UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________________________________

FORM 10-Q

_________________________________________________________________________________

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2019~~March 31, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-34652

_________________________________________________________________________________

SENSATA TECHNOLOGIES HOLDING PLC

(Exact name of registrant as specified in its charter)

_________________________________________________________________________________



England and Wales				98-1386780
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

~~Interface House, Interface Business Park, Bincknoll Lane~~

~~Royal Wootton Bassett, SwindonSN4 8SY~~, ~~United Kingdom~~

529 Pleasant Street

Attleboro, Massachusetts, 02703, United States

(Address of principal executive offices, including zip code))

+1 (508) 236 3800

(Registrant's telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

_____________________________________

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of exchange on which registered
Ordinary Shares - nominal value €0.01 per share	ST	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~July 17, 2019, 161,122,430~~April 15, 2020, 157,161,723 ordinary shares were outstanding.

TABLE OF CONTENTS



PART I
	Item 1.	Financial Statements (unaudited):
		Condensed Consolidated Balance Sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	3
		Condensed Consolidated Statements of Operations for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	4
		Condensed Consolidated Statements of Comprehensive (Loss)/Income for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	5
		Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	6
		Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three ~~and Six~~ Months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2419
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3026
	Item 4.	Controls and Procedures	3127

PART II
	Item 1.	Legal Proceedings	3228
	Item 1A.	Risk Factors	3228
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3229
	Item 3.	Defaults Upon Senior Securities	3229
	Item 5.	Other Information	30
	Item 6.	Exhibits	3331
		Signatures	3432

PART I—FINANCIAL INFORMATION


Item 1.	Financial Statements.

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(unaudited)


	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	721,073		$	729,833		$	802,971		$	774,119
Accounts receivable, net of allowances of $17,726 and $13,762 as of June 30, 2019 and December 31, 2018, respectively	635,544			581,769
Accounts receivable, net of allowances of $15,832 and $15,129 as of March 31, 2020 and December 31, 2019, respectively							536,416			557,874
Inventories	490,123			492,319			514,274			506,678
Prepaid expenses and other current assets	122,839			113,234			115,887			126,981
Total current assets	1,969,579			1,917,155			1,969,548			1,965,652
Property, plant and equipment, net	809,092			787,178			824,553			830,998
Goodwill	3,080,395			3,081,302			3,093,598			3,093,598
Other intangible assets, net of accumulated amortization of $1,968,741 and $1,896,861 as of June 30, 2019 and December 31, 2018, respectively	826,144			897,191
Other intangible assets, net of accumulated amortization of $2,072,227 and $2,039,436 as of March 31, 2020 and December 31, 2019, respectively							738,244			770,904
Deferred income tax assets	27,383			27,971			27,293			21,150
Other assets	139,524			86,890			159,582			152,217
Total assets	$	6,852,117		$	6,797,687		$	6,812,818		$	6,834,519
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt, finance lease and other financing obligations	$	13,582		$	14,561		$	7,095		$	6,918
Accounts payable	378,504			379,824			345,787			376,968
Income taxes payable	25,188			27,429			19,390			35,234
Accrued expenses and other current liabilities	211,870			218,130			248,789			215,626
Total current liabilities	629,144			639,944			621,061			634,746
Deferred income tax liabilities	238,992			225,694			247,960			251,033
Pension and other post-retirement benefit obligations	33,652			33,958			33,716			36,100
Finance lease and other financing obligations, less current portion	30,141			30,618			28,280			28,810
Long-term debt, net	3,216,135			3,219,762			3,220,359			3,219,885
Other long-term liabilities	86,990			39,277			123,645			90,190
Total liabilities	4,235,054			4,189,253			4,275,021			4,260,764
Commitments and contingencies (Note 12)
Shareholders’ equity:
Ordinary shares, €0.01 nominal value per share, 177,069 shares authorized, and 172,325 and 171,719 shares issued, as of June 30, 2019 and December 31, 2018, respectively	2,209			2,203
Treasury shares, at cost, 10,986 and 7,571 shares as of June 30, 2019 and December 31, 2018, respectively	(567,615		)	(399,417		)
Ordinary shares, €0.01 nominal value per share, 177,069 shares authorized, and 172,596 and 172,561 shares issued, as of March 31, 2020 and December 31, 2019, respectively							2,212			2,212
Treasury shares, at cost, 15,631 and 14,733 shares as of March 31, 2020 and December 31, 2019, respectively							(784,596		)	(749,421		)
Additional paid-in capital	1,710,711			1,691,190			1,731,884			1,725,091
Retained earnings	1,492,356			1,340,636			1,624,773			1,616,357
Accumulated other comprehensive loss	(20,598		)	(26,178		)	(36,476		)	(20,484		)
Total shareholders’ equity	2,617,063			2,608,434			2,537,797			2,573,755
Total liabilities and shareholders’ equity	$	6,852,117		$	6,797,687		$	6,812,818		$	6,834,519

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

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)


	For the three months ended						For the six months ended						For the three months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			March 31, 2020			March 31, 2019
Net revenue	$	883,726		$	913,860		$	1,754,225		$	1,800,153		$	774,269		$	870,499
Operating costs and expenses:
Cost of revenue	575,235			582,509			1,156,041			1,164,966			566,406			580,806
Research and development	36,685			37,980			71,781			73,981			34,453			35,096
Selling, general and administrative	72,026			80,473			142,575			161,795			77,221			70,549
Amortization of intangible assets	36,031			34,594			72,174			69,663			33,092			36,143
Restructuring and other charges, net	16,310			244			21,619			4,010			4,498			5,309
Total operating costs and expenses	736,287			735,800			1,464,190			1,474,415			715,670			727,903
Operating income	147,439			178,060			290,035			325,738			58,599			142,596
Interest expense, net	(39,608		)	(38,321		)	(78,861		)	(76,750		)	(39,403		)	(39,253		)
Other, net	(3,554		)	(11,053		)	(365		)	(15,686		)	(12,281		)	3,189
Income before taxes	104,277			128,686			210,809			233,302			6,915			106,532
Provision for income taxes	30,841			23,398			52,308			37,524
(Benefit from)/provision for income taxes													(1,516		)	21,467
Net income	$	73,436		$	105,288		$	158,501		$	195,778		$	8,431		$	85,065
Basic net income per share:	$	0.45		$	0.61		$	0.98		$	1.14		$	0.05		$	0.52
Diluted net income per share:	$	0.45		$	0.61		$	0.97		$	1.13		$	0.05		$	0.52

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

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Comprehensive (Loss)/Income

(In thousands)

(unaudited)


	For the three months ended					For the six months ended				For the three months ended
	June 30, 2019			June 30, 2018		June 30, 2019		June 30, 2018		March 31, 2020			March 31, 2019
Net income	$	73,436		$	105,288	$	158,501	$	195,778	$	8,431		$	85,065
Other comprehensive (loss)/income, net of tax:
Cash flow hedges	(4,646		)	22,673		5,414		29,212		(19,334		)	10,060
Defined benefit and retiree healthcare plans	83			61		166		1,038		3,342			83
Other comprehensive (loss)/income	(4,563		)	22,734		5,580		30,250		(15,992		)	10,143
Comprehensive income	$	68,873		$	128,022	$	164,081	$	226,028
Comprehensive (loss)/income										$	(7,561	)	$	95,208

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

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	For the six months ended						For the three months ended
	June 30, 2019			June 30, 2018			March 31, 2020			March 31, 2019
Cash flows from operating activities:
Net income	$	158,501		$	195,778		$	8,431		$	85,065
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	55,182			53,445			34,679			27,208
Amortization of debt issuance costs	3,718			3,643			1,631			1,836
Share-based compensation	12,425			11,502			6,084			5,940
Loss on debt financing	—			2,350
Amortization of intangible assets	72,174			69,663			33,092			36,143
Deferred income taxes	13,213			12,266			(4,100		)	5,113
Loss on litigation judgment							29,200			—
Unrealized loss on derivative instruments and other	16,717			8,432			11,040			6,204
Changes in operating assets and liabilities, net of the effects of acquisitions and divestitures:
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, net	(53,775		)	(70,295		)	21,458			(51,237		)
Inventories	2,196			(35,132		)	(7,596		)	8,183
Prepaid expenses and other current assets	(1,645		)	(6,045		)	5,625			3,028
Accounts payable and accrued expenses	(27,157		)	23,430			(19,962		)	(14,917		)
Income taxes payable	(2,241		)	(12,040		)	(15,844		)	(781		)
Other	2,858			(3,084		)	(5,194		)	908
Net cash provided by operating activities	252,166			253,913			98,544			112,693
Cash flows from investing activities:
Acquisition, net of cash received	(1,681		)	—
Acquisitions, net of cash received							—			(1,681		)
Additions to property, plant and equipment and capitalized software	(81,549		)	(66,301		)	(29,547		)	(41,690		)
Other	305			5,000			(3,289		)	1,000
Net cash used in investing activities	(82,925		)	(61,301		)	(32,836		)	(42,371		)
Cash flows from financing activities:
Proceeds from exercise of stock options and issuance of ordinary shares	7,099			3,397			709			5,813
Payment of employee restricted stock tax withholdings	(6,778		)	(3,641		)	(15		)	(275		)
Payments on debt	(8,248		)	(12,404		)	(2,375		)	(4,157		)
Payments to repurchase ordinary shares	(168,198		)	(60,105		)	(35,175		)	(150,749		)
Payments of debt and equity issuance costs	(1,876		)	(9,568		)	—			(1,269		)
Net cash used in financing activities	(178,001		)	(82,321		)	(36,856		)	(150,637		)
Net change in cash and cash equivalents	(8,760		)	110,291			28,852			(80,315		)
Cash and cash equivalents, beginning of period	729,833			753,089			774,119			729,833
Cash and cash equivalents, end of period	$	721,073		$	863,380		$	802,971		$	649,518

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

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Changes in Shareholders' Equity

(In thousands)

(unaudited)


	Ordinary Shares					Treasury Shares					Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity			Ordinary Shares			Treasury Shares					Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	Number		Amount			Number		Amount			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity			Number	Amount		Number		Amount			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance as of December 31, 2018	171,719		$	2,203		(7,571	)	$	(399,417	)	$	1,691,190	$	1,340,636		$	(26,178	)	$	2,608,434
Surrender of shares for tax withholding	—		—			(6	)	(275		)	—		—			—			(275		)
Stock options exercised	248		3			—		—			5,810		—			—			5,813
Vesting of restricted securities	26		—			—		—			—		—			—			—
Repurchase of ordinary shares	—		—			(3,036	)	(150,749		)	—		—			—			(150,749		)
Retirement of ordinary shares	(6	)	—			6		275			—		(275		)	—			—
Share-based compensation	—		—			—		—			5,940		—			—			5,940
Net income	—		—			—		—			—		85,065			—			85,065
Other comprehensive income	—		—			—		—			—		—			10,143			10,143
Balance as of March 31, 2019	171,987		2,206			(10,607	)	(550,166		)	1,702,940		1,425,426			(16,035		)	2,564,371
Balance as of December 31, 2019																						172,561	$	2,212	(14,733	)	$	(749,421	)	$	1,725,091	$	1,616,357		$	(20,484	)	$	2,573,755
Surrender of shares for tax withholding	—		—			(138	)	(6,503		)	—		—			—			(6,503		)	—	—		—		(15		)	—		—			—			(15		)
Stock options exercised	64		—			—		—			1,286		—			—			1,286			34	—		—		—			709		—			—			709
Vesting of restricted securities	412		5			—		—			—		(5		)	—			—			1	—		—		—			—		—			—			—
Repurchase of ordinary shares	—		—			(379	)	(17,449		)	—		—			—			(17,449		)	—	—		(898	)	(35,175		)	—		—			—			(35,175		)
Retirement of ordinary shares	(138	)	(2		)	138		6,503			—		(6,501		)	—			—			—	—		—		15			—		(15		)	—			—
Share-based compensation	—		—			—		—			6,485		—			—			6,485			—	—		—		—			6,084		—			—			6,084
Net income	—		—			—		—			—		73,436			—			73,436			—	—		—		—			—		8,431			—			8,431
Other comprehensive loss	—		—			—		—			—		—			(4,563		)	(4,563		)	—	—		—		—			—		—			(15,992		)	(15,992		)
Balance as of June 30, 2019	172,325		$	2,209		(10,986	)	$	(567,615	)	$	1,710,711	$	1,492,356		$	(20,598	)	$	2,617,063
Balance as of March 31, 2020																						172,596	$	2,212	(15,631	)	$	(784,596	)	$	1,731,884	$	1,624,773		$	(36,476	)	$	2,537,797


Balance as of December 31, 2017	178,437		$	2,289		(7,076	)	$	(288,478	)	$	1,663,367	$	1,031,612		$	(63,164	)	$	2,345,626
Stock options exercised	—		—			58		2,250			126		(157		)	—			2,219
Retirement of ordinary shares	(7,018	)	(90		)	7,018		286,228			—		(286,138		)	—			—
Share-based compensation	—		—			—		—			5,090		—			—			5,090
Net income	—		—			—		—			—		90,490			—			90,490
Other comprehensive income	—		—			—		—			—		—			7,516			7,516
Balance as of March 31, 2018	171,419		2,199			—		—			1,668,583		835,807			(55,648		)	2,450,941
																						Ordinary Shares				Treasury Shares					Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
																						Number		Amount		Number		Amount			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance as of December 31, 2018																						171,719		$	2,203	(7,571	)	$	(399,417	)	$	1,691,190	$	1,340,636		$	(26,178	)	$	2,608,434
Surrender of shares for tax withholding	—		—			(70	)	(3,641		)	—		—			—			(3,641		)	—		—		(6	)	(275		)	—		—			—			(275		)
Stock options exercised	30		1			—		—			1,177		—			—			1,178			248		3		—		—			5,810		—			—			5,813
Vesting of restricted securities	255		2			—		—			—		(2		)	—			—			26		—		—		—			—		—			—			—
Repurchase of ordinary shares	—		—			(1,137	)	(60,105		)	—		—			—			(60,105		)	—		—		(3,036	)	(150,749		)	—		—			—			(150,749		)
Retirement of ordinary shares	(70	)	—			70		3,641			—		(3,641		)	—			—			(6	)	—		6		275			—		(275		)	—			—
Share-based compensation	—		—			—		—			6,412		—			—			6,412			—		—		—		—			5,940		—			—			5,940
Net income	—		—			—		—			—		105,288			—			105,288			—		—		—		—			—		85,065			—			85,065
Other comprehensive income	—		—			—		—			—		—			22,734			22,734			—		—		—		—			—		—			10,143			10,143
Balance as of June 30, 2018	171,634		$	2,202		(1,137	)	$	(60,105	)	$	1,676,172	$	937,452		$	(32,914	)	$	2,522,807
Balance as of March 31, 2019																						171,987		$	2,206	(10,607	)	$	(550,166	)	$	1,702,940	$	1,425,426		$	(16,035	)	$	2,564,371

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

SENSATA TECHNOLOGIES HOLDING PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements reflect the financial position, results of operations, comprehensive (loss)/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 wholly-owned subsidiaries, collectively referred to as the "Company," "Sensata," "we," "our," or "us."

