 2020 Global Restructure Program was commenced in order to align our cost structure to the then anticipated future demand outlook.

We have completed all actions contemplated thereunder, with approximately 840 positions impacted.

Charges recognized in the years ended December 31, 2021 and 2020 resulting from the Q2 2020 Global Restructure Program are presented by impacted segment below.

However, as discussed in Note 20:

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

There were no charges recognized in the year ended December 31, 2022.

For the year ended December 31,

Performance Sensing (1)

$ 2,584 $ 9,073

Sensing Solutions (2)

Corporate and other ( 1,362 ) 8,940

Q2 2020 Global Restructure Program, net $ 7,120 $ 24,458

__________________________

(1) Approximately $ 1.2 million of these charges for the year ended December 31, 2021 relate to site closures.

There were no site closures in the Performance Sensing reportable segment in the year ended December 31, 2020.

(2) Approximately $ 3.8 million and $ 0.6 million of these charges for the years ended December 31, 2021 and 2020, respectively, relate to site closures.

The following table presents a rollforward of the severance portion of our restructuring obligations for the years ended December 31, 2023 and 2022:

Q2 Plan Other Total

Q2 2020 Global Restructure Program

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

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Balance as of December 31, 2023 $ 6,017 $ 22 $ 747 $ 6,786

__________________________

(1) Includes severance charges related to the exit of the Spear Marine Business.

The severance portion of our restructuring obligations for each period presented was entirely recorded in accrued expenses and other current liabilities on our consolidated balance sheets.

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4,237 4,324 ( 7,553 )

(Loss)/gain on commodity forward contracts (2)

Loss on commodity forward contracts (2)

( 2,762 ) ( 3,350 ) ( 2,967 )

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( 5,413 ) ( 5,468 ) ( 30,066 )

Mark-to-market loss on investments, net (4)

Loss on equity investments, net (4)

( 711 ) ( 75,569 ) —

3 unchanged sentences

__________________________

(1) Relates to the remeasurement of non-USD denominated net monetary assets and liabilities into USD.

(1) Relates to the remeasurement of non-functional currency denominated net monetary assets and liabilities into the functional currency.

Refer to Note 2:

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(4) Primarily reflects a mark-to-market loss on our investment in Quanergy Systems, Inc.

("Quanergy").

("Quanergy") in the year ended December 31, 2022.

Refer to Note 18:

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2021 $ 39,947 $ 373,970 $ 413,917

__________________________

(1) Includes U.K.

income/(loss) before taxes of $ 7,506 , $( 4,401 ), and $( 42,879 ) for the years ended December 31, 2023, 2022, and 2021, respectively.

Provision for income taxes

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Total $ 7,266 $ 41,654 $ 1,417 $ 50,337

__________________________

(1) Includes U.K.

current tax (or benefit) of $ 100 , $ 246 , and $( 7,739 ) and U.K.

deferred tax (or benefit) of $( 811 ), $( 3,528 ), and $( 20,643 ), resulting in U.K.

total tax (or benefit) of $( 711 ), $( 3,282 ), and $( 28,382 ) for tax years ended December 31, 2023, 2022, and 2021, respectively.

Effective tax rate reconciliation

The principal reconciling items from income tax computed at the U.K.

statutory tax rate for the year ended December 31, 2023 were as follows:

For the year ended December 31, 2023

Tax computed at statutory rate of 23.5%

Capital restructuring and dispositions

Valuation allowances 278,486

Goodwill impairment

Foreign rate differential ( 17,690 )

Withholding taxes not creditable 14,132

Research and development incentives ( 9,023 )

state taxes, net of federal benefit ( 8,740 )

Unrealized foreign currency exchange losses/(gains), net 1,395

Reserve for tax exposure 1,117

Changes in tax laws or rates ( 339 )

Nontaxable items and other 3,503

Provision for income taxes $ 21,751

The principal reconciling items from income tax computed at the U.S.

statutory tax rate for the years ended December 31, 2022, 2021, and 2020 were as follows:

statutory rate for the years ended December 31, 2023, 2022, and 2021 were as follows:

For the year ended December 31,

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Tax computed at statutory rate of 21% $ 3,747 $ 83,307 $ 86,923

Foreign tax rate differential ( 44,327 ) ( 30,485 ) ( 21,994 )

Capital restructuring and dispositions

( 286,434 ) 4,496 —

Valuation allowances 278,486 15,679 20,512

Goodwill impairment

Foreign tax rate differential ( 17,303 ) ( 44,327 ) ( 30,485 )

Withholding taxes not creditable 14,132 12,337 13,259

Research and development incentives ( 9,023 ) ( 10,834 ) ( 11,067 )

Unrealized foreign currency exchange losses/gains, net 9,306 ( 6,137 ) 2,650

Dispositions and capital restructurings 4,496 — ( 54,188 )

Change in tax laws or rates 2,611 ( 7,070 ) 11,229

state taxes, net of federal benefit ( 8,740 ) 2,496 1,119

Unrealized foreign currency exchange losses/gains, net 1,454 9,306 ( 6,137 )

Reserve for tax exposure 1,117 1,315 ( 16,330 )

Change in tax laws or rates ( 339 ) 2,611 ( 7,070 )

Nontaxable items and other 3,503 9,631 ( 387 )

Provision for income taxes

$ 21,751 $ 86,017 $ 50,337

Foreign tax rate differential

We operate in locations outside the U.S., including Belgium, Bulgaria, China, Malaysia, Malta, the Netherlands, South Korea, and the U.K., that historically have had statutory tax rates different than the U.S.

statutory tax rate.

We operate in multiple jurisdictions including but not limited to Bulgaria, China, Malaysia, Malta, the Netherlands, South Korea, the U.S., and the U.K.

This can result in a foreign tax rate differential that may reflect a tax benefit or detriment.

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Certain of our subsidiaries are currently eligible, or have been eligible, for tax exemptions or reduced tax rates in their respective jurisdictions.

From 2020 through 2022, a subsidiary in Changzhou, China was eligible for a reduced corporate income tax rate of 15 %.

A subsidiary in Changzhou, China has been and continues to be eligible for a reduced corporate income tax rate of 15 % through 2024.

The impact on current tax expense of the tax holidays and exemptions is included in the foreign tax rate differential disclosure, reconciling the statutory rate to our effective rate.

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In the U.S., we benefit from R&D credit incentives.

Dispositions and capital restructuring

Capital restructuring and dispositions

During the year ended December 31, 2023, we recorded a $ 300 million deferred tax benefit related to the intercompany transfer of certain intellectual property rights, included in the outside basis difference line in the deferred tax table below.

Based on our corporate structure at December 31, 2023, it is more likely than not that the future tax benefits associated with this intercompany transfer will not be realized.

As such this benefit has been fully offset by a valuation allowance.

The increase of $ 4.5 million in our effective tax rate for the year ended December 31, 2022 was due to the tax accounting impacts of the divestiture of the Qinex Business, partially offset by separate intangible property transfers.

For the year ended December 31, 2020, the decrease in our effective tax rate was due to a net $ 54.2 million deferred tax benefit in the fourth quarter of 2020 related to intangible property transfers.

Goodwill impairment

During the year ended December 31, 2023, we incurred a non-cash impairment charge for goodwill that is nondeductible for tax purposes.

Deferred income tax assets and liabilities

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Unrealized exchange loss 286 17,645

Outside basis difference of subsidiaries

Total deferred tax assets 867,161 562,585

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Intangible assets and goodwill ( 460,892 ) ( 489,169 )

Tax on undistributed earnings of subsidiaries ( 60,535 ) ( 68,384 )

Tax on undistributed earnings and outside basis differences of subsidiaries

( 34,995 ) ( 60,535 )

Operating lease right of use assets ( 6,332 ) ( 6,803 )

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We consider these limitations in our assessment of positive and negative evidence.

Our assessment of these limitations has resulted in the conclusion that a portion of our interest carryforwards are subject to a valuation allowance.

Our assessment of these limitations has resulted in the conclusion that a portion of our interest carryforwards is subject to a valuation allowance at both December 31, 2023 and December 31, 2022.

We continually evaluate both the positive and negative evidence for these valuation allowances.

We believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow a conclusion that a portion of the valuation allowance against these interest carryforwards 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 dependent on the level of profitability and likelihood of future utilization of this attributes that we are able to actually achieve.

For tax purposes, certain goodwill and indefinite-lived intangible assets are generally amortizable over 6 to 15 years.

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The total valuation allowance increased $ 320.0 million and $ 23.6 million in the years ended December 31, 2023 and 2022, respectively.

Due to our inability to benefit from the deferred tax asset created upon the transfer of certain intellectual property, we recorded a $ 300 million valuation allowance in the year ended December 31, 2023.

As a result of changes in interest limitation rules in the Netherlands that became effective in 2021, we recorded a valuation allowance against our interest carryforwards in this jurisdiction in the year ended December 31, 2021.

Subsequently reported tax benefits relating to the valuation allowance for deferred tax assets as of December 31, 2022 will be allocated to income tax benefit recognized in the consolidated statements of operations.

Subsequently reported tax benefits relating to the valuation allowance for deferred tax assets as of December 31, 2023 and 2022 have been allocated to income tax benefit recognized in the consolidated statements of operations.

As of December 31, 2023, we have U.S.

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Our limited life state net operating losses will expire beginning in 2024.

As of December 31, 2022, we have suspended interest expense carryforwards of $ 418.9 million, which have an unlimited life.

We also have net operating loss carryforwards in foreign jurisdictions of $ 576.5 million, which will begin to expire in 2023.

As of December 31, 2023, we have suspended interest expense carryforwards of $ 180.3 million in the U.S., $ 217.0 million in the Netherlands, $ 6.3 million in France, and $ 118.2 million in the U.K., all of which have an unlimited life.

We also have net operating loss carryforwards in various foreign jurisdictions of $ 497.4 million, which will begin to expire in 2026.

Unrecognized tax benefits

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The amount of unrecognized tax benefits as of December 31, 2023 that if recognized would impact our effective tax rate is $ 136.4 million.

Our major tax jurisdictions include Belgium, Bulgaria, China, France, Germany, Japan, Malaysia, Malta, Mexico, the Netherlands, South Korea, the U.K., and the U.S.

Our major tax jurisdictions include Bulgaria, China, France, Germany, Japan, Malaysia, Malta, Mexico, the Netherlands, South Korea, the U.K., and the U.S.

