UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, ~~2009~~2010

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

Commission File Number 333-139739

SENSATA TECHNOLOGIES B.V.

(Exact Name of Registrant as Specified in Its Charter)

THE NETHERLANDS		~~Not Applicable~~98-0528648
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Kolthofsingel 8, 7602 EM Almelo The Netherlands		31-546-879-555
(Address of Principal Executive Offices, including Zip Code)		(Registrant’s Telephone Number, Including Area Code)
Corporation Service Company 1177 Avenue of the Americas, 17th Floor New York, New York 10001		(800) 221-0770
Corporation Service Company 2711 Centerville Rd., Wilmington, DE 19808		(866) 403-5272
(Name and Address, Including Zip Code, of Agent for Service)		(Telephone Number of Agent for Service)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by a 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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer, or a smaller reporting company. See ~~definition~~the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act. (check one):


Large Accelerated Filer ¨		Accelerated Filer ¨
Non-Accelerated Filer x		Smaller Reporting Company ¨
(Do not check if a smaller reporting company)

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

As of June 30, ~~2009~~2010, the last business day of the registrant’s most recently completed second ~~fiscal~~ quarter, there was no established public trading market for the registrant’s equity securities.

~~Indicate~~As ~~the number~~ of ~~shares~~January 15, ~~outstanding~~2011, of220 ~~each~~ordinary ofshares ~~the~~were ~~issuer’s~~outstanding ~~classes~~(all of ~~common~~ ~~stock,~~which asare ofowned ~~the~~by ~~latest~~Sensata ~~practicable~~Technologies ~~date:~~Intermediate AsHolding ofB.V. and ~~January 1,~~are ~~2010,~~not ~~180~~publicly ~~shares of common stock were outstanding~~traded).

The registrant meets the conditions set forth in General Instructions I(1)(a) and (b) of Form 10-K as, among other things, all of the registrant’s equity securities are owned indirectly by Sensata Technologies Holdings N.V., which is a reporting company under the Securities Exchange Act of 1934 and which has filed with the SEC all materials required to be filed pursuant to Section 13, 14 or 15(d) thereof, and the registrant is therefore filing this Form 10-K with a reduced disclosure format.

TABLE OF CONTENTS

PART I		3	4
Item 1.	Business	3	4
Item 1A.	Risk Factors	19	20
Item 1B.	Unresolved Staff Comments	31	32
Item 2.	Properties	32	32
Item 3.	Legal Proceedings	32	32
Item 4.	Submission of Matters to a Vote of Security Holders (Removed and Reserved)	35	34
PART II		36	35
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	36	35
Item 6.	Selected Financial Data	36	35
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41	38
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	75	67
Item 8.	Financial Statements and Supplementary Data	79	72
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	79	151
Item 9A.	Controls and Procedures	79	151
Item 9B.	Other Information	81	154
PART III		82	154
Item 10.	Directors, ~~and~~ Executive Officers ofand ~~the~~Corporate ~~Registrant~~Governance	82	154
Item 11.	Executive Compensation	85	154
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~100~~	154
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~102~~	154
Item 14.	Principal ~~Accountant~~Accounting Fees and Services	~~104~~	154
PART IV		~~105~~	156
Item 15.	Exhibits and Financial Statement Schedules	~~105~~	156
	Signatures		162

Cautionary Statements Concerning Forward-Looking Statements

In addition to historical facts, this Annual Report, on Form 10-K, including any documents incorporated by reference herein, includes “forward-looking statements.” These forward-looking statements include statements relating to our business. In some cases, forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “believes,” “projects,” “forecasts,” “continue” or the negative of such terms or comparable terminology. Forward-looking statements contained herein (including future cash contractual obligations), or in other statements made by us, are made based on management’s expectations and beliefs concerning future events impacting us and 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. We believe that the following important factors, among others (including those described in Item 1A, “Risk Factors”), 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:

•

continued fundamental changes in the industries in which we operate have had and could continue to have adverse effects on our businesses;

•

we may incur material losses and costs as a result of product liability, warranty and recall claims that may be brought against us;

•

our substantial indebtedness could adversely affect our financial condition and our ability to operate our business, and we may not be able to generate sufficient cash flows to meet our debt service obligations;

•

Bain Capital Partners, LLC controls us, and their interests may conflict with your interests; and

•

the other risks set forth in Item 1A, “Risk Factors” included elsewhere in this Annual Report on Form 10-K.

All forward-looking statements speak only as of the date of this Annual Report on Form 10-K and are expressly qualified in their entirety by the cautionary statements contained in this Annual Report on Form 10-K. We undertake no obligation to update or revise forward-looking statements which 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 this Annual Report on Form 10-K and in the other documents that we file with the Securities and Exchange Commission (“SEC”). You can read these documents at www.sec.gov. Additional information about us is available at our principal Internet address, www.sensata.com.

PART I

ITEM 1.

BUSINESS

Introduction

In addition to historical facts, this annual report contains forward-looking statements. Forward-looking statements are merely our current predictions of future events. These statements are inherently uncertain, and actual events could differ materially from our predictions. Important factors that could cause actual events to vary from our predictions include those discussed in this annual report as Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 1A, “Risk Factors.” We assume no obligation to update our forward-looking statements to reflect new information or developments. We urge readers to review carefully the risk factors described in this annual report and in the other documents that we file with the Securities and Exchange Commission (“SEC”). You can read these documents at www.sec.gov. Additional information about us is available at our principal Internet address, www.sensata.com.

The Company

The reporting company is Sensata Technologies B.V. (“STBV”, “Sensata”, the “Company”, “we”, “our”, or ~~the~~ “~~Successor~~us”), a private company with limited liability incorporated under the laws of the Netherlands. Sensata is a direct, wholly-owned subsidiary of Sensata Technologies Intermediate Holding B.V. (“Sensata Intermediate Holding”). Sensata Intermediate Holding is aan ~~direct~~indirect wholly-owned subsidiary of Sensata Technologies Holding BN.V. (“~~Parent~~Sensata Technologies Holding”) and ~~Parent~~Sensata Technologies Holding is a ~~direct~~majority ~~wholly-~~owned subsidiary of Sensata Investment Company S.C.A. ~~Parent~~(“SCA”). The ~~and~~share ~~Sensata~~capital ~~are companies~~of ~~established~~SCA is 100% owned by ~~funds~~entities associated with Bain Capital Partners, LLC (“Bain Capital”), toa ~~facilitate~~leading ~~the~~global ~~acquisition~~private ofinvestment ~~the~~firm, ~~Sensors~~its co-investors (Bain Capital and ~~Controls~~its co-investors ~~business~~are ~~(“S&C”~~collectively orreferred to as the “~~Predecessor~~Sponsors”) and certain members of ~~Texas~~the ~~Instruments Incorporated~~Company’s ~~(“TI”)~~senior management.

~~Unless~~On ~~the~~April 27, ~~context~~2006 ~~otherwise indicates~~(inception), asinvestment ~~used~~funds inassociated ~~this~~with ~~report,~~ the ~~terms~~Sponsors completed the acquisition of the Sensors and Controls business (“~~we,~~S&C” or the “~~us,~~Predecessor”) of Texas Instruments Incorporated (“~~our,~~TI” ~~the~~or “~~Company~~Texas Instruments”) ~~and~~for ~~similar~~aggregate ~~terms~~consideration ~~mean~~of ~~(a) the~~$3.0 ~~S&C~~billion ~~business~~in ~~for~~cash ~~periods~~and ~~prior~~transaction tofees ~~April 27,~~and ~~2006~~expenses ~~(inception)~~of ~~and~~$31.4 million (b“2006 Acquisition”) ~~Sensata~~. ~~and~~The ~~its~~2006 ~~consolidated~~Acquisition ~~subsidiaries~~was financed ~~for~~by ~~periods~~a oncash investment from the Sponsors of approximately $985.0 million and ~~after April 27,~~the ~~2006~~issuance ~~(inception)~~of approximately $2.1 billion of indebtedness.

OnSensata ~~April 27,~~is ~~2006~~incorporated ~~(inception),~~under ~~investment~~the ~~funds~~laws ~~associated~~of ~~with~~the ~~Bain~~Netherlands, ~~Capital~~ and ~~Unitas Capital~~was ~~(formerly~~purchased ~~known~~ as ~~CCMP Capital Asia Ltd.) (collectively referred to on~~ a ~~combined~~shelf ~~basis~~company asby the “Sponsors”) ~~completed~~in ~~the~~February ~~acquisition~~2006. ofSensata ~~S&C~~currently ~~for~~conducts ~~aggregate~~its ~~consideration~~business ofthrough ~~$3.0~~subsidiary ~~billion~~companies inwhich operate ~~cash~~business and ~~transaction~~product ~~fees~~development ~~and~~centers ~~expenses of~~in ~~$31.4~~the ~~million~~United ~~(the~~States (“~~2006 Acquisition~~U.S.”), ~~pursuant~~the toNetherlands anand ~~Asset~~Japan; and ~~Stock~~manufacturing ~~Purchase~~operations ~~Agreement~~in ~~(the~~China, ~~“Purchase~~South ~~Agreement”)~~Korea, ~~dated~~Malaysia, ~~as of January 8~~Mexico, ~~2006.~~the WeDominican ~~refer~~Republic toand the ~~2006~~U.S. ~~Acquisition,~~Many ~~together~~of ~~with~~these ~~related~~companies are ~~transactions~~the ~~entered into~~successors to ~~finance~~businesses ~~the~~that ~~cash~~have ~~consideration~~been ~~for~~engaged in the ~~2006~~sensing ~~Acquisition~~ and tocontrol ~~pay~~business ~~related~~since ~~transaction~~1931. ~~fees~~TI ~~and~~first ~~expenses,~~acquired asan ~~the~~ownership ~~“Transaction.”~~interest Asin aS&C ~~result~~in of1959 ~~the~~through ~~Transaction,~~a ~~the~~merger ~~Sponsors~~between ~~indirectly~~TI ~~own~~and ~~99% of~~ the ~~issued~~former Metals and ~~outstanding~~Controls ~~ordinary shares of Sensata~~Corporation.

Sensata was incorporated in the Netherlands in 2005 and currently conducts its business through subsidiary companies which operate business and product development centers in the United States (“U.S.”), the Netherlands and Japan; and manufacturing operations in Brazil, China, South Korea, Malaysia, Mexico, the Dominican Republic and the U.S. Many of these companies are the successors to businesses that have been previously engaged in the sensors and controls business. TI first acquired an ownership interest in S&C in 1959 through a merger between TI and the former Metals and Controls Corporation.

The “Successor” periods refer to the period from April 27, 2006 (inception) to December 31, 2006 and the years ended December 31, 2007, 2008 and 2009, and the “Predecessor” periods refer to the year ended December 31, 2005 and the period from January 1, 2006 to April 26, 2006.

Overview

Sensata, a global industrial technology company, is a leader in the development, manufacture and sale of sensors and controls. We produce a wide range of customized, innovative sensors and controls for mission- critical applications such as thermal circuit breakers in aircraft, pressure sensors in automotive systems, and bimetal current and temperature control devices in electric motors. We believe that we are one of the largest suppliers of sensors and controls in the majority of the key applications in which we compete and that we have developed our strong market position due to our long-standing customer relationships, technical expertise, product performance and quality and competitive cost structure. We compete in growing global market segments driven by demand for products that are safe, energy-efficient and environmentally-friendly. In addition, our long-standing position in emerging markets, including our 15-year presence in China, further enhances our growth prospects. We deliver a strong value proposition to our customers by leveraging an innovative portfolio of core technologies and manufacturing at high volumes in low-cost locations such as China, Mexico, Malaysia and the Dominican Republic.

3Our sensors are customized devices that translate a physical phenomenon such as force or position into electronic signals that microprocessors or computer-based control systems can act upon. Our controls are customized devices embedded within systems to protect them from excessive heat or current. Underlying these sensors and controls are core technology platforms—thermal and magnetic-hydraulic circuit protection, micro electromechanical systems, ceramic capacitance and monosilicon strain gage—that we leverage across multiple products and applications, enabling us to optimize our research, development and engineering investments and achieve economies of scale.

~~Table~~Our ofprimary ~~Contents~~products include pressure sensors, force sensors, position sensors, motor protectors, and thermal and magnetic-hydraulic circuit breakers and switches. We develop customized and innovative solutions

bimetal current and temperature control devices in electric motors. We believe that we are one of the largest suppliers of sensors and controls in each of the key applications in which we compete and that we have developed our strong market position due to our long-standing customer relationships, technical expertise, product performance and quality and competitive cost structure. We compete in growing global market segments driven by demand for products that are safe, energy-efficient and environmentally-friendly, as well as the proliferation of, and increasing use of sensors and controls in, electronic applications. In addition, our long-standing position in emerging markets, including our 14-year presence in China, further enhances our growth prospects. We deliver a strong value proposition to our customers by leveraging an innovative portfolio of core technologies and manufacturing at high volumes in low-cost locations such as China, Mexico, Malaysia and the Dominican Republic.

Our sensors are customized devices that translate a physical phenomenon such as force or position into electronic signals that microprocessors or computer-based control systems can act upon. Our controls are customized devices embedded within systems to protect them from excessive heat or current. Underlying these sensors and controls are core technology platforms—thermal and magnetic-hydraulic circuit protection, micro electromechanical systems, ceramic capacitance or capacitive and monosilicon strain gages—that we leverage across multiple products and applications, enabling us to optimize our research, development and engineering investments and achieve economies of scale.

Our primary products include pressure sensors, force sensors, position sensors, motor protectors, and thermal and magnetic-hydraulic circuit breakers and switches. We develop customized and innovative solutions for specific customer requirements, or applications, across the appliance, automotive, HVAC, industrial, aerospace, defense, data/telecom, and other end-markets. We have long-standing relationships with a geographically diverse base of leading global OEMs and other multi-national companies. Our largest end-customers for each of our segments within each of our principal operating regions of the Americas, Asia Pacific and Europe include, in alphabetical order: A.O. Smith, Arcelic, Askol, Continental, Danfoss, Emerson, Ford, GM, Honda, Huawei, Peugeot, Renault-Nissan, Samsung Electronics, Volkswagen and Whirlpool.

We develop products that address increasingly complex engineering requirements by investing substantially in research, development and application engineering. By locating our global engineering team in close proximity to key customers in regional business centers, we are exposed to many development opportunities at an early stage and work closely with our customers to deliver the required solutions. Systems development by our customers typically requires significant multi-year investment for certification and qualification, which are often government or customer mandated. We believe the capital commitment and time required for this process significantly increases the switching costs once a customer has designed and installed a particular sensor or control into a system.

We are a global business with a diverse revenue mix by geography, customer and end-market and have significant operations around the world. Our subsidiaries located in the Americas, Europe and the Asia Pacific region generated 45%, 27% and 28%, respectively, of our net revenue for fiscal year 2009. Our largest customer accounted for approximately 7% of our net revenue for fiscal year 2009. Our net revenue for fiscal year 2009 was derived from the following end-markets: 22% from European automotive, 15% from appliances and HVAC, 16% from North American automotive, 14% from industrial, 14% from Asia and rest of world automotive, 5% from heavy vehicle off-road and 14% from all other end-markets. Within many of our end-markets, we are a significant supplier to multiple OEMs, reducing our exposure to fluctuations in market share within individual end-markets.

We have a history of innovation dating back to our origins and operated as a part of Texas Instruments from 1959 until we were acquired as a result of the 2006 Acquisition. We then expanded our operations in part through the acquisitions of First Technology Automotive and Special Products, or “First Technology Automotive,” in December 2006 and Airpax Holdings, Inc., or “Airpax,” in July 2007.

for specific customer requirements, or applications, across the appliance, automotive, heating, ventilation and air-conditioning (“HVAC,”) industrial, aerospace, defense, data/telecom, and other end-markets. We have long-standing relationships with a geographically diverse base of leading global original equipment manufacturers, (“OEMs,”) and other multi-national companies. Our largest end-customers for each of our segments within each of our principal operating regions of the Americas, Asia Pacific and Europe include, in alphabetical order: A.O. Smith, Askol, BMW, Bosch, Continental, Danfoss, Emerson, Ford, Giatek, GM, Honda, Hyundai-Kia, LG Group, Peugeot, Renault-Nissan, Samsung Electronics, Volkswagen and Whirlpool.

The increasing use of sensors in our targeted applications has enabled us to achieve growth rates for our sensors business in excess of underlying end market demand for many of those applications. For example, according to Strategy Analytics, Inc., the automotive sensor market is expected to grow at a 10.3% compounded annual rate from 2009 to 2014.

We develop products that address increasingly complex engineering requirements by investing substantially in research, development and application engineering. By locating our global engineering team in close proximity to key customers in regional business centers, we are exposed to many development opportunities at an early stage and work closely with our customers to deliver the required solutions. As a result of the long development lead times and embedded nature of our products, we collaborate closely with our customers throughout the design and development phase of their products. Systems development by our customers typically requires significant multi-year investment for certification and qualification, which are often government or customer mandated. We believe the capital commitment and time required for this process significantly increases the switching costs once a customer has designed and installed a particular sensor or control into a system.

We are a global business with a diverse revenue mix by geography, customer and end-market and we have significant operations around the world. Our subsidiaries located in the Americas, the Asia Pacific region and Europe generated 42%, 33% and 25%, respectively, of our net revenue for the year ended December 31, 2010. Our largest customer accounted for approximately 8% of our net revenue for the year ended December 31, 2010. Our net revenue for the year ended December 31, 2010 was derived from the following end-markets: 21% from European automotive, 18% from Asia and rest of world automotive, 16% from North American automotive, 14% from appliances and HVAC, 13% from industrial, 7% from heavy vehicle off-road and 11% from all other end-markets. Within many of our end-markets, we are a significant supplier to multiple OEMs, reducing our exposure to fluctuations in market share within individual end-markets.

Competitive Strengths

We believe we have a number of competitive strengths that differentiate us from our competitors. These include:

Leading positions in high-growth segments. We believe that we are one of the largest suppliers of sensors and controls in ~~each~~the majority of the key applications in which we compete. We attribute our strong market positions to our long-standing customer relationships, technical expertise, breadth of product portfolio, product performance and quality, and competitive cost structure. We have selectively chosen to compete in growing ~~applications~~ applications and geographies. We believe increased regulation of safety and emissions, a growing emphasis on energy efficiency and consumer demand for electronic products with advanced features are driving sensor growth rates exceeding underlying end- market demand in many of our key markets, and will continue to offer us significant growth opportunities.

Innovative, highly- engineered products for mission-critical applications. Most of our products are highly- engineered, critical components in complex systems that are essential to the proper functioning of the product in which they are integrated. Our products are differentiated by their performance, reliability and level of customization, which are critical factors in customer selection. We leverage our core technology platforms across multiple applications ~~supported by approximately 400 patents and engineering expertise~~, allowing us to cost-effectively develop products that are customized for each application in which they are incorporated. For example, we used our core pressure sensing technology portfolio to develop a pressure sensor specifically designed for a fire suppression system in a military application. Our global engineering team, consisting of approximately 1,000 full-time team members located close to customers, enables us to identify many opportunities at an early stage and to work closely with customers to efficiently deliver solutions they require.

Long-standing local presence in key emerging markets. We believe that our long-standing local presence in key emerging markets such as China, India and Brazil provides us with significant growth opportunities. Our net revenue from sales in emerging markets grew at a 11% compounded annual growth rate from 2005 to 2009. Our sales into these markets represented approximately 22% of our net revenue for fiscal year 2009. We have been present in China since 1995 and currently have two high volume manufacturing facilities located in Baoying and Changzhou. As an early market entrant in China, we established a leading position serving multinationals with local manufacturing operations in China. We believe we have developed strong relationships with local customers and suppliers based on our local manufacturing and sales presence, track record of performance and brand portfolio. We believe the Klixon brand, part of our controls business since 1927, distinguishes us in the motor controls sector where recognition of global corporate brands is limited. We believe the brand has been an important driver of success with larger Chinese companies who are seeking to build their international sales presence. We have built a local engineering and sales team in China to develop localized technology solutions and continue to build our presence with both multinational and local companies.

Collaborative, long-term relationships with diversified customer base. We have long-standing relationships with a diverse base of leading global OEMs and other multi-national companies across the appliance, automotive, HVAC, industrial, aerospace, defense and other end-markets. We have worked with our top 25 customers for an average of 22 years. Our established customer relationships span multiple levels of the organization from executives to engineers. As a result of the long development lead times and embedded nature of our products, we collaborate closely with our customers throughout the design and development phase of their products. We believe that our broad product portfolio and global reach reduce our dependence on any particular market or customer.

High switching costs. The technology-driven, highly-customized and integrated nature of our products requires customers to invest heavily in certification and qualification over a one- to three-year period to ensure proper functioning of the system in which our products are embedded. We believe the capital commitment and time required for this process significantly increases the switching costs for customers once a particular sensor or control has been designed and installed in a system. In addition, our products are often relatively low-cost

~~components~~pressure ~~integrated~~sensor ~~into~~specifically ~~mission-critical~~designed ~~applications~~ for ~~high-value systems. As~~ a ~~result,~~fire ~~many~~suppression ofsystem ~~our~~in ~~sensors~~a ~~and~~military ~~controls~~application. ~~are~~Our ~~rarely~~global ~~substituted~~engineering ~~during a product lifecycle~~team, ~~which~~many ~~in the case~~ of ~~the~~whom ~~automotive~~are ~~end-market~~located ~~typically~~close ~~lasts five~~ to ~~seven~~customers, ~~years.~~enables ~~New~~us ~~suppliers seeking~~ to ~~provide~~identify many ~~replacement~~opportunities ~~components~~at ~~generally~~an ~~must~~early ~~demonstrate~~stage ~~a long track record of reliability, performance~~ and ~~quality~~to ~~control,~~work asclosely ~~well~~with ascustomers ~~the scale and resources~~ to ~~support~~efficiently ~~the~~deliver ~~customer’s~~solutions ~~product~~they ~~evolution~~require.

~~Attractive~~Long-standing ~~cost~~local ~~structure~~presence ~~with~~in ~~scale~~key ~~advantage~~emerging ~~and low-cost footprint~~markets. We believe that our ~~global~~long-standing ~~scale~~local ~~and~~presence ~~cost-focused~~in ~~approach~~key ~~have~~emerging ~~provided~~markets ussuch ~~with~~as anChina, ~~attractive~~India ~~cost~~and ~~position~~Brazil ~~within~~provides ~~our~~us ~~industry~~with significant growth opportunities. WeOur ~~currently~~net ~~manufacture~~revenue ~~approximately~~from ~~800~~sales ~~million~~in ~~devices~~emerging ~~per~~markets ~~year,~~grew ~~with~~at 85a 18% ofcompounded ~~our~~annual ~~production~~growth ~~in low-cost~~rate ~~countries~~from ~~including~~2006 ~~China,~~to ~~Mexico,~~2010. ~~Malaysia~~Our ~~and~~sales ~~the~~into ~~Dominican~~these ~~Republic.~~markets ~~Our~~represented ~~strategy~~approximately 19% of ~~leveraging~~our ~~core~~net ~~technology~~revenue ~~platforms~~for ~~and~~fiscal ~~focusing~~year on2010. ~~high~~We ~~volume~~have ~~applications~~been present ~~enables~~in usChina tosince ~~provide~~1995 ~~our~~and ~~customers~~currently ~~with~~have ~~highly~~two ~~customized~~high-volume ~~products~~manufacturing atfacilities ~~a relatively~~located ~~low-cost~~in asBaoying ~~compared~~and toChangzhou. ~~the~~As ~~costs~~an ofearly ~~the~~market ~~systems~~entrant in ~~which~~China, ~~our~~we ~~products~~established ~~are~~a ~~embedded.~~leading Weposition ~~have~~serving ~~achieved~~multinationals ~~our~~with ~~current~~local ~~cost~~manufacturing operations ~~position~~in ~~through~~China. aWe ~~continuous~~believe ~~process~~we ofhave ~~migration~~developed tostrong ~~low-cost~~relationships ~~manufacturing~~with ~~locations,~~local ~~transformation~~customers ofand suppliers based on our ~~supply chain~~local tomanufacturing ~~low-cost~~and ~~sourcing~~sales presence, ~~product~~track ~~design~~record ~~improvements~~of performance and ~~ongoing~~brand ~~productivity-enhancing initiatives~~portfolio. ~~Over~~We believe the ~~past~~Klixon® ~~ten years~~brand, wepart ~~have~~of ~~aggressively shifted~~ our ~~manufacturing~~controls ~~base~~business ~~from~~since ~~higher-labor~~1927, ~~cost~~distinguishes ~~countries~~us ~~such~~in as the ~~United~~motor ~~States, Australia,~~controls ~~Canada,~~sector ~~Italy,~~where ~~Japan,~~recognition ~~Korea~~of global ~~and~~corporate ~~the~~brands ~~Netherlands~~is tolimited. ~~lower-cost~~We ~~countries~~believe ~~including~~the ~~China,~~brand ~~Mexico,~~has ~~Malaysia,~~been ~~and~~an ~~the~~important ~~Dominican~~driver ~~Republic.~~of Wesuccess ~~continue~~with tolarger ~~increase~~Chinese ~~our~~companies ~~use~~who ofare ~~local~~seeking ~~suppliers~~to ~~based~~build intheir ~~these~~international ~~lower-cost~~sales ~~locations~~presence. ~~The~~We ~~employment of~~have ~~manufacturing~~built ~~best~~a ~~practices~~local engineering and ~~process~~sales ~~controls~~team ~~has~~in ~~yielded~~China ~~consistent~~to develop ~~productivity~~localized ~~gains~~technology solutions and ~~improvements~~continue into ~~operating~~build ~~margins~~our ~~for~~presence ~~our~~with ~~business~~both ~~since~~multinational ~~2003~~and local companies.

~~Operating~~Collaborative, ~~model~~long-term relationships with ~~high~~diversified ~~cash~~customer ~~generation and significant revenue visibility~~base. We ~~believe~~have ~~our~~long-standing ~~strong~~relationships ~~customer~~with ~~value~~a ~~proposition~~diverse base ~~and~~of ~~cost~~leading ~~structure~~global ~~enable~~OEMs ~~us to generate attractive operating margins~~ and ~~return~~other onmulti-national ~~capital.~~companies ~~Over~~across the ~~last~~appliance, ~~five~~automotive, ~~completed~~HVAC, ~~fiscal~~industrial, ~~years~~aerospace, ~~our~~defense ~~aggregate~~and ~~capital~~other ~~expenditures represented approximately 3% of our aggregate net revenue~~end-markets. We ~~believe~~have ~~that~~worked with our ~~current~~top ~~manufacturing~~25 ~~base~~customers ~~offers~~for ~~significant~~an ~~capacity~~average ~~to support~~of ~~higher~~22 ~~revenue levels~~years. WeOur ~~have~~established customer arelationships ~~low~~span ~~effective~~multiple ~~cash~~levels ~~tax rate due to amortization~~ of ~~intangible assets resulting from our carve-out from Texas Instruments in~~ the ~~2006~~organization ~~Acquisition and other tax benefits derived~~ from ~~our~~executives ~~operating~~to ~~and~~engineers. ~~capital structure,~~As ~~including tax holidays in China and Malaysia, operations in~~ a ~~Dominican~~result ~~Republic~~of ~~tax~~the ~~free~~long ~~zone,~~development ~~favorable~~lead ~~tax~~times ~~status in Mexico~~ and ~~the~~embedded ~~Dutch~~nature ~~participation exemption, which permits the tax-free movement~~ of ~~funds~~our ~~between Dutch entities and foreign entities within the same corporate group. In addition~~products, we ~~believe~~collaborate ~~that~~closely ~~our business provides us~~ with ~~significant visibility into new business opportunities based on product development cycles that are typically more than one year,~~ our ~~ability~~ tocustomers ~~win~~throughout the design ~~awards (i.e., new “sockets” for our sensors~~ and development ~~controls)~~phase ~~in advance~~ of ~~system~~their ~~roll-outs~~products. ~~and~~We ~~commercialization,~~believe ~~and~~that our ~~lengthy~~broad product ~~life~~portfolio ~~cycles.~~and ~~Additionally,~~global ~~customer~~reach ~~order~~reduce ~~cycles typically provide us with visibility into more than a majority of~~ our ~~expected~~dependence ~~quarterly~~on ~~revenue~~any atparticular ~~the~~market ~~start~~or ~~of each quarter~~customer.

~~Experienced management~~High ~~team~~switching costs. ~~Our~~The ~~senior~~technology-driven, ~~management~~highly ~~team~~customized ~~has~~and ~~significant~~integrated ~~collective~~nature ~~experience~~of ~~both~~our ~~within~~products ~~our~~requires ~~business~~customers ~~and~~to invest heavily in ~~working~~certification ~~together~~and ~~managing~~qualification over a one- to three-year period to ensure proper functioning of the system in which our ~~business~~products are embedded. ~~Our~~We ~~CEO,~~believe ~~COO~~the capital commitment and ~~other~~time ~~members~~required offor ~~our~~this ~~senior~~process ~~management~~significantly ~~team~~increases ~~have~~the ~~been~~switching ~~employed~~costs byfor ~~our~~customers once a particular sensor ~~company~~or control has been designed and ~~its~~installed ~~predecessor~~in a system. In addition, ~~the~~our ~~S&C~~products ~~business~~are often relatively low-cost components integrated into mission-critical applications for high-value systems. As a result, many of ~~Texas~~our ~~Instruments~~sensors and controls are rarely substituted during a product lifecycle, ~~for~~which in the ~~majority~~case of ~~their~~the ~~careers~~automotive end-market typically lasts five to seven years. ~~Our~~New ~~current~~suppliers ~~management~~seeking ~~team~~to ~~oversaw~~provide ~~the~~replacement ~~carve-out~~components ofgenerally ~~our~~must ~~business~~demonstrate ~~from~~a ~~Texas~~long ~~Instruments~~track record of reliability, performance and quality control, as well as the ~~expansion~~scale ofand ~~our~~resources ~~business~~to ~~through~~support ~~both organic~~the ~~growth~~customer’s ~~and~~product ~~acquisitions~~evolution.

~~Growth~~Attractive ~~Strategy~~cost structure with scale advantage and low-cost footprint. We believe that our global scale and cost-focused approach have provided us with an attractive cost position within our industry. We currently manufacture approximately 1.1 billion devices per year, with approximately 90% of our production in low-cost countries including China, Mexico, Malaysia and the Dominican Republic. Our strategy of leveraging core technology platforms and focusing on high-volume applications enables us to provide our customers with highly customized products at a relatively low-cost as compared to the costs of the systems in which our products are embedded. We have achieved our current cost position through a continuous process of migration to low-cost manufacturing locations, transformation of our supply chain to low-cost sourcing, product design improvements and ongoing productivity-enhancing initiatives. Over the past eleven years, we have aggressively shifted our manufacturing base from higher-labor cost countries such as the United States, Australia, Canada, Italy, Japan, Korea and the Netherlands to lower-cost countries including China, Mexico, Malaysia, and the Dominican Republic. We continue to increase our use of local suppliers based in these lower-cost locations. The employment of manufacturing best practices and process controls has yielded consistent productivity gains and improvements in operating margins for our business since 2003.

We intend to enhance our position as a leading provider of customized, innovative sensors and controls on a global basis. The key elements of our growth strategy include:

Continue product innovation and expansion. We believe our solutions help satisfy the world’s need for safety, energy efficiency and a clean environment, as well as address the demand associated with the proliferation of electronic applications in everyday life. We expect to continue to address our customers’ increased demand for sensor and control solutions with our technology and engineering expertise. We leverage our various core technology platforms across many different products and applications to maximize the impact of

Operating model with high cash generation and significant revenue visibility. We believe our ~~research,~~strong ~~development~~customer value proposition and ~~engineering~~cost ~~investments~~structure enable us to generate attractive operating margins and ~~increase~~return ~~economies~~on capital. Over the last five completed fiscal years, our aggregate capital expenditures represented approximately 3% of ~~scale~~our aggregate net revenue. We ~~intend~~have toa ~~continue~~low toeffective ~~collaborate~~cash ~~closely~~tax ~~with~~rate ~~customers~~due to ~~improve~~amortization of intangible assets resulting from our ~~current~~carve-out ~~line~~from ofTexas ~~products incorporated~~Instruments ~~into~~in ~~our~~the ~~customers’~~2006 ~~products~~Acquisition and toother ~~identify~~tax benefits derived from our operating and ~~develop~~capital structure, ~~new~~including ~~technologies~~tax holidays in China and ~~products~~Malaysia, ~~that~~operations ~~can~~in bea ~~incorporated~~Dominican ~~into~~Republic ~~our~~tax-free ~~customers’~~zone, ~~products~~favorable attax anstatus ~~early~~in ~~stage~~Mexico and the Dutch participation exemption, which permits the tax-free movement of funds between Dutch entities and foreign entities within the ~~development~~same ~~process~~corporate group. In addition, we ~~intend~~believe tothat ~~focus~~our onbusiness ~~new applications~~provides ~~that~~us ~~will~~with ~~help~~significant usvisibility ~~secure~~into new business ~~and~~opportunities ~~drive~~based ~~long-term~~on ~~growth.~~product ~~New~~development ~~applications~~cycles ~~for~~that ~~sensors~~are typically ~~provide~~more anthan ~~opportunity~~one year, our ability to ~~define~~win adesign ~~leading~~awards ~~application~~(i.e., ~~technology~~new “sockets” for our sensors and controls) in ~~collaboration~~advance ~~with~~of system roll-outs and commercialization, and our ~~customers.~~lengthy ~~Our~~product ~~strategy~~life iscycles. toAdditionally, ~~target new~~customer ~~applications~~order ~~early~~cycles intypically ~~the~~provide ~~development~~us ~~cycle~~with visibility byinto ~~leveraging~~a majority of our ~~strong~~expected ~~customer~~quarterly ~~relationships,~~revenue ~~engineering~~at ~~expertise~~the ~~and~~start ~~attractive~~of ~~cost~~each ~~position~~quarter.

Experienced management team. Our senior management team has significant collective experience both within our business and in working together managing our business. Our CEO, President and COO and other members of our senior management team have been employed by our company and the Predecessor for the majority of their careers. Our current management team oversaw the carve-out of our business from Texas Instruments and the expansion of our business through both organic growth and acquisitions.

Growth Strategy

We intend to enhance our position as a leading provider of customized, innovative sensors and controls on a global basis. The key elements of our growth strategy include:

Continue product innovation and expansion. We believe our solutions help satisfy the world’s need for safety, energy efficiency and a clean environment, as well as address the demand associated with the proliferation of electronic applications in everyday life. We expect to continue to address our customers’ increased demand for sensor and control solutions with our technology and engineering expertise. We leverage our various core technology platforms across many different products and applications to maximize the impact of our research, development and engineering investments and increase economies of scale. We intend to continue to collaborate closely with customers to improve our current line of products incorporated into our customers’ products and to identify and develop new technologies and products that can be incorporated into our customers’ products at an early stage of the development process. In addition, we intend to focus on new applications that will help us secure new business and drive long-term growth. New applications for sensors typically provide an opportunity to define a leading application technology in collaboration with our customers. Our strategy is to target new applications early in the development cycle by leveraging our strong customer relationships, engineering expertise and attractive cost position.

Expand our presence in significant emerging markets. We believe emerging markets such as China, India and Brazil represent substantial, rapidly growing opportunities. A growing middle class and rapid industrialization are creating significant demand for electric motors, consumer conveniences (such as appliances), automobiles and communication infrastructure. Our broad mix of sensor and control applications utilized in a variety of products and end-markets enables us to participate from the early stages of economic growth, typically characterized by rapid adoption of basic household durables, to later stages of economic growth, typically involving more rapid penetration of automobiles and other consumer conveniences into everyday life. We believe our substantial manufacturing presence and capacity in China provides us with a significant opportunity for future growth. We intend to continue investing in local engineering and sales talent across key emerging markets to build our presence with both multinational and local OEMs.

Broaden customer relationships. We seek to differentiate ourselves from our competitors through superior product reliability, performance and service. We believe that this focus has strengthened our relationships with our existing customers and provided us the experience and market exposure to attract new customers. We also believe our global presence and investments in application engineering and support create competitive advantages in serving multinational and local companies. The continued establishment of business centers near our customers’ facilities and continued close collaboration with our customers’ engineering staffs are key components of this strategy.

Extend low-cost advantage. We intend to continue to focus on managing our costs and increasing our productivity. These ongoing efforts have included migrating our manufacturing to low-cost regions, transforming the supply chain to low-cost sourcing and aggressively pursuing ongoing productivity improvements. We will continue to strive to significantly reduce materials and manufacturing costs for key products by focusing on our design-driven cost initiatives. We will also continue to locate our people and processes in the most strategic, cost-effective regions. As we develop new applications, we intend to continue to leverage our core technology platforms to give us economies of scale advantage in manufacturing and in our research, development and engineering investments.

Recruit, retain, and develop talent globally. We intend to continue to recruit, develop and retain a highly educated, technically sophisticated and globally dispersed workforce. Those in senior management roles have broad experience in managing global businesses. Our strategy leadership team has over 150 years of combined experience with our global businesses. Other senior managers bring global experience, subject matter expertise and an outside perspective which has contributed to our success. We will continue to utilize our extensive network for our global recruiting, including university, community and employee referral programs to introduce our brand and values to prospective employees. We will continue to utilize our formal Integrated Talent Management Program to emphasize learning and development activities focusing on each employee’s particular skill set, including their technical and leadership capabilities. We will continue to engage in extensive market-based research to align our compensation and benefits programs with employee performance and to remain competitive with industry benchmarks.

Pursue strategic acquisitions to extend leadership and leverage global platform. We intend to continue to opportunistically pursue selective acquisitions and joint ventures to extend our leadership across global end-markets and applications, realize operational value from our global low-cost footprint, and deliver the right

~~technology~~our ~~solutions~~existing ~~for~~customers ~~emerging markets. We believe we have a track record of success in acquiring~~ and ~~integrating~~provided ~~businesses.~~us ~~Our acquisition of~~ the ~~First~~experience ~~Technology~~and ~~business~~market inexposure ~~December~~to ~~2006 added~~attract ~~steering~~new ~~position,~~customers. ~~twilight~~We ~~sensors,~~also ~~fuel~~believe ~~cut-off switches and glass bottle thermal protectors to~~ our ~~portfolio~~global ofpresence ~~products.~~and ~~Our~~investments ~~acquisition of Airpax,~~ in ~~July~~application ~~2007~~engineering ~~further~~and ~~strengthened~~support create ~~our~~competitive ~~customer~~advantages ~~positions~~ in ~~electrical~~serving ~~protection~~multinational and ~~sensor~~ ~~solutions~~local ~~for~~companies. ~~the~~The ~~telecommunication,~~continued ~~data~~establishment ~~network,~~of ~~military~~business ~~and~~centers ~~mobile~~near ~~power~~our ~~markets.~~customers’ Wefacilities ~~intend~~and tocontinued ~~continue~~close tocollaboration ~~seek~~with ~~acquisitions~~our ~~that~~customers’ ~~will~~engineering ~~present~~staffs ~~attractive~~are ~~risk-adjusted~~key components ~~returns~~of ~~and~~this ~~significant value-creation opportunities~~strategy.

Extend low-cost advantage. We intend to continue to focus on managing our costs and increasing our productivity. These ongoing efforts have included migrating our manufacturing to low-cost regions, transforming the supply chain to low-cost sourcing and aggressively pursuing ongoing productivity improvements. We will continue to strive to significantly reduce materials and manufacturing costs for key products by focusing on our design-driven cost initiatives. We will also continue to locate our people and processes in the most strategic, cost-effective regions. As we develop new applications, we intend to continue to leverage our core technology platforms to give us economies of scale advantage in manufacturing and in our research, development and engineering investments.

Recruit, retain, and develop talent globally. We intend to continue to recruit, develop and retain a highly educated, technically sophisticated and globally dispersed workforce. Those in senior management roles have broad experience in managing global businesses. Our strategy leadership team has over 165 years of combined experience with our global businesses. Other senior managers bring global experience, subject matter expertise and an outside perspective which has contributed to our success. We will continue to utilize our extensive network for our global recruiting, including university, community and employee referral programs to introduce our brand and values to prospective employees. We will continue to utilize our formal Integrated Talent Management Program to emphasize learning and development activities focusing on each employee’s particular skill set, including their technical and leadership capabilities. We will continue to engage in extensive market-based research to align our compensation and benefits programs with employee performance and to remain competitive with industry benchmarks.