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q. Accordingly, these interim financial statements do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. The accompanying financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the interim period results. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

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

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

2. New Accounting Standards

~~In February 2016~~There are no recently issued accounting standards that have been adopted in the ~~Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02,~~ ~~Leases (Topic 842), which establishes new accounting and disclosure requirements for leases. FASB Accounting Standards Codification ("ASC") Topic 842,~~ ~~Leases, requires lessees~~current period or will be adopted in future periods that have had or are expected to ~~classify most leases as either finance~~have a material impact on our consolidated financial position or ~~operating leases and to recognize a lease liability and right-of-use asset. For finance leases, the statements~~results of operations include separate recognition of interest on the lease liability and amortization of the right-of-use asset. For operating leases, the 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. We adopted the provisions of FASB ASU No. 2016-02 on January 1, 2019 using the modified retrospective transition method. Refer to Note 18, "Leases" for additional discussion of this adoption.operations.

3. Revenue Recognition

The following ~~tables present~~table presents net revenue disaggregated by segment and end market for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:


	For the three months ended June 30, 2019						For the three months ended June 30, 2018						For the three months ended March 31, 2020						For the three months ended March 31, 2019
	Performance Sensing		Sensing Solutions		Total		Performance Sensing		Sensing Solutions		Total		Performance Sensing		Sensing Solutions		Total		Performance Sensing		Sensing Solutions		Total
Automotive	$	498,296	$	10,672	$	508,968	$	532,586	$	13,002	$	545,588	$	437,703	$	8,236	$	445,939	$	492,015	$	11,428	$	503,443
HVOR ⁽¹⁾	146,220		—		146,220		143,631		—		143,631		130,986		—		130,986		148,013		—		148,013
Industrial													—		80,599		80,599		—		92,641		92,641
Appliance and HVAC ⁽²⁾	—		55,832		55,832		—		56,610		56,610		—		45,396		45,396		—		51,704		51,704
Industrial	—		95,818		95,818		—		86,847		86,847
Aerospace	—		44,902		44,902		—		40,500		40,500		—		42,124		42,124		—		42,979		42,979
Other	—		31,986		31,986		—		40,684		40,684		—		29,225		29,225		—		31,719		31,719
Total	$	644,516	$	239,210	$	883,726	$	676,217	$	237,643	$	913,860	$	568,689	$	205,580	$	774,269	$	640,028	$	230,471	$	870,499

~~__________________________~~________________________

⁽¹⁾ Heavy vehicle and off-road

⁽²⁾ Heating, ventilation and air conditioning

For the six months ended June 30, 2019 For the six months ended June 30, 2018
Performance Sensing Sensing Solutions Total Performance Sensing Sensing Solutions Total
Automotive $ 990,311
$ 22,100
$ 1,012,411
$ 1,062,379
$ 26,858
$ 1,089,237
HVOR 294,233
—
294,233
276,667
—
276,667
Appliance and HVAC —
107,536
107,536
—
110,927
110,927
Industrial —
188,459
188,459
—
169,232
169,232
Aerospace —
87,881
87,881
—
82,206
82,206
Other —
63,705
63,705
—
71,884
71,884
Total $ 1,284,544
$ 469,681
$ 1,754,225
$ 1,339,046
$ 461,107
$ 1,800,153

4. Share-Based Payment Plans

~~Share-Based Compensation Expense~~

The following table ~~below~~ presents the components of non-cash compensation expense related to our equity awards ~~which is recognized within selling, general~~for the three months ended March 31, 2020 and ~~administrative expense in the condensed consolidated statements of operations, during the identified periods:~~2019.


	For the three months ended				For the six months ended				For the three months ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018		March 31, 2020		March 31, 2019
Stock options	$	1,964	$	1,789	$	3,488	$	3,078	$	2,489	$	1,524
Restricted securities	4,521		4,623		8,937		8,424		3,595		4,416
Share-based compensation expense	$	6,485	$	6,412	$	12,425	$	11,502	$	6,084	$	5,940

~~Equity Awards~~

~~Awards granted in or after April 2019 permit accelerated vesting~~

5. Restructuring and Other Charges, Net

The following table presents the components of restructuring and other charges, net for ~~qualified retirements.~~

~~We granted~~ the ~~following options under the Sensata Technologies Holding plc First Amended and Restated 2010 Equity Incentive Plan (the "2010 Equity Plan") during the six~~three months ended ~~June 30,~~March 31, 2020 and 2019:



	For the three months ended
	March 31, 2020		March 31, 2019
Severance costs, net ⁽¹⁾	$	3,897	$	2,855
Other ⁽²⁾	601		2,454
Restructuring and other charges, net	$	4,498	$	5,309

Options Granted To: Number of Options Granted (in thousands) Weighted- Average Grant Date Fair Value Vesting Period
Various executives and employees 378
$ 13.91
25% per year over four years

We granted the following restricted stock units ("RSUs" and each, an "RSU") and performance-based restricted stock units ("PRSUs" and each, a "PRSU") under the 2010 Equity Plan during the six months ended June 30, 2019:

Awards Granted To: Type of Award Number of Units Granted (in thousands) Percentage of PRSUs Awarded That May Vest Weighted- Average Grant Date Fair Value
Various executives and employees
RSU ⁽¹⁾
186
N/A $ 46.76
Directors
RSU ⁽¹⁾
28
N/A $ 43.92
Various executives and employees
PRSU⁽²⁾
137
0.0% - 172.5% $ 46.93
Various executives and employees
PRSU ⁽²⁾
75
0.0% - 150.0% $ 46.93

~~__________________________~~

⁽¹⁾

~~RSUs granted during~~Severance costs, net for the ~~six~~three months ended ~~June 30,~~March 31, 2020 were primarily related to termination benefits arising from the shutdown and relocation of an operating site in Northern Ireland. Severance costs for the three months ended March 31, 2019 ~~vest on various dates between March 2020~~were primarily related to limited workforce reductions of manufacturing, engineering, and ~~June 2022.~~administrative positions.


⁽²⁾	~~PRSUs granted during~~Other charges in the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~vest on April 1, 2022. The number~~were primarily related to deferred compensation incurred in connection with the acquisition of ~~units that ultimately vest is dependent on the achievement of certain performance criteria.~~GIGAVAC, LLC.

~~5. Restructuring and Other Charges, Net~~

~~Restructuring and other charges, net for the three and six months ended June 30, 2019 and 2018 were as follows:~~

For the three months ended For the six months ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Severance costs, net $ 14,631
$ (284 ) $ 17,486
$ 3,320
Facility and other exit costs 37
528
37
690
Other 1,642
—
4,096
—
Restructuring and other charges, net $ 16,310
$ 244
$ 21,619
$ 4,010

Severance costs, net for the three and six months ended June 30, 2019 include a $13.7 million charge related to benefits provided for under a voluntary retirement incentive program offered to a limited number of eligible employees in the U.S. We expect the majority of these benefits will be paid during the third quarter of 2019. Other charges for the three and six months ended June 30, 2019 were primarily related to deferred compensation incurred in connection with the acquisition of GIGAVAC, LLC ("GIGAVAC"). Refer to Note 16, "Acquisitions and Divestitures" for further discussion.

Severance costs, net for the three and six months ended June 30, 2018 were primarily related to limited workforce reductions of manufacturing, engineering, and administrative positions as well as the elimination of certain positions related to site consolidations.

~~Changes~~The following table presents changes to the severance portion of our restructuring liability during the ~~six~~three months ended ~~June 30, 2019 were as follows:~~March 31, 2020:

Severance
Balance at December 31, 2018 $ 6,591
Charges 17,486
Payments (6,004 )
Impact of changes in foreign currency exchange rates (80 )
Balance at June 30, 2019 $ 17,993



	Severance
Balance at December 31, 2019	$	14,779
Charges, net of reversals	3,897
Payments	(5,356		)
Foreign currency remeasurement	(500		)
Balance at March 31, 2020	$	12,820

6. Other, Net

~~Other,~~The following table presents the components of other, net ~~consisted of the following~~ for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:


	For the three months ended						For the six months ended						For the three months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			March 31, 2020			March 31, 2019
Currency remeasurement loss on net monetary assets	$	(4,326	)	$	(15,677	)	$	(2,461	)	$	(8,929	)
Gain/(loss) on foreign currency forward contracts	1,039			5,776			1,517			(550		)
Currency remeasurement gain on net monetary assets													$	1,553		$	1,865
(Loss)/gain on foreign currency forward contracts													(3,781		)	478
(Loss)/gain on commodity forward contracts	(102		)	(1,426		)	1,021			(4,621		)	(5,575		)	1,123
Loss on debt financing	—			—			—			(2,350		)
Net periodic benefit cost, excluding service cost	(287		)	(216		)	(574		)	(514		)	(4,381		)	(287		)
Other	122			490			132			1,278			(97		)	10
Other, net	$	(3,554	)	$	(11,053	)	$	(365	)	$	(15,686	)	$	(12,281	)	$	3,189

7. Income Taxes

The following table presents the (benefit from)/provision for income taxes for the three months ended March 31, 2020 and 2019:



	For the three months ended
	March 31, 2020			March 31, 2019
(Benefit from)/provision for income taxes	$	(1,516	)	$	21,467

The decrease in total tax from the prior period was predominantly related to the overall decrease in income before tax as impacted by the mix of profits in the various jurisdictions in which we operate.

In response to the global financial and health crisis caused by the coronavirus pandemic ("COVID-19"), the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") on March 27, 2020. Federal limitations on interest deductions were reduced in connection with this legislation, and we recorded a deferred tax benefit of

~~7. Income Taxes~~

~~We recorded provision for income taxes of the following~~$7.5 million in the ~~periods presented:~~

For the three months ended For the six months ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Provision for income taxes $ 30,841
$ 23,398
$ 52,308
$ 37,524

three months ended March 31, 2020, as we were able to utilize additional interest expense that was previously subject to a valuation allowance.

The increase in the provision for income taxes relates to changes in the jurisdictional mix of profits, effects of changes in tax laws in the locations where we operate, changes in tax accruals related to prior year tax positions, and the utilization of previously unbenefitted net operating losses in our U.S. jurisdiction. The (benefit from)/provision for income taxes consists of:

current tax expense, which relates primarily to our profitable operations in non-U.S. tax jurisdictions and withholding taxes related to ~~interest,~~management fees, royalties, and the repatriation of foreign earnings; and

deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to (1) the step-up in fair value of fixed and intangible assets acquired in connection with business combination transactions, (2) ~~the utilization of~~changes in net operating ~~losses,~~loss carryforwards, (3) changes in tax rates, and (4) changes in our assessment of the realizability of our deferred tax assets.

8. Net Income per Share

Basic and diluted net income per share are calculated by dividing net income by the number of basic and diluted weighted-average ordinary shares outstanding during the period. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ the weighted-average ordinary shares outstanding ~~for~~used to calculate basic and diluted net income per share were as follows:


	For the three months ended		For the six months ended		For the three months ended
	June 30, 2019	June 30, 2018	June 30, 2019	June 30, 2018	March 31, 2020	March 31, 2019
Basic weighted-average ordinary shares outstanding	161,618	171,439	162,433	171,422	157,599	163,247
Dilutive effect of stock options	568	883	601	905	334	635
Dilutive effect of unvested restricted securities	292	371	466	448	452	639
Diluted weighted-average ordinary shares outstanding	162,478	172,693	163,500	172,775	158,385	164,521

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

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


	For the three months ended		For the six months ended		For the three months ended
	June 30, 2019	June 30, 2018	June 30, 2019	June 30, 2018	March 31, 2020	March 31, 2019
Anti-dilutive shares excluded	1,358	989	1,185	849	1,385	1,013
Contingently issuable shares excluded	794	808	635	798	596	477

9. Inventories

The following table presents the components of inventories as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018 were as follows:~~2019:


	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Finished goods	$	179,254	$	187,095	$	205,819	$	197,531
Work-in-process	104,793		104,405		100,057		104,007
Raw materials	206,076		200,819		208,398		205,140
Inventories	$	490,123	$	492,319	$	514,274	$	506,678

10. Pension and Other Post-Retirement Benefits

The components of net periodic benefit ~~cost~~cost/(credit) associated with our defined benefit and retiree healthcare plans for the three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows:

U.S. Plans Non-U.S. Plans
Defined Benefit Retiree Healthcare Defined Benefit Total
2019 2018 2019 2018 2019 2018 2019 2018
Service cost $ —
$ —
$ 2
$ 19
$ 632
$ 804
$ 634
$ 823
Interest cost 399
364
53
70
338
332
790
766
Expected return on plan assets (451 ) (408 ) —
—
(176 ) (235 ) (627 ) (643 )
Amortization of net loss 245
300
11
—
192
110
448
410
Amortization of prior service (credit)/cost —
—
(327 ) (334 ) 3
2
(324 ) (332 )
Loss on settlement —
15
—
—
—
—
—
15
Net periodic benefit cost/(credit) $ 193
$ 271
$ (261 ) $ (245 ) $ 989
$ 1,013
$ 921
$ 1,039

~~The components of net periodic benefit cost associated with our defined benefit and retiree healthcare plans for the six months ended June 30, 2019 and 2018 were as follows:~~


	U.S. Plans												Non-U.S. Plans												U.S. Plans												Non-U.S. Plans
	Defined Benefit						Retiree Healthcare						Defined Benefit						Total						Defined Benefit						Retiree Healthcare						Defined Benefit						Total
	2019			2018			2019			2018			2019			2018			2019			2018			2020			2019			2020			2019			2020			2019			2020			2019
Service cost	$	—		$	—		$	4		$	38		$	1,363		$	1,635		$	1,367		$	1,673		$	—		$	—		$	2		$	2		$	769		$	731		$	771		$	733
Interest cost	798			691			106			140			676			674			1,580			1,505			267			399			37			53			315			338			619			790
Expected return on plan assets	(902		)	(836		)	—			—			(351		)	(472		)	(1,253		)	(1,308		)	(433		)	(451		)	—			—			(174		)	(175		)	(607		)	(626		)
Amortization of net loss	490			600			22			—			383			135			895			735			295			245			10			11			236			191			541			447
Amortization of prior service (credit)/cost	—			—			(654		)	(668		)	6			1			(648		)	(667		)	—			—			(196		)	(327		)	2			3			(194		)	(324		)
Loss on settlement	—			545			—			—			—			—			—			545			4,022			—			—			—			—			—			4,022			—
Gain on curtailment	—			—			—			—			—			(296		)	—			(296		)
Net periodic benefit cost/(credit)	$	386		$	1,000		$	(522	)	$	(490	)	$	2,077		$	1,677		$	1,941		$	2,187		$	4,151		$	193		$	(147	)	$	(261	)	$	1,148		$	1,088		$	5,152		$	1,020

Components of net periodic benefit ~~cost~~cost/(credit) other than service cost are presented in other, net. Refer to Note 6, "Other, Net."

