Sensata Technologies Holding plc 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 1. Financial Statements The following audited consolidated financial statements of Sensata Technologies Holding plc are included in this Annual Report on Form 10-K: Report of Independent Registered Public Accounting Firm (PCAOB ID: 34 ) 64 R eport of Independent Registered Public Accounting F irm (PCAOB ID: 42 ) 66 Consolidated Balance Sheets 67 Consolidated Statements of Operations 68 Consolidated Statements of Comprehensive Income 69 Consolidated Statements of Cash Flows 70 Consolidated Statements of Changes in Shareholders' Equity 71 Notes to Consolidated Financial Statements 72 2. Financial Statement Schedules The following schedules are included elsewhere in this Annual Report on Form 10-K: Schedule I — Condensed Financial Information of the Registrant 122 Schedule II — Valuation and Qualifying Accounts 126 Schedules other than those listed above have been omitted since the required information is not present, or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the audited consolidated financial statements or the notes thereto. 63 Table of Contents 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 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. 64 Table of Contents 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. 65 Table of Contents 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. 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 audits. 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 audits 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 audits 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 audits 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 audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company's auditor from 2005 to 2023. Boston, Massachusetts February 13, 2023, except for notes 3 and 20, as to which the date is February 29, 2024 66 Table of Contents SENSATA TECHNOLOGIES HOLDING PLC Consolidated Balance Sheets (In thousands, except per share amounts) As of December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 508,104 $ 1,225,518 Accounts receivable, net of allowances of $ 28,980 and $ 24,246 as of December 31, 2023 and 2022, respectively 744,129 742,382 Inventories 713,485 644,875 Prepaid expenses and other current assets 136,686 162,268 Total current assets 2,102,404 2,775,043 Property, plant and equipment, net 886,010 840,819 Goodwill 3,542,770 3,911,224 Other intangible assets, net 883,671 999,722 Deferred income tax assets 131,527 100,539 Other assets 134,605 128,873 Total assets $ 7,680,987 $ 8,756,220 Liabilities and shareholders' equity Current liabilities: Current portion of long-term debt and finance lease obligations $ 2,276 $ 256,471 Accounts payable 482,301 531,572 Income taxes payable 32,139 43,987 Accrued expenses and other current liabilities 307,002 346,942 Total current liabilities 823,718 1,178,972 Deferred income tax liabilities 359,073 364,593 Pension and other post-retirement benefit obligations 38,178 36,086 Finance lease obligations, less current portion 22,949 24,742 Long-term debt, net 3,373,988 3,958,928 Other long-term liabilities 66,805 82,092 Total liabilities 4,684,711 5,645,413 Commitments and contingencies (Note 15) Shareholders' equity: Ordinary shares, € 0.01 nominal value per share, 177,069 shares authorized and 175,832 and 175,207 shares issued as of December 31, 2023 and 2022, respectively 2,249 2,242 Treasury shares, at cost, 25,090 and 22,781 shares as of December 31, 2023 and 2022, respectively ( 1,213,160 ) ( 1,124,713 ) Additional paid-in capital 1,901,621 1,866,201 Retained earnings 2,295,604 2,383,341 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 consolidated financial statements. 67 Table of Contents SENSATA TECHNOLOGIES HOLDING PLC Consolidated Statements of Operations (In thousands, except per share amounts) For the year ended December 31, 2023 2022 2021 Net revenue $ 4,054,083 $ 4,029,262 $ 3,820,806 Operating costs and expenses: Cost of revenue 2,792,825 2,712,048 2,542,434 Research and development 178,867 189,344 159,072 Selling, general and administrative 350,655 370,644 336,989 Amortization of intangible assets 173,860 153,787 134,129 Goodwill impairment charge 321,700 — — Restructuring and other charges, net 54,500 ( 66,700 ) 14,942 Total operating costs and expenses 3,872,407 3,359,123 3,187,566 Operating income 181,676 670,139 633,240 Interest expense ( 182,184 ) ( 195,565 ) ( 182,582 ) Interest income 31,324 16,746 3,291 Other, net ( 12,974 ) ( 94,618 ) ( 40,032 ) Income before taxes 17,842 396,702 413,917 Provision for income taxes 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. 68 Table of Contents SENSATA TECHNOLOGIES HOLDING PLC Consolidated Statements of Comprehensive Income (In thousands) For the year ended December 31, 2023 2022 2021 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 Cumulative translation adjustment 20,948 — — 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 consolidated financial statements. 69 Table of Contents SENSATA TECHNOLOGIES HOLDING PLC Consolidated Statements of Cash Flows (In thousands) For the year ended December 31, 2023 2022 2021 Cash flows from 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 321,700 — — Gain on sale of business ( 5,877 ) ( 135,112 ) — Share-based compensation 29,994 31,791 25,663 Loss on debt financing 1,413 5,468 30,066 Amortization of intangible assets 173,860 153,787 134,129 Deferred income taxes ( 54,159 ) ( 781 ) ( 5,270 ) Loss on equity investments, net 711 75,569 — Unrealized loss on derivative instruments and other 35,986 34,309 13,837 Changes in operating assets and liabilities, net of the effects of acquisitions: Accounts receivable, net 2,861 ( 108,992 ) ( 48,106 ) Inventories ( 70,155 ) ( 44,362 ) ( 119,961 ) Prepaid expenses and other current assets 13,943 ( 16,961 ) 6,624 Accounts payable and accrued expenses ( 80,712 ) 40,930 35,333 Income taxes payable ( 12,119 ) 17,490 8,602 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 Cash flows from investing activities: Acquisitions, net of cash received — ( 631,516 ) ( 736,077 ) Additions to property, plant and equipment and capitalized software ( 184,609 ) ( 150,064 ) ( 144,403 ) Investment in debt and equity securities ( 390 ) ( 7,983 ) ( 5,533 ) Proceeds from sale of business, net of cash sold 19,000 198,841 — Other 994 152 3,919 Net cash used in investing activities ( 165,005 ) ( 590,570 ) ( 882,094 ) Cash flows from financing activities: Proceeds from exercise of stock options and issuance of ordinary shares 5,346 22,803 26,290 Payment of employee restricted stock tax withholdings ( 12,280 ) ( 8,525 ) ( 9,048 ) Proceeds from borrowings on debt — 500,000 1,001,875 Payments on debt ( 848,897 ) ( 510,701 ) ( 763,263 ) Dividends paid ( 71,543 ) ( 51,072 ) — Payments to repurchase ordinary shares ( 88,398 ) ( 292,274 ) ( 47,843 ) Payments of debt financing costs ( 787 ) ( 13,691 ) ( 33,093 ) 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 7,475 — — Net change in cash and cash equivalents ( 717,414 ) ( 483,437 ) ( 153,025 ) Cash and cash equivalents, beginning of year 1,225,518 1,708,955 1,861,980 Cash and cash equivalents, end of year $ 508,104 $ 1,225,518 $ 1,708,955 Supplemental cash flow items: Cash paid for interest $ 187,236 $ 188,533 $ 188,857 Cash paid for income taxes $ 95,473 $ 68,768 $ 66,642 The accompanying notes are an integral part of these consolidated financial statements. 70 Table of Contents SENSATA TECHNOLOGIES HOLDING PLC Consolidated Statements of Changes in Shareholders' Equity (In thousands) Ordinary Shares Treasury Shares Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss)/Income Total Shareholders' Equity Number Amount Number Amount Balance as of December 31, 2020 173,266 $ 2,220 ( 15,631 ) $ ( 784,596 ) $ 1,759,668 $ 1,777,729 $ ( 49,535 ) $ 2,705,486 Surrender of shares for tax withholding — — ( 155 ) ( 9,048 ) — — — ( 9,048 ) Stock options exercised 707 8 — — 26,913 — — 26,921 Vesting of restricted securities 469 6 — — — ( 6 ) — — Repurchase of ordinary shares — — ( 807 ) ( 47,843 ) — — — ( 47,843 ) Retirement of ordinary shares ( 155 ) ( 2 ) 155 9,048 — ( 9,046 ) — — Share-based compensation — — — — 25,663 — — 25,663 Net income — — — — — 363,580 — 363,580 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 Surrender of shares for tax withholding — — ( 174 ) ( 8,525 ) — — — ( 8,525 ) Stock options exercised 572 6 — — 22,166 — — 22,172 Vesting of restricted securities 522 6 — — — ( 6 ) — — Cash dividends paid — — — — — ( 51,072 ) — ( 51,072 ) Repurchase of ordinary shares — — ( 6,343 ) ( 292,274 ) — — — ( 292,274 ) Retirement of ordinary shares ( 174 ) ( 2 ) 174 8,525 — ( 8,523 ) — — Share-based compensation — — — — 31,791 — — 31,791 Net income — — — — — 310,685 — 310,685 Other comprehensive income — — — — — — 3,296 3,296 Balance as of December 31, 2022 175,207 2,242 ( 22,781 ) ( 1,124,713 ) 1,866,201 2,383,341 ( 16,264 ) 3,110,807 Surrender of shares for tax withholding — — ( 253 ) ( 12,280 ) — — — ( 12,280 ) Stock options exercised 158 2 — — 5,426 — — 5,428 Vesting of restricted securities 720 8 — — — ( 8 ) — — Cash dividends paid — — — — — ( 71,543 ) — ( 71,543 ) Repurchase of ordinary shares — — ( 2,309 ) ( 88,447 ) — — — ( 88,447 ) Retirement of ordinary shares ( 253 ) ( 3 ) 253 12,280 — ( 12,277 ) — — Share-based compensation — — — — 29,994 — — 29,994 Net loss — — — — — ( 3,909 ) — ( 3,909 ) Other comprehensive income — — — — — — 26,226 26,226 Balance as of December 31, 2023 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. 71 Table of Contents SENSATA TECHNOLOGIES HOLDING PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Business Description and Basis of Presentation Description of Business 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. 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. 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. Other products and services we provide include vehicle area networks and data collection devices and software, battery storage systems, and power conversion systems, the latter of which include inverters, converters, and rectifiers for renewable energy generation, green hydrogen production, electric vehicle charging stations, and microgrid applications, as well as industrial and defense applications. Sensata plc conducts its operations through subsidiary companies that operate business and product development centers primarily in Belgium, Bulgaria, China, Denmark, India, Japan, Lithuania, the Netherlands, South Korea, the United Kingdom (the "U.K."), and the United States (the "U.S."); and manufacturing operations primarily in Bulgaria, China, Malaysia, Mexico, the U.K., and the U.S. We present financial information for two reportable segments, Performance Sensing and Sensing Solutions. Refer to Note 20: 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 The accompanying audited consolidated financial statements have been prepared in accordance with U.S. 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. All U.S. dollar ("USD") and share amounts presented, except per share amounts, are stated in thousands, unless otherwise indicated. 2. Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in accordance with U.S. GAAP requires us to exercise our judgment in the process of applying our accounting policies. It also requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingencies at the date of the financial statements, and the reported amounts of net revenue and expense during the reporting periods. 72 Table of Contents Estimates are used when accounting for certain items such as: allowance for doubtful accounts and sales returns; inventory obsolescence; asset impairments (including goodwill and other intangible assets); contingencies; the value of certain equity awards and the measurement of share-based compensation; the determination of accrued expenses; certain asset valuations; accounting for income taxes; the useful lives of plant and equipment; measurement of our post-retirement benefit obligations; and with respect to business combinations, valuation of contingent consideration and the identification, valuation, and determination of useful lives of acquired identifiable intangible assets. The accounting estimates used in the preparation of the consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained, and as the operating environment changes. Actual results could differ from those estimates. Revenue Recognition We recognize revenue to depict the transfer of promised goods to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods. In order to achieve this, we use the five-step model outlined in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers . This five-step model requires us to identify the contract with the customer, identify the performance obligation(s) in the contract, determine the transaction price, allocate the transaction price to the performance obligation(s), and recognize revenue when (or as) we satisfy the performance obligation(s). The vast majority of our contracts (as defined in FASB ASC Topic 606) are customer purchase orders that require us to transfer specified quantities of tangible products to our customers. These performance obligations are generally satisfied within a short period of time. Amounts billed to our customers for shipping and handling after control has transferred are recognized as revenue and the related costs that we incur are presented in cost of revenue. In determining the transaction price, we evaluate whether the consideration promised in the contract includes a variable amount and, if applicable, we include in the transaction price some or all of an amount of variable consideration only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration may be explicitly stated in the contract or implied based on our customary practices. Examples of variable consideration present in our contracts include rights of return, in the case of a defective or non-conforming product, and trade discounts, including early payment discounts and retrospective volume discounts. Such variable consideration has not historically been material in relation to our net revenue. Our contract terms generally require the customer to make payment shortly (that is, less than one year) after the shipment date. In such instances, we do not consider the effects of a significant financing component in determining the transaction price. Lastly, we exclude from our determination of the transaction price value-added tax and other similar taxes. Our performance obligations are satisfied, and revenue is recognized, when control of the product is transferred to the customer. The transfer of control generally occurs at the point in time the product is shipped from our warehouse or, less often, at the point in time it is received by the customer, depending on the specific terms of the arrangement. Many of our products are designed and engineered to meet customer specifications. These activities, and the testing of our products to determine compliance with those specifications, occur prior to any revenue being recognized. Products are then manufactured and sold to customers. 