Pursue strategic acquisitions to extend leadership and leverage global platform. We intend to continue to opportunistically pursue selective acquisitions and joint ventures to extend our leadership across global end-markets and applications, realize operational value from our global low-cost footprint, and deliver the right technology solutions for emerging markets. We believe we have a track record of success in acquiring and integrating businesses. Our acquisition of the First Technology Automotive and Special Products (“First Technology Automotive”) business in December 2006 added steering position, twilight sensors, fuel cut-off switches and glass bottle thermal protectors to our portfolio of products. Our acquisition of Airpax Holdings, Inc. (“Airpax”) in July 2007 further strengthened our customer positions in power protection and secured our position as a leading designer and manufacturer of sensing and power protection solutions for the industrial, HVAC, military and mobile power markets. On January 28, 2011, we acquired the Automotive on Board sensors business (“Automotive on Board”) of Honeywell International Inc., in order to complement the existing operations of our sensors segment, provide new capabilities in light vehicle speed and position sensing, and expand our presence in emerging markets, particularly in China. We intend to continue to seek acquisitions that will present attractive risk-adjusted returns and significant value-creation opportunities.

History

We can trace ~~our~~ our origins back to businesses that have been engaged in the sensors and controls business since 1916. We operated as a part of Texas Instruments from 1959 until ~~we were acquired as a result of the 2006 Acquisition. On~~ April 27, 2006 ~~(inception)~~, ~~S&C~~ ~~Purchase~~when ~~Corp.,~~we ~~a company owned by affiliates of Bain Capital,~~ completed the ~~acquisition~~2006 ofAcquisition, ~~the~~which ~~S&C business from Texas Instruments for an aggregate purchase price of $3.0 billion plus fees and expenses. The acquisition~~ was effected ~~through~~ through a number of our subsidiaries that collectively purchased the assets and assumed the liabilities being transferred ~~in the 2006 Acquisition~~.

On December 19, 2006, we acquired First Technology Automotive from Honeywell International Inc. for $88.5 million plus fees and expenses. First Technology Automotive designs, develops and manufactures automotive sensors (cabin comfort and safety and stability controls), electromechanical control devices (circuit breakers and thermal protectors), and crash switch devices. First Technology Automotive’s products are sold to automotive OEMs, Tier I automotive suppliers, large vehicle and off-road OEMs, and industrial manufacturers. We believe that the First Technology Automotive acquisition enhanced existing customer relationships and our motor protector and circuit breaker product offerings.

On8 March 14, 2007, we acquired SMaL Camera, the automotive imaging unit of Cypress Semiconductor Corporation, for approximately $11.4 million plus fees and expenses. SMaL Camera provides cameras and camera subsystems to automotive advanced driver assistance systems. We believed that the acquisition of SMaL Camera accelerated the time to market in the vision business, and built camera and imager expertise and credibility.

OnTable July 27, 2007, we acquired Airpax for approximately $277.3 million, including fees and expenses. We believe the acquisition of Airpax provided us with leading customer positions in electrical protection for high-growth network power and critical, high-reliability mobile power applications, and further secured our position as a leading designer and manufacturer of sensing and electrical protection solutions for the industrial, heating, ventilation, air-conditioning, military and mobile markets. The acquisition also added new products such as power inverters and expanded our customer end-markets to include growing network power applications where customers value high reliability and differentiated performance. Contents

breakers and thermal protectors), and crash switch devices. First Technology Automotive’s products are sold to automotive OEMs, Tier I automotive suppliers, large vehicle and off-road OEMs, and industrial manufacturers. We believe that the First Technology Automotive acquisition enhanced existing customer relationships and our motor protector and circuit breaker product offerings.

On March 14, 2007, we acquired SMaL Camera Technologies, Inc. (“SMaL Camera”), the automotive imaging unit of Cypress Semiconductor Corporation, for approximately $11.4 million plus fees and expenses. SMaL Camera provides cameras and camera subsystems to automotive advanced driver assistance systems. We believed that the acquisition of SMaL Camera accelerated the time to market in the Automotive Vision sensing business, and built camera and imager expertise and credibility.

On July 27, 2007, we acquired Airpax for approximately $277.3 million, including fees and expenses. We believe the acquisition of Airpax provided us with leading customer positions in electrical protection for high-growth network power and critical, high-reliability mobile power applications, and further secured our position as a leading designer and manufacturer of sensing and power protection solutions for the industrial, HVAC, military and mobile power markets. The acquisition also added new products such as power inverters and expanded our customer end-markets to include growing network power applications where customers value high reliability and differentiated performance.

On April 30, 2009, we completed the sale of the automotive vision sensing business, which included the assets and operations of SMaL Camera. Our decision to sell this business was driven by the economic climate, slower than expected demand for these products and the expectation that our OEM customers will internally develop the software associated with this business.

Recent Developments

On January 28, 2011, we completed the acquisition of the Automotive on Board business for approximately $140 million in cash, subject to a working capital adjustment and certain transfer taxes. We will refer to the acquired business as Magnetic Speed and Position (“MSP”), which will be integrated into our sensors segment. We acquired this business in order to complement the existing operations of our sensors segment, provide new capabilities in light vehicle speed and position sensing, and expand our presence in emerging markets, particularly in China.

Sensors Business

Overview

We are a leading supplier of automotive, commercial and industrial sensors, including pressure sensors, pressure switches and position and force sensors. Our sensors business accounted for approximately ~~60.4~~63% of our net revenue for fiscal year ~~2009~~2010. Our sensors are used in a wide variety of applications, including automotive air-conditioning, braking, transmission and air bag applications as well as HVAC and heavy vehicle off-road applications. We derive most of our sensor revenue from the sale of medium and high-pressure sensors, and we believe that we are one of the largest suppliers of sensors in the majority of the key applications in which we compete. Our customers consist primarily of leading global automotive, industrial, and commercial OEMs and their Tier 1 suppliers. Our products are ultimately used by the majority of global automotive OEMs, providing us with a balanced customer portfolio of automotive OEMs which, we believe, helps to protect us against shifts in market share between different OEMs.

believe that we are one of the largest suppliers of sensors in each of the key applications in which we compete. Our customers consist primarily of leading global automotive, industrial, and commercial OEMs and their Tier 1 suppliers. Our products are ultimately used by the majority of global automotive OEMs, providing us with a balanced customer portfolio of automotive OEMs which, we believe, helps to protect us against shifts in market share between different OEMs.

Sensors Industry

Sensors are customized devices that translate physical phenomenon into electronic signals for use by microprocessors or computer-based control systems. Based on a report prepared by Global Industry Analysts, we believe that the global sensor industry in ~~2007~~2008 generated sales in excess of $4951 billion. The market is characterized by a broad range of products and applications across a diverse set of end-markets. We believe large OEMs and other multi-national companies are increasingly demanding a global presence to supply sensors on their key global platforms.

Automotive Sensors

Revenue from the global automotive end-market, which includes applications in powertrain, air-conditioning and chassis control is driven, we believe, by three principal trends. First, global automotive vehicle unit sales have demonstrated moderate but consistent annual growth prior to 2008, and are expected to increase as the current recession subsides. Second, the number of sensors used per vehicle has expanded, driven by a combination of factors including government regulation of safety and emissions, market demand for greater fuel efficiency and consumer demand for new applications. For example, governments have mandated sensor intensive advanced braking systems in both Europe and the United States. Finally, revenue growth has been augmented by a continuing shift away from legacy electromechanical products towards higher-value electronic solid-state sensors.

Based on a report prepared by Strategy Analytics, we believe sales of automotive sensors in North America, Europe, Japan, South Korea and China generated approximately $10.4 billion of revenue in 2008 and are expected to grow at a compound annual rate of 4.5% from 2008 to 2013. Where demand for automotive sensors is driven primarily by the increase in the number of sensors per vehicle, as well as by the level of global vehicle sales, we believe that the increasing installation of safety, emissions, efficiency, and comfort-related features in vehicles, such as airbags and electronic stability control, advanced driver assistance, advanced combustion and exhaust aftertreatment that depend on sensors for proper functioning will continue to drive increased sensor usage.

As reported by J.D. Power and Associates, global light vehicle sales saw continuous quarterly expansion from 2002 to 2007. This expansion came to a halt during fiscal year 2008. Global economic conditions translated into lower demand and an overall decline in automotive production by approximately 13% globally in 2009. In the mature markets, the decline was higher; for example, U.S. light vehicle production declined to 5.6 million units, down 34.4% from 8.5 million units in 2008. Western Europe light vehicle production declined 19.0% from 14.6 million units in 2008. Japan’s light vehicle production declined 31.3% from 11.0 million units in 2008. J.D. Power and Associates forecasts the industry will strengthen in 2010 with an estimated 8.5% increase in global light vehicle production. Global light vehicle production expanded on a quarterly basis for the second and third quarters of 2009. Over the long-term, many third-party forecasters expect global auto demand to continue expanding based on population growth and increased usage of cars in emerging markets.

~~testing~~characterized ~~sensors~~by ~~as part of their product development. Switching to~~ a ~~different~~broad ~~sensor~~range ~~results in considerable additional work, both in terms~~ of ~~sensor~~products ~~customization~~ and ~~extensive~~applications ~~platform/product retesting.~~across ~~This results in high switching costs for automotive manufacturers once~~ a ~~sensor~~diverse isset ~~designed-in, and, we believe is one~~ of ~~the reasons that sensors are rarely changed during a platform lifecycle, which is typically five to seven years~~end-markets. ~~Given~~ ~~the~~We ~~importance~~believe oflarge ~~reliability and the fact that the sensors have to be supported through the length of a product life, our experience has been that~~ OEMs and ~~Tier~~other 1multi-national ~~suppliers~~companies ~~tend~~are toincreasingly ~~work~~demanding ~~with suppliers that have~~ a ~~long track record of quality~~global ~~and~~presence ~~on-time delivery, and the scale and resources~~ to ~~meet~~supply ~~their needs as the car platform evolves and grows. In addition, the automotive segment is one of the largest markets for~~ sensors, ~~giving~~on ~~participants~~their ~~with~~key aglobal ~~presence in this end-market significant scale advantages over those participating only in smaller, more niche industrial and medical markets~~platforms.

Automotive Sensors

Revenue from the global automotive end-market, which includes applications in powertrain, air-conditioning and chassis control is driven, we believe, by three principal trends. First, global automotive vehicle unit sales have demonstrated moderate but consistent annual growth prior to 2008, and are expected to increase again as the recent recession continues to subside. Second, the number of sensors used per vehicle has expanded, driven by a combination of factors including government regulation of safety and emissions, market demand for greater fuel efficiency and consumer demand for new applications. For example, governments have mandated sensor intensive advanced braking systems in both Europe and the United States. Finally, revenue growth has been augmented by a continuing shift away from legacy electromechanical products towards higher-value electronic solid-state sensors.

Beginning in the second half of 2009 and into 2010, global light vehicle sales began to expand. According to IHS Automotive, global light vehicle production expanded approximately 23.5% from 2009 to 2010. Over the long-term, many third-party forecasters expect global auto demand to continue expanding based on population growth and increased usage of cars in emerging markets.

Based on a report prepared by Strategy Analytics, Inc., we believe sales of automotive sensors in North America, Europe, Japan, South Korea and China generated approximately $9.0 billion of revenue in 2009 and are expected to grow at a compound annual rate of 10% from 2009 to 2014. The increase in the number of sensors per vehicle and the level of global vehicle sales are the primary drivers in the increase of global automotive sensors. We believe that the increasing installation of safety, emissions, efficiency, and comfort-related features in vehicles, such as airbags and electronic stability control, advanced driver assistance, advanced combustion and exhaust aftertreatment that depend on sensors for proper functioning will continue to drive increased sensor usage.

The automotive sensors market is characterized by high switching costs and barriers to entry, benefiting incumbent market leaders. Sensors are critical components that enable a wide variety of applications, many of which are essential to the proper functioning of the product in which they are incorporated. Sensor application-specific products require close engineering collaboration between the sensor supplier and the OEM or the Tier 1 supplier. As a result, OEMs and Tier 1 suppliers make significant investments in selecting, integrating and testing sensors as part of their product development. Switching to a different sensor results in considerable additional work, both in terms of sensor customization and extensive platform/product retesting. This results in high switching costs for automotive manufacturers once a sensor is designed-in, and we believe is one of the reasons that sensors are rarely changed during a platform lifecycle, which is typically five to seven years. Given the importance of reliability and the fact that the sensors have to be supported through the length of a product life, our experience has been that OEMs and Tier 1 suppliers tend to work with suppliers that have a long track record of quality and on-time delivery, and the scale and resources to meet their needs as the car platform evolves and grows. In addition, the automotive segment is one of the largest markets for sensors, giving participants with a presence in this end-market significant scale advantages over those participating only in smaller, more niche industrial and medical markets.

Commercial and Industrial Sensors

Commercial and industrial sensors employ similar technology to automotive sensors, but often require greater customization in terms of packaging and calibration. Commercial and industrial applications in which sensors are widely used include HVAC, engines (for example, generators), heavy vehicle off-road and general industrial products (for example, fire suppression products). We believe that sensor usage in industrial and commercial applications is driven by many of the same factors as in the automotive market—regulation of safety and emissions, market demand for greater energy efficiency and consumer demand for new features. In the United States, for example, the Environmental Protection Agency (“EPA”) has mandated the use of environmentally–-friendly refrigerant ~~use~~ in all new HVAC equipment by 2010.

Based on a report prepared by VDC Research Group, we estimate that revenue for the global commercial and industrial pressure sensor ~~markets~~ markets generated $1.5 billion in ~~revenue~~revenues in 2008 and is expected to grow at a compound annual rate of 5.9% from 2008 to 2013. In addition, we believe based on that report that growth in commercial and industrial sensors is driven by growth in the underlying end-markets, which generally track the level of GDP, and greater usage of sensors within individual applications.

The current economic environment has resulted in lower spending for heavy vehicle off-road and general industrial products due to reduced spending in commercial development and commodity exploration, and slower growth in defense spending. This decline has been offset in part by consistent spending for HVAC products due to replacement or upgrades.

Sensor Products

We offer the following sensor products:


Product Categories	Key Applications/Solutions	Key End-Markets
Pressure Sensors	Air-conditioning systems Transmission Engine oil Suspension Fuel rail Braking Marine engine Air compressors	Automotive Heavy Vehicle Off-Road Marine Industrials

Pressure Switches	Air-conditioning systems Power steering Transmission HVAC refrigerant	Automotive HVAC Industrial

Position Sensors	Transmission Steering	Automotive

Force Sensors	Airbag (Occupant Weight Sensing)	Automotive

The table below sets forth the amount of net revenue we generated from each of these product categories in each of the last three fiscal years.

Product Category	For the year ended December 31,
(Amounts in thousands)	~~2009~~2010		~~2008~~	2009		~~2007~~		2008
Pressure Sensors	$	~~456~~687,~~116~~047	$	~~553,722~~$	456,116	$	~~562,239~~	$	553,722
Pressure Switches		7198,~~946~~350		~~96,928~~	71,946		~~101,748~~		96,928
Position Sensors		2632,~~062~~954		~~39,273~~	26,062		~~31,892~~		39,273
Force Sensors		5771,~~151~~977		~~87,654~~	57,151		~~91,894~~		87,654
Other		7379,~~817~~300		~~89,809~~	73,817		~~94,702~~		89,809
Total	$	~~685~~969,~~092~~628	$	~~867,386~~$	685,092	$	~~882,475~~	$	867,386

Controls Business

Overview

We are a leading provider of bimetal electromechanical controls, thermal and magnetic-hydraulic circuit breakers, power inverters and interconnection products. Our controls business accounted for approximately ~~39.6~~37% of our net revenue for fiscal year ~~2009~~2010. We manufacture and market a broad portfolio of application-specific products, including motor and compressor protectors, circuit breakers, semiconductor burn-in test sockets, electrical HVAC controls, power inverters and precision switches and thermostats. Our controls are sold into industrial, aerospace, military, commercial and residential end-markets. We derive most of our controls revenue from products that prevent damage from excess heat or current in a variety of applications within these end-markets, such as commercial and residential heating, air-conditioning and refrigeration and light industrial systems. We believe that we are one of the largest suppliers of controls in ~~each~~the majority of the key applications in which we compete.

Our controls business also benefits from strong agency relationships. For example, a number of electrical ~~standards~~ standards for motor control products, including portions of the Underwriters’ Laboratories Standards for Safety, have been written based on the performance and specifications of our controls products. We also have blanket approval from Underwriters’ Laboratories for many of our control products, so that customers can use Klixon® products in the United States interchangeably, but are required to receive certification from Underwriters’ Laboratories for their own products if they decide to incorporate competitive motor protection offerings.

We attribute a substantial portion of our growth in this business to an expanded presence in Asia, particularly China. We are well-positioned to capture additional revenue from our multinational customers as they relocate manufacturing operations to China. We have been working to leverage this market position, with our brand recognition, to develop new relationships with a number of high-growth local Chinese manufacturers. We continue to focus on managing our costs and increasing our productivity in these lower-cost manufacturing regions.

Controls Industry

Controls are customized devices which protect equipment and electrical architecture from excessive heat or current. Our product line encompasses four categories of controls—bimetal electromechanical controls, thermal and magnetic-hydraulic circuit breakers, power inverters and interconnection—each of which serves a highly diversified base of customers, end-markets, applications and geographies.

Bimetal Electromechanical Controls

Bimetal electromechanical controls include motor protectors, motor starters, thermostats and switches, each of which helps prevent damage from excessive heat or current. Our bimetal electromechanical controls business serves a diverse group of end-markets, including commercial and residential HVAC systems, lighting, refrigeration, industrial motors and household appliances, commercial and military aircraft. In the developed markets such as the United States, Europe and Japan, the demand for many of these products, and their respective applications, tends to track to the general economic environment, with historical growth moderately above increases in GDP. In the emerging markets, a growing middle class and rapid overall industrialization is creating significant growth for our control products in electric motors, consumer conveniences such as appliances and HVAC, and communication infrastructure. As an example, the China Countryside Initiative has established higher targets for penetration of household refrigerators and washing machines in rural households that we believe creates significant growth opportunities in China for our controls business.

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serves a diverse group of end-markets, including commercial and residential HVAC systems, lighting, refrigeration, industrial motors and household appliances, commercial and military aircraft. In the developed markets such as the United States, Europe and Japan, the demand for many of these products, and their respective applications, tends to track to the general economic environment, with historical growth moderately above increases in GDP. In the emerging markets, a growing middle class and rapid overall industrialization is creating significant growth for our control products in electric motors, consumer conveniences such as appliances and HVAC, and communication infrastructure. As an example, the China Countryside Initiative has established higher targets for penetration of household refrigerators and washing machines in rural households that we believe creates significant growth opportunities in China for our controls business.

Thermal and Magnetic-Hydraulic Circuit Breakers

Our circuit breaker portfolio includes customized magnetic-hydraulic circuit breakers and thermal circuit breakers, all of which help prevent damage from electrical or thermal overload. Our magnetic-hydraulic circuit breakers serve a broad spectrum of OEMs and other multi-national companies in the telecommunication, industrial, recreational vehicle, HVAC, refrigeration, marine, medical, information processing, electronic power supply, power generation, over-the-road trucking, construction, agricultural and alternative energy markets. We provide thermal circuit breakers to the commercial and military aircraft market. Although demand for these products tends to pace the general economic environment, demand in certain end-markets such as electrical protection for network power and critical, high-reliability mobile power applications is projected to exceed the growth of the general economic environment.

Power Inverters

Our power inverters products allow an electronic circuit to convert DC to AC. Power inverters are used mainly in applications where DC power, such as that stored in a battery, must be converted for use in an electrical device that runs on AC power (e.g., any electrical products that plug into a standard electrical outlet). Specific applications for power inverters include powering applications in utility/service trucks or recreational vehicles and providing power backup for critical applications such as traffic light signals and key business/computer systems. Demand for these products is driven by economic development, as well as growing interest in clean energy to replace generators, all of which increase demand for both portable and stationary power. As development slows, the demand for our products in these markets declines. The decline is mitigated by growing requirements to meet new energy efficient standards.

Interconnection

Our interconnection products consist of semiconductor burn-in test sockets used by semiconductor manufacturers to verify packaged semiconductor reliability. The semiconductor industry experienced a decline throughout 2009 primarily due to high levels of inventory and rapidly changing technologies. However, beginning in 2010, we experienced an increase in demand for our Interconnection products and we believe, based on information from IC Insights, that the semiconductor market will grow at a compound annual rate of approximately ~~12.3~~6% from ~~2009~~2010 to ~~2013~~2015.

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Controls Products

We offer the following controls products:


Product Categories	Key Applications/Solutions	Key End-Markets
Bimetal Electromechanical Controls	Internal motor and compressor protectors External motor and compressor protectors Motor starters Thermostats Switches	HVAC Small/Large Appliances Lighting Industrial Motors Automotive Accessory Motors Commercial Aircraft Military Heavy Vehicle Off-Road Marine/Industrial

Thermal and Magnetic-Hydraulic Circuit Breakers	Circuit protection	Commercial Aircraft Data Communications Telecommunications Computer Servers Heavy Vehicle Off-Road Marine/Industrial HVAC Military

Power Inverters	DC/AC motors	Heavy Vehicle Off-Road

Interconnection	Semiconductor testing	Semiconductor Manufacturing

The table below sets forth the amount of revenue we generated from each of these product categories in each of the last three fiscal years.

Product Category	For the year ended December 31,
(Amounts in thousands)	~~2009~~2010		~~2008~~	2009		~~2007~~		2008
Bimetal Electromechanical Controls	$	~~298~~379,~~476~~487	$	~~363,826~~$	298,476	$	~~380,717~~	$	363,826
Thermal and Magnetic-Hydraulic Circuit Breakers		~~113~~131,~~855~~234		~~142,112~~	113,855		~~83,648~~		142,112
Power Inverters		1419,~~341~~985		~~20,641~~	14,341		~~9,590~~		20,641
Interconnection		2339,~~180~~485		~~28,398~~	23,180		~~37,105~~		28,398
Other		—260		~~292~~	—		~~9,719~~		292
Total	$	~~449~~570,~~852~~451	$	~~555,269~~$	449,852	$	~~520,779~~	$	555,269

Technology, Product Development and Intellectual Property

We employ various core technology platforms across many different product families and applications in an effort to maximize the impact of our research, development and engineering investments, to increase economies of scale and to leverage our technology-specific expertise across multiple product platforms. The technologies inherent in our sensors and controls products include bimetal discs, ceramic ~~capacitive~~capacitance, monosilicon strain gage and micro electromechanical systems.

~~Our~~14 global engineering team consists of approximately 1,000 full-time team members dedicated to product research, development and engineering. These team members work closely with our customers to develop customized highly-engineered sensors, controls and other products to satisfy our customers’ needs. Our research,

Our global engineering team members work closely with our customers to develop customized highly engineered sensors, controls and other products to satisfy our customers’ needs. Our research, development and engineering investments enable us to consistently provide innovative, high-quality products with efficient manufacturing methods. Our research, development and engineering investments include research and development costs and the costs of all our engineering-related activities, including costs related to customer-specific customization of our products.

We believe that continued focused investment in research, development and engineering activities are critical to our future growth and maintaining our leadership position. Our research, development and engineering efforts are directly related to timely development of new and enhanced products that are central to our core business strategy. We develop our technologies to meet an evolving set of customer requirements and new product introductions.

We operate a global network of business centers ~~worldwide~~ that allows us to develop new sensing technologies, improve existing technologies and customize our products to the particular needs of our customers. We coordinate our technology research, development and engineering efforts through Centers of Expertise that are designed to maintain a critical mass of intellectual capital in our core technologies and leverage that knowledge in our sensors and controls businesses.

We rely primarily on patents and trade secret laws, confidentiality procedures and licensing arrangements to protect our intellectual property rights. While we consider our patents to be valuable assets, we do not believe that our overall competitive position is dependent ~~upon~~on patent protection or that our overall operations are dependent upon any single patent or group of related patents. Many of our patents protect specific functionality in our sensors and controls products and others consist of processes or techniques that result in reduced manufacturing costs. Our patents generally relate to improvements on earlier filed Sensata, acquired or competitor patents. We acquired ownership and license rights to a portfolio of patents and patent applications, as well as certain registered trademarks and service marks for discrete product offerings, from Texas Instruments in the 2006 Acquisition. We have also acquired intellectual property in the acquisitions of First Technology Automotive, Airpax and ~~Airpax~~most recently Automotive on Board. We have continued to have issued to us, and to file for, additional U.S. and ~~foreign~~non-U.S. patents since the 2006 Acquisition. As of December 31, ~~2009~~2010, we had approximately ~~196~~174 U.S. and ~~190~~163 ~~foreign~~non-U.S. patents and approximately 2514 U.S. and ~~180~~162 ~~foreign~~non-U.S. pending patent applications. We do not know whether any of our pending patent applications will result in the issuance of patents or whether the examination process will require us to narrow our claims.

The table below sets forth the number of our current U.S. patents that are scheduled to expire in the referenced periods.

For the years ending December 31,	# of Patents
During the years ending December 31,	Number of Patents
2010-2014	40
2011 – 2015		36
2015-2019	72
2016 – 2020		61
2020-2024	61
2021 – 2025		55
2025-2028	23
2026 – 2029		22

The 4036 U.S. patents that will expire between ~~2010~~2011 and ~~2014~~2015 include patents involving pressure sensors, motor controls, semiconductor burn-in-test sockets, thermostats, transmission position switches, temperature sensors, thermal circuit breakers, magnetic-hydraulic circuit breakers and power inverters. Since our core technology platforms, and most of our products, are mature, and our patents generally relate to improvements on earlier filed Sensata, acquired or competitor patents, we do not expect that the expiration of these patents will limit our ability to manufacture and sell such products or otherwise have a material adverse effect on our competitive position.

We15 utilize licensing arrangements with respect to some technology that we use in our sensor products and to a lesser extent, our control products. We entered into a perpetual, royalty-free cross-license agreement with our former owner, Texas Instruments, in connection with the 2006 Acquisition that permits each party to use specified technology owned by the other party in its business. No license may be terminated under the agreement,

~~even~~We utilize licensing arrangements with respect to some technology that we use in ~~the~~our ~~event~~sensor products ofand to a ~~material~~lesser ~~breach~~extent, our control products. ~~See~~We ~~Item~~entered 13into a perpetual, ~~“Certain~~royalty-free ~~Relationships~~cross-license ~~and~~agreement ~~Related~~with ~~Party~~our ~~Transactions—~~former owner, Texas Instruments, in connection with the 2006 ~~Acquisitions~~Acquisition ~~Arrangements—Cross~~that ~~License~~permits ~~Agreement~~each party to use specified technology owned by the other party in its business.” No license may be terminated under the agreement, even in the event of a material breach. We also have a material licensing arrangement with Measurement Specialties that enables us to manufacture the sensing elements used in our monosilicon strain gage pressure sensors. The initial term of this license ran until July 1, 2008 and has been subsequently renewed annually. We anticipate that it will continue to be renewed each year or other acceptable arrangements will be available to us with respect to this technology. This license can be terminated by either party in the event of an uncured material breach. This sensing element is a component used in both our monosilicon strain gage pressure sensors and our occupancy weight-sensing force sensors, which accounted for $287.0 million in net revenue for the year ended December 31, 2010. We purchase these sensing elements from Measurement Specialties and also manufacture them internally as a second source of supply pursuant to the license.

Sales and Marketing

We believe that the integration of our sensors and controls products into our customers’ systems, as well as their long sales cycle and high initial investment required in customization and qualification, puts a premium on the ability of sales and marketing professionals to develop strong customer relationships and identify new business opportunities. To that end, our sales and marketing staff consists of an experienced, technically knowledgeable group of professionals with extensive knowledge of the end-markets and key applications for our sensors and controls.

Our sales team works closely with our dedicated research, development and engineering teams to identify products and solutions for both existing and potential customers. Our sales and marketing function within our business is organized into regions—America, ~~Europe~~Asia Pacific and ~~Asia~~Europe—but also organizes globally across all geographies according to market segments, so as to facilitate knowledge sharing and coordinate activities involving our larger customers through global account managers. Our sales and marketing professionals also focus on “early entry” into new applications rather than the displacement of existing suppliers in mature applications, due to the high switching costs that typically are required in the markets we serve. In addition, in our controls business, we seek to capitalize on what we believe is our existing reputation for quality and reliability, together with recognition of our Sensata, Klixon®, Airpax® and Dimensions brands, in order to deepen our relationships with existing customers and develop new customers across all end-markets.

Customers

Our customer base in the sensors business includes a wide range of OEMs and Tier 1 suppliers in the automotive, industrial and commercial end-markets. Our customers in the controls business include a wide range of industrial and commercial ~~OEMs~~manufacturers and ~~Tier~~suppliers ~~1 manufacturers~~ across multiple end-markets, primarily OEMs in the climate control, appliance, semiconductor, datacomm, telecommunications and aerospace industries, as well as Tier 1 motor and compressor suppliers. In geographic and product markets where we lack an established base of customers we rely on third-party distributors to sell our sensors and controls products. We have had relationships with our top ten customers for an average of 24 years.

The following table presents the top ten customers by net revenue for fiscal year 2009 for each of the sensors and controls businesses, set forth in alphabetical order:

Sensors Controls BMW A.O. Smith Chrysler Group Emerson Electric Continental Flame Enterprises Ford Motor Company Giatek Corporation General Motors LG Group Honda Motor Company Peerless Electronics Peugeot Citroen Regal Beloit Renault/Nissan Robert Bosch GmbH TRW Automotive Samsung Volkswagen Whirlpool

The following table presents a summary of the percentage of net revenue by selected geographic regions, based on the location of the respective entities, for the years ended December 31, 2009, 2008 and 2007:

	Percentage of Revenue by Geographic Regions
	For the year ended December 31,
	2009		2008		2007
Geographic Region
Americas	45	%	47	%	49	%
Europe	27		25		25
Asia Pacific	28		28		26
Total	100	%	100	%	100	%

Competition

Within each of the principal product categories in our sensors business, we compete with a variety of independent suppliers and with the in-house operations of Tier 1 systems suppliers. We believe that the key competitive factors in this market are product quality and reliability, technical expertise and development capability, breadth of product offerings, product service and price. Our principal competitors in the market for automotive sensors are Robert Bosch GmbH and Denso Corporation which are in-house, or captive, providers, and Nagano Keiki Co., Ltd. and Schneider Electric, which are independent. Our principal competitors in the market for commercial and industrial sensors include Saginomiya Seisakusho, Inc. and Schneider Electric.

Within each of the principal product categories in our controls business, we compete with divisions of large multi-national industrial corporations and fragmented companies, which compete primarily in specific end-markets or applications. We believe that the key competitive factors in this market are product quality and reliability, although manufacturers in certain markets also compete based on price. Physical proximity to the facilities of the OEM/Tier 1 manufacturer customer have, in our experience, also increasingly become a basis for competition. We have additionally found, in our experience, that certain of the product categories have specific competitive factors. For example, in the thermal circuit breakers, thermostats and switches markets, strength of technology, quality and the ability to provide custom solutions are particularly important. In the hydraulic-magnetic circuit breaker markets, as another example, we have encountered heightened competition on price and a greater emphasis on agency approvals, including approvals by Underwriters’ Laboratories, a U.S.-based organization that issues safety standards for many electrical products used in the U.S., and similar organizations outside of the U.S., such as Verband der Elektrotechnik, Elektronik und Informationstechnik and TÜV Rheinland in Europe, China Compulsory Certification in China and Canadian Standards Association in Canada.

Our primary competitors in the basic alternating current motor protection market include Asian manufacturers Jiangsu Chengsheng Electric Appliance Company Ltd., ChwenDer Thermostat & Company Ltd., Wanbao Refrigeration Group Guangzhou Appliances Company Ltd., Hangzhou Star Shuaier Electric Appliance Co., Ltd., Ubukata Industries Co., Ltd. and Foshan TongBao Corporation Limited. Our competitors in the thermal circuit breaker, thermostat and switches markets include Cutler Hammer, a division of Eaton Corporation; and Crouzet, a division of Schneider Electric, in aircraft circuit breakers; Honeywell International Inc. in aircraft switches and thermostats; and Cooper Bussman, a division of Cooper Electric, in heavy and off-road thermal circuit breakers. Our competitors in magnetic-hydraulic circuit breaker markets include Carling Technologies, Circuit Breaker Industries, the Heinemann brand of Eaton Corporation and a growing number of smaller competitors primarily in Asia.

Employees

As of December 31, 2009, we had approximately 9,500 employees, approximately 10% of whom are located in the U.S. None of our employees are covered by collective bargaining agreements. In various countries, local

~~law~~The ~~requires~~following ~~our~~table ~~participation~~presents inthe ~~works~~top ~~councils.~~ten Wecustomers ~~also~~by ~~utilize~~net ~~contract~~revenue ~~workers~~for infiscal ~~multiple~~year ~~locations~~2010 infor each ~~order to cost-effectively manage variations in manufacturing volume. As~~ of ~~December 31,~~ ~~2009,~~the wesensors ~~had~~and ~~approximately~~controls 1businesses,~~600~~ ~~contract~~set ~~workers~~forth onin aalphabetical ~~worldwide~~order: ~~basis. We believe that our relations with our employees are good.~~

~~Environmental~~Sensors ~~Matters~~Controls ~~and~~Caterpillar ~~Governmental~~Chrysler ~~Regulation~~Group Continental Ford Motor Company General Motors Honda Motor Company Peugeot Citroen Renault/Nissan TRW Automotive Volkswagen A.O. Smith Emerson Electric Flame Enterprises Giatek Corporation LG Group Peerless Electronics Regal Beloit Robert Bosch GmbH Samsung Whirlpool

~~Our~~The ~~operations~~following ~~and~~table ~~facilities~~presents ~~are~~a ~~subject~~summary ~~to U.S. and foreign laws and regulations governing the protection~~ of the ~~environment~~percentage ~~and our employees, including those governing air emissions, water discharges, the management and disposal~~ of ~~hazardous~~net ~~substances~~revenue ~~and~~by ~~wastes,~~selected ~~and~~geographic ~~the~~regions ~~cleanup~~for ~~of contaminated sites. We could incur substantial costs, including cleanup costs, fines or civil or criminal sanctions, or third-party property damage or personal injury claims, in~~ the ~~event~~last ofthree ~~violations~~fiscal ~~or liabilities under these laws and regulations, or non-compliance with the environmental permits required at our facilities~~years. Potentially significant expenditures could be required in order to comply with environmental laws that may be adopted or imposed in the future. We are, however, not aware of any threatened or pending material environmental investigations, lawsuits or claims involving us or our operations. As of December 31, 2009, compliance with federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect on our capital expenditures, earnings and competitive position. We have not budgeted any material capital expenditures for environmental control facilities during 2010 or 2011.

In 2001, Texas Instruments Brazil was notified by the State of São Paolo, Brazil, regarding its potential cleanup liability as a generator of wastes sent to the Aterro Mantovani disposal site, which operated near Campinas from 1972 to 1987. The site is a landfill contaminated with a variety of chemical materials, including petroleum products, allegedly disposed at the site. Texas Instruments Brazil is one of over 50 companies notified of potential cleanup liability. There have been several lawsuits filed by third parties alleging personal injuries caused by exposure to drinking water contaminated by the disposal site. Our subsidiary, Sensata Technologies Brazil, is the successor in interest to Texas Instruments Brazil. However, in accordance with the terms of the acquisition agreement entered into in connection with the 2006 Acquisition, Texas Instruments retained these liabilities (subject to the limitations set forth in that agreement) and has agreed to indemnify us with regard to these excluded liabilities. Additionally, in 2008 lawsuits were filed against Sensata Technologies Brazil alleging personal injuries suffered by individuals who were exposed to drinking water allegedly contaminated by the Aterro disposal site. These matters are managed and controlled by Texas Instruments. Texas Instruments is defending these lawsuits, which are in early stages. Although Sensata Technologies Brazil cooperates with Texas Instruments in this process, we do not anticipate incurring any non-reimbursable expenses related to the matters described above. Accordingly, no amounts have been accrued for these matters as of December 31, 2009 or 2008.


	Percentage of Revenue by Geographic Regions
	For the year ended December 31,
	2010			2009			2008
Geographic Region
Americas		42	%		45	%		47	%
Asia Pacific		33			28			28
Europe		25			27			25

Total		100	%		100	%		100	%

~~Control~~Competition Devices, Inc., a wholly-owned subsidiary of one of our U.S. operating subsidiaries acquired through our acquisition of the First Technology Automotive business, holds a post-closure license, along with GTE Operations Support, Inc., from the Maine Department of Environmental Protection with respect to a closed hazardous waste surface impoundment located on real property and a facility owned by Control Devices in Standish, Maine. The post-closure license obligates GTE Operations Support to operate a pump and treatment process to reduce the levels of chlorinated solvents in the groundwater under the property. The post-closure license obligates Control Devices to maintain the property and provide access to GTE Operations Support. We do not expect the costs to comply with the post-closure license to be material. As a related but separate matter, pursuant to the terms of an Environmental Agreement dated July 6, 1994, GTE Operations Support retained liability and agreed to indemnify Control Devices for certain liabilities related to the soil and groundwater contamination from the surface impoundment and an out-of-service leach field at the Standish, Maine facility, and Control Devices and GTE Operations Support have certain obligations related to the property and each other. The site is contaminated primarily with chlorinated solvents. We do not expect the remaining cost associated with addressing the soil and groundwater contamination to be material.

Within each of the principal product categories in our sensors business, we compete with a variety of independent suppliers and with the in-house operations of Tier 1 systems suppliers. We believe that the key competitive factors in this market are product quality and reliability, technical expertise and development capability, breadth of product offerings, product service and price. Our principal competitors in the market for automotive sensors are Robert Bosch GmbH and Denso Corporation, which are in-house, or captive, providers, and Nagano Keiki Co., Ltd. and Schneider Electric, which are independent. Our principal competitors in the market for commercial and industrial sensors include Saginomiya Seisakusho, Inc. and Schneider Electric.

Within each of the principal product categories in our controls business, we compete with divisions of large multi-national industrial corporations and fragmented companies, which compete primarily in specific end-markets or applications. We believe that the key competitive factors in this market are product quality and reliability, although manufacturers in certain markets also compete based on price. Physical proximity to the facilities of the OEM/Tier 1 manufacturer customer has, in our experience, also increasingly become a basis for competition. We have additionally found, in our experience, that certain of the product categories have specific competitive factors. For example, in the thermal circuit breakers, thermostats and switches markets, strength of technology, quality and the ability to provide custom solutions are particularly important. In the hydraulic-magnetic circuit breaker markets, as another example, we have encountered heightened competition on price and a greater emphasis on agency approvals, including approvals by Underwriters’ Laboratories, a U.S.-based organization that issues safety standards for many electrical products used in the United States, and similar organizations outside of the United States, such as Verband der Elektrotechnik, Elektronik und Informationstechnik and TÜV Rheinland in Europe, China Compulsory Certification in China and Canadian Standards Association in Canada.

WeOur ~~are~~primary ~~subject~~competitors toin ~~compliance~~the ~~with~~basic ~~laws~~alternating ~~and~~current ~~regulations~~motor ~~controlling~~protection ~~the~~market ~~export~~include Asian ofmanufacturers ~~goods~~Jiangsu ~~and services.~~Chengsheng ~~Certain~~Electric ofAppliance ~~our~~Company ~~products~~Ltd., ~~are~~ChwenDer ~~subject~~Thermostat & toCompany ~~International~~Ltd., ~~Traffic~~Wanbao inRefrigeration ~~Arms~~Group ~~Regulation,~~Guangzhou orAppliances ~~“ITAR~~Company Ltd.”, ~~These~~Hangzhou ~~products~~Star ~~represent~~Shuaier anElectric ~~immaterial~~Appliance ~~portion~~Co., ofLtd., ~~our~~Ubukata ~~revenues~~Industries Co., Ltd. and weFoshan ~~have~~TongBao ~~not~~Corporation ~~exported an ITAR-controlled product~~Limited. ~~However,~~Our ifcompetitors in the ~~future~~ wethermal ~~decide~~circuit ~~to export ITAR-controlled products~~breaker, ~~such~~thermostat ~~transactions~~and ~~would~~switches ~~require~~markets aninclude ~~individual~~Cutler ~~validated~~Hammer ~~license~~and ~~from~~Crouzet, ~~the~~divisions ~~U.S. State Department’s Directorate~~ of ~~Defense~~Eaton ~~Trade~~Corporation ~~Controls.~~and ~~The~~Schneider ~~State~~Electric, ~~Department~~respectively, ~~makes~~in ~~licensing decisions based on~~aircraft ~~type~~circuit ofbreakers; ~~product,~~Honeywell ~~destination~~International ofInc. ~~end~~in ~~use,~~aircraft ~~end~~switches ~~user~~ and ~~considers~~thermostats; ~~national security~~ and ~~foreign~~Cooper ~~policy.~~Bussman, ~~The~~a ~~length~~division of ~~time~~Cooper ~~involved~~Electric, in ~~the~~heavy ~~licensing~~and ~~process~~off-road ~~varies,~~thermal ~~but~~circuit ~~is currently less than three weeks~~breakers. ~~The~~Our ~~license~~competitors ~~processing~~in ~~time~~magnetic-hydraulic ~~could~~circuit ~~result~~breaker inmarkets ~~delays~~include inCarling ~~the~~Technologies, ~~shipping~~Circuit ofBreaker ~~products.~~Industries, ~~These~~the ~~laws~~Heinemann ~~and~~brand ~~regulations~~of ~~are~~Eaton ~~subject~~Corporation ~~to change,~~ and ~~any~~a ~~such~~growing ~~change~~number ~~may~~of ~~require~~smaller uscompetitors toprimarily ~~change~~in ~~technology or incur expenditures to comply with such laws and regulations~~Asia.