These jurisdictions generally remain open to examination by the relevant tax authority for the tax years 2008 through 2023.

On December 15, 2022, the European Union ("EU") Member States formally adopted the EU's Pillar Two Directive, which generally provides for a minimum jurisdictional effective tax rate of 15%.

The legislation is effective for our fiscal year beginning January 1, 2024.

The Company continues to evaluate the potential impact on future periods due to the Pillar Two framework, as such changes could result in complexity and uncertainty where we do business and could increase our effective tax rate.

We are currently evaluating the potential impact of Pillar Two on our consolidated financial statements and related disclosures.

Indemnifications

We have various indemnification provisions in place with parties including Honeywell (sellers of First Technology Automotive and Special Products), the Terence Richard Prime Trust dated August 10, 1999 and John Christopher Lakey (sellers of Elastic M2M, Inc.), John Milios (seller of Sendyne Corp.), the former stockholders of SmartWitness Holdings, Inc., and the sellers of Xirgo Technologies Intermediate Holdings, LLC and Xirgo Holdings, Inc., whereby such provisions provide for the reimbursement of future tax liabilities paid by us that relate to the pre-acquisition periods of the acquired businesses.

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 years ended December 31, 2022, 2021, and 2020, the weighted-average ordinary shares outstanding used to calculate basic and diluted net income per share were as follows:

Net (Loss)/Income per Share

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

For the years ended December 31, 2023, 2022, and 2021, the weighted-average ordinary shares outstanding used to calculate basic and diluted net (loss)/income per share were as follows:

For the year ended December 31,

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Diluted weighted-average ordinary shares outstanding 152,089 155,927 159,370

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

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

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

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

Refer to Note 4:

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Depreciation expense for PP&E, including amortization of leasehold improvements and depreciation of assets under finance leases, totaled $ 133.1 million, $ 127.2 million, and $ 125.0 million for the years ended December 31, 2023, 2022, and 2021, respectively.

PP&E, net as of December 31, 2022 and 2021 included the following assets under finance leases:

As of December 31,

Assets under finance leases in property, plant and equipment $ 49,714 $ 49,714

Accumulated depreciation ( 29,442 ) ( 27,821 )

Assets under finance leases in property, plant and equipment, net $ 20,272 $ 21,893

Refer to Note 2:

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The following table presents the changes in net goodwill by segment for the years ended December 31, 2023 and 2022.

Performance Sensing Sensing Solutions Total

Performance Sensing (3)

Sensing Solutions (3)

Balance as of December 31, 2021 $ 2,480,598 $ 1,021,465 $ 3,502,063

Acquisitions 30,873 423,288 454,161

— ( 45,000 ) ( 45,000 )

Balance as of December 31, 2022 2,511,471 1,399,753 3,911,224

Acquisitions 30,873 423,288 454,161

Divestiture of Qinex Business — ( 45,000 ) ( 45,000 )

— ( 8,240 ) ( 8,240 )

Measurement period adjustments

— ( 38,494 ) ( 38,494 )

Goodwill impairment charge (1)

( 321,700 ) — ( 321,700 )

Foreign currency translation effect

( 20 ) — ( 20 )

Goodwill reallocation (2)

( 57,071 ) 57,071 —

Balance as of December 31, 2023 $ 2,132,680 $ 1,410,090 $ 3,542,770

At each of December 31, 2022, 2021, and 2020, accumulated goodwill impairment related to Performance Sensing and Sensing Solutions was $ 0.0 million and $ 18.5 million, respectively.

__________________________

(1) In the fourth quarter of 2023, we determined that our Insights reporting unit was impaired and we recorded a $ 321.7 million non-cash impairment charge.

Refer to additional information under the heading Reporting Units below.

(2) Effective April 1, 2023, we moved our material handling products from the HVOR operating segment (in the Performance Sensing reportable segment) to the Sensing Solutions operating segment to align with new management reporting.

Refer to Note 20:

Acquisitions and Divestitures for additional information related to goodwill acquired and written off as a result of our recent acquisitions and the divestiture of the Qinex Business, respectively.

Segment Reporting for additional information.

This product move resulted in a reallocation of $ 57.1 million of goodwill from the HVOR reporting unit to the Industrial Solutions reporting unit based on its fair value relative to the total fair value of the HVOR reporting unit.

(3) Accumulated goodwill impairment related to the Performance Sensing reportable segment was $ 321.7 million as of December 31, 2023 and $ 0.0 million at each of December 31, 2022 and 2021.

Accumulated goodwill impairment related to the Sensing Solutions reportable segment was $ 18.5 million at each of December 31, 2023, 2022, and 2021.

Acquisitions and Divestitures

Goodwill attributed to acquisitions reflects our allocation of purchase price to the estimated fair value of certain assets acquired and liabilities assumed.

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In addition, we estimate the economic lives of these identified intangible assets and these lives are used to calculate amortization expense.

Goodwill has been included in our segments based on a methodology using anticipated future earnings of the components of business.

We own the Klixon ® and Airpax ® tradenames, which are indefinite-lived intangible assets as they have each been in continuous use for almost 75 years and we have no plans to discontinue using either of them.

We have recorded $ 59.1 million and $ 9.4 million, respectively, on our consolidated balance sheets related to these tradenames.

In addition, in the year ended December 31, 2020, we recognized indefinite-lived intangible assets of $ 6.9 million related to in-process research & development acquired in a fiscal year 2020 business combination transaction.

Effective July 1, 2021, we reorganized our Sensing Solutions operating segment, which resulted in realignment of our reporting units.

As a result of this reorganization, our electrical protection product category that includes high-voltage contactors, inverters, rectifiers, and battery management systems was moved to a new reporting unit, Clean Energy Solutions.

The remaining portions of our Electrical Protection, Industrial Sensing, Power Management, and Interconnection reporting units were consolidated into a new reporting unit, Industrial Solutions.

This reorganization had no impact on our Aerospace reporting unit.

Accordingly, as of October 1, 2021, we had five reporting units, Automotive, HVOR, Industrial Solutions, Aerospace, and Clean Energy Solutions.

With the acquisition of SmartWitness Holdings, Inc.

("SmartWitness") in the fourth quarter of 2021, we formed Sensata INSIGHTS, a business unit organized under the HVOR operating segment, to drive growth of our smart and connected offerings to the transportation market, including both those developed organically and through the acquisition of Xirgo Technologies, LLC ("Xirgo") and SmartWitness.

We concluded that Sensata INSIGHTS was a separate reporting unit from HVOR.

There have been no subsequent changes to our reporting units.

Accordingly, as of October 1, 2022, we had six reporting units, Automotive, HVOR, Sensata INSIGHTS, Industrial Solutions, Aerospace, and Clean Energy Solutions.

Goodwill has been included in our segments based on a methodology using anticipated future earnings of

the components of business.

Refer to Note 21:

Acquisitions and Divestitures for additional information related to our acquisitions.

In July 2022, we sold the Qinex Business, which had previously been consolidated into the Industrial Solutions reporting unit.

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Acquisitions and Divestitures for additional information on this transaction.

We concluded that these reorganizations have not impacted our reportable or operating segment evaluations.

We reassigned assets and liabilities, including goodwill, to these new reporting units as required by FASB ASC Topic 350.

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

We evaluated our goodwill and other indefinite-lived intangible assets for impairment as of October 1, 2022 using a quantitative analysis for each reporting unit, under which a discounted cash flow analysis is prepared to determine whether the fair value of the reporting unit is less than its carrying value.

Based on these analyses, we have determined that as of October 1, 2022, the fair value of each of our reporting units and indefinite-lived intangible assets exceeded their carrying values.

We concluded that this sale did not impact our reportable or operating segment evaluations.

Reporting Units

On June 6, 2023, we announced that we had made the decision to exit the Spear Marine Business, which was a part of the Clean Energy Solutions reporting unit.

We qualitatively determined that the goodwill related to the Clean Energy Solutions reporting unit was not impaired as a result of the exit of this business.

Refer to Note 5:

Restructuring and Other Charges, Net for additional information related to the exit of the Spear Marine Business.

As of October 1, 2023, we had seven reporting units, Automotive, HVOR, Insights, Industrial Solutions, Aerospace, Clean Energy Solutions, and Dynapower.

Upon acquisition of Dynapower in the third quarter of 2022, it was included in the Clean Energy Solutions reporting unit.

We did not integrate the Dynapower acquisition with the Clean Energy Solutions reporting unit and have subsequently determined that the manner in which we operate the Dynapower business and the availability of discrete financial information necessitates that it should be considered a separate reporting unit, a change that was made as of October 1, 2023.

There have been no subsequent changes to our reporting units as of December 31, 2023.

We evaluated our goodwill for impairment as of October 1, 2023, using a quantitative analysis for each reporting unit, under which a discounted cash flow analysis is prepared (and, when applicable, a market multiples approach using comparable companies) to determine whether the fair value of the reporting unit is less than its carrying value.

Based on these analyses, we have determined that our Insights reporting unit was impaired.

As a result, we recorded a $ 321.7 million non-cash impairment charge in the fourth quarter of 2023, representing the entire goodwill balance allocated to Insights.

This impairment was primarily driven by reprioritization of our investments into electrification as a company, which is a core component of our overall capital allocation strategy.

The reprioritization evolved from an assessment of our business strategy, beginning in the second half of 2023.

With electrification as the clear future of our company and the best area of focus for management, in the fourth quarter of 2023, we decided to narrow our investment in Insights.

Our assessment of the potential of the business has not changed, but our focus has moved from growth of the business to profitability.

These decisions resulted in significant cost restructuring and a lower long-range financial forecast for the reporting unit, impacting the valuation of the business with respect to the goodwill impairment analysis.

Other valuation assumptions for the Insights reporting unit valuation that are impacted by macroeconomic factors also contributed to the impairment.

We are considering strategic alternatives for this business as we continue to focus our investment priorities in-line with our strategy.

On a quarterly basis, we assess whether any factors exist that would trigger the need for an additional impairment review of our goodwill.

No such factors were present until the fourth quarter of 2023, when we made the decision to change our strategy with respect to our investment in Insights.