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 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 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 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. In these instances, we may provide additional warranties for longer durations, consistent with differing end market practices, and where our liability is not limited. In addition, many sales take place in situations where commercial or civil codes or other laws would imply various warranties and restrict limitations on liability. Refer to Note 3: Revenue Recognition for additional information related to the net revenue recognized in the consolidated statements of operations. 73 Table of Contents Share-Based Compensation We measure at fair value any new or modified share-based compensation arrangements with employees, such as stock options and restricted securities, and recognize as compensation expense that fair value over the requisite service period in accordance with FASB ASC Topic 718, Compensation—Stock Compensation . Share-based compensation expense is generally recognized as a component of selling, general and administrative ("SG&A") expense, which is consistent with where the related employee costs are presented, however, such costs, or a portion thereof, may be capitalized provided certain criteria are met. Share-based awards may be subject to either cliff vesting (i.e., the entire award vests on a particular date) or graded vesting (i.e., portions of the award vest at different points in time). 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. 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. 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. Compensation expense is recognized if it is probable that the performance condition will be achieved. We elect to recognize share-based compensation expense net of estimated forfeitures as permitted by FASB ASC Topic 718. Accordingly, we only recognize compensation expense for those awards expected to vest over the requisite service period. Compensation expense recognized for each award ultimately reflects the number of units that actually vest. Refer to Note 4: Share-Based Payment Plans for additional information related to share-based compensation. Financial Instruments Our material financial instruments include derivative instruments, debt instruments, equity investments, trade accounts receivable, and trade accounts payable. Derivative financial instruments We account for derivative financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurement and FASB ASC Topic 815, Derivatives and Hedging . In accordance with FASB ASC Topic 815, we recognize all derivatives on the balance sheet at fair value. The fair value of our derivative financial instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected net cash flows of each instrument. These analyses utilize observable market-based inputs, including foreign currency exchange rates and commodity forward curves, and reflect the contractual terms of these instruments, including the period to maturity. Derivative instruments that are designated and qualify as hedges of the exposure to changes in the fair value of an asset, liability, or commitment, and that are attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivative instruments that are designated and qualify as hedges of the exposure to variability in expected future cash flows are considered cash flow hedges. Derivative instruments may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Currently, all of our derivative instruments that are designated as accounting hedges are cash flow hedges. We also hold derivative instruments that are not designated as accounting hedges. 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 income/(loss) and are subsequently reclassified into earnings in the period in which the hedged forecasted 74 Table of Contents transaction affects earnings. Changes in the fair value of derivative instruments that are not designated as accounting hedges are recognized immediately in other, net. Refer to Note 16: Shareholders' Equity and Note 19: 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. We incorporate credit valuation adjustments to appropriately reflect both our own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of non-performance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. We do not offset the fair value amounts recognized for derivative instruments against fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral. We maintain derivative instruments with major financial institutions of investment grade credit rating and monitor the amount of credit exposure to any one issuer. We believe there are no significant concentrations of risk associated with our derivative instruments. Refer to Note 19: Derivative Instruments and Hedging Activities for additional information related to our derivative instruments. Debt Instruments A premium or discount on a debt instrument is recognized on the balance sheet as an adjustment to the carrying value of the debt liability. In general, amounts paid to creditors are considered a reduction in the proceeds received from the issuance of the debt and are accounted for as a component of the premium or discount on the issuance, not as an issuance cost. Direct and incremental costs associated with the issuance of debt instruments such as legal fees, printing costs, and underwriters' fees, among others, paid to parties other than creditors, are also reported and presented as a reduction of debt on the consolidated balance sheets. 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 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 . Our evaluation of the accounting under FASB ASC Subtopic 470-50 is done on a creditor-by-creditor basis in order to determine if the terms of the debt are substantially different and, as a result, whether to apply modification or extinguishment accounting. In the event that an individual holder of existing debt did not invest in new debt, we apply extinguishment accounting. Borrowings associated with individual holders of new debt that are not holders of existing debt are accounted for as new issuances. Refer to Note 14: Debt for additional information related to our debt instruments and transactions. Equity Investments We measure equity investments (other than those accounted for under the equity method, those that result in consolidation of the investee, and certain other investments) either at fair value, with changes to fair value recognized in net income, or, in certain instances, by use of a measurement alternative prescribed in FASB ASC Topic 321, Investments - Equity Securities . Under the measurement alternative, such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Refer to Note 18: Fair Value Measures for additional information related to our measurement of equity investments. Trade accounts receivable Trade accounts receivable are recognized at invoiced amounts and do not bear interest. Trade accounts receivable are reduced by an allowance for losses on receivables. Concentrations of risk with respect to trade accounts receivable are generally limited due to the large number of customers in various industries and their dispersion across several geographic areas. Although we do not foresee that credit risk associated with these receivables will deviate from historical experience, repayment is dependent upon the financial stability of these individual customers. 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 75 Table of Contents 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 The allowance for losses on receivables is used to present accounts receivable, net at an amount that represents our estimate of the related transaction price recognized as revenue in accordance with FASB ASC Topic 606. The allowance represents an estimate of expected credit losses over the lifetime of our receivables, even if the loss is considered remote, and reflects expected recoveries of amounts previously written-off. We estimate the allowance on the basis of specifically identified receivables that are evaluated individually for impairment and a statistical analysis of the remaining receivables determined by reference to past default experience. We consider the need to adjust historical information to reflect the extent to which we expect current conditions and reasonable forecasts to differ from the conditions that existed for the historical period considered. The allowance for losses on receivables also includes an allowance for sales returns (variable consideration). Management judgments are used to determine when to charge off uncollectible trade accounts receivable. We base these judgments on the age of the receivable, credit quality of the customer, current economic conditions, and other factors that may affect a customer’s ability and intent to pay. Customers are generally not required to provide collateral for purchases. Losses on receivables have not historically been significant. Goodwill and Other Intangible Assets Businesses acquired are recognized at their fair value on the date of acquisition, with the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed recognized as goodwill. Intangible assets acquired may include either definite-lived or indefinite-lived intangible assets, or both. In accordance with the guidance in FASB ASC Topic 350, Intangibles—Goodwill and Other , goodwill and intangible assets determined to have an indefinite useful life are not amortized. Instead, these assets are evaluated for impairment on an annual basis and whenever events or business conditions change that could indicate that the asset is impaired. We evaluate goodwill and indefinite-lived intangible assets for impairment in the fourth quarter of each fiscal year, unless events occur which trigger the need for an earlier impairment review. Goodwill Our reporting units have been identified based on the definitions and guidance provided in FASB ASC Topic 350. Identification of reporting units includes an analysis of the components that comprise each of our operating segments, which considers, among other things, the manner in which we operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form one reporting unit if the components have similar economic characteristics. We periodically review these reporting units to ensure that they continue to reflect the manner in which the business is operated. Some assets and liabilities relate to the operations of multiple reporting units. We allocate these assets and liabilities to the related reporting units based on methods that we believe are reasonable and supportable. We apply that allocation method on a consistent basis from year to year. Other assets and liabilities, such as debt, cash and cash equivalents, and property, plant and equipment ("PP&E") associated with our corporate offices, are viewed as being corporate in nature. Accordingly, we do not assign these assets and liabilities to our reporting units. In the event we reorganize our business, we reassign the assets (including goodwill) and liabilities among the affected reporting units using a reasonable and supportable methodology. As businesses are acquired, we assign assets acquired (including goodwill) and liabilities assumed to a new or existing reporting unit as of the date of the acquisition. 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 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 76 Table of Contents 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 a 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. Indefinite-lived intangible assets Similar to goodwill, we perform an annual impairment review of our indefinite-lived intangible assets in the fourth quarter of each fiscal year, unless events occur that trigger the need for an earlier impairment review. We have the option to first assess qualitative factors in determining whether it is more likely than not that an indefinite-lived intangible asset is impaired. If we elect not to use this option, or we determine that it is more likely than not that the asset is impaired, we perform a quantitative impairment analysis in which we estimate the fair value of the indefinite-lived intangible asset and compare that amount to its carrying value. In this analysis, we estimate the fair value by using the relief-from-royalty method, in which we make assumptions about future conditions impacting the fair value of our indefinite-lived intangible assets, including projected growth rates, cost of capital, effective tax rates, and royalty rates. Impairment, if any, is based on the excess of the carrying value over the fair value of these assets. Definite-lived intangible assets Acquisition-related definite-lived intangible assets are amortized on an economic-benefit basis according to the useful lives of the assets, or on a straight-line basis if a pattern of economic benefits cannot be reliably determined. Capitalized software and capitalized software licenses are presented on the consolidated balance sheets as intangible assets. Capitalized software licenses are amortized on a straight-line basis over the lesser of the term of the license or the estimated useful life of the software. Capitalized software is amortized on a straight-line basis over its estimated useful life. 