Employees

As of December 31, 2010, we had approximately 10,500 employees, approximately 9% of whom are located in the United States, none of which were covered by collective bargaining agreements. In various countries, local law requires our participation in works councils. We also utilize contract workers in multiple locations in order to cost-effectively manage variations in manufacturing volume. As of December 31, 2010, we had approximately 1,300 contract workers on a worldwide basis. We believe that our relations with our employees are good.

Environmental Matters and Governmental Regulation

Our operations and facilities are subject to U.S. and non-U.S. laws and regulations governing the protection of the environment and our employees, including those governing air emissions, water discharges, the management and disposal of hazardous substances and wastes, and the cleanup of contaminated sites. We could incur substantial costs, including cleanup costs, fines or civil or criminal sanctions, or third party property damage or personal injury claims, in the event of violations or liabilities under these laws and regulations, or non-compliance with the environmental permits required at our facilities. Potentially significant expenditures could be required in order to comply with environmental laws that may be adopted or imposed in the future. We are, however, not aware of any threatened or pending material environmental investigations, lawsuits or claims involving us or our operations other than as set forth below. As of December 31, 2010, compliance with federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect on our capital expenditures, earnings and competitive position. We have not budgeted any material capital expenditures for environmental control facilities during 2011.

In 2001, Texas Instruments Brazil was notified by the State of São Paolo, Brazil, regarding its potential cleanup liability as a generator of wastes sent to the Aterro Mantovani disposal site, which operated near Campinas from 1972 to 1987. The site is a landfill contaminated with a variety of chemical materials, including petroleum products, allegedly disposed at the site. Texas Instruments Brazil is one of over 50 companies notified of potential cleanup liability. There have been several lawsuits filed by third parties alleging personal injuries caused by exposure to drinking water contaminated by the disposal site. Our subsidiary, Sensata Technologies Brazil, is the successor in interest to Texas Instruments Brazil. However, in accordance with the terms of the acquisition agreement entered into in connection with the 2006 Acquisition (“Acquisition Agreement”) Texas Instruments retained these liabilities (subject to the limitations set forth in that agreement) and has agreed to indemnify us with regard to these excluded liabilities. Additionally, in 2008, lawsuits were filed against Sensata Technologies Brazil alleging personal injuries suffered by individuals who were exposed to drinking water allegedly contaminated by the Aterro disposal site. These matters are managed and controlled by Texas Instruments. Texas Instruments is defending these lawsuits, which are in early stages. Although Sensata Technologies Brazil cooperates with Texas Instruments in this process, we do not anticipate incurring any non-reimbursable expenses related to the matters described above. Accordingly, no amounts have been accrued for these matters as of December 31, 2010.

Control Devices, Inc. (“CDI”), a wholly-owned subsidiary of one of our U.S. operating subsidiaries acquired through our acquisition of the First Technology Automotive business, holds a post-closure license, along with GTE Operations Support, Inc. (“GTE”), from the Maine Department of Environmental Protection with respect to a closed hazardous waste surface impoundment located on real property and a facility owned by CDI in Standish, Maine. The post-closure license obligates GTE to operate a pump and treatment process to reduce the levels of chlorinated solvents in the groundwater under the property. The post-closure license obligates CDI to maintain the property and provide access to GTE. We do not expect the costs to comply with the post-closure license to be material. As a related but separate matter, pursuant to the terms of an environmental agreement dated July 6, 1994, GTE retained liability and agreed to indemnify CDI for certain liabilities related to the soil and groundwater contamination from the surface impoundment and an out-of-service leach field at the Standish, Maine facility, and CDI and GTE have certain obligations related to the property and each other. The site is contaminated primarily with chlorinated solvents. We do not expect the remaining cost associated with addressing the soil and groundwater contamination to be material.

Our products are governed by material content restrictions and reporting requirements, examples of which include the European Union regulations such as REACH, RoHS, ELV, etc., and similar regulations in other countries. Numerous customers, across all business sectors, are requiring us to provide declarations of compliance or, in some cases, full material content disclosure as a requirement of doing business with them.

We are subject to compliance with laws and regulations controlling the export of goods and services. Certain of our products are subject to International Traffic in Arms Regulation (“ITAR”). These products represent an immaterial portion of our net revenue and we have not exported an ITAR-controlled product. However, if in the future we decided to export ITAR-controlled products, such transactions would require an individual validated license from the U.S. State Department’s Directorate of Defense Trade Controls. The State Department makes licensing decisions based on type of product, destination of end use, end user and national security and foreign policy. The length of time involved in the licensing process varies, but is currently less than three weeks. The license processing time could result in delays in the shipping of products. These laws and regulations are subject to change, and any such change may require us to change technology or incur expenditures to comply with such laws and regulations.

ITEM 1A.

RISK FACTORS

Our operating results and financial condition have been and may continue to be adversely affected by the current financial crisis and worldwide economic conditions.

The current financial crisis affecting the banking system and financial markets and the uncertainty in global economic conditions has resulted in a significant tightening of the credit markets, a low level of liquidity in financial markets, decreased consumer confidence, and reduced corporate profits and capital spending. These conditions make it difficult for our customers, our vendors and us to accurately forecast and plan future business activities, and have caused, and may continue to cause, our customers to reduce spending on our products. We cannot predict the timing or duration of the global economic crisis or the timing or strength of a subsequent economic recovery. If the economy or markets in which we operate experience continued weakness at current levels or deteriorate further, our business, financial condition and results of operations would be materially and adversely affected.

Continued fundamental changes in the industries in which we operate have had and could continue to have adverse effects on our businesses.

Our products are sold to automobile manufacturers and manufacturers of commercial and residential HVAC systems, as well as to manufacturers in the refrigeration, lighting, aerospace, telecommunications, power supply and generation and industrial markets, among others. These are global industries, and they are experiencing various degrees of growth and consolidation. Customers in these industries are located in every major geographic market. As a result, our customers are affected by changes in global and regional economic conditions, as well as by labor relations issues, regulatory requirements, trade agreements and other factors. ~~This~~These factors, in turn, ~~affects~~affect overall demand and prices for our products sold to these industries. Changes ~~For example, the significant economic decline beginning~~ in the ~~fourth~~industries ~~quarter of 2008 has resulted~~ in awhich ~~reduction~~we inoperate automotive production and in the sales of many of the other products manufactured by our customers that use our products, and has had an adverse effect on our results of operations. This negative outlook may ~~continue into 2010. This may~~ be more detrimental to us in comparison to our competitors due to our significant levels of debt. In addition, many of our products are platform-specific—for example, sensors are designed for certain of our HVAC manufacturer customers according to specifications to fit a particular model. Our success may, to a certain degree, be connected with the success or failure of one or more of the industries to which we sell products, either in general or with respect to one or more of the platforms or systems for which our products are designed.

Continued pricing and other pressures from our customers may adversely affect our business.

Many of our customers, including automotive manufacturers and other industrial and commercial OEMs, have policies of seeking price reductions each year. Recently, many of the industries in which our products are sold have suffered from unfavorable pricing pressures in North America and Europe, which in turn has led manufacturers to seek price reductions from their suppliers. Our significant reliance on these industries subjects us to these and other similar pressures. If we are not able to offset continued price reductions through improved operating efficiencies and reduced expenditures, those price reductions may have a material adverse effect on our results of operations and cash flows. In addition, our customers occasionally require engineering, design or production changes. In some circumstances, we may be unable to cover the costs of these changes with price increases. Additionally, as our customers grow larger, they may increasingly require us to provide them with our products on an exclusive basis, which could cause an increase in the number of products we must carry and, consequently, increase our inventory levels and working capital requirements. Certain of our customers, particularly domestic automotive ~~manufactures~~manufacturers, are increasingly requiring their suppliers to agree to their standard purchasing terms without deviation as a condition to engage in future business transactions. As a result, we may find it difficult to enter into agreements with such customers on terms that are commercially reasonable to us.

19Conditions in the automotive industry have had, and may have in the future, adverse effects on our results of operations.

Much of our business depends on and is directly affected by the global automobile industry. Sales to customers in the automotive industry accounted for approximately 55% of our total net revenue for fiscal year 2010. Automakers and their suppliers globally continue to experience significant difficulties from a weakened economy and tightened credit markets. Globally, many automakers and their suppliers are still recovering from financial distress experienced in recent years. Adverse developments like those we have seen in recent years in the automotive industry, including but not limited to declines in demand, customer bankruptcies and increased demands on us for pricing decreases, would have adverse effects on our results of operations and could impact our liquidity position and our ability to meet restrictive debt covenants. In addition, these same conditions could adversely impact certain of our vendors’ financial solvency, resulting in potential liabilities or additional costs to us to ensure uninterrupted supply to our customers.

Conditions in the automotive industry have had and may continue to have adverse effects on our results of operations.

Much of our business depends on and is directly affected by the global automobile industry. Sales to customers in the automotive industry accounted for approximately 52% of our total net revenue for fiscal year 2009. Automakers and their suppliers globally continue to experience significant difficulties from a weakened economy and tightening credit markets. Globally, many automakers and their suppliers are in financial distress. Continued adverse developments in the automotive industry, including but not limited to continued share declines in demand, customer bankruptcies and increased demands on us for pricing decreases, would have adverse effects on our results of operations and could impact our liquidity position and our ability to meet restrictive debt covenants. In addition, these same conditions could adversely impact certain of our vendors’ financial solvency, resulting in potential liabilities or additional costs to us to ensure uninterrupted supply to our customers.

Our ability to operate our business effectively could be impaired if we fail to attract and retain key personnel.

Our ability to operate our business and implement our strategies effectively depends, in part, on the efforts of our executive officers and other key employees. Our management team has significant industry experience and would be difficult to replace. These individuals possess sales, marketing, engineering, manufacturing, financial and administrative skills that are critical to the operation of our business. In addition, the market for engineers and other individuals with the required technical expertise to succeed in our business is highly competitive and we may be unable to attract and retain qualified personnel to replace or succeed key employees should the need arise. During 2008 and 2009, we completed certain reductions in force at a number of our sites in order to align our business operations with current and projected economic conditions. ~~Additional actions have occurred and may continue to occur during 2010.~~ The loss of the services of any of our key employees or the failure to attract or retain other qualified personnel could have a material adverse effect on our business.

If we fail to maintain our existing relationships with our customers, our exposure to industry and customer -specific demand fluctuations could increase and our revenue may decline as a result.

Our customers consist of a diverse base of OEMs across the automotive, HVAC, appliance, industrial, aerospace, defense and other end-markets in various geographic locations throughout the world. In the event that we fail to maintain our relationships with our existing customers and such failure increases our dependence on particular markets or customers, then our revenue would be exposed to greater industry and customer -specific demand fluctuations, and could decline as a result.

We are subject to risks associated with our non-U.S. operations, which could adversely impact the reported results of operations from our international businesses.

Our subsidiaries outside of the Americas generated approximately 5558% of our net revenue for fiscal year ~~2009~~2010, and we expect sales from non-U.S. markets to continue to represent a significant portion of our total sales. International sales and operations are subject to changes in local government regulations and policies, including those related to tariffs and trade barriers, investments, taxation, exchange controls and repatriation of earnings.

A significant portion of our revenue, ~~and~~ expenses, ~~and~~ receivables and payables are denominated in currencies other than U.S. dollars. We are, therefore, subject to foreign currency risks and foreign exchange exposure. Changes in the relative values of currencies occur from time to time and could affect our operating results. For financial reporting purposes, the functional currency that we use is the U.S. dollar because of the significant influence of the U.S. dollar on our operations. In certain instances, we enter into transactions that are denominated in a currency other than the U.S. dollar. At the date the transaction is recognized, each asset, liability, revenue, expense, gain or loss arising from the transaction is measured and recorded in U.S. dollars using the exchange rate in effect at that date. At each balance sheet date, recorded monetary balances denominated in a currency other than the U.S. dollar are adjusted to the U.S. dollar using the current exchange rate with gains or losses recorded in Currency translation gain/(loss) and other, net. During times of a weakening U.S. dollar, our reported international sales and earnings will increase because the non-U.S. currency will translate into more U.S. dollars. Conversely, during times of a strengthening U.S. dollar, our reported international sales and earnings will be reduced because the local currency will translate into fewer U.S. dollars.

20There are other risks that are inherent in our non-U.S. operations, including the potential for changes in socio-economic conditions and/or monetary and fiscal policies, intellectual property protection difficulties and disputes, the settlement of legal disputes through certain foreign legal systems, the collection of receivables, exposure to possible expropriation or other government actions, unsettled political conditions and possible terrorist attacks against American interests. These and other factors may have a material adverse effect on our non-U.S. operations and, therefore, on our business and results of operations.

liability, revenue, expense, gain or loss arising from the transaction is measured and recorded in U.S. dollars using the exchange rate in effect at that date. At each balance sheet date, recorded monetary balances denominated in a currency other than the U.S. dollar are adjusted to the U.S. dollar using the current exchange rate with gains or losses recorded in Currency translation gain/(loss) and other, net. During times of a weakening U.S. dollar, our reported international sales and earnings will increase because the non-U.S. currency will translate into more U.S. dollars. Conversely, during times of a strengthening U.S. dollar, our reported international sales and earnings will be reduced because the local currency will translate into fewer U.S. dollars.

There are other risks that are inherent in our non-U.S. operations, including the potential for changes in socio-economic conditions and/or monetary and fiscal policies, intellectual property protection difficulties and disputes, the settlement of legal disputes through certain foreign legal systems, the collection of receivables through certain foreign legal systems, exposure to possible expropriation or other government actions, unsettled political conditions and possible terrorist attacks against American interests. These and other factors may have a material adverse effect on our non-U.S. operations and, therefore, on our business and results of operations.

Our businesses operate in markets that are highly competitive, and competitive pressures could require us to lower our prices or result in reduced demand for our products.

Our businesses operate in markets that are highly competitive, and we compete on the basis of product performance, quality, service and/or price across the industries and markets we serve. A significant element of our competitive strategy is to manufacture high-quality products at low-cost, particularly in markets where low-cost country-based suppliers, primarily China with respect to the controls business, have entered our markets or increased their sales in our markets by delivering products at low-cost to local OEMs. Some of our competitors have greater sales, assets and financial resources than we do. In addition, many of our competitors in the automotive sensors market are controlled by major OEMs or suppliers, limiting our access to certain customers. Many of our customers also rely on us as their sole source of supply for many of the products we have historically sold to them. These customers may choose to develop relationships with additional suppliers or elect to produce some or all of these products internally, in each case in order to reduce risk of delivery interruptions or as a means of extracting pricing concessions. Certain of our customers currently have, or may develop in the future, the capability of internally producing the products we sell to them and may compete with us with respect to those and other products with respect to other customers. For example, Robert Bosch ~~GmbH~~Gmbh, who is one of our largest customers with respect to our control products, also competes with us with respect to certain of our sensors products. Competitive pressures such as these, and others, could affect prices or customer demand for our products, negatively impacting our profit margins and/or resulting in a loss of market share.

We may not be able to keep up with rapid technological and other competitive changes affecting our industry.

The sensors and controls markets are characterized by rapidly changing technology, evolving industry standards, frequent enhancements to existing services and products, the introduction of new services and products and changing customer demands. Changes in competitive technologies may render certain of our products less attractive or obsolete, and if we cannot anticipate changes in technology and develop and introduce new and enhanced products on a timely basis, our ability to remain competitive may be negatively impacted. The success of new products depends on their initial and continued acceptance by our customers. Our businesses are affected by varying degrees of technological change, which result in unpredictable product transitions, shortened lifecycles and increased importance of being first to market with new products and services. We may experience difficulties or delays in the research, development, production and/or marketing of new products, which may negatively impact our operating results and prevent us from recouping or realizing a return on the investments required to bring new products to market.

As part of our ongoing cost containment program designed to align our operations with economic conditions, we have had to make, and ~~will~~may ~~likely~~have ~~continue~~ to make again in the future, adjustments to both the scope and breadth of our overall research and development (“R&D”) program. Such actions may result in choices that could adversely affect our ability to either take advantage of emerging trends or to develop new technologies or make sufficient advancements to existing technologies.

21We may not be able to timely and efficiently increase our production capacity in order to meet future growth in the demand for our products.

A substantial increase in demand for our products may require us to expand our production capacity, which could require us to identify and acquire or lease additional manufacturing facilities. While we believe that suitable additional or substitute facilities will be available as required, if we are unable to acquire, integrate and move into production the facilities, equipment and personnel necessary to meet such increase in demand, our customer relationships, results of operations and financial performance may suffer materially. We are currently expanding our manufacturing capacity in our Baoying and Changzhou facilities to mitigate this risk.

~~our~~We ~~overall research and development program. Such actions~~ may ~~result~~not inbe ~~choices~~able ~~that~~to ~~could~~protect ~~adversely affect~~ our ~~ability~~intellectual toproperty, ~~either~~including ~~take~~our ~~advantage~~proprietary technology ofand ~~emerging~~the ~~trends~~Sensata, orKlixon®, toAirpax® ~~develop~~and ~~new~~Dimensions ~~technologies or make sufficient advancements to existing technologies~~brands.

We may not be able to protect our intellectual property, including our proprietary technology and the Sensata, Klixon, Airpax and Dimensions brands.

Our success depends to some degree on our ability to protect our intellectual property and to operate without infringing on the proprietary rights of third parties. If we fail to adequately protect our intellectual property, competitors may manufacture and market products similar to ours. We have sought and may continue from time to time to seek to protect our intellectual property rights through litigation. These efforts might be unsuccessful in protecting such rights and may adversely affect our financial performance and distract our management. We also cannot be sure that competitors will not challenge, invalidate or void the application of any existing or future patents that we receive or license. In addition, patent rights may not prevent our competitors from developing, using or selling products that are similar or functionally equivalent to our products. It is also possible that third parties may have or acquire licenses for other technology or designs that we may use or wish to use, so that we may need to acquire licenses to, or contest the validity of, such patents or trademarks of third parties. Such licenses may not be made available to us on acceptable terms, if at all, and we may not prevail in contesting the validity of third-party rights.

In addition to patent and trademark protection, we also protect trade secrets, know-how and other proprietary information, as well as brand names such as the Sensata, Klixon®, Airpax® and Dimensions brands under which we market many of the products sold in our controls business, against unauthorized use by others or disclosure by persons who have access to them, such as our employees, through contractual arrangements. These arrangements may not provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. Disputes may arise concerning the ownership of intellectual property or the applicability of confidentiality agreements, and we cannot be sure that our trade secrets and proprietary technology will not otherwise become known or that our competitors will not independently develop our trade secrets and proprietary technology. If we are unable to maintain the proprietary nature of our technologies, our sales could be materially adversely affected.

We may be subject to claims that our products or processes infringe the intellectual property rights of others, which may cause us to pay unexpected litigation costs or damages, modify our products or processes or prevent us from selling our products.

Third parties may claim that our processes and products infringe on their intellectual property rights. Whether or not these claims have merit, we may be subject to costly and time-consuming legal proceedings, and this could divert our management’s attention from operating our business. If these claims are successfully asserted against us, we could be required to pay substantial damages and could be prevented from selling some or all of our products. We may also be obligated to indemnify our business partners or customers in any such litigation. Furthermore, we may need to obtain licenses from these third parties or substantially reengineer or rename our products in order to avoid infringement. In addition, we might not be able to obtain the necessary licenses on acceptable terms, or at all, or be able to reengineer or rename our products successfully. If we are prevented from selling some or all of our products, our sales could be materially adversely affected.

Increasing costs for manufactured components and raw materials may adversely affect our profitability.

We use a broad range of manufactured components and raw materials in the manufacture of our products, including silver, gold, nickel, aluminum and copper, which may experience significant volatility in their prices. We generally purchase raw materials at spot prices. We first entered into hedge arrangements in 2007 and may continue to do so from time to time in the future. Such hedges might not be economically successful. In addition, these hedges do not qualify as accounting hedges in accordance with U.S. generally accepted accounting principles (“GAAP”). Accordingly, the change in fair value of these hedges is recognized in earnings immediately, which could cause volatility in our results of operations from quarter to quarter. The availability and price of raw materials and manufactured components may be subject to change due to, among other things, new laws or regulations, global economic or political events including strikes, terrorist actions and war,

2223

these hedges do not qualify as accounting hedges in accordance with U.S. GAAP. Accordingly, the change in fair value of these hedges is recognized in earnings immediately, which could cause volatility in our results of operations from quarter to quarter. The availability and price of raw materials and manufactured components may be subject to change due to, among other things, new laws or regulations, global economic or political events including strikes, terrorist actions and war, suppliers’ allocations to other purchasers, interruptions in production by suppliers, changes in exchange rates and prevailing price levels. It is generally difficult to pass increased ~~prices~~ prices for manufactured components and raw materials through to our customers in the form of price increases. Therefore, a significant increase in the price of these items could materially increase our operating costs and materially and adversely ~~affect~~ affect our profit margins.

We may incur material losses and costs as a result of product liability, ~~and~~ warranty and recall claims that may be brought against us.

We have been and may continue to be exposed to product liability and warranty claims in the event that our products actually or allegedly fail to perform as expected or the use of our products results, or is alleged to result, in death, bodily injury and/or property damage. Accordingly, we could experience material warranty or product liability losses in the future and incur significant costs to defend these claims. In addition, if any of our products are, or are alleged to be, defective, we may be required to participate in a recall of the underlying end product, particularly if the defect or the alleged defect relates to product safety. Depending on the terms under which we supply products, an OEM may hold us responsible for some or all of the repair or replacement costs of these products under warranties, when the product supplied did not perform as represented. In addition, a product recall could generate substantial negative publicity about our business and interfere with our manufacturing plans and product delivery obligations as we seek to repair affected products. Our costs associated with product liability, warranty and recall claims could be material.

We may not be successful in recovering damages, including those associated with product liability, ~~and~~ warranty and recall claims, from Texas Instruments under the terms of ~~our acquisition agreement entered into with Texas Instruments in connection with~~ the ~~2006~~ Acquisition Agreement.

Texas Instruments has agreed in the 2006 Acquisition to indemnify us for certain claims and litigation. Texas Instruments is not required to indemnify us for these claims until the aggregate amount of damages from such claims exceeds $30.0 million. If the aggregate amount of these claims exceeds $30.0 million, Texas Instruments is obligated to indemnify us for amounts in excess of the $30.0 million threshold. Texas Instruments’ indemnification obligation is capped at $300.0 million. Based on claims to date, we believe that the aggregate amount of damages from these claims will ultimately exceed $30.0 million. There can be no assurance that we will be successful in recovering amounts from Texas Instruments.

Our substantial indebtedness could adversely affect our financial condition and our ability to operate our business, and we may not be able to generate sufficient cash flows to meet our debt service obligations.

As of December 31, ~~2009~~2010, we had $21,~~300~~889.87 million of outstanding indebtedness, including $1,~~468~~412.10 million of indebtedness under our multi-currency $1,500.0 million senior secured credit facility with Morgan Stanley Senior Funding, Inc., Banc of America Securities LLC and Goldman Sachs Credit Partners, L.P. as joint lead arrangers (the “Senior Secured Credit Facility”) (excluding availability under our revolving credit facility and outstanding letters of credit),; $~~790~~436.82 million of outstanding 8% senior notes issued under an indenture dated as of April 27, 2006 (the “Senior Notes”) and 9% and 11.25% senior subordinated notes issued under an indenture dated as of April 27, 2006 (the “Senior Subordinated Notes”); and $41.95 million of capital lease and other financing obligations. We may ~~also~~ incur additional indebtedness in the future. Our substantial indebtedness could have important consequences. For example, it could:

•

make it more difficult for us to satisfy our debt obligations;

•

restrict us from making strategic acquisitions;

•

limit our flexibility in planning for, or reacting to, changes in our business and future business opportunities, thereby placing us at a competitive disadvantage if our competitors are not as highly-leveraged;

•

increase our vulnerability to general adverse economic and industry conditions; or

•24 require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness if we do not maintain specified financial ratios, thereby reducing the availability of our cash flow for other purposes.

InTable addition, our Senior Secured Credit Facility and the indentures governing our Senior Notes and Senior Subordinated Notes permit us to incur substantial additional indebtedness in the future. As of December 31, 2009, we had $131.1 million available to us for additional borrowing under our $150.0 million revolving credit facility portion of our Senior Secured Credit Facility. If we increase our indebtedness by borrowing under the revolving credit facility or incur other new indebtedness, the risks described above would increase. Contents

•

require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness if we do not maintain specified financial ratios or are not able to refinance our indebtedness as it comes due, thereby reducing the availability of our cash flow for other purposes.

In addition, our Senior Secured Credit Facility and the indentures governing the Senior Notes and Senior Subordinated Notes permit us to incur substantial additional indebtedness in the future. As of December 31, 2010, we had $143.1 million available to us for additional borrowing under the $150.0 million revolving credit facility portion of the Senior Secured Credit Facility. If we increase our indebtedness by borrowing under the revolving credit facility or incur other new indebtedness, the risks described above would increase.

Labor disruptions or increased labor costs could adversely affect our business.

As of December 31, ~~2009~~2010, we had approximately 910,500 employees, of whom approximately 109% were located in the United States., ~~None~~none of ~~our employees~~which ~~are~~were covered by collective bargaining agreements. In various countries, local law requires our participation in works councils. A material labor disruption or work stoppage at one or more of our manufacturing facilities could have a material adverse effect on our business. In addition, work stoppages occur relatively frequently in the industries in which many of our customers operate, such as the automotive industry. If one or more of our larger customers were to experience a material work stoppage, that customer may halt or limit the purchase of our products. This could cause us to shut down production facilities relating to those products, which could have a material adverse effect on our business, results of operations and financial condition.

The loss of one or more of our suppliers of finished goods or raw materials may interrupt our supplies and materially harm our business.

We purchase raw materials and components from a wide range of suppliers. For certain raw materials or components, however, we are dependent on sole source suppliers. We generally obtain these raw materials and components through individual purchase orders executed on an as needed basis rather than pursuant to long-term supply agreements. Our ability to meet our customers’ needs depends on our ability to maintain an uninterrupted supply of raw materials and finished products from our third-party suppliers and manufacturers. Our business, financial condition or results of operations could be adversely affected if any of our principal third-party suppliers or manufacturers experience production problems, lack of capacity or transportation disruptions or otherwise determine to cease producing such raw materials or components. The magnitude of this risk depends upon the timing of the changes, the materials or products that the third-party manufacturers provide and the volume of the production. We may not be able to make arrangements for transition supply and qualifying replacement suppliers in both a cost-effective and timely manner. Refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Off-Balance Sheet Arrangements.,” for additional information.

In May 2009, Sensata Technologies, Inc. entered into a transition production agreement with Engineered Materials Solutions, LLC in order to support its Electrical Contact Systems business unit, which is the primary supplier to us for electrical contacts in the manufacturing of certain of our controls products and which was at risk of closing. Although we have been developing a second source supplier, if Engineered Materials Solutions was unable to continue as a supplier, it could have a material adverse effect on our business.

Our dependence on third parties for raw materials and components subjects us to the risk of supplier failure and customer dissatisfaction with the quality of our products. Quality failures by our third-party manufacturers or changes in their financial or business condition which affect their production could disrupt our ability to supply quality products to our customers and thereby materially harm our business.

Non-performance by our suppliers may adversely affect our operations.

Because we purchase various types of raw materials and component parts from suppliers, we may be materially and adversely affected by the failure of those suppliers to perform as expected. This non-performance may consist of delivery delays or failures caused by production issues or delivery of non-conforming products. The risk of non-performance may also result from the insolvency or bankruptcy of one or more of our suppliers.

24Our efforts to protect against and to minimize these risks may not always be effective. We may occasionally seek to engage new suppliers with which we have little or no experience. For example, we do not have a prior

~~may~~relationship ~~consist~~with all of ~~delivery~~the ~~delays~~suppliers orthat ~~failures~~we ~~caused~~are byqualifying ~~production~~for ~~issues~~the orsupply ~~delivery~~ of ~~non-conforming products~~contacts. The ~~risk~~use of ~~non-performance~~new ~~may~~suppliers ~~also~~can ~~result~~pose ~~from~~technical, ~~the~~quality ~~insolvency~~and orother ~~bankruptcy of one or more of our suppliers~~risks.

Our efforts to protect against and to minimize these risks may not always be effective. We may occasionally seek to engage new suppliers with which we have little or no experience. For example, we do not have a prior relationship with all of the suppliers that we are qualifying for the supply of contacts. The use of new suppliers can pose technical, quality and other risks.

We depend on third parties for certain transportation, warehousing and logistics services.

We rely primarily on third parties for transportation of the products we manufacture. In particular, a significant portion of the goods we manufacture are transported to different countries, requiring sophisticated warehousing, logistics and other resources. If any of the countries from which we transport products were to suffer delays in exporting manufactured goods, or if any of our third-party transportation providers were to fail to deliver the goods we manufacture in a timely manner, we may be unable to sell those products at full value, or at all. Similarly, if any of our raw materials could not be delivered to us in a timely manner, we may be unable to manufacture our products in response to customer demand.

A material disruption at one of our manufacturing facilities could harm our financial condition and operating results.

If one of our manufacturing facilities were to be shut down unexpectedly, or certain of our manufacturing operations within an otherwise operational facility were to cease production unexpectedly, our revenue and profit margins would be adversely affected. Such a disruption could be caused by a number of different events, including:

•

maintenance outages;

•

prolonged power failures;

•

an equipment failure;

•

fires, floods, earthquakes or other catastrophes;

•

potential unrest or terrorist activity;

•

labor difficulties; or

•

other operational problems.

In addition, approximately 9596% of our products are manufactured at facilities located outside the United States. Serving a global customer base requires that we place more production in emerging markets, such as China, Mexico and Malaysia, to capitalize on market opportunities and maintain our low-cost position. Our international production facilities and operations could be particularly vulnerable to the effects of a natural disaster, labor strike, war, political unrest, terrorist activity or public health concerns, especially in emerging countries that are not well-equipped to handle such occurrences. Our manufacturing facilities abroad may also be more susceptible to changes in laws and policies in host countries and economic and political upheaval than our domestic facilities. If any of these or other events were to result in a material disruption of our manufacturing operations, our ability to meet our production capacity targets and satisfy customer requirements may be impaired.

We may not realize all of the revenue or achieve anticipated gross margins from products subject to existing purchase orders or for which we are currently engaged in development.

Our ability to generate revenue from products subject to customer awards is subject to a number of important risks and uncertainties, many of which are beyond our control, including the number of products our customers will actually produce as well as the timing of such production. Many of our customer contracts provide for supplying a certain share of the customer’s requirements for a particular application or platform, rather than for manufacturing a specific quantity of products. In some cases we have no remedy if a customer chooses to purchase less than we expect. In cases where customers do make minimum volume commitments to us, our remedy for their failure to meet those minimum volumes is limited to increased pricing on those products

2526

chooses to purchase less than we expect. In cases where customers do make minimum volume commitments to us, but our remedy for their failure to meet those minimum volumes is limited to increased pricing on those products the customer does purchase from us or renegotiating other contract terms. There is no assurance that such price increases or new terms will offset a shortfall in expected revenue. In addition, some of our customers may have the right to discontinue a program or replace us with another supplier under certain circumstances. As a result, products for which we are currently incurring development expenses may not be manufactured by customers at all, or may be manufactured in smaller amounts than currently anticipated. Therefore, our anticipated future revenue from products relating to existing customer awards or product development relationships may not result in firm orders from customers for the ~~same~~originally contracted amount. We also incur capital expenditures and other costs, and price our products, based on estimated production volumes. If actual production volumes were significantly lower than estimated, our anticipated revenue and gross margin from those new products would be adversely affected. We cannot predict the ultimate demand for our customers’ products, nor can we predict the extent to which we would be able to pass through unanticipated per-unit cost increases to our customers.

Compliance with Section 404 of the Sarbanes-Oxley Act of 2002, or “Section 404,” may be costly with no assurance of maintaining effective internal controls over financial reporting.

We will likely experience significant operating expenses in connection with maintaining our internal control environment and Section 404 compliance activities. In addition, if we are unable to efficiently maintain effective internal controls over financial reporting, our operations may suffer and we may be unable to obtain an attestation on internal controls from our independent registered public accounting firm when required under the Sarbanes-Oxley Act of 2002. Recent cost reduction actions, including the loss of experienced finance and administrative personnel, may adversely effect our ability to maintain effective internal controls. This, in turn, could have a materially adverse impact on trading prices for our securities and adversely affect our ability to access the capital markets.

Export of our products are subject to various export control regulations and may require a license from either the U.S. Department of State, the U.S. Department of Commerce or the U.S. Department of the Treasury.

We must comply with the United States Export Administration Regulations, ~~or “EAR,” the International Traffic in Arms Regulations, or “~~ITAR,” and the sanctions, regulations and embargoes administered by the Office of Foreign Assets Control. Certain of our products that have military applications are on the munitions list of the ITAR and require an individual validated license in order to be exported to certain jurisdictions. Any changes in export regulations may further restrict the export of our products, and we may cease to be able to procure export licenses for our products under existing regulations. The length of time required by the licensing process can vary, potentially delaying the shipment of products and the recognition of the corresponding revenue. Any restriction on the export of a significant product line or a significant amount of our products could cause a significant reduction in revenue.

We may be adversely affected by environmental, safety and governmental regulations or concerns.

We are subject to the requirements of environmental and occupational safety and health laws and regulations in the United States and other countries, as well as product performance standards established by quasi governmental and industrial standards organizations. We cannot assure you that we have been and will continue to be in complete compliance with all of these requirements on account of circumstances or events that have occurred or exist but that we are unaware of, or that we will not incur material costs or liabilities in connection with these requirements in excess of amounts we have reserved. In addition, these requirements are complex, change frequently and have tended to become more stringent over time. These requirements may change in the future in a manner that could have a material adverse effect on our business, results of operations and financial condition. We have made and ~~will~~may ~~continue~~be required in the future to make capital and other expenditures to comply with environmental requirements. In addition, certain of our subsidiaries are subject to pending litigation raising various environmental and human health and safety claims. We cannot assure you that our costs to defend and settle these claims will not be material.

2627

~~environmental~~Changes ~~requirements.~~in Inexisting ~~addition,~~environmental ~~certain~~and/or ofsafety ~~our~~laws, ~~subsidiaries~~regulations ~~are~~and ~~subject~~programs tocould ~~pending~~reduce ~~litigation~~demand ~~raising various~~ for environmental and ~~human health and~~ safety-related ~~claims.~~products, Wewhich ~~cannot~~could ~~assure~~cause ~~you that~~ our ~~costs~~revenue to ~~defend and settle these claims will not be material~~decline.

Changes in existing environmental and/or safety laws, regulations and programs could reduce demand for environmental services, which could cause our revenue to decline.

A significant amount of our business is generated either directly or indirectly as a result of existing U.S. federal and state laws, regulations and programs related to environmental protection, fuel economy and energy efficiency, and safety regulation. Accordingly, a relaxation or repeal of these laws and regulations, or changes in governmental policies regarding the funding, implementation or enforcement of these programs, could result in a decline in demand for environmental and safety products which may have a material adverse effect on our revenue.

We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.

The U.S. Foreign Corrupt Practices Act (“FCPA”) and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to non-U.S. government officials for the purpose of obtaining or retaining business. Our policies mandate compliance with these laws. Many of the countries in which we operate have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. Despite our compliance program, we cannot assure you that our internal control policies and procedures always will protect us from reckless or negligent acts committed by our employees or agents. Violations of these laws, or allegations of such violations, may have a negative effect on our results of operations, financial condition and reputation.

During the second half of 2010, we conducted an internal investigation under the direction of the audit committee of our board of directors to determine whether any laws, including the FCPA, may have been violated in connection with a certain business relationship entered into by one of our operating subsidiaries involving business in China. We believe the amount of payments and the business involved are immaterial. We discontinued the specific business relationship and did not identify any other suspect transactions in our investigation. We contacted the United States Department of Justice and the Securities and Exchange Commission to begin the process of making a voluntary disclosure of the possible violations, investigation, and initial findings. We will continue to cooperate fully with their review; however, the outcome of such review is unknown. The FCPA (and related statutes and regulations) provides for potential monetary penalties, criminal and civil sanctions, and other remedies. We are unable to estimate the potential penalties and/or sanctions, if any, that might be assessed in connection with our voluntary disclosure of possible FCPA violations. Any such penalties or sanctions may have a negative effect on our results of operations, financial condition and reputation.

Integration of acquired companies and any future acquisitions and joint ventures or dispositions may require significant resources and/or result in significant unanticipated losses, costs or liabilities.

We have grown , and in the future we intend to continue to grow, by making acquisitions or entering into joint ventures or similar arrangements. On January 28, 2011, we closed on the acquisition of the Automotive on Board business, which we will refer to as MSP. The Automotive on Board business was expected to generate approximately $130 million of revenue in 2010; however, there can be no assurance that MSP will perform as expected in the future. Any future acquisitions will depend on our ability to identify suitable acquisition candidates, to negotiate acceptable terms for their acquisition and to finance those acquisitions. We will also face competition for suitable acquisition candidates that may increase our costs. In addition, acquisitions or investments require significant managerial attention, which may be diverted from our other operations. Furthermore, acquisitions of businesses or facilities, including MSP and those which may occur in the future, entail a number of additional risks, including:

•

problems with effective integration of operations;

•

the inability to maintain key pre-acquisition customer, supplier and employee relationships;

•

increased operating costs; and

•

exposure to unanticipated liabilities.

Subject to the terms of our indebtedness, we may finance future acquisitions with cash from operations, additional indebtedness and/or by issuing additional equity securities. In addition, we could face financial risks associated with incurring additional indebtedness such as reducing our liquidity, ~~and~~obtaining access to financing markets and increasing the amount of debt service. If conditions in the credit markets remain tight, the availability of debt to finance future acquisitions will be restricted and our ability to make future acquisitions will be limited.

We may also seek to restructure our business in the future by disposing of certain of our assets. There can be no assurance that any restructuring of our business will not adversely affect our financial position, leverage or results of operations. In addition, any significant restructuring of our business will require significant managerial attention which may be diverted from our operations and may require us to accept non-cash consideration for any sale of our assets, the market value of which may fluctuate.

We may not realize all of the anticipated operating synergies and cost savings from acquisitions, and we may experience difficulties in integrating these businesses, which may adversely affect our financial performance.

There can be no assurance that we will realize all of the anticipated operating synergies and cost savings from our acquisitions,. orWe anticipate that we will ~~not~~achieve ~~experience~~synergies ~~difficulties~~from inMSP ~~integrating~~over ~~acquired~~18 ~~operations~~to ~~with~~24 months following the closing. However, there can be no assurance that any of the anticipated synergies will be achieved or that they will be achieved in our ~~operations~~estimated time frame. We may not be able to successfully integrate and streamline overlapping functions ~~or,~~from ifthis ~~such~~transaction ~~activities~~or ~~are~~future ~~accomplished~~acquisitions, ~~such~~ and integration may be more costly to accomplish than we expect. In addition, we could encounter difficulties in managing ~~the~~our combined company due to its increased size and scope.

Taxing authorities could challenge our historical and future tax positions or our allocation of taxable income among our subsidiaries, or tax laws to which we are subject could change in a manner adverse to us.