We consider a combination of quantitative and qualitative factors to determine whether a reporting unit is at risk of failing the goodwill impairment test, including:

the timing of our most recent quantitative impairment tests and the relative amount by which a reporting unit’s fair value exceeded its then carrying value, the inputs and assumptions underlying our valuation models and the sensitivity of our fair value measurements to those inputs and assumptions, the impact that adverse economic or market conditions may have on the degree of uncertainty inherent in our long-term operating forecasts, and changes in the carrying value of a reporting unit’s net assets from the time of our most recent goodwill impairment test.

We also consider the impact of recent acquisitions in our expectations of the reporting units, and how these acquisitions perform against their original expected performance, as these might put pressure on the reporting units' fair value over carrying value in the short term.

Based on the results of this analysis, we do not consider any of our reporting units to be at risk of failing the goodwill impairment test.

We also consider the impact of recent acquisitions in our expectations of the reporting units, such as the Insights and Dynapower reporting units, and how these acquisitions perform against their original expected performance, as these might put pressure on the reporting units' fair value over carrying value in the short term.

Indefinite-Lived Intangible Assets

We own the Klixon ® and Airpax ® tradenames, which are indefinite-lived intangible assets as they have been in continuous use since 1927 and 1948, respectively, and we have no plans to discontinue using either of them.

We evaluated our indefinite-lived intangible assets for impairment as of October 1, 2023 using a qualitative analysis.

As of each of December 31, 2023, 2022, and 2021, we have $ 59.1 million and $ 9.4 million for the Klixon ® and Airpax ® tradenames, respectively, on our consolidated balance sheets.

In addition, we have recorded indefinite-lived intangible assets of $ 6.9 million related to in-process research & development acquired in a fiscal year 2020 business combination transaction.

Definite-Lived Intangible Assets

The following tables outline the components of definite-lived intangible assets as of December 31, 2023 and 2022:

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Amortization Accumulated

Impairment Net

Impairment Foreign Currency Translation Effect

Completed technologies

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12 2,123,931 ( 1,661,230 ) ( 12,144 ) — 450,557

Tradenames (3)

2 15,500 ( 8,346 ) — — 7,154

16 107,577 ( 32,316 ) — — 75,261

Capitalized software and other

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Total 11 $ 3,345,850 $ ( 2,522,760 ) $ ( 14,574 ) $ ( 215 ) $ 808,301

__________________________

(1) During the year ended December 31, 2023, we wrote-off approximately $ 4.0 million of fully-amortized customer relationships that were not in use.

As of December 31, 2022

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Completed technologies (1)

13 $ 1,017,911 $ ( 684,181 ) $ ( 2,430 ) $ 331,300

Customer relationships (1)(2)

12 2,092,088 ( 1,586,454 ) ( 12,144 ) 493,490

Tradenames (2)

18 107,577 ( 24,575 ) — 83,002

Capitalized software and other (3)

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__________________________

(1) During the year ended December 31, 2022, we retired approximately $ 2.2 million of capitalized software that was not in use, along with approximately $ 0.5 million of associated accumulated amortization.

During the year ended December 31, 2021, we wrote off approximately $ 2.4 million of fully-amortized capitalized software that was not in use.

(1) During the year ended December 31, 2022, we disposed of the Qinex Business, which included approximately $ 4.2 million and $ 26.5 million of fully amortized completed technologies and customer relationships, respectively.

(2) During the year ended December 31, 2022, we wrote-off approximately $ 43.1 million and $ 4.1 million of fully-amortized customer relationships and tradenames, respectively, that were not in use.

(3) During the year ended December 31, 2022, we retired approximately $ 2.2 million of capitalized software that was not in use, along with approximately $ 0.5 million of associated accumulated amortization.

The following table outlines amortization of definite-lived intangible assets for the years ended December 31, 2023, 2022, and 2021:

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Significant Accounting Policies for discussion of our accounting policies related to our pension and other post-retirement benefit plans.

The total net periodic benefit cost associated with our defined benefit and retiree healthcare plans for the years ended December 31, 2022, 2021, and 2020 were $ 9.1 million, $ 11.6 million, and $ 13.5 million, respectively.

Benefit Plans

The principal retirement plans in the U.S.

include a qualified defined benefit pension plan and a defined contribution plan.

In addition, we provide post-retirement medical coverage and non-qualified benefits to certain employees.

Effective January 31, 2012, we froze the defined benefit pension plans and eliminated future benefit accruals.

Benefit Plans

Retirement coverage for non-U.S.

employees is provided through separate defined benefit and defined contribution plans.

Retirement benefits are generally based on an employee’s years of service and compensation.

Funding requirements are determined on an individual country and plan basis and are subject to local country practices and market circumstances.

We do not expect to contribute to the non-U.S.

defined benefit plans during 2024.

Impact on Financial Statements

The total net periodic benefit cost associated with our defined benefit and retiree healthcare plans for the years ended December 31, 2023, 2022, and 2021 was $ 7.9 million, $ 9.1 million, and $ 11.6 million, respectively.

Components of net periodic benefit cost other than service cost are presented in other, net in the consolidated statements of operations.

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Plan participants’ contributions 539 562

Actuarial (gain)/loss ( 11,710 ) 1,163

Curtailment loss/(gain) 466 ( 1,368 )

Actuarial loss/(gain)

31 ( 11,710 )

Curtailment loss

Benefits paid ( 5,975 ) ( 12,436 )

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Accumulated benefit obligation at end of year $ 74,593 $ 72,468

Our long-term debt, net and finance lease and other financing obligations as of December 31, 2022 and 2021 consisted of the following:

Assumptions and Investment Policies

Weighted-average assumptions used to calculate the projected benefit obligations of our defined benefit and retiree healthcare benefit plans as of December 31, 2023 and 2022 are as follows:

As of December 31,

Defined Benefit Retiree Healthcare Defined Benefit Retiree Healthcare

assumed discount rate 4.85 % 4.85 % 5.10 % 5.15 %

assumed discount rate 4.60 % NA 3.99 % NA

average long-term pay progression 3.47 % NA 3.28 % NA

Weighted-average assumptions used to calculate the net periodic benefit cost of our defined benefit and retiree healthcare benefit plans for the years ended December 31, 2023 and 2022 and 2021 are as follows:

For the year ended December 31,

2023 2022 2021

Defined Benefit Retiree Healthcare Defined Benefit Retiree Healthcare Defined Benefit Retiree Healthcare

assumed discount rate 5.10 % 5.15 % 2.30 % 2.40 % 2.04 % 1.80 %

assumed discount rate 7.14 % NA 5.03 % NA 4.52 % NA

average long-term rate of return on plan assets 4.36 % NA 4.53 % NA 4.00 % NA

average long-term rate of return on plan assets 2.73 % NA 2.38 % NA 1.52 % NA

average long-term pay progression 4.96 % NA 4.52 % NA 4.50 % NA

We hold material assets for our defined benefit plans in the U.S.

Information about the assets for each of these plans is detailed below.

Refer to Note 18:

Fair Value Measures for additional information related to the levels of the fair value hierarchy in accordance with FASB ASC Topic 820.

Our target asset allocation for the U.S.

defined benefit plan is 65 % fixed income and 35 % equity securities.

To arrive at the targeted asset allocation, we and our investment adviser reviewed market opportunities using historical data, as well as the actuarial valuation for the plan, to ensure that the levels of acceptable return and risk are well-defined and monitored.

The total fair value of our U.S.

plan assets as of December 31, 2023 and 2022 was $ 10 million and $ 11 million, respectively, which included $ 0 million and $ 2.2 million, respectively, of equity mutual funds, $ 7.3 million and $ 7.1 million, respectively, of fixed income mutual funds, and $ 2.7 million and $ 1.6 million, respectively, of money market funds.

All fair value measures presented above are categorized in Level 1 of the fair value hierarchy.

Investments in mutual funds are based on the publicly-quoted final net asset values on the last business day of the year.

Permitted asset classes include U.S.

fixed income, cash, and cash equivalents.

Fixed income includes both investment grade and non-investment grade.

Permitted investment vehicles include mutual funds, individual securities, derivatives, and long-duration fixed income securities.

While investments in individual securities, derivatives, long-duration fixed income securities, cash, and cash equivalents are permitted, the plan did not hold these types of investments as of December 31, 2023 and 2022.

Prohibited investments include direct investments in real estate, commodities, unregistered securities, uncovered options, currency exchange contracts, and natural resources (such as timber, oil, and gas).

Japan plan assets

The target asset allocation of the Japan defined benefit plan is 50 % fixed income securities, cash, and cash equivalents and 50 % equity securities, with allowance for a 40 % deviation in either direction.

We, along with the trustee of the plan's assets, minimize investment risk by thoroughly assessing potential investments based on indicators of historical returns and current credit ratings.

Additionally, investments are diversified by type and geography.

The total fair value of our Japan plan assets as of December 31, 2023 and 2022 was $ 27.2 million and $ 26.5 million, respectively, which included $ 12.6 million and $ 9.2 million, respectively, of equity securities, $ 8 million and $ 9.7 million, respectively, of fixed income securities, and $ 4.7 million and $ 7.6 million, respectively, of cash and cash equivalents.

All fair value measures presented above are categorized in Level 1 of the fair value hierarchy, with the exception of U.S.

fixed income securities of $ 2.5 million, non-U.S.

equity securities of $ 2.2 million, and alternative risk managed balance of $ 1.9 million as of December 31, 2023, which are categorized as Level 2.

The fair values of equity and fixed income securities are based on publicly-quoted closing stock and bond values on the last business day of the year.

Permitted asset classes include equity securities that are traded on the official stock exchange(s) of the respective countries, fixed income securities with certain credit ratings, cash, and cash equivalents.

Our long-term debt, net and finance lease obligations as of December 31, 2023 and 2022 consisted of the following:

As of December 31,

Maturity Date 2023 2022

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5.625 % Senior Notes (2)

October 15, 2023 — 500,000

5.625 % Senior Notes

November 1, 2024 — 400,000

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Long-term debt, net $ 3,373,988 $ 3,958,928

Finance lease and other financing obligations $ 26,583 $ 28,767

Finance lease obligations

$ 25,225 $ 26,583

current portion ( 2,276 ) ( 1,841 )

Finance lease and other financing obligations, less current portion $ 24,742 $ 26,564

Finance lease obligations, less current portion

$ 22,949 $ 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 term loan principal balance has been presented in current portion of long-term debt on our consolidated balance sheet as of December 31, 2022.