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 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. Refer to Note 11: Goodwill and Other Intangible Assets, Net for additional information related to our goodwill and other intangible assets. Income Taxes We estimate our provision for (or benefit from) income taxes in each of the jurisdictions in which we operate. The provision for (or benefit from) income taxes includes both our current and deferred tax expense. Our deferred tax expense is measured using the asset and liability method, under which deferred income taxes are recognized to reflect the future tax consequences of differences between the tax bases of assets and liabilities and their financial reporting amounts at each balance sheet date, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to reverse or settle. The effect on deferred tax assets and liabilities of a change in statutory tax rates is recognized in the consolidated statements of operations as an adjustment to income tax expense in the period that includes the enactment date. In measuring our deferred tax assets, we consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for all or some portion of the deferred tax assets. If it is determined that it is more likely than not that future tax benefits associated with a deferred tax asset will not be realized, a valuation allowance is provided. As a result, we maintain valuation allowances against the deferred tax assets in jurisdictions that have incurred losses in recent periods and in which it is more likely than not that such deferred tax assets will not be utilized in the foreseeable future. In accordance with FASB ASC Topic 740, Income Taxes , we record uncertain tax positions on the basis of a two-step process. First, we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position. Second, for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the relevant tax authority. Significant judgment is required in evaluating whether our tax positions meet this two-step process. The more-likely- 77 Table of Contents 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. We classify interest and penalties related to uncertain tax positions within the provision for (or benefit from) income taxes line of the consolidated statements of operations. Refer to Note 7: Income Taxes for additional information related to our income taxes. Pension and Other Post-Retirement Benefits We sponsor various pension and other post-retirement benefit plans covering our current and former employees in several countries. The funded status of pension and other post-retirement benefit plans, recognized on our consolidated balance sheets as an asset, current liability, or long-term liability, is measured as the difference between the fair value of plan assets and the benefit obligation at the measurement date. Benefit obligations represent the actuarial present value of all benefits attributed by the pension formula as of the measurement date to employee service rendered before that date. The value of benefit obligations takes into consideration various financial assumptions, including assumed discount rate and the rate of increase in healthcare costs, and demographic assumptions, including compensation rate increases, retirement patterns, employee turnover rates, and mortality rates. 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. We present the service cost component of net periodic benefit cost in the cost of revenue, research and development ("R&D"), and SG&A expense line items, and we present the non–service components of net periodic benefit cost in other, net. Refer to Note 13: Pension and Other Post-Retirement Benefits for additional information related to our pension and other post-retirement benefit plans. Inventories 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 78 Table of Contents overhead. We conduct quarterly inventory reviews for salability and obsolescence, and inventories considered unlikely to be sold are adjusted to net realizable value. Refer to Note 9: Inventories for additional information related to our inventory balances. Leases We account for leases in accordance with the guidance in FASB ASC Topic 842, Leases . We enter into lease agreements for many of our facilities around the world. We occupy leased facilities with initial terms ranging up to 20 years. Our lease agreements frequently include options to renew for additional periods or to purchase the leased assets and generally require that we pay taxes, insurance, and maintenance costs. Depending on the specific terms of the leases, our obligations are in two forms: finance leases and operating leases. For both forms of leases, we recognize a related lease liability and right-of-use asset on our consolidated balance sheets. Our lease liabilities are initially measured at the present value of the lease payments not yet paid, discounted using our incremental borrowing rate for a period that is comparable to the remaining lease term. We use our incremental borrowing rate, adjusted for collateralization, because the discount rates implicit in our leases are generally not readily determinable. For finance leases, the consolidated statements of operations include separate recognition of interest on the lease liability and amortization of the right-of-use asset. For operating leases, the consolidated statements of operations include a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis. 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 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 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. 79 Table of Contents 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 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 maturities as of the date of purchase 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: 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. FASB ASU No. 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. 80 Table of Contents 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. 3. Revenue Recognition We recognize revenue to depict the transfer of promised goods to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods. The vast majority of our revenue is derived from the sale of tangible products whereby (1) control of the product transfers to the customer at a point in time, (2) we recognize revenue at a point in time, and (3) the underlying contract is a purchase order that establishes a firm purchase commitment for a short period of time. Our standard terms of sale provide our customers with a warranty against faulty workmanship and the use of defective materials. We do not generally offer separately priced extended warranty or product maintenance contracts. Refer to Note 2: Significant Accounting Policies for additional information. We have elected to apply certain practical expedients that allow for more limited disclosures than those that would otherwise be required by FASB ASC Topic 606, including (1) the disclosure of transaction price allocated to the remaining unsatisfied performance obligations at the end of the period and (2) an explanation of when we expect to recognize the related revenue. We believe that our end markets are the categories that best depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following table presents net revenue disaggregated by segment and end market for the years ended December 31, 2023, 2022, and 2021: Performance Sensing Sensing Solutions Total For the year ended December 31, For the year ended December 31, For the year ended December 31, 2023 2022 2021 2023 2022 2021 2023 2022 2021 Net revenue: Automotive $ 2,139,306 $ 2,071,879 $ 2,018,056 $ 37,883 $ 35,772 $ 44,351 $ 2,177,189 $ 2,107,651 $ 2,062,407 HVOR (1) 863,422 848,514 783,170 — — — 863,422 848,514 783,170 Industrial (1) — — — 597,502 581,806 460,567 597,502 581,806 460,567 Appliance and HVAC (2) — — — 186,729 218,115 243,938 186,729 218,115 243,938 Aerospace — — — 188,179 152,880 134,735 188,179 152,880 134,735 Other — — — 41,062 120,296 135,989 41,062 120,296 135,989 Net revenue $ 3,002,728 $ 2,920,393 $ 2,801,226 $ 1,051,355 $ 1,108,869 $ 1,019,580 $ 4,054,083 $ 4,029,262 $ 3,820,806 __________________________ (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 Refer to Note 20: Segment Reporting for a presentation of net revenue disaggregated by product category and geographic region. Contract Assets and Liabilities Excluding trade receivables, which are presented on our consolidated balance sheets, our contract assets are not material. Contract liabilities, whereby we receive payment from customers related to our promise to satisfy performance obligations in the future, are not material. 4. Share-Based Payment Plans At our Annual General Meeting held on May 27, 2021, our shareholders approved the Sensata Technologies Holding plc 2021 Equity Incentive Plan (the "2021 Equity Plan"), which replaced the Sensata Technologies Holding plc First Amended and Restated 2010 Equity Incentive Plan (the "2010 Equity Plan"). The 2021 Equity Plan is substantially similar to the 2010 Equity Plan with some updates based on changes in law and current practices. The purpose of the 2021 Equity Plan is to promote the long-term growth, profitability, and interests of the Company and its shareholders by aiding us in attracting and retaining 81 Table of Contents 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. The 2010 Equity Plan was terminated as to the grant of any additional awards, but prior awards remain outstanding in accordance with their terms. As of December 31, 2023, there were 4.6 million ordinary shares available for grants of awards under the 2021 Equity Plan. Refer to Note 2: Significant Accounting Policies for additional information related to our share-based compensation accounting policies. Share-Based Compensation Awards We grant restricted stock unit ("RSU") and performance-based restricted stock unit ("PRSU") awards. 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. 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. Options 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 Exercise Price Per Option Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value Balance as of December 31, 2022 1,527 $ 44.55 3.3 $ 1,802 Forfeited or expired ( 102 ) $ 47.66 Exercised ( 158 ) $ 34.31 Balance as of December 31, 2023 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 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. We recognize compensation expense for options on a straight-line basis over the requisite service period, which is generally the same as the vesting period. The options generally expire ten years from the date of grant. For options granted prior to April 2019, except as otherwise provided in specific option award agreements, if a participant ceases to be employed by us, options not yet vested generally expire and are forfeited at the termination date, and options that are fully vested generally expire 90 days after termination of the participant’s employment. Exclusions to the general policy for terminated employees include termination for cause (in which case the options expire on the participant’s termination date) and termination due to death or disability (in which case any unvested options shall immediately vest and expire one year after the participant’s termination date). 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. Restricted Securities 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. For PRSU awards, the number of units that ultimately vest depends on the extent to which certain performance criteria, described in the table below, are met. 82 Table of Contents A summary of restricted securities granted in the years ended December 31, 2023, 2022, and 2021 is presented below: Percentage Range of Units That May Vest (1) 0.0 % to 150.0 % 0.0 % to 172.5 % 0.0 % to 200.0 % (Awards in thousands) RSU Awards Granted Weighted-Average Grant-Date Fair Value Market PRSU Awards Granted (2) Weighted-Average Grant-Date Fair Value PRSU Awards Granted Weighted-Average Grant-Date Fair Value PRSU Awards Granted Weighted-Average Grant-Date Fair Value 2023 599 $ 48.68 198 $ 52.72 — $ — 150 $ 49.15 2022 618 $ 49.68 — $ — 231 $ 50.12 194 $ 48.33 2021 413 $ 58.29 — $ — 170 $ 58.56 76 $ 57.04 __________________________ (1) Represents the percentage range of PRSU award units granted that may vest according to the terms of the awards. 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. See Note 2: 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) 3 Risk free interest rate 3.8 % Dividend yield 0.9 % Stock price on valuation date $ 50.00 Expected volatility 36 % 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 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 Grant-Date Fair Value Balance as of December 31, 2022 1,755 $ 46.68 Granted 947 $ 49.60 Forfeited ( 386 ) $ 48.23 Vested ( 720 ) $ 48.19 Balance as of December 31, 2023 1,596 $ 50.51 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. 83 Table of Contents 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, 2023 2022 2021 Outstanding 1.2 1.2 1.0 Expected to vest 1.2 1.2 1.0 The expected to vest restricted securities are calculated based on the application of a forfeiture rate assumption to all outstanding restricted securities as well as our assessment of the probability of meeting the required performance conditions that pertain to the PRSU awards. Share-Based Compensation Expense The table below presents non-cash compensation expense related to our equity awards, which is recognized within SG&A expense in the consolidated statements of operations, for the years ended December 31, 2023, 2022, and 2021: For the year ended December 31, 2023 2022 2021 Stock options $ ( 88 ) $ 632 $ 1,389 Restricted securities 30,082 31,159 24,274 Share-based compensation expense $ 29,994 $ 31,791 $ 25,663 In the years ended December 31, 2023, 2022, and 2021, we recognized $ 4.5 million, $ 3.8 million, and $ 3.2 million, respectively, of income tax benefit associated with share-based compensation expense. The table below presents unrecognized compensation expense at December 31, 2023 for each class of award and the remaining expected term for this expense to be recognized: Unrecognized Compensation Expense Expected Recognition (years) Restricted securities 33,767 1.6 5. 