11. Debt

Our long-term debt and finance lease and other financing obligations as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 consisted of the following:


	Maturity Date	June 30, 2019			December 31, 2018			Maturity Date	March 31, 2020			December 31, 2019
Term Loan	October 14, 2021	$	913,040		$	917,794		September 20, 2026	$	459,568		$	460,725
4.875% Senior Notes	October 15, 2023	500,000			500,000			October 15, 2023	500,000			500,000
5.625% Senior Notes	November 1, 2024	400,000			400,000			November 1, 2024	400,000			400,000
5.0% Senior Notes	October 1, 2025	700,000			700,000			October 1, 2025	700,000			700,000
6.25% Senior Notes	February 15, 2026	750,000			750,000			February 15, 2026	750,000			750,000
4.375% Senior Notes								February 15, 2030	450,000			450,000
Less: discount		(13,820		)	(15,169		)		(11,220		)	(11,758		)
Less: deferred financing costs		(23,184		)	(23,159		)		(23,359		)	(24,452		)
Less: current portion		(9,901		)	(9,704		)		(4,630		)	(4,630		)
Long-term debt, net		$	3,216,135		$	3,219,762			$	3,220,359		$	3,219,885


Finance lease and other financing obligations		$	33,822		$	35,475			$	30,745		$	31,098
Less: current portion		(3,681		)	(4,857		)		(2,465		)	(2,288		)
Finance lease and other financing obligations, less current portion		$	30,141		$	30,618			$	28,280		$	28,810

OnAs of March ~~27, 2019 certain indirect, wholly-owned subsidiaries of Sensata plc, including Sensata Technologies B.V., entered into the ninth amendment (the "Ninth Amendment") of the credit agreement governing~~31, 2020 there was $416.1 million available under our ~~senior secured credit facilities (as amended, the "Credit Agreement"). Among other changes to the Credit Agreement, the Ninth Amendment (i) extended the maturity date of the~~ $420.0 million revolving credit facility (the "Revolving Credit Facility") to March 27, 2024; (ii) added pounds sterling as an available currency for revolving credit loans and letters of credit under the Revolving Credit Facility; (iii) lowered certain index rate spreads related to the Revolving Credit Facility; (iv) lowered our letter of credit fees; (v) reduced our revolving credit commitment fees; and (vi) modified the senior secured net leverage ratio financial covenant to increase the Revolving Credit Facility utilization threshold above which such financial covenant is tested from 10% to 20%, and deleted the requirement that such financial covenant be tested (regardless of utilization) in determining whether a default exists for purposes of satisfying the conditions to borrowing or other utilization of the Revolving Credit Facility.

~~In connection with the entry into the Ninth Amendment, we incurred $2.4 million of creditor fees and related third-party costs. We applied the provisions of FASB ASC Subtopic 470-50,~~ ~~Modifications and Extinguishments~~ ~~in accounting for the amounts paid. As a result, we recorded $2.4 million as an adjustment to the carrying amount of long-term debt.~~

On June 13, 2019, our subsidiaries that are borrowers under the Credit Agreement entered into an amendment to the Credit Agreement with the administrative agent to correct certain technical and immaterial errors in the Credit Agreement.

~~As of June 30, 2019 there was $416.1 million available under the Revolving Credit Facility,~~ net of $3.9 million inof obligations related to outstanding letters of ~~credit.~~credit issued thereunder. Outstanding letters of credit are issued primarily for the benefit of certain operating activities. As of ~~June 30, 2019 no~~March 31, 2020, 0 amounts had been drawn against these outstanding letters of credit.

In order to enhance our financial flexibility in light of COVID-19, we executed a $400.0 million drawdown on the Revolving Credit Facility on April 1, 2020.

Accrued Interest

Accrued interest associated with our outstanding debt is included as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets. As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019, accrued interest totaled ~~$40.5~~$47.1 million and ~~$40.6~~$42.8 million, respectively.

12. Commitments and Contingencies

We are a defendant in a lawsuit, Wasica Finance Gmbh et al v. Schrader International Inc. et al, Case No. 13-1353-CPS, U.S.D.C., Delaware, in which the claimant alleges infringement of their patent (US 5,602,524) in connection with certain of our tire pressure monitoring system products. The patent in question has expired, and as a result, the claimant ~~is seeking~~seeks damages for past alleged infringement with interest and costs. ~~Should~~The asserted patent is the ~~claimant prevail, these amounts could~~U.S. counterpart of a German patent that had been previously asserted against Schrader. Schrader succeeded in proving that German patent to be ~~material.~~invalid. On February 14, 2020, the federal jury trial related to this lawsuit concluded, and the jury found Schrader International Inc. liable for damages in the amount of $31.2 million. As a result, we recorded a loss of $29.2 million in the three months ended March 31, 2020 through cost of revenue. We continue to deny any wrongdoing, have ~~denied liability~~filed post-trial motions, and intend to appeal the jury's decision, including any final circuit court order against us. As of March 31, 2020, we have ~~been defending the litigation, which is in discovery. Trial is currently expected in February 2020. We do not believe a loss~~recorded an accrual of $31.2 million related to this matter in other long-term liabilities, based on timing of expected payment if our appeal is ~~probable. As of June 30, 2019, we have not recorded an accrual for this matter.~~

~~We are a defendant in a lawsuit,~~ ~~Metal Seal Precision, Ltd. v. Sensata Technologies Inc., Case No. 2017-0518-BCSI, MA Superior Court (Suffolk County)~~, in which the claimant ("Metal Seal"), a supplier of certain metal parts used in the manufacture of our products, alleges breach of contract, breach of covenant of good faith and fair dealing, and anticipatory repudiation. The dispute arises out of an agreement under which Metal Seal alleges certain purchase requirements were not met, resulting in damages and lost profits. On April 12, 2019 the court granted, in part, our motion for summary judgment and dismissed Metal Seal's unfair trade practices claims. Plaintiff’s damage expert claims that Metal Seal has losses ranging up to $51.0 million. We dispute Metal Seal's claims and continue to defend the lawsuit, with trial currently expected in December 2019. We do not believe a loss related to this matter is probable. As of June 30, 2019, we have not recorded an accrual related to this matter.unsuccessful.

13. Shareholders' Equity

~~On July 30, 2019,~~Treasury Shares

From time to time, our Board of Directors ~~approved a new~~has authorized various share repurchase programs. The authorized amount of our various share repurchase programs may be modified or terminated by our Board of Directors at any time. We currently have an authorized $500.0 million share repurchase program ~~with terms consistent to those~~under which approximately $302.3 million remained available as of ~~our previously authorized $250.0 million share repurchase program. The $250.0 million~~March 31, 2020. On April 2, 2020, we announced a temporary suspension of this share repurchase program ~~was terminated upon commencement~~to enhance our financial flexibility in light of the ~~new program.~~

uncertainties surrounding COVID-19.

Accumulated Other Comprehensive Loss

The ~~following is a roll forward of the~~ components of accumulated other comprehensive loss for the ~~six~~three months ended ~~June 30, 2019:~~March 31, 2020 were as follows:

Cash Flow Hedges Defined Benefit and Retiree Healthcare Plans Accumulated Other Comprehensive Loss
Balance as of December 31, 2018 $ 9,184
$ (35,362 ) $ (26,178 )
Other comprehensive income before reclassifications, net of tax 13,985
—
13,985
Reclassifications from accumulated other comprehensive loss, net of tax (8,571 ) 166
(8,405 )
Other comprehensive income 5,414
166
5,580
Balance as of June 30, 2019 $ 14,598
$ (35,196 ) $ (20,598 )



	Cash Flow Hedges			Defined Benefit and Retiree Healthcare Plans			Accumulated Other Comprehensive Loss
Balance at December 31, 2019	$	16,546		$	(37,030	)	$	(20,484	)
Other comprehensive loss before reclassifications, net of tax	(13,041		)	—			(13,041		)
Reclassifications from accumulated other comprehensive loss, net of tax	(6,293		)	3,342			(2,951		)
Other comprehensive (loss)/income	(19,334		)	3,342			(15,992		)
Balance at March 31, 2020	$	(2,788	)	$	(33,688	)	$	(36,476	)

The details of the amounts reclassified from accumulated other comprehensive loss for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ are as follows:


	(Gain)/Loss Reclassified from Accumulated Other Comprehensive Loss												Affected Line in Condensed Consolidated Statements of Operations
	For the three months ended						For the six months ended							For the three months ended March 31,
Component	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018				2020			2019
Derivative instruments designated and qualifying as cash flow hedges:
Foreign currency forward contracts	$	(6,493	)	$	8,064		$	(9,712	)	$	18,948		Net revenue ⁽¹⁾
Foreign currency forward contracts	(941		)	(2,662		)	(1,069		)	(1,836		)	Cost of revenue ⁽¹⁾	$	(6,623	)	$	(3,219	)	Net revenue ⁽¹⁾
Foreign currency forward contracts	—			—			—			1,376			Other, net ⁽¹⁾	(1,768		)	(128		)	Cost of revenue ⁽¹⁾
Total, before taxes	(7,434		)	5,402			(10,781		)	18,488			Income before taxes	(8,391		)	(3,347		)	Income before taxes
Income tax effect	1,524			(1,350		)	2,210			(4,622		)	Provision for income taxes	2,098			686			(Benefit from)/provision for income taxes
Total, net of taxes	$	(5,910	)	$	4,052		$	(8,571	)	$	13,866		Net income	$	(6,293	)	$	(2,661	)	Net income

Defined benefit and retiree healthcare plans	$	124		$	93		$	247		$	317		Other, net ⁽²⁾	$	4,369		$	123		Other, net ⁽²⁾
Income tax effect	(41		)	(32		)	(81		)	143			Provision for income taxes	(1,027		)	(40		)	(Benefit from)/provision for income taxes
Total, net of taxes	$	83		$	61		$	166		$	460		Net income	$	3,342		$	83		Net income

__________________________


⁽¹⁾	Refer to Note 15, "Derivative Instruments and Hedging Activities" for additional ~~details~~information on amounts to be reclassified from accumulated other comprehensive loss in future periods.


⁽²⁾	Refer to Note 10, "Pension and Other Post-Retirement Benefits" for additional ~~details of~~information on net periodic benefit ~~cost.~~cost/(credit).

14. Fair Value Measures

Measured on a Recurring Basis

The fair values of our assets and liabilities measured at fair value on a recurring basis as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are as shown in the below table. All fair value measures presented are categorized in Level 2 of the fair value hierarchy.


	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Assets
Foreign currency forward contracts	$	21,761	$	17,871	$	20,095	$	23,561
Commodity forward contracts	1,397		831		2,079		3,623
Total	$	23,158	$	18,702	$	22,174	$	27,184

Liabilities
Foreign currency forward contracts	$	3,290	$	5,165	$	24,052	$	1,959
Commodity forward contracts	1,913		4,137		4,993		462
Total	$	5,203	$	9,302	$	29,045	$	2,421

Measured on a Nonrecurring Basis

We evaluated our goodwill and other indefinite-lived intangible assets for impairment as of October 1, ~~2018~~2019 and determined that they were not impaired. As of ~~June 30, 2019 no events or changes in circumstances occurred~~March 31, 2020, we have assessed the market impact of COVID-19, including the resulting impact on our forecasts, and have determined that ~~would have triggered the need for an additional impairment review~~our intangible assets (including goodwill) were not impaired as of ~~these assets.~~

~~We account for our investment in Series B Preferred Stock of Quanergy Systems, Inc. ("Quanergy") under the measurement alternative in FASB ASC Topic 321,~~ ~~Investments - Equity Securities~~ for equity investments without a readily determinable fair value. 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. No adjustments to the carrying value of this investment were required in the second quarter of 2019 or since the adoption of this guidance. Accordingly, our investment in Quanergy continues to be held at cost of $50.0 million.

~~On July 12, 2019, we made a $3.7 million investment in Lithium Balance A/S, a battery management company.~~March 31, 2020.

Financial Instruments Not Recorded at Fair Value

The following table presents the carrying values and fair values of financial instruments not recorded at fair value in the condensed consolidated balance sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. All fair value measures presented are categorized in Level 2 of the fair value hierarchy.


	June 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
	Carrying Value ⁽¹⁾		Fair Value		Carrying Value ⁽¹⁾		Fair Value		Carrying Value ⁽¹⁾		Fair Value		Carrying Value ⁽¹⁾		Fair Value
Liabilities
Term Loan	$	913,040	$	915,324	$	917,794	$	904,027	$	459,568	$	436,590	$	460,725	$	464,181
4.875% Senior Notes	$	500,000	$	522,500	$	500,000	$	491,875	$	500,000	$	480,000	$	500,000	$	532,500
5.625% Senior Notes	$	400,000	$	433,000	$	400,000	$	400,500	$	400,000	$	384,000	$	400,000	$	444,000
5.0% Senior Notes	$	700,000	$	731,500	$	700,000	$	660,625	$	700,000	$	665,000	$	700,000	$	759,500
6.25% Senior Notes	$	750,000	$	798,750	$	750,000	$	751,875	$	750,000	$	727,500	$	750,000	$	808,125
4.375% Senior Notes									$	450,000	$	396,000	$	450,000	$	457,875

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

~~Cash and cash equivalents, accounts receivable, and accounts payable~~In addition to the above, we hold certain equity investments that do not have readily determinable fair values for which we use the measurement alternative prescribed in FASB ASC Topic 321, Investments - Equity Securities. Such investments are ~~carried~~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. There were no impairments or changes resulting from observable transactions for any of these investments, and no adjustments have been made to their carrying values.

Refer to the table below for a detail of the carrying values of these investments, each of which ~~approximates fair value because of their short-term nature.~~are presented in other assets.



	March 31, 2020		December 31, 2019
Quanergy Systems, Inc	$	50,000	$	50,000
Lithium Balance	—		3,700
Total	$	50,000	$	53,700

15. Derivative Instruments and Hedging Activities

Hedges of Foreign Currency Risk

We are exposed to fluctuations in various foreign currencies against our functional currency, the U.S. dollar (the "USD"). We enter into forward contracts for certain of these foreign currencies 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, ~~Derivatives and Hedging~~.

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018~~ amounts excluded from the assessment of effectiveness of our foreign currency forward ~~agreements~~contracts that are designated as cash flow hedges were not material. As of ~~June 30, 2019~~March 31, 2020, we estimate that ~~$17.9~~$3.5 million of net gains will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending ~~June 30, 2020.~~March 31, 2021.

