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, 2022~~March 31, 2023


☐			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.)

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 15, 2022, 155,251,755~~April 14, 2023, 152,894,406 ordinary shares were outstanding.

Table of Contents

TABLE OF CONTENTS


PART I
	Item 1.	Financial Statements (unaudited):
		Condensed Consolidated Balance Sheets as of ~~June~~March 31, 2 3023 0 ~~, 2022~~ and December 31, ~~2021~~202 2	3
		Condensed Consolidated Statements of Operations for the Three ~~and~~ Si x Months Ended ~~June~~March 31, 2023 and 3 0 , 2022 ~~and 2021~~	4
		Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Six~~Months Ended ~~June~~ 3 0March 31 , ~~2022~~2023 and ~~2021~~2022	5
		Condensed Consolidated Statements of Cash Flows for the T hree S ix Months Ended ~~June~~ 3 0March 31 , ~~2022~~2023 and ~~2021~~2022	6
		Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three ~~Three and~~ ~~Six~~Months Ended ~~June~~March 31, 2023 and 3 0 , 2022 ~~and 2021~~	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2319
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3428
	Item 4.	Controls and Procedures	3429

PART II
	Item 1.	Legal Proceedings	3530
	Item 1A.	Risk Factors	3530
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3530
	Item 3.	Defaults Upon Senior Securities	3530
	Item 5.	Other Information	30
	Item 6.	Exhibits	3631
		Signatures	3732

Table of Contents

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, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,558,578	$	1,708,955	Cash and cash equivalents	$	1,034,134	$	1,225,518
Accounts receivable, net of allowances of $26,448 and $17,003 as of June 30, 2022 and December 31, 2021, respectively		743,048		653,438
Accounts receivable, net of allowances of $23,675 and $24,246 as of March 31, 2023 and December 31, 2022, respectively						Accounts receivable, net of allowances of $23,675 and $24,246 as of March 31, 2023 and December 31, 2022, respectively	759,752		742,382
Inventories	Inventories	656,736		588,231		Inventories	658,562		644,875
Prepaid expenses and other current assets	Prepaid expenses and other current assets	161,367		126,370		Prepaid expenses and other current assets	187,747		162,268

Total current assets	Total current assets	3,119,729		3,076,994		Total current assets	2,640,195		2,775,043
Property, plant and equipment, net	Property, plant and equipment, net	825,862		820,933		Property, plant and equipment, net	848,033		840,819
Goodwill	Goodwill	3,534,438		3,502,063		Goodwill	3,902,862		3,911,224
Other intangible assets, net of accumulated amortization of $2,351,560 and $2,277,393 as of June 30, 2022 and December 31, 2021, respectively		904,929		946,731
Other intangible assets, net of accumulated amortization of $2,393,587 and $2,352,813 as of March 31, 2023 and December 31, 2022, respectively						Other intangible assets, net of accumulated amortization of $2,393,587 and $2,352,813 as of March 31, 2023 and December 31, 2022, respectively	959,469		999,722
Deferred income tax assets	Deferred income tax assets	101,899		105,028		Deferred income tax assets	98,230		100,539
Other assets	Other assets	119,820		162,017		Other assets	136,065		128,873
Total assets	Total assets	$	8,606,677	$	8,613,766	Total assets	$	8,584,854	$	8,756,220
Liabilities and shareholders' equity	Liabilities and shareholders' equity					Liabilities and shareholders' equity
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of long-term debt, finance lease and other financing obligations	Current portion of long-term debt, finance lease and other financing obligations	$	6,566	$	6,833	Current portion of long-term debt, finance lease and other financing obligations	$	198,696	$	256,471
Accounts payable	Accounts payable	537,261		459,093		Accounts payable	529,941		531,572
Income taxes payable	Income taxes payable	15,309		26,517		Income taxes payable	50,869		43,987
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	327,993		343,816		Accrued expenses and other current liabilities	329,960		346,942

Total current liabilities	Total current liabilities	887,129		836,259		Total current liabilities	1,109,466		1,178,972
Deferred income tax liabilities	Deferred income tax liabilities	341,383		339,273		Deferred income tax liabilities	369,897		364,593
Pension and other post-retirement benefit obligations	Pension and other post-retirement benefit obligations	37,863		38,758		Pension and other post-retirement benefit obligations	37,883		36,086
Finance lease and other financing obligations, less current portion	Finance lease and other financing obligations, less current portion	25,623		26,564		Finance lease and other financing obligations, less current portion	24,471		24,742
Long-term debt, net	Long-term debt, net	4,213,512		4,214,946		Long-term debt, net	3,768,627		3,958,928
Other long-term liabilities	Other long-term liabilities	77,583		63,232		Other long-term liabilities	81,018		82,092
Total liabilities	Total liabilities	5,583,093		5,519,032		Total liabilities	5,391,362		5,645,413
Commitments and contingencies (Note 12)		0		0
Commitments and contingencies (Note 11)						Commitments and contingencies (Note 11)
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Ordinary shares, €0.01 nominal value per share, 177,069 shares authorized, and 174,924 and 174,287 shares issued as of June 30, 2022 and December 31, 2021, respectively		2,239		2,232
Treasury shares, at cost, 19,269 and 16,438 shares as of June 30, 2022 and December 31, 2021, respectively		(978,595)		(832,439)
Ordinary shares, €0.01 nominal value per share, 177,069 shares authorized, and 175,298 and 175,207 shares issued as of March 31, 2023 and December 31, 2022, respectively						Ordinary shares, €0.01 nominal value per share, 177,069 shares authorized, and 175,298 and 175,207 shares issued as of March 31, 2023 and December 31, 2022, respectively	2,243		2,242
Treasury shares, at cost, 22,781 and 22,781 shares as of March 31, 2023 and December 31, 2022, respectively						Treasury shares, at cost, 22,781 and 22,781 shares as of March 31, 2023 and December 31, 2022, respectively	(1,124,713)		(1,124,713)
Additional paid-in capital	Additional paid-in capital	1,841,925		1,812,244		Additional paid-in capital	1,876,168		1,866,201
Retained earnings	Retained earnings	2,164,734		2,132,257		Retained earnings	2,452,858		2,383,341
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(6,719)		(19,560)		Accumulated other comprehensive loss	(13,064)		(16,264)

Total shareholders' equity	Total shareholders' equity	3,023,584		3,094,734		Total shareholders' equity	3,193,492		3,110,807
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	8,606,677	$	8,613,766	Total liabilities and shareholders' equity	$	8,584,854	$	8,756,220