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) $ 2,584 Sensing Solutions (1) 5,898 Corporate and other ( 1,362 ) Q2 2020 Global Restructure Program, net $ 7,120 ___________________________________ (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. 84 Table of Contents Q3 2023 Plan 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: Charges (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 85 Table of Contents Summary The following table presents the components of restructuring and other charges, net for the years ended December 31, 2023, 2022, and 2021: For the year ended December 31, 2023 2022 2021 Q2 2020 Global Restructure Program, net (1) $ — $ — $ 7,120 Q3 2023 Plan, net (1) 23,495 — — 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 business (3) ( 5,877 ) ( 135,112 ) — Acquisition-related compensation arrangements (4) 15,274 48,864 — Other (5) 13,159 ( 5,028 ) 885 Restructuring and other charges, net $ 54,500 $ ( 66,700 ) $ 14,942 __________________________ (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. (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. Refer to Note 21: Acquisitions and Divestitures for additional information. The following table presents a rollforward of the severance portion of our restructuring obligations for the years ended December 31, 2023 and 2022: Q3 2023 Plan Q2 2020 Global Restructure Program Other (1) Total Balance as of December 31, 2021 $ — $ 3,853 $ 3,380 $ 7,233 Charges, net of reversals — ( 660 ) 19,772 19,112 Payments — ( 3,155 ) ( 14,479 ) ( 17,634 ) Foreign currency remeasurement — ( 16 ) ( 78 ) ( 94 ) Balance as of December 31, 2022 — 22 8,595 8,617 Charges, net of reversals 22,303 — 7,849 30,152 Payments ( 16,501 ) — ( 15,822 ) ( 32,323 ) Foreign currency remeasurement 215 — 125 340 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. Refer to Note 12: Accrued Expenses and Other Current Liabilities . 86 Table of Contents 6. Other, Net The following table presents the components of other, net for the years ended December 31, 2023, 2022, and 2021: For the year ended December 31, 2023 2022 2021 Currency remeasurement (loss)/gain on net monetary assets (1) $ ( 20,152 ) $ ( 18,155 ) $ 3,449 Gain/(loss) on foreign currency forward contracts (2) 4,237 4,324 ( 7,553 ) Loss on commodity forward contracts (2) ( 2,762 ) ( 3,350 ) ( 2,967 ) Loss on debt financing (3) ( 5,413 ) ( 5,468 ) ( 30,066 ) Loss on equity investments, net (4) ( 711 ) ( 75,569 ) — Net periodic benefit cost, excluding service cost ( 3,923 ) ( 5,125 ) ( 7,528 ) Other 15,750 8,725 4,633 Other, net $ ( 12,974 ) $ ( 94,618 ) $ ( 40,032 ) __________________________ (1) Relates to the remeasurement of non-functional currency denominated net monetary assets and liabilities into the functional currency. Refer to Note 2: Significant Accounting Policies — Foreign Currency for additional information. (2) Relates to changes in the fair value of derivative financial instruments not designated as cash flow hedges. Refer to Note 19: Derivative Instruments and Hedging Activities for additional information related to gains and losses on our commodity and foreign currency forward contracts. (3) Refer to Note 14: Debt for additional information related to our debt financing transactions. (4) Primarily reflects a mark-to-market loss on our investment in Quanergy Systems, Inc. ("Quanergy") in the year ended December 31, 2022. Refer to Note 18: Fair Value Measures for additional information. 7. Income Taxes Refer to Note 2: Significant Accounting Policies for detailed discussion of the accounting policies related to income taxes. Income before taxes Income before taxes for the years ended December 31, 2023, 2022, and 2021 was categorized by jurisdiction as follows: U.S. Non-U.S. (1) Total 2023 $ ( 323,548 ) $ 341,390 $ 17,842 2022 $ ( 66,899 ) $ 463,601 $ 396,702 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. 87 Table of Contents Provision for income taxes Provision for income taxes for the years ended December 31, 2023, 2022, and 2021 comprised provisions for (or benefits from) income tax by jurisdiction as follows: U.S. Federal Non-U.S. (1) U.S. State Total 2023 Current $ 1,578 $ 73,658 $ 665 $ 75,901 Deferred ( 15,862 ) ( 27,089 ) ( 11,199 ) ( 54,150 ) Total $ ( 14,284 ) $ 46,569 $ ( 10,534 ) $ 21,751 2022 Current $ 2,111 $ 81,912 $ 2,775 $ 86,798 Deferred 3,699 ( 4,865 ) 385 ( 781 ) Total $ 5,810 $ 77,047 $ 3,160 $ 86,017 2021 Current $ 1,005 $ 54,401 $ 201 $ 55,607 Deferred 6,261 ( 12,747 ) 1,216 ( 5,270 ) 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% $ 4,193 Capital restructuring and dispositions ( 286,434 ) Valuation allowances 278,486 Goodwill impairment 41,151 Foreign rate differential ( 17,690 ) Withholding taxes not creditable 14,132 Research and development incentives ( 9,023 ) U.S. 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 88 Table of Contents The principal reconciling items from income tax computed at the U.S. statutory rate for the years ended December 31, 2023, 2022, and 2021 were as follows: For the year ended December 31, 2023 2022 2021 Tax computed at statutory rate of 21% $ 3,747 $ 83,307 $ 86,923 Capital restructuring and dispositions ( 286,434 ) 4,496 — Valuation allowances 278,486 15,679 20,512 Goodwill impairment 41,151 — — 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 ) U.S. 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 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. This foreign tax rate differential can change from year to year based upon the jurisdictional mix of earnings and changes in current and future enacted tax rates. Certain of our subsidiaries are currently eligible, or have been eligible, for tax exemptions or reduced tax rates in their respective jurisdictions. 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. The remeasurement of the deferred tax assets and liabilities is included in the change in tax laws or rates caption. Withholding taxes not creditable Withholding taxes may apply to intercompany interest, royalty, management fees, and certain payments to third parties. Such taxes are deducted if they cannot be credited against the recipient’s tax liability in its country of residence. Additional consideration has been given to the withholding taxes associated with unremitted earnings and the recipient's ability to obtain a tax credit for such taxes. Earnings are not considered to be indefinitely reinvested in the jurisdictions in which they were earned. In certain jurisdictions we recognize a deferred tax liability on withholding and other taxes on intercompany payments including dividends. Research and development incentives Certain income of our U.K. subsidiaries is eligible for lower tax rates under the "patent box" regime, resulting in certain of our intellectual property income being taxed at a rate lower than the U.K. statutory tax rate. Qualified investments are eligible for a bonus deduction under China’s R&D super deduction regime. In the U.S., we benefit from R&D credit incentives. 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. Goodwill impairment During the year ended December 31, 2023, we incurred a non-cash impairment charge for goodwill that is nondeductible for tax purposes. 89 Table of Contents Deferred income tax assets and liabilities The primary components of deferred income tax assets and liabilities as of December 31, 2023 and 2022 were as follows: As of December 31, 2023 2022 Deferred tax assets: Net operating loss, interest expense, and other carryforwards $ 453,618 $ 379,036 Prepaid and accrued expenses 37,737 48,540 Intangible assets and goodwill 20,820 67,330 Pension liability and other 8,910 9,801 Property, plant and equipment 14,661 15,042 Share-based compensation 8,175 7,862 Inventories and related reserves 18,556 17,329 Unrealized exchange loss 286 17,645 Outside basis difference of subsidiaries 304,398 — Total deferred tax assets 867,161 562,585 Valuation allowance ( 569,569 ) ( 249,525 ) Net deferred tax asset 297,592 313,060 Deferred tax liabilities: Intangible assets and goodwill ( 460,892 ) ( 489,169 ) Tax on undistributed earnings and outside basis differences of subsidiaries ( 34,995 ) ( 60,535 ) Operating lease right of use assets ( 6,332 ) ( 6,803 ) Property, plant and equipment ( 15,232 ) ( 14,309 ) Unrealized exchange gain ( 7,687 ) ( 6,298 ) Total deferred tax liabilities ( 525,138 ) ( 577,114 ) Net deferred tax liability $ ( 227,546 ) $ ( 264,054 ) Valuation allowance and net operating loss carryforwards We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In measuring our deferred tax assets, we consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for all or some portion of the deferred tax assets. Significant judgment is required in considering the relative impact of the negative and positive evidence, and weight given to each category of evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary, and the more difficult it is to support a conclusion that a valuation allowance is not needed. Additionally, we utilize the "more likely than not" criteria established in FASB ASC Topic 740 to determine whether the future tax benefit from the deferred tax assets should be recognized. As a result, we have established valuation allowances on the deferred tax assets in jurisdictions that have incurred net operating losses and in which it is more likely than not that such losses will not be utilized in the foreseeable future. As of each reporting date, we consider new evidence, both positive and negative, that could impact our view with regard to future realization of deferred tax assets. Our interest expense carryforwards in certain jurisdictions are subject to limitations. 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 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. For book purposes, goodwill and indefinite-lived intangible assets are not amortized but are tested for impairment annually. The tax amortization of goodwill and indefinite-lived intangible assets will result in a taxable temporary difference, which will not reverse unless the related book goodwill or indefinite-lived intangible asset is impaired or written off. This liability may not be used to support deductible temporary differences, such as net operating loss carryforwards, which may expire within a definite period. 90 Table of Contents 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, 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. federal net operating loss carryforwards of $ 686.4 million, of which $ 87.2 million will expire from 2029 to 2037, and $ 599.2 million do not expire. We have state net operating loss carryforwards with limited and unlimited lives. Our limited life state net operating losses will expire beginning in 2024. 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 A reconciliation of the amount of unrecognized tax benefits is as follows: For the year ended December 31, 2023 2022 2021 Balance at beginning of year $ 224,588 $ 223,791 $ 201,410 Increases related to current year tax positions 3,335 4,997 3,574 Increases related to prior year tax positions 1,205 1,312 37,869 (Decreases)/increases related to business combinations — ( 883 ) 1,370 Decreases related to settlements with tax authorities ( 414 ) — ( 11,015 ) Decreases related to prior year tax positions ( 41,241 ) ( 3,097 ) ( 8,363 ) Decreases related to lapse of applicable statute of limitations ( 687 ) ( 743 ) ( 483 ) Changes related to foreign currency exchange rates 406 ( 789 ) ( 571 ) Balance at end of year $ 187,192 $ 224,588 $ 223,791 We recognize interest and penalties related to unrecognized tax benefits in the consolidated statements of operations and the consolidated balance sheets. The following table presents the expense/(income) related to such interest and penalties recognized in the consolidated statements of operations during the years ended December 31, 2023, 2022, and 2021, and the amount of interest and penalties recorded on the consolidated balance sheets as of December 31, 2023 and 2022: Statements of Operations Balance Sheets For the year ended December 31, As of December 31, (In millions) 2023 2022 2021 2023 2022 Interest $ 0.3 $ 0.5 $ ( 0.1 ) $ 2.5 $ 2.1 Penalties $ 0.0 $ 0.1 $ 0.0 $ 0.5 $ 0.5 At December 31, 2023, we anticipate that the liability for unrecognized tax benefits could decrease by up to $ 3.3 million within the next twelve months due to the expiration of certain statutes of limitation or the settlement of examinations or issues with tax authorities. 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 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. 91 Table of Contents 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. 8. 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, (In thousands) 2023 2022 2021 Basic weighted-average ordinary shares outstanding 152,089 155,253 158,166 Dilutive effect of stock options — 212 640 Dilutive effect of unvested restricted securities — 462 564 Diluted weighted-average ordinary shares outstanding 152,089 155,927 159,370 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: Share-Based Payment Plans for additional information related to our equity awards. These potential ordinary shares are as follows: For the year ended December 31, (In thousands) 2023 2022 2021 Anti-dilutive shares excluded 2,864 1,115 6 Contingently issuable shares excluded 1,239 1,294 1,029 9. Inventories The following table presents the components of inventories as of December 31, 2023 and 2022: As of December 31, 2023 2022 Finished goods $ 223,972 $ 202,531 Work-in-process 113,209 117,691 Raw materials 376,304 324,653 Inventories $ 713,485 $ 644,875 Refer to Note 2: Significant Accounting Policies for a discussion of our accounting policies related to inventories. 