As of ~~June 30, 2019~~March 31, 2020, we had the following outstanding foreign currency forward contracts:

Notional

(in millions)

Effective Date(s)

Maturity Date(s)

Index (Exchange Rates)

~~Weighted- Average~~Weighted-Average Strike Rate

Hedge

Designation ⁽¹⁾

~~16.0~~30.0 EUR

~~June 26, 2019~~March 27, 2020

~~July 31, 2019~~April 30, 2020

Euro ("EUR") to USD

~~1.14~~1.10 USD

Not designated

~~339.7~~325.7 EUR

Various from ~~July 2017~~May 2018 to ~~June 2019~~March 2020

Various from ~~July 2019~~April 2020 to ~~May 2021~~February 2022

EUR to USD

~~1.20~~1.16 USD

Cash flow hedge

~~330.0~~437.0 CNY

~~June 25, 2019~~March 26, 2020

~~July 31, 2019~~April 30, 2020

USD to Chinese Renminbi ("CNY")

~~6.88~~7.12 CNY

Not designated

~~542.3~~804.6 CNY

~~January 10, 2019~~

Various from ~~July~~December 2019 to January 2020

Various from April to December ~~2019~~2020

USD to CNY

~~6.82~~6.99 CNY

Cash flow hedge

~~545.0~~498.0 JPY

~~June 26, 2019~~March 27, 2020

~~July 31, 2019~~April 30, 2020

USD to Japanese Yen ("JPY")

~~107.35~~107.94 JPY

Not designated

~~24,313.6~~22,742.4 KRW

Various from ~~August 2017~~May 2018 to ~~June 2019~~March 2020

Various from ~~July 2019~~April 2020 to ~~May 2021~~February 2022

USD to Korean Won ("KRW")

~~1,100.30~~1,151.92 KRW

Cash flow hedge

~~23.0~~16.0 MYR

~~June 25, 2019~~March 26, 2020

~~July 31, 2019~~April 30, 2020

USD to Malaysian Ringgit ("MYR")

~~4.12~~4.31 MYR

Not designated

~~74.0~~202.0 MXN

~~June 26, 2019~~March 27, 2020

~~July 31, 2019~~April 30, 2020

USD to Mexican Peso ("MXN")

~~19.29~~23.53 MXN

Not designated

~~2,654.2~~2,961.0 MXN

Various from ~~August 2017~~May 2018 to ~~June 2019~~March 2020

Various from ~~July 2019~~April 2020 to ~~May 2021~~February 2022

USD to MXN

~~20.87~~21.36 MXN

Cash flow hedge

~~43.6~~2.0 GBP

~~Various from August 2017 to June 2019~~March 27, 2020

~~Various from July 2019 to May 2021~~April 30, 2020

British Pound Sterling ("GBP") to USD

~~1.33~~1.23 USD

Not Designated

53.7 GBP

Various from May 2018 to March 2020

Various from April 2020 to February 2022

GBP to USD

1.29 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 economic value, and they are not used for trading or speculative purposes.

Hedges of Commodity Risk

~~We enter into~~As of March 31, 2020, we had the following outstanding commodity forward contracts, ~~in order to limit our exposure to variability in raw material costs that is caused by movements in the price~~none 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~~which were designated for hedge accounting treatment in accordance with FASB ASC Topic ~~815.~~

~~As of June 30, 2019 we had the following outstanding commodity forward contracts:~~815, Derivatives and Hedging:



Commodity	Notional	Remaining Contracted Periods	Weighted-Average Strike Price Per Unit
Silver	~~848,995~~850,249 troy oz.	~~July 2019-April 2021~~April 2020 - February 2022	$~~15.99~~16.65
Gold	~~7,614~~7,733 troy oz.	~~July 2019-April 2021~~April 2020 - February 2022	$~~1,316.24~~1,457.41
Nickel	~~227,693~~221,697 pounds	~~July 2019-April 2021~~April 2020 - February 2022	$~~5.83~~6.16
Aluminum	~~3,926,212~~3,103,095 pounds	~~July 2019-April 2021~~April 2020 - February 2022	$~~0.92~~0.87
Copper	~~2,271,886~~2,290,867 pounds	~~July 2019-April 2021~~April 2020 - February 2022	$~~3.04~~2.69
Platinum	~~6,709~~7,821 troy oz.	~~July 2019-April 2021~~April 2020 - February 2022	$~~883.35~~896.59
Palladium	~~643~~942 troy oz.	~~July 2019-April 2021~~April 2020 - February 2022	$~~1,108.43~~1,620.30

Financial Instrument Presentation

The following table presents the fair values of our derivative financial instruments and their classification in the condensed consolidated balance sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:


	Asset Derivatives					Liability Derivatives					Asset Derivatives					Liability Derivatives
	Balance Sheet Location	June 30, 2019		December 31, 2018		Balance Sheet Location	June 30, 2019		December 31, 2018		Balance Sheet Location	March 31, 2020		December 31, 2019		Balance Sheet Location	March 31, 2020		December 31, 2019
Derivatives designated as hedging instruments											Derivatives designated as hedging instruments
Foreign currency forward contracts	Prepaid expenses and other current assets	$	19,684	$	14,608	Accrued expenses and other current liabilities	$	2,228	$	3,615	Prepaid expenses and other current assets	$	17,224	$	20,957	Accrued expenses and other current liabilities	$	17,139	$	1,055
Foreign currency forward contracts	Other assets	2,072		3,168		Other long-term liabilities	933		1,134		Other assets	2,840		2,530		Other long-term liabilities	6,504		428
Total		$	21,756	$	17,776		$	3,161	$	4,749		$	20,064	$	23,487		$	23,643	$	1,483

Derivatives not designated as hedging instruments											Derivatives not designated as hedging instruments
Commodity forward contracts	Prepaid expenses and other current assets	$	1,084	$	524	Accrued expenses and other current liabilities	$	1,743	$	3,679	Prepaid expenses and other current assets	$	1,635	$	3,069	Accrued expenses and other current liabilities	$	3,603	$	394
Commodity forward contracts	Other assets	313		307		Other long-term liabilities	170		458		Other assets	444		554		Other long-term liabilities	1,390		68
Foreign currency forward contracts	Prepaid expenses and other current assets	5		95		Accrued expenses and other current liabilities	129		416		Prepaid expenses and other current assets	31		74		Accrued expenses and other current liabilities	409		476
Total		$	1,402	$	926		$	2,042	$	4,553		$	2,110	$	3,697		$	5,402	$	938

These fair value measurements are all categorized within Level 2 of the fair value hierarchy.

The following tables present the effect of our derivative financial instruments on the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive (loss)/income for the three months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:


Derivatives designated as hedging instruments	Amount of Deferred Gain/(Loss) Recognized in Other Comprehensive (Loss)/Income					Location of Net Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income		Amount of Net Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income								Amount of Deferred Gain/(Loss) Recognized in Other Comprehensive (Loss)/Income							Location of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income		Amount of Net Gain Reclassified from Accumulated Other Comprehensive Loss into Net Income
Derivatives designated as hedging instruments	2019		2018				2019				2018				2020				2019					2020				2019
Foreign currency forward contracts	$	1,209	$	33,641			Net revenue		$	6,493			$	(8,064	)		$	12,544			$	9,118		Net revenue		$	6,623			$	3,219
Foreign currency forward contracts	$	382	$	(8,813	)	Cost of revenue		$	941			$	2,662			$	(29,630	)		$	6,078		Cost of revenue		$	1,768			$	128

Derivatives not designated as
hedging instruments
Amount of (Loss)/Gain Recognized in Net Income Location of (Loss)/Gain Recognized in Net Income
2019 2018
Commodity forward contracts $ (102 ) $ (1,426 ) Other, net
Foreign currency forward contracts $ 1,039
$ 5,776
Other, net

The following tables present the effect of our derivative financial instruments on the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive income for the six months ended June 30, 2019 and 2018:

Derivatives designated as
hedging instruments Amount of Deferred Gain Recognized in Other Comprehensive Income Location of Net Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income Amount of Net Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income
2019 2018 2019 2018
Foreign currency forward contracts $ 10,327
$ 15,803
Net revenue $ 9,712
$ (18,948 )
Foreign currency forward contracts $ 6,460
$ 4,658
Cost of revenue $ 1,069
$ 1,836
Foreign currency forward contracts $ —
$ —
Other, net $ —
$ (1,376 )


Derivatives not designated as hedging instruments	Amount of Gain/(Loss) Recognized in Net Income					Location of Gain/(Loss) Recognized in Net Income	Amount of (Loss)/Gain Recognized in Net Income					Location of (Loss)/Gain Recognized in Net Income
Derivatives not designated as hedging instruments	2019		2018			Location of Gain/(Loss) Recognized in Net Income	2020			2019		Location of (Loss)/Gain Recognized in Net Income
Commodity forward contracts	$	1,021	$	(4,621	)	Other, net	$	(5,575	)	$	1,123	Other, net
Foreign currency forward contracts	$	1,517	$	826		Other, net	$	(3,781	)	$	478	Other, net

Credit Risk Related Contingent Features

We have agreements with certain of 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 ~~June 30, 2019~~March 31, 2020, the termination value of outstanding derivatives in a liability position, excluding any adjustment for non-performance risk, was ~~$5.2~~$29.3 million. As of ~~June 30, 2019~~March 31, 2020, we ~~have not~~had 0t 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.

16. Acquisitions ~~and Divestitures~~

~~GIGAVAC merger~~

On September 24, 2018 we entered into an agreement and plan of merger with GIGAVAC, whereby GIGAVAC would merge with one of our wholly-owned subsidiaries, thereby becoming a wholly-owned subsidiary of Sensata. On October 31, 201813, 2019, we completed ~~the~~1 acquisition ~~of GIGAVAC~~ for ~~$233.0~~approximately $30 million, net of cash ~~consideration, subject to working capital and other adjustments, approximately $12.0 million of which related to certain compensation arrangements with certain GIGAVAC employees and shareholders.~~

Based in Carpinteria, California, GIGAVAC has more than 270 employees and is a leading provider of solutions that enable electrification in demanding environments within the automotive, battery storage, industrial, and HVOR end markets. We acquired GIGAVAC to increase our content and capabilities for electrification, including products such as cars, delivery trucks, buses, material handling equipment, and charging stations. Portions of GIGAVAC will be integrated into each of our operating segments.

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

Net working capital, excluding cash $ 16,980
Property, plant and equipment 4,384
Goodwill 113,731
Other intangible assets 122,742
Other assets 63
Deferred income tax liabilities (27,000 )
Other long-term liabilities (1,000 )
Fair value of net assets acquired, excluding cash and cash equivalents 229,900
Cash and cash equivalents 359
Fair value of net assets acquired $ 230,259

The allocation of purchase price related to the GIGAVAC merger is preliminary, and is based on management’s judgments after evaluating several factors, including preliminary valuation assessments of tangible and intangible assets. The final allocation of the purchase price to the assets acquired will be completed when the final valuations are completed. The preliminary goodwill recognized as a result of this acquisition was approximately $113.7 million, which represents future economic benefits expected to arise from synergies from combining operations and the extension of existing customer relationships. The amount of goodwill recorded that is expected to be deductible for tax purposes is not material.acquired.

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 $ 74,500
10
Completed technologies 31,040
13
Tradenames 15,400
15
Other 1,802
6
Total definite-lived intangible assets acquired $ 122,742
12

The definite-lived intangible assets were valued using the income approach. We used the relief-from-royalty method to value completed technologies and tradenames, and we used the multi-period excess earnings method to value customer relationships. These valuation methods incorporate assumptions including expected discounted future cash flows resulting from either the future estimated after-tax royalty payments avoided as a result of owning the completed technologies or the future earnings related to existing customer relationships.

~~Valves Business Divestiture~~

On August 31, 2018 we completed the sale of the capital stock of Schrader Bridgeport International, Inc. and August France Holding Company SAS (collectively, the "Valves Business") to Pacific Industrial Co. Ltd. (together with its affiliates, "Pacific"). Contemporaneous with the closing of the sale, Sensata and Pacific entered into a long-term supply agreement, which imposes an obligation on us to purchase minimum quantities of product from Pacific over a period of nearly five years.

In exchange for selling the Valves Business and entering into the long-term supply agreement, we received cash consideration from Pacific of approximately $165.5 million, net of $11.8 million of cash and cash equivalents sold.

We determined that the terms of the long-term supply agreement entered into concurrent with the sale of the Valves Business were not at market. Accordingly, we recognized a liability of $16.4 million, measured at fair value, which represented the fair value of the off-market component of the supply agreement.

17. Segment Reporting

We ~~organize our business into two~~operate in, and report financial information for, the following 2 reportable segments, Performance Sensing and Sensing Solutions, each of which is also an operating segment. Our operating segments are businesses that we manage as components of an enterprise, for which separate financial information is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and assess performance.

An operating segment’s performance is primarily evaluated based on segment operating income, which excludes amortization of intangible assets, restructuring and other charges, net, and certain corporate costs/credits not associated with the operations of the segment, including share-based compensation expense and a portion of depreciation expense associated with assets recorded in connection with acquisitions. ~~In addition, an operating segment’s performance excludes results from discontinued operations, if any.~~ Corporate and other costs excluded from an operating segment’s performance are separately stated below and also include costs that are related to functional areas, such as finance, information technology, legal, and human resources. 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 reporting segments are materially consistent with those in the summary of significant accounting policies as described in Note 2, "Significant Accounting Policies" included in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~

2019.

The following table presents net revenue and segment operating income for the reported segments and other operating results not allocated to the reported segments for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:


	For the three months ended						For the six months ended						For the three months ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			March 31, 2020			March 31, 2019
Net revenue:
Performance Sensing	$	644,516		$	676,217		$	1,284,544		$	1,339,046		$	568,689		$	640,028
Sensing Solutions	239,210			237,643			469,681			461,107			205,580			230,471
Total net revenue	$	883,726		$	913,860		$	1,754,225		$	1,800,153		$	774,269		$	870,499
Segment operating income (as defined above):
Performance Sensing	$	168,072		$	187,365		$	318,581		$	356,775		$	129,062		$	150,509
Sensing Solutions	77,115			79,070			152,084			150,954			55,949			74,969
Total segment operating income	245,187			266,435			470,665			507,729			185,011			225,478
Corporate and other	(45,407		)	(53,537		)	(86,837		)	(108,318		)	(88,822		)	(41,430		)
Amortization of intangible assets	(36,031		)	(34,594		)	(72,174		)	(69,663		)	(33,092		)	(36,143		)
Restructuring and other charges, net	(16,310		)	(244		)	(21,619		)	(4,010		)	(4,498		)	(5,309		)
Operating income	147,439			178,060			290,035			325,738			58,599			142,596
Interest expense, net	(39,608		)	(38,321		)	(78,861		)	(76,750		)	(39,403		)	(39,253		)
Other, net	(3,554		)	(11,053		)	(365		)	(15,686		)	(12,281		)	3,189
Income before taxes	$	104,277		$	128,686		$	210,809		$	233,302		$	6,915		$	106,532

18. ~~Leases~~Subsequent Events

~~As discussed~~On April 2, 2020, we announced a series of actions taken in ~~Note 2, "New Accounting Standards," we adopted FASB ASC Topic 842 on January 1, 2019, using~~response to COVID-19. These actions are designed to protect the ~~modified retrospective transition method. We have elected~~health and safety of our employees, enable us to ~~apply the package~~continue to serve critical customer needs, and further enhance our financial flexibility. Actions taken to enhance our financial flexibility included a temporary suspension of ~~practical expedients~~our share repurchase program and ~~the land easement practical expedient. We have not elected to apply the hindsight practical expedient.~~

As a result of this adoption, we classify most leases as either finance or operating leases and recognize a related lease liability and right-of-use asset on our consolidated balance sheets. Our accounting for finance leases remains unchanged after the adoption of FASB ASC Topic 842. We have elected to account for leases with a term of one year or less (short-term leases) using a method similar to the operating lease model under FASB ASC Topic 840, ~~Leases~~ ~~(i.e. they are not recorded~~$400.0 million drawdown on the ~~consolidated balance sheets).~~

~~We elected to apply the transition provisions~~Revolving Credit Facility on April 1, 2020, leaving us with cash on hand of this guidance, including its disclosure requirements, at its date of adoption instead of at the beginning of the earliest comparative period presented. Accordingly, we have not restated our consolidated balance sheet as of December 31, 2018. There was no cumulative effect of adoptionapproximately $1.2 billion on ~~our retained earnings or any other components of equity. The below adjustments were made to our condensed consolidated balance sheet on January 1, 2019 to reflect the new guidance:~~

December 31, 2018 Adjustment January 1, 2019
Prepaid expenses and other current assets $ 113,234
$ (253 ) $ 112,981
Other intangible assets, net $ 897,191
$ (1,510 ) $ 895,681
Other assets $ 86,890
$ 58,496
$ 145,386
Accrued expenses and other current liabilities $ 218,130
$ 12,119
$ 230,249
Other long-term liabilities $ 39,277
$ 44,614
$ 83,891

that date.