The amount of income taxes we pay is subject to our interpretation of applicable tax laws in the jurisdictions in which we file. We have taken and will continue to take tax positions based on our interpretation of such tax laws. There can be no assurance that a taxing authority will not have a different interpretation of applicable law and assess us with additional taxes. Should we be assessed with additional taxes, this may result in a material adverse effect on our results of operations or financial condition.

We conduct operations through manufacturing and distribution subsidiaries in numerous tax jurisdictions around the world. Our transfer pricing methodology is based on economic studies. The price charged for products, services and financing among our companies could be challenged by the various tax authorities resulting in additional tax liability, interest and/or penalties.

Tax laws are subject to change in the various countries in which we operate. Such future changes could be unfavorable and result in an increased tax burden to us.

We have significant unfunded benefit obligations with respect to our defined benefit and other post-retirement benefit plans.

We provide various retirement plans for employees, including defined benefit, defined contribution and retiree healthcare benefit plans. As of December 31, ~~2009~~2010, we had recognized a net accrued benefit liability of approximately $4643.57 million representing the unfunded benefit obligations of the defined benefit and retiree healthcare plans.

We29 have previously experienced declines in interest rates and pension asset values. Future declines in interest rates or the market values of the securities held by the plans, or certain other changes, could materially deteriorate the funded status of our plans and affect the level and timing of required contributions in 2010 and beyond. Additionally, a material deterioration in the funded status of the plans could significantly increase pension expenses and reduce our profitability. We fund certain of our benefit obligations on a pay-as-you-go basis; accordingly, the related plans have no assets. As a result, we are subject to increased cash outlays and costs due to, among other factors, rising healthcare costs. Increases in the expected cost of health care in excess of current assumptions could increase actuarially determined liabilities and related expenses along with future cash outlays. Our assumptions used to calculate pension and healthcare obligations as of the annual measurement date directly impact the expense to be recognized in future periods. While our management believes that these assumptions are appropriate, significant differences in actual experience or significant changes in these assumptions may materially affect our pension and healthcare obligations and future expense.

We have recorded a significant amount of impairment charges of our goodwill and other identifiable intangible assets, and we may be required to recognize additional goodwill or intangible asset impairments which would reduce our earnings.

We have recorded a significant amount of goodwill and other identifiable intangible assets, including tradenames. Goodwill and other net identifiable intangible assets were approximately $2.4 billion as of December 31, 2009, or 76% of our total assets. Goodwill, which represents the excess of cost over the fair value of the net assets of the businesses acquired, was approximately $1.5 billion as of December 31, 2009, or 48% of our total assets. Goodwill and other net identifiable intangible assets were recorded at fair value on the date of acquisition. Impairment of goodwill and other identifiable intangible assets may result from, among other things, deterioration in our performance, adverse market conditions, adverse changes in laws or regulations, unexpected significant or planned changes in use of assets and a variety of other factors. The amount of any quantified impairment must be expensed immediately as a charge that is included in operating income which may impact our ability to raise capital. During the three months ended March 31, 2009, we determined the carrying value of

~~goodwill~~We have previously experienced declines in interest rates and ~~definite-lived~~pension ~~intangible~~asset ~~assets~~values. ~~associated~~Future declines ~~with~~in ~~our~~interest ~~Interconnection~~rates ~~reporting~~or ~~unit~~the ~~was~~market ~~impaired~~values ~~and~~of ~~recorded~~the asecurities ~~charge~~held ~~totaling~~by ~~$19.9~~the ~~million~~plans, ~~(goodwill~~or certain other changes, could materially deteriorate the funded status of ~~$5.3~~our ~~million~~plans and ~~definite-lived~~ ~~intangible~~affect ~~assets~~the level and timing of ~~$14.6~~required ~~million)~~contributions in 2011 and beyond. Additionally, ~~During~~a material deterioration in the ~~three~~funded ~~months~~status ~~ended~~of ~~December 31,~~the ~~2008,~~plans itcould ~~was~~significantly ~~determined~~increase ~~that~~pension ~~goodwill~~expenses ~~associated~~and ~~with~~reduce our ~~Interconnection~~profitability. ~~reporting~~We ~~unit~~fund ~~was~~certain ~~impaired~~of ~~and,~~our benefit obligations on a pay-as-you-go basis; accordingly, the related plans have no assets. As a result, we ~~recorded~~are asubject ~~charge~~to ofincreased ~~$13.2 million.~~cash Asoutlays ofand ~~October~~costs 1due to, ~~2009~~among other factors, werising ~~evaluated~~healthcare ~~our~~costs. ~~goodwill~~Increases in the expected cost of health care beyond current assumptions could increase actuarially determined liabilities and ~~indefinite-lived~~related ~~intangible~~expenses ~~assets~~along ~~for~~with ~~impairment~~future atcash ~~the~~outlays. ~~reporting~~Our ~~unit~~assumptions ~~level~~used to calculate pension and ~~determined~~healthcare ~~that~~obligations as of the ~~fair~~annual ~~value~~measurement ~~exceeded~~date directly impact the ~~carrying~~expense ~~value~~to onbe ~~that~~recognized ~~date~~in future periods. ~~Should~~While ~~certain~~our management believes that these assumptions ~~used in~~are ~~the~~appropriate, ~~development~~significant ofdifferences ~~the~~in ~~fair~~actual ~~value~~experience ofor ~~our~~significant ~~reporting~~changes ~~units~~in ~~change,~~these weassumptions may bematerially ~~required~~affect toour ~~recognize~~pension ~~additional~~and ~~goodwill~~healthcare orobligations ~~intangible~~and ~~asset~~future ~~impairment~~expense.

~~Our~~We ~~historical~~have ~~financial~~recorded ~~information~~a ~~may~~significant ~~not~~amount beof ~~representative~~goodwill ofand ~~our~~other ~~results~~identifiable asintangible aassets, ~~separate~~and ~~company~~we may be required to recognize goodwill or ~~indicative~~intangible asset ofimpairments ~~our~~which ~~future~~would ~~financial~~reduce ~~performance~~our earnings.

~~Our~~We ~~historical~~have ~~financial~~recorded ~~information~~a ~~for~~significant ~~Predecessor~~amount ~~periods~~of ~~included~~goodwill inand ~~this~~other identifiable ~~annual~~intangible ~~report~~assets, ~~have~~including ~~been~~tradenames. ~~derived~~Goodwill ~~from~~and other net identifiable intangible assets totaled approximately $2.3 billion as of December 31, 2010, or 69% of our total assets. Goodwill, which represents the ~~consolidated~~excess ~~financial~~of cost ~~statements~~over the fair value of ~~Texas~~the ~~Instruments~~net assets of the businesses acquired, was approximately $1.5 ~~This~~billion ~~financial~~as ~~information~~of ~~relies~~December 31, on2010, ~~assumptions~~or 47% of our total assets. Goodwill and ~~estimates~~other ~~that~~net ~~relate~~identifiable tointangible assets were recorded at fair value on the respective ~~ownership~~dates of acquisition. Impairment of goodwill and other identifiable intangible assets may result from, among other things, deterioration in our ~~business~~performance, byadverse ~~Texas~~market ~~Instruments~~conditions, ~~and~~adverse changes in laws or regulations, unexpected significant or planned changes in use of assets and a variety of other factors. The amount of any quantified impairment must be expensed immediately as a ~~result,~~charge ~~the~~that ~~financial~~is ~~information~~included ~~may~~in ~~not~~operating ~~reflect~~income ~~what~~which may impact our ~~results~~ability ofto raise capital. ~~operations~~During fiscal years 2009 and 2008, ~~financial~~we ~~position~~recorded impairment charges on goodwill and ~~cash~~other ~~flows~~intangible ~~would~~assets ~~have~~associated ~~been~~with ~~had~~our weInterconnection ~~been~~reporting aunit ~~separate~~totaling $19.9 million and $13.2 million, ~~stand-alone~~respectively. ~~entity~~No impairment charges were required during fiscal year 2010. Should certain assumptions used in the ~~periods~~development ~~presented~~of orthe ~~what~~fair value of our ~~results~~reporting ofunits ~~operations~~change, ~~financial~~we ~~position~~may ~~and~~be ~~cash~~required ~~flows~~to ~~will~~recognize beadditional ingoodwill ~~the~~or ~~future,~~other ~~because:~~intangible asset impairment.

•Our ~~costs~~business ~~reflected~~may innot ~~this~~generate ~~annual~~sufficient ~~report~~cash ~~may~~flow ~~differ~~ from ~~the~~operations, ~~costs~~or wefuture ~~would~~borrowings ~~have~~under ~~incurred~~our ~~had~~Senior weSecured ~~operated~~Credit asFacility or from other sources may not be available to us in an ~~independent~~amount sufficient to enable us to repay our indebtedness, ~~stand-alone~~including ~~entity~~our ~~for~~existing ~~all~~Senior ~~the~~Notes ~~periods~~and ~~presented;~~Senior Subordinated Notes, or to fund our other liquidity needs, including capital expenditure requirements.

• we have made certain adjustments and allocations since Texas Instruments did not account for us as, and we were not operated as, a single, stand-alone business for the periods presented; and

• the information does not reflect certain changes that have occurred in our operations as a result of or after our separation from Texas Instruments.

Accordingly, our historical results of operations may not be indicative of our future operating or financial performance.

Our business may not generate sufficient cash flow from operations, or future borrowings under our Senior Secured Credit Facility or from other sources may not be available to us in an amount sufficient, to enable us to repay our indebtedness, including our existing Senior Notes and Senior Subordinated Notes, or to fund our other liquidity needs, including capital expenditure requirements.

We cannot guarantee that we will be able to obtain enough capital to service our debt and fund our planned capital expenditures and business plan. If we complete additional acquisitions, our debt service requirements could also increase. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity investments or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances, any of which could have a material adverse effect on our operations. Additionally, we may not be able to effect such actions, if necessary, on commercially reasonable terms, or at all.

Our failure to comply with the covenants contained in our credit arrangements, including as a result of events beyond our control, could result in an event of default which could materially and adversely affect our operating results and our financial condition.

~~Our~~The Senior Secured Credit Facility requires us to maintain specified financial ratios, including a maximum ratio of total indebtedness to Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization and certain other adjustments as defined in the Senior Secured Credit Facility), ~~and~~ a minimum ratio of Adjusted EBITDA to interest expense, and maximum capital expenditures. In addition, ~~our~~the Senior Secured Credit Facility and the indentures governing the Senior Notes and Senior Subordinated Notes require us to comply with various operational and other covenants. For purposes of the Senior Secured Credit Facility, Adjusted EBITDA is calculated using various add-backs to EBITDA. During the fourth quarter of fiscal year 2010, the leverage and coverage ratios tighten from levels in 2009. Sufficiently adverse financial performance, including the failure to

2930

~~achieve~~operational ~~our~~and ~~financial~~other ~~forecasts,~~covenants. ~~could~~For ~~result~~purposes inof ~~default~~the ~~under~~Senior ~~current~~Secured ~~and~~Credit ~~future ratio levels~~Facility, ~~particularly the ratio of total indebtedness to~~ Adjusted EBITDA. ~~Additionally,~~is ~~creditors~~calculated ~~may challenge~~using ~~the~~various ~~nature of our~~ add-backs to EBITDA,. ~~possibly~~During ~~increasing~~ the ~~risk~~fourth ofquarter ~~default. If there were an event~~ of ~~default~~fiscal ~~under any of our debt instruments that was not cured or waived~~year 2010, the ~~holders~~leverage ofand ~~the~~coverage ~~defaulted~~ratios ~~debt~~tightened ~~could~~from ~~cause~~levels ~~all~~in ~~amounts outstanding~~2009 ~~with respect~~ to ~~the~~a ~~debt~~maximum toleverage beratio ~~due~~covenant ~~and~~of ~~payable~~7.00 ~~immediately,~~to ~~which~~1 inand ~~turn~~a ~~would~~minimum ~~result~~interest incoverage ~~cross~~ratio ~~defaults~~covenant ~~under~~of ~~our~~1.60 ~~other~~to ~~debt instruments~~1. ~~Our~~These ~~assets~~ratios ~~and~~will ~~cash~~remain ~~flow~~at ~~may~~these ~~not~~amounts befor ~~sufficient~~the toremaining ~~fully~~term ~~repay~~of the ~~borrowings~~Senior ifSecured ~~accelerated~~Credit ~~upon an event of default~~Facility.

~~If,~~Based ~~when~~on ~~required,~~December ~~we are unable to repay~~31, ~~refinance~~2010 ~~or restructure our~~ indebtedness ~~under,~~(as ordefined ~~amend the covenants contained~~ in, ~~our credit agreement, or if a default otherwise occurs,~~ the ~~lenders under our~~ Senior Secured Credit Facility) ~~could~~of ~~elect~~$1,503.6 tomillion, ~~terminate~~STBV’s ~~their~~minimum ~~commitments~~“last ~~thereunder,~~twelve ~~cease~~months” ~~making~~Adjusted ~~further~~EBITDA ~~loans,~~to ~~declare~~maintain ~~all~~compliance ~~borrowings outstanding, together~~ with ~~accrued~~the ~~interest~~maximum ~~and~~leverage ~~other~~ratio ~~fees,~~covenant tois be$214.8 ~~immediately~~million. ~~due~~Based ~~and~~on ~~payable~~December 31, ~~institute~~2010 ~~foreclosure~~last ~~proceedings~~twelve ~~against~~months ~~those~~interest ~~assets~~expense ~~that~~(as defined ~~secure~~in the ~~borrowings under our~~ Senior Secured Credit Facility) ~~and~~of ~~prevent~~$96.0 usmillion, ~~from~~STBV’s ~~making payments~~minimum onlast ~~the~~twelve ~~notes.~~months ~~Any~~Adjusted ~~such~~EBITDA ~~actions~~to ~~could~~maintain ~~force~~compliance uswith ~~into~~the ~~bankruptcy~~minimum orinterest ~~liquidation,~~coverage ~~and~~ratio werequirement ~~might~~is ~~not~~$153.6 bemillion. ~~able~~STBV’s tolast ~~repay~~twelve ~~our~~months Adjusted ~~obligations~~EBITDA inas ~~such~~of anDecember ~~event~~31, 2010 was $462.2 million.

~~Our~~Sufficiently ~~limited~~adverse ~~history~~financial asperformance, aincluding ~~stand-alone~~the ~~company~~failure to ~~could~~achieve ~~pose~~our ~~challenges~~financial forecasts, could result in default. Additionally, creditors may challenge the ~~operation~~nature of our ~~business~~add-backs to EBITDA, possibly increasing the risk of default. If there were an event of default under any of our debt instruments that was not cured or waived, the holders of the defaulted debt could cause all amounts outstanding with respect to the debt to become due and payable immediately, which in turn would result in cross defaults under our other debt instruments. Our assets and cash flow may not be sufficient to fully repay borrowings if accelerated upon an event of default.

~~Prior to April 27~~If, ~~2006 (inception)~~when required, we ~~operated~~are asunable ato ~~business~~repay, ofrefinance ~~Texas~~or ~~Instruments.~~restructure ~~Following~~our ~~the~~indebtedness ~~2006 Acquisition~~under, ~~Texas~~or ~~Instruments~~amend nothe ~~longer~~covenants ~~has~~contained ~~any ownership interest~~ in, our ~~Company. Historically~~credit agreement, asor ~~part~~if ofa ~~Texas~~default ~~Instruments~~otherwise occurs, wethe ~~had~~lenders ~~access~~under to the ~~administrative~~Senior ~~services~~Secured ~~and~~Credit ~~internal~~Facility ~~controls~~could ~~provided~~elect byto terminate ~~Texas~~their ~~Instruments.~~commitments ~~Until September 30~~thereunder, ~~2008,~~cease ~~Texas~~making ~~Instruments~~further ~~provided~~loans, ~~the~~declare ~~Company~~all ~~with~~borrowings ~~certain administrative services~~outstanding, ~~including~~ ~~real~~together ~~estate,~~with ~~finance~~accrued interest and ~~accounting,~~other ~~human resources~~fees, ~~information~~to ~~technology,~~be ~~warehousing~~immediately due and ~~logistics~~payable, ~~record~~institute ~~retention~~foreclosure ~~and~~proceedings ~~security~~against ~~consulting~~those ~~services.~~assets Asthat secure ~~a result of~~ the ~~expiration~~borrowings ofunder the ~~transition~~Senior ~~services~~Secured ~~agreement,~~Credit weFacility ~~have~~and ~~had~~prevent ~~to establish~~us ~~all~~from ofmaking ~~our~~payments ~~own~~on ~~services,~~the ~~systems~~Senior ~~and~~Notes ~~controls~~ and weSenior ~~may~~Subordinated beNotes. ~~unable~~Any tosuch ~~operate~~actions ~~such~~could ~~services,~~force ~~systems~~us ~~and~~into ~~controls~~bankruptcy ator ~~the~~liquidation, ~~costs~~and we ~~paid~~might tonot ~~Texas~~be ~~Instruments~~able ~~under~~to ~~that~~repay our ~~agreement~~obligations ~~and reflected~~ in ~~our~~such ~~historical~~an ~~financial statements~~event.

In the future, we may not secure financing necessary to operate and grow our business or to exploit opportunities.

Our future liquidity and capital requirements will depend upon numerous factors, some of which are outside our control, including the future development of the markets in which we participate. We may need to raise additional funds to support expansion, develop new or enhanced ~~services~~products, respond to competitive pressures, acquire complementary businesses or technologies or take advantage of unanticipated opportunities. If our capital resources are not sufficient to satisfy our liquidity needs, we may seek to sell additional debt or equity securities or obtain other debt financing. The incurrence of debt would result in increased expenses and could include covenants that would further restrict our operations. If the credit markets remain tight, we may not be able to obtain additional financing, if required, in amounts or on terms acceptable to us, or at all.

We have reported significant net losses for ~~periods~~fiscal ~~following~~2007, ~~the~~2008, ~~2006~~and ~~Acquisition~~2009 and may not ~~achieve~~sustain ~~profitability~~recently achieved profitability in the foreseeable future.

We incurred a significant amount of indebtedness in connection with the 2006 Acquisition and the subsequent acquisitions of First Technology Automotive and Airpax and, as a result, our interest expense has been substantial for periods following the 2006 Acquisition. Due, in part, to this significant interest expense and the amortization of intangible assets also related to these acquisitions, we have reported net losses of $27.0 million, $134.5 million and $252.5 million, for fiscal years 2009, 2008 and 2007, respectively. ~~Although~~For wefiscal ~~have~~year ~~historically used working capital to repurchase certain outstanding indebtedness and intend to continue to do so in the future~~2010, we ~~will~~reported ~~continue~~net toincome ~~have a significant amount~~ of ~~indebtedness and, as a result, expect to continue to report net losses for the foreseeable future due to the significant interest expense~~$131.4 ~~associated~~million. ~~with~~We ~~such~~repaid ~~indebtedness~~approximately ~~and~~$321.7 ~~the~~million ~~continued~~in ~~amortization~~principal of ~~intangible~~our ~~assets.~~indebtedness Asin aMarch ~~result,~~and weApril ~~cannot~~2010 ~~assure~~with ~~you~~proceeds ~~that~~from weSensata ~~will~~Technologies ~~achieve~~Holding’s ~~profitability~~initial inpublic ~~the~~offering ~~near term.~~

3031

~~Forward-looking~~ (“IPO”). ~~statements~~However, we continue to have a significant amount of indebtedness. Due to the significant interest expense associated with the remaining indebtedness and the continued amortization of intangible assets, we cannot assure you that we will sustain recently achieved profitability in the foreseeable future.

This annual report, including any documents incorporated by reference herein, includes “forward-looking statements.” These forward-looking statements include statements relating to our business. In some cases, forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “believes,” “projects,” “forecasts,” “continue” or the negative of such terms or comparable terminology. Forward-looking statements contained herein (including future cash contractual obligations), or in other statements made by us, are made based on management’s expectations and beliefs concerning future events impacting us and 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. We believe that the following important factors, among others (including those described in Item 1A, “Risk Factors”), 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:

• our operating results and financial condition have been and may continue to be adversely affected by the current financial crisis and worldwide economic conditions;

• continued fundamental changes in the industries in which we operate have had and could continue to have adverse effects on our businesses;

• we may incur material losses and costs as a result of product liability and warranty and recall claims that may be brought against us;

• our substantial indebtedness could adversely affect our financial condition and our ability to operate our business, and we may not be able to generate sufficient cash flows to meet our debt service obligations; and

• the other risks set forth in Item 1A, “Risk Factors” included elsewhere in this annual report.

All forward-looking statements speak only as of the date of this annual report and are expressly qualified in their entirety by the cautionary statements contained in this annual report. We undertake no obligation to update or revise forward-looking statements which may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

We occupy 10 principal manufacturing facilities and business centers totaling approximately 2,~~235~~291,000 square feet, with the majority devoted to research, development and engineering, manufacturing and assembly. Of our principal facilities, approximately 1,~~380~~436,000 square feet are owned and approximately 855,000 square feet are occupied under leases. We consider our manufacturing facilities sufficient to meet our current ~~and planned~~ operational requirements. We lease approximately 433,000 square feet for our U.S. headquarters in Attleboro, Massachusetts. The table below lists the location of our principal executive and operating facilities. Substantially all of our owned properties and equipment are subject to a lien under ~~our~~the Senior Secured ~~Credit~~ Credit Facility. Refer to Note 107 toof our audited consolidated financial statements, included elsewhere in this ~~annual~~Annual ~~report~~Report on Form 10-K, for additional information on ~~our~~the Senior Secured Credit Facility.

Location	Operating Segment	Owned orLeased		~~ApproximateSquareFootage~~	ApproximateSquareFootage
Attleboro, Massachusetts	Sensors and Controls	~~Leased~~	Leased	~~433,000~~		433,000
Aguascalientes, Mexico	Sensors and Controls	~~Owned~~	Owned	~~444,000~~		444,000
Almelo, Netherlands	Sensors and Controls	~~Owned~~	Owned	~~188,000~~		188,000
Oyama, Japan	Sensors and Controls	~~Owned~~	Owned	~~74,000~~		74,000
Jincheon, South Korea	Controls	~~Owned~~	Owned	~~133,000~~		133,000
Baoying, China	Controls	~~Owned~~	Owned	~~384,000~~		440,000
Changzhou, China	Sensors and Controls	~~Leased~~	Leased	~~252,000~~		252,000
Subang Jaya, Malaysia	Sensors	~~Leased~~	Leased	~~108,000~~		108,000
Haina, Dominican Republic	Sensors and Controls	~~Leased~~	Leased	~~62,000~~		62,000
Cambridge, Maryland	Controls	~~Owned~~	Owned	~~157,000~~		157,000

Leases covering our currently occupied leased facilities expire at varying dates, generally within the next ten years. We anticipate no difficulty in retaining occupancy through lease renewals, month-to-month occupancy or replacing the leased facilities with equivalent facilities. AAn ~~substantial~~ increase in demand for our products may require us to expand our production capacity, which could require us to identify and acquire or lease additional manufacturing facilities. We believe that suitable additional or substitute facilities will be available as required, however, if we are unable to acquire, integrate and move into production the facilities, equipment and personnel necessary to meet such increase in demand, our customer relationships, results of operations and financial performance may suffer materially. We are currently expanding our manufacturing capacity in our Baoying and Changzhou facilities to mitigate this risk.

ITEM 3.

LEGAL PROCEEDINGS

~~Pursuant~~We toare regularly ~~Item 103,~~involved ~~Regulation~~in ~~S-K,~~a ~~instruction~~number 2,of weclaims ~~provide~~and ~~information~~litigation onmatters in the ~~legal~~ordinary ~~proceedings~~course ~~described~~of ~~below~~business. ~~Additionally,~~Most inof ~~the~~our ~~ordinary~~litigation ~~course~~matters ofare ~~business,~~third-party weclaims ~~are~~for aproperty ~~party~~damage toallegedly ~~inquiries~~caused by our products, ~~legal~~but ~~proceedings~~some ~~and~~involve ~~claims~~allegations of personal ~~including,~~injury ~~from~~or wrongful death. From time to time, ~~disagreements~~we are also involved in disagreement with vendors and customers. We believe that the ultimate resolution of the current litigation matters that are pending against us, except potentially those matters described below, will not have a material effect on our financial condition or results of operations. Information on other legal proceedings is included in Note 1613 toof our audited consolidated financial statements, included elsewhere in this Annual Report on Form 10-K.

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 for property damage allegedly caused by our products, but some involve allegations of personal injury or wrongful death. We believe that the ultimate resolution of the current litigation matters that are pending against us, except potentially those matters described below, will not have a material effect on our financial condition or results of operations.

Ford Speed Control Deactivation Switch Litigation: We are involved in a number of litigation matters relating to a pressure switch that Texas Instruments sold to Ford Motor Company, or “Ford,” for several years until 2002. Ford incorporated the switch into a cruise control deactivation switch system that it installed in certain vehicles. Due to concerns that, in some circumstances, this system and switch may cause fires, Ford issued seven separate recalls of vehicles in the United States between 1999 and October 23, 2009, which covered approximately fourteen million vehicles in the aggregate. Also, in October 2009, Mazda issued a recall in the United States of 36,000 vehicles that Ford had manufactured for it which contained the system and switch; and in December 2009, Ford China issued a recall of 528 vehicles imported into China by Ford.

InWhirlpool ~~2001,~~Recall ~~Texas~~Litigation: ~~Instruments~~We ~~received~~are ainvolved ~~demand~~in ~~from~~litigation ~~Ford~~relating ~~for~~to ~~reimbursement~~certain control ofproducts ~~costs~~that ~~related~~TI sold between 2000 and 2004 to Whirlpool Corporation (“Whirlpool”). The control products were incorporated into the ~~first~~compressors ~~recall~~of certain refrigerators in ~~1999~~a number of Whirlpool brands, aincluding ~~demand~~Maytag, ~~that~~Jenn-Air, Amana, ~~Texas~~Admiral, ~~Instruments~~Magic ~~rejected~~Chef, Performa by Maytag, and Crosley. Whirlpool contends that ~~Ford~~the ~~has~~control ~~not~~products ~~subsequently~~were ~~pursued~~defective ~~against~~because usthey allegedly fail at excessive rates, and have allegedly caused property damage, including fires. ~~Ford~~During ~~has~~fiscal ~~never~~years 2007 ~~made~~and ~~such~~2008, we paid Whirlpool for certain costs associated with third-party claims and other external engineering costs in amounts that did not have a ~~demand~~material toadverse ~~us,~~effect ~~nor~~on ~~made~~our ~~demands~~financial condition or results of usoperations. ~~related~~During to2009, Whirlpool, in conjunction with the ~~subsequent~~Consumer Product Safety Commission, announced voluntary recalls of approximately 1.8 million refrigerators.

InOn ~~August~~January 28, ~~2006~~2009, ~~the~~Whirlpool ~~National~~Corporation, ~~Highway~~as ~~Traffic~~well ~~Safety~~as ~~Administration,~~its orsubsidiaries ~~“NHTSA~~Whirlpool SA and Maytag Corporation,” ~~issued~~filed a ~~closing~~lawsuit ~~report~~against ~~based~~TI onand aour ~~multi-year~~subsidiary, Sensata Technologies, Inc. ~~investigation~~(“STI”). ~~which~~The ~~found~~lawsuit ~~that~~was filed in the ~~fire~~Circuit ~~incidents~~Court ~~were~~of ~~caused~~Cook byCounty, ~~system-related~~Illinois, ~~factors~~under the name Whirlpool Corp. Onet ~~October 14~~al. v. Sensata Technologies, Inc. et al., Docket No. 2009-L-001022. The complaint asserts, ~~NHTSA~~among ~~issued~~other athings, contract ~~closing~~claims ~~report~~as ~~associated~~well ~~with~~as aclaims ~~more~~for ~~recent~~breach ~~recall~~of ~~which~~warranty, ~~modified~~fraud, ~~the~~negligence, ~~findings~~indemnification and deceptive trade practices. It seeks an unspecified amount of ~~the~~compensatory ~~2006~~and ~~report~~exemplary ~~but~~damages. ~~continued~~While tounspecified, we believe that Whirlpool is ~~emphasize~~claiming ~~system~~amounts ~~factors~~in excess of $100 million. We, along with TI, have answered the complaint and denied liability.

AsWe, ofalong with ~~December 31~~TI, ~~2009,~~subsequently wefiled ~~were~~ a ~~defendant~~cross inclaim 26for ~~lawsuits~~indemnification inagainst ~~which plaintiffs~~Empresa ~~have~~Braseila ~~alleged~~de ~~property~~Compressores, ~~damage and various personal injuries from the system and switch~~S. ~~Of these cases~~A., ~~17 are pending in~~ n/k/a ~~state~~Whirlpool ~~multi-district~~SA, ~~litigation~~and inEmbraco ~~the~~North ~~53rd Judicial Court of Travis County~~America, ~~Texas~~Inc., Intogether re“Embraco.” ~~Ford~~We ~~Motor~~assert, ~~Company~~among ~~Speed~~other ~~Control~~things, ~~Deactivation~~that ~~Switch~~Embraco ~~Litigation,~~was ~~Docket~~responsible ~~No.~~for ~~D-1-GN-08-00091;~~testing ~~3 are pending in a federal multi-district litigation in~~ the ~~United~~compatibility ~~States~~of ~~District Court for~~ the ~~Eastern~~control ~~District~~product ofwith ~~Michigan,~~its ~~Ford Motor Co. Speed Control Deactivation Switch Products Liability Litigation~~compressors, ~~Docket No. 05-md-01718.~~and ~~The~~that ~~remainder~~we ishave inbecome ~~individual~~exposed ~~dockets~~to inlitigation ~~various~~because ~~state courts~~ of ~~California,~~Embraco’s ~~Georgia,~~actions ~~Tennessee,~~ and ~~Texas,~~inactions. ~~and~~We ~~the~~believe ~~federal~~that ~~court~~Embraco ~~for~~is ~~the~~now ~~Southern~~a ~~District~~wholly-owned subsidiary of Whirlpool ~~Iowa~~SA.

~~For~~Discovery ~~the~~on ~~most~~all ~~part,~~claims ~~these cases seek an unspecified amount of compensatory~~ and ~~exemplary~~cross-claims ~~damages. For the plaintiffs that have requested a specific amount, the range of the demand~~ is ~~$50~~ongoing,~~000~~ ~~to $3.0 million. Ford~~ and ~~Texas~~the ~~Instruments~~court ~~are~~has ~~co-defendants~~reserved time in ~~each~~October of2011 ~~these~~for ~~lawsuits~~a possible trial.

In ~~accordance~~January ~~with~~2009, ~~terms~~TI ofelected under the ~~acquisition~~Acquisition ~~agreement~~Agreement ~~entered~~to ~~into~~become inthe ~~connection~~controlling ~~with~~party ~~the~~for ~~2006~~this ~~Acquisition,~~lawsuit and wewill ~~are~~manage ~~managing~~ and ~~defending~~defend ~~these~~the ~~lawsuits~~litigation on behalf of both ~~our~~parties. ~~company~~Although we are working with TI to defend the litigation, we believe that a loss is probable and, ~~Texas~~as of December 31, 2010, have recorded a reserve of $5.9 million for this ~~Instruments~~matter. ~~The~~There ~~majority~~can be no assurances, however, that this reserve will be sufficient to cover the extent of ~~these~~our ~~cases~~costs ~~are~~and inpotential ~~discovery~~liability from this or any related matters. ~~Two~~Any ~~have~~additional ~~been~~liability ~~set~~in ~~for~~excess ~~trial~~of ~~and~~this ~~one~~reserve iscould have a material adverse effect on ~~appeal~~our financial condition or results of operations.

~~During~~Pursuant ~~fiscal year~~to ~~2008~~the terms of the Acquisition Agreement, weand subject ~~settled~~to ~~all~~the ~~outstanding~~limitations ~~wrongful~~set ~~death~~forth ~~cases~~in ~~related~~that toagreement, ~~these~~TI ~~matters~~has ~~for~~agreed ~~amounts~~to ~~that~~indemnify ~~did~~us ~~not~~for ~~have~~certain aclaims ~~material~~and ~~effect~~litigation, onincluding ~~our~~this ~~financial~~matter, ~~condition~~provided orthat ~~results~~the aggregate amount of ~~operations.~~costs Asand/or ~~for~~damages ~~the~~from ~~cases~~such ~~that~~claims ~~are~~exceeds ~~still~~$30.0 ~~pending~~million, wein which ~~have~~case ~~included~~TI ~~a reserve~~will inreimburse ~~our~~us ~~financial~~for ~~statements~~amounts incurred in excess of the ~~amount~~$30.0 million threshold up to a cap of $0300.70 million. In January 2011, we notified TI that, as of December 31, ~~2009.~~2010, ~~There~~we ~~can~~believed bewe nohad ~~assurances,~~incurred ~~however,~~approximately $27.4 million of costs that ~~this~~apply ~~reserve~~towards ~~will~~the beindemnification. ~~sufficient~~TI tohas ~~cover~~reserved ~~the~~all ~~extent~~rights ofto ~~our~~contest ~~costs~~that claim, and ~~potential~~may ~~liability~~dispute ~~from~~all ~~these~~or ~~matters~~some portion of the amount we claimed. ~~Any~~ ~~additional~~We ~~liability~~believe inthat ~~excess~~our ofcosts ~~this~~and/or ~~reserve~~damages ~~could~~from ~~have~~the aWhirlpool ~~material~~litigation ~~adverse~~and ~~effect~~other onclaims and ~~our~~litigation ~~financial~~matters ~~condition~~subject orto ~~results~~the ofindemnification ~~operations~~will ultimately exceed $30.0 million.

~~Whirlpool Recall Litigation:~~ We are also involved in ~~litigation~~a ~~relating~~related, tobut ~~certain~~separate ~~control~~proceeding ~~products~~with ~~that~~TI’s ~~Texas~~insurer, ~~Instruments~~American ~~sold~~Alternative ~~between~~Insurance ~~2000~~(“American ~~and~~Alternative”). ~~2004~~On toJune 3, ~~Whirlpool~~2009, ~~Corporation.~~TI ~~The~~filed ~~control~~a ~~products~~lawsuit ~~were incorporated~~against ~~into~~American ~~the~~Alternative ~~compressors~~seeking ofreimbursement ~~certain~~for ~~refrigerators~~our defense costs in athe ~~number~~Whirlpool oflitigation ~~Whirlpool~~and ~~brands,~~certain ~~including~~other ~~Maytag,~~third ~~Jenn-Air,~~party ~~Amana,~~claims. ~~Admiral~~The case, ~~Magic~~Texas ~~Chef,~~Instruments ~~Performa~~Incorporated byv. ~~Maytag,~~American ~~and~~Alternative ~~Crosley~~Ins. ~~Whirlpool~~Corp., ~~contends~~was ~~that~~filed in the ~~control~~193rd ~~products~~Court ~~were~~of ~~defective~~Dallas ~~because they~~County, ~~allegedly~~Texas, ~~fail~~No. atDC-09-07045-L. ~~excessive~~On ~~rates~~October 16, ~~and~~2009, ~~have~~American ~~allegedly~~Alternative ~~caused~~filed ~~property~~a ~~damage,~~third ~~including~~party claims ~~fires.~~against ~~During~~STI ~~fiscal~~alleging ~~years~~that ~~2007~~STI ~~and~~assumed ~~2008,~~liability wefor ~~paid~~the Whirlpool ~~for~~matters ~~certain~~under ~~costs~~the ~~associated~~Acquisition ~~with~~Agreement. ~~third-party~~On ~~claims~~that ~~and~~basis, ~~other~~American ~~external~~Alternative ~~engineering~~has ~~costs,~~asserted ~~in amounts~~ that ~~did~~STI ~~not~~owes ~~have~~them aany ~~material~~amounts ~~adverse~~that ~~effect~~they onmay ~~our~~ultimately ~~financial~~be ~~condition~~required orto ~~results~~pay ofto ~~operations~~Texas Instruments. ~~During~~Texas ~~2009,~~Instruments ~~Whirlpool~~is indefending ~~conjunction~~this ~~with~~claim ~~the~~on ~~Consumer~~STI’s ~~Product Safety Commission~~behalf, orand ~~“CPSC,”~~has ~~announced~~filed ~~voluntary~~an ~~recalls of approximately 1.8 million refrigerators.~~

On January 28, 2009, Whirlpool Corporation, as well as its subsidiaries Whirlpool SA and Maytag Corporation, filed a lawsuit against Texas Instruments and our subsidiary, Sensata Technologies, Inc., or “STI.” The lawsuit was filed in the Circuit Court of Cook County, Illinois, under the name Whirlpool Corp. et al. v. Sensata Technologies, Inc. et al., Docket No. 2009-L-001022. The complaint asserts, among other things, contract claims as well as claims for breach of warranty, fraud, negligence, indemnification and deceptive trade practices. It seeks an unspecified amount of compensatory and exemplary damages. We and Texas Instruments have answered the complaint and denied liability.

We and Texas Instruments subsequently filed a cross claim for indemnification against Empresa Braseila de Compressores, S.A., n/k/a Whirlpool SA, and Embraco North America, Inc., together “Embraco.” We assert, among other things, that Embraco was responsible for testing the compatibility of the control product with its

~~compressors,~~answer ~~and~~denying ~~that~~any weliability. ~~and~~During ~~Texas~~the ~~Instruments~~second ~~have~~quarter ~~become~~of ~~exposed~~2010, toTI ~~litigation~~informed ~~because~~us ofthat ~~Embraco’s~~they ~~actions~~have ~~and~~reached ~~inactions~~a settlement with American Alternative in this matter. WeAs ~~believe~~of ~~that~~December 31, ~~Embraco~~2010, iswe ~~now~~have not recorded a ~~wholly-owned~~reserve ~~subsidiary~~for ~~of Whirlpool~~this SAmatter.

~~Discovery~~The onInternal ~~all~~Revenue ~~claims~~Code ~~and~~requires ~~cross~~that companies disclose in their Form 10-~~claims~~K iswhether they ~~ongoing,~~have ~~and~~been ~~the~~required ~~court~~to ~~has~~pay ~~reserved~~penalties ~~time~~to inthe ~~April~~Internal ~~2011~~Revenue Service (“IRS”) for certain transactions that have been identified by the IRS as abusive or that have a significant tax avoidance purpose. We have not been required to pay ~~possible~~any ~~trial~~such penalties.

InITEM January 2009, Texas Instruments elected under the acquisition agreement to become the controlling party for this lawsuit and will manage and defend the litigation on behalf of both Texas Instruments and our company4. ~~Although~~SUBMISSION weOF ~~are~~MATTERS ~~working~~TO ~~with~~A ~~Texas~~VOTE ~~Instruments~~OF toSECURITY ~~defend~~HOLDERS ~~the~~(REMOVED ~~litigation,~~AND we believe that a loss is probable and, as of December 31, 2009, have recorded a reserve of $5.9 million for this matter. There can be no assurances, however, that this reserve will be sufficient to cover the extent of our costs and potential liability from this or any related matters. Any additional liability in excess of this reserve could have a material adverse effect on our financial condition or results of operations. RESERVED)

Pursuant to the terms of the acquisition agreement entered into in connection with the 2006 Acquisition, and subject to the limitations set forth in that agreement, Texas Instruments has agreed to indemnify us for certain claims and litigation, including this matter, provided that the aggregate amount of costs and/or damages from such claims exceeds $30.0 million. If the aggregate amount of costs and/or damages from these claims exceeds $30.0 million, Texas Instruments is obligated to indemnify us for amounts in excess of the $30.0 million threshold up to a cap on Texas Instruments’s indemnification obligation of $300.0 million. In January 2010, we notified Texas Instruments that, as of December 31, 2009, we believe we had incurred approximately $26.7 million of costs that apply towards the indemnification, excluding the $5.9 million reserve noted above. Texas Instruments has reserved all rights to contest that claim, and may dispute all or some portion of the amount we claimed. We believe that our costs and/or damages from the Whirlpool Litigation and other claims and litigation matters will ultimately exceed $30.0 million.

Pelonis Appliances: On December 26, 2008, seven individuals filed suit against Pelonis Appliances, Inc., which sells a fan forced heater product, manufactured by GD Midea Environmental Appliances Mfg. Co. Ltd. (“GD Midea”), that incorporates one of our thermal cut-off products, which was purchased from one of our distributors. The lawsuit, Cueller v. Pelonis Appliances, Inc., No. 08-16188, 160th Judicial District Court of Dallas County, Texas, arose out of a residential fire that resulted in one death, personal injuries (including burns) to the other plaintiffs, and property damage.