92 Table of Contents 10. Property, Plant and Equipment, Net PP&E, net as of December 31, 2023 and 2022 consisted of the following: As of December 31, 2023 2022 Land $ 16,005 $ 17,881 Buildings and improvements 326,170 300,288 Machinery and equipment 1,770,382 1,634,371 Total property, plant and equipment 2,112,557 1,952,540 Accumulated depreciation ( 1,226,547 ) ( 1,111,721 ) Property, plant and equipment, net $ 886,010 $ 840,819 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. Refer to Note 2: Significant Accounting Policies for a discussion of our accounting policies related to PP&E, net. 11. Goodwill and Other Intangible Assets, Net Goodwill The following table presents the changes in net goodwill by segment for the years ended December 31, 2023 and 2022. Performance Sensing (3) Sensing Solutions (3) Total Balance as of December 31, 2021 $ 2,480,598 $ 1,021,465 $ 3,502,063 Acquisitions 30,873 423,288 454,161 Divestiture — ( 45,000 ) ( 45,000 ) Balance as of December 31, 2022 2,511,471 1,399,753 3,911,224 Divestiture — ( 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 __________________________ (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: 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. Net assets acquired are comprised of tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. We apply estimates and assumptions to determine the fair value of the intangible assets and of any contingent consideration obligations. Critical estimates in valuing purchased technology, customer relationships, and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets. 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 93 Table of Contents 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. Upon closing of the sale, we transferred approximately $ 70 million of assets (including allocated goodwill of $ 45 million) and $ 2 million of liabilities to the buyer. Refer to Note 21: Acquisitions and Divestitures for additional information on this transaction. 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, 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. 94 Table of Contents Definite-Lived Intangible Assets The following tables outline the components of definite-lived intangible assets as of December 31, 2023 and 2022: As of December 31, 2023 Weighted- Average Life (years) Gross Carrying Amount Accumulated Amortization Accumulated Impairment Foreign Currency Translation Effect Net Carrying Value Completed technologies 11 $ 1,024,019 $ ( 756,831 ) $ ( 2,430 ) $ ( 215 ) $ 264,543 Customer relationships (1) 12 2,123,931 ( 1,661,230 ) ( 12,144 ) — 450,557 Backlog 2 15,500 ( 8,346 ) — — 7,154 Tradenames 16 107,577 ( 32,316 ) — — 75,261 Capitalized software and other 7 74,823 ( 64,037 ) — — 10,786 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 Weighted- Average Life (years) Gross Carrying Amount Accumulated Amortization Accumulated Impairment Net Carrying Value 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) 7 74,163 ( 57,603 ) — 16,560 Total 12 $ 3,291,739 $ ( 2,352,813 ) $ ( 14,574 ) $ 924,352 __________________________ (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: For the year ended December 31, 2023 2022 2021 Acquisition-related definite-lived intangible assets $ 167,695 $ 147,110 $ 125,982 Capitalized software 6,165 6,677 8,147 Amortization of intangible assets $ 173,860 $ 153,787 $ 134,129 The table below presents estimated amortization of definite-lived intangible assets for each of the next five years: For the year ended December 31, 2024 $ 147,405 2025 $ 118,280 2026 $ 97,972 2027 $ 84,910 2028 $ 73,375 95 Table of Contents 12. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities as of December 31, 2023 and 2022 consisted of the following: As of December 31, 2023 2022 Accrued compensation and benefits $ 73,209 $ 85,995 Accrued interest 45,187 50,146 Foreign currency and commodity forward contracts 7,909 10,652 Current portion of operating lease liabilities 11,458 9,971 Accrued severance 6,786 8,617 Current portion of pension and post-retirement benefit obligations 2,653 2,504 Other accrued expenses and current liabilities 159,800 179,057 Accrued expenses and other current liabilities $ 307,002 $ 346,942 13. Pension and Other Post-Retirement Benefits We provide various pension and other post-retirement benefit plans for current and former employees, including defined benefit, defined contribution, and retiree healthcare benefit plans. Refer to Note 2: Significant Accounting Policies for discussion of our accounting policies related to our pension and other post-retirement benefit plans. U.S. 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. Non-U.S. 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. Refer to Note 6: Other, Net . 96 Table of Contents The following table presents changes in the benefit obligation and plan assets for our defined benefit and other post-retirement benefit plans in total for the years ended December 31, 2023 and 2022: For the year ended December 31, 2023 2022 Change in benefit obligation: Beginning balance $ 84,451 $ 108,511 Service cost 4,073 3,897 Interest cost 3,453 2,485 Plan participants’ contributions 539 562 Actuarial loss/(gain) 31 ( 11,710 ) Curtailment loss — 466 Benefits paid ( 5,975 ) ( 12,436 ) Divestiture — ( 997 ) Foreign currency remeasurement 1,135 ( 6,327 ) Ending balance $ 87,707 $ 84,451 Change in plan assets: Beginning balance $ 45,861 $ 67,199 Actual return on plan assets 4,458 ( 8,606 ) Employer contributions 3,419 4,368 Plan participants’ contributions 539 562 Benefits paid ( 5,975 ) ( 12,436 ) Foreign currency remeasurement ( 1,426 ) ( 5,226 ) Ending balance $ 46,876 $ 45,861 Funded status at end of year $ ( 40,831 ) $ ( 38,590 ) Accumulated benefit obligation at end of year $ 74,593 $ 72,468 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, 2023 2022 Defined Benefit Retiree Healthcare Defined Benefit Retiree Healthcare U.S. assumed discount rate 4.85 % 4.85 % 5.10 % 5.15 % Non-U.S. assumed discount rate 4.60 % NA 3.99 % NA Non-U.S. 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 U.S. assumed discount rate 5.10 % 5.15 % 2.30 % 2.40 % 2.04 % 1.80 % Non-U.S. assumed discount rate 7.14 % NA 5.03 % NA 4.52 % NA U.S. average long-term rate of return on plan assets 4.36 % NA 4.53 % NA 4.00 % NA Non-U.S. average long-term rate of return on plan assets 2.73 % NA 2.38 % NA 1.52 % NA Non-U.S. average long-term pay progression 4.96 % NA 4.52 % NA 4.50 % NA 97 Table of Contents Plan Assets We hold material assets for our defined benefit plans in the U.S. and Japan. 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. U.S. plan assets 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. and non-U.S. equity, U.S. and non-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. 98 Table of Contents 14. Debt 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 Term Loan (1) September 20, 2026 $ — $ 446,834 5.625 % Senior Notes (2) November 1, 2024 — 400,000 5.0 % Senior Notes October 1, 2025 700,000 700,000 4.375 % Senior Notes February 15, 2030 450,000 450,000 3.75 % Senior Notes February 15, 2031 750,000 750,000 4.0 % Senior Notes April 15, 2029 1,000,000 1,000,000 5.875 % Senior Notes September 1, 2030 500,000 500,000 Less: debt discount, net of premium ( 1,568 ) ( 3,360 ) Less: deferred financing costs ( 24,444 ) ( 29,916 ) Less: current portion (1) — ( 254,630 ) Long-term debt, net $ 3,373,988 $ 3,958,928 Finance lease obligations $ 25,225 $ 26,583 Less: current portion ( 2,276 ) ( 1,841 ) 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 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 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 “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 99 Table of Contents 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 the 5.875 % Senior Notes. The 5.875 % Senior Notes bear interest at 5.875 % per year and mature on September 1, 2030. Interest is payable semi-annually on September 1 and March 1 of each year, commencing on March 1, 2023. The 5.875 % Senior Notes were issued under an indenture dated as of August 29, 2022, among STBV, as issuer, The Bank of New York Mellon, as trustee, and our guarantor subsidiaries named therein (the " 5.875 % Senior Notes Indenture"). The 5.875 % Senior Notes 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: 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. Secured Credit Facility 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 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); (iii) released the Foreign Guarantors (as defined in the Credit Agreement), excluding STBV, from their obligations to guarantee the obligations of STI and the other Loan Parties (as defined in the Credit Agreement) relating to the Revolving Credit Facility and certain related obligations, subject to an obligation to reinstate such guaranties under certain conditions; (iv) replaced the LIBOR-based interest rates referenced by the Credit Agreement regarding revolving credit loans to (a) for revolving credit loans denominated in U.S. dollars, an interest rate based on the secured overnight financing rate ("SOFR") published by the Federal Reserve Bank of New York and (b) for revolving credit loans denominated in pounds sterling, an interest rate based on the Sterling Overnight Index Average ("SONIA"); and (v) certain of the operational and restrictive covenants and other terms and conditions of the Credit Agreement were modified to provide STI and its affiliates increased flexibility and permissions thereunder. The Credit Agreement provides that, if our senior secured net leverage ratio exceeds a specified level, we are required to use a portion of our excess cash flow, as defined in the Credit Agreement, generated by operating, investing, or financing activities to prepay the outstanding borrowings under the Senior Secured Credit Facilities. The Credit Agreement also requires mandatory prepayments of the outstanding borrowings under the Senior Secured Credit Facilities upon certain asset dispositions and casualty events, in each case subject to certain reinvestment rights, and the incurrence of certain indebtedness (excluding any permitted indebtedness). These provisions were not triggered during the year ended December 31, 2023. Term Loan 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, 100 Table of Contents once repaid, may be reborrowed. Revolving Credit Facility In accordance with the terms of the Credit Agreement, borrowings under the Revolving Credit Facility may, at our option, be maintained from time to time as Base Rate loans, Term SOFR loans, or Daily Simple SONIA loans (each as defined in the Credit Agreement), with each representing a different determination of interest rates. The interest rate margins and letter of credit fees under the Revolving Credit Facility are as follows (each depending on our senior secured net leverage ratio): (i) the interest rate margin for Base Rate loans range from 0.00 % to 0.50 %; (ii) the interest rate margin for Term SOFR and Daily Simple SONIA loans range from 1.00 % to 1.50 %; and (iii) the letter of credit fees range from 0.875 % to 1.375 %. We are required to pay to our revolving credit lenders, on a quarterly basis, a commitment fee on the unused portion of the Revolving Credit Facility. The commitment fee ranges from 0.125 % to 0.250 %, depending on our senior secured net leverage ratios. As of December 31, 2023, there was $ 746.1 million available under the Revolving Credit Facility, net of $ 3.9 million of obligations in respect of outstanding letters of credit issued thereunder. Outstanding letters of credit are issued primarily for the benefit of certain operating activities. As of December 31, 2023, no amounts had been drawn against these outstanding letters of credit. Availability under the Revolving Credit Facility may be borrowed, repaid, and re-borrowed to fund our working capital needs and for other general corporate purposes. Senior Notes We have various tranches of senior unsecured notes outstanding as of December 31, 2023. 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 Interest rate 5.625 % 5.000 % 4.375 % 3.750 % 4.000 % 5.875 % Issue price 100.000 % 100.000 % 100.000 % 100.000 % Various (2) 100.000 % Issuer STBV STBV STI STI STBV STBV Issue date October 2014 March 2015 September 2019 August 2020 Various (2) August 2022 Interest due May 1 April 1 February 15 February 15 April 15 September 1 Interest due November 1 October 1 August 15 August 15 October 15 March 1 __________________________ (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 %. On April 8, 2021, we issued $ 250.0 million of 4.0 % Senior Notes that were priced at 100.75 %. Redemption - General Upon the occurrence of certain specific change in control events, we will be required to offer to repurchase the Senior Notes at 101 % of their principal amount, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. If changes in certain tax laws or treaties, or any change in the official application, administration, or interpretation thereof, of any relevant taxing jurisdiction become effective that would impose withholding taxes or other deductions on the payments of any of the Senior Notes or the guarantees thereof, we may, at our option, redeem the relevant Senior Notes in whole but not in part, at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, premium, if any, and all additional amounts (as described in the relevant Senior Notes Indenture), if any, then due and which will become due on the date of redemption. Except as described below with respect to the 4.375 % Senior Notes, 3.75 % Senior Notes, the 4.0 % Senior Notes, and the 5.875 % Senior Notes, at any time, and from time to time, we may optionally redeem the Senior Notes, in whole or in part, at a price equal to 100 % of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption, plus a "make-whole" premium set forth in the relevant Senior Notes Indenture. 