~~The table below presents the amounts recognized and location of recognition in our condensed consolidated balance sheet as of June 30, 2019 related to our operating and finance leases:~~

June 30, 2019
Operating lease right-of-use assets:
Other assets $ 52,471
Total operating lease right-of-use assets $ 52,471
Operating lease liabilities:
Accrued expenses and other current liabilities $ 11,864
Other long-term liabilities 42,062
Total operating lease liabilities $ 53,926
Finance lease right-of-use assets:
Property, plant and equipment, at cost $ 49,714
Accumulated depreciation (23,412 )
Property, plant and equipment, net $ 26,302
Finance lease liabilities:
Current portion of long-term debt, finance lease and other financing obligations $ 2,298
Finance lease and other financing obligations, less current portion 29,797
Total finance lease liabilities $ 32,095

~~The table below presents the lease liabilities arising from obtaining right-of-use assets in the six months ended June 30, 2019:~~

Six months ended
June 30, 2019
Operating leases $ 1,882
Finance leases $ —

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. The table below presents our total lease cost for the three and six months ended June 30, 2019:

For the three months ended For the six months ended
June 30, 2019 June 30, 2019
Operating lease cost $ 4,244
$ 8,224

Finance lease cost:
Amortization of right-of-use assets $ 452
$ 904
Interest on lease liabilities 671
1,360
Total finance lease cost $ 1,123
$ 2,264

~~Short-term lease cost was not material for the three and six months ended June 30, 2019.~~

Cash flows from operating activities include (1) interest on finance lease liabilities and (2) payments arising from operating leases. Cash flows from financing activities include repayments of the principal portion of finance lease liabilities. The table below presents the cash paid related to our operating and financing leases for the six months ended June 30, 2019:

For the six months ended
June 30, 2019
Operating cash flows from operating leases $ 8,090
Operating cash flows from finance leases $ 1,206
Financing cash flows from finance leases $ 753

We occupy leased facilities with initial terms ranging up to 20 years. These lease agreements frequently include options to renew for additional periods and generally require that we pay taxes, insurance, and maintenance costs. We also lease certain

~~vehicles and equipment. The table below presents the weighted average remaining lease term of our operating and finance leases (in years):~~



	~~June 30, 2019~~
~~Operating leases~~	~~8.2~~
~~Finance leases~~	~~12.8~~

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. Upon adoption of FASB ASC Topic 842, we initially measured our operating lease liabilities using this methodology, while our accounting for finance leases remained unchanged. We use our incremental borrowing rate, adjusted for collateralization, because the discount rate implicit in our leases are generally not readily determinable. The table below presents our weighted average discount rate as of June 30, 2019:



	~~June 30, 2019~~
~~Operating leases~~	~~5.8~~	%
~~Finance leases~~	~~8.5~~	%

~~The table below presents a maturity analysis of the obligations related to our operating lease liabilities and finance lease liabilities in effect as of June 30, 2019:~~

Operating Leases Finance Leases
Year ending December 31,
2019 (excluding the six months ended June 30, 2019) $ 7,932
$ 2,715
2020 13,030
4,541
2021 9,235
4,063
2022 7,266
3,713
2023 5,961
3,772
Thereafter 27,550
36,330
Total undiscounted cash flows related to lease liabilities 70,974
55,134
Less imputed interest (17,048 ) (23,039 )
Total lease liabilities $ 53,926
$ 32,095

Cautionary Statements Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q, including any documents incorporated by reference herein, includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These forward-looking statements also relate to our future prospects, developments, and business strategies and may be identified by terminology such as "may," "will," "could," "should," "expect," "anticipate," "believe," "estimate," "predict," "project," "forecast," "continue," "intend," "plan," and similar terms or phrases, or the negative of such terminology, including references to assumptions. However, these terms are not the exclusive means of identifying such statements.

Forward-looking statements contained herein, or in other statements made by us, are made based on management’s expectations and beliefs concerning future events impacting us. These statements are subject to uncertainties and other important factors relating to our operations and business environment, all of which are difficult to predict, and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurances that any of the events anticipated by these forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition.

We believe that the following important factors, among others (including those set forth here and described in Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, ~~2018)~~2019), could affect our future performance and the liquidity and value of our securities and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf:

Future risks and existing uncertainties associated with the COVID-19 pandemic, which continues to have a significant adverse impact on our business and operations including: (i) full or partial shutdowns of our facilities as mandated by government decrees, (ii) limited ability to adjust certain costs due to government actions, (iii) significant travel restrictions and “work-from-home” orders limiting the availability of our workforce, (iv) supplier constraints and supply-chain interruptions, (v) logistics challenges and limitations, (vi) reduced demand from certain customers, (vi) uncertainties associated with a protracted economic slowdown that could negatively affect the financial condition of our customers and suppliers, and (vii) uncertainties and volatility in the global capital markets;

business disruptions due to natural disasters or other disasters outside our control, such as the global coronavirus (COVID-19) pandemic.

instability and changes in the global markets, including regulatory, political, economic, governmental, and military matters, such as the ~~impending~~recent exit of the United Kingdom (the "U.K.") from the European Union (the "EU");

adverse conditions or competition in the industries upon which we are dependent, including the automotive industry;

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

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

market acceptance of new product introductions and product innovations;

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

~~we may not~~risks related to the acquisition or disposition of businesses, or the restructuring of our business;

labor disruptions or increased labor costs;

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

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

~~market acceptance of new product introductions and product innovations;~~

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

~~business disruptions due to natural disasters or other disasters outside our control;~~

~~labor disruptions or increased labor costs;~~

security breaches, cyber theft of our intellectual property, and other disruptions to our information technology infrastructure, or improper disclosure of confidential, personal, or proprietary data;

foreign currency risks, changes in socio-economic conditions, or changes to monetary and fiscal policies;

our level of indebtedness, or our inability to meet debt service obligations or comply with the covenants contained in the credit agreement and senior notes indentures;

changes to current policies, such as trade tariffs, by the U.S. government;

risks related to the potential for goodwill impairment;

the impact of ~~United States ("U.S.") federal income tax reform, or~~challenges by taxing authorities ~~challenging~~of our historical and future tax positions or our allocation of taxable income among our subsidiaries, and challenges to the sovereign taxation regimes of EU member states by the European ~~Commission;~~

~~changes to current policies, such as trade tariffs, by~~Commission and the ~~U.S. government;~~Organization for Economic Co-operation and Development;

changes to, or inability to comply with, various regulations, including tax laws, import/export regulations, anti-bribery laws, environmental, health, and safety laws, and other governmental regulations; and

risks related to our domicile in the U.K.

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

All forward-looking statements attributable to us or persons acting on our behalf speak only as of the date of this Quarterly Report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements contained in this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise forward-looking statements that may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. We urge readers to review carefully the risk factors described in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 and in the other documents that we file with the U.S. Securities and Exchange Commission. You can read these documents at www.sec.gov or on our website at www.sensata.com.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the ~~United States ("~~U.S.") Securities and Exchange Commission on February ~~6, 2019,~~11, 2020, and the unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Overview

The COVID-19 pandemic has caused widespread disruptions to our Company, employees, customers, suppliers and communities. During the first quarter, these disruptions were primarily limited to our manufacturing operations in China, most of which were closed for approximately three weeks during the quarter due to government mandates. As the virus spread to the rest of the world in March, most of our other operations outside of China also were impacted. As of March 31, 2020, we were still experiencing significant disruptions, and at a minimum, we expect those disruptions to continue throughout the second quarter of 2020. These disruptions include, depending on the specific location, full or partial shutdowns of our facilities as mandated by government decrees, limited ability to adjust certain costs due to government actions, significant travel restrictions and “work-from-home” orders limiting the availability of our workforce, supplier constraints and material supply-chain interruptions, logistics challenges and limitations, and reduced demand from certain customers.

The COVID-19 outbreak did have a negative impact on our first quarter 2020 results, and we expect it to have a negative impact on our second quarter 2020 results. The extent of the impact on our second quarter 2020 results and beyond will be dependent on future developments such as the length and severity of the crisis, the potential resurgence of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

Given these uncertainties and negative impact of the COVID-19 pandemic, we have taken steps to manage and reduce operating costs and further enhance our financial flexibility, including the Board’s formation of a Health & Economic Response Committee to oversee the impact of the COVID-19 pandemic. These steps also include the following actions to reduce compensation expense in the second quarter 2020: (1) a 50% reduction to the cash retainers paid to non-employee directors; (2) a reduction to the Chief Executive officer salary to $1.00; (3) a 25% reduction to the salaries of all senior leaders of the Company; and (4) temporary furloughs or equivalent cost saving methods for the remaining workforce. We also are taking steps to reduce capital and discretionary expenditures and to ramp down certain production facilities in line with end market demand. We expect these actions to generate approximately $15 million to $20 million in cost savings during the second quarter of 2020.

Further, to provide maximum financial flexibility due to COVID-19, we drew down $400.0 million on the Revolving Credit Facility on April 1, 2020, resulting in cash on hand as of that date of approximately $1.2 billion. In addition, effective April 1, 2020, we have temporarily suspended our share repurchase program.

Given the foregoing and unprecedented market uncertainty, the Company is currently unable to quantify the expected impact of the COVID-19 pandemic on its future operations, financial condition, liquidity and results of operations. The Company plans to continue taking actions to help mitigate, as best we can, the impact of the COVID-19 pandemic on the health and well-being of our employees, the communities in which we operate and our business partners, as well as the impact on our operations and business as a whole. However, there can be no assurance that the COVID-19 pandemic will not have a material adverse impact on our financial condition, liquidity, and results of operations.

Results of Operations

The table below presents our historical results of operations, in millions of dollars and as a percentage of net revenue, for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 compared to the three ~~and six~~ months ended ~~June 30, 2018.~~March 31, 2019. We have derived the results of operations from the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Amounts and percentages in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.


	For the three months ended										For the six months ended										For the three months ended
	June 30, 2019					June 30, 2018					June 30, 2019					June 30, 2018					March 31, 2020					March 31, 2019
	Amount			Margin*		Amount			Margin*		Amount			Margin*		Amount			Margin*		Amount			Margin*		Amount			Margin*
Net revenue:
Performance Sensing	$	644.5		72.9	%	$	676.2		74.0	%	$	1,284.5		73.2	%	$	1,339.0		74.4	%	$	568.7		73.4	%	$	640.0		73.5	%
Sensing Solutions	239.2			27.1		237.6			26.0		469.7			26.8		461.1			25.6		205.6			26.6		230.5			26.5
Net revenue	883.7			100.0		913.9			100.0		1,754.2			100.0		1,800.2			100.0		774.3			100.0		870.5			100.0
Operating costs and expenses	736.3			83.3		735.8			80.5		1,464.2			83.5		1,474.4			81.9		715.7			92.4		727.9			83.6
Operating income	147.4			16.7		178.1			19.5		290.0			16.5		325.7			18.1		58.6			7.6		142.6			16.4
Interest expense, net	(39.6		)	(4.5	)	(38.3		)	(4.2	)	(78.9		)	(4.5	)	(76.8		)	(4.3	)	(39.4		)	(5.1	)	(39.3		)	(4.5	)
Other, net	(3.6		)	(0.4	)	(11.1		)	(1.2	)	(0.4		)	0.0		(15.7		)	(0.9	)	(12.3		)	(1.6	)	3.2			0.4
Income before taxes	104.3			11.8		128.7			14.1		210.8			12.0		233.3			13.0		6.9			0.9		106.5			12.2
Provision for income taxes	30.8			3.5		23.4			2.6		52.3			3.0		37.5			2.1
(Benefit from)/provision for income taxes																					(1.5		)	(0.2	)	21.5			2.5
Net income	$	73.4		8.3	%	$	105.3		11.5	%	$	158.5		9.0	%	$	195.8		10.9	%	$	8.4		1.1	%	$	85.1		9.8	%

__________________________

* Represents the amount presented divided by total net revenue.

Net revenue

The following table presents a reconciliation of organic revenue ~~(decline)/growth,~~decline, a non-GAAP financial measure, ~~not presented in accordance with U.S. generally accepted accounting principles ("GAAP"),~~ to reported net revenue ~~(decline)/growth,~~decline, a financial measure determined in accordance with U.S. GAAP, for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 compared to the ~~comparable periods of the prior year.~~three months ended March 31, 2019. Refer to the section entitled Non-GAAP Financial Measures below for further information on our use of organic revenue ~~growth (or decline).~~decline.

Three-Month (Decline)/Growth Six-Month (Decline)/Growth
Performance Sensing Sensing Solutions Total Performance Sensing Sensing Solutions Total
Reported net revenue (decline)/growth (4.7 )% 0.7 % (3.3 )% (4.1 )% 1.9 % (2.6 )%
Percent impact of:
Acquisition and divestiture, net⁽¹⁾
(3.0 ) 5.8
(0.7 ) (3.2 ) 5.4
(1.0 )
Foreign currency remeasurement⁽²⁾
(1.0 ) (1.0 ) (1.0 ) (1.2 ) (0.9 ) (1.2 )
Organic revenue (decline)/growth (0.7 )% (4.1 )% (1.6 )% 0.3 % (2.6 )% (0.4 )%



	Three-Month Decline
	Performance Sensing		Sensing Solutions		Total
Reported net revenue decline	(11.1	)%	(10.8	)%	(11.1	)%
Percent impact of:
Foreign currency remeasurement⁽¹⁾	(0.7	)	(0.4	)	(0.7	)
Organic revenue decline	(10.4	)%	(10.4	)%	(10.4	)%

__________________________

⁽¹⁾

Represents the percentage change in net revenue attributed to the effect of acquisitions and divestitures for the 12 months immediately following the respective transaction dates. The percentage amounts presented relate to the sale of the capital stock of Schrader Bridgeport International, Inc. and August France Holding Company SAS (collectively, the "Valves Business") in August 2018 and the merger with GIGAVAC, LLC ("GIGAVAC") in October 2018, each of which is

~~discussed in Note 16, "Acquisitions and Divestitures" of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.~~

⁽²⁾

Represents the percentage change in net revenue between the comparative periods attributed to differences in exchange rates used to remeasure foreign currency denominated revenue transactions into ~~U.S. dollars,~~USD, which is the functional currency of the Company and each of its subsidiaries. The percentage amounts presented above ~~relate~~related primarily to the ~~U.S. dollar~~USD to ~~Chinese Renminbi~~CNY and the EUR to USD exchange rates.

Performance Sensing

For the three months ended ~~June 30, 2019,~~March 31, 2020, Performance Sensing net revenue declined ~~0.7%~~11.1%, or 10.4% on an organic basis. ~~Our~~

Automotive net revenue declined 11.0% in the first quarter of 2020 versus the corresponding prior-year period. Excluding a 0.6% decline attributed to foreign exchange rate differences between the two periods, automotive business was impacted by market declines, primarily in China and Europe, and price reductions that were in line with historical trends, which were largely offset by content growth, primarily in Europe, China, and North America. In our heavy vehicle and off-road ("HVOR") business, strong content growth in China was partially offset by general weakness in many of the end markets served by our HVOR business.