(2) The 4.875 % Senior Notes were redeemed on September 28, 2022.

_______________________________

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

Accordingly, that portion of the principal balance outstanding on the Term Loan as of December 31, 2022 was presented as current portion of long-term debt.

On May 3, 2023, we prepaid $ 196.8 million of outstanding principal on the Term Loan, representing the remaining balance on the Term Loan as of that date plus $ 0.5 million in interest.

(2) On December 18, 2023, we redeemed in full the $ 400.0 million aggregate principal amount outstanding on our $ 400.0 million aggregate principal amount of 5.625 % senior notes due 2024 (the " 5.625 % Senior Notes").

Fiscal year 2023 transactions

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

On August 22, 2023, 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.

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

Among other changes to the Credit Agreement, the Thirteenth Amendment, (i) released the Foreign Guarantors (excluding STBV) (the "Specified Foreign Guarantors") from all of their remaining obligations as guarantors and securing parties under the Credit Agreement, subject to an obligation to reinstate the guarantees under certain conditions, and (ii) modified certain of the operational and restrictive covenants and other terms and conditions of the Credit Agreement to provide us increased flexibility and permissions thereunder.

The Specified Foreign Guarantors were released from their guaranty obligations with respect to the 5.625 % Senior Notes, the $ 700.0 million aggregate principal amount of 5.0 % senior notes due 2025 (the " 5.0 % Senior Notes"), the $ 1.0 billion aggregate principal amount of 4.0 % senior notes due 2029 (the " 4.0 % Senior Notes"), the $ 500.0 million aggregate principal amount of 5.875 % senior notes due 2030 (the " 5.875 % Senior Notes"), the $ 450.0 million aggregate principal amount of 4.375 % senior notes due 2030 (the " 4.375 % Senior Notes"), and the $ 750 million aggregate principal amount of 3.75 % senior notes due 2031 (the " 3.75 % Senior Notes"), in each case in accordance with the terms of the relevant indenture pursuant to which such senior notes were issued (the "Senior Notes Indentures").

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 as of December 31, 2022 was presented as current portion of long-term debt.

On May 3, 2023, we prepaid $ 196.8 million of outstanding principal on the Term Loan, representing the remaining balance on the Term Loan as of that date plus $ 0.5 million in interest.

On December 18, 2023, we redeemed in full the $ 400.0 million aggregate principal amount outstanding on the 5.625 % Senior Notes in accordance with the terms of the indenture under which the 5.625 % Senior Notes were issued, at a redemption price of

100.0 % of the aggregate principal amount of the outstanding 5.625 % Senior Notes, plus a $ 4.0 million "make-whole" premium, plus accrued and unpaid interest to (but not including) the redemption date.

Fiscal year 2022 transactions

On June 23, 2022, certain of our indirect, wholly-owned subsidiaries, including STI, STIHBV, and STBV, entered into an amendment (the “Eleventh Amendment”) to (i) the Credit Agreement and (ii) the Foreign Guaranty, dated as of May 12, 2011.

Refer to discussion under the heading Secured Credit Facility below for additional information regarding the Eleventh Amendment.

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").

On August 29, 2022, STBV completed the issuance and sale of the 5.875 % Senior Notes.

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

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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 $ 400.0 million aggregate principal amount of 5.625 % senior notes due 2024 (the " 5.625 % Senior Notes"), $ 700.0 million aggregate principal amount of 5.0 % senior notes due 2025 (the " 5.0 % Senior Notes"), and $ 1.0 billion aggregate principal amount of 4.0 % senior notes due 2029 (the " 4.0 % Senior Notes");

and STI's $ 450.0 million aggregate principal amount of 4.375 % senior notes due 2030 (the " 4.375 % Senior Notes") and $ 750 million aggregate principal amount of 3.75 % senior notes due 2031 (the " 3.75 % Senior Notes").

the 5.625 % Senior Notes, the 5.0 % Senior Notes, the 4.0 % Senior Notes, the 4.375 % Senior Notes, and the 3.75 % Senior Notes.

Refer to discussion under the heading Senior Notes below for additional information regarding the issuance of the 5.875 % Senior Notes.

On September 28, 2022, we redeemed in full the $ 500.0 million aggregate principal amount outstanding on our 4.875 % senior notes due 2023 (the " 4.875 % Senior Notes") in accordance with the terms of the indenture under which the 4.875 % Senior Notes were issued, 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.

Fiscal Year 2021 transactions

On March 5, 2021, we redeemed the $ 750.0 million aggregate principal amount outstanding on the 6.25 % senior notes due 2026 (the " 6.25 % Senior Notes") in accordance with the terms of the indenture under which the 6.25 % Senior Notes were issued and the terms of the notice of redemption, at a redemption price equal to 103.125 % of the aggregate principal amount of the outstanding 6.25 % Senior Notes, plus accrued and unpaid interest to (but not including) the redemption date.

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

On March 29, 2021, our indirect, wholly-owned subsidiary, STBV, completed the issuance and sale of $ 750.0 million aggregate principal amount of 4.0 % senior notes due 2029, issued under an indenture dated as of March 29, 2021 among STBV, as issuer, The Bank of New York Mellon, as trustee (the "Trustee"), and our guarantor subsidiaries (the "Guarantors") named therein (the " 4.0 % Senior Notes Indenture").

On April 8, 2021, STBV completed the issuance and sale of an additional $ 250.0 million in aggregate principal amount of 4.0 % senior notes due 2029, which were priced at 100.75 % and were issued pursuant to the 4.0 % Senior Notes Indenture, as supplemented by the First Supplemental Indenture, dated as of April 8, 2021, among STBV, the Guarantors, and the Trustee.

The 4.0 % senior notes due 2029 issued in March 2021 have the same terms as those issued in April 2021, other than with respect to the date of issuance and the issue price.

The two issuances of 4.0 % senior notes are consolidated and form a single class of 4.0 % Senior Notes due 2029.

Refer to discussion under the heading Senior Notes below for additional information regarding these transactions.

Secured Credit Facility

The Credit Agreement provides for the Senior Secured Credit Facilities, consisting of a term loan facility (the "Term Loan"), a revolving credit facility, and incremental availability under which additional secured credit facilities could be issued under certain circumstances.

The Credit Agreement provides for the Senior Secured Credit Facilities, consisting of the Term Loan, a revolving credit facility (the "Revolving Credit Facility"), and incremental availability under which additional secured credit facilities could be issued under certain circumstances.

All obligations under the Senior Secured Credit Facilities are unconditionally guaranteed by certain of our subsidiaries and secured by substantially all present and future property and assets of STBV and its guarantor subsidiaries.

On June 23, 2022, we entered into the Eleventh Amendment, which amended the Credit Agreement as follows:

(i) increased the aggregate principal amount of the revolving credit facility under the Credit Agreement (the "Revolving Credit Facility") to $ 750.0 million;

(i) increased the aggregate principal amount of 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 is not refinanced with a maturity date that is on or after June 23, 2027);

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These provisions were not triggered during the year ended December 31, 2023.

The principal amount of the Term Loan amortizes in equal quarterly installments in an aggregate annual amount equal to 1.0 % of the aggregate principal amount of the Term Loan upon completion of the tenth amendment of the Credit Agreement entered into on September 20, 2019 (the "Tenth Amendment,") with the balance due at maturity.

In accordance with the terms of the Credit Agreement, as of December 31, 2022, the Term Loan may, at our option, be maintained from time to time as a Base Rate loan or a Eurodollar Rate loan (each as defined in the Credit Agreement), with each representing a different determination of interest rates.

The interest rate margins for the Term Loan are fixed at, and as of December 31, 2022 were, 0.75 % and 1.75 % for Base Rate loans and Eurodollar Rate loans, respectively, subject to floors of 1.00 % and 0.00 % for Base Rate loans and Eurodollar Rate loans, respectively.

As of December 31, 2022, we maintained the Term Loan as a Eurodollar Rate loan, which accrued interest at 5.87 %.

On January 4, 2023, we entered into an amendment to the Credit Agreement (the “Twelfth Amendment”) that will change the referenced rates related to the Term Loan to the SOFR and SONIA, effective in April 2023.

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

On May 3, 2023, the remaining amount outstanding on the Term Loan was prepaid.

Prior to prepayment, the principal amount of the Term Loan amortized in equal quarterly installments in an aggregate annual amount equal to 1.0 % of the aggregate principal amount of the Term Loan upon completion of the tenth amendment of the Credit Agreement entered into on September 20, 2019 with the balance due at maturity.

In accordance with the terms of the Senior Secured Credit Facilities, no amount under the Term Loan,

once repaid, may be reborrowed.

Revolving Credit Facility

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We have various tranches of senior unsecured notes outstanding as of December 31, 2023.

Information regarding these senior notes (together, the "Senior Notes") is included in the following table.

The Senior Notes were issued under indentures (the "Senior Notes Indentures") among the issuers listed in the table below, The Bank of New York Mellon, as trustee, and our guarantor subsidiaries named in the respective Senior Notes Indentures.

5.625% Senior Notes 5.0% Senior Notes 4.375% Senior Notes 3.75% Senior Notes 4.0% Senior Notes 5.875% Senior Notes

Information regarding these senior notes and the 5.625% Senior Notes, which were not outstanding as of December 31, 2023 (together, the "Senior Notes") is included in the following table.

The Senior Notes were issued under the Senior Notes Indentures among the issuers listed in the table below, The Bank of New York Mellon, as trustee, and our guarantor subsidiaries named in the respective Senior Notes Indentures.

5.625 % Senior Notes (1)

5.0 % Senior Notes

4.375 % Senior Notes

3.75 % Senior Notes

4.0 % Senior Notes

5.875 % Senior Notes

Aggregate principal amount $ — $ 700,000 $ 450,000 $ 750,000 $ 1,000,000 $ 500,000

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__________________________

(1) On December 18, 2023, we redeemed in full the $ 400.0 million aggregate principal amount outstanding on our 5.625 % Senior Notes.

(2) On March 29, 2021, we issued $ 750.0 million of 4.0 % Senior Notes that were priced at 100.00 %.

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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.

The obligations of the issuers of the Senior Notes are guaranteed by STBV and all of its subsidiaries (excluding the company that is the issuer of the relevant Senior Notes) that guarantee the obligations of STI under the Credit Agreement (after giving effect to the Guarantees Release pursuant to the Tenth Amendment).

effect to the release of guarantees pursuant to the Eleventh Amendment and the Thirteenth Amendment discussed below).