101 Table of Contents Redemption - 4.375 % Senior Notes The "make-whole" premium will not be payable with respect to any such redemption of the 4.375 % Senior Notes on or after November 15, 2029. Redemption - 3.75 % Senior Notes The "make-whole" premium will not be payable with respect to any such redemption of the 3.75 % Senior Notes on or after February 15, 2026. On or after such date, we may optionally redeem the 3.75 % Senior Notes, in whole or in part, at the following prices (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, up to but excluding the redemption date: Period beginning February 15, Price 2026 101.875 % 2027 100.938 % 2028 and thereafter 100.000 % Redemption - 4.0 % Senior Notes The "make-whole" premium will not be payable with respect to any such redemption of the 4.0 % Senior Notes on or after April 15, 2024. On or after such date, we may optionally redeem the 4.0 % Senior Notes, in whole or in part, at the following prices (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, up to but excluding the redemption date: Period beginning April 15, Price 2024 102.000 % 2025 101.000 % 2026 and thereafter 100.000 % In addition, at any time prior to April 15, 2024, STBV may redeem up to 40 % of the principal amount of the outstanding 4.0 % Senior Notes (including additional 4.0 % Senior Notes, if any, that may be issued after March 29, 2021) with the net cash proceeds of certain equity offerings at a redemption price (expressed as a percentage of principal amount) of 104.00 %, plus accrued and unpaid interest, if any, up to but excluding the redemption date, provided that at least 60 % of the aggregate principal amount of the 4.0 % Senior Notes (including additional 4.0 % Senior Notes, if any) remains outstanding immediately after each such redemption. Redemption - 5.875 % Senior Notes At any time, and from time to time, prior to September 1, 2025, STBV may redeem the 5.875 % Senior Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount of the 5.875 % Senior Notes being redeemed, plus a “make whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time on or after September 1, 2025, STBV may redeem the 5.875 % Senior Notes, in whole or in part, at the following prices (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, up to but excluding the redemption date: Period beginning September 1, Price 2025 102.398 % 2026 101.469 % 2027 and thereafter 100.000 % In addition, at any time prior to September 1, 2025, STBV may redeem up to 40 % of the principal amount of the outstanding 5.875 % Senior Notes (including additional 5.875 % Senior Notes, if any) with the net cash proceeds of certain equity offerings at a redemption price (expressed as a percentage of principal amount) of 105.875 %, plus accrued and unpaid interest, if any, up to but excluding the redemption date, provided that at least 60 % of the aggregate principal amount of the 5.875 % Senior Notes (including additional 5.875 % Senior Notes, if any) remains outstanding immediately after each such redemption. Guarantees 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 102 Table of Contents 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 The Senior Notes Indentures provide for events of default that include, among others, nonpayment of principal or interest when due, breach of covenants or other provisions in the relevant Senior Notes Indenture, defaults in payment of certain other indebtedness, certain events of bankruptcy or insolvency, failure to pay certain judgments, and the cessation of the full force and effect of the guarantees of significant subsidiaries. Generally, if an event of default occurs, the trustee or the holders of at least 25 % in principal amount of the then outstanding Senior Notes issued under the relevant Senior Notes Indenture may declare the principal of, and accrued but unpaid interest on, all of the relevant Senior Notes to be due and payable immediately. All provisions regarding remedies in an event of default are subject to the relevant Senior Notes Indenture. Restrictions and Covenants 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; the Senior Notes Indentures do not contain such a permission. STBV has not designated any subsidiaries as unrestricted. The net assets of STBV subject to these restrictions totaled $ 3.0 billion at December 31, 2023. Credit Agreement The Credit Agreement contains non-financial restrictive covenants (subject to important exceptions and qualifications set forth in the Credit Agreement) that limit our ability to, among other things: • incur indebtedness or liens, prepay subordinated debt, or amend the terms of our subordinated debt; • make loans and investments (including acquisitions) or sell assets; • change our business or accounting policies, merge, consolidate, dissolve or liquidate, or amend the terms of our organizational documents; • enter into affiliate transactions; • pay dividends and make other restricted payments; • or enter into certain burdensome contractual obligations. In addition, under the Credit Agreement, STBV and its subsidiaries are required to maintain a senior secured net leverage ratio not to exceed 5.0 :1.0 at the conclusion of certain periods when outstanding loans and letters of credit that are not cash collateralized for the full face amount thereof exceed 20 % of the commitments under the Revolving Credit Facility. 103 Table of Contents Senior Notes Indentures The Senior Notes Indentures contain restrictive covenants (subject to important exceptions and qualifications set forth in the Senior Notes Indentures) that limit the ability of STBV and its subsidiaries to, among other things: incur liens; incur or guarantee indebtedness without guaranteeing the Senior Notes; engage in sale and leaseback transactions; or effect mergers or consolidations, or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of the assets of STBV and its subsidiaries. Certain of these covenants will be suspended if the Senior Notes are assigned an investment grade rating by Standard & Poor's Rating Services or Moody's Investors Service, Inc. and provided no default has occurred and is continuing at such time. The suspended covenants will be reinstated if the Senior Notes are no longer assigned an investment grade rating by either rating agency or an event of default has occurred and is continuing at such time. As of December 31, 2023, none of the Senior Notes were assigned an investment grade rating by either rating agency. Restrictions on Payment of Dividends STBV's subsidiaries are generally not restricted in their ability to pay dividends or otherwise distribute funds to STBV, except for restrictions imposed under applicable corporate law. STBV, however, is limited in its ability to pay dividends or otherwise make distributions to its immediate parent company and, ultimately, to Sensata plc, under the Credit Agreement. Specifically, the Credit Agreement prohibits STBV from paying dividends or making distributions to its parent companies except for purposes that include, but are not limited to, the following: • customary and reasonable operating expenses, legal and accounting fees and expenses, and overhead of such parent companies incurred in the ordinary course of business, provided that such amounts, in the aggregate, do not exceed $ 20.0 million in any fiscal year; • 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; • 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; and • 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 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. In connection with the issuance of the 5.875 % Senior Notes, we capitalized $ 6.1 million of deferred financing costs, which are presented on the consolidated balance sheets as a reduction of long-term debt. In connection with the redemption of the 4.875 % Senior Notes, we recognized a loss of $ 5.5 million, presented in other, net, related to the 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 $ 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, 104 Table of Contents 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. Refer to Note 2: Significant Accounting Policies for additional information related to our accounting policies regarding debt financing transactions. Finance Leases Refer to Note 17: Leases for additional information related to our finance leases. Debt Maturities The aggregate principal amount of each tranche of our Senior Notes is due in full at its 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. 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 2024 $ — 2025 700,000 2026 — 2027 — 2028 — Thereafter 2,700,000 Total long-term debt principal payments $ 3,400,000 15. Commitments and Contingencies Off-Balance Sheet Arrangements From time to time, we execute contracts that require us to indemnify the other parties to the contracts. These indemnification obligations generally arise in two contexts. First, in connection with certain transactions, such as the divestiture of a business or the issuance of debt or equity securities, the agreement typically contains standard provisions requiring us to indemnify the purchaser against breaches by us of representations and warranties contained in the agreement. These indemnities are generally subject to time and liability limitations. Second, we enter into agreements in the ordinary course of business, such as customer contracts, that might contain indemnification provisions relating to product quality, intellectual property infringement, governmental regulations and employment related matters, and other typical indemnities. In certain cases, indemnification obligations arise by law. We believe that our indemnification obligations are consistent with other companies in the markets in which we compete. Performance under any of these indemnification obligations would generally be triggered by a breach of the terms of the contract or by a third-party claim. Historically, we have experienced only immaterial and irregular losses associated with these indemnifications. Consequently, any future liabilities brought about by these indemnifications cannot reasonably be estimated or accrued. Indemnifications Provided as Part of Contracts and Agreements We are party to the following types of agreements pursuant to which we may be obligated to indemnify a third party with respect to certain matters. 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, 105 Table of Contents 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. No indemnification is provided for in respect of any claim, issue, or matter as to which such person has been adjudged to be liable for gross negligence or willful misconduct in the performance of his or her duty on our behalf. In addition, we have a liability insurance policy that insures directors and officers against the cost of defense, settlement, or payment of claims and judgments under some circumstances. Certain indemnification payments may not be covered under our directors’ and officers’ insurance coverage. Initial Purchasers of Senior Notes : Pursuant to the terms of the purchase agreements entered into in connection with our private placement senior note offerings, we are obligated to indemnify the initial purchasers of the Senior Notes against certain liabilities caused by any untrue statement or alleged untrue statement of a material fact in various documents relied upon by such initial purchasers, or to contribute to payments the initial purchasers may be required to make in respect thereof. The purchase agreements do not provide a limit to the maximum future payments, if any, under these indemnifications. Intellectual Property and Product Liability Indemnification: We routinely sell products with a limited intellectual property and product liability indemnification included in the terms of sale. Historically, we have had only immaterial and irregular losses associated with these indemnifications. Consequently, any future liabilities resulting from these indemnifications cannot reasonably be estimated or accrued. Product Warranty Liabilities Refer to Note 2: Significant Accounting Policies — Revenue Recognition for additional information related to the warranties we provide to customers. In the event a warranty claim based on defective materials exists, we may be able to recover some of the cost of the claim from the vendor from whom the materials were purchased. Our ability to recover some of the costs will depend on the terms and conditions to which we agreed when the materials were purchased. When a warranty claim is made, the only collateral available to us is the return of the inventory from the customer making the warranty claim. Historically, when customers make a warranty claim, we either replace the product or provide the customer with a credit. We generally do not rework the returned product. Our policy is to accrue for warranty claims when a loss is both probable and estimable. 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 are not material. In some instances, customers may make claims for costs they incurred or other damages related to a claim. Environmental Remediation Liabilities Our operations and facilities are subject to U.S. and non-U.S. laws and regulations governing the protection of the environment and our employees, including those governing air emissions, chemical usage, water discharges, the management and disposal of hazardous substances and wastes, and the cleanup of contaminated sites. We could incur substantial costs, including cleanup costs, fines, civil or criminal sanctions, or third-party property damage or personal injury claims, in the event of violations or liabilities under these laws and regulations, or non-compliance with the environmental permits required at our facilities. Potentially significant expenditures could be required in order to comply with environmental laws that may be adopted or imposed in the future. We are, however, not aware of any threatened or pending material environmental investigations, lawsuits, or claims involving us or our operations. Legal Proceedings and Claims We are regularly involved in a number of claims and litigation matters that arise in the ordinary course of business. Although it is not feasible to predict the outcome of these matters, based upon our experience and current information known to us, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our results of operations, financial position, and/or cash flows. We account for litigation and claims losses in accordance with FASB ASC Topic 450, Contingencies . 