~~For the six months ended June 20, 2019, Performance Sensing~~net revenue ~~grew 0.3%~~declined 10.4% on an organic basis. Our automotive business was impacted by market declines, primarily in Asia and Europe, and price reductions that were in line with historical trends, which were largely offset by content growth in all regions that we serve. In our

HVOR business, strong content growth in China and in our agriculture and North American on-road truck businesses were partially offset by general weakness in many of the end markets served by our HVOR business.

We continue to expect sustained content growth as we execute on our clean & efficient, electrification, and smart & connected initiatives in our automotive and HVOR businesses. However, we expect global automotive production will remain under pressure for the full year 2019, and expect the HVOR markets we serve in total to further weaken in the second half of 2019.

~~Sensing Solutions~~

~~Sensing Solutions organic~~net revenue ~~decline of 4.1%~~declined 11.5% in the three months ended ~~June 30, 2019~~March 31, 2020 versus the corresponding prior-year period. Excluding a 0.8% decline attributed to foreign exchange rate differences between the two periods, HVOR net revenue declined 10.7% on an organic basis.

While our automotive business experienced a 10.4% organic revenue decline, our end-market production was down 19.5% in the first quarter of 2020 versus the corresponding prior-year period. The difference between the performance of our automotive business and that of the end-markets we serve is due primarily ~~attributable~~ to ~~weakness~~two factors. First, we were able to alleviate the impact of end-market declines by delivering market outgrowth, driven by increased content in ~~our industrial markets, which is consistent with trends~~all regions, but particularly in ~~certain leading indicators~~China where we experienced strong content growth, following the adoption of ~~demand, such~~NS6 emissions regulations. Additionally, we noted growth as the ~~Purchasing Managers Index ("PMI"),~~result of automotive OEMs, particularly in China, stocking inventory to ensure adequate supply levels in anticipation of reopening plants and ramping up production. We expect automotive end-markets to be worse in the ~~major~~second quarter of 2020 as OEM plant shutdowns and production declines continue. Our primary independent third-party source for information on automotive production in future periods is predicting a 47% decline in automotive production for the second quarter of 2020 and a 22% decline in automotive production for the full year 2020.

While our HVOR business generated a 10.7% organic revenue decline, end-market production was down 20.0% in the first quarter of 2020 versus the corresponding prior-year period. The difference between the performance of our HVOR business and the performance of the end-markets it serves is the result of market outgrowth, due primarily to increased content. Similar to our automotive business, a significant portion of this content came from China following the adoption of NS6 emissions regulations. We evaluate key economic indicators to gauge the health of our HVOR customers and the markets ~~that~~they serve, including freight load factors, truck inventory to sales ratios, building permits, industrial production, crop futures, and farm machinery. Based on some of these indicators, we ~~serve,~~expect HVOR end-markets to remain down throughout the second quarter of 2020.

Sensing Solutions

For the three months ended March 31, 2020, Sensing Solutions net revenue declined 10.8%, or 10.4% on an organic basis.

Industrial and ~~from~~other net revenue declined 12.8% in the first quarter of 2020 versus the corresponding prior-year period. Excluding a 0.5% decline attributed to foreign exchange rate differences between the two periods, industrial and other net revenue declined 12.3% on an organic basis.

Aerospace net revenue declined 2.0%, on a reported and organic basis, in the first quarter of 2020 versus the corresponding prior-year period.

Our industrial and other business observed a 15.0% decline in the ~~semiconductor market. This weakness~~global end-markets it serves. These market declines were primarily attributed to China, where the COVID-19 pandemic resulted in government mandated shutdowns. The key economic indicators we routinely evaluate for our industrial end-markets, such as regional PMI data, GDP, and housing starts, help develop a forward-looking view of future demand levels. These currently indicate further deterioration in demand in the second quarter of 2020 and, as a result, we believe our industrial and other business will be adversely impacted.

While our Aerospace business generated a 2.0% organic revenue decline, end-market production was ~~partially offset by growth~~down 6.3% in the first quarter of 2020 versus the corresponding prior year period. For our aerospace business, this market outgrowth, which we define as the difference between the performance of our aerospace business and ~~content growth in~~the performance of the end-markets it serves, was primarily attributed to increased content. Expectations for future OEM commercial and defense production build rates and passenger miles flown are good indicators of future demand for our ~~industrial sensing business.~~

~~Sensing Solutions organic revenue decline of 2.6%~~aerospace products and aftermarket services. We expect demand to be down in the ~~six months ended June 30, 2019 was primarily attributable~~second quarter of 2020 due to ~~weakness~~continued lower OEM production levels driven by COVID-19 and the worldwide travel restrictions which will continue to be in ~~our industrial markets, which is consistent with trends in certain leading indicators of demand, such as the PMI,~~place in the major markets that we serve, as well as declines in the semiconductor market. These declines were partially offset by growth in our aerospace business and content growth in our industrial sensing business.second quarter of 2020.

Operating costs and expenses

Operating costs and expenses for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ are presented, in millions of dollars and as a percentage of net revenue, in the following table. Amounts and percentages in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.


	For the three months ended								For the six months ended								For the three months ended
	June 30, 2019				June 30, 2018				June 30, 2019				June 30, 2018				March 31, 2020				March 31, 2019
	Amount		Margin*		Amount		Margin*		Amount		Margin*		Amount		Margin*		Amount		Margin*		Amount		Margin*
Operating costs and expenses:
Cost of revenue	$	575.2	65.1	%	$	582.5	63.7	%	$	1,156.0	65.9	%	$	1,165.0	64.7	%	$	566.4	73.2	%	$	580.8	66.7	%
Research and development	36.7		4.2		38.0		4.2		71.8		4.1		74.0		4.1		34.5		4.4		35.1		4.0
Selling, general and administrative	72.0		8.2		80.5		8.8		142.6		8.1		161.8		9.0		77.2		10.0		70.5		8.1
Amortization of intangible assets	36.0		4.1		34.6		3.8		72.2		4.1		69.7		3.9		33.1		4.3		36.1		4.2
Restructuring and other charges, net	16.3		1.8		0.2		0.0		21.6		1.2		4.0		0.2		4.5		0.6		5.3		0.6
Total operating costs and expenses	$	736.3	83.3	%	$	735.8	80.5	%	$	1,464.2	83.5	%	$	1,474.4	81.9	%	$	715.7	92.4	%	$	727.9	83.6	%

__________________________

* Represents the amount presented divided by total net revenue.

Cost of revenue

For the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, cost of revenue as a percentage of net revenue increased from the prior period. The largest driver of this increase was a $29.2 million loss recognized in cost of revenue related to a judgment against us in an intellectual property litigation with Wasica Finance Gmbh. We continue to deny any wrongdoing and will appeal the decision. Refer to Note 12, "Commitments and Contingencies," of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information. Other drivers of the increase included productivity headwinds and volume declines primarily ~~as a result~~resulting from the impacts of ~~negative mix due to new product launches, the impact of acquisitions and divestitures, and increased tariff costs,~~COVID-19, partially offset by the positive impact of changes in foreign currency exchange rates.

In response to the impacts we are seeing to our business due to COVID-19, we will continue to align our costs to the demand we are experiencing by ramping down certain production facilities in line with end market demand. This will be a challenge in the second quarter of 2020, as we address COVID-19 and corresponding government actions, which are creating operating restrictions, supply disruptions and increased freight costs, which will negatively impact our future cost of revenue margin. We are also taking steps to reduce discretionary spend and to reduce or delay capital expenditures for the near future.

Research and development ("R&D") expense

For the three months ended March 31, 2020, R&D expense ~~declined for~~decreased from the ~~three and six months ended June 30, 2019 and 2018~~prior period, primarily as a result of the positive impact of changes in foreign currency exchange rates.

Selling, general and administrative ("SG&A") expense

For the three months ended March 31, 2020, SG&A expense ~~declined for~~increased from the ~~three and six months ended June 30, 2019~~prior period, primarily due to ~~lower variable~~higher compensation ~~lower selling costs, the divestiture of the Valves Business, lower~~to retain and incentivize critical employee talent and increased costs related to optimization of our ~~redomicile in the prior year, and the favorable impact of foreign currency exchange rates, partially offset by additional SG&A expense related~~global operating processes to ~~GIGAVAC.~~increase productivity.

Amortization of intangible assets

~~The increase in~~For the three months ended March 31, 2020, amortization expense ~~for~~decreased from the ~~three and six months ended June 30, 2019 and 2018 was~~prior period due to ~~the intangible assets acquired with GIGAVAC, partially offset by~~ the effect of the economic benefit method.

Restructuring and other charges, net

Restructuring and other charges, net for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018 consisted of the following:~~

For the three months ended For the six months ended
($ in millions) June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Severance costs, net ⁽¹⁾
$ 14.6
$ (0.3 ) $ 17.5
$ 3.3
Facility and other exit costs 0.0
0.5 0.0
0.7
Other ⁽²⁾
1.6
—
4.1
—
Restructuring and other charges, net $ 16.3
$ 0.2
$ 21.6
$ 4.0

~~__________________________~~

⁽¹⁾

Severance costs, net for the three and six months ended June 30, 2019 include a $13.7 million charge related to benefits provided for under a voluntary retirement incentive program offered to a limited number of eligible employees in the U.S. We expect the majority of these benefits will be paid during the third quarter of 2019. Severance costs, net for the three and six months ended June 30, 2018 were primarily related to limited workforce reductions of manufacturing, engineering, and administrative positions as well as the elimination of certain positions related to site consolidations.


⁽²⁾	Other costs for the three and six months ended June 30, 2019 were primarily related to deferred compensation incurred in connection with the acquisition of GIGAVAC. Refer to Note 16, "Acquisitions and Divestitures" of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further discussion.

~~Operating income~~

Operating income decreased $30.6 million, or 17.2%, to $147.4 million (16.7% of net revenue) in the three months ended June 30, 2019 from $178.1 million (19.5% of net revenue) in the three months ended June 30, 2018. The decline in operating income was due primarily to net productivity headwinds, higher restructuring charges, the divestiture of the Valves Business in the third quarter of 2018, and increased tariff costs, partially offset by lower variable compensation.

Operating income decreased $35.7 million, or 11.0%, to $290.0 million (16.5% of net revenue) in the six months ended June 30, 2019 from $325.7 million (18.1% of net revenue) in the six months ended June 30, 2018. The decline in operating income was due primarily to net productivity headwinds, higher restructuring charges, the divestiture of the Valves Business in the third quarter of 2018, and increased tariff costs, partially offset by lower variable compensation and the favorable impact of foreign currency rates.

~~Other, net~~

~~Other, net for the three and six months ended June 30, 2019 and 2018~~ consisted of the following (amounts in the table below have been calculated based on unrounded numbers; accordingly, certain amounts may not appear to recalculate due to the effect of rounding):

For the three months ended For the six months ended
($ in millions) June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Currency remeasurement loss on net monetary assets ⁽¹⁾
$ (4.3 ) $ (15.7 ) $ (2.5 ) $ (8.9 )
Gain/(loss) on foreign currency forward contracts ⁽²⁾
1.0
5.8
1.5
(0.6 )
(Loss)/gain on commodity forward contracts (0.1 ) (1.4 ) 1.0
(4.6 )
Loss on debt financing —
—
—
(2.4 )
Net periodic benefit cost, excluding service cost (0.3 ) (0.2 ) (0.6 ) (0.5 )
Other 0.1
0.5
0.1
1.3
Other, net $ (3.6 ) $ (11.1 ) $ (0.4 ) $ (15.7 )



	For the three months ended
(In millions)	March 31, 2020		March 31, 2019
Severance costs, net ⁽¹⁾	$	3.9	$	2.9
Other ⁽²⁾	0.6		2.5
Restructuring and other charges, net	$	4.5	$	5.3

__________________________


⁽¹⁾	Severance costs, net for the three months ended March 31, 2020, were primarily related to termination benefits arising from the shutdown and relocation of an operating site in Northern Ireland. Severance costs for the three months ended March 31, 2019 were primarily related to limited workforce reductions of manufacturing, engineering, and administrative positions.


⁽²⁾	Other charges in the three months ended March 31, 2020 and 2019 were primarily related to deferred compensation incurred in connection with the acquisition of GIGAVAC, LLC.

Operating income

Operating income decreased $84.0 million, or 58.9%, to $58.6 million (7.6% of net revenue) in the three months ended March 31, 2020, from $142.6 million (16.4% of net revenue) in the three months ended March 31, 2019. The decline in operating income was due primarily to the impact of the global economic downturn caused by COVID-19 as well as the $29.2 million loss recognized in cost of revenue related to a judgment against us in an intellectual property litigation with Wasica Finance Gmbh (refer to Note 12, "Commitments and Contingencies," of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information).

Other, net

Other, net for the three months ended March 31, 2020 and 2019 consisted of the following (amounts in the table below have been calculated based on unrounded numbers; accordingly, certain amounts may not appear to recalculate due to the effect of rounding):



	For the three months ended
(In millions)	March 31, 2020			March 31, 2019
Currency remeasurement loss on net monetary assets ⁽¹⁾	$	1.6		$	1.9
(Loss)/gain on foreign currency forward contracts ⁽²⁾	(3.8		)	0.5
(Loss)/gain on commodity forward contracts	(5.6		)	1.1
Net periodic benefit cost, excluding service cost	(4.4		)	(0.3		)
Other	(0.1		)	—
Other, net	$	(12.3	)	$	3.2

__________________________


⁽¹⁾	Relates to the remeasurement of ~~non-U.S. dollar~~non-USD denominated monetary assets and liabilities into ~~U.S. dollars.~~USD.


⁽²⁾	Relates to changes in the fair value of derivative financial instruments not designated as hedges. Refer to Note 15, "Derivative Instruments and Hedging Activities" of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion.

~~Provision~~(Benefit from)/provision for income taxes

The ~~increase~~decrease in ~~our~~ total tax ~~provision for~~from the ~~three and six months ended June 30, 2019 compared~~prior period was predominantly related to the ~~prior year relates to changes~~overall decrease in income before tax as impacted by the ~~jurisdictional~~ mix of profits ~~effects of changes in tax laws~~ in the ~~locations where~~various jurisdictions in which we ~~operate, changes~~operate.

In response to COVID-19, the U.S. federal government enacted the CARES Act on March 27, 2020. Federal limitations on interest deductions were reduced in connection with this legislation, and we recorded a deferred tax ~~accruals related~~benefit of $7.5 million in the three months ended March 31, 2020, as we were able to ~~prior year tax positions, and the utilization of~~utilize additional interest expense that was previously ~~unbenefitted net operating losses in our U.S. jurisdiction.~~ subject to a valuation allowance.

The (benefit from)/provision for income taxes consists ~~of (i)~~ of:

current tax expense, which relates primarily to our profitable operations in non-U.S. tax jurisdictions and withholding taxes ~~on interest~~related to management fees, royalties, and ~~royalty income;~~the repatriation of foreign earnings; and ~~(ii)~~

deferred tax expense (or benefit), which represents adjustments in book-to-tax basis differences primarily related to (1) the step-up in fair value of fixed and intangible assets acquired in connection with business combination transactions, ~~the utilization of~~(2) changes in net operating ~~losses, and~~loss carryforwards, (3) changes in tax ~~rates.~~rates, and (4) changes in our assessment of the realizability of our deferred tax assets.