On June 23, 2022, we entered into the Eleventh Amendment, which amended the Credit Agreement to, among other things, release 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.

On August 22, 2023, we entered into the Thirteenth Amendment, which amended the Credit Agreement to, among other things, release the Specified Foreign Guarantors from all of their remaining obligations as guarantors and securing parties under the Credit Agreement, subject to an obligation to reinstate the guarantees under certain conditions.

The Specified Foreign Guarantors were released from their guaranty obligations with respect to the 5.625 % Senior Notes, the 5.0 % Senior Notes, the 4.0 % Senior Notes, the 5.875 % Senior Notes, the 4.375 % Senior Notes, and the 3.75 % Senior Notes, in each case in accordance with the terms of the relevant indenture pursuant to which such senior notes were issued.

Events of Default

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As of December 31, 2023, STBV and all of its subsidiaries were subject to certain restrictive covenants under the Credit Agreement and the Senior Notes Indentures.

We entered into the Eleventh Amendment and Thirteenth Amendment to the Credit Agreement on June 23, 2022 and August 22, 2023, respectively.

These amendments each amended the Credit Agreement to, among other things, modify certain of the operational and restrictive covenants and other terms and conditions of the Credit Agreement to provide us increased flexibility and permissions thereunder.

Under certain circumstances, STBV is permitted to designate a subsidiary as "unrestricted" for purposes of the Credit Agreement, in which case the restrictive covenants thereunder will not apply to that subsidiary;

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• dividends and other distributions in an aggregate amount not to exceed $ 200.0 million plus certain amounts, including the retained portion of excess cash flow, but only insofar as no default or event of default exists and the senior secured net leverage ratio is less than 2.0 :1.0 calculated on a pro forma basis;

unlimited additional amounts but only insofar as the senior secured net leverage ratio is less than 2.5 :1.0 calculated on a pro forma basis;

• so long as no default or an event of default exists, dividends and other distributions in an aggregate amount not to exceed $ 50.0 million in any calendar year (with the unused portion in any year being carried over to succeeding years) plus unlimited additional amounts but only insofar as the senior secured net leverage ratio is less than 2.5 :1.0 calculated on a pro forma basis;

• other dividends and other distributions in an aggregate amount not to exceed $ 150.0 million, so long as no default or event of default exists.

The Senior Notes Indentures generally allow STBV to pay dividends and make other distributions to its parent companies.

Compliance with Financial and Non-Financial Covenants

We were in compliance with all of the financial and non–financial covenants and default provisions associated with our indebtedness as of December 31, 2022 and for the fiscal year then ended.

Compliance with Financial Covenants

We were in compliance with all of the financial covenants and default provisions associated with our indebtedness as of December 31, 2023 and for the fiscal year then ended.

Accounting for Debt Financing Transactions

In the year ended December 31, 2023, in connection with the early redemption of the 5.625 % Senior Notes, we recognized a loss of $ 4.6 million, which primarily reflects payment of $ 4.0 million for the "make-whole" premium, with the remaining loss representing the write-off of debt discounts and deferred financing costs.

In connection with the prepayment on the Term Loan, we recognized a loss of $ 0.9 million, representing the write-off of deferred financing costs.

These losses are presented in other, net.

In the year ended December 31, 2022, in connection with the entry into the Eleventh Amendment, we recognized $ 2.7 million of deferred financing costs, which are presented as a reduction of long-term debt on our consolidated balance sheets.

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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 write-off of unamortized deferred financing costs and debt discounts.

In the year ended December 31, 2021, in connection with the early redemption of the 6.25% Senior Notes, we recognized a loss of $ 30.1 million, which primarily reflects payment of $ 23.4 million for the early redemption premium, with the remaining loss representing write-off of debt discounts and deferred financing costs.

In the year ended December 31, 2021, in connection with the early redemption of the $ 750.0 million aggregate principal amount outstanding on the 6.25 % senior notes due 2026 (the " 6.25 % Senior Notes"), we recognized a loss of $ 30.1 million,

which primarily reflects payment of $ 23.4 million for the early redemption premium, with the remaining loss representing write-off of debt discounts and deferred financing costs.

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

In the year ended December 31, 2020, in connection with the entry into the 3.75% Senior Notes, we incurred $ 8.4 million of related third-party costs, which are presented as a reduction of long-term debt on our consolidated balance sheets.

Refer to Note 2:

Significant Accounting Policies for additional information related to our accounting policies regarding debt financing transactions.

Finance Lease and Other Financing Obligations

Finance Leases

Refer to Note 17:

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The aggregate principal amount of each tranche of our Senior Notes is due in full at its maturity date.

The Term Loan must be repaid in full on or prior to its final maturity date.

The Term Loan was paid in full on May 3, 2023.

Loans made pursuant to the Revolving Credit Facility must be repaid in full at its maturity date and can be repaid prior to then at par.

All letters of credit issued thereunder will terminate at the final maturity of the Revolving Credit Facility unless cash collateralized prior to such time.

The following table presents the remaining mandatory principal repayments of long-term debt, excluding finance lease payments, other financing obligations, and discretionary repurchases of debt, in each of the years ended December 31, 2023 through 2027 and thereafter.

On February 6, 2023, we prepaid $ 250.0 million of outstanding principal on our Term Loan, which has been reflected below as paid in 2023.

In accordance with the terms of the Senior Secured Credit Facilities, no amount under the Term Loan, once repaid, may be reborrowed.

The following table presents the remaining mandatory principal repayments of long-term debt, excluding finance lease payments and discretionary repurchases of debt, in each of the years ended December 31, 2024 through 2028 and thereafter.

For the year ended December 31, Aggregate Maturities

2023 $ 254,630

Thereafter 2,700,000

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Commitments and Contingencies

Non-cancelable purchase agreements exist with various suppliers, primarily for services such as information technology ("IT") support.

The terms of these agreements are fixed and determinable.

As of December 31, 2022, we had the following purchase commitments, presented by expected payment dates:

For the year ending December 31,

2023 $ 77,671

Thereafter 96

Total purchase commitments $ 96,714

Off-Balance Sheet Arrangements

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Officers and Directors:

Our articles of association provide for indemnification of directors and officers by us to the fullest extent permitted by applicable law, as it now exists or may hereinafter be amended (but, in the case of an amendment, only to the extent such amendment permits broader indemnification rights than permitted prior thereto), against any and all liabilities, including all expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit, or proceeding, provided he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful or outside of his or her mandate.

including all expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit, or proceeding, provided he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful or outside of his or her mandate.

The articles do not provide a limit to the maximum future payments, if any, under the indemnification.

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This is accomplished by accruing for estimated returns and estimated costs to replace the product at the time the related revenue is recognized.

Liabilities for warranty claims have historically not been material.

Liabilities for warranty claims are not material.

In some instances, customers may make claims for costs they incurred or other damages related to a claim.

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Under FASB ASC Topic 450, loss contingency provisions are recognized for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss.

These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined each accounting period as additional information becomes known.

These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined each accounting period as

additional information becomes known.

Accordingly, we are often initially unable to develop a best estimate of loss and therefore the minimum amount, which could be an immaterial amount, is recognized.

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Cash Dividends

In the year ended December 31, 2022, we paid three quarterly dividends totaling $ 0.33 per share, or $ 51.1 million in the aggregate.

In the years ended December 31, 2023 and 2022, we paid cash dividends totaling an aggregate of $ 71.5 million and $ 51.1 million, respectively.

We did not pay cash dividends in the year ended December 31, 2021.

Foreign Currency Translation

Prior to October 1, 2023, the functional currency of the Company's wholly-owned subsidiaries in China was the USD.

Effective October 1, 2023, as a result of significant changes in economic facts and circumstances in the operations of our China foreign entities, the functional currency of the Company's wholly-owned subsidiaries in China changed to the CNY.

The changes in economic facts and circumstances caused a permanent change to our strategy in China toward a more self-contained model, making China the primary economic environment in which these subsidiaries operate.

This change was accounted for prospectively and does not impact prior period financial statements.

As a result of this change, on October 1, 2023, we recorded an adjustment in other comprehensive income attributable to the current-rate translation of non-monetary assets as of that date in accordance with FASB ASC Topic 830.

In addition, in the fourth quarter of 2024, we started recording an adjustment to translate these subsidiaries' financial statements from CNY to USD (our reporting currency).

These adjustments are included in other comprehensive income and are presented under the heading Accumulated Other Comprehensive Income/(Loss) below.

Treasury Shares

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

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

Under these programs, we may repurchase ordinary shares at such times and in amounts to be determined by our management, based on market conditions, legal requirements, and other corporate considerations, on the open market or in privately negotiated transactions, provided that such transactions were completed pursuant to an agreement and with a third party approved by our shareholders at the annual general meeting.

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

Ordinary shares repurchased by us are recognized, measured at cost, and presented as treasury shares on our consolidated balance sheets, resulting in a reduction of shareholders' equity.

In July 2019 our Board of Directors authorized a $ 500.0 million share repurchase program (the "July 2019 Program").

On April 2, 2020, we announced a temporary suspension of the July 2019 Program.

At the time of this announcement, approximately $ 302.3 million remained available under this program.

We resumed repurchasing shares under the July 2019 Program in November 2021, and during the year ended December 31, 2021, we repurchased approximately 0.8 million shares for $ 47.8 million (an average price of $ 59.28 per share).

As of December 31, 2021, approximately $ 254.5 million remained available under the July 2019 Program.

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 July 2019 Program.

In July 2019 our Board of Directors authorized a $ 500.0 million ordinary share repurchase program (the "July 2019 Program").

During the year ended December 31, 2021, we repurchased approximately 0.8 million ordinary shares under the July 2019 Program for $ 47.8 million (an average price of $ 59.28 per share).

In January 2022, our Board of Directors authorized a new $ 500.0 million ordinary share repurchase program (the “January 2022 Program”), which replaced the July 2019 Program.

During the years ended December 31, 2023 and 2022, we repurchased approximately 1.5 million and 6.3 million ordinary shares, respectively, for $ 60.3 million and $ 292.3 million, respectively, (an average price of $ 40.80 and $ 46.08 per share, respectively), under the January 2022 Program.