Pelonis demanded indemnity from Sensata in a letter dated May 6, 2009, and we rejected that demand. On June 9, 2009, the plaintiffs amended their complaint to include STI as a defendant. The plaintiffs seek an unspecified amount of actual and exemplary damages.

On August 3, 2009, we answered the amended complaint, denying any liability. We also asserted cross-claims against Pelonis for indemnification and against Pelonis and GD Midea as responsible third parties.

Discovery is ongoing, and a trial has been scheduled for August 2, 2010. As of December 31, 2009, we have not recorded a reserve for this matter.

Huawei. Huawei, a Chinese telecommunications equipment customer, has informed us that it is planning to conduct a field replacement campaign for power supply products containing our circuit breakers. The customer has alleged defects in our products, which are sold through distributors to two power supply subcontractors. There are 24,000 systems in the field and we estimate that a 100% field replacement campaign would cost approximately $6.0 million. The customer has not yet determined the percentage of systems that will need to be serviced. We are contesting the customer’s allegations but working with them to analyze the situation.

We have included a reserve in our financial statements in the amount of $0.4 million as of December 31, 2009. There can be no assurances, however, that this reserve will be sufficient to cover the extent of our costs and potential liability from these matters. Any additional liability in excess of this reserve could have a material adverse effect on our financial condition or results of operations.

Audi. Audi, a part of the Volkswagen Auto Group, has alleged defects in certain of our products installed in its vehicles. The customer first brought the claim in 2008 in the amount €8.1 million in expenses related to replacement of our products. The customer recently expanded its claim to €24.0 million. We are contesting the customer’s allegations, but have entered into discussions seeking to resolve the dispute. To date, the customer has not filed a lawsuit or instituted any proceedings against us relating to the claim. We recognized a charge in our financial statements in the amount of €0.9 million or $1.1 million as of December 31, 2009. There can be no assurances, however, that this reserve will be sufficient to cover the extent of our costs and potential liability from these matters. Any additional liability in excess of this reserve could have a material adverse effect on our financial condition or results of operations.

Coffeemakers. Certain European small appliance customers have made claims alleging defects in one of our electro mechanical controls products. One customer has conducted a recall of their products and two customers have reported several third-party fire incidents. One customer has filed a lawsuit against us in Sweden, Jede AB v. Stig Wahlström AB and Sensata Technologies Holland B.V., No. 10017-9, Soederfoern district court, Sweden. The suit alleges damages amounting to €1.8 million. We filed our answer on December 1, 2009, and denied liability. Discovery has not yet begun. The other customer’s claims aggregate to a similar amount. We are contesting these claims. As of December 31, 2009, we have not recorded a reserve for this matter.

The Internal Revenue Code requires that companies disclose in their Form 10-K whether they have been required to pay penalties to the Internal Revenue Service (“IRS”) for certain transactions that have been identified by the IRS as abusive or that have a significant tax avoidance purpose. We have not been required to pay any such penalties.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during fiscal year 2009.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

There is no public trading market for our common stock.

Stockholders

There was one owner of record of our common stock as of January 28, ~~2010~~2011.

Dividends

We do not anticipate declaring any dividends in the foreseeable future. The payment of cash dividends in the future, if any, will be at the discretion of our board of directors and will depend upon such factors as earnings levels, capital requirements, contractual restrictions, our overall financial condition and any other factors deemed relevant by our board of directors. In addition, we are limited in our ability to pay dividends isor ~~restricted~~otherwise bymake ~~certain~~distributions ~~covenants~~to ~~contained~~our Parent. Under Dutch law, we may only pay dividends out of profits as shown in our adopted ~~Senior~~annual ~~Secured~~accounts ~~Credit~~prepared ~~Facility,~~in asaccordance ~~well~~with asIFRS. ~~subject~~Refer to ~~limitations~~Note ~~contained~~7 of our audited consolidated financial statements included elsewhere in ~~the indentures~~this ~~governing~~Annual ~~the~~Report ~~Senior~~on ~~and~~Form ~~Senior~~10-K, ~~Subordinated~~for ~~Notes~~additional information on our dividend restrictions.

Issuer Purchases of Equity Securities

None.

ITEM 6.

SELECTED FINANCIAL DATA

We have derived the selected consolidated statement of operations and other financial data for the years ended December 31, 2010, 2009, ~~2008~~ and ~~2007~~2008 and the selected consolidated balance sheet data as of December 31, ~~2009~~2010 and ~~2008~~2009 from the audited consolidated financial statements, included elsewhere in this ~~annual~~Annual ~~report~~Report on Form 10-K. We have derived the selected consolidated statement of operations and other financial data for the year ended December 31, 2007, the period from April 27, 2006 (inception) to December 31, 2006 ~~and~~, the selected combined statement of operations and other financial data for the period from January 1, 2006 to April 26, 2006 ~~and the year ended December 31~~, ~~2005,~~ and the consolidated balance sheet data as of December 31, ~~2007~~ 2008, ~~2006~~2007 and ~~2005~~2006 from ~~the~~ audited consolidated and combined financial statements not included in this ~~annual~~Annual ~~report.~~Report on Form 10-K.

The information included in this five-year financial summary has been reclassified to conform to current period presentation.

~~You should~~35 read the following information in conjunction with the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and accompanying notes thereto, included elsewhere in this annual report. Our historical results are not necessarily indicative of the results to be expected in any future period.

You should read the following information in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and accompanying notes thereto, included elsewhere in this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results to be expected in any future period.


	Sensata Technologies B.V. (consolidated)															Predecessor (combined)
	For the year ended December 31,												For the period April 27 (inception) to December 31, 2006			For the period January 1 to April 26, 2006
(Amounts in thousands)	2010			2009			2008			2007						For the period January 1 to April 26, 2006
Statement of Operations Data:
Net revenue	$	1,540,079		$	1,134,944		$	1,422,655		$	1,403,254		$	798,507		$	375,600
Operating costs and expenses:
Cost of revenue		948,070			742,080			951,763			944,765			536,485			253,028
Research and development		24,664			16,796			38,256			33,891			19,742			8,635
Selling, general and administrative^(a)		192,909			126,282			166,565			166,052			94,749			38,674
Amortization of intangible assets and capitalized software		144,514			153,081			148,762			131,064			82,740			1,078
Impairment of goodwill and intangible assets		—			19,867			13,173			—			—			—
Restructuring		(138	)		18,086			24,124			5,166			—			2,456

Total operating costs and expenses		1,310,019			1,076,192			1,342,643			1,280,938			733,716			303,871

Profit from operations		230,060			58,752			80,012			122,316			64,791			71,729
Interest expense		(106,400	)		(150,589	)		(197,840	)		(191,161	)		(165,160	)		(511	)
Interest income		863			573			1,503			2,574			1,567			—
Currency translation gain/(loss) and other, net^(b)		45,166			107,717			55,455			(105,474	)		(63,633	)		115

Income/(loss) from continuing operations before income taxes		169,689			16,453			(60,870	)		(171,745	)		(162,435	)		71,333
Provision for income taxes		38,304			43,047			53,531			62,504			48,560			25,796

Income/(loss) from continuing operations		131,385			(26,594	)		(114,401	)		(234,249	)		(210,995	)		45,537
Loss from discontinued operations		—			(395	)		(20,082	)		(18,260	)		(1,309	)		(167	)

Net income/(loss)	$	131,385		$	(26,989	)	$	(134,483	)	$	(252,509	)	$	(212,304	)	$	45,370


Other Financial Data:
Net cash provided by/(used in):
Operating activities	$	300,658		$	187,791		$	47,821		$	155,278		$	129,906		$	40,599
Investing activities		(52,548	)		(15,077	)		(38,713	)		(355,710	)		(3,142,543	)		(16,705	)
Financing activities		(10,081	)		(102,304	)		8,551			175,736			3,097,390			(23,894	)
Capital expenditures		52,912			14,959			40,963			66,701			29,630			16,705


	2010		2009		2008		2007		2006
Balance Sheet Data (as of December 31)
Working capital^(c)		502,024		245,034		201,940		187,027		221,509
Total assets		3,280,271		3,163,127		3,303,074		3,555,491		3,372,292
Total debt, including capital lease and other financing obligations		1,889,693		2,300,826		2,511,187		2,562,480		2,272,633
Total shareholder’s equity		900,182		386,747		405,051		566,321		824,632

(a)

For fiscal year 2010, selling, general and administrative expense includes $18.9 million recorded as a cumulative catch-up adjustment for previously unrecognized compensation expense associated with the Tranche 2 and 3 option awards under the First Amended and Restated Sensata Technologies Holding B.V. 2006 Management Option Plan and the related modification thereof, and $22.4 million in fees related to the termination of the advisory agreement with the Sponsors at their option. Refer to Note 10, “Share-Based Payment Plans” and Note 12, “Related Party Transactions” of our audited consolidated financial statements, included elsewhere in this Annual Report on Form 10-K, for additional information.

	SensataTechnologies B.V.(consolidated)												Predecessor (combined)
	For the year ended December 31,									For the period			For the period			For theyear endedDecember 31,
(Amounts in thousands)	2009			2008			2007			April 27(inception) toDecember 31,2006			January 1 toApril 26, 2006			2005
Statement of Operations Data:
Net revenue	$	1,134,944		$	1,422,655		$	1,403,254		$	798,507		$	375,600		$	1,060,671
Operating costs and expenses:
Cost of revenue		742,080			951,763			944,765			536,485			253,028			681,983
Research and development		16,796			38,256			33,891			19,742			8,635			31,252
Selling, general and administrative		126,282			166,565			166,052			94,749			38,674			96,146
Amortization of intangible assets and capitalized software		153,081			148,762			131,064			82,740			1,078			2,458
Impairment of goodwill and intangible assets		19,867			13,173			—			—			—			—
Restructuring		18,086			24,124			5,166			—			2,456			22,996
Total operating costs and expenses		1,076,192			1,342,643			1,280,938			733,716			303,871			834,835
Profit from operations		58,752			80,012			122,316			64,791			71,729			225,836
Interest expense		(150,589	)		(197,840	)		(191,161	)		(165,160	)		(511	)		(105	)
Interest income		573			1,503			2,574			1,567			—			—
Currency translation gain/(loss) and other, net(1)		107,717			55,455			(105,474	)		(63,633	)		115			—
Income/(loss) from continuing operations before income taxes		16,453			(60,870	)		(171,745	)		(162,435	)		71,333			225,731
Provision for income taxes		43,047			53,531			62,504			48,560			25,796			81,390
(Loss)/income from continuing operations		(26,594	)		(114,401	)		(234,249	)		(210,995	)		45,537			144,341
Loss from discontinued operations, net of tax of $0		(395	)		(20,082	)		(18,260	)		(1,309	)		(167	)		(924	)
Net (loss)/income(6)	$	(26,989	)	$	(134,483	)	$	(252,509	)	$	(212,304	)	$	45,370		$	143,417
Other Financial Data:
Net cash provided by/(used in):
Operating activities	$	187,791		$	47,821		$	155,278		$	129,906		$	40,599		$	173,276
Investing activities		(15,077	)		(38,713	)		(355,710	)		(3,142,543	)		(16,705	)		(56,505	)
Financing activities		(102,304	)		8,551			175,736			3,097,390			(23,894	)		(116,771	)
Capital expenditures(2)		14,959			40,963			66,701			29,630			16,705			42,218
EBITDA(3)		367,582			315,508			187,850			111,037			81,286			256,070
Ratio of earnings to fixed charges (unaudited)(4)		1.1			NM			NM			NM			63.4			208.1
	SensataTechnologies B.V.(consolidated)												Predecessor(combined)
(Amounts in thousands)	December 31,2009			December 31,2008			December 31,2007			December 31,2006			December 31,2005
Balance Sheet Data:
Working capital(5)	$	245,034		$	201,940		$	187,027		$	221,509		$	167,018
Total assets		3,163,127			3,303,074			3,555,491			3,372,292			504,297
Total debt, including capital lease and other financing obligations		2,300,826			2,511,187			2,562,480			2,272,633			31,165
TI’s net investment/shareholder’s equity		386,747			405,051			566,321			824,632			355,673

(b)

Currency translation gain/(loss) and other, net for the years ended December 31, 2010, 2009 and 2008 includes (losses) / gains of $(23.5) million, $120.1 million and $15.0 million, respectively, recognized on repurchases of Senior Notes and Senior Subordinated Notes, as well as currency translation gains/(losses) associated with the Euro-denominated debt of $72.8 million, $(13.6) million and $53.2 million, respectively. Currency translation gain/(loss) and other, net for the year ended December 31, 2007 primarily includes currency translation loss associated with the Euro-denominated debt of $(111.9) million. Currency translation gain/(loss) and other, net in the period from April 27, 2006 (inception) to December 31, 2006 primarily includes currency translation loss associated with Euro-denominated debt and the Deferred Payment Certificates (“DPCs”) of $(65.5) million.

(1c) ~~Currency~~We ~~translation~~define ~~gain/(loss)~~working ~~and~~capital ~~other,~~as ~~net~~current ~~for~~assets ~~the~~less ~~years~~current ~~ended December 31, 2009 and 2008 includes gains of $120~~liabilities.1 ~~million~~Working ~~and~~capital ~~$15.0~~amounts ~~million,~~for ~~respectively,~~2006 ~~recognized~~through on2009 ~~the~~have ~~repurchases~~not ofbeen ~~certain~~recast ~~outstanding~~to ~~Senior~~include ~~Notes~~assets ~~and~~designated ~~Senior Subordinated Notes,~~ as ~~well as currency translation (loss)/gain associated with the Euro~~held-~~denominated debt of $(13.6) million and $53.2 million, respectively. Currency translation gain/(loss) and other, net~~ for ~~the year ended December 31, 2007 primarily includes currency translation loss associated with the Euro~~-~~denominated~~sale ~~debt~~during ~~of $(111~~2010.9) million. Currency translation gain/(loss) and other, net in the period from April 27, 2006 (inception) to December 31, 2006 primarily includes currency translation loss associated with Euro-denominated debt and the deferred payment certificates of $(65.5) million.

(2) Excludes non-cash capital expenditures, financed through a capital lease, of $31.2 million for the year ended December 31, 2005.

(3) EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-U.S. GAAP financial measure. We believe that EBITDA provides investors with helpful information with respect to our operations. EBITDA is

used by management and investors to evaluate our operating performance exclusive of financing costs and depreciation policies. In addition to its use to monitor performance trends, EBITDA provides a comparative metric to management and investors that is consistent across companies with different capital structures and depreciation policies. This enables management and investors to compare our performance to that of our peers. The use of EBITDA has limitations and you should not consider EBITDA in isolation from or as an alternative to U.S. GAAP measures such as net income.

The following unaudited table summarizes the calculation of EBITDA and provides a reconciliation to net (loss)/ income, the most directly comparable financial measure presented in accordance with U.S. GAAP, for the periods presented:

	SensataTechnologies B.V.(consolidated)												Predecessor (combined)
	For the year ended December 31,									For the period			For the period		For theyear endedDecember 31,
(Amounts in thousands)	2009			2008			2007			April 27(inception) toDecember 31,2006			January 1 toApril 26,2006		2005
Net (loss)/income	$	(26,989	)	$	(134,483	)	$	(252,509	)	$	(212,304	)	$	45,370	$	143,417
Provision for income taxes		43,047			53,531			62,504			48,560			25,796		81,390
Interest expense, net		150,016			196,337			188,587			163,593			511		105
Depreciation and amortization		201,508			200,123			189,268			111,188			9,609		31,158
EBITDA	$	367,582		$	315,508		$	187,850		$	111,037		$	81,286	$	256,070

Following the 2006 Acquisition, our senior management, together with our Sponsors, developed a series of strategic initiatives to better position us for future revenue growth and an improved cost structure. This plan has been modified, from time to time, to reflect changes in overall market conditions and the competitive environment facing our business. These initiatives have included, among other items, acquisitions, divestitures, restructurings of certain operations and various financing transactions. In connection with these activities, we incurred certain costs and expenses included in EBITDA that we have further described below and believe are important to consider in evaluating our operating performance over these periods.

The following table summarizes certain expenses, losses and gains included in EBITDA for the periods presented:

	(Unaudited)
	Sensata Technologies B.V. (consolidated)
	For the year ended December 31,									For the period
(Amounts in thousands)	2009			2008			2007			April 27(inception) toDecember 31,2006
Supplemental Information
Acquisition, integration and financing costs and other significant items:
Transition costs(a)	$	23		$	4,052		$	16,768		$	15,980
Litigation costs(b)		147			841			4,006			258
Integration and finance costs(c)		2,813			20,931			13,649			1,182
Relocation and disposition costs(d)		8,202			12,828			114			—
Pension charges(e)		4,828			3,588			—			—
Inventory step-up(f)		—			—			4,454			25,017
IPR&D write-off(g)		—			—			5,700			—
Other(h)		6,972			27,105			3,123			1,296
Total	$	22,985		$	69,345		$	47,814		$	43,733
Impairment of goodwill and intangible assets(i)		19,867			13,173			—			—
Severance and other termination costs associated with downsizing(j)		12,276			12,282			5,166			—
Gain on extinguishment of debt(k)		(120,123	)		(14,961	)		—			—
Currency translation loss/(gain) on debt(l)		15,301			(53,209	)		111,946			65,519
Stock compensation(m)		2,233			2,108			2,015			1,259
Management fees(n)		4,000			4,000			4,000			2,667
Other(o)		973			123			(25	)		—
Total	$	(42,488	)	$	32,861		$	170,916		$	113,178

(a) Represents transition costs incurred by us in becoming a stand-alone company, an SEC reporting company and complying with Section 404 of the Sarbanes-Oxley Act.

(b) Represents litigation costs we recognized related to customers alleging defects in certain of our products, which were manufactured and sold prior to April 27, 2006 (inception).

(c) Represents integration and financing costs related to the acquisitions of Airpax, First Technology Automotive and SMaL Camera and other consulting and advisory fees associated with acquisitions and financings, whether or not consummated.

(d) Represents costs we incurred to move certain operations to lower-cost Sensata locations, to close certain manufacturing operations and dispose of the SMaL Camera business.

(e) Represents pension curtailment and settlement losses, and amortization of prior service costs associated with various restructuring activities.

(f) Represents the impact on our cost of revenue from the increase in the carrying value of the inventory that was adjusted to fair value as a result of the application of purchase accounting to the acquisitions of the S&C business, Airpax and First Technology Automotive.

(g) Represents the charge we recorded for acquired in-process research and development associated with our acquisition of SMaL Camera in March 2007.

(h) Represents other (gains)/losses, including impairment losses associated with certain assets held for sale, losses related to the early termination of commodity forward contracts of $7.2 million during fiscal year 2008, a loss of $13.4 million during fiscal year 2008 associated with a settlement with a significant automotive customer that alleged defects in certain of our products installed in its

automobiles and a reserve associated with the Whirlpool recall litigation described in Item 3, “Legal Proceedings.”

(i) Represents the impairment of goodwill and intangible assets associated with a reporting unit within our controls business segment and relates to products used in the semiconductor business.

(j) Represents severance, outplacement costs and special termination benefits associated with the downsizing of various manufacturing facilities and our corporate office.

(k) Gain on extinguishment of debt relates to the repurchases of outstanding notes.

(l) Currency translation loss/(gain) on debt reflects the net losses/(gains) associated with the translation of our Euro-denominated debt into U.S. dollars and losses/(gains) on related hedging transactions.

(m) Stock compensation represents share-based compensation expense recorded in accordance with ASC 718.

(n) Represents fees expensed under the terms of the advisory agreement with our Sponsors. Refer to “Certain Relationships and Related Party Transactions—Advisory Agreement.”

(o) Other represents unrealized gains/losses on commodity forward contracts and penalty expenses associated with uncertain tax positions.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information regarding certain of these items.

(4) Ratio of earnings to fixed charges is calculated by dividing (1) “earnings” which consist of earnings from continuing operations and fixed charges, by (2) “fixed charges” which consist of interest expense and the estimated interest portion of rental payments on operating leases. Earnings were insufficient to cover fixed charges due to losses from continuing operations before taxes incurred of $(60,870), $(171,745) and $(162,435), for the years ended December 31, 2008 and 2007 and the period from April 27, 2006 (inception) to December 31, 2006. Additional earnings of $60,870, $171,745 and $162,435, respectively, must be generated to achieve a coverage ratio of 1:1.

(5) We define working capital as current assets less current liabilities. Prior to the 2006 Acquisition, we participated in TI’s centralized system for cash management, under which our cash flows were transferred to TI on a regular basis and netted against TI’s net investment account. Consequently, none of TI’s cash, cash equivalents, debt or interest expense has been allocated to our business in the Predecessor historical combined financial statements.

(6) Included within Net loss for each of the periods presented were the following expenses:

	Sensata Technologies B.V. (consolidated)
	For the year ended December 31,						For the period
(Amounts in thousands)	2009		2008		2007		April 27(inception) toDecember 31,2006
Amortization and depreciation expense related to the step-up in fair value of fixed and intangible assets(a)	$	157,800	$	160,595	$	154,296	$	84,774
Deferred income tax and other tax expense		26,592		29,980		46,126		30,148
Amortization expense of deferred financing costs		9,055		10,698		9,640		11,518
Interest expense related to uncertain tax positions		823		43		1,747		—
Interest expense related to Deferred Payment Certificates		—		—		—		44,581

(a) Amortization and depreciation expense related to the step-up in fair value of fixed and intangible assets relates to the acquisition of the S&C business, First Technology Automotive and Airpax and the step-up in the fair value of these assets through purchase accounting.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read the following discussion in conjunction with Item 6, “Selected Financial Data,” and our audited consolidated financial statements and the accompanying notes thereto, included elsewhere in ~~this annual report. The statements~~ in this ~~discussion~~Annual ~~regarding~~Report ~~industry~~on ~~outlook,~~Form ~~our expectations regarding our future performance, liquidity and capital resources and other non~~10-~~historical statements in this discussion are forward-looking statements~~K. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in Item 1A, “Risk Factors.” Our actual results may differ materially from those contained in or implied by any forward-looking statements.

The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in Item 1A, “Risk Factors.” Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Overview

Sensata, a global industrial technology company, is a leader in the development, manufacture and sale of sensors and controls. We produce a a wide range of customized, innovative sensors and controls for mission-critical applications such as thermal circuit breakers in aircraft, pressure sensors in automotive systems, and bimetal current and temperature control devices in electric motors. We believe that we are one of the largest suppliers of sensors and controls in ~~each~~the majority of the key applications in which we compete and that we have developed our strong market position due to our long-standing customer relationships, ~~technical~~ technical expertise, product performance and quality and competitive cost structure. We compete in growing global market segments driven by demand for products that are safe, energy-efficient and environmentally-friendly~~, as well as the proliferation of, and increasing use of sensors and controls in, electronic applications~~. In addition, our long-standing position in emerging markets, including our 1415-year presence in China, further enhances our growth prospects. We deliver a strong value proposition to our customers by leveraging an innovative portfolio of core technologies and manufacturing at high volumes in low-cost locations such as China, Mexico, Malaysia and the Dominican Republic.

History

We have a history of innovation dating back to our origins. We operated as a part of Texas Instruments from 1959 until we were acquired as a result of the 2006 Acquisition. Since then, we have expanded our operations in part through the ~~acquisition~~acquisitions of the First Technology Automotive and Special Products (“First Technology Automotive”) business in December 2006 and Airpax Holdings, Inc. (“Airpax”) in July 2007.

WeSensata ~~are~~Technologies anB.V. ~~indirect,~~(“Sensata” ~~99%~~or the “Company”) is a direct, wholly-owned subsidiary of Sensata ~~Investment~~Technologies ~~Company,~~Intermediate SHolding B.CV.A. (“Sensata ~~Investment~~Intermediate ~~Co.~~Holding”),. aSensata ~~Luxembourg~~Intermediate ~~company,~~Holding ~~which~~ is ~~owned~~an ~~by investment funds or vehicles advised or managed by Bain Capital~~indirect, ~~its co~~wholly-~~investors~~owned ~~and~~subsidiary ~~certain members~~ of ~~our~~Sensata ~~senior~~Technologies ~~management~~Holding N.V. (“Parent”) Weand ~~conduct~~the ~~our~~Parent ~~operations~~is ~~through~~a majority-owned subsidiary ~~companies,~~of ~~which~~Sensata ~~operate~~Investment ~~business~~Company ~~and~~S.C.A. ~~product~~(“SCA”). ~~development~~The ~~centers~~share incapital ~~the~~of ~~United~~SCA ~~States,~~is ~~the~~100% ~~Netherlands~~owned ~~and~~by ~~Japan~~entities ~~and manufacturing~~associated ~~operations~~with inBain ~~Brazil,~~Capital ~~China~~Partners, ~~South~~LLC ~~Korea,~~(“Bain ~~Malaysia~~Capital”), ~~Mexico,~~its co-investors ~~the~~(Bain ~~Dominican~~Capital ~~Republic~~ and ~~the~~its ~~United~~co-investors ~~States. Many of these companies~~ are ~~the~~collectively ~~successors~~referred to ~~businesses~~as ~~that have been engaged in~~ the ~~sensing~~“Sponsors”) and ~~control~~certain ~~business~~members ~~since~~of ~~1916~~our senior management.

We conduct our operations through subsidiary companies, which operate business and product development centers in the United States, the Netherlands and Japan and manufacturing operations in China, South Korea, Malaysia, Mexico, the Dominican Republic and the United States. Many of these companies are the successors to businesses that have been engaged in the sensing and control business since 1916.

Recent Developments

On January 28, 2011, we completed the acquisition of the Automotive on Board sensors business of Honeywell International Inc. (“Automotive on Board”) for approximately $140 million in cash, subject to a working capital adjustment and certain transfer taxes. We will refer to this acquisition as “Magnetic Speed and Position” (“MSP”), which will be integrated into our sensors segment. We acquired MSP in order to complement

the existing operations of our sensors segment, provide new capabilities in light vehicle speed and position sensing, and expand our presence in emerging markets, particularly in China.

MSP manufactures, develops and sells certain sensor products, and has operations in the U.S., South Korea, the Czech Republic and China. This acquisition was structured as a purchase of assets for the operations in the U.S., South Korea and the Czech Republic, and as a purchase of 100% of the outstanding shares of an entity in the Czech Republic and 90% of the outstanding shares of a joint venture in China. We entered into an Equity Transfer Agreement with the owner of the remaining 10% equity interest in the joint venture in China. We expect to own 100% of the joint venture by the end of the first quarter of 2011. Consideration for the purchase of the remaining 10% equity interest in the China joint venture is included in the $140 million purchase price.

We incurred approximately $3.2 million of costs during 2010 related to this transaction, which were included within selling, general and administrative (“SG&A”) expense in our consolidated statements of operations.

Selected Segment Information

We manage our sensors and controls businesses separately and report their results of operations as two segments for accounting purposes. Set forth below is selected information for each of these business segments for each of the periods presented. Amounts and percentages in the tables below have been calculated based on unrounded numbers. Accordingly, certain amounts may not add due to the effect of rounding.

41The following table presents net revenue by segment and segment operating income for the following periods:


	For the year ended December 31,
	2010		2009		2008
(Amounts in millions)
Net revenue
Sensors segment	$	969.6	$	685.1	$	867.4
Controls segment		570.5		449.9		555.3

Total	$	1,540.1	$	1,134.9	$	1,422.7

Segment operating income
Sensors segment	$	327.1	$	201.3	$	221.9
Controls segment		193.3		133.9		136.5

Total	$	520.4	$	335.2	$	358.3

The following table presents net revenue by segment as a percentage of total net revenue and segment operating income as a percentage of segment net revenue for the following periods:


	For the year ended December 31,
	2010			2009			2008
Net revenue
Sensors segment		63.0	%		60.4	%		61.0	%
Controls segment		37.0			39.6			39.0

Total		100.0	%		100.0	%		100.0	%

Segment operating income
Sensors segment		33.7	%		29.4	%		25.6	%
Controls segment		33.9	%		29.8	%		24.6	%

~~The~~For ~~following~~a ~~table~~reconciliation ~~presents~~of ~~net~~total ~~revenue by~~ segment ~~for~~operating ~~the~~income ~~years~~to ~~ended~~profit ~~December 31~~from operations, refer to ~~2009,~~Note ~~2008~~18 ~~and~~of ~~2007:~~our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

	For the year ended December 31,
	2009		2008		2007
(Amounts in millions)
Net revenue
Sensors segment	$	685.1	$	867.4	$	882.5
Controls segment		449.9		555.3		520.8
Total	$	1,134.9	$	1,422.7	$	1,403.3
Segment operating income
Sensors segment	$	194.1	$	221.9	$	244.3
Controls segment		129.6		136.5		130.0
Total	$	323.7	$	358.3	$	374.3

The table below presents net revenue by segment and segment operating income as a percentage of segment net revenue for the years ended December 31, 2009, 2008 and 2007. Amounts and percentages in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not add due to the effect of rounding.

	For the year ended December 31,
	2009		2008		2007
(As a percentage of net revenue)
Net revenue
Sensors segment	60.4	%	61.0	%	62.9	%
Controls segment	39.6		39.0		37.1
Total	100.0	%	100.0	%	100.0	%
Segment operating income
Sensors segment	28.3	%	25.6	%	27.7	%
Controls segment	28.8	%	24.6	%	25.0	%

Factors Affecting Our Operating Results

The following discussion sets forth certain components of our statements of operations as well as factors that impact those ~~items~~components.

Net revenue

We generate revenue from the sale of sensors and controls products across all major geographic areas. Our net revenue from product sales includes total sales less estimates of returns for product quality reasons and for price allowances. Price allowances include discounts for prompt payment as well as volume-based incentives.

Because we sell our products to end-users in a wide range of industries and geographies, demand for our products is generally driven more by the level of general economic activity rather than conditions in one particular industry or geographic region.

Our overall net revenue is generally impacted by the following factors:

•

fluctuations in overall economic activity within the geographic markets in which we operate;

•

underlying growth in one or more of our core end-markets, either worldwide or in particular geographies in which we operate;

•

the number of sensors and/or controls used within existing applications, or the development of new applications requiring sensors and/or controls;

•

the “mix” of products sold, including the proportion of new or upgraded products and their pricing relative to existing products;

•

changes in product sales prices (including quantity discounts, rebates and cash discounts for prompt payment);

•

changes in the level of competition faced by our products, including the launch of new products by competitors;

•

our ability to successfully develop and launch new products and applications; and

•

fluctuations in exchange rates.

While the factors described above impact net revenue in each of our operating segments, the impact of these factors on our operating segments can differ, as described below. For more information about risks relating to our business, refer to Item 1A, “Risk Factors.”

Cost of revenue

We manufacture the majority of our products and subcontract only a limited number of products to third parties. As such, our cost of revenue consists principally of the following:

• Production Materials Costs. We purchase much of the materials used in production on a global lowest-cost basis, but we are still impacted by global and local market conditions. A portion of our production materials contains metals, such as copper, nickel and aluminum, and precious metals, such as gold and silver, and the costs of these materials may vary with underlying metals pricing. We ~~purchase much of the materials used in production on a global best-cost basis, but we are still impacted by global and local market conditions. We~~ enter into forward contracts to hedge a portion of our exposure to the potential change in prices associated with these commodities. The terms of these contracts fix the price at a future date for various notional amounts associated with these commodities.

•

Employee Costs. These employee costs include the salary costs and benefit charges for employees involved in our manufacturing operations. These costs generally increase on an aggregate basis as sales and production volumes increase, and may decline as a percent of net revenue as a result of economies of scale associated with higher production volumes. We rely heavily on contract workers in certain geographies.

•

Sustaining Engineering Activity costs. These costs relate to modifications of existing products for use by new customers in familiar applications.

•

Other. Our remaining cost of revenue consists of:

• sustaining engineering activity costs;

•

customer-related development costs;

•

depreciation of fixed assets;

•

freight costs;

•

warehousing expenses;

•

purchasing costs;

• outsourcing or subcontracting costs relating to services used by us on an occasional basis during periods of excess demand; and

•

other general manufacturing expenses, such as expenses for energy consumption.

The main factors that influence our cost of revenue as a percent of net revenue include:

• production volumes—~~fixed~~ production costs are capitalized in inventory based on normal production volumes. As revenue increases the fixed portion of these costs do not;

•

transfer of production to our lower cost production facilities;

•

the implementation of cost control measures aimed at improving productivity, including reduction of fixed production costs, refinements in inventory management and the coordination of purchasing within each subsidiary and at the business level;

•

product lifecycles, as we typically incur higher cost of revenue associated with manufacturing over-capacity during the initial stages of product launches and when we are phasing out discontinued products;

• the increase in the carrying value of the inventory that was adjusted to fair value as a result of the application of purchase accounting associated with acquisitions;

• depreciation expense, including amounts arising from the adjustment of property, plant and equipment (“PP&E”) to fair value associated with acquisitions; and

•

changes in the price of raw materials, including certain metals.

Research and development ~~expense~~

Research and development (“R&D”) expenses consist of costs related to direct product design, development and process engineering. The level of ~~research~~R&D ~~and development~~ expense is related to the number of ~~products~~ products in development, the stage of development process, the complexity of the underlying technology, the potential scale of the product upon successful commercialization and the level of our exploratory research. We conduct such activities in areas we believe will accelerate our longer term net revenue growth. Our basic technologies have been developed through a combination of internal development and third-party efforts (often by parties with whom we have joint development relationships). Our development expense is typically associated with:

•

engineering core technology platforms to specific applications; and

•

improving functionality of existing products.

~~Costs~~41 ~~related to modifications of existing products for use by new customers in familiar applications is accounted for in cost of revenue and not included in research and development expense.~~

Selling,Table generalof and administrative expense Contents

~~Our~~Costs ~~selling,~~related ~~general~~to ~~and~~modifications ~~administrative,~~of orexisting ~~“SG&A,”~~products ~~expense~~for ~~consists~~use ofby ~~all~~new ~~expenditures~~customers ~~incurred~~ in ~~connection~~familiar applications ~~with~~is ~~the~~accounted ~~sales~~for ~~and~~in ~~marketing~~cost of ~~our~~revenue ~~products,~~and asnot ~~well~~included asin ~~administrative overhead~~R&D ~~costs,~~expense. ~~including:~~

•Selling, ~~salary~~general and ~~benefit costs for sales personnel and~~ administrative staff, which accounted for approximately 57% of total SG&A expense for fiscal year 2009. Expenses relating to our sales personnel generally increase or decrease principally with changes in sales volume due to the need to increase or decrease sales personnel to meet changes in demand. Expenses relating to administrative personnel generally do not increase or decrease directly with changes in sales volume.

Our SG&A expense consists of all expenditures incurred in connection with the sales and marketing of our products, as well as administrative overhead costs, including:

•

salary and benefit costs for sales personnel and administrative staff, including share-based compensation expense. Expenses relating to our sales personnel generally increase or decrease principally with changes in sales volume due to the need to increase or decrease sales personnel to meet changes in demand. Expenses relating to administrative personnel generally do not increase or decrease directly with changes in sales volume;

•

expense related to the use and maintenance of administrative offices, including depreciation expense;

•

other administrative expense, including expense relating to logistics, information systems and legal and accounting services;

• general advertising expense; ~~and~~

• other selling expenses, such as expenses incurred in connection with travel and communications.; and

~~Changes~~• intransaction ~~SG&A~~costs ~~expenses~~associated aswith ~~a percent of net revenue have historically been impacted by a number of factors, including:~~ acquisitions.

•Changes ~~changes~~ in ~~sales~~SG&A ~~volume,~~expense as ~~higher~~a ~~volumes~~percent ~~enable~~of usnet torevenue ~~spread~~have ~~the~~historically ~~fixed~~been ~~portion~~impacted ofby ~~our~~a ~~sales~~number ~~and~~of ~~marketing~~factors, ~~expense~~including: ~~over higher revenue;~~

44• changes in sales volume, as higher volumes enable us to spread the fixed portion of our administrative expense over higher revenue;

•

changes in the mix of products we sell, as some products may require more customer support and sales effort than others;

•

changes in our customer base, as new customers may require different levels of sales and marketing attention;

• new product launches in existing and new markets, as these launches typically involve a more intense sales activity before they are integrated into customer applications; ~~and~~

• customer credit issues requiring increases to the allowance for doubtful accounts.; and

•

volume and timing of acquisitions.

Amortization of intangible assets and capitalized software

Acquisition-related intangible assets are amortized on ~~the~~an economic benefit basis ~~based~~according ~~upon~~to the useful lives of the assets. Capitalized software licenses are amortized on a straight-line basis over the term of the license.

Impairment of goodwill and intangible assets

AsGoodwill aand ~~result~~intangible ofassets ~~the~~are ~~annual~~reviewed ~~goodwill~~for impairment ~~review~~on inan ~~the~~annual ~~fourth~~basis ~~quarter~~unless ofevents ~~2008, we determined~~or ~~that~~circumstances ~~the~~occur ~~goodwill~~which ~~associated~~trigger ~~with~~ the ~~Interconnection~~need ~~reporting~~for ~~unit~~an ~~was~~earlier ~~impaired~~impairment ~~and, therefore, recorded a charge of $13~~review.2 ~~million~~No inimpairment ~~the~~charges ~~consolidated~~were ~~statements~~required ofduring ~~operations~~2010. ~~for~~For the ~~year~~years ended December 31, ~~2008.~~2009 ~~During~~and ~~the first quarter of 2009~~2008, we ~~again~~recorded ~~performed a review of goodwill and definite-lived intangible asset for potential~~ impairment ~~since~~charges ~~indicators were present and concluded that goodwill and definite-lived intangible assets were impaired and recorded a charge~~ of $19.9 ~~million,~~ ~~of which $5.3~~ million ~~related to goodwill~~ and $1413.62 million, respectively, ~~related~~associated towith ~~definite-lived~~the ~~intangible~~Interconnection ~~assets~~reporting unit. We believe that the global economic crisis, economic conditions within the semiconductor end-market and an increase in the competitive landscape surrounding suppliers to the semiconductor end-market were all factors that led to ~~the~~these impairment ~~of goodwill~~charges. Key assumptions that were used in the development of the fair value of the Interconnection reporting unit are described in “Critical Accounting Policies and Estimates—Impairment of Goodwill and Intangible Assets.”

As42 of October 1, 2009, we evaluated our goodwill and indefinite-lived intangible assets for impairment at the reporting unit level and determined that the fair values of the reporting units exceeded the carrying values on that date. Should certain assumptions used in the development of the fair value of our reporting units change, we may be required to recognize additional goodwill or intangible assets impairments.

Our revenue and earnings forecasts depend on many factors, including our ability to project customer spending, particularly within the semiconductor industry. Changes in the level of spending in the industry and/or by our customers could result in a change to our forecasts, which, in turn, could result in a future impairment of goodwill and/or intangible assets. See the “Critical Accounting Policies and Estimates” section of this Management’s Discussion and Analysis for more discussion of the key assumptions that are used in the determination of fair value of our reporting units.

Restructuring

Restructuring costs consist of severance, outplacement, other separation benefits, pension settlement and curtailment losses and facilities and other exit costs.

Depreciation expense

Property, plant and equipment (“PP&E”) are stated at cost and depreciated on a straight-line basis over their estimated useful lives. ~~Property,~~PP&E ~~plant and equipment~~ acquired through the 2006 Acquisition and the acquisitions of the ~~S&C business and~~ First Technology Automotive and Airpax businesses were “stepped-up” to fair value on the date of the respective business acquisition resulting in a new cost basis for accounting purposes. The amount of the adjustment to the cost basis of these assets as a result of the 2006 Acquisition, the First Technology Automotive acquisition and the Airpax acquisition totaled $57.8 million, $2.2 million and $5.1 million, respectively.

Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements.

Assets held under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. These assets are depreciated on a straight-line basis over the shorter of the estimated useful lives or the period of the related lease.

45Interest expense, net

Interest expense

Interest expense, net consists primarily of interest expense on institutional borrowings, interest rate derivative instruments and capital lease and other financing obligations. Interest expense, net also includes the amortization of deferred financing costs and interest expense on liabilities arising from uncertain tax positions.