Non-GAAP Financial Measures

This Quarterly Report on Form 10-Q includes references to organic revenue growth (or decline), which is a non-GAAP financial measure. Organic revenue growth (or decline) is defined as the reported percentage change in net revenue, calculated in accordance with U.S. GAAP, excluding the period-over-period impact of foreign exchange rate differences as well as the net impact of material acquisitions and divestitures for the 12-month period following the respective transaction date(s). Refer to the Net revenue section above for a reconciliation of organic revenue ~~growth~~decline to reported revenue decline.

We believe that organic revenue growth (or decline) provides investors with helpful information with respect to our operating performance, and we use organic revenue growth (or decline) to evaluate our ongoing operations, as well as for internal planning and forecasting purposes. We believe that organic revenue growth (or decline) provides useful information in evaluating the results of our business because it excludes items that we believe are not indicative of ongoing performance or that we believe impact comparability with the prior-year period.

Organic revenue growth (or decline) should be considered as supplemental in nature and is not intended to be considered in isolation or as a substitute for reported percentage change in net revenue calculated in accordance with U.S. GAAP. In addition, our measure of organic revenue growth (or decline) may not be the same as, or comparable to, similar non-GAAP financial measures presented by other companies.

Liquidity and Capital Resources

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019, we held cash and cash equivalents in the following ~~regions:~~regions (amounts have been calculated based on unrounded numbers; accordingly, certain amounts may not appear to recalculate due to the effect of rounding):


(in millions)	June 30, 2019		December 31, 2018
(In millions)					March 31, 2020		December 31, 2019
United Kingdom	$	10.5	$	8.8	$	14.4	$	8.8
United States	12.4		4.6		6.6		7.0
The Netherlands	461.7		482.1		546.3		522.9
China	118.8		125.2		121.1		119.3
Other	117.7		109.1		114.6		116.1
Total	$	721.1	$	729.8	$	803.0	$	774.1

The amount of cash and cash equivalents held in these geographic regions fluctuates throughout the year due to a variety of factors, such as our use of intercompany loans and dividends and the timing of cash receipts and disbursements in the normal course of business. Our earnings are not considered to be permanently reinvested in certain jurisdictions in which they were earned. We recognize a deferred tax liability on these unremitted earnings to the extent the remittance of such earnings cannot be recovered in a tax-free manner.

Cash Flows:

The table below summarizes our primary sources and uses of cash for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019. We have derived the summarized statements of cash flows from the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.


	For the six months ended						For the three months ended
(in millions)	June 30, 2019			June 30, 2018
(In millions)							March 31, 2020			March 31, 2019
Net cash provided by/(used in):
Operating activities:
Net income adjusted for non-cash items	$	331.9		$	357.1		$	120.1		$	167.5
Changes in operating assets and liabilities, net	(79.8		)	(103.2		)	(21.5		)	(54.8		)
Operating activities	252.2			253.9			98.5			112.7
Investing activities	(82.9		)	(61.3		)	(32.8		)	(42.4		)
Financing activities	(178.0		)	(82.3		)	(36.9		)	(150.6		)
Net change	$	(8.8	)	$	110.3		$	28.9		$	(80.3	)

Operating activities. Net cash provided by operating activities ~~for the six months ended June 30, 2019~~declined primarily due to lower net income, higher inventory balances, higher payments to third parties and ~~2018 was $252.2 million~~suppliers, and ~~$253.9 million, respectively. Net cash provided by operating activities remained essentially flat as a declines in profitability were~~timing of income tax payments, partially offset by ~~improvements in working capital balances.~~timing of customer payments.

Investing activities. Net cash used in investing activities ~~for~~declined from the ~~six months ended June 30,~~first quarter of 2019 ~~and 2018 was $82.9 million and $61.3 million, respectively, which included $81.5 million and $66.3 million, respectively,~~primarily due to a reduction in capital ~~expenditures.~~expenditures as a result of COVID-19. In ~~2019,~~fiscal year 2020, we anticipate capital expenditures of approximately ~~$150~~$120.0 million to ~~$170~~$130.0 million, a decline from previously forecasted capital expenditures, which we expect to be funded from net cash provided by operating activities.

Financing activities. Net cash used in financing activities ~~for~~declined from the ~~six months ended June 30,~~first quarter of 2019 ~~and 2018 was $178.0 million and $82.3 million, respectively, which included $168.2 million and $60.1 million, respectively,~~primarily due to a reduction in ~~payments~~share repurchases. On April 2, 2020 we announced a temporary suspension of our share repurchase program to ~~repurchase~~further enhance our ~~ordinary shares.~~financial flexibility in light of COVID-19.

Indebtedness and Liquidity:

As of ~~June 30, 2019~~March 31, 2020, we had ~~$3,296.9~~$3,290.3 million in gross indebtedness, which ~~includes~~included finance lease and other financing obligations and ~~excludes~~excluded debt discounts and deferred financing costs.

~~A summary of our indebtedness as of June 30, 2019 is as follows:~~

($ in millions) Maturity Date June 30, 2019
Term Loan October 14, 2021 $ 913.0
4.875% Senior Notes October 15, 2023 500.0
5.625% Senior Notes November 1, 2024 400.0
5.0% Senior Notes October 1, 2025 700.0
6.25% Senior Notes February 15, 2026 750.0
Less: discount (13.8 )
Less: deferred financing costs (23.2 )
Less: current portion (9.9 )
Long-term debt, net $ 3,216.1

Finance lease and other financing obligations $ 33.8
Less: current portion (3.7 )
Finance lease and other financing obligations, less current portion $ 30.1

On March 27, 2019 certain indirect, wholly owned subsidiaries of Sensata Technologies Holding plc entered into the ninth amendment (the "Ninth Amendment") of the credit agreement governing our senior secured credit facilities (as amended, the "Credit Agreement"), which governs our senior secured credit facilities. On June 13, 2019, our subsidiaries that are borrowers under the Credit Agreement entered into a technical amendment to the Credit Agreement (the "Technical Amendment"). Refer to Note 11, ~~"Debt"~~"Debt," of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for ~~discussion~~additional information on the components of ~~the Ninth Amendment and the Technical Amendment.~~our debt.

~~As of June 30, 2019 we had $416.1 million available under~~Capital Resources

The credit agreement governing our ~~$420.0 million revolving~~secured credit facility (as amended, the "Credit Agreement") provides for senior secured credit facilities (the ~~"Revolving~~"Senior Secured Credit ~~Facility"~~Facilities") consisting of a term loan facility (the "Term Loan"), ~~net of $3.9 million in letters of credit. Outstanding letters of~~the Revolving Credit Facility, and incremental availability (the "Accordion") under which additional secured credit ~~are~~facilities could be issued ~~primarily for the benefit of~~under certain ~~operating activities. As of June 30, 2019, no amounts had been drawn against these outstanding letters of credit.~~

~~Capital Resources~~circumstances.

Our sources of liquidity include cash on hand, cash flows from operations, and available capacity under the Revolving Credit Facility. ~~In addition,~~Availability under the Accordion varies each period based on our ~~senior secured credit facilities provide for incremental availability (the "Accordion"), under which additional secured debt may be issued or~~attainment of certain financial metrics as set forth in the ~~capacity~~terms of the ~~Revolving~~ Credit ~~Facility may be increased. Subject to certain limitations as defined in~~Agreement and the indentures under which our senior notes were issued ~~we have $1.0 billion~~(the "Senior Notes Indentures"). As of March 31, 2020, availability under the ~~Accordion.~~Accordion was approximately $0.9 billion.

We believe, based on our current level of operations ~~as reflected in our results of operations for the six months ended June 30, 2019,~~ and taking into consideration the restrictions and covenants ~~discussed below,~~included in the Credit Agreement and Senior Notes Indentures, that these sources of liquidity will be sufficient to fund our operations, capital expenditures, ordinary share repurchases, and debt service for at least the next twelve months. However, we cannot make assurances that our business will generate sufficient cash flows from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. Further, our highly-leveraged nature may limit our ability to procure additional financing in the future.

~~In May 2018~~As a result of COVID-19, although we ~~announced that~~believe our Board of Directors had authorized a $400.0 million share repurchase program. The program was completed during the three months ended March 31, 2019. Since inception we repurchased approximately 7.6 million ordinary shares under the program.

~~In October 2018 our Board of Directors authorized a new $250.0 million share repurchase program. Under this program we may repurchase ordinary shares at such times and in amounts~~financial position to be ~~determined~~strong, we decided to further enhance our financial flexibility by ~~our management, based on market conditions, legal requirements, and other corporate considerations,~~executing a $400 million drawdown on the ~~open market or in privately negotiated transactions, provided that such transactions are completed pursuant to an agreement and~~Revolving Credit Facility on April 1, 2020, leaving us with ~~a third party approved by our shareholders. We repurchased approximately 3.4 million ordinary shares under this program during the six months ended June 30, 2019, for a total purchase price~~cash on hand of approximately ~~$167.6 million, which are now held as treasury shares. Remaining availability under this program was $82.4 million as of June 30, 2019.~~$1.2 billion on that date.

On July 30, 2019, our Board of Directors approved a new $500.0 million share repurchase program with terms consistent to those of our previously authorized $250.0 million share repurchase program. The $250.0 million share repurchase program was terminated upon commencement of the new program.

The Credit Agreement ~~stipulates certain events and conditions~~provides that, ~~may require us~~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 ~~by the terms of~~in the Credit Agreement, generated by operating, investing, or financing activities to prepay some or all of the

outstanding borrowings under ~~our secured credit facilities.~~the Senior Secured Credit Facilities. The Credit Agreement also requires mandatory prepayments of the outstanding borrowings under ~~our secured credit facilities~~the Senior Secured Credit Facilities upon certain asset dispositions and casualty events, in each case subject to certain reinvestment rights, and upon the incurrence of certain indebtedness (excluding any permitted indebtedness). These provisions were not triggered during the ~~six~~three months ended ~~June 30,~~March 31, 2020.

The Credit Agreement and the Senior Notes Indentures contain restrictions and covenants that limit the ability of our wholly-owned subsidiary, Sensata Technologies B.V. ("STBV"), and certain of its subsidiaries to, among other things, incur subsequent indebtedness, sell assets, pay dividends, and make other restricted payments. For a full discussion of these restrictions and covenants, refer to Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources," included in our Annual Report on Form 10-K for the year ended December 31, 2019.

These restrictions and covenants, which are subject to important exceptions and qualifications set forth in the Credit Agreement and Senior Notes Indentures, were taken into consideration when we established our share repurchase programs, and will be evaluated periodically with respect to future potential funding of those programs. As of March 31, 2020, we believe we were in compliance with all covenants and default provisions under our credit arrangements.

Our ability to raise additional financing, and our borrowing costs, may be impacted by short- and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on our performance as measured by certain credit metrics such as interest coverage and leverage ratios. As of ~~July 26, 2019~~April 24, 2020, Moody’s Investors Service’s corporate credit rating for ~~Sensata Technologies B.V. ("STBV")~~STBV was Ba2 with a stable outlook and Standard & Poor’s corporate credit rating for STBV was BB+ with a ~~stable~~negative outlook. The Standard & Poor's outlook represents a decline from our prior quarter outlook of "stable." The change in outlook reflects the uncertainties in the markets caused by COVID-19. Any future downgrades to STBV's credit ratings may increase our future borrowing costs, but will not reduce availability under the Credit Agreement.

From time to time, our Board of Directors has authorized various share repurchase programs. The ~~Credit Agreement and the indentures~~authorized amount of our various share repurchase programs may be modified or terminated by our Board of Directors at any time. We currently have an authorized $500.0 million share repurchase program under which ~~our senior notes were issued contain restrictions and covenants that limit~~approximately $302.3 million remained available as of March 31, 2020. During the ability of STBV and certain of its subsidiaries to, among other things, incur subsequent indebtedness, sell assets, make capital expenditures, pay dividends, and make other restricted payments. For a full discussion of these restrictions and covenants, refer to Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources," included in our Annual Report on Form 10-K for the yearthree months ended ~~December~~March 31, ~~2018.~~

~~As of June 30, 2019~~2020, we ~~were in compliance with all covenants and default provisions~~repurchased approximately 0.9 million ordinary shares under our ~~credit arrangements.~~share repurchase program for a total purchase price of approximately $35.2 million, which are now held as treasury shares. On April 2, 2020, we announced a temporary suspension of our share repurchase program to enhance our financial flexibility in light of the uncertainties surrounding COVID-19.

Recently Issued Accounting Pronouncements

~~In February 2016~~There are no recently issued accounting standards that have been adopted in the ~~Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02,~~ ~~Leases (Topic 842), which establishes new accounting and disclosure requirements for leases. We~~current period or will be adopted the provisions of FASB ASU No. 2016-02 on January 1, 2019 using the modified retrospective transition method. Refer to Note 2, "New Accounting Pronouncements" and Note 18, "Leases," each of our condensed consolidated financial statements included elsewhere in ~~this Quarterly Report on Form 10-Q, for additional discussion of this adoption. We do not expect adoption of FASB ASU No. 2016-02~~future periods that have had or are expected to have a material impact on our ~~future~~consolidated financial position or results of operations.

Critical Accounting Policies and Estimates

For a discussion of the critical accounting policies that require the use of significant judgments and estimates by management, refer to Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates" included in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

No significant changes to our market risk have occurred since December 31, ~~2018.~~2019. For a discussion of market risks affecting us, refer to Part II, Item 7A—"Quantitative and Qualitative Disclosures About Market Risk" included in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.


Item 4.	Controls and Procedures.

The required certifications of our Chief Executive Officer and Chief Financial Officer are included as exhibits to this Quarterly Report on Form 10-Q. The disclosures set forth in this Item 4 contain information concerning the evaluation of our disclosure controls and procedures and changes in internal control over financial reporting referred to in these certifications. These certifications should be read in conjunction with this Item 4 for a more complete understanding of the matters covered by the certifications.

Evaluation of Disclosure Controls and Procedures

With the participation of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as of ~~June 30, 2019.~~March 31, 2020. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the ~~United States ("~~U.S.") Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of ~~June 30, 2019,~~March 31, 2020, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

There are inherent limitations to the effectiveness of any system of internal control over financial reporting. Accordingly, even an effective system of internal control over financial reporting can only provide reasonable assurance with respect to financial statement preparation and presentation in accordance with U.S. generally accepted accounting principles. Our internal controls over financial reporting are subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may be inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time.

PART II—OTHER INFORMATION


Item 1.	Legal Proceedings.

~~As discussed in Part I, Item 3—"Legal Proceedings" in our Annual Report on Form 10-K for the year ended December 31, 2018, we~~We are regularly involved in a number of claims and litigation matters in the ordinary course of business. Most of our litigation matters are third-party claims related to patent infringement allegations or for property damage allegedly caused by our products, but some involve allegations of personal injury or wrongful death. From time to time, we are also involved in disagreements with vendors and customers. Information on certain legal proceedings in which we are involved is included in Note ~~10,~~12, "Commitments and Contingencies" of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. 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, or cash flows.


Item 1A.	Risk Factors.

Information regarding risk factors appears in Part I, Item 1A—"Risk ~~Factors"~~Factors," in our Annual Report on Form 10-K for the year ended December 31, ~~2018. There have been no material changes to~~2019. The information presented below updates and should be read in connection with the risk factors and information previously disclosed therein.