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

Table of Contents

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, 2022		June 30, 2021		June 30, 2022		June 30, 2021			March 31, 2023		March 31, 2022
Net revenue	Net revenue	$	1,020,548	$	992,660	$	1,996,318	$	1,935,188	Net revenue	$	998,175	$	975,770
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Cost of revenue	Cost of revenue	686,603		658,285		1,343,683		1,293,634		Cost of revenue	670,471		657,080
Research and development	Research and development	47,971		42,913		93,951		78,869		Research and development	45,939		45,980
Selling, general and administrative	Selling, general and administrative	97,329		86,821		193,009		163,944		Selling, general and administrative	86,150		95,680
Amortization of intangible assets	Amortization of intangible assets	36,805		34,857		74,172		66,921		Amortization of intangible assets	40,774		37,367
Restructuring and other charges, net	Restructuring and other charges, net	12,897		5,029		26,630		9,611		Restructuring and other charges, net	5,999		13,733
Total operating costs and expenses	Total operating costs and expenses	881,605		827,905		1,731,445		1,612,979		Total operating costs and expenses	849,333		849,840
Operating income	Operating income	138,943		164,755		264,873		322,209		Operating income	148,842		125,930
Interest expense, net	Interest expense, net	(44,842)		(45,213)		(90,287)		(89,256)		Interest expense, net	(40,091)		(45,445)
Other, net	Other, net	(39,240)		1,012		(89,696)		(38,385)		Other, net	1,392		(50,456)
Income before taxes	Income before taxes	54,861		120,554		84,890		194,568		Income before taxes	110,143		30,029
Provision for income taxes	Provision for income taxes	20,020		7,638		27,608		27,919		Provision for income taxes	23,726		7,588
Net income	Net income	$	34,841	$	112,916	$	57,282	$	166,649	Net income	$	86,417	$	22,441
Basic net income per share	Basic net income per share	$	0.22	$	0.71	$	0.36	$	1.05	Basic net income per share	$	0.57	$	0.14
Diluted net income per share	Diluted net income per share	$	0.22	$	0.71	$	0.36	$	1.05	Diluted net income per share	$	0.56	$	0.14

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

Table of Contents

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(unaudited)


		For the three months ended				For the six months ended					For the three months ended
		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021			March 31, 2023		March 31, 2022
Net income	Net income	$	34,841	$	112,916	$	57,282	$	166,649	Net income	$	86,417	$	22,441
Other comprehensive income:	Other comprehensive income:									Other comprehensive income:
Cash flow hedges	Cash flow hedges	9,183		1,398		12,033		15,676		Cash flow hedges	2,807		2,850
Defined benefit and retiree healthcare plans	Defined benefit and retiree healthcare plans	380		1,672		808		3,384		Defined benefit and retiree healthcare plans	393		428
Other comprehensive income	Other comprehensive income	9,563		3,070		12,841		19,060		Other comprehensive income	3,200		3,278
Comprehensive income	Comprehensive income	$	44,404	$	115,986	$	70,123	$	185,709	Comprehensive income	$	89,617	$	25,719

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

Table of Contents

SENSATA TECHNOLOGIES HOLDING PLC

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

For the six months ended
June 30, 2022 June 30, 2021
Cash flows from operating activities:
Net income $ 57,282 $ 166,649
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 62,882 62,833
Amortization of debt issuance costs 3,433 3,426
Share-based compensation 15,739 11,475
Loss on debt financing — 30,066
Amortization of intangible assets 74,172 66,921
Deferred income taxes (5,211) (7,070)
Acquisition-related compensation payments (15,000) —
Mark-to-market loss on equity investments, net 71,100 —
Unrealized loss on derivative instruments and other 20,669 12,700
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, net (102,845) (97,906)
Inventories (69,379) (45,664)
Prepaid expenses and other current assets (17,762) (8,280)
Accounts payable and accrued expenses 56,767 68,764
Income taxes payable (11,384) 6,448
Other 1,425 (2,431)
Net cash provided by operating activities 141,888 267,931
Cash flows from investing activities:
Acquisitions, net of cash received (48,989) (421,951)
Additions to property, plant and equipment and capitalized software (74,069) (63,572)
Investment in debt and equity securities (6,878) (6,444)
Other 152 2,862
Net cash used in investing activities (129,784) (489,105)
Cash flows from financing activities:
Proceeds from exercise of stock options and issuance of ordinary shares 14,577 17,957
Payment of employee restricted stock tax withholdings (7,577) (7,948)
Proceeds from borrowings on debt — 1,001,875
Payments on debt (5,664) (757,889)
Dividends paid (17,225) —
Payments to repurchase ordinary shares (144,279) —
Payments of debt financing costs (2,313) (33,032)
Net cash (used in)/provided by financing activities (162,481) 220,963
Net change in cash and cash equivalents (150,377) (211)
Cash and cash equivalents, beginning of year 1,708,955 1,861,980
Cash and cash equivalents, end of period $ 1,558,578 $ 1,861,769


	For the three months ended
	March 31, 2023		March 31, 2022
Cash flows from operating activities:
Net income	$	86,417	$	22,441
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	30,948		31,531
Amortization of debt issuance costs	1,734		1,716
Gain on sale of business	(5,877)		—
Share-based compensation	7,206		6,540
Loss on debt financing	485		—
Amortization of intangible assets	40,774		37,367
Deferred income taxes	6,491		(340)
Acquisition-related compensation payments	(3,000)		(7,500)
Mark-to-market loss on equity investments, net	—		59,279
Unrealized loss/(gain) on derivative instruments and other	3,107		(517)
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, net	(17,370)		(49,821)
Inventories	(13,687)		(53,004)
Prepaid expenses and other current assets	(19,668)		(8,807)
Accounts payable and accrued expenses	(27,586)		13,488
Income taxes payable	6,882		(7,268)
Other	32		2,250
Net cash provided by operating activities	96,888		47,355
Cash flows from investing activities:
Acquisitions, net of cash received	—		(48,441)
Additions to property, plant and equipment and capitalized software	(36,882)		(35,711)
Investment in debt and equity securities	—		(6,853)
Proceeds from the sale of business, net of cash sold	14,000		—

Other	—		152
Net cash used in investing activities	(22,882)		(90,853)
Cash flows from financing activities:
Proceeds from exercise of stock options and issuance of ordinary shares	2,762		13,348
Payment of employee restricted stock tax withholdings	(123)		(135)

Payments on debt	(250,944)		(2,931)
Dividends paid	(16,777)		—
Payments to repurchase ordinary shares	—		(67,258)

Payments of debt financing costs	(308)		—

Net cash used in financing activities	(265,390)		(56,976)
Net change in cash and cash equivalents	(191,384)		(100,474)
Cash and cash equivalents, beginning of year	1,225,518		1,708,955
Cash and cash equivalents, end of period	$	1,034,134	$	1,608,481

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

Table of Contents

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								Total Shareholders' Equity	Number					Amount		Number			Amount		Additional Paid-In Capital			Retained Earnings
Balance as of March 31, 2022		174,583	$	2,236	(17,576)	$	(899,697)	$	1,831,497	$	2,154,563	$	(16,282)			$	3,072,317
Balance as of December 31, 2022																				Balance as of December 31, 2022	175,207		$	2,242		(22,781)							$	(1,124,713)			$	1,866,201			$	2,383,341	$	(16,264)			$	3,110,807
Surrender of shares for tax withholding	Surrender of shares for tax withholding	—	—		(148)	(7,442)		—		—		—						(7,442)		Surrender of shares for tax withholding	—		—			(2)		(123)			—				—				—						(123)
Stock options exercised	Stock options exercised	39	—		—	—		1,229		—		—						1,229		Stock options exercised	82		1			—		—			2,761				—				—						2,762
Vesting of restricted securities	Vesting of restricted securities	450	5		—	—		—		(5)		—						—		Vesting of restricted securities	11		—			—		—			—				—				—						—
Cash dividends paid	Cash dividends paid	—	—		—	—		—		(17,225)		—						(17,225)		Cash dividends paid	—		—			—		—			—				(16,777)				—						(16,777)
Repurchase of ordinary shares		—	—		(1,693)	(78,898)		—		—		—						(78,898)