On September 26, 2023, our Board of Directors authorized a new $ 500.0 million ordinary share repurchase program (the “September 2023 Program”), which replaced the January 2022 Program, effective on October 1, 2023.

Sensata’s shareholders had previously approved the forms of share repurchase agreements and the potential broker counterparties needed to execute the buyback program.

During the year ended December 31, 2022, we repurchased approximately 6.3 million shares for $ 292.3 million (an average price of $ 46.08 per share).

As of December 31, 2022, approximately $ 224.5 million remained available for repurchase under the January 2022 Program.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss for the years ended December 31, 2022, 2021, and 2020 were as follows:

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

Approximately $ 164.2 million remained available for repurchase under the January 2022 Program on September 30, 2023.

During the year ended December 31, 2023, we repurchased approximately 0.8 million ordinary shares under the September 2023 Program for $ 28.1 million (an average price of $ 33.83 per share).

As of December 31, 2023, approximately $ 471.9 million remained available under the September 2023 Program.

Accumulated Other Comprehensive Income/(Loss)

The components of accumulated other comprehensive income/(loss) for the years ended December 31, 2023, 2022, and 2021 were as follows:

Cash Flow Hedges Defined Benefit and Retiree Healthcare Plans Cumulative Translation Adjustment

Accumulated Other Comprehensive (Loss)/Income

Balance as of December 31, 2020 $ ( 6,733 ) $ ( 42,802 ) $ — $ ( 49,535 )

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Balance as of December 31, 2023 $ 17,513 $ ( 28,499 ) $ 20,948 $ 9,962

The components of other comprehensive (loss)/income, net of tax, for the years ended December 31, 2022, 2021, and 2020 were as follows:

The components of other comprehensive income, net of tax, for the years ended December 31, 2023, 2022, and 2021 were as follows:

For the year ended December 31,

2023 2022 2021

Cash Flow Hedges Defined Benefit and Retiree Healthcare Plans Total Cash Flow Hedges Defined Benefit and Retiree Healthcare Plans Total Cash Flow Hedges Defined Benefit and Retiree Healthcare Plans Total

Other comprehensive (loss)/income before reclassifications $ 37,957 $ 1,597 $ 39,554 $ 23,883 $ ( 30 ) $ 23,853 $ ( 17,738 ) $ ( 12,494 ) $ ( 30,232 )

Amounts reclassified from accumulated other comprehensive loss ( 39,123 ) 2,865 ( 36,258 ) ( 319 ) 6,441 6,122 ( 5,541 ) 6,722 1,181

Other comprehensive (loss)/income $ ( 1,166 ) $ 4,462 $ 3,296 $ 23,564 $ 6,411 $ 29,975 $ ( 23,279 ) $ ( 5,772 ) $ ( 29,051 )

The amounts reclassified from accumulated other comprehensive loss for the years ended December 31, 2022, 2021, and 2020 were as follows:

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

Cash Flow Hedges Pension

Total Cash Flow Hedges Pension

Other comprehensive income/(loss) before reclassifications

$ 30,490 $ 2,033 $ 20,948 $ 53,471 $ 37,957 $ 1,597 $ 39,554 $ 23,883 $ ( 30 ) $ 23,853

Amounts reclassified from accumulated other comprehensive income/(loss) ( 28,642 ) 1,397 — ( 27,245 ) ( 39,123 ) 2,865 ( 36,258 ) ( 319 ) 6,441 6,122

Other comprehensive income/(loss)

$ 1,848 $ 3,430 $ 20,948 $ 26,226 $ ( 1,166 ) $ 4,462 $ 3,296 $ 23,564 $ 6,411 $ 29,975

The amounts reclassified from accumulated other comprehensive income/(loss) for the years ended December 31, 2023, 2022, and 2021 were as follows:

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

For the year ended December 31, Affected Line in Consolidated Statements of Operations

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Income tax effect 9,959 13,603 107 Provision for income taxes

Total, net of taxes $ ( 39,123 ) $ ( 319 ) $ ( 5,541 ) Net income

Total, net of taxes $ ( 28,642 ) $ ( 39,123 ) $ ( 319 ) Net (loss)/income

Defined benefit and retiree healthcare plans $ 1,942 $ 3,844 $ 8,268 Other, net

Total, before taxes 3,844 8,268 9,118 Income before taxes

Income tax effect ( 545 ) ( 979 ) ( 1,827 ) Provision for income taxes

Total, net of taxes $ 2,865 $ 6,441 $ 6,722 Net income

Total, net of taxes $ 1,397 $ 2,865 $ 6,441 Net (loss)/income

__________________________

(1) Refer to Note 19:

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

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

The table below shows right-of-use asset and lease liability amounts and the financial statement line item in which those amounts are presented:

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Finance lease liabilities:

Current portion of long-term debt, finance lease and other financing obligations $ 1,841 $ 2,203

Finance lease and other financing obligations, less current portion 24,742 26,564

Current portion of long-term debt and finance lease obligations

$ 2,276 $ 1,841

Finance lease obligations, less current portion

22,949 24,742

Total finance lease liabilities $ 25,225 $ 26,583

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Finance leases $ 0 $ 284

The table below presents our total lease cost for the years ended December 31, 2022, 2021, and 2020 (short-term lease cost was not material for any of the years presented):

The table below presents our total lease cost for the years ended December 31, 2023, 2022, and 2021 (short-term and variable lease cost was not material for any of the years presented):

For the year ended December 31,

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Financing cash outflow related to finance leases $ 1,460 $ 2,423 $ 1,806

The table below presents the weighted-average remaining lease term of our operating and finance leases (in years) as of December 31, 2022:

The table below presents the weighted-average remaining lease term of our operating and finance leases (in years) as of December 31, 2023, 2022, and 2021:

2023 2022 2021

Operating leases 6.0 6.5 7.2

Finance leases 9.3 10.1 11.1

The table below presents our weighted-average discount rate as of December 31, 2022:

The table below presents our weighted-average discount rate as of December 31, 2023, 2022, and 2021:

2023 2022 2021

Operating leases 5.6 % 5.2 % 5.6 %

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Measured on a Recurring Basis

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

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

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

As of December 31,

Assets measured at fair value:

Foreign currency forward contracts $ 31,126 $ 25,112

Commodity forward contracts 4,181 2,979

Cash equivalents (Level 1)

$ 138,749 $ 860,034

Foreign currency forward contracts (Level 2)

28,871 31,126

Commodity forward contracts (Level 2)

Total assets measured at fair value $ 169,077 $ 895,341

Liabilities measured at fair value:

Foreign currency forward contracts $ 9,866 $ 3,073

Commodity forward contracts 4,671 4,492

Foreign currency forward contracts (Level 2)

$ 8,996 $ 9,866

Commodity forward contracts (Level 2)

Total liabilities measured at fair value $ 9,791 $ 14,537

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Derivative Instruments and Hedging Activities for additional information related to the inputs used to determine these fair value measurements and the nature of the risks that these derivative instruments are intended to mitigate.

Cash equivalents consist of U.S.

Government Treasury money market funds and are classified as Level 1 as they are exchange traded in an active market.

Although we have determined that the majority of the inputs used to value our derivative instruments fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to appropriately reflect both our own non-performance risk and the respective counterparties' non-performance risk in the fair value measurement.

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Upon completion of the merger, our investment in Quanergy was $ 75.1 million, consisting of a $ 50.0 million investment in common shares converted from the Series B Investment, a $ 7.5 million private investment in public equity, and 2.5 million warrants with a fair value of $ 17.6 million, each of which represented the right to purchase one common share of Quanergy at a price of $ 0.01 per share.

We subsequently converted these warrants to common shares.

We converted these warrants to common shares in the year ended December 31, 2022.

On October 6, 2022, Quanergy executed a 1-to-20 reverse stock split.

Upon execution of the reverse stock split, our holdings of Quanergy common stock declined to approximately 0.4 million shares.

As of December 31, 2022, the share price of Quanergy was $ 0.11 per share and we have marked the full investment to approximately zero , resulting in a mark-to-market loss of $ 75.1 million in the year ended December 31, 2022, which was recorded in other, net.

As of December 31, 2022, we had marked the full investment in Quanergy to approximately zero , resulting in a mark-to-market loss of $ 75.1 million in the year ended December 31, 2022, which was recorded in other, net.

As of December 31, 2023, the fair value of the investment is zero .

Refer to Note 6:

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Measured on a Nonrecurring Basis

We evaluated our goodwill and other indefinite-lived intangible assets for impairment as of October 1, 2022.

We evaluated our goodwill for impairment as of October 1, 2023.

Refer to Note 11:

Goodwill and Other Intangible Assets, Net for additional information.

Based on these analyses, we determined that they were not impaired.

Based on this analysis, which used the discounted cash flow method, and, when applicable, a market multiples approach using comparable companies, we determined that as of October 1, 2023, goodwill related to our Insights reporting unit was impaired.

As a result, we recorded a $ 321.7 million non-cash goodwill impairment charge in the fourth quarter of 2023, representing the entire goodwill balance allocated to Insights.

This impairment was driven by a lower long-range financial forecast resulting from the impact of restructuring actions taken in the third and fourth quarters of 2023 and consequent business decisions regarding our level of investment in Insights in future years considering Sensata’s focus on electrification.

Other valuation assumptions for the Insights reporting unit valuation that are impacted by macroeconomic factors also contributed to the impairment.

No other reporting units were impaired.

As of December 31, 2023, no events or changes in circumstances occurred that would have triggered the need for an additional impairment review of goodwill or other indefinite-lived intangible assets.

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Refer to Note 11:

Goodwill and Other Intangible Assets, Net and Note 21:

Acquisitions and Divestitures for additional information.

In the three months ended June 30, 2023, we exited the Spear Marine Business, as discussed further in Note 5:

Restructuring and Other Charges, Net .

We considered the exit of the Spear Marine Business and determined that goodwill related to the Clean Energy Solutions reporting unit was not impaired as of the date of the exit.

Financial Instruments Not Recorded at Fair Value

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$ 500,000 $ 495,000 $ 500,000 $ 473,750

5.875 % Senior Notes

__________________________

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

We also hold trade accounts receivables and payables, for which the fair value approximates the carrying value due to 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 .

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.

As of December 31, 2023 and 2022, we held equity investments under the measurement alternative of $ 18.3 million and $ 15.0 million, respectively, which are presented in other assets in the consolidated balance sheets.