We are subject to various risks related to public health crises, including the global coronavirus (COVID-19) pandemic, which could have material and adverse impacts on our business, financial condition, liquidity and results of operations.

Any outbreaks of contagious diseases and other adverse public health developments in countries where we operate could have a material and adverse impact on our business, financial condition, liquidity and results of operations. For example, the COVID-19 pandemic has caused widespread disruptions to our Company in the first quarter of 2020. During the first quarter, these disruptions were primarily limited to our operations in China, portions of which were closed during the end of January and first half of February due to government mandates. As the virus spread to the rest of the world in March, our operations outside of China also have been materially impacted. As of March 31, 2020, we were still experiencing significant disruptions, and at a minimum we expect those disruptions to continue throughout the second quarter of 2020. These disruptions include, depending on the specific location, full or partial shutdowns of our facilities as mandated by government decree, government actions limiting our ability to adjust certain costs, significant travel restrictions, “work-from-home” orders, limited availability of our workforce, supplier constraints, supply-chain interruptions, logistics challenges and limitations, and reduced demand from certain customers. In addition, in these challenging and dynamic circumstances, we are working to protect our employees, maintain business continuity and sustain our operations, including ensuring the safety and protection of our people who work in our plants and distribution centers across the world, many of whom support the manufacturing and delivery of products deemed part of the critical infrastructure or essential businesses by the applicable local or country governments. The extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, the potential resurgence of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

In addition, the COVID-19 pandemic increases the likelihood and potential severity of other risks previously discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for our fiscal year ended December 31, 2019. These include, but are not limited to, the following:

A protracted economic downturn could negatively affect the financial condition of the industries and customers we serve, which may result in an increase in bankruptcies or insolvencies, a delay in payments, and decreased sales.

A scarcity of resources or other hardships caused by the COVID-19 pandemic may result in increased nationalism, protectionism and political tensions which may cause governments and/or other entities to take actions that may have a significant negative impact on the ability of the Company, its suppliers and its customers to conduct business.

The impact of the COVID-19 pandemic may cause us to restructure our business or divest some of our businesses or product lines in the future, which may have a material adverse effect on our results of operations, financial condition, and cash flows.

To mitigate the spread of COVID-19, we have transitioned a significant subset of our employee population to a remote work environment, which may exacerbate various cybersecurity risks to our business, including an increased demand for information technology resources, an increased risk of phishing and other cybersecurity attacks, and an increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information.

The COVID-19 pandemic has disrupted the supply of raw materials, and we may experience increased difficulties in obtaining a consistent supply of materials at stable pricing levels.

If the financial performance of our businesses were to decline significantly as a result of the COVID-19 pandemic, we could incur a material non-cash charge to our income statement for the impairment of goodwill and other intangible assets.

The continued global spread of COVID-19 has led to disruption and volatility in the global capital markets, which may increase the cost of, and adversely impacted access to, capital. In addition, as a public limited company incorporated under the laws of England and Wales, we may have even less flexibility with respect to certain aspects of capital management.

If the financial performance of our businesses were to decline significantly for an extended period of time as a result of the COVID-19 pandemic, we may face challenges to comply with the covenants contained in our credit arrangements.

As of the date of this Quarterly Report on Form10-Q, given the speed with which the COVID-19 pandemic is evolving and the uncertainty of its duration and impact, we are not able to predict the impact of the COVID-19 pandemic on our business, financial condition, liquidity and financial results, and there can be no assurance that the COVID-19 pandemic will not have a material and adverse effect on our financial results during any quarter or year in which we are affected.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

Period
Total
Number
of Shares
Purchased (in shares)

Weighted-Average
Price
Paid per Share
Total Number of
Shares Purchased as Part of Publicly
Announced Plan or Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs
(in millions) ⁽²⁾
April 1 through April 30, 2019 137,522
⁽¹⁾
$ 46.93
—
$ 99.8
May 1 through May 31, 2019 1,117
⁽¹⁾
$ 43.73
—
$ 99.8
June 1 through June 30, 2019 379,101
$ 46.03
379,101
$ 82.4
Total 517,740
$ 46.26
379,101
$ 82.4



Period	Total Number of Shares Purchased (in shares)		Weighted-Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs (in millions) ⁽²⁾
January 1 through January 31, 2020	—		$	—	—	$	337.5
February 1 through February 29, 2020	90,159	(1)	$	44.49	89,831	$	333.5
March 1 through March 31, 2020	808,701		$	38.56	808,701	$	302.3
Quarter total	898,860		$	39.15	898,532	$	302.3

__________________________

⁽¹⁾

~~Consists of ordinary shares withheld to cover withholding tax obligations for employees upon~~Upon the vesting of restricted ~~securities.~~securities, we collect and pay withholding tax for employees by withholding shares to cover such tax. The number of shares presented includes 328 shares withheld in this manner with an aggregate value of $15 thousand, based on the closing price of our ordinary shares on the date of withholding. These withholdings took place outside of a ~~public~~publicly announced repurchase plan.

⁽²⁾

Other than shares withheld to cover required tax withholding upon the vesting of restricted securities, all purchases during the three months ended ~~June 30, 2019~~March 31, 2020 were conducted pursuant to a ~~$250.0~~$500.0 million share repurchase program authorized by our Board of Directors and publicly announced on ~~October 30, 2018. On~~ July 30, ~~2019 our Board of Directors approved a new $500.0 million~~2019. This share repurchase program ~~which replaces~~does not have an established expiration date. On April 2, 2020, we announced a temporary suspension of our share repurchase program to enhance our financial flexibility in light of the ~~$250.0 million program.~~uncertainties surrounding COVID-19.


Item 3.	Defaults Upon Senior Securities.

None.


Item 5.	Other Information.

As previously reported in our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 23, 2020 (the “Prior Report”), on March 1, 2020, Jeffrey Cote assumed the role of our Chief Executive Officer upon the effective retirement of Martha Sullivan from that role.

As reported in the Prior Report, in connection with Mr. Cote becoming our Chief Executive Officer, his annual base salary was increased to $930,000 and his annual incentive opportunity was set at 120% of his annual base salary. Effective as of March 1, 2020, Mr. Cote entered into a Third Amended and Restated Employment Agreement (the “Cote Employment Agreement”) with our subsidiary Sensata Technologies, Inc. (“STI”) to give effect to these adjustments. In addition, the Cote Employment Agreement provides for an increase to the severance payable to Mr. Cote from an amount equal to one year of his annual base salary to an amount equal to two years of his annual base salary in the event that his employment is terminated by us without “cause” or by him for “good reason” (as those terms are defined in the Cote Employment Agreement).

As also reported in the Prior Report, effective as of March 1, 2020, Ms. Sullivan assumed the role of Executive Advisor, and her annual base salary was adjusted to $472,500. On March 1, 2020, STI and Ms. Sullivan entered into a Third Amended and Restated Employment Agreement (the “Sullivan Employment Agreement”) to give effect to this change and the other changes described in the Prior Report. In addition, we and Ms. Sullivan entered into an Amendment to Martha Sullivan Award Agreements dated February 29, 2020 (the “Sullivan Award Amendment”), to provide for the previously announced amendment to Ms. Sullivan’s stock option awards granted from 2013 through 2018 to allow for their continued exercisability until 60 days after her service as a director on our Board ends.

The foregoing description of the Cote Employment Agreement, the Sullivan Employment Agreement, and the Sullivan Award Amendment is a summary and is qualified in its entirety by reference to the full text of the Cote Employment Agreement, the Sullivan Employment Agreement, and the Sullivan Award Amendment, which are attached to this Quarterly Report on Form 10-Q as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference.


Item 6.	Exhibits.



Exhibit No.		Description

10.1		~~Technical~~ Third Amended and Restated Employment Agreement between Jeffrey Cote and Sensata Technologies Inc., dated March 1, 2020. *†

10.2		Third Amended and Restated Employment Agreement between Martha Sullivan and Sensata Technologies Inc., dated March 1, 2020. *†

10.3		Amendment to ~~Credit Agreement dated as of June 13, 2019, to the Credit Agreement dated as of May 12, 2011, by and among~~Martha Sullivan Award Agreements with Sensata Technologies ~~B.V.,~~Holding plc, dated February 29, 2020. *†

10.4		Amended and Restated Employment Agreement between Yann Etienvre and Sensata Technologies ~~Finance Company, LLC~~Inc., dated March 5, 2020.*†

10.5		Amended and ~~Morgan Stanley Senior Funding,~~Restated Employment Agreement between Vineet Nargolwala and Sensata Technologies Inc. ~~as administrative agent on behalf~~, dated March 5, 2020.*†

10.6		Amended and Restated Employment Agreement between Hans Lidforss and Sensata Technologies Inc., dated March 5, 2020.*†

10.7		Form of ~~the lenders party~~Consent to ~~the Credit Agreement.~~Reduction in Salary April 1, 2020 through June 30, 2020 for Executive Officers.*†

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document. *

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document. *

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document. *

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document. *

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document. *

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

___________________________

* Filed herewith

† Indicates management contract or compensatory plan, contract, or arrangement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: ~~July 30, 2019~~April 29, 2020

~~SENSATA TECHNOLOGIES HOLDING PLC~~

SENSATA TECHNOLOGIES HOLDING PLC

/s/ ~~Martha Sullivan~~Jeffrey Cote

(~~Martha Sullivan)~~Jeffrey Cote)

President and Chief Executive Officer

(Principal Executive Officer)

/s/ Paul Vasington

(Paul Vasington)

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

3432



	For the six months ended June 30, 2019						For the six months ended June 30, 2018
	Performance Sensing		Sensing Solutions		Total		Performance Sensing		Sensing Solutions		Total
Automotive	$	990,311	$	22,100	$	1,012,411	$	1,062,379	$	26,858	$	1,089,237
HVOR	294,233		—		294,233		276,667		—		276,667
Appliance and HVAC	—		107,536		107,536		—		110,927		110,927
Industrial	—		188,459		188,459		—		169,232		169,232
Aerospace	—		87,881		87,881		—		82,206		82,206
Other	—		63,705		63,705		—		71,884		71,884
Total	$	1,284,544	$	469,681	$	1,754,225	$	1,339,046	$	461,107	$	1,800,153



Options Granted To:	Number of Options Granted (in thousands)	Weighted- Average Grant Date Fair Value		Vesting Period
Various executives and employees	378	$	13.91	25% per year over four years



Awards Granted To:	Type of Award	Number of Units Granted (in thousands)	Percentage of PRSUs Awarded That May Vest	Weighted- Average Grant Date Fair Value
Various executives and employees	RSU ⁽¹⁾	186	N/A	$	46.76
Directors	RSU ⁽¹⁾	28	N/A	$	43.92
Various executives and employees	PRSU⁽²⁾	137	0.0% - 172.5%	$	46.93
Various executives and employees	PRSU ⁽²⁾	75	0.0% - 150.0%	$	46.93



	Severance
Balance at December 31, 2018	$	6,591
Charges	17,486
Payments	(6,004		)
Impact of changes in foreign currency exchange rates	(80		)
Balance at June 30, 2019	$	17,993



Derivatives designated as hedging instruments	Amount of Deferred Gain Recognized in Other Comprehensive Income				Location of Net Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income	Amount of Net Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income
Derivatives designated as hedging instruments	2019		2018			2019		2018
Foreign currency forward contracts	$	10,327	$	15,803	Net revenue	$	9,712	$	(18,948	)
Foreign currency forward contracts	$	6,460	$	4,658	Cost of revenue	$	1,069	$	1,836
Foreign currency forward contracts	$	—	$	—	Other, net	$	—	$	(1,376	)



Net working capital, excluding cash	$	16,980
Property, plant and equipment	4,384
Goodwill	113,731
Other intangible assets	122,742
Other assets	63
Deferred income tax liabilities	(27,000		)
Other long-term liabilities	(1,000		)
Fair value of net assets acquired, excluding cash and cash equivalents	229,900
Cash and cash equivalents	359
Fair value of net assets acquired	$	230,259



	Acquisition Date Fair Value		Weighted-Average Lives (years)
Acquired definite-lived intangible assets:
Customer relationships	$	74,500	10
Completed technologies	31,040		13
Tradenames	15,400		15
Other	1,802		6
Total definite-lived intangible assets acquired	$	122,742	12



	December 31, 2018		Adjustment			January 1, 2019
Prepaid expenses and other current assets	$	113,234	$	(253	)	$	112,981
Other intangible assets, net	$	897,191	$	(1,510	)	$	895,681
Other assets	$	86,890	$	58,496		$	145,386
Accrued expenses and other current liabilities	$	218,130	$	12,119		$	230,249
Other long-term liabilities	$	39,277	$	44,614		$	83,891



	June 30, 2019
Operating lease right-of-use assets:
Other assets	$	52,471
Total operating lease right-of-use assets	$	52,471
Operating lease liabilities:
Accrued expenses and other current liabilities	$	11,864
Other long-term liabilities	42,062
Total operating lease liabilities	$	53,926
Finance lease right-of-use assets:
Property, plant and equipment, at cost	$	49,714
Accumulated depreciation	(23,412		)
Property, plant and equipment, net	$	26,302
Finance lease liabilities:
Current portion of long-term debt, finance lease and other financing obligations	$	2,298
Finance lease and other financing obligations, less current portion	29,797
Total finance lease liabilities	$	32,095



	Six months ended
	June 30, 2019
Operating leases	$	1,882
Finance leases	$	—



	For the six months ended
	June 30, 2019
Operating cash flows from operating leases	$	8,090
Operating cash flows from finance leases	$	1,206
Financing cash flows from finance leases	$	753



	Operating Leases			Finance Leases
Year ending December 31,
2019 (excluding the six months ended June 30, 2019)	$	7,932		$	2,715
2020	13,030			4,541
2021	9,235			4,063
2022	7,266			3,713
2023	5,961			3,772
Thereafter	27,550			36,330
Total undiscounted cash flows related to lease liabilities	70,974			55,134
Less imputed interest	(17,048		)	(23,039		)
Total lease liabilities	$	53,926		$	32,095



	Three-Month (Decline)/Growth						Six-Month (Decline)/Growth
	Performance Sensing		Sensing Solutions		Total		Performance Sensing		Sensing Solutions		Total
Reported net revenue (decline)/growth	(4.7	)%	0.7	%	(3.3	)%	(4.1	)%	1.9	%	(2.6	)%
Percent impact of:
Acquisition and divestiture, net⁽¹⁾	(3.0	)	5.8		(0.7	)	(3.2	)	5.4		(1.0	)
Foreign currency remeasurement⁽²⁾	(1.0	)	(1.0	)	(1.0	)	(1.2	)	(0.9	)	(1.2	)
Organic revenue (decline)/growth	(0.7	)%	(4.1	)%	(1.6	)%	0.3	%	(2.6	)%	(0.4	)%



	For the three months ended					For the six months ended
($ in millions)	June 30, 2019		June 30, 2018			June 30, 2019		June 30, 2018
Severance costs, net ⁽¹⁾	$	14.6	$	(0.3	)	$	17.5	$	3.3
Facility and other exit costs	0.0		0.5			0.0		0.7
Other ⁽²⁾	1.6		—			4.1		—
Restructuring and other charges, net	$	16.3	$	0.2		$	21.6	$	4.0