Retirement of ordinary shares	Retirement of ordinary shares	(148)	(2)		148	7,442		—		(7,440)		—						—		Retirement of ordinary shares	(2)		—			2		123			—				(123)				—						—
Share-based compensation	Share-based compensation	—	—		—	—		9,199		—		—						9,199		Share-based compensation	—		—			—		—			7,206				—				—						7,206

Net income	Net income	—	—		—	—		—		34,841		—						34,841		Net income	—		—			—		—			—				86,417				—						86,417
Other comprehensive income	Other comprehensive income	—	—		—	—		—		—		9,563						9,563		Other comprehensive income	—		—			—		—			—				—				3,200						3,200
Balance as of June 30, 2022		174,924	$	2,239	(19,269)	$	(978,595)	$	1,841,925	$	2,164,734	$	(6,719)					$	3,023,584
Balance as of March 31, 2023																				Balance as of March 31, 2023	175,298		$	2,243		(22,781)		$	(1,124,713)		$	1,876,168			$	2,452,858			$	(13,064)					$	3,193,492


		Ordinary Shares			Treasury Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Total Shareholders' Equity			Ordinary Shares			Treasury Shares			Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Loss					Total Shareholders' Equity
		Number	Amount		Number	Amount								Total Shareholders' Equity				Amount	Number		Amount	Additional Paid-In Capital												Total Shareholders' Equity
Balance as of December 31, 2021	Balance as of December 31, 2021	174,287	$	2,232	(16,438)	$	(832,439)	$	1,812,244	$	2,132,257	$	(19,560)		$	3,094,734	Balance as of December 31, 2021	174,287	$	2,232	(16,438)					$	1,812,244			$	2,132,257				$	(19,560)	$	3,094,734
Surrender of shares for tax withholding	Surrender of shares for tax withholding	—	—		(151)	(7,577)		—		—		—			(7,577)		Surrender of shares for tax withholding	—	—		(3)	(135)		—				—				—					(135)
Stock options exercised	Stock options exercised	329	4		—	—		13,942		—		—			13,946		Stock options exercised	290	4		—	—		12,713				—				—					12,717
Vesting of restricted securities	Vesting of restricted securities	459	5		—	—		—		(5)		—			—		Vesting of restricted securities	9	—		—	—		—				—				—					—

Cash dividends paid		—	—		—	—		—		(17,225)		—			(17,225)
Repurchase of ordinary shares	Repurchase of ordinary shares	—	—		(2,831)	(146,156)		—		—		—			(146,156)		Repurchase of ordinary shares	—	—		(1,138)	(67,258)		—				—				—					(67,258)
Retirement of ordinary shares	Retirement of ordinary shares	(151)	(2)		151	7,577		—		(7,575)		—			—		Retirement of ordinary shares	(3)	—		3	135		—				(135)				—					—
Share-based compensation	Share-based compensation	—	—		—	—		15,739		—		—			15,739		Share-based compensation	—	—		—	—		6,540				—				—					6,540

Net income	Net income	—	—		—	—		—		57,282		—			57,282		Net income	—	—		—	—		—				22,441				—					22,441
Other comprehensive income	Other comprehensive income	—	—		—	—		—		—		12,841			12,841		Other comprehensive income	—	—		—	—		—				—				3,278					3,278
Balance as of June 30, 2022		174,924	$	2,239	(19,269)	$	(978,595)	$	1,841,925	$	2,164,734	$	(6,719)		$	3,023,584
Balance as of March 31, 2022																	Balance as of March 31, 2022	174,583	$	2,236	(17,576)	$	(899,697)	$	1,831,497			$	2,154,563			$	(16,282)				$	3,072,317

Ordinary Shares Treasury Shares Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders' Equity
Number Amount Number Amount
Balance as of March 31, 2021 173,533 $ 2,223 (15,631) $ (784,596) $ 1,775,320 $ 1,831,241 $ (33,545) $ 2,790,643
Surrender of shares for tax withholding — — (132) (7,727) — — — (7,727)
Stock options exercised 208 3 — — 8,167 — — 8,170
Vesting of restricted securities 396 5 — — — (5) — —
Retirement of ordinary shares (132) (2) 132 7,727 — (7,725) — —
Share-based compensation — — — — 6,376 — — 6,376
Net income — — — — — 112,916 — 112,916
Other comprehensive income — — — — — — 3,070 3,070
Balance as of June 30, 2021 174,005 $ 2,229 (15,631) $ (784,596) $ 1,789,863 $ 1,936,427 $ (30,475) $ 2,913,448

Ordinary Shares Treasury Shares Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders' Equity
Number Amount Number Amount
Balance as of December 31, 2020 173,266 $ 2,220 (15,631) $ (784,596) $ 1,759,668 $ 1,777,729 $ (49,535) $ 2,705,486
Surrender of shares for tax withholding — — (136) (7,948) — — — (7,948)
Stock options exercised 467 6 — — 18,720 — — 18,726
Vesting of restricted securities 408 5 — — — (5) — —
Retirement of ordinary shares (136) (2) 136 7,948 — (7,946) — —
Share-based compensation — — — — 11,475 — — 11,475
Net income — — — — — 166,649 — 166,649
Other comprehensive income — — — — — — 19,060 19,060
Balance as of June 30, 2021 174,005 $ 2,229 (15,631) $ (784,596) $ 1,789,863 $ 1,936,427 $ (30,475) $ 2,913,448

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

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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 income, cash flows, and changes in shareholders' equity of Sensata Technologies Holding plc, a public limited company incorporated under the laws of England and Wales, and its consolidated subsidiaries, collectively referred to as the "Company," "Sensata," "we," "our," 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 interim financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the interim period results. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022, filed with the U.S. Securities and Exchange Commission ~~(the "SEC")~~ on February ~~10, 2022~~13, 2023 (the ~~"2021~~"2022 Annual Report").