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 106 Table of Contents 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. As information becomes known, either the minimum loss amount is increased, or a best estimate can be made, generally resulting in additional loss provisions. A best estimate amount may be changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected. Pending Litigation and Claims: There are no material pending litigation or claims outstanding as of December 31, 2023. 16. Shareholders' Equity Cash Dividends 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, 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. 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 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. 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. 107 Table of Contents 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 ) Pre-tax current period change 31,671 8,145 — 39,816 Income tax effect ( 8,107 ) ( 1,734 ) — ( 9,841 ) Balance as of December 31, 2021 16,831 ( 36,391 ) — ( 19,560 ) Pre-tax current period change ( 1,571 ) 5,311 — 3,740 Income tax effect 405 ( 849 ) — ( 444 ) Balance as of December 31, 2022 15,665 ( 31,929 ) — ( 16,264 ) Pre-tax current period change 2,492 4,864 21,390 28,746 Income tax effect ( 644 ) ( 1,434 ) ( 442 ) ( 2,520 ) Balance as of December 31, 2023 $ 17,513 $ ( 28,499 ) $ 20,948 $ 9,962 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 Pension CTA Total Cash Flow Hedges Pension Total Cash Flow Hedges Pension Total 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 2023 2022 2021 Derivative instruments designated and qualifying as cash flow hedges: Foreign currency forward contracts $ ( 17,120 ) $ ( 46,183 ) $ 9,281 Net revenue (1) Foreign currency forward contracts ( 21,481 ) ( 6,543 ) ( 9,707 ) Cost of revenue (1) Total, before taxes ( 38,601 ) ( 52,726 ) ( 426 ) Income before taxes Income tax effect 9,959 13,603 107 Provision for income taxes 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 Income tax effect ( 545 ) ( 979 ) ( 1,827 ) Provision for income taxes 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 income/(loss) in future periods. 108 Table of Contents 17. Leases The table below shows right-of-use asset and lease liability amounts and the financial statement line item in which those amounts are presented: As of December 31, 2023 2022 Operating lease right-of-use assets: Other assets $ 40,223 $ 42,836 Total operating lease right-of-use assets $ 40,223 $ 42,836 Operating lease liabilities: Accrued expenses and other current liabilities $ 11,458 $ 9,971 Other long-term liabilities 29,288 32,721 Total operating lease liabilities $ 40,746 $ 42,692 Finance lease right-of-use assets: Property, plant and equipment, at cost $ 44,852 $ 49,714 Accumulated depreciation ( 28,875 ) ( 29,442 ) Property, plant and equipment, net $ 15,977 $ 20,272 Finance lease liabilities: 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 The table below presents the lease liabilities arising from obtaining right-of-use assets in the years ended December 31, 2023 and 2022: For the year ended December 31, 2023 2022 Operating leases $ 1,152 $ 4,230 Finance leases $ 0 $ 284 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, 2023 2022 2021 Operating lease cost $ 15,215 $ 14,900 $ 15,529 Finance lease cost: Amortization of right-of-use assets $ 1,460 $ 1,621 $ 1,714 Interest on lease liabilities 2,200 2,339 2,477 Total finance lease cost $ 3,660 $ 3,960 $ 4,191 The table below presents the cash paid related to our operating and finance leases for the years ended December 31, 2023, 2022, and 2021: For the year ended December 31, 2023 2022 2021 Operating cash outflow related to operating leases $ 15,374 $ 15,498 $ 15,173 Operating cash outflow related to finance leases $ 2,016 $ 2,119 $ 2,372 Financing cash outflow related to finance leases $ 1,460 $ 2,423 $ 1,806 109 Table of Contents 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, 2023, 2022, and 2021: 2023 2022 2021 Operating leases 5.6 % 5.2 % 5.6 % Finance leases 8.7 % 8.7 % 8.6 % The table below presents a maturity analysis of the obligations related to our operating lease liabilities and finance lease liabilities in effect as of December 31, 2023: Year ending December 31, Operating Leases Finance Leases 2024 $ 13,692 $ 4,184 2025 11,165 3,871 2026 6,318 3,930 2027 4,120 3,994 2028 2,985 3,809 Thereafter 11,852 17,577 Total undiscounted cash flows related to lease liabilities 50,132 37,365 Less imputed interest ( 9,386 ) ( 12,140 ) Total lease liabilities $ 40,746 $ 25,225 18. Fair Value Measures Our assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance with FASB ASC Topic 820. The levels of the fair value hierarchy are described below: • Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access at the measurement date. • Level 2 inputs utilize inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. • Level 3 inputs are unobservable inputs for the asset or liability, allowing for situations where there is little, if any, market activity for the asset or liability. 110 Table of Contents Measured on a Recurring Basis 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, 2023 2022 Assets measured at fair value: Cash equivalents (Level 1) $ 138,749 $ 860,034 Foreign currency forward contracts (Level 2) 28,871 31,126 Commodity forward contracts (Level 2) 1,457 4,181 Total assets measured at fair value $ 169,077 $ 895,341 Liabilities measured at fair value: Foreign currency forward contracts (Level 2) $ 8,996 $ 9,866 Commodity forward contracts (Level 2) 795 4,671 Total liabilities measured at fair value $ 9,791 $ 14,537 Refer to Note 2: Significant Accounting Policies for additional information related to the methods used to estimate the fair value of our financial instruments and Note 19: 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. As of December 31, 2023 and 2022, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivatives in their entirety are classified in Level 2 in the fair value hierarchy. Quanergy As of December 31, 2021, we held a $ 50.0 million investment in Quanergy Series B Preferred Stock (the "Series B Investment"). The Series B Investment did not have a readily determinable fair value and was held using the measurement alternative prescribed in FASB ASC Topic 321. On February 8, 2022, Quanergy merged with CITIC Capital Acquisition Corp, a special purpose acquisition corporation. On February 9, 2022, Quanergy was listed on the NYSE under the ticker symbol QNGY. 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 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, 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: Other, Net for details of the components of other, net. 111 Table of Contents Measured on a Nonrecurring Basis 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 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. In July 2022, we sold the Qinex Business. We allocated goodwill to the Qinex Business based on its fair value relative to the total fair value of the Industrial Solutions reporting unit. 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 The following table presents the carrying values and fair values of financial instruments not recorded at fair value in the consolidated balance sheets as of December 31, 2023 and 2022. All fair value measures presented are categorized within Level 2 of the fair value hierarchy. As of December 31, 2023 2022 Carrying Value (1) Fair Value Carrying Value (1) Fair Value Term Loan $ — $ — $ 446,834 $ 443,483 5.625 % Senior Notes $ — $ — $ 400,000 $ 398,000 5.0 % Senior Notes $ 700,000 $ 694,750 $ 700,000 $ 684,250 4.375 % Senior Notes $ 450,000 $ 415,125 $ 450,000 $ 400,500 3.75 % Senior Notes $ 750,000 $ 656,250 $ 750,000 $ 626,250 4.0 % Senior Notes $ 1,000,000 $ 920,000 $ 1,000,000 $ 875,000 5.875 % Senior Notes $ 500,000 $ 495,000 $ 500,000 $ 473,750 __________________________ (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. 19. Derivative Instruments and Hedging Activities We utilize derivative instruments that are designated and qualify as hedges of our exposure to variability in expected future cash flows. 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 112 Table of Contents 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. Refer to Note 2: Significant Accounting Policies for additional information related to the valuation techniques and accounting policies regarding derivative instruments and hedging activities. Foreign Currency Risk 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. We currently have outstanding foreign currency forward contracts that qualify as cash flow hedges intended to offset the effect of exchange rate fluctuations on forecasted sales and certain manufacturing costs. We also have outstanding foreign currency forward contracts that are intended to preserve the economic value of foreign currency denominated monetary assets and liabilities, which are not designated for hedge accounting treatment in accordance with FASB ASC Topic 815. 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, 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: Notional (in millions) Effective Date(s) Maturity Date(s) Index (Exchange Rates) Weighted- Average Strike Rate Hedge Designation (1) 43.0 EUR December 21, 2023 January 31, 2024 Euro ("EUR") to USD 1.10 USD 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 29,224.7 KRW Various from February 2022 to December 2023 Various from January 2024 to November 2025 USD to Korean Won ("KRW") 1,283.82 KRW Cash flow hedge 21.0 MYR December 21, 2023 January 31, 2024 USD to Malaysian Ringgit ("MYR") 4.62 MYR Not designated 183.0 MXN December 21, 2023 January 31, 2024 USD to Mexican Peso ("MXN") 17.17 MXN Not designated 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 __________________________ (1) Derivative financial instruments not designated as hedges are used to manage our exposure to currency exchange rate risk. They are intended to preserve the economic value, and they are not used for trading or speculative purposes. Commodity Risk We enter into commodity forward contracts in order to limit our exposure to variability in raw material costs that is caused by movements in the price of underlying metals. The terms of these forward contracts fix the price at a future date for various notional amounts associated with these commodities. These instruments are not designated for hedge accounting treatment in accordance with FASB ASC Topic 815. As of December 31, 2023, we had the following outstanding commodity forward contracts, none of which were designated for hedge accounting treatment in accordance with FASB ASC Topic 815: Commodity Notional Remaining Contracted Periods Weighted-Average Strike Price Per Unit Silver 682,292 troy oz. January 2024 to September 2025 $ 23.87 Copper 6,530,830 pounds January 2024 to September 2025 $ 3.88 113 Table of Contents Financial Instrument Presentation The following table presents the fair value of our derivative financial instruments and their classification in the consolidated balance sheets as of December 31, 2023 and 2022: Asset Derivatives Liability Derivatives Balance Sheet Location As of December 31, Balance Sheet Location As of December 31, 2023 2022 2023 2022 Derivatives designated as hedging instruments: Foreign currency forward contracts Prepaid expenses and other current assets $ 25,176 $ 27,114 Accrued expenses and other current liabilities $ 6,746 $ 6,586 Foreign currency forward contracts Other assets 3,554 3,763 Other long-term liabilities 1,806 3,280 Total $ 28,730 $ 30,877 $ 8,552 $ 9,866 Derivatives not designated as hedging instruments: Commodity forward contracts Prepaid expenses and other current assets $ 1,314 $ 2,542 Accrued expenses and other current liabilities $ 719 $ 4,066 Commodity forward contracts Other assets 143 1,639 Other long-term liabilities 76 605 Foreign currency forward contracts Prepaid expenses and other current assets 141 249 Accrued expenses and other current liabilities 444 — Total $ 1,598 $ 4,430 $ 1,239 $ 4,671 These fair value measurements are all categorized within Level 2 of the fair value hierarchy. Refer to Note 18: Fair Value Measures for additional information related to the categorization of these fair value measurements within the fair value hierarchy. 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 (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, 2023 2022 2023 2022 Foreign currency forward contracts $ ( 1,018 ) $ 39,173 Net revenue $ 17,120 $ 46,183 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 (Loss)/Income Location of (Loss)/Gain Recognized in Net (Loss)/Income For the year ended December 31, 2023 2022 Commodity forward contracts $ ( 2,762 ) $ ( 3,350 ) Other, net Foreign currency forward contracts $ 4,237 $ 4,324 Other, net Credit risk related contingent features We have agreements with our derivative counterparties that contain a provision whereby if we default on our indebtedness and repayment of the indebtedness has been accelerated by the lender, then we could also be declared in default on our derivative obligations. As of 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, 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. 114 Table of Contents 20. Segment Reporting 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. 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. 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. Corporate and other costs excluded from an operating (and reportable) segment’s performance are separately stated below and also include costs that are related to functional areas such as finance, information technology, legal, and human resources. We believe that segment operating income, as defined above, is an appropriate measure for evaluating the operating performance of our segments. However, this measure should be considered in addition to, and not as a substitute for, or superior to, operating income or other measures of financial performance prepared in accordance with U.S. GAAP. The accounting policies of each of our operating and reportable segments are materially consistent with those described in Note 2: Significant Accounting Policies . 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), and exhaust management. 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 power to alternating current power. 