Currency translation gain~~/(loss)~~ and other, net

Currency translation gain~~/(loss)~~ and other, net includes gains and losses recognized on currency translation, gains and losses recognized on our derivatives used to hedge commodity prices and foreign ~~currency~~ currency exposures, gains and losses on the disposition of ~~property,~~PP&E ~~plant~~ and ~~equipment~~gains and ~~gains~~losses on the repurchases of debt. We continue to derive a significant portion of our revenue in markets outside of the United States, primarily Europe and Asia. For financial reporting purposes, the functional currency of all our subsidiaries is the U.S. dollar. In certain instances, we enter into transactions that are denominated in a currency other than the U.S. dollar. At the date the transaction is recognized, each asset, liability, revenue, expense, gain or loss arising from the transaction is measured and recorded in U.S. dollars using the exchange rate in effect at that date. At each balance sheet date, recorded monetary balances denominated in a currency other than the U.S. dollar are adjusted to the U.S. dollar using the current exchange rate with gains or losses recorded in the consolidated statements of operations.

Provision for income taxes

We and our subsidiaries are subject to income tax in the various jurisdictions in which we operate. While the extent of our future tax liability is uncertain, the ~~purchase~~impact ~~accounting~~ of ~~the~~purchase ~~2006 Acquisition,~~accounting ~~the~~for ~~acquisition~~past ~~of First Technology Automotive~~ and ~~the~~future ~~acquisition of Airpax~~acquisitions, ~~the~~changes ~~new~~to debt and equity capitalization of our subsidiaries and the realignment of the functions performed and risks assumed by the various subsidiaries are among the factors that will determine the future book and taxable income of the respective subsidiary and Sensata as a whole.

We43 adopted guidance included within Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740, Income Taxes (originally issued as FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes) effective January 1, 2007, and recognized an increase of $0.7 million in the liability for unrecognized tax benefits, which was accounted for as an increase to the January 1, 2007 balance of accumulated deficit.

ForTable the Predecessor periods, our operations were included in the consolidated U.S. federal income tax return and certain foreign income tax returns of Texas Instruments. The income tax provisions and related deferred tax assets and liabilities for the Predecessor periods have been determined as if we were a separate taxpayer. Deferred income taxes are provided for temporary differences between the book and tax basis of assets and liabilities.Contents

Loss from discontinued operations

In December 2008, we announced our intention to discontinue and sell our ~~automotive~~Automotive ~~vision~~Vision sensing business ~~(the~~ (“Vision business”). In connection with this announcement, we reclassified to discontinued operations the results from operations of the Vision business and recognized a loss associated with measuring the net assets of the Vision business at fair value less cost to sell and other exit costs, in accordance with ASC Topic 360, Property, Plant, and Equipment.

Effects of Acquisitions and Other Transactions

Purchase Agreement

On April 27, 2006, ~~(inception)~~we completed the 2006 Acquisition, ~~S&C~~which ~~Purchase~~was ~~Corp~~effected through a number of our subsidiaries that collectively acquired the assets and assumed the liabilities being transferred. The acquisition structure resulted in significant tax amortization, which has reduced our overall cash tax expense compared to predecessor periods. We also entered into a ~~company~~transition ~~owned~~services byagreement ~~affiliates~~with ofTexas ~~Bain~~Instruments ~~Capital,~~pursuant ~~completed~~to which the ~~acquisition~~parties agreed ofto provide various services to each other in the area of facilities-related services, finance and accounting, human resources, information technology system services, warehousing and logistics and records retention and storage. We ceased ~~S&C~~relying ~~business~~on these services from Texas Instruments in 2008. The fees for anthese ~~aggregate~~services ~~purchase~~were ~~price~~equivalent of to the provider’s cost.

approximately $3.0 billion plus fees and expenses. The acquisition of the S&C business was effected through a number of our subsidiaries that collectively acquired the assets and assumed the liabilities being transferred. The acquisition structure resulted in significant tax amortization, which will reduce our overall cash tax expense compared to historical periods. We also entered into a transition services agreement pursuant to which we and Texas Instruments agreed to provide various services to each other in the area of facilities-related services, finance and accounting, human resources, information technology system services, warehousing and logistics and records retention and storage. As of September 30, 2008, we were no longer relying on these services from Texas Instruments. The fees for these services were equivalent to the provider’s cost.

Shareholder’s Equity

InAs ~~connection~~of ~~with~~December ~~the~~31, ~~2006 Acquisition~~2010, we ~~issued~~had ~~180~~ 220 ordinary shares, ~~with~~par ~~a nominal~~ value of €100.0 per share, issued and outstanding. We are authorized to issue up to 900 ordinary shares.

~~Upon~~On ~~the~~March ~~close~~26, ~~of the 2006 Acquisition~~2010, ~~the~~we ~~Sponsors~~issued ~~contributed~~20 ~~$985.0~~ordinary ~~million~~shares, topar ~~Sensata Investment~~value ~~Company~~€100 ~~S.C.A.,~~per ~~which~~share, into ~~turn,~~our ~~contributed~~immediate ~~these~~parent ~~proceeds~~company, ~~through~~ Sensata ~~Technologies~~ Intermediate Holding ~~B.V.~~, toin ~~Sensata~~exchange ~~Intermediate~~for ~~Holding.~~consideration ~~Sensata~~of ~~Intermediate~~approximately ~~Holding contributed~~ $~~985~~5.02 million ~~to Sensata and in exchange received 180 ordinary shares with a nominal value of €100.0~~ per share, ~~and~~or ~~€616.9 million~~aggregate consideration of ~~deferred~~approximately ~~payment~~$103.8 ~~certificates~~million. ~~The~~On ~~deferred~~April ~~payment~~29, ~~certificates~~2010 ~~were~~we ~~legally~~ issued asan ~~debt~~additional ~~and~~20 ~~provided~~ordinary ~~the~~shares, ~~holder~~par ~~with~~value a€100 ~~14%~~per ~~yield~~share, onto ~~the~~Sensata ~~principal~~Intermediate ~~amount. As a result~~Holding, ~~the~~in ~~deferred~~exchange ~~payment~~for ~~certificates~~consideration ~~were classified as long-term debt as~~ of ~~April 27,~~approximately ~~2006 (inception) and the accrued yield was recognized as interest expense~~$4.7 million Inper ~~addition~~share, ~~the~~or ~~deferred~~aggregate ~~payment~~consideration ~~certificates~~of ~~and~~approximately ~~the related yield were remeasured into the U~~$93.S.1 ~~dollar equivalent at the end of each reporting period with the difference recorded as currency gain or loss~~million.

On September 21, 2006, we legally retired the deferred payment certificates effective as of April 27, 2006 (inception), and restructured them as Additional paid-in capital, the original intended investment classification. In accordance with U.S. GAAP, the deferred payment certificates were classified as debt until the date of the modification of the instrument. Therefore, effective September 21, 2006, the principal amounts of $768.3 million, for the deferred payment certificates and their accrued interest of $44.6 million and foreign currency exchange losses of $13.4 million, were reclassified into equity as Additional paid-in capital.

Purchase Accounting

We accounted for the ~~acquisitions~~2006 ofAcquisition and the acquisitions ~~S&C~~of ~~business,~~ First Technology Automotive and Airpax using the purchase method of accounting. As a result, the purchase prices for each of these transactions~~, plus~~ ~~fees and expenses,~~ have been allocated to the tangible and intangible assets acquired and liabilities assumed based upon their respective fair values as of the date of each acquisition. The excess of the purchase price over the fair value of assets and liabilities was assigned to goodwill, which is not amortized for accounting purposes, but is subject to testing for impairment at least annually. The application of purchase accounting resulted in an increase in amortization and depreciation expense in the periods subsequent to acquisition relating to our acquired intangible assets and ~~property, plant and equipment~~ PP&E. In addition to the increase in the carrying value of ~~property~~PP&E, ~~plant and equipment,~~ we extended the remaining depreciable lives of ~~property,~~PP&E ~~plant and equipment~~ to reflect the estimated remaining useful lives for purposes of calculating periodic depreciation. We also adjusted the value of the inventory to fair value, increasing the costs and expenses recognized upon the sale of this acquired inventory.

On January 28, 2011, we completed the acquisition of the Automotive on Board business for approximately $140 million in cash, subject to a working capital adjustment and certain transfer taxes. As of the date of this filing, we have not yet completed our allocation of the purchase price to the fair value of the assets acquired and the liabilities assumed.

Increased Leverage

We are a highly-leveraged company and our interest expense ~~has~~ increased significantly in the periods following the consummation of the 2006 Acquisition, ~~the First Technology Automotive acquisition~~ and the ~~Airpax~~acquisitions ~~acquisition. In addition, a portion~~ of ~~our~~First ~~debt~~Technology ~~and~~Automotive the related interest is denominated in Euros, subjecting us to changes in foreign currency rates. Further, a portion of our debt has a variable interest rate. We have utilized interest rate swaps, interest rate collars and ~~interest rate caps to hedge the effect of variable interest rates. Refer to Item 7A, “Quantitative and Qualitative Disclosures About Market~~ ~~Risk—Interest Rate Risk,” for more information regarding our hedging activities. Our large amount of indebtedness may limit our flexibility in~~

4744

Airpax. While it has declined in 2009 and 2010, it is still a significant portion of our results of operations. A portion of our debt has a variable interest rate. We have utilized interest rate swaps, interest rate collars and interest rate caps to hedge the effect of variable interest rates. Refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk,” for more information regarding our hedging activities. In addition, a portion of our debt and the related interest is denominated in Euros, subjecting us to changes in foreign currency rates. We monitor our exposures to these foreign currency risks and generally employ operating and financing activities to offset these exposures where appropriate. Refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Risk,” for more information regarding our activities to mitigate these risks. Our large amount of indebtedness may limit our flexibility in planning for, or reacting to, changes in our business and future business opportunities since a substantial portion of our cash flow from operations will be dedicated to the servicing ~~payment~~ of our debt ~~service~~, and this may place us at a competitive disadvantage as some of our competitors are less leveraged. Our leverage may make us more vulnerable to a downturn in our business, industry or the economy in general. Refer to Item 1A, “Risk Factors.” Refer also to Note 15, “Derivative Instruments and Hedging Activities” of our audited consolidated financial statements, included elsewhere in this Annual Report on Form 10-K.

Predecessor Periods

For periods before the 2006 Acquisition, we operated as a business of Texas Instruments and not as a stand-alone company. The Predecessor financial statements included in this annual report were derived using the historical results of operations and the historical basis of assets and liabilities of Texas Instruments’ S&C business, excluding the radio frequency identification systems business unit, which had been operated as part of the S&C business, but was not sold in connection with the 2006 Acquisition. The historical financial information may not reflect what our results of operations, financial position and cash flows would have been had we operated as a separate, stand-alone company without the shared resources of Texas Instruments for the periods presented, and may not be indicative of our future results of operations, financial position and cash flows. Refer to our audited consolidated financial statements and accompanying notes for more information.

Texas Instruments provided various services to the S&C business, including cash management, facilities management, information technology, finance and accounting, tax, legal, human resources, data processing, security, payroll and employee benefit administration, insurance administration and telecommunications. The costs of these services and the costs associated with employee benefit plans, information technology and facilities shared with Texas Instruments have been allocated to the S&C business in the combined financial statements included in this annual report and amounted to $14.0 million for the period from January 1, 2006 to April 26, 2006. These expenses and all other centralized operating costs were allocated first on the basis of direct usage when identifiable, with the remainder being allocated among Texas Instruments’ businesses units on the basis of their respective revenue, headcount or other measures. We believe these allocations are a reasonable reflection of the use of these services from Texas Instruments. The allocated costs included in our combined financial statements could differ from amounts that would have been incurred by us if we operated on a stand-alone basis, and are not necessarily indicative of costs to be incurred in the future.

During each of the Predecessor periods presented, we participated in Texas Instruments’ centralized cash management system. Cash receipts attributable to our operations were collected by Texas Instruments and cash disbursements were funded by Texas Instruments. Cash advances necessary to fund our major improvements to and replacements of property, acquisitions and expansion, to the extent not provided through internally generated funds, were provided by Texas Instruments’ cash or funded with a capital lease. As a result, none of Texas Instruments’ cash, cash equivalents, debt or interest expense (other than our capital lease obligation for our Attleboro business center) has been allocated to the consolidated and combined financial statements of the S&C business.

Results of Operations

~~The~~Our ~~table~~discussion ~~below~~and ~~presents~~analysis ~~our~~of ~~historical~~ results of operations inand ~~millions~~financial ofcondition ~~dollars~~are ~~and~~based asupon aour ~~percent~~consolidated offinancial ~~net revenue~~statements. WeThese financial statements have ~~derived~~been ~~the~~prepared ~~statements~~in accordance with U.S. GAAP. The preparation of ~~operations~~these ~~for~~financial ~~the~~statements ~~years~~requires ~~ended~~us ~~December 31, 2009,~~to ~~2008~~make estimates and ~~2007~~judgments ~~from~~that affect the ~~audited~~amounts ~~consolidated~~reported in the financial statements,. ~~included~~We ~~elsewhere~~base inour ~~this~~estimates ~~annual~~on historical ~~report.~~experiences ~~Amounts~~ and ~~percentages~~assumptions inbelieved ~~the~~to ~~table~~be ~~below~~reasonable ~~have~~under ~~been~~the ~~calculated~~circumstances ~~based~~and re-evaluate them on ~~unrounded~~an ~~numbers~~ongoing basis. ~~Accordingly,~~Those ~~certain~~estimates form the basis for our judgments that affect the amounts ~~may~~reported ~~not~~in ~~add~~the financial statements. Actual ~~due~~results tocould ~~the~~differ ~~effect~~from our estimates under different assumptions or conditions. Our significant accounting policies are more fully described in Note 2 of ~~rounding~~our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

	For the year ended December 31,
	2009					2008					2007
(Amounts in millions)	Amount			Percent ofNet Revenue		Amount			Percent ofNet Revenue		Amount			Percent ofNet Revenue
Net revenue
Sensors segment	$	685.1		60.4	%	$	867.4		61.0	%	$	882.5		62.9	%
Controls segment		449.9		39.6			555.3		39.0			520.8		37.1
Net revenue		1,134.9		100.0			1,422.7		100.0			1,403.3		100.0
Operating costs and expenses:
Cost of revenue		742.1		65.4			951.8		66.9			944.8		67.3
Research and development		16.8		1.5			38.3		2.7			33.9		2.4
Selling, general and administrative		126.3		11.1			166.6		11.7			166.1		11.8
Amortization of intangible assets and capitalized software		153.1		13.5			148.8		10.5			131.1		9.3
Impairment of goodwill and intangible assets		19.9		1.8			13.2		0.9			—		—
Restructuring		18.1		1.6			24.1		1.7			5.2		0.4
Total operating costs and expenses		1,076.2		94.8			1,342.6		94.4			1,280.9		91.3
Profit from operations		58.8		5.2			80.0		5.6			122.3		8.7
Interest expense		(150.6	)	(13.3	)		(197.8	)	(13.9	)		(191.2	)	(13.6	)
Interest income		0.6		0.1			1.5		0.1			2.6		0.2
Currency translation gain/(loss) and other, net		107.7		9.5			55.5		3.9			(105.5	)	(7.5	)
Income/(loss) from continuing operations before income taxes		16.5		1.4			(60.9	)	(4.3	)		(171.7	)	(12.2	)
Provision for income taxes		43.0		3.8			53.5		3.8			62.5		4.5
Loss from continuing operations		(26.6	)	(2.3	)		(114.4	)	(8.0	)		(234.2	)	(16.7	)
Loss from discontinued operations, net of tax of $0		(0.4	)	0.0			(20.1	)	(1.4	)		(18.3	)	(1.3	)
Net loss	$	(27.0	)	(2.4	)%	$	(134.5	)	(9.5	)%	$	(252.5	)	(18.0	)%

YearTable Endedof December 31, 2009 (“fiscal year 2009”) Compared to the Year Ended December 31, 2008 (“fiscal year 2008”) Contents

The table below presents our historical results of operations in millions of dollars and as a percentage of net revenue. We have derived the statements of operations for the years ended December 31, 2010, 2009 and 2008 from the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Amounts and percentages in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not add due to the effect of rounding.


	For the year ended December 31,
	2010						2009						2008
(Amounts in millions)	Amount			Percent of Net Revenue			Amount			Percent of Net Revenue			Amount			Percent of Net Revenue
Net revenue
Sensors segment	$	969.6			63.0	%	$	685.1			60.4	%	$	867.4			61.0	%
Controls segment		570.5			37.0			449.9			39.6			555.3			39.0

Net revenue		1,540.1			100.0			1,134.9			100.0			1,422.7			100.0
Operating costs and expenses:
Cost of revenue		948.1			61.6			742.1			65.4			951.8			66.9
Research and development		24.7			1.6			16.8			1.5			38.3			2.7
Selling, general and administrative		192.9			12.5			126.3			11.1			166.6			11.7
Amortization of intangible assets and capitalized software		144.5			9.4			153.1			13.5			148.8			10.5
Impairment of goodwill and intangible assets		—			—			19.9			1.8			13.2			0.9
Restructuring		(0.1	)		(0.0	)		18.1			1.6			24.1			1.7

Total operating costs and expenses		1,310.0			85.1			1,076.2			94.8			1,342.6			94.4
Profit from operations		230.1			14.9			58.8			5.2			80.0			5.6
Interest expense		(106.4	)		(6.9	)		(150.6	)		(13.3	)		(197.8	)		(13.9	)
Interest income		0.9			0.1			0.6			0.1			1.5			0.1
Currency translation gain and other, net		45.2			2.9			107.7			9.5			55.5			3.9

Income/(loss) from continuing operations before income taxes		169.7			11.0			16.5			1.4			(60.9	)		(4.3	)
Provision for income taxes		38.3			2.5			43.0			3.8			53.5			3.8

Income/(loss) from continuing operations		131.4			8.5			(26.6	)		(2.3	)		(114.4	)		(8.0	)
Loss from discontinued operations, net of tax of $0		—			—			(0.4	)		(0.0	)		(20.1	)		(1.4	)

Net income/(loss)	$	131.4			8.5	%	$	(27.0	)		(2.4	)%	$	(134.5	)		(9.5	)%

Year Ended December 31, 2010 (“fiscal year 2010”) Compared to the Year Ended December 31, 2009 (“fiscal year 2009”)

Net revenue

Net revenue for fiscal year ~~2009~~2010 ~~decreased~~increased $~~287~~405.71 million, or 2035.27%, to $1,~~134~~540.91 million from $1,~~422~~134.79 million for fiscal year ~~2008~~2009. Net revenue ~~decreased~~increased 1836.59% due to higher volumes, partially offset by a ~~reduction~~decrease inof ~~volume,~~0.9% 1due to pricing and 0.13% due to unfavorable foreign ~~currency~~ exchange rates, primarily the U.S. dollar to Euro exchange rate,. ~~and~~The ~~0.6%~~increase in volumes was due to ~~pricing.~~growth ~~Sales~~in our ~~during~~mature ~~fiscal~~markets ~~year~~of ~~2009~~16.0%, ~~benefited~~growth ~~from~~in ~~government incentive~~content ~~programs~~of 10.1%, ~~such~~growth asin ~~the~~our ~~“Car~~emerging ~~Allowance~~markets ~~Rebate~~(primarily ~~System”~~China) inof ~~the U~~6.S.9% and ~~the~~inventory ~~“New~~replenishment ~~Countryside~~of ~~Initiative”~~4.4%, inpartially ~~China~~offset by a 0.5% reduction due to other miscellaneous factors.

~~Sensors~~46 business segment net revenue for fiscal year 2009 decreased $182.3 million, or 21.0%, to $685.1 million from $867.4 million for fiscal year 2008. Sensors net revenue decreased 18.2% due to lower volumes, 1.3% due to unfavorable foreign exchange rates, primarily the U.S. dollar to Euro exchange rate, and 1.5% due to pricing. The decrease in volumes was due to the deterioration in the global economy and the automotive end-market which began during the second half of fiscal year 2008 and continued during fiscal year 2009.

~~Controls~~Sensors business segment net revenue for fiscal year ~~2009~~2010 ~~decreased~~increased $~~105~~284.45 million, or 1941.05%, to $~~449~~969.9 6 million from $~~555~~685.3 1 million for fiscal year ~~2008~~2009. ~~Controls~~Sensors net revenue ~~decreased~~increased 1943.18% due to ~~lower~~higher volumes ~~and 0.7% due to unfavorable foreign exchange rates~~, ~~primarily the U.S. dollar to Euro exchange rate,~~ partially offset by ~~an increase~~decreases of 01.86% due to ~~higher~~ pricing. ~~The~~and ~~decrease~~0.7% ~~in volumes was also~~ due to the ~~deterioration~~effect inof ~~the~~unfavorable ~~global~~foreign ~~economy and certain end-markets~~exchange rates, ~~such~~primarily ~~as HVAC, lighting and appliances, which began during~~ the ~~second~~U.S. ~~half~~dollar ofto ~~fiscal~~Euro ~~year~~exchange ~~2008 and continued during fiscal year 2009~~rate.

Controls business segment net revenue for fiscal year 2010 increased $120.6 million, or 26.8%, to $570.5 million from $449.9 million for fiscal year 2009. Controls net revenue increased 26.4% due to higher volumes, 0.3% due to pricing and 0.1% due to favorable foreign exchange rates.

Cost of revenue

Cost of revenue for fiscal ~~years~~year ~~2009~~2010 ~~and 2008~~ was $~~742~~948.1 million, ~~and~~or 61.6% of revenue, compared to $~~951~~742.81 million, ~~respectively~~or 65.4% of revenue, for fiscal year 2009. Cost of revenue ~~decreased~~increased primarily due to ~~lower~~the increase in unit volumes sold. Cost of revenue ~~and~~decreased as a percentage of net revenue primarily due to cost savings initiatives resulting from the various restructuring activities implemented during the second half of fiscal year 2008 and ~~continuing into~~ fiscal year 2009, and the leverage effect of higher volumes on certain fixed manufacturing costs. Depreciation expense for fiscal years ~~2009~~2010 and ~~2008~~2009 was $4838.46 million and $5148.4 million, respectively, of which $4434.78 million and $4744.7 million, ~~was~~respectively, was included in cost of revenue. Cost of revenue as a percentage of net revenue for fiscal years 2009 and 2008 was 65.4% and 66.9%, respectively. Cost of revenue as a percentage of net revenue decreased due primarily to the cost saving initiatives described above.

Research and development expense

~~Research and development, or “~~R&D,” expense ~~for~~increased ~~fiscal~~$7.9 ~~years~~million, ~~2009~~or ~~and 2008 was $16~~46.8 ~~million~~%, ~~and~~to $3824.37 million, ~~respectively~~or 1.6% ~~R&D expense as a percentage~~ of net revenue ~~for~~in fiscal ~~years~~year ~~2009~~2010, ~~and~~from ~~2008~~$16.8 ~~was~~million, or 1.5% ~~and~~of ~~2.7%,~~net ~~respectively.~~revenue ~~The~~in ~~decrease~~fiscal inyear ~~R&D~~2009. ~~expense~~We ~~and~~have ascontinued ato ~~percentage~~increase ofR&D ~~net~~spending ~~revenue~~across ~~was~~various ~~due~~areas to aalign ~~reduction~~our ~~in headcount~~cost ~~and~~structure ~~other~~with ~~spending~~expected ~~resulting~~revenues ~~from~~and ~~various~~to ~~restructuring~~continue ~~and~~developing ~~other~~innovative ~~cost~~solutions ~~reduction~~for ~~activities~~our customers.

Selling, general and administrative expense

SG&A expense for fiscal ~~years~~year ~~2009~~2010 ~~and 2008~~ was $~~126~~192.39 million, ~~and~~or 12.5% of net revenue compared to $~~166~~126.63 million, ~~respectively~~ or 11.1% of net revenue for fiscal year 2009. SG&A ~~expenses~~expense ~~decreased~~increased primarily due to $22.4 ~~the~~million ~~cost~~of ~~savings~~expense ~~resulting~~associated ~~from~~with the ~~restructuring~~termination ~~activities~~of ~~which~~the ~~were~~advisory ~~implemented~~agreement ~~during~~with the ~~second~~Sponsors ~~half~~at oftheir ~~fiscal~~election ~~year~~upon ~~2008~~completion ~~and~~of inour ~~fiscal~~Parent’s ~~year 2009~~IPO, as$18.9 ~~well~~million asof ~~other~~stock ~~cost~~compensation ~~reduction measures~~expense inassociated ~~response~~with tothe ~~global~~performance ~~economic~~vesting ~~conditions.~~of the ~~SG&A~~Tranche ~~expense~~2 asand a3 ~~percentage~~option ofawards, ~~net~~both ~~revenue~~of ~~for~~which ~~fiscal~~occurred ~~years~~in ~~2009~~March ~~and~~2010, ~~2008~~an ~~was~~ $11.1%5 ~~and~~million ~~11.7%,~~increase ~~respectively.~~in ~~SG&A~~incentive ~~expense~~and asstock acompensation, ~~percentage~~and of$3.2 ~~net~~million ~~revenue~~in ~~decreased~~costs ~~primarily~~associated ~~due~~with tothe acquisition of the ~~cost saving~~Automotive ~~measures~~on ~~described~~Board ~~above~~business.

Amortization of intangible assets and capitalized software

Amortization expense associated with ~~definite-lived~~ intangible assets and capitalized software for fiscal ~~years~~year ~~2009~~2010 ~~and 2008~~ was $~~153~~144.~~1 million~~5 ~~and $148.8~~ million, ~~respectively~~or 9.4% ~~The increase in amortization expense reflects the pattern in which the economic benefits~~ of ~~the~~net revenue, ~~intangible~~compared ~~assets~~to ~~are being realized~~$153.1 ~~Amortization~~million, ~~expense~~or as13.5% ~~a percentage~~ of net revenue ~~was 13.5% and 10.5%~~ for fiscal ~~years~~year 2009 ~~and 2008, respectively~~. The ~~increase~~decrease in amortization expense asreflects ~~a percentage of net revenue is due to~~ the ~~increase~~pattern in ~~amortization~~which ~~expense~~the ~~described~~economic ~~above,~~benefits ~~combined~~of ~~with~~ the ~~decrease~~intangible inassets ~~net~~are ~~revenue~~being realized.

Impairment of goodwill and intangible assets

During ~~the three months ended March 31~~2010, ~~2009,~~no weimpairment ~~performed~~charges awere ~~review~~required ofrelated to goodwill and other intangible assets ~~for potential impairment~~. AsIn athe ~~result~~fourth quarter of ~~this analysis~~2010, we ~~determined~~estimated that ~~goodwill~~the ~~and definite-lived~~fair ~~intangible~~value ~~assets~~of ~~associated~~the ~~with~~Sensors, ~~our~~Electrical ~~Interconnection~~Protection, Power ~~reporting~~Protection ~~unit were impaired~~ and ~~recorded~~Interconnection areporting ~~charge~~units (as of ~~$19.9~~October ~~million~~1, of2010) ~~which~~exceeded ~~$5.3~~their ~~million~~carrying ~~related~~values toby ~~goodwill~~approximately ~~and~~215%, ~~$14.6~~180%, ~~million~~60% ~~related~~and to190%, ~~definite-lived intangible assets~~respectively. We ~~attribute~~ ~~the~~did ~~impairment~~not ~~charge~~update to the ~~deterioration~~goodwill inimpairment ~~the~~analysis ~~global~~through ~~economy~~December 31, ~~including~~2010 as ~~capital~~we ~~spending~~believe inthat ~~the~~our ~~semiconductor~~financial ~~market~~performance, ~~which~~future ~~occurred~~projections, ~~during~~and the ~~three~~global ~~months~~economy ~~ended~~provide ~~March 31,~~sufficient ~~2009.~~evidence Wethat ~~utilized~~there awere ~~discounted~~no ~~cash~~indicators ~~flow~~of ~~analysis~~impairment ~~to estimate~~between the ~~fair~~time ~~value~~our ofannual ~~the~~test ~~Interconnection~~was ~~reporting~~performed ~~unit.~~and ~~Key~~December ~~assumptions~~31, ~~that~~2010. ~~were~~

5047

~~used~~During in2009, ~~the~~we ~~development~~recorded ofa ~~the~~$19.9 ~~fair~~million ~~value~~impairment ofcharge ~~the~~related ~~Interconnection~~to ~~reporting~~goodwill ~~unit~~and intangible ~~are~~assets ~~described~~associated inwith ~~“Critical~~our ~~Accounting~~Interconnection ~~Policies~~reporting ~~and~~unit. ~~Estimates—Impairment~~See ofNote 5, “Goodwill and Other Intangible Assets.,” ~~Our~~ ~~revenue~~in ~~and~~our ~~earnings~~audited ~~forecasts~~consolidated ~~for~~financial ~~this~~statements ~~business~~included ~~depend~~elsewhere onin ~~many~~this ~~factors,~~Annual ~~including~~Report ~~our~~on ~~ability~~Form to10-K ~~project~~for ~~customer~~more detailed ~~spending,~~discussion ~~particularly~~of ~~within~~this ~~the semiconductor industry~~impairment. ~~Changes~~ inSee the ~~level~~“Critical ofAccounting ~~spending~~Policies inand ~~the~~Estimates” ~~industry and/or~~section byof ~~our~~this ~~customers~~Management’s ~~could~~Discussion ~~result~~and inAnalysis afor ~~change~~more todiscussion ~~our~~of ~~forecasts,~~the ~~which,~~key inassumptions ~~turn,~~that ~~could~~are ~~result~~used in athe ~~future~~determination ~~impairment~~ of ~~goodwill~~fair value ~~and/or~~of ~~intangible~~our ~~assets~~reporting units.

As of October 1, 2009, we evaluated our goodwill and indefinite-lived intangible assets for impairment at the reporting unit level and determined that the fair value exceeded the carrying value on that date. The estimated fair values of the Sensors, Electrical Protection, Power Protection and Interconnection reporting units used in these analyses exceeded their carrying values by 147.1%, 116.3%, 26.1% and 81.3%, respectively. Should certain assumptions used in the development of the fair value of its reporting units change, we may be required to recognize additional goodwill or intangible assets impairments.

Restructuring

Restructuring charges ~~related~~decreased toby ~~all~~$18.2 ofmillion ~~our restructuring~~to ~~programs~~$(0.1) ~~for~~million in fiscal ~~years~~year ~~2009~~2010 ~~and~~from ~~2008 were~~ $18.1 million ~~and~~in ~~$24.1~~fiscal ~~million,~~year ~~respectively~~2009. Beginning in the second half of fiscal year 2008 and continuing into fiscal year 2009, we implemented several restructuring activities in order to reduce costs given the decline in our net revenue;, ~~these restructuring~~ activities which are referred to as the “2008 Plan.”. These ~~restructuring~~ activities consisted of reducing the workforce in our business centers and manufacturing facilities throughout the world and moving certain manufacturing operations to low-cost countries. Restructuring charges associated with the 2008 Plan totaled of $18.3 million for fiscal year 2009 and ~~consists~~consisted of $12.9 million related to severance, $4.8 million related to pension settlement, curtailment and other related charges, and $0.6 million related to other exit costs. ~~The total cost of the restructuring activities related to the 2008 Plan is expected to be $41.6 million, of~~ which $41.3 million has been incurred to date through fiscal year 2009. In addition, in fiscal year 2009, we recognized a credit of $0.2 million in our consolidated statement of operations associated with certain facility exit costs related to the First Technology Automotive Plan.

The decrease in charges in 2010 is primarily due to the fact that the 2008 Plan activity was substantially completed in 2009. However, in 2010 we recorded approximately $1.1 million in charges that represented the termination of a limited number of employees located in various business centers and facilities throughout the world, but which we did not consider to be the initiation of a larger restructuring program. These charges were offset by a reversal of prior restructuring accruals related to the assignment of the Farnborough lease at better-than-expected rates and to the expiration of underutilized termination benefits (tuition assistance, job placement services, etc.).

Interest expense

Interest expense was $106.4 million for fiscal ~~years~~year ~~2009~~2010 ~~and~~compared ~~2008~~to ~~was~~ $150.6 million ~~and~~for ~~$197.8~~fiscal ~~million,~~year ~~respectively~~2009. Interest expense ~~for~~decreased primarily ~~fiscal~~due ~~year~~to ~~2009 consists~~a ~~primarily~~reduction of ~~interest~~principal ~~expense~~balances ofrelated ~~$120.8~~to ~~million~~the onrepurchase ~~our~~of ~~outstanding~~the ~~debt,~~8% ~~amortization~~Senior ofNotes ~~deferred~~due ~~financing~~2014 ~~costs~~(“Senior ofNotes”) $the 9.1% ~~million,~~Senior ~~$14.6~~Subordinated ~~million~~Notes ofdue ~~interest~~2016 ~~associated~~and ~~with~~the ~~our~~11.25% ~~outstanding~~Senior ~~derivative~~Subordinated ~~instruments,~~Notes ~~$1.6~~(together ~~million~~the of“Senior Subordinated ~~interest~~Notes”) ~~on line~~in ofApril ~~credit~~2009, March 2010 and ~~revolving~~May ~~credit~~2010, ~~facility~~as ~~fees~~well ~~and~~as ~~$3.7~~lower ~~million~~average of interest ~~associated~~rates ~~with~~on ~~our~~the ~~capital~~U.S. ~~lease~~dollar and ~~other~~Euro ~~financing~~term ~~obligations~~loan facilities.

Interest expense for fiscal year ~~2008~~2010 ~~consists~~consisted primarily of ~~interest expense of~~ $~~177~~80.15 million on our outstanding debt, ~~amortization of deferred financing costs of~~ $1011.76 million, ~~$4.9 million of interest~~ associated with our outstanding derivative instruments, $18.36 million ofin ~~interest~~amortization ~~on line~~ of deferred ~~credit~~financing ~~and~~costs, ~~revolving credit facility fees and~~ $3.36 million ~~of interest~~ associated with ~~our~~ capital lease and other financing obligations and $1. 0 million on line of credit and revolving credit facility fees.

Interest expense for fiscal year 2009 consisted primarily of $120.8 million on our outstanding debt, $14.6 million associated with our outstanding derivative instruments, $9.1 million in amortization of deferred financing costs, $3.7 million of interest associated with capital lease and other financing obligations and $1.6 million on line of credit and revolving credit facility fees.

Interest income

Interest income for fiscal years ~~2009~~2010 and ~~2008~~2009 was $0.69 million and $10.56 million, respectively.

Currency translation gain~~/(loss)~~ and other, net

Currency translation gain~~/(loss)~~ and other, net was $45.2 million for fiscal ~~years~~year ~~2009~~2010 ~~and~~compared ~~2008~~to ~~was~~ $107.7 million ~~and~~for ~~$55.5~~fiscal ~~million,~~year ~~respectively~~2009. Currency translation gain~~/(loss)~~ and other, net for fiscal year ~~2009~~2010 ~~consists~~consisted primarily of currency gains of $~~120~~72.18 million resulting from the re-measurement ~~extinguishment~~ of our foreign currency denominated debt, and net gains of $29.61 million associated with our commodity forward contracts, ~~and~~partially ~~net~~offset ~~currency~~by ~~gains~~losses of $023.5 million ~~resulting from the re-measurement of net monetary assets~~

5148

~~denominated~~resulting infrom ~~foreign~~the ~~currencies.~~extinguishment ~~Currency~~of ~~translation gain/(loss) and other~~debt, net ~~for fiscal year 2009 also includes~~ currency losses of $~~(13~~7.6)3 million resulting from the re-measurement of ~~our foreign~~net ~~currency~~monetary assets denominated ~~debt~~in ~~and~~foreign ancurrencies ~~impairment~~and ~~loss~~losses of $(15.9) 2 million ~~associated~~related ~~with~~to ~~our~~the ~~manufacturing~~write-off ~~facilities~~of ~~classified~~tax asrelated ~~held~~indemnification ~~for~~assets ~~sale~~and other tax related items.

Currency translation gain~~/(loss)~~ and other, net for fiscal year ~~2008~~2009 ~~consists~~consisted primarily of ~~currency~~ gains of $53120.21 million resulting from the ~~re-measurement~~extinguishment of ~~our~~debt, ~~foreign~~net ~~currency~~gains ~~denominated~~of ~~debt~~$2.6 million associated with our commodity forward contracts and net currency gains of $~~15.~~0.3 million resulting from the ~~extinguishment~~re-measurement of ~~debt,~~net ~~offset~~monetary byassets ~~losses~~denominated ofin ~~$(8~~foreign currencies.3) ~~million~~Currency ~~associated~~translation ~~with~~gain ~~our~~and ~~commodity~~other, ~~forward~~net ~~contracts~~for ~~and~~fiscal ~~net~~year 2009 also included currency losses of $(513.0)6 million resulting from the re-measurement of ~~net~~our ~~monetary~~foreign ~~assets~~currency denominated indebt ~~foreign~~and ~~currencies~~an impairment loss of $1.7 million associated with our manufacturing facilities classified as held for sale.

Provision for income taxes

Provision for income taxes for fiscal years ~~2009~~2010 and ~~2008~~2009 totaled $4338.03 million and $5343.50 million, respectively. Our ~~tax provision consists of~~ current tax ~~expense~~provision ~~which~~ relates primarily to our profitable operations in foreign tax jurisdictions and withholding taxes on interest and royalty income. Our deferred tax expense ~~which~~ relates primarily to amortization of tax deductible goodwill., ~~Several~~withholding ~~factors~~taxes ~~contributed~~on subsidiary earnings and other temporary book to tax differences. Additionally, during the ~~decrease~~fourth inquarter of 2010, based upon an analysis of our cumulative ~~income~~history ~~tax~~of ~~provision~~Japan ~~for~~earnings ~~fiscal~~over ~~year~~a ~~2009~~twelve-quarter asperiod ~~compared~~and toan ~~fiscal~~assessment ~~year~~of ~~2008~~our ~~including~~expected ~~the~~future ~~composition~~results of ~~income~~operations, ~~and~~we ~~loss~~determined ~~among~~that ~~jurisdictions,~~it ~~year~~had become more-tolikely-~~date~~than-not ~~earnings~~that ~~and~~we awould be able to realize our Japan net operating loss carry-forward tax ~~benefit~~assets ~~related~~prior to ~~the~~their ~~goodwill~~expiration. ~~impairment~~As ~~recorded~~a result, during the ~~three~~fourth ~~months ended~~quarter ~~March 31~~of 2010, ~~2009~~we released the valuation allowance related to our Japan deferred tax assets resulting in a net benefit in our deferred tax expense of approximately $18.5 million.

~~Loss~~Year ~~from~~Ended ~~discontinued~~December 31, ~~operations~~2009 (“fiscal year 2009”) Compared to the Year Ended December 31, 2008 (“fiscal year 2008”)

Loss from discontinued operations for fiscal years 2009 and 2008 totaled $0.4 million and $20.1 million, respectively.

Year Ended December 31, 2008 (“fiscal year 2008”) Compared to the Year Ended December 31, 2007 (“fiscal year 2007”)

Net revenue

Net revenue for fiscal year ~~2008~~2009 ~~increased~~decreased $19287.47 million, or 120.42%, to $1,~~422~~134.7 9 million from $1,~~403~~422.37 million for fiscal year ~~2007~~2008. Net revenue ~~increased~~decreased 618.5% due to ~~the~~a ~~acquisition~~reduction ofin ~~Airpax~~volume, ~~and~~ 1.71% due to unfavorable ~~the favorable~~ foreign currency exchange rates, primarily the U.S. dollar to Euro exchange rate., ~~The~~and ~~increase in net revenue was partially offset by a 4~~0.56% ~~reduction~~ due to ~~volume, primarily in the controls business,~~ pricing ~~declines of 1~~.~~3% that~~ ~~are~~Sales ~~customary~~during infiscal ~~our~~year ~~industry~~2009 ~~and~~benefited afrom ~~1.0%~~government ~~reduction~~incentive inprograms, ~~net~~such ~~revenue associated with a settlement with a customer~~ as ~~described~~the ~~below.~~“Car ~~Net~~Allowance ~~revenue~~Rebate ~~excluding~~System” in the ~~effect~~U.S. ofand the ~~Airpax~~“New ~~acquisition~~Countryside ~~would~~Initiative” ~~have~~in ~~decreased $72~~China.0 ~~million, or 5.1%.~~

Sensors business segment net revenue for fiscal year ~~2008~~ 2009 decreased $15182.13 million, or 121.70%, to $~~867~~685.4 1 million from $~~882~~867.54 million for fiscal year ~~2007~~2008. ~~Net~~Sensors net revenue decreased ~~due to a 2~~18.~~1% reduction in pricing, a 1.6% reduction due to a charge associated with a settlement with a customer and 1.~~2% due to lower volumes., ~~The decline in net revenue was partially offset by an increase of 2.~~1.3% due to ~~favorable~~unfavorable foreign ~~currency~~ exchange rates, primarily the U.S. dollar to Euro exchange rate, and 1.15% due to ~~the acquisition of Airpax~~pricing. The ~~volume~~decrease ~~declined~~ in ~~the~~volumes ~~Americas~~was ~~primarily~~ due to ~~weakness~~the deterioration in the ~~U.S. automotive~~global ~~end-market~~economy and the ~~economy~~automotive ~~overall. In the fourth quarter of 2008~~end-market, ~~the~~which ~~declining economies in Europe and Asia also~~ began to have an impact. The reduction in pricing is primarily due to incentives inherent in long-term customer agreements. A significant automotive customer alleged defects in certain of our pressure sensor products used in its product which is installed in automobiles. The customer claimed to have incurred costs to recall and repair certain of the systems in these automobiles. We contested its allegations believing the issue was caused by the customer’s failure to apply our product in accordance with product specifications. In 2008, however, we decided to settle this claim in an effort to ensure a continuing positive relationship with this customer. As a result, we recognized a charge to earnings during ~~2008 in~~ the ~~amount~~second ofhalf ~~€9.5 million. The settlement has not had a significant effect on the sales~~ of ~~any~~fiscal ofyear ~~our~~2008 ~~products. In addition, we believe that we still have a good relationship with this customer~~ and ~~continue~~continued toduring ~~conduct~~fiscal ~~business~~year ~~with them~~2009.