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

2. New Accounting Standards

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

3. Revenue Recognition

The following table presents net revenue disaggregated by segment and end market for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		For the three months ended June 30, 2022						For the three months ended June 30, 2021							For the three months ended March 31, 2023						For the three months ended March 31, 2022
		Performance Sensing		Sensing Solutions		Total		Performance Sensing		Sensing Solutions		Total			Performance Sensing		Sensing Solutions		Total		Performance Sensing		Sensing Solutions		Total
Automotive	Automotive	$	506,232	$	9,932	$	516,164	$	518,367	$	12,052	$	530,419	Automotive	$	516,884	$	8,134	$	525,018	$	502,362	$	9,285	$	511,647
HVOR (1)	HVOR (1)	240,650		—		240,650		223,485		—		223,485		HVOR (1)	234,641		—		234,641		215,335		—		215,335
Industrial	Industrial	—		122,094		122,094		—		105,474		105,474		Industrial	—		135,255		135,255		—		114,619		114,619
Appliance and HVAC (2)	Appliance and HVAC (2)	—		57,675		57,675		—		63,187		63,187		Appliance and HVAC (2)	—		47,474		47,474		—		58,825		58,825
Aerospace	Aerospace	—		38,558		38,558		—		32,793		32,793		Aerospace	—		44,326		44,326		—		33,270		33,270
Other	Other	—		45,407		45,407		—		37,302		37,302		Other	—		11,461		11,461		—		42,074		42,074
Total	Total	$	746,882	$	273,666	$	1,020,548	$	741,852	$	250,808	$	992,660	Total	$	751,525	$	246,650	$	998,175	$	717,697	$	258,073	$	975,770

(1) Heavy vehicle and off-road

(2) Heating, ventilation and air conditioning

For the six months ended June 30, 2022 For the six months ended June 30, 2021
Performance Sensing Sensing Solutions Total Performance Sensing Sensing Solutions Total
Automotive $ 1,008,594 $ 19,217 $ 1,027,811 $ 1,055,080 $ 23,552 $ 1,078,632
HVOR 455,985 — 455,985 401,284 — 401,284
Industrial — 236,713 236,713 — 195,949 195,949
Appliance and HVAC — 116,500 116,500 — 123,103 123,103
Aerospace — 71,828 71,828 — 65,470 65,470
Other — 87,481 87,481 — 70,750 70,750
Total $ 1,464,579 $ 531,739 $ 1,996,318 $ 1,456,364 $ 478,824 $ 1,935,188

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4. Share-Based Payment Plans

The following table presents the components of non-cash compensation expense related to our equity awards for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021:~~

For the three months ended For the six months ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Stock options $ 2 $ 305 $ 309 $ 765
Restricted securities 9,197 6,071 15,430 10,710
Share-based compensation expense $ 9,199 $ 6,376 $ 15,739 $ 11,475

~~Equity Awards~~

We granted the following restricted stock units ("RSUs" and each, an "RSU") and performance-based restricted stock units ("PRSUs" and each, a "PRSU") under the Sensata Technologies Holding plc 2021 Equity Incentive Plan during the six months ended June 30, 2022:

Awards Granted To: Type of Award Number of Units Granted (in thousands) Percentage of PRSUs Awarded that May Vest Weighted Average Grant Date Fair Value
Directors
RSU (1)
29 N/A $ 46.30
Various executives and employees
RSU (2)
518 N/A $ 50.72
Various executives and employees
PRSU (3)
349 0.0% - 200.0% $ 50.52


	For the three months ended
	March 31, 2023		March 31, 2022
Stock options	$	119	$	307
Restricted securities	7,087		6,233
Share-based compensation expense	$	7,206	$	6,540

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

~~(2)~~ ~~These RSUs vest ratably over three years, one-third per year beginning on the first anniversary of the grant date. These RSUs will fully vest on various dates between January 2025 and June 2025.~~

~~(3)~~ ~~ThesePRSUs vest on various dates between April 2025 and June 2025. The number of units that ultimately vest is dependent on the achievement of certain performance criteria.~~

5. Restructuring and Other Charges, Net

The following table presents the components of restructuring and other charges, net for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		For the three months ended				For the six months ended					For the three months ended
		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021			March 31, 2023		March 31, 2022
Q2 2020 Global Restructure Program charges		$	—	$	3,830	$	—	$	5,654
Other restructuring and other charges, net

Severance costs, net	Severance costs, net	—		407		587		593		Severance costs, net	$	4,213	$	587
Facility and other exit costs	Facility and other exit costs	1,241		625		2,289		1,291		Facility and other exit costs	225		1,048

Other (1)		11,656		167		23,754		2,073
Gain on sale of business										Gain on sale of business	(5,877)		—
Acquisition-related compensation arrangements (1)										Acquisition-related compensation arrangements (1)	7,272		18,255
Other (1)(2)										Other (1)(2)	166		(6,157)
Restructuring and other charges, net	Restructuring and other charges, net	$	12,897	$	5,029	$	26,630	$	9,611	Restructuring and other charges, net	$	5,999	$	13,733

(1) ~~Primarily includes expenses related to~~We have reclassified acquisition-related compensation arrangements ~~entered into concurrent with~~for the ~~closing of acquisitions, partially offset by~~three months ended March 31, 2022 from the "other" caption within restructuring and other charges, net, to correspond to current period presentation.

(2) The three months ended March 31, 2022 primarily includes gains ~~relating~~related to changes in the fair value of acquisition-related contingent consideration amounts. ~~Refer to~~ ~~Note 16: Acquisitions and Divestitures~~ ~~for additional information.~~

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The following table presents a rollforward of ~~the~~our severance ~~portion of our restructuring obligations~~liability for the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023:

Q2 2020 Global Restructure Program Other Total
Balance as of December 31, 2021 $ 3,853 $ 3,380 $ 7,233
Charges, net of reversals — 587 587
Payments (3,018) (1,383) (4,401)
Foreign currency remeasurement (14) (159) (173)
Balance as of June 30, 2022 $ 821 $ 2,425 $ 3,246


	Severance
Balance as of December 31, 2022	$	8,617
Charges, net of reversals	4,213
Payments	(5,635)
Foreign currency remeasurement	139
Balance as of March 31, 2023	$	7,334

The severance liability as of ~~June 30,~~March 31, 2023 and December 31, 2022 was entirely recorded in accrued expenses and other current liabilities on our condensed consolidated balance ~~sheet.~~sheets.

6. Other, Net

The following table presents the components of other, net for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		For the three months ended				For the six months ended					For the three months ended
		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021			March 31, 2023		March 31, 2022
Currency remeasurement (loss)/gain on net monetary assets		$	(14,090)	$	1,988	$	(14,157)	$	511
Currency remeasurement loss on net monetary assets										Currency remeasurement loss on net monetary assets	$	(1,259)	$	(67)
Gain/(loss) on foreign currency forward contracts	Gain/(loss) on foreign currency forward contracts	3,165		(1,419)		1,922		(2,377)		Gain/(loss) on foreign currency forward contracts	184		(1,243)
(Loss)/gain on commodity forward contracts		(18,254)		1,186		(8,830)		33
Gain on commodity forward contracts										Gain on commodity forward contracts	1,899		9,424
Loss on debt financing	Loss on debt financing	—		—		—		(30,066)		Loss on debt financing	(485)		—
Mark-to-market loss on investments, net		(11,821)		—		(71,100)		—
Mark-to-market loss on equity investments, net										Mark-to-market loss on equity investments, net	—		(59,279)
Net periodic benefit cost, excluding service cost	Net periodic benefit cost, excluding service cost	(639)		(2,268)		(1,394)		(4,678)		Net periodic benefit cost, excluding service cost	(971)		(755)
Other	Other	2,399		1,525		3,863		(1,808)		Other	2,024		1,464
Other, net	Other, net	$	(39,240)	$	1,012	$	(89,696)	$	(38,385)	Other, net	$	1,392	$	(50,456)

7. Income Taxes

The following table presents the provision for income taxes for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021:~~2022:

For the three months ended For the six months ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Provision for income taxes $ 20,020 $ 7,638 $ 27,608 $ 27,919


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


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

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carryforwards, and (c) changes in withholding taxes on unremitted earnings. Other items impacting deferred tax expense include changes in tax rates and changes in our assessment of the realizability of our deferred tax assets.