115 Table of Contents 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, 2023 2022 2021 Net revenue: Performance Sensing $ 3,002,728 $ 2,920,393 $ 2,801,226 Sensing Solutions 1,051,355 1,108,869 1,019,580 Total net revenue $ 4,054,083 $ 4,029,262 $ 3,820,806 Segment operating income (as defined above): Performance Sensing $ 744,246 $ 728,308 $ 758,129 Sensing Solutions 299,032 323,347 312,293 Total segment operating income 1,043,278 1,051,655 1,070,422 Corporate and other ( 633,242 ) ( 294,429 ) ( 288,111 ) Amortization of intangible assets ( 173,860 ) ( 153,787 ) ( 134,129 ) Restructuring and other charges, net ( 54,500 ) 66,700 ( 14,942 ) Operating income 181,676 670,139 633,240 Interest expense ( 182,184 ) ( 195,565 ) ( 182,582 ) Interest income 31,324 16,746 3,291 Other, net ( 12,974 ) ( 94,618 ) ( 40,032 ) Income before taxes $ 17,842 $ 396,702 $ 413,917 No customer exceeded 10% of our net revenue in any of the periods presented. The following table presents net revenue by product category for the years ended December 31, 2023, 2022, and 2021: Performance Sensing Sensing Solutions For the year ended December 31, 2023 2022 2021 Net revenue: Sensors X X $ 2,991,525 $ 2,887,063 $ 2,952,485 Electrical protection X X 677,949 710,483 635,141 Other X X 384,609 431,716 233,180 Net revenue $ 4,054,083 $ 4,029,262 $ 3,820,806 The following table presents depreciation and amortization expense for our reportable segments for the years ended December 31, 2023, 2022, and 2021: For the year ended December 31, 2023 2022 2021 Depreciation and amortization: Performance Sensing $ 100,012 $ 97,063 $ 91,591 Sensing Solutions 16,356 16,380 16,334 Corporate and other (1) 190,597 167,528 151,163 Total depreciation and amortization $ 306,965 $ 280,971 $ 259,088 __________________________ (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. 116 Table of Contents The following table presents total assets for our reportable segments as of December 31, 2023 and 2022: As of December 31, 2023 2022 Assets: Performance Sensing $ 2,029,982 $ 1,747,768 Sensing Solutions 409,162 631,052 Corporate and other (1) 5,241,843 6,377,400 Total assets $ 7,680,987 $ 8,756,220 __________________________ (1) The following is included within corporate and other as of December 31, 2023 and 2022: goodwill of $ 3,542.8 million and $ 3,911.2 million, respectively; other intangible assets, net of $ 883.7 million and $ 999.7 million, respectively; cash and cash equivalents of $ 508.1 million and $ 1,225.5 million, respectively; and PP&E, net of $ 50.5 million and $ 43.3 million, respectively. This treatment is consistent with the financial information reviewed by our chief operating decision maker. The following table presents additions to PP&E and capitalized software for our reportable segments for the years ended December 31, 2023, 2022, and 2021: For the year ended December 31, 2023 2022 2021 Additions to property, plant and equipment and capitalized software: Performance Sensing $ 131,864 $ 110,101 $ 104,220 Sensing Solutions 20,878 19,681 20,559 Corporate and other 31,867 20,282 19,624 Total additions to property, plant and equipment and capitalized software $ 184,609 $ 150,064 $ 144,403 Geographic Area Information The following tables present net revenue by geographic area and by significant country for the years ended December 31, 2023, 2022, and 2021. In these tables, net revenue is aggregated according to the location of our subsidiaries. For the year ended December 31, 2023 2022 2021 Net revenue: Americas $ 1,825,012 $ 1,705,222 $ 1,450,658 Europe 1,066,100 1,045,031 1,003,204 Asia and rest of world 1,162,971 1,279,009 1,366,944 Net revenue $ 4,054,083 $ 4,029,262 $ 3,820,806 For the year ended December 31, 2023 2022 2021 Net revenue: United States $ 1,678,457 $ 1,563,616 $ 1,311,878 China 724,737 818,974 871,667 The Netherlands 904,176 810,069 621,658 Korea 168,600 159,239 191,045 United Kingdom 105,205 119,109 120,686 All other 472,908 558,255 703,872 Net revenue $ 4,054,083 $ 4,029,262 $ 3,820,806 117 Table of Contents The following tables present PP&E, net, by geographic area and by significant country as of December 31, 2023 and 2022. In these tables, PP&E, net is aggregated based on the location of our subsidiaries. As of December 31, 2023 2022 Property, plant and equipment, net: Americas $ 318,562 $ 283,189 Europe 158,445 168,271 Asia and rest of world 409,003 389,359 Property, plant and equipment, net $ 886,010 $ 840,819 As of December 31, 2023 2022 Property, plant and equipment, net: United States $ 120,736 $ 111,270 China 305,647 294,408 Mexico 197,672 171,749 Bulgaria 119,413 127,171 United Kingdom 28,140 29,640 Malaysia 98,694 90,584 All other 15,708 15,997 Property, plant and equipment, net $ 886,010 $ 840,819 21. Acquisitions and Divestitures Acquisitions 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. Elastic M2M 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 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. We are integrating Elastic M2M into the Performance Sensing reportable segment. 118 Table of Contents 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 Goodwill 28,211 Other intangible assets 27,700 Deferred income tax liabilities ( 5,925 ) Fair value of net assets acquired, excluding cash and cash equivalents 50,021 Cash and cash equivalents 1,597 Fair value of net assets acquired $ 51,618 The goodwill recognized as a result of this acquisition represents future economic benefits expected to arise from synergies from combining operations and the extension of existing customer relationships. The goodwill recognized in this acquisition will not be deductible for tax purposes. In connection with the 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 $ 17,500 13 Completed technologies 10,200 10 Total definite-lived intangible assets acquired $ 27,700 12 The definite-lived intangible assets were valued using the income approach. We primarily used the relief-from-royalty method to value completed technologies, and we used the multi-period excess earnings method to value customer relationships. These valuation methods incorporate assumptions including expected discounted future net cash flows resulting from either the future estimated after-tax royalty payments avoided as a result of owning the completed technologies or the future earnings related to existing customer relationships. Dynapower On July 12, 2022, we completed the acquisition of all of the equity interests of DP Acquisition Corp ("Dynapower"), a leader in power conversion systems, including inverters, converters, and rectifiers, for renewable energy generation, green hydrogen production, electric vehicle charging stations, and microgrid applications, as well as industrial and defense applications, for an aggregate cash purchase price of $ 577.5 million, subject to certain post-closing items. 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 complements our recent acquisitions of GIGAVAC, Lithium Balance, and Spear. We are integrating Dynapower into our Sensing Solutions reportable segment. 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. 119 Table of Contents 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 Property, plant and equipment 1,846 Goodwill 379,823 Other intangible assets 221,600 Other assets 1,656 Deferred income tax liabilities ( 40,785 ) Other liabilities ( 1,035 ) Fair value of net assets acquired, excluding cash and cash equivalents 573,063 Cash and cash equivalents 4,410 Fair value of net assets acquired $ 577,473 The goodwill recognized as a result of this acquisition represents future economic benefits expected to arise from synergies from combining operations and the extension of existing customer relationships. The goodwill recognized in this acquisition will not be deductible for tax purposes. In connection with the 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 $ 79,800 16 Backlog 15,500 3 Completed technologies 92,100 15 Tradenames 34,200 18 Total definite-lived intangible assets acquired $ 221,600 15 The 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. Divestiture - Qinex Business On May 27, 2022, we executed an asset purchase agreement (the "APA") whereby we agreed to sell the Qinex Business to LTI Holdi ngs, Inc. ("LTI") in exchange for consideration of approximately $ 219.0 million, subject to working capital and other adjustments. Concurrent with the execution of the APA, the parties entered into a Contract Manufacturing Agreement ("CMA") and a Transition Services Agreement ("TSA"), each for nominal consideration. The CMA commenced at closing of the transaction ("Closing") and 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 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, 120 Table of Contents 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. Refer to Note 5: Restructuring and Other Charges, Net for additional information. 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. 121 Table of Contents SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT SENSATA TECHNOLOGIES HOLDING PLC (Parent Company Only) Balance Sheets (In thousands) As of December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 328 $ 1,227 Accounts receivable from subsidiaries 11,394 8,291 Notes receivable from subsidiaries 135,003 203,844 Prepaid expenses and other current assets 1,797 1,998 Total current assets 148,522 215,360 Deferred income tax assets 343 436 Investment in subsidiaries 2,971,636 2,911,358 Total assets $ 3,120,501 $ 3,127,154 Liabilities and shareholders’ equity Current liabilities: Accounts payable $ 694 $ 1,075 Accounts payable to subsidiaries 7,446 13,814 Intercompany interest payable 1,111 — Accrued expenses and other current liabilities 2,376 1,458 Total current liabilities 11,627 16,347 Long-term intercompany debt 112,598 — Total liabilities 124,225 16,347 Total shareholders’ equity 2,996,276 3,110,807 Total liabilities and shareholders’ equity $ 3,120,501 $ 3,127,154 The accompanying notes are an integral part of these condensed financial statements. 122 Table of Contents SENSATA TECHNOLOGIES HOLDING PLC (Parent Company Only) Statements of Comprehensive Income (In thousands) For the year ended December 31, 2023 2022 2021 Net revenue $ — $ — $ — Operating costs and expenses 14,709 15,489 13,687 Loss from operations ( 14,709 ) ( 15,489 ) ( 13,687 ) Intercompany dividend income — 400,000 200,000 Intercompany interest income/(expense), net 6,537 140 ( 315 ) Other intercompany, net ( 14 ) 859 — Other, net ( 3,683 ) 141 ( 215 ) Net (loss)/income before income taxes and equity in net income of subsidiaries ( 11,869 ) 385,651 185,783 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 The accompanying notes are an integral part of these condensed financial statements. 123 Table of Contents SENSATA TECHNOLOGIES HOLDING PLC (Parent Company Only) Statements of Cash Flows (In thousands) For the year ended December 31, 2023 2022 2021 Net cash used in operating activities $ ( 15,510 ) $ ( 9,455 ) $ ( 15,959 ) Cash flows from investing activities: Intercompany loans 112,598 — ( 224,972 ) Cash dividends received from subsidiary — 400,000 200,000 Net cash provided by/(used in) investing activities 112,598 400,000 ( 24,972 ) Cash flows from financing activities: Proceeds from exercise of stock options and issuance of ordinary shares 5,346 22,803 26,290 Proceeds from/(payments on) intercompany borrowings 68,888 ( 62,108 ) 72,726 Dividends paid ( 71,543 ) ( 51,072 ) — Payments to repurchase ordinary shares ( 88,398 ) ( 292,274 ) ( 47,843 ) Payments of employee restricted stock tax withholdings ( 12,280 ) ( 8,525 ) ( 9,048 ) Net cash (used in)/provided by financing activities ( 97,987 ) ( 391,176 ) 42,125 Net change in cash and cash equivalents ( 899 ) ( 631 ) 1,194 Cash and cash equivalents, beginning of year 1,227 1,858 664 Cash and cash equivalents, end of year $ 328 $ 1,227 $ 1,858 The accompanying notes are an integral part of these condensed financial statements. 124 Table of Contents 1. Basis of Presentation and Description of Business Sensata Technologies Holding plc (Parent Company)—Schedule I—Condensed Financial Information of Sensata Technologies Holding plc ("Sensata plc"), included in this Annual Report on Form 10-K (this "Report"), provides all parent company information that is required to be presented in accordance with the U.S. Securities and Exchange Commission ("SEC") rules and regulations for financial statement schedules. The accompanying condensed financial statements have been prepared in accordance with the reduced disclosure requirements permitted by the SEC. 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. All U.S. dollar amounts presented except per share amounts are stated in thousands, unless otherwise indicated. 2. Debt Sensata plc conducts limited separate operations and acts primarily as a holding company. Sensata plc has no direct outstanding debt obligations. However, Sensata Technologies B.V., an indirect, wholly-owned subsidiary of Sensata plc, is limited in its ability to pay dividends or otherwise make distributions to its immediate parent company and, ultimately, to Sensata plc, under its Senior Secured Credit Facilities and the indentures governing its senior notes. For a discussion of the debt obligations of the subsidiaries of Sensata plc, refer to Note 14: Debt of the Consolidated Financial Statements included elsewhere in this Report. 3. Commitments and Contingencies For a discussion of the commitments and contingencies of the subsidiaries of Sensata plc, refer to Note 15: Commitments and Contingencies of the Consolidated Financial Statements included elsewhere in this Report. 125 Table of Contents SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (In thousands) Balance at the Beginning of the Period Additions Deductions Balance at the End of the Period Charged, Net of Reversals, to Expenses/Against Revenue For the year ended December 31, 2023 Accounts receivable allowances $ 24,246 $ 9,027 $ ( 4,293 ) $ 28,980 For the year ended December 31, 2022 Accounts receivable allowances $ 17,003 $ 8,531 $ ( 1,288 ) $ 24,246 For the year ended December 31, 2021 Accounts receivable allowances $ 19,033 $ ( 813 ) $ ( 1,217 ) $ 17,003 126 Table of Contents ITEM 9. 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.