52Controls business segment net revenue for fiscal year 2009 decreased $105.4 million, or 19.0%, to $449.9 million from $555.3 million for fiscal year 2008. Controls net revenue decreased 19.1% due to lower volumes and 0.7% due to unfavorable foreign exchange rates, primarily the U.S. dollar to Euro exchange rate, partially offset by an increase of 0.8% due to higher pricing. The decrease in volumes was also due to the deterioration in the global economy and certain end-markets, such as heating, ventilation and air-conditioning, lighting and appliances, which began during the second half of fiscal year 2008 and continued during fiscal year 2009.

Controls business segment net revenue for fiscal year 2008 increased $34.5 million, or 6.6%, to $555.3 million from $520.8 million for fiscal year 2007. Controls net revenue increased 15.8% due to the acquisition of Airpax, 1.0% due to favorable foreign currency exchange rates, primarily the U.S. dollar to Euro exchange rate, and 0.1% due to an increase in pricing. The increase in net revenue was partially offset by a 10.3% decline in volume. The decline in unit volume was due to overall softness in certain of the controls business segment’s end-markets.

Cost of revenue

Cost of revenue for fiscal years ~~2008~~2009 and ~~2007~~2008 was $~~951~~742.81 million and $~~944~~951.8 million, respectively. Cost of revenue ~~increased due primarily to the acquisition of Airpax. Excluding the impact of the Airpax acquisition, cost of revenue~~ decreased primarily due to lower ~~volumes~~revenue and ~~several~~ cost savings ~~measures~~initiatives ~~announced~~resulting tofrom ~~offset~~ the various ~~impact~~restructuring ofactivities ~~lower~~implemented ~~sales.~~during ~~Cost~~the ofsecond ~~revenue~~half ~~for~~of fiscal year ~~2007~~2008 ~~increased~~and ~~approximately~~continuing ~~$4.5~~into ~~million~~fiscal ~~due~~year to2009. ~~the~~Depreciation ~~sale of~~expense ~~inventory~~for ~~acquired~~fiscal inyears ~~connection~~2009 ~~with~~and ~~the~~2008 ~~First~~was ~~Technology~~$48.4 ~~Automotive~~million and ~~Airpax business acquisitions~~$51.4 ~~Upon the acquisition of these businesses~~million, ~~we recorded the acquired assets~~respectively, ~~including~~of ~~inventory,~~which ~~at fair value in accordance with ASC 805~~$44. ~~This~~7 ~~resulted~~million inand a$47.7 ~~higher~~million, ~~carrying~~respectively, ~~value~~was ~~for~~included ~~this inventory and a corresponding increase~~ in cost of revenue ~~when it was subsequently sold~~. ~~There~~Cost ~~was~~of norevenue ~~similar~~as ~~charge~~a ~~recognized~~percentage ~~during~~of ~~fiscal~~net ~~year~~revenue ~~2008. Depreciation expense~~ for fiscal years ~~2008~~2009 and ~~2007 totaled~~2008 ~~$51~~was 65.4% ~~million~~ and ~~$58~~66.~~2 million~~9%, respectively. ~~For~~Cost ~~fiscal~~of ~~years~~revenue ~~2008~~as ~~and~~a ~~2007,~~percentage ~~$47.7 million and $55.7 million, respectively,~~ of ~~total~~net ~~depreciation~~revenue ~~expense~~decreased ~~incurred~~due primarily ~~was~~to ~~included~~the in cost ofsaving ~~revenue~~initiatives described above.

~~Cost~~49 of revenue as a percentage of net revenue for fiscal years 2008 and 2007 was 66.9% and 67.3%, respectively. As a percentage of net revenue, cost of revenue decreased due to the absence of any charges associated with acquired inventory as described above and the cost savings measures noted above.

Research and development expense

R&D expense for fiscal years ~~2008~~ 2009 and ~~2007~~2008 ~~totaled~~was $3816.38 million and $3338.93 million, respectively. R&D expense as a percentage of net revenue for fiscal years ~~2008~~2009 and ~~2007~~2008 was 21.75% and 2.47%, respectively. ~~R&D~~The ~~expense~~decrease ~~and~~in R&D expense and as a percentage of net revenue ~~increased~~ ~~primarily~~was due to ~~our~~a ~~continued~~reduction ~~focus~~in onheadcount ~~development~~and ~~activities~~other tospending ~~accelerate~~resulting ~~long-term~~from ~~revenue~~various ~~growth~~restructuring and other cost reduction activities.

Selling, general and administrative expense

SG&A expense for fiscal years ~~2008~~2009 and ~~2007~~2008 ~~totaled~~ was $~~166~~126.6 3 million and $166.16 million, respectively. SG&A expenses decreased primarily due to the cost savings resulting from the restructuring activities that were implemented during the second half of fiscal year 2008 and in fiscal year 2009, as well as other cost reduction measures in response to global economic conditions. SG&A expense as a percentage of net revenue for fiscal years ~~2008~~2009 and ~~2007~~2008 was 11.71% and 11.87%, respectively. SG&A expense as a percentage of net revenue decreased primarily due to the cost saving measures described above.

Amortization of intangible assets and capitalized software

Amortization expense associated with ~~definite-lived~~ intangible assets and capitalized software for fiscal years ~~2008~~2009 and ~~2007~~2008 was $~~148~~153.81 million and $~~131~~148.18 million, respectively. The increase in amortization expense reflects isthe ~~primarily~~pattern ~~due~~in towhich the ~~inclusion~~ ofeconomic abenefits ~~full year~~ of ~~amortization expense related to Airpax in fiscal year 2008. The Company completed~~ the ~~acquisition~~intangible ofassets ~~Airpax~~are inbeing ~~July 2007~~realized. Amortization expense as a percentage of net revenue was 1013.5% and 910.35% for fiscal years ~~2008~~2009 and ~~2007~~ 2008, respectively. The increase in amortization expense as a percentage of net revenue iswas ~~primarily~~ due to the increase in amortization expense described above, combined with the decrease in net revenue.

Impairment of goodwill and intangible assets

InImpairment ~~2008, in connection with our annual impairment review~~ of goodwill, and weintangible ~~determined~~assets ~~that~~for afiscal ~~portion~~years of2009 ~~our~~and ~~goodwill~~2008 ~~associated with the Interconnection reporting unit~~ was ~~impaired~~$19.9 Asmillion aand ~~result, we recorded a goodwill impairment charge of~~ $13.2 million~~. We believe that the current global economic crisis~~, ~~economic~~respectively. ~~conditions~~These ~~within~~charges ~~the~~relate ~~semiconductor end-market and an increase in the competitive landscape surrounding suppliers~~ to the ~~semiconductor~~Interconnection ~~end-market~~reporting ~~were~~unit ~~all~~as ~~factors~~discussed ~~that~~in ~~led~~more todetail ~~the~~in ~~impairment~~Note of5, ~~goodwill.~~“Goodwill Weand ~~utilized~~Other aIntangible ~~discounted~~Assets,” ~~cash~~in ~~flow~~our ~~analysis~~audited toconsolidated ~~estimate~~financial ~~the~~statements ~~fair~~included ~~value~~elsewhere ofin ~~the~~this ~~Interconnection~~Annual ~~reporting~~Report ~~unit.~~on ~~Given~~Form ~~the~~10-K. ~~volatility in the~~

53We attribute these impairment charges to the global economic crisis, economic conditions within the semiconductor end-market and an increase in the competitive landscape surrounding suppliers to the semiconductor end-market. See the “Critical Accounting Policies and Estimates” section of this Management’s Discussion and Analysis for more discussion of the key assumptions that are used in the determination of fair value of our reporting units.

~~Table~~In the fourth quarter of ~~Contents~~2009, we estimated that the fair values of the Sensors, Electrical Protection, Power Protection and Interconnection reporting units (as of October 1, 2009) exceeded their carrying values by approximately 145%, 115%, 25% and 80%, respectively.

end-markets in which we serve and our financial results during the fourth quarter of fiscal year 2008, we updated our goodwill impairment analysis to reflect information and projections available to us as of December 31, 2008. No additional goodwill impairment charges were necessary. However, if certain assumptions, such as projections regarding the end-markets in which we serve, our financial projections, customer bankruptcies or any other factors discussed in “Critical Accounting Policies and Estimates—Impairment of Goodwill and Intangible Assets” were to change, we may be required to recognize charges in connection with goodwill and/or indefinite-lived intangible assets of some or all of our reporting units.

Restructuring

Restructuring charges ~~during~~for fiscal years ~~2008~~2009 and ~~2007~~2008 ~~totaled~~were $2418.1 million and $524.2 1 million, respectively. ~~During~~Beginning ~~fiscal~~in ~~year 2008, we announced plans to reduce~~ the ~~workforce~~second inhalf ~~several~~ of fiscal ~~our~~year ~~business~~2008 ~~centers~~ and ~~manufacturing~~continuing ~~facilities;~~into ~~these~~fiscal ~~restructuring~~year ~~activities~~2009, ~~are~~we ~~referred~~implemented ~~to as~~ the “2008 Plan.”, Aswhich aconsisted ~~result~~ of ~~these~~reducing ~~actions,~~the weworkforce ~~recognized~~in ~~charges~~our ~~totaling $23.0~~business ~~million,~~centers ofand ~~which~~manufacturing ~~$16.2~~facilities ~~million~~throughout ~~relates~~the toworld ~~severance,~~and ~~$1.3~~moving ~~million~~certain ~~relates~~manufacturing tooperations ~~a pension enhancement provided~~ to low-cost ~~certain~~countries. ~~eligible~~Restructuring ~~employees~~charges ~~under~~associated awith ~~voluntary~~the ~~retirement~~2008 ~~program,~~Plan totaled $318.63 million ~~relates~~for tofiscal ~~pension~~year ~~curtailment~~2009 and ~~settlement~~consisted ~~charges and~~of $112.9 million ~~relates~~related to ~~other~~severance, ~~exit costs~~$4.8 Wemillion ~~expect the cost of the restructuring activities~~ related to ~~the~~pension ~~2008 Plan~~settlement, ~~when~~curtailment ~~complete,~~and toother ~~total~~related charges, ~~approximately~~and $410.6 million, ~~when~~related ~~combined~~to ~~with~~other ~~actions~~exit ~~taken in fiscal year 2009~~costs. In addition, in fiscal year ~~2008~~2009, we ~~incurred~~recognized a ~~charge~~credit of $10.12 million in our consolidated statement of operations associated with certain facility exit costs related to the First Technology Automotive Plan.

~~During~~50 fiscal year 2007, we implemented voluntary early retirement programs in certain of our foreign operations. These programs offered eligible employees special termination benefits in exchange for their early retirement from the Company. As a result of these programs, 64 employees chose to leave the Company, opting for voluntary early retirement during fiscal year 2007.

Interest expense

Interest expense for fiscal years ~~2008~~2009 and ~~2007~~2008 ~~totaled~~was $~~197~~150.86 million and $~~191~~197.28 million, respectively. Interest expense for fiscal year ~~2008~~2009 ~~consists~~consisted primarily of ~~interest~~$120.8 ~~expense~~million of ~~$177.1~~interest ~~million~~expense on ~~our~~ our outstanding debt, ~~amortization of deferred financing costs of~~ $1014.76 million, ~~$4.9 million~~ of interest associated with our outstanding derivative instruments, $19.31 million of ~~interest~~amortization ~~on line~~ of ~~credit~~deferred ~~and~~financing ~~revolving~~costs, ~~credit facility fees and~~ $3.37 million of interest associated with our capital lease and other financing obligations and $1.6 ~~Interest~~million ~~expense for fiscal year 2007 consists primarily~~ of interest ~~expense of $175.1 million~~ on ~~the~~line ~~outstanding debt, amortization~~ of ~~deferred~~credit ~~financing costs of $9.6 million~~ and ~~interest~~revolving ~~associated~~credit ~~with~~facility ~~our capital lease obligation of $2~~fees.8 ~~million.~~

Interest expense for fiscal year 2008 consisted primarily of $177.1 million of interest expense on our outstanding debt, $10.7 million of amortization of deferred financing costs, $4.9 million of interest associated with our outstanding derivative instruments, $3.3 million of interest associated with our capital lease and other financing obligations, and $1.3 million of interest on line of credit and revolving credit facility fees.

Interest income

Interest income for fiscal years ~~2008~~2009 and ~~2007~~2008 ~~totaled~~ was $10.56 million and $21.6 5 million, respectively.

Currency translation gain~~/(loss)~~ and other, net

Currency translation gain~~/(loss)~~ and other, net for fiscal years ~~2008~~2009 and ~~2007~~2008 ~~totaled~~was $55107.57 million and $~~(105~~55.4)5 million, respectively. ~~Currency~~ Currency translation gain~~/(loss)~~ and other, net for fiscal year ~~2008~~2009 ~~consists~~consisted primarily of ~~currency~~ gains of $53120.21 million resulting from the ~~re-measurement~~extinguishment of ~~our~~debt, ~~foreign~~net ~~currency~~gains ~~denominated~~of ~~debt~~$2.6 million associated with our commodity forward contracts and net currency gains of $~~15.~~0 .3 million resulting from the ~~extinguishment~~ re-measurement of ~~debt,~~net ~~offset~~monetary byassets ~~losses~~denominated ofin ~~$(8~~foreign currencies.3) ~~million~~These ~~associated~~gains ~~with~~were ~~our~~partially ~~commodity~~offset ~~forward~~by ~~contracts and net~~ currency losses of $(513.0)6 million resulting from the re-measurement of ~~net~~our ~~monetary~~foreign ~~assets~~currency denominated indebt ~~foreign~~and an ~~currencies~~impairment loss of $1. 7 million associated with our manufacturing facilities classified as held for sale.

Currency translation ~~loss~~gain and other, net for fiscal year ~~2007~~2008 ~~consists~~consisted primarily of ~~the~~ currency ~~losses~~gains of $~~(111~~53.9)2 million resulting from the re-measurement of our foreign currency denominated debt and gains of $15.0 million resulting from the extinguishment of debt, partially offset by losses of $8.3 million associated with our commodity forward contracts and net currency ~~gains~~losses of $65.90 million resulting from the re-measurement of ~~our~~ net monetary assets denominated in foreign currencies.

Provision for income taxes

Provision for income taxes for fiscal years ~~2008~~2009 and ~~2007~~2008 totaled $5343.50 million and $6253.5 million, respectively. Our tax provision consists of current tax expense, which relates primarily to our profitable operations in foreign tax jurisdictions and deferred tax expense, which ~~primarily~~ relates primarily to amortization of tax- deductible goodwill. Several factors contributed to the decrease in our income tax provision for fiscal year 2009 as compared to fiscal year 2008 including the composition of income and loss among jurisdictions and a tax benefit related to the goodwill impairment recorded during the first quarter of 2009.

Loss from discontinued operations

Loss from discontinued operations for fiscal years ~~2008~~2009 and ~~2007~~2008 ~~was~~totaled $200.14 million and $1820.31 million, respectively. Fiscal year 2008 includes a loss from operations of our Vision business of $12.2 million and a loss of $7.9 million associated with measuring the net assets of the business at fair value less cost to sell and other exit costs. The loss from operations of our Vision business incurred during fiscal year 2007 was $18.3 million, which includes a charge associated with acquired in-process research and development expense of $5.7 million. On March 14, 2007, we acquired SMaL Camera for $12.0 million plus fees and expenses. We allocated $5.7 million of the purchase price to acquired in-process research and development projects. There was no acquired in-process research and development expense during fiscal year 2008.

~~Quarterly~~51 ~~Results of Operations~~

The following tables set forth unaudited quarterly consolidated statement of operations data for fiscal years 2009 and 2008. We have prepared the statement of operations for each of these quarters on the same basis as the audited consolidated financial statements included elsewhere in this annual report and, in the opinion of the management, each statement of operations includes all adjustments, consisting solely of normal recurring adjustments, necessary for the fair statement of the results of operations for these periods. This information should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this annual report. These quarterly operating results are not necessarily indicative of our operating results for any future period.

	(Unaudited)
	For the three months ended
	December 31,2009		September 30,2009			June 30,2009		March 31,2009			December 31,2008			September 30,2008		June 30,2008			March 31,2008
(Amounts in thousands)
Statement of Operations Data:
Net revenue	$	338,089	$	302,468		$	255,371	$	239,016		$	267,585		$	361,005	$	406,221		$	387,844
Cost of revenue		220,926		190,908			168,902		161,344			177,418			241,370		263,059			269,916
Research and development		4,104		3,569			3,960		5,163			6,895			10,142		10,417			10,802
Selling, general and administrative		31,439		33,178			30,051		31,614			37,857			36,502		45,054			47,152
Profit/(loss) from operations		43,546		32,224			12,246		(29,264	)		(22,114	)		33,083		45,516			23,527
Net income/(loss)	$	14,146	$	(54,024	)	$	23,074	$	(10,185	)	$	(52,196	)	$	72,535	$	(27,934	)	$	(126,888	)
Other Financial Data:
EBITDA	$	109,585	$	49,234		$	119,271	$	89,492		$	44,511		$	186,995	$	91,893		$	(7,891	)

	(Unaudited)
	For the three months ended
	December 31,2009		September 30,2009		June 30,2009		March 31,2009		December 31,2008		September 30,2008		June 30,2008		March 31,2008
(As a percentage of netrevenue)
Statement of Operations Data:
Net revenue	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue	65.3		63.1		66.1		67.5		66.3		66.9		64.8		69.6
Research and development	1.2		1.2		1.6		2.2		2.6		2.8		2.6		2.8
Selling, general and administrative	9.3		11.0		11.8		13.2		14.1		10.1		11.1		12.2
Profit/(loss) from operations	12.9		10.7		4.8		(12.2	)	(8.3	)	9.2		11.2		6.1
Net income/(loss)	4.2	%	(17.9	)%	9.0	%	(4.3	)%	(19.5	)%	20.1	%	(6.9	)%	(32.7	)%
Other Financial Data:
EBITDA	32.4	%	16.3	%	46.7	%	37.4	%	16.6	%	51.8	%	22.6	%	(2.0	)%

The quarterly revenue trend in 2008 reflects the impact of reduced orders from our customers beginning in the third quarter due to the global economic crisis. This trend of declining revenue continued into the first quarter of 2009. In the second and third quarters of 2009 we believe that we have experienced higher volume due to an increase in orders from our customers as the global economy began to stabilize as well as from government incentive programs such as the “Car Allowance Rebate System” in the United States, the “New Countryside Initiative” in China, and supply chain replenishment.

In addition, cost of revenue as a percentage of net revenue increased from 63.1% during the three months ended September 30, 2009 to 65.3% during the three months ended December 31, 2009 due to the increased cost of freight, labor and commodities, offset by a favorable change in the mix of products sold. Cost of revenue as a percentage of net revenue decreased from 66.1% during the three months ended June 30, 2009 to 63.1% during the three months ended September 30, 2009 due to several factors, including the leverage effect associated with higher sales and fixed manufacturing expenses, a reduction in certain costs associated with moving manufacturing lines between manufacturing sites as part of our integration activities and a favorable change in the mix of products sold.

Net income/(loss) during the three months ended December 31, 2009, September 30, 2009 and June 30, 2009 was $14.1 million, $(54.0) million and $23.1 million, respectively. Net loss during the three months ended December 31, 2009, September 30, 2009 and June 30, 2009 included a net gain/(loss) of $14.9 million, $(35.0) million and $(62.5) million, respectively, associated with the translation of our Euro-denominated debt. Additionally, net loss during the three months ended June 30, 2009 included a net gain of $120.1 million related to the repurchases of outstanding Senior Notes and Senior Subordinated Notes. These items were recorded in Currency translation gain/(loss) and other, net in the consolidated statement of operations.

Reconciliation of Quarterly Non-U.S. GAAP Financial Measures

We define EBITDA as net income/(loss) before interest, taxes, depreciation and amortization. We believe that EBITDA is useful to investors in evaluating our operating performance because it is widely used by investors to measure a company’s operating performance without regard to certain items, such as interest expense, income tax expense and depreciation and amortization.

Our management uses EBITDA:

• as a measure of operating performance;

• for planning purposes, including the preparation of our annual operating budget;

• to allocate resources to enhance the financial performance of our business;

• to evaluate the effectiveness of our business strategies; and

• in communications with our board of directors concerning our financial performance.

We understand that, although EBITDA is used by investors and securities analysts in their evaluation of companies, EBITDA has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under U.S. GAAP.

EBITDA should not be considered as an alternative to net income, profit from operations or any other measure of financial performance calculated and presented in accordance with U.S. GAAP. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate.

The following unaudited table summarizes the calculations of EBITDA and provides a reconciliation to net income/(loss), the most directly comparable financial measure presented in accordance with U.S. GAAP, for the quarterly periods presented:

	(Unaudited)
	For the three months ended
	December 31,2009		September 30,2009			June 30,2009		March 31,2009			December 31,2008			September 30,2008		June 30,2008			March 31,2008
(in thousands)
Net income/(loss)	$	14,146	$	(54,024	)	$	23,074	$	(10,185	)	$	(52,196	)	$	72,535	$	(27,934	)	$	(126,888	)
Provision for income taxes		7,882		16,648			10,876		7,641			1,306			16,613		19,722			15,890
Interest expense, net		35,114		36,472			36,270		42,160			46,224			48,995		50,315			50,803
Depreciation and amortization		52,443		50,138			49,051		49,876			49,177			48,852		49,790			52,304
EBITDA (unaudited)	$	109,585	$	49,234		$	119,271	$	89,492		$	44,511		$	186,995	$	91,893		$	(7,891	)

Liquidity and Capital Resources

Cash Flows

The table below summarizes our primary sources and uses of cash for the years ended December 31, ~~2009~~2010, ~~2008~~2009 and ~~2007~~2008. We have derived ~~the~~these summarized statements of cash flows ~~for the years ended December 31, 2009, 2008 and 2007~~ from the ~~audited~~ audited consolidated financial statements, included elsewhere in this ~~annual~~Annual ~~report~~Report on Form 10-K. Amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not add due to the effect of rounding.

	For the year endedDecember 31,
	For the years ended December 31,
(Amounts in millions)	~~2009~~2010			~~2008~~2009			~~2007~~2008
Net cash provided by/(used in):
Operating activities:
Continuing operations:
Net (loss)/income, adjusted for non-cash items	$	128.9		$	73.0		$	127.0
Net income, adjusted for non-cash items	$	323.1		$	128.9		$	73.0
Changes in operating assets and liabilities		59(22.35	)		~~(10~~59.83	)		41(10.08	)
Continuing operations		~~188~~300.27			62188.32			~~168~~62.13
Discontinued operations		~~(0.4~~—	)		(140.4	)		(1214.84	)
Operating activities		~~187~~300.87			47187.8			~~155~~47.38
Investing activities:
Continuing operations		(1552.45	)		(3815.54	)		(~~343~~38.75	)
Discontinued operations		~~0.4~~—			(0.24	)		(~~12.~~0.2	)
Investing activities		(1552.15	)		(3815.71	)		(~~355~~38.7	)
Financing activities		(~~102~~10.31	)		8(102.63	)		~~175~~8.76
Net change	$	70238.40		$	1770.74		$	~~(24~~17.7	)

Operating activities

Net cash provided by operating activities during fiscal year ~~2009~~2010 totaled $~~187~~300.87 million compared to $47187.8 million during fiscal year ~~2008. Changes in operating assets and liabilities for fiscal years~~ 2009 and ~~2008 totaled~~ $5947.38 million ~~and~~during ~~$(10.8)~~fiscal ~~million,~~year ~~respectively~~2008. ~~The~~Net ~~most~~cash ~~significant~~(used in)/provided ~~components~~by tochanges ~~the change~~ in operating assets and liabilities ~~of $59.3 million~~ for fiscal ~~year 2009~~years ~~was~~2010, an2009 ~~increase in accounts payable~~ and ~~accrued~~2008 ~~expenses~~totaled of $61(22.45) million, ~~and a decrease in inventories of~~ $1359.93 million, ~~offset~~and ~~by an increase in accounts receivable of~~ $35(10.18) million., ~~The increase in accounts payable and accrued expenses was due to our initiative to migrate certain strategic vendors to 60-day payment terms~~respectively. The increase in accounts receivable was due to higher sales in the fourth quarter of 2009 as compared to the fourth quarter of 2008. The decrease in inventory was due to initiatives we implemented to minimize the days of inventory on hand given the rapid decline in net revenue during the fourth quarter of fiscal year 2008.

The most significant ~~component~~components to the change in operating assets and liabilities ~~of $(10.8) million~~ for fiscal year ~~2008~~2010 ~~was~~were ~~the~~increases ~~decrease~~ in accounts ~~payable~~receivables ~~and accrued expenses~~ of $~~108~~17.14 million~~, partially~~ ~~offset~~and ~~by the decrease~~ in ~~accounts~~inventories ~~receivable~~ of $6615.56 million, partially ~~and~~offset ~~the~~by ~~decrease~~increases in ~~inventories~~other liabilities of $2613.71 million. The ~~decrease~~increase in accounts ~~payable~~receivables ~~and accrued expenses~~ was due to ~~interest~~higher ~~pre-payments~~sales onin ~~our~~the ~~U.S.~~fourth ~~and~~quarter ~~Euro~~of ~~term~~2010 ~~loan facilities~~as ~~and~~compared ~~11.25% Senior Subordinated Notes and payments~~ to ~~certain~~the ~~strategic~~fourth ~~vendors~~quarter ~~who~~of ~~agreed to migrate to 60-day payment terms~~2009. The ~~decrease~~increase in ~~accounts~~inventories ~~receivable~~was ~~reflects~~due ~~the~~to ~~decline~~higher materials inand ~~net~~finished ~~revenue~~goods ~~that~~requirements ~~occurred~~as ~~during~~a ~~the~~result ~~fourth quarter~~ of ~~fiscal year 2008, specifically~~ the ~~month~~increased ofsales ~~December~~demand. ~~During~~The ~~December~~increase ~~2008,~~in ~~many~~other ofliabilities ~~our~~was ~~facilities~~primarily ~~and the facilities of our largest customers were closed~~ due to the ~~economic~~write-off ~~environment.~~of ~~The~~tax ~~decrease~~indemnification inassets ~~inventory~~and ~~reflects~~other ~~actions~~tax werelated ~~took~~assets ~~to lower~~and ~~inventories given~~ the ~~decline~~change in ~~net~~fair ~~revenue~~value ~~that occurred during the fourth quarter~~ of ~~fiscal year 2008~~ derivatives.

AsThe ~~of December 31,~~most ~~2009,~~significant wecomponents ~~had commitments~~ to ~~purchase~~the ~~certain~~change ~~raw~~in ~~materials~~operating ~~that~~assets ~~contain~~and ~~various~~liabilities ~~commodities,~~of ~~such~~$59.3 asmillion ~~gold,~~for ~~silver,~~fiscal year ~~copper,~~2009 ~~nickel~~were ~~and~~an ~~aluminum.~~increase Inin ~~general,~~accounts ~~the~~payable ~~price~~and ~~for~~accrued ~~these~~expenses ~~products~~of ~~varies~~$61.4 ~~with~~million ~~the~~and ~~market~~a ~~price~~decrease ~~for~~in ~~the~~inventories ~~related commodity~~of $13.9 ~~In addition~~million, ~~when~~offset weby ~~place~~an ~~orders~~increase ~~for~~in ~~materials,~~accounts wereceivable doof so$35.1 million. The increase in ~~quantities~~accounts ~~that~~payable ~~will~~and ~~satisfy~~accrued ~~our~~expenses was ~~production~~due ~~demand~~to ~~for~~our ~~various~~initiative ~~periods~~to ofmigrate ~~time.~~certain Instrategic ~~general,~~vendors weto ~~place~~60-day ~~these~~payment ~~orders~~terms. ~~for~~The ~~quantities~~increase ~~that~~in ~~will~~accounts ~~satisfy~~receivable ~~our~~was ~~production~~due ~~demand~~to ~~over~~higher ~~a one-,~~sales ~~two-~~in orthe ~~three-month~~fourth ~~period.~~quarter Weof do2009 ~~not~~as ~~have~~compared ato ~~significant~~the ~~number~~fourth quarter of ~~long-term~~2008. ~~supply~~The ~~contracts~~decrease ~~that~~in ~~contain~~inventory was ~~fixed-price~~due ~~commitments.~~to ~~Accordingly,~~initiatives we ~~believe~~implemented ~~that~~to ~~our~~minimize ~~exposure~~the todays aof inventory on hand given the rapid decline in ~~the~~net ~~spot~~revenue ~~prices~~during ~~for~~the ~~those~~fourth ~~commodities~~quarter ~~under~~of ~~contract is~~fiscal ~~not~~year ~~material~~2008.

~~Net~~52 cash provided by operating activities during fiscal year 2008 totaled $47.8 million compared to $155.3 million during fiscal year 2007. Changes in operating assets and liabilities for fiscal years 2008 and 2007 totaled $(10.8) million and $41.0 million, respectively. The most significant component to the change in operating assets and liabilities of $41.0 million for fiscal year 2007 was the increase in accounts payable and accrued expenses of $45.9 million. The increase in accounts payable and accrued expenses was due to the higher level of overall operating costs and expenses and improvement surrounding management of disbursements. The improvement in the areas of disbursements was the result of an initiative to improve overall working capital which was put in place after the 2006 Acquisition.

Investing activities

Net cash used in investing activities during fiscal year 2009 totaled $15.1 million compared to $38.7 million during fiscal year 2008 and $355.7 million during fiscal year 2007. Net cash used in investing activities of $15.1 million and $38.7 million during fiscal years 2009 and 2008, respectively, consisted primarily of capital expenditures partially offset by the sale of assets. Capital expenditures during fiscal years 2009 and 2008 totaled $15.0 million and $41.0 million, respectively. Cash received from the sale of assets during fiscal years 2009 and 2008 totaled $0.6 million and $2.3 million, respectively.

Net cash used in investing activities of $355.7 million during fiscal year 2007 consisted primarily of the acquisitions of Airpax and capital expenditures. During July 2007, we acquired Airpax for total consideration of

The most significant component to the change in operating assets and liabilities of $(10.8) million for fiscal year 2008 was the decrease in accounts payable and accrued expenses of $~~277~~108.51 million, ~~net~~partially offset by the decrease in accounts receivable of ~~cash~~$66.5 ~~received~~million and ~~SMaL~~a ~~Camera~~decrease ~~for~~in ~~total~~inventories ~~consideration~~ of $1226.07 million. ~~Capital~~The ~~expenditures~~decrease ~~during~~in accounts ~~fiscal~~payable ~~year~~and ~~2007~~accrued ~~totaled~~expenses ~~$66~~was due to interest pre-payments on our U.7S. ~~million~~and Euro term loan facilities and ~~included~~11.25% ~~routine~~Senior ~~expenditures~~Subordinated Notes and payments to certain strategic vendors who agreed to migrate to 60-day payment terms. The asdecrease ~~well~~in asaccounts ~~expenditures~~receivable ~~associated~~reflects ~~with~~the decline in net revenue that occurred during the ~~2006~~fourth ~~Acquisition~~quarter ~~and~~of ~~build-out~~fiscal year 2008, specifically the month of aDecember. ~~new~~During ~~building~~December 2008, many of our facilities and ~~real~~the ~~estate~~facilities atof our ~~Malaysian~~largest customers ~~operating~~were ~~subsidiary~~closed ~~(Sensata~~due ~~Technologies~~to ~~Malaysia~~the ~~Sdn~~economic environment. ~~Bhd~~The decrease in inventory reflects actions we took to lower inventories given the decline in net revenue that occurred during the fourth quarter of fiscal year 2008.).

InAs of December 31, 2010, we ~~anticipate~~had ~~spending~~commitments ~~approximately~~to ~~$35~~purchase certain raw materials that contain various commodities, such as gold, silver, copper, nickel and aluminum.0 ~~million~~In togeneral, ~~$45~~the price for these products varies with the market price for the related commodity.0 ~~million~~In onaddition, ~~capital~~when ~~expenditures~~we place orders for materials, we do so in quantities that will satisfy our production demand for various periods of time. ~~Capital~~In ~~expenditures~~general, we place these orders for quantities that will besatisfy ~~funded~~our production demand over a one-, two- or three-month period. We do not have a significant number of long-term supply contracts that contain fixed-price ~~with~~commitments. ~~cash~~Accordingly, ~~flow~~we ~~from~~believe ~~operations~~that our exposure to a decline in the spot prices for those commodities under contract is not material.

Investing activities

Net cash used in investing activities during fiscal year 2010 totaled $52.5 million compared to $15.1 million during fiscal year 2009 and $38.7 million during fiscal year 2008. Net cash used in investing activities during fiscal years 2010, 2009 and 2008 consisted primarily of capital expenditures of $52.9 million, $15.0 million and $41.0 million, respectively, which were partially offset by the sale of assets of $0.4 million, $0.6 million, and $2.3 million, respectively. Also, in 2009 we made a $1.1 million payment related to our Euro call option.

In 2011, we anticipate spending approximately $70 million to $75 million on capital expenditures (including capital expenditures of acquired businesses), which will be funded with cash flow from operations, and approximately $140 million, subject to a working capital adjustment and certain transfer taxes, for the acquisition of the Automotive on Board business, which will be funded by cash on hand.

Our investing cash flows will be impacted in the future by any additional acquisitions we make, whether in 2011 or beyond. At this time, we cannot predict what the impact of these additional cash flows will be.

Financing activities

Net cash (used in)/provided by financing activities during fiscal year ~~2009~~2010 totaled $(~~102~~10.31) million compared to $8(102.63) million during fiscal year ~~2008~~2009 and $~~175~~8.76 million during fiscal year ~~2007~~2008. Net cash used in financing activities during fiscal year ~~2009~~2010 consisted primarily of ~~payments~~$338.3 tomillion ~~purchase~~in ~~outstanding~~payments ~~debt of~~ ($57321.27 million, in ~~addition~~principal) to repurchase outstanding Senior Notes and Senior Subordinated Notes and principal payments totaling $1514.1 7 million on our U.S. dollar ~~term loan~~ and Euro term loan facilities, ~~and~~partially ~~payments~~offset ~~totaling~~by $25346.09 million onof ~~our~~proceeds ~~revolving~~of ~~credit~~issuance ~~facility. The principal amount~~ of ~~the~~ordinary ~~Senior~~shares ~~Notes that were repurchased totaled $110.0 million~~to, and ~~the~~capital ~~principal~~contributions ~~amount of~~from, ~~the~~Sensata ~~Senior~~Intermediate ~~Subordinated Notes that were repurchased totaled €54~~Holding.3 ~~million (or $72.5 million at the date of repurchase).~~

Net cash ~~provided~~used byin financing activities ~~of $8.6 million~~ during fiscal year ~~2008~~2009 consisted primarily of ~~$25.0 million~~payments ofto ~~borrowings~~purchase ~~under~~outstanding ~~the~~debt ~~revolving credit facility and proceeds received from the financing arrangement associated with our facility in Malaysia~~ of $1257.6 2 million, ~~partially~~in ~~offset~~addition byto principal payments totaling $(15.5)1 million on our U.S. dollar term loan and Euro term loan facilities, ~~payments of debt issuance costs of $(5.2) million associated with the refinancing of the Senior Subordinated Term Loan utilized to finance the acquisition of Airpax~~ and payments oftotaling $(625.7)0 million toon ~~repurchase~~our 9%revolving ~~Senior~~credit ~~Subordinated Notes~~facility. The principal amount of the 9% Senior ~~Subordinated~~ Notes that were ~~repurchased~~ repurchased totaled $22110.40 million., ~~During~~and ~~fiscal~~the ~~year~~principal ~~2008,~~amount weof ~~sold,~~the ~~and~~Senior ~~are~~Subordinated ~~now~~Notes ~~leasing~~that ~~back,~~were ~~our~~repurchased ~~facility~~totaled ~~in Malaysia~~€54.3 Wemillion ~~received~~(or ~~proceeds of~~ $1272.65 million ~~from~~at ~~this transaction, which has been accounted for as a financing arrangement, rather than a sale-leaseback, due to~~ the ~~nature~~date of ~~the terms of the lease~~repurchase).

~~Net~~53 cash provided by financing activities of $175.7 million during fiscal year 2007 consisted of the borrowings under the Senior Subordinated Term Loan of $195.0 million associated with the acquisition of Airpax, partially offset by principal payments totaling $(15.0) million on our U.S. term loan and Euro term loan facilities and payments of debt issuance costs of $(3.8) million associated with the refinancing of the Senior Subordinated Term Loan utilized to finance the acquisition of Airpax.

Indebtedness and Liquidity

Our liquidity requirements are significant due to the highly-leveraged nature of our company. As of December 31, 2009, we had $2,300.8 million in outstanding indebtedness, including our outstanding capital lease and other financing obligations.

~~The~~Net ~~following~~cash ~~table~~provided ~~outlines~~by ~~our~~financing ~~outstanding~~activities ~~indebtedness~~of as$8.9 million during fiscal year 2008 consisted primarily of ~~December~~$25.0 ~~31,~~million ~~2009~~of borrowings under the revolving credit facility and proceeds received from the financing arrangement associated ~~interest~~with ~~expense~~our facility in Malaysia of $12.6 million, partially offset by principal payments totaling $15.5 million on our U.S. dollar term loan and ~~interest~~Euro ~~rate~~term ~~for~~loan ~~such~~facilities, ~~borrowings~~payments ~~for~~of debt issuance costs of $5.2 million associated with the refinancing of the senior subordinated term loan utilized to finance the acquisition of Airpax and payments of $6.7 million to repurchase 9% Senior Subordinated Notes. The principal amount of the 9% Senior Subordinated Notes that were repurchased totaled $22.4 million. During fiscal year ~~2009~~2008, we sold, and are now leasing back, our facility in Malaysia. We received proceeds of $12.6 million from this transaction, which has been accounted for as a financing arrangement, rather than a sale-leaseback, due to the nature of the terms of the lease.