We recorded a partial valuation allowance against certain interest carryforwards in the U.S. at both December 31, 2022 and December 31, 2021. We are continually evaluating both the positive and negative evidence for this partial valuation allowance. We believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of this deferred tax asset and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability and future utilization of this attribute that we are able to actually achieve.

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, 2023 and 2022 ~~and 2021~~ the weighted-average ordinary shares outstanding used to calculate basic and diluted net income per share were as follows:

For the three months ended For the six months ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Basic weighted-average ordinary shares outstanding 156,477 158,208 156,950 157,986
Dilutive effect of stock options 190 670 331 689
Dilutive effect of unvested restricted securities 327 466 531 612
Diluted weighted-average ordinary shares outstanding 156,994 159,344 157,812 159,287

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	For the three months ended
	March 31, 2023	March 31, 2022
Basic weighted-average ordinary shares outstanding	152,518	157,422
Dilutive effect of stock options	151	473
Dilutive effect of unvested restricted securities	655	735
Diluted weighted-average ordinary shares outstanding	153,324	158,630

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 were as follows:


		For the three months ended		For the six months ended			For the three months ended
		June 30, 2022	June 30, 2021	June 30, 2022	June 30, 2021		March 31, 2023	March 31, 2022
Anti-dilutive shares excluded	Anti-dilutive shares excluded	1,426	8	715	7	Anti-dilutive shares excluded	381	4
Contingently issuable shares excluded	Contingently issuable shares excluded	1,383	1,089	1,192	1,020	Contingently issuable shares excluded	1,268	1,002

9. Inventories

The following table presents the components of inventories as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:

June 30,
2022 December 31,
2021
Finished goods $ 223,919 $ 201,424
Work-in-process 114,277 101,558
Raw materials 318,540 285,249
Inventories $ 656,736 $ 588,231

~~10. Pension and Other Post-Retirement Benefits~~

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

U.S. Plans Non-U.S. Plans
Defined Benefit Retiree Healthcare Defined Benefit Total
2022 2021 2022 2021 2022 2021 2022 2021
Service cost $ — $ — $ 2 $ 2 $ 982 $ 1,325 $ 984 $ 1,327
Interest cost 113 120 18 21 426 401 557 542
Expected return on plan assets (195) (226) — — (242) (179) (437) (405)
Amortization of net loss/(gain) 226 401 (43) — 330 462 513 863
Amortization of prior service (credit)/cost — — (100) (159) 3 13 (97) (146)
Loss on settlement 103 1,414 — — — — 103 1,414
Net periodic benefit cost/(credit) $ 247 $ 1,709 $ (123) $ (136) $ 1,499 $ 2,022 $ 1,623 $ 3,595

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

U.S. Plans Non-U.S. Plans
Defined Benefit Retiree Healthcare Defined Benefit Total
2022 2021 2022 2021 2022 2021 2022 2021
Service cost $ — $ — $ 4 $ 4 $ 1,938 $ 2,303 $ 1,942 $ 2,307
Interest cost 226 240 64 42 850 805 1,140 1,087
Expected return on plan assets (390) (452) — — (486) (357) (876) (809)
Amortization of net loss/(gain) 367 802 (43) — 608 921 932 1,723
Amortization of prior service (credit)/cost — — (200) (318) 5 16 (195) (302)
Loss on settlement 393 2,979 — — — — 393 2,979
Net periodic benefit cost/(credit) $ 596 $ 3,569 $ (175) $ (272) $ 2,915 $ 3,688 $ 3,336 $ 6,985

~~Components of net periodic benefit cost/(credit) other than service cost are presented in other, net in the condensed consolidated statements of operations. Refer to~~ ~~Note 6: Other, Net~~.


	March 31, 2023		December 31, 2022
Finished goods	$	217,181	$	202,531
Work-in-process	115,608		117,691
Raw materials	325,773		324,653
Inventories	$	658,562	$	644,875

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~~11.~~10. Debt

The following table presents the components of long-term debt, finance lease and other financing obligations as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


		Maturity Date	June 30, 2022		December 31, 2021			Maturity Date	March 31, 2023		December 31, 2022
Term Loan(1)	Term Loan(1)	September 20, 2026	$	449,150	$	451,465	Term Loan(1)	September 20, 2026	$	196,834	$	446,834
4.875% Senior Notes		October 15, 2023	500,000		500,000

5.625% Senior Notes	5.625% Senior Notes	November 1, 2024	400,000		400,000		5.625% Senior Notes	November 1, 2024	400,000		400,000
5.0% Senior Notes	5.0% Senior Notes	October 1, 2025	700,000		700,000		5.0% Senior Notes	October 1, 2025	700,000		700,000

4.375% Senior Notes	4.375% Senior Notes	February 15, 2030	450,000		450,000		4.375% Senior Notes	February 15, 2030	450,000		450,000
3.75% Senior Notes	3.75% Senior Notes	February 15, 2031	750,000		750,000		3.75% Senior Notes	February 15, 2031	750,000		750,000
4.0% Senior Notes	4.0% Senior Notes	April 15, 2029	1,000,000		1,000,000		4.0% Senior Notes	April 15, 2029	1,000,000		1,000,000

5.875% Senior Notes							5.875% Senior Notes	September 1, 2030	500,000		500,000

Less: debt discount, net of premium	Less: debt discount, net of premium		(4,317)		(5,207)		Less: debt discount, net of premium		(2,831)		(3,360)
Less: deferred financing costs	Less: deferred financing costs		(26,691)		(26,682)		Less: deferred financing costs		(28,542)		(29,916)
Less: current portion	Less: current portion		(4,630)		(4,630)		Less: current portion		(196,834)		(254,630)
Long-term debt, net	Long-term debt, net		$	4,213,512	$	4,214,946	Long-term debt, net		$	3,768,627	$	3,958,928

Finance lease and other financing obligations	Finance lease and other financing obligations		$	27,559	$	28,767	Finance lease and other financing obligations		$	26,333	$	26,583
Less: current portion	Less: current portion		(1,936)		(2,203)		Less: current portion		(1,862)		(1,841)
Finance lease and other financing obligations, less current portion	Finance lease and other financing obligations, less current portion		$	25,623	$	26,564	Finance lease and other financing obligations, less current portion		$	24,471	$	24,742

(1) On February 6, 2023, we prepaid $250.0 million of outstanding principal on our Term Loan balance. Accordingly, that portion of the principal balance outstanding on the Term Loan has been presented as current portion of long-term debt on our consolidated balance sheet as of December 31, 2022. On April 25, 2023, we announced that we intend to pay down the remaining balance on the Term Loan in the second quarter of 2023. Accordingly, the remaining principal balance outstanding on the Term Loan has been presented as current portion of long-term debt on our condensed consolidated balance sheet as of March 31, 2023.