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 consolidated balance sheets.

As of December 31,

Quanergy Systems, Inc.

Other 15,000 15,000

Total $ 15,000 $ 65,000

_________________________

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

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

Derivative Instruments and Hedging Activities

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Hedge accounting generally provides for the matching of the timing of gain or loss recognition on these hedging instruments with the earnings effect of the hedged forecasted transactions.

We may enter into other derivative contracts that are intended to economically hedge certain risks, even though we elect not to apply hedge accounting under FASB ASC Topic 815.

We may enter into other derivative contracts that are

intended to economically hedge certain risks, even though we elect not to apply hedge accounting under FASB ASC Topic 815.

Derivative financial instruments not designated as hedges are used to manage our exposure to certain risks, not for trading or speculative purposes.

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Foreign Currency Risk

We are exposed to fluctuations in the values of certain foreign currencies relative to our functional currency, the USD.

We are exposed to fluctuations in the values of certain foreign currencies relative to the functional currency of a given entity.

We enter into forward contracts to manage this exposure.

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For each of the years ended December 31, 2023, 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 December 31, 2022, we estimate that $ 20.5 million of net gains will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending December 31, 2023.

As of December 31, 2023, we estimate that $ 20.6 million of net gains will be reclassified from accumulated other comprehensive income/(loss) to earnings during the twelve-month period ending December 31, 2024.

As of December 31, 2023, we had the following outstanding foreign currency forward contracts:

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43.0 EUR December 21, 2023 January 31, 2024 Euro ("EUR") to USD 1.10 USD Not designated

364.0 EUR Various from January 2021 to December 2022 Various from January 2023 to December 2024 EUR to USD 1.11 USD Cash flow hedge

402.0 CNY December 27, 2022 January 31, 2023 USD to Chinese Renminbi ("CNY") 6.96 CNY Not designated

390.0 EUR Various from February 2022 to December 2023 Various from January 2024 to December 2025 EUR to USD 1.10 USD Cash flow hedge

808.0 CNY December 21, 2023 January 31, 2024 USD to CNY 7.08 CNY Not designated

160.0 JPY December 21, 2023 January 31, 2024 USD to Japanese Yen ("JPY") 141.44 JPY Not designated

2 unchanged sentences

183.0 MXN December 21, 2023 January 31, 2024 USD to Mexican Peso ("MXN") 17.17 MXN Not designated

3,431.8 MXN Various from January 2021 to December 2022 Various from January 2023 to December 2024 USD to MXN 22.19 MXN Cash flow hedge

6.3 GBP December 28, 2022 January 31, 2023 British Pound Sterling ("GBP") to USD 1.21 USD Not designated

58.9 GBP Various from January 2021 to December 2022 Various from January 2023 to December 2024 GBP to USD 1.26 USD Cash flow hedge

4,480.0 MXN Various from February 2022 to December 2023 Various from January 2024 to December 2025 USD to MXN 19.84 MXN Cash flow hedge

61.9 GBP Various from February 2022 to December 2023 Various from January 2024 to December 2025 British Pound Sterling ("GBP") to USD 1.23 USD Cash flow hedge

__________________________

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Silver 682,292 troy oz.

January 2023 to November 2024 $ 23.24

Gold 7,894 troy oz.

January 2023 to November 2024 $ 1,861.63

Nickel 236,860 pounds January 2023 to November 2024 $ 10.88

Aluminum 4,310,163 pounds January 2023 to November 2024 $ 1.22

Copper 8,271,686 pounds January 2023 to November 2024 $ 4.07

Platinum 10,820 troy oz.

January 2023 to November 2024 $ 986.14

Palladium 1,355 troy oz.

January 2023 to November 2024 $ 2,215.19

January 2024 to September 2025 $ 23.87

Copper 6,530,830 pounds January 2024 to September 2025 $ 3.88

Financial Instrument Presentation

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The following tables present the effect of our derivative financial instruments on the consolidated statements of operations and the consolidated statements of comprehensive income for the years ended December 31, 2023 and 2022:

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

Derivatives designated as hedging instruments Amount of Deferred (Loss)/Gain Recognized in Other Comprehensive Income

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

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

For the year ended December 31, For the year ended December 31,

2 unchanged sentences

Foreign currency forward contracts $ 42,111 $ 11,982 Cost of revenue $ 21,481 $ 6,543

Derivatives not designated as hedging instruments Amount of (Loss)/Gain Recognized in Net Income Location of (Loss)/Gain Recognized in Net Income

Derivatives not designated as hedging instruments Amount of (Loss)/Gain Recognized in Net (Loss)/Income

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

For the year ended December 31,

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As of December 31, 2023, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was $ 9.9 million.

As of December 31, 2022, we have no t posted any cash collateral related to these agreements.

As of December 31, 2023, we have not 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.

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

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

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

The Sensing Solutions reportable segment is also an operating segment.

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

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

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

Effective April 1, 2023, we moved our material handling products from the HVOR operating segment (in the Performance Sensing reportable segment) to the Sensing Solutions operating segment to align with new management reporting.

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

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

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The Performance Sensing segment serves the automotive and HVOR industries through the development and manufacture of sensors, high-voltage solutions (i.e., electrical protection components), and other solutions that are used in mission-critical systems and applications.

Examples include those used in subsystems of automobiles, on-road trucks, and off-road equipment, such as tire pressure monitoring, thermal management, electrical protection, regenerative braking, powertrain (engine/transmission), exhaust management, and operator controls.

These products are used in subsystems that, among other things, improve operating performance and efficiency, contribute to environmentally sustainable and safe solutions, and provide data-driven insight, connectivity, and prognostics to commercial fleet operators and asset managers.

For fleet transportation and logistics customers and end users, the Performance Sensing Segment provide hardware and services that enable a variety of end-use applications, including vehicle tracking and on-board vehicle diagnostic data to monitor vehicle health;

the provision of vehicle data to enable usage-based insurance offerings;

cargo capacity data for trailers that increase the operational efficiency of fleets;

video telematics offerings that provide event analysis and in-cab monitoring to prevent and lower the cost of incidents;

and visibility to where assets are located across the supply chain.

These products are used in subsystems that, among other things, improve operating performance and efficiency and contribute to environmentally sustainable and safe solutions.

The Sensing Solutions segment primarily serves the industrial and aerospace industries through the development and manufacture of a broad portfolio of application-specific sensor and electrical protection products used in a diverse range of industrial markets, including the appliance, HVAC, water management, operator controls, charging infrastructure, renewable energy generation, green hydrogen production, and microgrid applications and markets, as well as the aerospace market, including commercial aircraft, defense, and aftermarket markets.

Some of the products and solutions the segment sells include pressure, temperature, and position sensors, motor and compressor protectors, high-voltage contactors, solid state relays, bimetal electromechanical controls, power inverters, charge controllers, battery management systems, operator controls, and power conversion systems.

Sensing Solutions products perform many functions, including prevention of damage from excess heat or electrical current, optimization of system performance, low-power circuit control, renewable energy generation, and power conversion from direct current ("DC") power to alternating current ("AC") power.

The following table presents net revenue and segment operating income for the reportable segments and other operating results not allocated to the reportable segments for the years ended December 31, 2023, 2022, and 2021.

The net revenue and segment operating income amounts previously reported in the table below for the years ended December 31, 2022 and 2021 have been retrospectively recast to reflect the move of the material handling products between operating segments as described above.

For the year ended December 31,

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Operating income 181,676 670,139 633,240

Interest expense, net ( 178,819 ) ( 179,291 ) ( 171,757 )

Interest expense

( 182,184 ) ( 195,565 ) ( 182,582 )

Interest income

31,324 16,746 3,291

Other, net ( 12,974 ) ( 94,618 ) ( 40,032 )

8 unchanged sentences

Net revenue $ 4,054,083 $ 4,029,262 $ 3,820,806

__________________________

(1) Beginning in the year ended December 31, 2022, we adjusted our product categories to better reflect how we currently view our products.

Vehicle area networks and data collection devices and software, products used in our Sensata INSIGHTS business, have been recast from the sensors product category to the other product category.

As a result, approximately $ 74.7 million of revenue in the year ended December 31, 2021 has been recast in the table above from the sensors product category to other.

There was no revenue related to these products in the year ended December 31, 2020.

The other product category included $ 173.3 million of revenue related to the Sensata INSIGHTS business in the year ended December 31, 2022

The following table presents depreciation and amortization expense for our reportable segments for the years ended December 31, 2023, 2022, and 2021:

8 unchanged sentences

__________________________

(1) Included within corporate and other is depreciation and amortization expense associated with the fair value step-up recognized in acquisitions and accelerated depreciation recognized in connection with restructuring actions.

We do not allocate the additional depreciation and amortization expense associated with the step-up in the fair value of the PP&E and

intangible assets associated with these acquisitions or accelerated depreciation related to restructuring actions to our segments.

(1) Included within corporate and other is depreciation expense associated with the step-up in fair value of assets acquired in connection with a business combination (e.g., PP&E and inventories), amortization of intangible assets, and accelerated depreciation recognized in connection with restructuring actions.

We do not allocate these amounts to our segments.

This treatment is consistent with the financial information reviewed by our chief operating decision maker.

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Acquisitions and Divestitures

The following discussion relates to our acquisitions during the years ended December 31, 2022 and 2021.

The following discussion relates to our acquisitions during the year ended December 31, 2022.

There were no acquisitions in the year ended December 31, 2023.

Refer to Note 11:

Goodwill and Other Intangible Assets, Net for additional discussion of our consolidated goodwill and other intangible assets, net balances.

On April 1, 2021, we acquired all of the equity interests in Xirgo, a leading telematics and data insights provider across the fleet transportation and logistics segments, headquartered in Camarillo, California, for an aggregate cash purchase price of $ 401.7 million.

The product offerings and technology of Xirgo will augment our existing portfolio in advancing our Insights/IoT megatrend initiative, and greatly expands our ability to provide data insights to fleet transportation and logistics customers, by serving telematics service providers, fleet management solution providers, and fleet operators themselves.

Xirgo brings a comprehensive suite of telematics and asset tracking devices, cloud-based data insight solutions, as well as emerging cargo capacity and video sensing applications and data services.

We are integrating Xirgo into our Performance Sensing reportable segment.