Our debt consists of secured credit facilities and various tranches of senior unsecured notes. Refer to Note 14: Debt of our ~~2021~~2022 Annual Report for additional information related to our existing indebtedness.

~~Secured Credit Facilities~~

On June 23, 2022, certain of our indirect, wholly-owned subsidiaries, including Sensata Technologies, Inc. ("STI"), Sensata Technologies Intermediate Holding B.V. ("STIHBV"), and Sensata Technologies B.V. (“STBV”), entered into an amendment (the “Eleventh Amendment”) to (i) the credit agreement, dated as of May 12, 2011 (as amended, supplemented, waived, or otherwise modified, the “Credit Agreement”), and (ii) the Foreign Guaranty, dated as of May 12, 2011.

Among other changes to the Credit Agreement, the Eleventh Amendment (i) increased the aggregate principal amount of the revolving credit facility under the Credit Agreement (the "Revolving Credit Facility") to $750.0 million; (ii) extended the maturity date of the Revolving Credit Facility to June 23, 2027 (which could be accelerated to June 22, 2026 if, prior to June 22, 2026, the term loan under the Credit Agreement (the "Term Loan") is not refinanced with a maturity date that is on or after June 23, 2027); (iii) released the Foreign Guarantors (as defined in the Credit Agreement), excluding STBV, from their obligations to guarantee the obligations of STI and the other Loan Parties (as defined in the Credit Agreement) relating to the Revolving Credit Facility and certain related obligations, subject to an obligation to reinstate such guaranties under certain conditions; (iv) replaced the LIBOR-based interest rates referenced by the Credit Agreement regarding revolving credit loans to (a) for revolving credit loans denominated in U.S. dollars, an interest rate based on the secured overnight financing rate ("SOFR") published by the Federal Reserve Bank of New York and (b) for revolving credit loans denominated in pounds sterling, an interest rate based on the Sterling Overnight Index Average ("SONIA"); and (v) certain of the operational and restrictive covenants and other terms and conditions of the Credit Agreement were modified to provide STI and its affiliates increased flexibility and permissions thereunder.

As of ~~June 30, 2022,~~March 31, 2023, we had $746.1 million available under our $750.0 million ~~Revolving~~revolving credit facility (the "Revolving Credit ~~Facility,~~Facility"), net of $3.9 million of obligations in respect of outstanding letters of credit issued thereunder. Outstanding letters of credit are issued primarily for the benefit of certain operating activities. As of ~~June 30, 2022,~~March 31, 2023, no amounts had been drawn against these outstanding letters of credit.

~~Accounting for Debt Financing Transactions~~

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

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In the six months ended June 30, 2021, in connection with the redemption of $750.0 million aggregate principal amount of 6.25% senior notes due 2026 (the "6.25% Senior Notes"), we recognized a loss of $30.1 million, which included $23.4 million in premiums paid, with the remaining loss representing write-off of debt discounts and deferred financing costs.

Accrued Interest

Accrued interest associated with our outstanding debt is included as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets. As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, accrued interest totaled ~~$44.5~~$54.4 million and ~~$45.1~~$50.1 million, respectively.

~~12.~~11. Commitments and Contingencies

We are regularly involved in a number of claims and litigation matters that arise in the ordinary course of business. Although it is not feasible to predict the outcome of these matters, based upon our experience and current information known to us, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our results of operations, financial condition, and/or cash flows.

~~13.~~12. Shareholders' Equity

Cash Dividends

On ~~May 25, 2022,~~February 22, 2023, we paid a cash dividend of $0.11 per share, or ~~$17.2~~$16.8 million in aggregate, to shareholders of record as of February 8, 2023. On April 13, 2023, we announced that our Board of Directors approved a quarterly dividend of $0.12 per share, payable on May 24, 2023 to shareholders of record as of May 10, 2023.

11 ~~2022.~~

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Treasury Shares

From time to time, our Board of Directors has authorized various share repurchase programs, which may be modified or terminated by the Board at any time. On January 20, 2022, we announced that our Board of Directors had authorized a new $500.0 million ordinary share repurchase program (the “January 2022 Program”), which replaced the previous $500.0 million program approved in July ~~2019, which had availability of $254.5~~2019. We did not repurchase any ordinary shares under this program in the three months ended March 31, 2023. In the three months ended March 31, 2022, we repurchased 1.1 million ~~as of December 31, 2021.~~ordinary shares under the January 2022 Program. As of ~~June 30, 2022, $370.6~~March 31, 2023, $224.5 million remained available for repurchase under the January 2022 Program.

Accumulated Other Comprehensive Loss

The following table presents the components of accumulated other comprehensive loss for the ~~six~~three months ended ~~June 30, 2022:~~March 31, 2023:

Cash Flow Hedges Defined Benefit and Retiree Healthcare Plans Accumulated Other Comprehensive Loss
Balance as of December 31, 2021 $ 16,831 $ (36,391) $ (19,560)
Other comprehensive income before reclassifications, net of tax 26,111 — 26,111
Reclassifications from accumulated other comprehensive loss, net of tax (14,078) 808 (13,270)
Other comprehensive income 12,033 808 12,841
Balance as of June 30, 2022 $ 28,864 $ (35,583) $ (6,719)

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	Cash Flow Hedges		Defined Benefit and Retiree Healthcare Plans		Accumulated Other Comprehensive Loss
Balance as of December 31, 2022	$	15,665	$	(31,929)	$	(16,264)
Other comprehensive income before reclassifications, net of tax	8,992		—		8,992
Reclassifications from accumulated other comprehensive loss, net of tax	(6,185)		393		(5,792)
Other comprehensive income	2,807		393		3,200
Balance as of March 31, 2023	$	18,472	$	(31,536)	$	(13,064)

The following table presents the amounts reclassified from accumulated other comprehensive loss for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 and ~~2021:~~2022:


		For the three months ended June 30,				For the six months ended June 30,				Affected Line in Condensed Consolidated Statements of Operations		For the three months ended March 31,				Affected Line in Condensed Consolidated Statements of Operations
Component	Component	2022		2021		2022		2021			Component	2023		2022
Derivative instruments designated and qualifying as cash flow hedges:	Derivative instruments designated and qualifying as cash flow hedges:										Derivative instruments designated and qualifying as cash flow hedges:
Foreign currency forward contracts	Foreign currency forward contracts	$	(9,476)	$	3,433	$	(13,740)	$	7,840	Net revenue (1)	Foreign currency forward contracts	$	(6,639)	$	(4,264)		Net revenue (1)
Foreign currency forward contracts	Foreign currency forward contracts	(2,603)		(2,024)		(5,232)		(2,767)		Cost of revenue (1)	Foreign currency forward contracts	(1,697)		(2,629)			Cost of revenue (1)