The allocation of the purchase price related to this acquisition was finalized in the fourth quarter of 2021.

On November 19, 2021, we acquired all of the equity interests in 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.

In the year ended December 31, 2022, we evaluated updated financial forecasts and determined that the fair value of the contingent consideration arrangement as of December 31, 2022 is zero .

Accordingly, a gain of $ 8.6 million for the year ended December 31, 2022 was recognized in earnings and presented in restructuring and other charges, net .

We are integrating Spear into the Sensing Solutions reportable segment.

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

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

Spear expands on Sensata’s acquisition of Lithium Balance in battery management systems and GIGAVAC in high-voltage contactors and provides energy storage solutions for OEMs and system integrators in fast-growing end markets that offer significant growth opportunities.

The allocation of the purchase price related to this acquisition was finalized in the fourth quarter of 2022.

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 $ 404

Property, plant and equipment 5,317

Goodwill 76,307

Other intangible assets 30,500

Other assets 421

Deferred income tax liabilities ( 3,287 )

Other long-term liabilities ( 525 )

Fair value of net assets acquired, excluding cash and cash equivalents 109,137

Cash and cash equivalents 4,547

Fair value of net assets acquired $ 113,684

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.

This goodwill will not be deductible for tax purposes.

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

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

Acquisition Date Fair Value Weighted-Average Lives (years)

Acquired definite-lived intangible assets

Customer relationships $ 6,200 11

Completed technologies 22,400 13

Tradenames 1,900 10

Total definite-lived intangible assets acquired $ 30,500 12

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

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

These valuation methods incorporate assumptions including expected discounted future 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.

On November 19, 2021, we acquired all of the equity interests of SmartWitness, an innovator of video telematics technology for heavy- and light-duty fleets, for an aggregate cash purchase price of $ 205.5 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.

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

The allocation of the purchase price related to this acquisition was finalized in the fourth quarter of 2022.

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 $ 6,106

Property, plant and equipment 317

Goodwill 129,210

Other intangible assets 76,800

Deferred income tax assets 1,444

Other assets 115

Deferred income tax liabilities ( 17,920 )

Other long-term liabilities ( 100 )

Fair value of net assets acquired, excluding cash and cash equivalents 195,972

Cash and cash equivalents 9,518

Fair value of net assets acquired $ 205,490

This goodwill will not be deductible for tax purposes.

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

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

Acquisition Date Fair Value Weighted-Average Lives (years)

Acquired definite-lived intangible assets

Customer relationships $ 24,100 16

Completed technologies 52,000 10

Tradenames 700 6

Total definite-lived intangible assets acquired $ 76,800 12

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

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

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 the twelve months ended December 31, 2022, we recognized $ 24.7 million of that acquisition-related incentive compensation in restructuring and other charges, net.

In the twelve months ended December 31, 2022, we paid $ 15.0 million of this acquisition-related incentive compensation, which is reflected as an operating cash outflow on our consolidated statement of cash flows.

In addition to the aggregate cash purchase price, the previous shareholders of Elastic M2M were 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.

In the years ended December 31, 2023 and 2022, we recognized $ 5.3 million and $ 24.7 million of that acquisition-related incentive compensation in restructuring and other charges, net.

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

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

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

This acquisition augments our cloud capabilities critical to delivering actionable sensor-based insights.

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 final 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 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

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

Dynapower is 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.

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

We recorded measurement period adjustments in the three months ended June 30, 2023 that predominantly reflected an updated valuation of definite-lived intangible assets.

Accordingly, definite-lived intangible assets in the three months ended June 30, 2023 increased $ 57.2 million (primarily customer relationships).

Along with other adjustments, including the associated deferred income tax liability on acquired intangibles, goodwill decreased $ 41.0 million as a result of these adjustments.

Other measurement period adjustments recorded in the year ended December 31, 2023 were not material.

The allocation of the purchase price related to this acquisition was finalized in the three months ended September 30, 2023.

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

Net working capital, excluding cash $ 9,958

8 unchanged sentences

Fair value of net assets acquired $ 577,473

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

We recorded certain measurement period adjustments in the fourth quarter of 2022 and further adjustments may be required until the allocation of purchase price is final.

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

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.

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:

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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.

The Transition Period ended in the three months ended March 31, 2023.

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 twelve months ended December 31, 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 twelve months ended December 31, 2022, we recognized a pre-tax gain of approximately $ 135.1 million and transaction-related charges of approximately $ 8.2 million.

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.

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

We received an additional $ 5.0 million in August 2022 following fulfillment of a portion of our TSA obligations.

In the three months ended June 30, 2023, we received an escrow payment of $ 15.0 million,

which included $ 10.0 million (presented in cash flows from operating activities) related to the transfer of inventory.

Approximately $ 4.0 million remains in escrow as of December 31, 2023.

In the twelve months ended December 31, 2022, we recognized a pre-tax gain of approximately $ 135.1 million and transaction-related charges of approximately $ 8.2 million related to this transaction.

The gain on sale and transaction-related charges are each presented in restructuring and other charges, net in our consolidated statements of operations for the year ended December 31, 2022.

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Restructuring and Other Charges, Net for additional information.

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 manufactured 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 was 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 total fair value of the Industrial Solutions reporting unit.

Subsequent Events

On February 6, 2023, we prepaid $ 250.0 million of principal on the outstanding Term Loan balance.

As a result, we have reflected $ 250.0 million of long-term debt related to the Term loan in current portion of long-term debt on our consolidated balance sheet as of December 31, 2022.

Refer to Note 14:

Debt for additional information.

SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

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Cash and cash equivalents $ 328 $ 1,227

Intercompany receivables 8,291 2,662

Intercompany notes receivable from subsidiaries 203,844 290,944

Accounts receivable from subsidiaries

Notes receivable from subsidiaries

135,003 203,844

Prepaid expenses and other current assets 1,797 1,998

1 unchanged sentence

Deferred income tax assets 343 436

Other non-current assets — 49

Investment in subsidiaries 2,971,636 2,911,358

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Accounts payable $ 694 $ 1,075

Intercompany accounts payable to subsidiaries 13,814 7,264

Intercompany notes payable to subsidiaries — 149,208

Accounts payable to subsidiaries

Intercompany interest payable

Accrued expenses and other current liabilities 2,376 1,458

Total current liabilities 11,627 16,347

Long-term intercompany debt

Total liabilities 124,225 16,347

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(Parent Company Only)

Statements of Operations

Statements of Comprehensive Income

(In thousands)

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Operating costs and expenses

Selling, general and administrative 15,489 13,687 12,477

Total operating costs and expenses 15,489 13,687 12,477

14,709 15,489 13,687

Loss from operations ( 14,709 ) ( 15,489 ) ( 13,687 )

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Other, net ( 3,683 ) 141 ( 215 )

Net income/(loss) before income taxes and equity in net income of subsidiaries 385,651 185,783 ( 12,841 )

Equity in net (loss)/income of subsidiaries ( 77,704 ) 175,663 182,733

Benefit from/(provision for) income taxes 2,738 2,134 ( 5,606 )

Net income $ 310,685 $ 363,580 $ 164,286

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

SENSATA TECHNOLOGIES HOLDING PLC

(Parent Company Only)

Statements of Comprehensive Income

(In thousands)

For the year ended December 31,

Net (loss)/income before income taxes and equity in net income of subsidiaries

( 11,869 ) 385,651 185,783

Net income $ 310,685 $ 363,580 $ 164,286

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

Subsidiaries' other comprehensive income/(loss) 3,296 29,975 ( 29,051 )

Other comprehensive income/(loss) 3,296 29,975 ( 29,051 )

Benefit from income taxes

2,473 2,738 2,134

Net (loss)/income before equity in net income of subsidiaries

( 9,396 ) 388,389 187,917

Equity in net income/(loss) of subsidiaries, net of tax 5,487 ( 77,704 ) 175,663

Net (loss)/income

( 3,909 ) 310,685 363,580

Subsidiaries' other comprehensive income

26,226 3,296 29,975

Comprehensive income $ 22,317 $ 313,981 $ 393,555

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Intercompany loans 112,598 — ( 224,972 )

Dividends received from subsidiary 400,000 200,000 —

Cash dividends received from subsidiary

— 400,000 200,000

Net cash provided by/(used in) investing activities 112,598 400,000 ( 24,972 )

1 unchanged sentence

Proceeds from exercise of stock options and issuance of ordinary shares 5,346 22,803 26,290

(Payments on)/proceeds from intercompany borrowings ( 62,108 ) 72,726 30,966

Proceeds from/(payments on) intercompany borrowings

68,888 ( 62,108 ) 72,726

Dividends paid ( 71,543 ) ( 51,072 ) —

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The accompanying condensed financial statements have been prepared in accordance with the reduced disclosure requirements permitted by the SEC.

Sensata plc and subsidiaries' audited consolidated financial statements and accompanying notes thereto (the "Consolidated Financial Statements") are included elsewhere in this Report.

These condensed financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto of Sensata plc and subsidiaries (the "Consolidated Financial Statements"), which are included elsewhere in this Report.

Investments in subsidiaries are accounted for using the equity method of accounting.

The income and losses attributable to subsidiaries is reported on a net basis as equity income in earnings of subsidiaries.

dollar amounts presented except per share amounts are stated in thousands, unless otherwise indicated.

Sensata plc conducts limited separate operations and acts primarily as a holding company.

3 unchanged sentences

Debt of the Consolidated Financial Statements included elsewhere in this Report.

dollar amounts presented except per share amounts are stated in thousands, unless otherwise indicated.

Commitments and Contingencies

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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

As disclosed in our Current Report on Form 8-K filed on February 27, 2023, we engaged Deloitte & Touche LLP, ("Deloitte"), as our new independent registered public accounting firm, effective February 23, 2023, to audit our financial statements starting with the fiscal year ending December 31, 2023, and dismissed Ernst & Young LLP, ("E&Y"), as our independent registered accounting firm.

The decision to change our independent registered accounting firm was approved by the Audit Committee of the Board.

During the fiscal years ending December 31, 2021 and December 31, 2022, as well as during the subsequent interim period through February 23, 2023, there were (1) no disagreements with E&Y on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of E&Y, would have caused E&Y to make reference to the subject matter of the disagreements in connection with its reports, and (2) no events of the type listed in paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K.

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-K

Item 8. Financial Statements and Supplementary Data