Total, before taxes	Total, before taxes	(12,079)		1,409		(18,972)		5,073		Income before taxes	Total, before taxes	(8,336)		(6,893)			Income before taxes
Income tax effect	Income tax effect	3,116		(352)		4,894		(1,268)		Provision for income taxes	Income tax effect	2,151		1,778			Provision for income taxes
Total, net of taxes	Total, net of taxes	$	(8,963)	$	1,057	$	(14,078)	$	3,805	Net income	Total, net of taxes	$	(6,185)	$	(5,115)		Net income

Defined benefit and retiree healthcare plans	Defined benefit and retiree healthcare plans	$	519	$	2,131	$	1,130	$	4,400	Other, net (2)	Defined benefit and retiree healthcare plans	$	537	$	611		Other, net

Income tax effect	Income tax effect	(139)		(459)		(322)		(1,016)		Provision for income taxes	Income tax effect	(144)		(183)			Provision for income taxes
Total, net of taxes	Total, net of taxes	$	380	$	1,672	$	808	$	3,384	Net income	Total, net of taxes	$	393	$	428		Net income

(1) Refer to Note ~~15:~~14: Derivative Instruments and Hedging Activities for additional 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 information on net periodic benefit cost/(credit).~~Table of Contents

~~14.~~13. Fair Value Measures

Measured on a Recurring Basis

The fair values of our derivative assets and liabilities measured at fair value on a recurring basis as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 are shown in the below table. All fair value measures presented in the table below are categorized in Level 2 of the fair value hierarchy.


		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Assets	Assets					Assets
Foreign currency forward contracts	Foreign currency forward contracts	$	45,074	$	25,112	Foreign currency forward contracts	$	33,583	$	31,126
Commodity forward contracts	Commodity forward contracts	616		2,979		Commodity forward contracts	5,091		4,181
Total	Total	$	45,690	$	28,091	Total	$	38,674	$	35,307

Liabilities	Liabilities					Liabilities
Foreign currency forward contracts	Foreign currency forward contracts	$	6,270	$	3,073	Foreign currency forward contracts	$	10,438	$	9,866
Commodity forward contracts	Commodity forward contracts	12,047		4,492		Commodity forward contracts	2,734		4,671
Total	Total	$	18,317	$	7,565	Total	$	13,172	$	14,537

Refer to Note ~~15:~~14: Derivative Instruments and Hedging Activities for additional information related to our forward contracts.

~~Quanergy~~

As of December 31, 2021, we held a $50.0 million investment in Quanergy Systems, Inc. ("Quanergy") Series B Preferred Stock (the "Series B Investment"). The Series B Investment did not have a readily determinable fair value and was held using the measurement alternative prescribed in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 321, ~~Investments - Equity Securities~~. Such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

On June 22, 2021, Quanergy announced that it had entered into a definitive business combination agreement (the "Merger Agreement") with CITIC Capital Acquisition Corp ("CITIC") (NYSE: CCAC). On July 16, 2021, CITIC filed a Registration Statement on Form S-4 (together with subsequent amendments, the "SPAC Form S-4") with the SEC, the effectiveness of which was a condition to closing of the business combination (the "SPAC Merger"). At December 31, 2021, we assessed our investment in Quanergy based on the proposed terms of the Merger Agreement and concluded that there were no indicators of impairment.

~~Table of Contents~~

On January 6, 2022, the SPAC Form S-4 was declared effective by the SEC. An extraordinary general meeting of shareholders of CITIC was held on January 31, 2022, at which time the SPAC Merger was approved. The SPAC Merger closed on February 8, 2022. Beginning on February 9, 2022, the combined company, which retained the name "Quanergy Systems, Inc.," was listed on the New York Stock Exchange (the "NYSE") under the ticker symbol QNGY.

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

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

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

•2.5 million warrants (the "Warrants"), each of which represent the right to purchase 1 common share at a price of $0.01 per share, received from Quanergy as up-front consideration for a four-year technical and marketing support agreement (the "Support Agreement").

The 5.75 million common share investment in Quanergy (including the investment in the PIPE) has a historical cost basis of $57.5 million. The fair value of the Warrants was determined to be equal to their intrinsic value at closing of the SPAC Merger in accordance with the guidance in FASB ASC Topic 815, ~~Derivatives and Hedging~~. At closing of the SPAC Merger, the common shares underlying the Warrants were valued at $7.05 per share (the closing market price on February 8, 2022). The intrinsic value of the Warrants, reflecting the $0.01 exercise price, was $17.6 million, which was recorded as deferred income.

~~A summary of our investment in Quanergy is presented in the table below, as of June 30, 2022 (at $0.41 per share),~~ March 31, ~~2022 (at $1.84 per share), February 8, 2022 (at $7.05 per share),~~2023 and December 31, ~~2021. Our investment in Quanergy is presented in other assets on our condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021.~~

June 30,
2022 March 31,
2022 February 8,
2022 December 31,
2021
Series B Investment $ — $ — $ — $ 50,000
Common shares (1)
3,075 9,200 50,000 —
PIPE investment 308 1,380 7,500 —
Warrants (1)
— 4,575 17,600 —
Total equity investment in Quanergy $ 3,383 $ 15,155 $ 75,100 $ 50,000

~~(1)~~ ~~In the three months ended June 30,~~ 2022, we ~~converted the Warrants into common shares. Accordingly, as~~also held cash equivalents of ~~June 30, 2022, we had 7.5~~$653.3 million ~~common shares outstanding (excluding the PIPE investment), compared to 5.0~~and $860.0 million, ~~common shares outstanding as~~respectively, consisting of ~~March 31, 2022.~~

~~For the three and six months ended June 30, 2022, we recorded losses (presented~~U.S. Government Treasury money market funds that are categorized in ~~in other, net on our condensed consolidated statements~~Level 1 of ~~operations) to adjust the carrying value of our aggregate investment in Quanergy to its fair value at June 30, 2022 as follows:~~

For the three months ended June 30, 2022 For the six months ended June 30, 2022
Mark-to-market loss $ (11,772) $ (71,717)

As noted above, in exchange for the Warrants, we entered into the Support Agreement, whereby we agreed to provide technical and business development services to Quanergy for a term of four years from the effective date of February 8, 2022. This transaction is an exchange of noncash consideration for services and was accounted for under FASB ASC Topic 845, ~~Nonmonetary Transactions, using~~ the fair value of the Warrants at February 8, 2022 ($17.6 million) as the measure of compensation received. We have deferred this consideration and are recognizing it in earnings on a straight-line basis over the term of the agreement (48 months).hierarchy.

Measured on a Nonrecurring Basis

We evaluated our goodwill and other indefinite-lived intangible assets for impairment as of October 1, ~~2021~~2022 and determined that they were not impaired. No events or changes in circumstances occurred in the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 that would have triggered the need for an additional impairment review of our goodwill and other indefinite-lived intangible assets.

~~Table of Contents~~

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, 2022~~March 31, 2023 and December 31, ~~2021.~~2022. All fair value measures presented are categorized in Level 2 of the fair value hierarchy.


		June 30, 2022				December 31, 2021					March 31, 2023				December 31, 2022
		Carrying Value(1)		Fair Value		Carrying Value(1)		Fair Value			Carrying Value(1)		Fair Value		Carrying Value(1)		Fair Value
Liabilities	Liabilities									Liabilities
Term Loan	Term Loan	$	449,150	$	443,535	$	451,465	$	450,901	Term Loan	$	196,834	$	196,343	$	446,834	$	443,483
4.875% Senior Notes		$	500,000	$	491,250	$	500,000	$	526,250

5.625% Senior Notes	5.625% Senior Notes	$	400,000	$	395,000	$	400,000	$	438,000	5.625% Senior Notes	$	400,000	$	398,000	$	400,000	$	398,000
5.0% Senior Notes	5.0% Senior Notes	$	700,000	$	672,000	$	700,000	$	759,500	5.0% Senior Notes	$	700,000	$	685,125	$	700,000	$	684,250

4.375% Senior Notes	4.375% Senior Notes	$	450,000	$	383,625	$	450,000	$	479,250	4.375% Senior Notes	$	450,000	$	408,375	$	450,000	$	400,500
3.75% Senior Notes	3.75% Senior Notes	$	750,000	$	601,875	$	750,000	$	747,188	3.75% Senior Notes	$	750,000	$	648,750	$	750,000	$	626,250
4.0% Senior Notes	4.0% Senior Notes	$	1,000,000	$	850,000	$	1,000,000	$	1,022,500	4.0% Senior Notes	$	1,000,000	$	897,500	$	1,000,000	$	875,000
5.875% Senior Notes										5.875% Senior Notes	$	500,000	$	490,625	$	500,000	$	473,750

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

~~Cash and cash equivalents are carried at cost, which approximates fair value because of their short-term nature.~~

In addition to the above, we hold certain equity investments that do not have readily determinable fair values for which we use the measurement alternative prescribed in FASB ASC Topic ~~321. There were no impairments or changes resulting from observable transactions for any~~321, Investments—Equity Securities. As of ~~these investments~~March 31, 2023 and ~~no adjustments were made to their carrying values.~~

~~Refer to the table below for the carrying values of~~December 31, 2022, we held a $15.0 million equity ~~investments~~investment using the measurement alternative, which ~~are~~is presented as a component of other assets in the condensed consolidated balance sheets.

June 30,
2022 December 31,
2021
Quanergy Systems, Inc. (1)
$ — $ 50,000
Other 15,000 15,000
Total $ 15,000 $ 65,000

~~(1)~~ As There were no impairments or changes resulting from observable transactions for this investment in the three months ended March 31, 2023 and 2022 and no adjustments have been made to its carrying value as of ~~June 30, 2022, Quanergy is no longer classified as an equity investment without a readily determinable fair value. See additional discussion under the heading~~ ~~Quanergy~~ ~~elsewhere in this Note.~~March 31, 2023 and December 31, 2022.

~~15.~~

Table of Contents

14. Derivative Instruments and Hedging Activities

Hedges of Foreign Currency Risk

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ amounts excluded from the assessment of effectiveness of our foreign currency forward contracts that are designated as cash flow hedges were not material. As of ~~June 30, 2022,~~March 31, 2023, we estimated that ~~$34.8~~$21.8 million of net gains will be reclassified from accumulated other comprehensive loss to earnings during the twelve-month period ending ~~June 30, 2023.~~

~~Table of Contents~~

March 31, 2024.

As of ~~June 30, 2022,~~March 31, 2023, we had the following outstanding foreign currency forward contracts:

Notional
(in millions)

Effective Date(s)

Maturity Date(s)

Index (Exchange Rates)

Weighted-Average Strike Rate

Hedge

Designation (1)

~~21.0~~20.0 EUR

~~June 28, 2022~~March 29, 2023

~~July 29, 2022~~April 28, 2023

Euro ("EUR") to USD

~~1.05~~1.09 USD

Not designated

~~358.9~~364.3 EUR

Various from ~~August 2020~~April 2021 to ~~June 2022~~March 2023

Various from ~~July 2022~~April 2023 to ~~June 2024~~March 2025

EUR to USD

~~1.17~~1.10 USD

Cash flow hedge

~~388.0~~474.0 CNY

~~June 27, 2022~~March 28, 2023

~~July 29, 2022~~April 28, 2023

USD to Chinese Renminbi ("CNY")

~~6.70~~6.85 CNY

Not designated

~~756.2~~530.0 CNY

Various ~~from October 2021 to March 2022~~in January 2023

Various from ~~July 2022~~April 2023 to ~~December 2022~~September 2023

USD to CNY

~~6.46~~6.76 CNY

Cash flow hedge

~~60.0 JPY~~

~~June 28, 2022~~

~~July 29, 2022~~

~~USD to Japanese Yen ("JPY")~~

~~135.93 JPY~~

~~Not designated~~

~~24,760.0~~609.0 JPY

March 29, 2023

April 28, 2023

USD to Japanese Yen ("JPY")

131.83 JPY

Not designated

19,364.0 KRW

Various from ~~August 2020~~June 2021 to ~~June 2022~~March 2023

Various from ~~July 2022~~April 2023 to ~~May 2024~~February 2025

USD to Korean Won ("KRW")

~~1,191.72~~1,248.39 KRW

Cash flow hedge

~~22.0~~25.0 MYR

~~June 27, 2022~~March 28, 2023

~~July 29, 2022~~April 28, 2023

USD to Malaysian Ringgit ("MYR")

~~4.40~~4.37 MYR

Not designated

~~70.0~~20.0 MXN

~~June 28, 2022~~March 29, 2023

~~July 29, 2022~~April 28, 2023

USD to Mexican Peso ("MXN")

~~20.13~~18.23 MXN

Not designated

~~3,458.7~~3,616.3 MXN

Various from ~~August 2020~~April 2021 to ~~June 2022~~March 2023

Various from ~~July 2022~~April 2023 to ~~June 2024~~March 2025

USD to MXN

~~22.15~~21.76 MXN

Cash flow hedge

~~10.0~~6.3 GBP

~~June 28, 2022~~March 29, 2023

~~July 29, 2022~~April 28, 2023

British Pound Sterling ("GBP") to USD

~~1.22~~1.23 USD

Not Designated

~~60.0~~57.6 GBP

Various from ~~August 2020~~April 2021 to ~~June 2022~~March 2023

Various from ~~July 2022~~April 2023 to ~~June 2024~~March 2025

GBP to USD

~~1.33~~1.24 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

As of ~~June 30, 2022,~~March 31, 2023, we had the following outstanding commodity forward contracts, none of which were designated for hedge accounting treatment in accordance with FASB ASC Topic ~~815:~~815, Derivatives and Hedging:

Commodity

Notional

Remaining Contracted Periods

Weighted-Average Strike Price Per Unit

Silver

~~1,092,999~~869,069 troy oz.