Description	Balance as ofDecember 31, 2009		Interest Expense,Net forFiscal Year 2009		Weighted-Average AnnualInterest Rate
(Amounts in thousands)
Senior secured term loan facility (denominated in U.S. dollars)	$	916,750	$	25,855	2.75	%
Senior secured term loan facility (€384.4 million)		551,350		19,840	3.56	%
Revolving credit facility		—		605	4.25	%
Senior Notes (denominated in U.S. dollars)		340,006		29,400	8.00	%
Senior Subordinated Notes (€177.3 million)		254,303		23,893	9.00	%
Senior Subordinated Notes (€137.0 million)		196,483		21,829	11.25	%
Capital lease obligations		30,293		2,795	9.04	%
Other financing obligations		11,641		879	7.50	%
Amortization of financing costs		—		9,055
Bank fees and other		—		16,438
Total	$	2,300,826	$	150,589

Indebtedness and liquidity

WeOur ~~have~~liquidity arequirements ~~Senior~~are ~~Secured~~significant ~~Credit~~due ~~Facility~~to ~~under~~the ~~which includes a $150.0 million revolving credit facility, a $950.0 million U.S. dollar~~highly-~~denominated~~leveraged ~~term~~nature ~~loan~~of ~~facility,~~our ~~and a €325~~company.~~0 million~~ ~~Euro-denominated term loan facility ($400.1 million, at issuance).~~ As of December 31, ~~2009~~2010, ~~after adjusting for outstanding letters of credit with an aggregate value of $18.9 million,~~ we had $~~131.~~1,889.7 million ofin ~~borrowing~~outstanding ~~capacity available under the revolving credit facility. As of December 31~~indebtedness, ~~2009,~~including noour ~~amounts~~debt ~~had been drawn against these outstanding letters of~~and ~~credit. These~~ outstanding ~~letters~~capital oflease ~~credit~~and ~~are~~other ~~stated~~financing ~~to expire at various dates in 2010~~obligations. ~~We do not anticipate difficulty in renewing these letters of credit upon their expiration.~~

The ~~Senior~~following ~~Secured~~table ~~Credit~~outlines ~~Facility also provides for an incremental term loan facility and/or incremental revolving credit facility in an aggregate principal amount of $250.0 million under certain conditions at the option of~~ our ~~bank~~outstanding ~~group.~~indebtedness ~~During~~as ~~fiscal year 2006, to finance the purchase~~ of ~~First Technology Automotive, we borrowed €73.0~~ December ~~million ($95.4 million~~31, at2010 ~~issuance), reducing~~and the ~~available~~associated ~~borrowing~~interest ~~capacity~~expense ofand ~~this~~interest ~~incremental~~rate ~~facility~~for to $154.6 million. The incremental borrowing facilities may be activated at any time up to a maximum of three times during the term of the Senior Secured Credit Facility with consent required only from those lenders that agree, at their sole discretion, to participate in such ~~incremental~~borrowings ~~facility and subject to certain conditions, including pro forma compliance with all financial covenants as of the date of incurrence and~~ for ~~the~~fiscal ~~most~~year ~~recent determination period after giving effect to the incurrence of such incremental facility~~2010.

The Senior Secured Credit Facility provides us with the ability to draw funds for ongoing working capital and other general corporate purposes under a revolving credit facility, or the “Revolving Credit Facility,” which includes a subfacility for swingline loans. The Revolving Credit Facility bears interest (i) for amounts drawn in U.S. dollars, at the borrower’s option, (x) at LIBOR plus a 200 basis point spread subject to a pricing grid based on our leverage ratio (the spreads range from 125 basis points to 200 basis points) or (y) at the greater of the Prime rate as published by the Wall Street Journal or 1/2 of 1% per annum above the Federal Funds rate plus a 100 basis point spread subject to a pricing grid based on our leverage ratio (the spreads range from 25 basis points to 100 basis points) (all amounts drawn under the swingline subfacility are subject to interest calculated under this clause (i)(y)), and (ii) for amounts drawn in Euros, at EURIBOR plus a 200 basis point spread. We are subject to a 50 basis point commitment fee on the unused portion of the Revolving Credit Facility. This commitment fee is also subject to a pricing grid based on our leverage ratio. The spreads on the commitment fee range from 37.5 basis points to 50 basis points. The maximum that can be drawn under the swingline subfacility is $25.0 million, and is part of, not in addition to, the total Revolving Credit Facility amount of $150.0 million. Amounts drawn under the Revolving Credit Facility can be prepaid at any time without premium or penalty, subject to certain restrictions, including advance notice. Amounts drawn under the Revolving Credit Facility must be paid in full at the final maturity date of April 27, 2012.


Description	Balance as of December 31, 2010		Interest expense for fiscal year 2010		Weighted- average annual interest rate
(Amounts in thousands)
Senior secured term loan facility (denominated in U.S. dollars)	$	907,250	$	19,358		2.09	%
Senior secured term loan facility (€380.5 million)		504,741		14,290		2.79	%
Revolving credit facility		—		—		—
Senior Notes (denominated in U.S. dollars)		201,181		19,856		8.00	%
Senior Subordinated Notes (€177.1 million)		234,978		21,054		9.00	%
Senior Subordinated Notes		—		5,911		11.25	%
Derivatives		—		11,611		—
Capital lease obligations		29,461		2,723		9.03	%
Other financing obligations		12,082		891		7.62	%
Amortization of financing costs		—		8,572
Other		—		2,134

Total	$	1,889,693	$	106,400

60Along with, Sensata Technologies Finance Company, LLC, we are a borrower under a Senior Secured Credit Facility, for which certain of our subsidiaries are guarantors. The Senior Secured Credit Facility includes a $150.0 million multi-currency revolving credit facility, a $950.0 million U.S. dollar-denominated term loan facility, and a €325.0 million Euro-denominated term loan facility ($400.1 million, at issuance). As of December 31, 2010, after adjusting for outstanding letters of credit with an aggregate value of $6.9 million, we had $143.1 million of borrowing capacity available under the revolving credit facility. The outstanding letters of credit were issued primarily for various operating activities. As of December 31, 2010, no amounts had been drawn against these outstanding letters of credit. These outstanding letters of credit are scheduled to expire in the next twelve months. Upon expiration, we intend to renew these letters of credit and do not anticipate difficulty in this regard.

The Senior Secured Credit Facility also provides for an incremental term loan facility and/or incremental revolving credit facility in an aggregate principal amount of $250.0 million under certain conditions at the option of our bank group. During fiscal year 2006, to finance the purchase of First Technology Automotive, we borrowed €73.0 million ($95.4 million, at issuance), reducing the available borrowing capacity of this incremental facility to $154.6 million. The incremental borrowing facilities may be activated at any time up to a maximum of three times during the term of the Senior Secured Credit Facility with consent required only from

We those ~~also~~lenders ~~have~~that ~~uncommitted~~agree, ~~local~~at ~~lines~~their ofsole ~~credit~~discretion, ~~with~~to ~~commercial~~participate ~~lenders~~in atsuch incremental facility and subject to certain ofconditions, ~~our subsidiaries~~including inpro forma compliance with all financial covenants as of the ~~amount~~date of ~~$15.0~~incurrence ~~million~~and asfor the most recent determination period after giving effect to the incurrence of ~~December 31,~~such ~~2009~~incremental facility.

AsThe ofSenior ~~December 31,~~Secured ~~2009,~~Credit weFacility ~~had~~provides $1us with the ability to draw funds for ongoing working capital and other general corporate purposes under a revolving credit facility,~~468.1~~ or the “Revolving ~~million~~Credit inFacility,” ~~term~~which ~~loans~~includes ~~outstanding~~a ~~against~~subfacility ~~our~~for ~~Senior~~swingline ~~Secured~~loans. The Revolving Credit Facility. ~~Term~~bears ~~loans~~interest ~~are~~(i) for ~~repayable~~amounts atdrawn 1in U.0%S. dollars, at the borrower’s option, (x) ~~per~~at ~~year~~LIBOR inplus ~~quarterly~~a ~~installments~~200 ~~with~~basis point spread subject to a pricing grid based on our leverage ratio (the ~~balance~~spreads ~~due~~range infrom ~~quarterly~~125 ~~installments~~basis ~~during~~points to 200 basis points) or (y) at the ~~year~~greater ~~preceding~~of the ~~final~~Prime ~~maturity~~rate as published by the Wall Street Journal or 1/2 of ~~April~~ 1% ~~27,~~per ~~2013.~~annum ~~Interest~~above the Federal Funds rate plus a 100 basis point spread subject to a pricing grid based on ~~U.S.~~our ~~dollar~~leverage ~~term~~ratio ~~loans~~(the ~~are~~spreads ~~calculated~~range atfrom ~~LIBOR~~25 ~~plus~~basis ~~175~~points to 100 basis points) ~~and~~(all ~~interest~~amounts ondrawn ~~Euro~~under ~~term~~the ~~loans~~swingline subfacility are subject to interest calculated under this clause (i)(y)), and (ii) for amounts drawn in Euros, at EURIBOR plus a 200 basis ~~points~~point spread. ~~The~~We ~~spreads~~ are ~~fixed~~subject ~~for~~to a 37.5 basis point commitment fee on the ~~duration~~unused portion of the ~~term~~Revolving ~~loans~~Credit Facility. ~~Interest~~This commitment fee is also subject to a pricing ~~payments~~grid based on our leverage ratio. The spreads on the ~~Senior~~commitment ~~Secured~~fee ~~Credit~~range ~~Facility~~from ~~are~~37.5 ~~due~~basis ~~quarterly~~points to 50 basis points. ~~All~~The ~~term~~maximum ~~loan~~that ~~borrowings~~can be drawn under the ~~Senior~~swingline ~~Secured~~subfacility is $25.0 million, and is part of, not in addition to, the total Revolving Credit Facility ~~are~~amount ~~pre-payable~~of $150.0 million. Amounts drawn under the Revolving Credit Facility can be prepaid at ~~our~~any ~~option~~time without premium or penalty, subject to certain restrictions, including advance notice. Amounts drawn under the Revolving Credit Facility must be paid in full at ~~par~~the final maturity date of April 27, 2012.

~~All~~We ~~obligations~~have ~~under~~uncommitted ~~the~~local ~~Senior~~lines ~~Secured~~of credit ~~Credit~~with ~~Facility~~commercial ~~are~~lenders ~~unconditionally~~at ~~guaranteed by~~ certain of our ~~indirect wholly-owned~~ subsidiaries in the ~~U.S.~~amount ~~(with the exception~~ of ~~those subsidiaries acquired in the First Technology Automotive acquisition) and certain subsidiaries in the following non-U~~$11.S.0 ~~jurisdictions~~million ~~located~~as ~~in the Netherlands, Mexico, Brazil, Japan, South Korea and Malaysia (with the exception~~ of ~~those subsidiaries acquired in the Airpax acquisition)~~December 31, ~~collectively the “Guarantors~~2010.” The collateral for such borrowings under the Senior Secured Credit Facility consists of all shares of capital stock, intercompany debt and substantially all present and future property and assets of the Guarantors.

~~Our~~As of December 31, 2010, we had $1,412.0 million in term loans outstanding against our Senior Secured Credit Facility. ~~contains~~Term ~~various~~loans ~~affirmative~~are ~~and~~repayable ~~negative~~at ~~covenants~~1.0% per ~~that~~year ~~are~~in quarterly installments with the balance due in quarterly installments during ~~customary~~the ~~for~~year apreceding ~~financing~~the final maturity of ~~this~~April 27, ~~type~~2013. ~~The~~Interest ~~Senior~~on ~~Secured~~U.S. ~~Credit~~dollar ~~Facility~~term ~~also~~loans ~~requires~~are uscalculated toat ~~comply~~LIBOR ~~with~~plus ~~financial~~175 ~~covenants,~~basis ~~including~~points ~~covenants~~and ~~with~~interest ~~respect~~on toEuro ~~maximum~~term ~~leverage~~loans ~~ratio~~are ~~and~~calculated ~~minimum~~at ~~interest~~EURIBOR ~~coverage~~plus ~~ratio~~200 ~~which~~basis ~~become~~points. ~~more restrictive~~The inspreads ~~the~~are ~~fourth~~fixed ~~quarter~~for the duration of ~~fiscal~~the ~~year~~term ~~2010~~loans. WeInterest ~~satisfied~~payments ~~all~~on ~~ratios~~the ~~required~~Senior bySecured ~~our~~Credit ~~financial~~Facility ~~covenants~~are ~~with~~due ~~regard~~quarterly. toAll ~~our~~term loan borrowings under the Senior Secured Credit Facility asare ofpre-payable ~~December 31,~~at ~~2009~~our option at par.

WeAll ~~also~~obligations ~~issued~~under 8%the Senior ~~Notes~~Secured Credit Facility are unconditionally guaranteed by certain of our direct and 9%indirect wholly-owned subsidiaries in the U.S. (with the exception of those subsidiaries acquired in the First Technology Automotive acquisition) and 11certain of our direct and indirect wholly-owned subsidiaries in non-U.~~25%~~S. jurisdictions located in the Netherlands, Mexico, Brazil, Japan, South Korea and Malaysia (with the exception of those subsidiaries acquired in the Airpax acquisition), collectively the “Guarantors.” The collateral for such borrowings under the Senior ~~Subordinated~~Secured ~~Notes~~Credit Facility consists of all shares of capital stock, intercompany debt and substantially all present and future property and assets of the Guarantors.

The 8% Senior ~~Notes~~Secured ~~mature~~Credit onFacility ~~May 1,~~contains ~~2014.~~various ~~Each~~affirmative ~~Senior~~and ~~Note~~negative ~~bears~~covenants ~~interest~~that atare ~~8% per~~customary ~~annum~~for ~~from~~a ~~April 27,~~financing ~~2006~~of ~~(inception), or~~this ~~from the most recent date to which interest has been paid or provided for~~type. ~~Interest~~The ~~is payable semi-annually in cash to holders of~~ Senior ~~Notes~~Secured ofCredit ~~record~~Facility atalso ~~the~~requires ~~close~~us ofto ~~business~~comply onwith financial ~~the~~covenants, ~~April 15~~including orcovenants ~~October 15~~with ~~immediately~~respect ~~preceding~~to ~~the interest~~maximum ~~payment~~leverage ~~date,~~ratio ~~on May 1~~ and ~~November 1~~minimum ofinterest ~~each~~coverage ~~year~~ratio, ~~commencing~~which ~~November 1,~~became ~~2006.~~more ~~Interest~~restrictive isin ~~paid on~~ the ~~basis~~fourth quarter of afiscal ~~360-day~~ year ~~consisting~~2010, ofbut ~~twelve~~do ~~30-day~~not ~~months.~~become ~~The~~more ~~Senior~~restrictive ~~Notes~~again ~~were~~for ~~issued~~the ~~in an aggregate principal~~remaining ~~amount~~term of ~~$450.0~~the ~~million~~facility. ~~Proceeds~~We ~~from~~satisfied ~~the~~all ~~issuance~~ratios ofrequired ~~the~~by ~~Senior~~our ~~Notes~~financial ~~were~~covenants ~~used~~with regard to ~~fund a portion of~~ the ~~2006 Acquisition. The~~ Senior ~~Notes~~Secured ~~issuance~~Credit ~~costs~~Facility ~~are~~as ~~being amortized over the eight year term~~ of ~~the~~December 31, ~~Senior Notes using the effective interest method~~2010. ~~The Senior Notes are unsecured.~~

~~The~~We 9%have ~~Senior~~also ~~Subordinated~~issued ~~Notes mature on May 1, 2016. Each 9~~8% Senior ~~Subordinated~~ ~~Note~~Notes ~~bears~~due ~~interest~~2014 ~~at a rate of 9% per annum from April 27, 2006~~ (~~inception), or from the most recent date to which interest has been paid or provided for. Interest is payable semi-annually in cash to holders of such~~ “Senior ~~Subordinated~~ Notes”) ~~of record at the close of business on the April 15 or October 15 immediately preceding the interest payment date, on May 1~~ and ~~November 1 of each year, commencing November 1, 2006. Interest is paid on the basis of a 360-day year consisting of twelve 30-day months. The~~ 9% Senior Subordinated Notes ~~were~~due ~~issued initially in an aggregate principal amount of €245~~2016.~~0 million~~ ~~($301.6~~In ~~million~~2010, atwe ~~issuance).~~repurchased ~~Proceeds~~all ~~from the issuance~~ of ~~such~~our ~~Senior Subordinated Notes were used to fund a portion of the 2006 Acquisition~~11. ~~The 9~~25% Senior Subordinated Notes ~~issuance~~(The ~~costs are being amortized over the ten year term of the~~ 9% ~~Senior~~and ~~Subordinated Notes using the effective interest method~~11. ~~The 9~~25% ~~Senior~~ Senior Subordinated Notes ~~are~~together ~~unsecured and~~ are ~~subordinated~~referred ~~in right of payment~~ to ~~all~~as ~~existing~~the ~~and future senior indebtedness and on par with our existing and future~~ “Senior Subordinated Notes”).

The ~~11.25%~~ Senior ~~Subordinated~~ Notes mature on ~~January~~ May 151, 2014. Each ~~11.25%~~ Senior ~~Subordinated~~ Note bears interest at ~~a rate of 11.25~~8% per annum from ~~July~~April 2327, ~~2008~~2006 (inception), or from the most recent date to which interest has been paid or provided for. Interest is payable

6155

~~interest has been paid or provided for. Interest is payable~~ semi-annually in cash to holders of ~~such~~ Senior ~~Subordinated~~ Notes of record at the close of business on ~~January~~the April 115 or ~~July~~October 1 15 immediately preceding the interest payment date, on ~~January~~May 151 and ~~July~~ November 151 of each year, commencing ~~on January~~November 151, ~~2009~~2006. Interest is paid on the basis of a 360-day year consisting of twelve 30-day months. The ~~11.25%~~ Senior ~~Subordinated~~ Notes were issued initially in an aggregate principal amount of ~~€141~~$450.0 million. Proceeds from the issuance of the ~~11.25%~~ Senior ~~Subordinated~~ Notes were used to ~~refinance~~fund ~~amounts~~a ~~outstanding~~portion ~~under~~of anthe ~~existing~~2006 ~~Senior Subordinated Term Loan, originally issued as bridge financing in July 2007~~Acquisition. The ~~11.25%~~ Senior ~~Subordinated~~ Notes ~~are~~issuance ~~unsecured~~costs ~~and~~ are ~~subordinated~~being inamortized ~~right~~over ofthe ~~payment~~eight toyear ~~all~~term ~~existing~~of ~~and~~the ~~future~~Senior ~~senior~~Notes ~~indebtedness~~using ~~and~~the oneffective ~~par~~interest ~~with~~method. ~~our~~The ~~existing and future~~ Senior ~~Subordinated~~ Notes are unsecured.

InThe ~~addition,~~9% ~~the~~Senior ~~indentures~~Subordinated ~~governing~~Notes ~~the~~mature 8%on ~~Senior~~May 1, ~~Notes~~2016. ~~and~~Each 9% Senior Subordinated ~~Notes~~Note ~~and~~bears 11interest at a rate of 9% per annum from April 27, 2006 (inception), or from the most recent date to which interest has been paid or provided for.25 Interest is payable semi-annually in cash to holders of such 9% Senior Subordinated Notes ~~limit,~~of ~~under~~record ~~certain~~at ~~circumstances,~~the close ~~our~~of ~~ability~~business ~~and~~on the ~~ability~~April 15 ofor ~~our~~October 15 ~~Restricted~~immediately ~~Subsidiaries~~preceding ~~(as~~the ~~defined~~interest ~~under~~payment ~~the~~date, ~~Senior~~on ~~Secured~~May 1 ~~Credit~~and ~~Facility)~~November 1 ~~to:~~of ~~incur~~each ~~additional indebtedness~~year, ~~create~~commencing ~~liens~~November 1, ~~pay~~2006. ~~dividends~~Interest ~~and~~is ~~make~~paid on the basis of a 360-day year consisting ~~other~~of ~~distributions~~twelve 30-day months. The 9% Senior Subordinated Notes were issued initially in ~~respect~~an aggregate principal amount of ~~our~~€245.0 million ~~capital~~($301.6 ~~stock~~million, ~~redeem~~at ~~our~~issuance). ~~capital~~Proceeds ~~stock,~~from ~~make~~the ~~certain~~issuance ~~investments~~of orthe ~~certain~~9% ~~restricted~~Senior ~~payments,~~Subordinated ~~sell~~Notes ~~certain~~were ~~kinds~~used to fund a portion of ~~assets,~~the ~~enter~~2006 ~~into~~Acquisition. ~~certain~~The ~~types~~9% Senior Subordinated Notes issuance costs are being amortized over the ten year term of ~~transactions~~the ~~with~~9% ~~affiliates~~Senior ~~and~~Subordinated ~~effect~~Notes ~~mergers~~using ~~or consolidations~~the effective interest method. ~~These~~The ~~covenants~~9% Senior Subordinated Notes are unsecured ~~subject~~and toare asubordinated ~~number~~in right of ~~exceptions~~payment to all existing and ~~qualifications~~future senior indebtedness and on par with our existing and future Senior Subordinated Notes.

~~The~~In ~~Senior~~addition, ~~Secured~~the ~~Credit~~indentures ~~Facility and~~governing the 8% Senior Notes, 9%and Senior Subordinated Notes ~~and~~limit, ~~the~~under ~~11.25%~~certain ~~Senior~~circumstances, ~~Subordinated~~our ~~Notes~~ability ~~contain~~and ~~customary~~that ~~events~~ of ~~default,~~our ~~including,~~Restricted ~~but~~Subsidiaries ~~not~~(as ~~limited~~defined under the Senior Secured Credit Facility) to incur additional indebtedness, ~~cross-defaults~~create ~~among~~liens, ~~these~~pay ~~agreements.~~dividends Anand ~~event~~make other distributions in respect of ~~default~~our capital stock, ifredeem ~~not~~our ~~cured~~capital stock, ~~could~~make ~~cause~~certain investments or certain restricted payments, sell certain ~~cross-default~~kinds ~~causing~~of ~~substantially~~assets, ~~all~~enter into certain types of ~~our~~transactions ~~indebtedness~~with affiliates and effect mergers or consolidations. These covenants are subject to ~~become~~a ~~due~~number of important exceptions and qualifications.

The ~~subsidiary guarantors under the~~ Senior Secured Credit Facility ~~and the indentures governing the notes are generally not restricted in their ability to pay dividends or otherwise distribute funds to us~~, except for restrictions imposed under applicable corporate law. We, however, are limited in our ability to pay dividends or otherwise make other distributions to Sensata Intermediate Holding, our immediate parent company and, ultimately, to the ~~Parent, under the~~ Senior ~~Secured~~Notes ~~Credit Facility~~ and the ~~indentures governing the notes. Specifically, the~~ Senior ~~Secured~~Subordinated ~~Credit~~Notes ~~Facility~~contain ~~prohibits~~customary usevents ~~from~~of ~~paying dividends or making any distributions to our parent companies except for limited purposes~~default, including, but not limited to:, ~~(i) customary and reasonable out~~cross-~~of-pocket expenses,~~defaults ~~legal~~among ~~and~~these ~~accounting~~agreements. ~~fees~~An ~~and~~event ~~expenses and overhead~~ of such parent companies incurred in the ordinary course of business to the extent attributable to our business and the business of our subsidiaries and in the aggregate not to exceed $5 million in any fiscal yeardefault, ~~plus~~if reasonable and customary indemnification claims made by directors or officers of the Parent attributable to our ownership and the ownership of our Restricted Subsidiaries, (ii) franchise taxes, general corporate and operating expenses, certain advisory fees and customary compensation of officers and employees of such parent companies, (iii) tax liabilities to the extent attributable to our business and the business of our subsidiaries, (iv) repurchase, retirement or other acquisition of equity interests of the Parent from certain present, future and former employees, directors, managers, consultants of the parent companies, us or our subsidiaries in an aggregate amount not ~~to exceed $7.5 million in any fiscal year~~cured, ~~plus~~could ~~the~~cause ~~amount of cash proceeds from certain equity issuances to such persons, the amount of equity interests subject to a certain deferred compensation plan and the amount of certain key~~cross-~~man~~default ~~life~~causing ~~insurance proceeds,~~substantially ~~(v) payment~~all of ~~dividends~~our orindebtedness ~~distributions with proceeds from the disposition of certain assets (net of mandatory prepayments) in an amount not~~ to ~~exceed~~become ~~$200 million and (vi) dividends and other distributions in an aggregate amount not to exceed $25 million (subject to increase to $35 million if the leverage ratio is less than 5~~due.0 ~~to 1.0 and to $50 million if the leverage ratio is less than 4.0 to 1.0, plus, if the leverage ratio is less than 5.0 to 1.0, the amount of excess cash flow not otherwise applied).~~

The subsidiary guarantors under the Senior Secured Credit Facility and the indentures governing the Senior Notes and Senior Subordinated Notes are generally ~~provide~~not ~~that~~restricted wein ~~can~~their ability to pay dividends ~~and~~or otherwise distribute funds to us, except for restrictions imposed under applicable corporate law. We are, however limited in our ability to pay dividends or otherwise make other distributions to our immediate parent company and, ultimately, to the Parent, under the Senior Secured Credit Facility and the indentures governing the Senior Notes and Senior Subordinated Notes. Specifically, the Senior Secured Credit Facility prohibits us from paying dividends or making any distributions to our parent companies inexcept anfor ~~amount~~limited purposes, including, but not limited to: ~~exceed~~ (i) ~~50%~~customary and reasonable out-of-pocket ~~our~~expenses, ~~consolidated~~legal ~~net~~and ~~income~~accounting ~~for~~fees ~~the~~and ~~period~~expenses ~~beginning~~and overhead ~~March 31,~~of ~~2006~~such ~~and~~parent ~~ending~~companies asincurred ofin the ~~end~~ordinary course of business to the ~~last~~extent ~~fiscal~~attributable ~~quarter~~to ~~before~~our business or the ~~proposed~~business ~~payment~~of our subsidiaries and in the aggregate not to exceed $5 million in any fiscal year, plus reasonable and customary indemnification claims made by our Parent’s directors or officers attributable to the ownership of us and our Restricted Subsidiaries, (ii) ~~100%~~franchise oftaxes, ~~the~~general ~~aggregate~~corporate ~~amount~~and ofoperating ~~cash~~expenses, ~~and~~certain ~~the~~advisory ~~fair~~fees ~~market~~and customary ~~value~~compensation of ~~property~~officers and ~~marketable~~employees ~~securities~~of ~~received~~such byparent uscompanies, ~~after April~~(iii) ~~27,~~tax ~~2006~~liabilities to the extent attributable to the our business and that of our subsidiaries, (~~inception~~iv) repurchase, retirement or other acquisition of our Parent’s equity interests from ~~the~~certain ~~issuance~~of our present, future and ~~sale~~former employees, directors, managers, consultants or those of our parent companies or subsidiaries in an aggregate amount not to exceed $7.5 million in any fiscal year, plus the amount of cash proceeds from certain equity issuances to such persons, the amount of equity interests (subject to a certain ~~exceptions)~~deferred compensation plan and the amount of certain key-man life insurance proceeds, (v) payment of dividends or ~~plus~~ distributions with proceeds from the disposition of certain assets (net of mandatory prepayments) in an amount not to exceed $200 million and (vi) dividends and

6256

~~(iii) 100%~~other ofdistributions ~~the~~in an aggregate amount ofnot ~~cash~~to ~~and~~exceed ~~the~~$25 ~~fair~~million ~~market~~(subject ~~value~~to ofincrease ~~property and marketable securities contributed~~ to ~~our~~$35 ~~capital~~million ~~after~~if ~~April 27, 2006 (inception), plus (iv) 100% of~~ the ~~aggregate~~leverage ~~amount~~ratio ~~received~~is inless ~~cash~~than ~~and~~5.0 ~~the~~to ~~fair~~1.0 ~~market value of property~~ and ~~marketable~~to ~~securities~~$50 ~~received~~million ~~after~~if ~~April 27, 2007 from~~ the ~~sale~~leverage ofratio ~~certain~~is less ~~investments~~than or4.0 ~~the~~to ~~sale of certain subsidiaries~~1.0, ~~provided that certain conditions are satisfied~~plus, ~~including~~if ~~that~~the weleverage ~~have a consolidated interest coverage~~ ratio ofis ~~greater~~less than 25.0 to 1.0~~. The restrictions on dividends and other distributions contained in the indentures are subject to certain exceptions~~, ~~including~~ ~~(i)~~ the ~~payment~~amount of ~~dividends~~excess ~~following~~cash ~~the~~flow ~~first~~not ~~public~~otherwise ~~offering~~applied). ofLeverage ~~the~~ratio ~~common~~is ~~stock~~defined ofin ~~any~~the ofSenior ~~our~~Secured ~~direct~~Credit orFacility ~~indirect~~as ~~parent~~total ~~companies~~indebtedness inincluding ancapital ~~amount~~lease upand toother financing ~~6.0% per~~obligations, ~~annum~~less ~~of the net~~ cash ~~proceeds~~and ~~contributed~~equivalents, toall usdivided inby ~~any~~Adjusted ~~such offering,~~EBITDA ~~(ii)~~ for the ~~payment~~last of12 ~~dividends~~months. toEBITDA ~~permit~~is ~~any~~defined ofas ~~our~~earnings ~~parent~~before ~~companies~~interest, ~~to pay~~ taxes, ~~general~~depreciation ~~corporate~~ and ~~operating expenses~~amortization, ~~certain advisory fees~~ and ~~customary~~Adjusted ~~compensation~~EBITDA ofis ~~officers~~defined ~~and~~as ~~employees~~EBITDA ofbefore ~~such parent companies and~~certain ~~(iii) dividends~~other ~~and~~adjustments ~~other~~as ~~distributions~~defined in anthe ~~aggregate~~Senior ~~amount~~Secured ~~not~~Credit ~~to exceed $75~~Facility.0 ~~million.~~

~~Repurchases~~The indentures governing the Senior Notes and Senior Subordinated Notes generally provide that we can pay dividends and make other distributions to our parent companies in an amount not to exceed (i) 50% of our consolidated net income for the period beginning March 31, 2006 and ending as of ~~Indebtedness~~the end of the last fiscal quarter before the proposed payment, plus (ii) 100% of the aggregate amount of cash and the fair market value of property and marketable securities received by us after April 27, 2006 from the issuance and sale of our equity interests (subject to certain exceptions), plus (iii) 100% of the aggregate amount of cash and the fair market value of property and marketable securities contributed to our capital after April 27, 2006, plus (iv) 100% of the aggregate amount received in cash and the fair market value of property and marketable securities received after April 27, 2007 from the sale of certain investments or the sale of certain subsidiaries, provided that certain conditions are satisfied, including that we have a consolidated interest coverage ratio of greater than 2.0 to 1.0. The restrictions on dividends and other distributions contained in the indentures are subject to certain exceptions, including (i) the payment of dividends following the first public offering of the common stock of any of our direct or indirect parent companies in an amount up to 6.0% per annum of the net cash proceeds contributed to us in any such offering, (ii) the payment of dividends to permit any of our parent companies to pay taxes, general corporate and operating expenses, certain advisory fees and customary compensation of officers and employees of such parent companies and (iii) dividends and other distributions in an aggregate amount not to exceed $75.0 million.

OnRepurchases ~~March 3, 2009, we announced the commencement~~ of ~~two~~indebtedness separate cash tender offers related to our Senior Notes and our Senior Subordinated Notes. The cash tender offers settled during the three months ended June 30, 2009. The aggregate principal amount of the Senior Notes validly tendered was $110.0 million, representing 24.4% of the outstanding Senior Notes. The aggregate principal amount of the Senior Subordinated Notes tendered was €72.1 million, representing approximately 19.6% of the outstanding Senior Subordinated Notes. The tender offer for our Senior Subordinated Notes was oversubscribed and we accepted for purchase a pro rata portion of the Senior Subordinated Notes tendered. The aggregate principal amount accepted for repurchase totaled €44.3 million ($58.4 million at the closing foreign exchange rate of $1.317 to 1.00) representing approximately 12.0% of the outstanding Senior Subordinated Notes. We paid $50.7 million ($40.7 million for the Senior Notes and €7.6 million for the Senior Subordinated Notes) to settle the tender offers and retire the debt on April 1, 2009.

InOn ~~addition~~February 26, ~~during~~2010, we announced the ~~three~~commencement ~~months~~of ~~ended~~cash ~~June 30,~~tender ~~2009~~offers related to the Senior Notes, the 9% Senior Subordinated weNotes ~~agreed~~due to2016 ~~purchase~~and ~~certain~~the 11.25% Senior Subordinated Notes due 2014 (the 9% and 11.25% Senior Subordinated Notes ~~having~~are atogether ~~principal~~referred ~~value~~to as the “Senior Subordinated Notes”). The cash tender offers settled during the first quarter of ~~€10~~2010.~~0 million~~ The (aggregate principal amount of the Senior Notes validly tendered was $140.13 million, atrepresenting approximately 0.1% of the ~~closing~~outstanding ~~exchange~~Senior ~~rate~~Notes. The aggregate principal amount of $1the Senior Subordinated Notes tendered was €71.419 million, torepresenting 1approximately 22.~~00)~~8% of the outstanding Senior Subordinated Notes. We paid $596.17 million in principal (€$0.3 million for the Senior Notes and €71.69 million for the Senior Subordinated Notes), $5.4 million in premiums (€4.0 million on the Senior Subordinated Notes) and $2.2 million of accrued interest to settle the ~~transaction~~tender offers and ~~retired~~ retire the debt on ~~May~~March 2529, ~~2009~~2010.

InOn ~~conjunction~~April 1, ~~with these transactions~~2010, we ~~wrote~~announced ~~off~~the ~~$5.3~~redemption ~~million~~of all of ~~debt~~the ~~issuance~~outstanding 11.25% Senior Subordinated Notes due 2014 at a redemption ~~costs~~price ~~during~~equal ~~the~~to ~~three~~105.625% ~~months~~of ~~ended~~the ~~June 30~~principal amount, ~~2009~~ and ~~recorded~~$138.6 million of the outstanding Senior Notes at a ~~net~~redemption ~~gain~~price inequal ~~Currency~~to ~~translation~~104.000% ~~gain/(loss)~~of ~~and~~the ~~other~~principal amount. We paid $225.0 million in principal, ~~net~~$10.4 ofmillion in premiums and $~~120~~8.1 4 million of accrued interest in May 2010 to complete the redemption.

AtIn ~~various~~connection ~~dates~~with ~~during~~these ~~2008~~transactions, we ~~repurchased~~recorded ~~certain~~a ~~outstanding~~loss 9%in Currency ~~Senior~~translation ~~Subordinated~~gain ~~Notes~~and ~~totaling~~other, ~~€17.4~~net ~~million (or $22.4 million at the date~~ of ~~repurchase). We paid~~ $623.75 million, ~~(€5.3 million)~~including ~~to settle~~ the ~~transactions and retire the debt. In conjunction with these transactions, we wrote~~ write-off ~~$0.7 million~~ of debt issuance costs ~~during 2008 and recorded a net gain in Currency translation gain/(loss) and other, net~~ of $156.0 8 million.

~~Capital~~On March 3, ~~Resources~~2009, we announced the commencement of two separate cash tender offers related to the Senior Notes and Senior Subordinated Notes. The cash tender offers settled during the second quarter of 2009. The aggregate principal amount of the Senior Notes validly tendered was $110.0 million, representing 24.4% of the outstanding Senior Notes. The aggregate principal amount of the Senior Subordinated Notes tendered was

~~Our~~57 sources of liquidity include cash on hand, cash flow from operations and amounts available under the Senior Secured Credit Facility. We believe, based on our current level of operations as reflected in our results of operations for the quarters ended September 30, 2009 and December 31, 2009, these sources of liquidity will be sufficient to fund our operations, capital expenditures and debt service for at least the next twelve months.

Our ability to raise additional financing and its 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 January 22, 2010, Moody’s Investors Service’s corporate credit rating for Sensata Technologies B.V. was Caa1 with positive outlook and Standard & Poor’s corporate credit rating for Sensata Technologies B.V. was CCC+ with positive outlook.

€72.1 million, representing approximately 19.6% of the outstanding Senior Subordinated Notes. The tender offer for the 9% Senior Subordinated Notes was oversubscribed, and we accepted for purchase a pro rata portion of the 9% Senior Subordinated Notes tendered. The aggregate principal amount accepted for repurchase totaled €44.3 million ($58.4 million at the closing foreign exchange rate of $1.317 to €1.00), representing approximately 12.0% of the outstanding 9% Senior Subordinated Notes. We paid $50.7 million ($40.7 million for the Senior Notes and €7.6 million for the 9% Senior Subordinated Notes) to settle the tender offers and retire the debt on April 1, 2009.

In addition, during the second quarter of 2009, we agreed to purchase certain 9% Senior Subordinated Notes having a principal value of €10.0 million ($14.1 million at the closing exchange rate of $1.41 to 1.00). We paid $5.1 million (€3.6 million) to settle the transaction and retire the debt on May 25, 2009.

In conjunction with these transactions, we wrote off $5.3 million of debt issuance costs during the second quarter of 2009 and recorded a net gain in Currency translation gain and other, net of $120.1 million.

During 2008, we repurchased certain outstanding 9% Senior Subordinated Notes with a principal balance of €17.4 million (or $22.4 million at the date of repurchase). We paid $6.7 million (€5.3 million) to settle the transactions and retire the debt. In conjunction with these transactions, we wrote off $0.7 million of debt issuance costs during 2008 and recorded a net gain in Currency translation gain and other, net of $15.0 million.

Capital resources

Our sources of liquidity include cash on hand, cash flow from operations and amounts available under the Senior Secured Credit Facility. We believe, based on our current level of operations as reflected in our results of operations for the year ended December 31, 2010, that these sources of liquidity will be sufficient to fund our operations, capital expenditures and debt service for at least the next twelve months.

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 January 27, 2011, Moody’s Investors Service’s corporate credit rating for us was B2 with positive outlook and Standard & Poor’s corporate credit rating for us was B+ with positive outlook.

We cannot make assurances that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our revolving credit facility in an amount sufficient to enable us to pay our indebtedness, including the Senior Notes and Senior Subordinated Notes, or to fund our other liquidity needs. Further, our highly-leveraged nature may limit our ability to procure additional financing in the future.

As of December 31, ~~2009~~2010, we were in compliance with all the covenants and default provisions under our credit arrangements. For more information on our indebtedness and related covenants and default provisions, refer to the notes to our audited consolidated financial statements, included elsewhere in this ~~annual~~Annual ~~report,~~Report on Form 10-K and Item 1A, “Risk Factors.”

~~Contractual Obligations~~58 ~~and Commercial Commitments~~

The table below reflects our contractual obligations as of December 31, 2009. Amounts we pay in future periods may vary from those reflected in the table.

	Payments Due by Period
(Amounts in millions)	Total		Less than1 Year		1-3Years		3-5Years		More than5 Years
Senior debt obligations principal(1)	$	2,258.9	$	15.2	$	737.6	$	1,251.8	$	254.3
Senior debt obligations interest(2)		474.5		105.9		208.5		125.8		34.3
Capital lease obligations principal(3)		30.3		0.8		1.9		2.5		25.1
Capital lease obligations interest(3)		28.4		2.7		5.2		4.8		15.7
Other financing obligations principal(4)		11.6		1.1		1.6		0.3		8.6
Other financing obligations interest(4)		5.9		0.9		1.5		1.3		2.2
Operating lease obligations(5)		15.6		5.2		4.6		2.2		3.6
Non-cancelable purchase obligations(6)		47.0		15.6		13.9		8.1		9.4
Total(7)(8)	$	2,872.2	$	147.4	$	974.8	$	1,396.8	$	353.2

(1) Represents the contractually required principal payments under the senior debt obligations in existence as of December 31, 2009 in accordance with the required payment schedule.

(2) Represents the contractually required interest payments on the senior debt obligations in existence as of December 31, 2009 in accordance with the required payment schedule. Cash flows associated with the next interest payment to be made subsequent to December 31, 2009 on our variable rate debt were calculated using the interest rates in effect as of the latest interest rate reset date prior to December 31, 2009, plus the appropriate credit spread. The three-month LIBOR and EURIBOR rates used in this calculation were 0.28% and 0.73%, respectively. Cash flows associated with all other future interest payments to be made on our variable rate debt were calculated using the interest rates in effect as of December 31, 2009, plus the appropriate credit spread. The three-month LIBOR and EURIBOR rates used in these calculations were 0.25% and 0.70%, respectively.

(3) Represents the contractually required payments under the capital lease obligations in existence as of December 31, 2009 in accordance with the required payment schedule. No assumptions were made with respect to renewing the lease term at its expiration date.

(4) Represents the contractually required payments under the financing obligations in existence as of December 31, 2009 in accordance with the required payment schedule. No assumptions were made with respect to renewing the financing arrangements at their expiration dates.

(5) Represents the contractually required payments under the operating lease obligations in existence as of December 31, 2009 in accordance with the required payment schedule. No assumptions were made with respect to renewing the lease obligations at the expiration date of their initial terms.

(6) Represents the contractually required payments under the various purchase obligations in existence as of December 31, 2009. No assumptions were made with respect to renewing the purchase obligations at the expiration date of their initial terms, no amounts are assumed to be prepaid and no assumptions were made for early termination of any obligations.

(7) Contractual obligations denominated in a foreign currency were calculated utilizing the U.S. dollar to local currency exchange rates in effect as of December 31, 2009. The most significant foreign currency denominated obligation relates to our Euro-denominated debt. The U.S. dollar to Euro exchange rate as of December 31, 2009 was $1.43 to €1.00.

~~(8)~~Contractual ~~This table does not include the contractual~~ obligations ~~associated with the Company’s defined benefit~~ and ~~other~~commercial ~~post-retirement~~commitments benefit plans. As of December 31, 2009, the Company has recognized an accrued benefit liability of $46.5 million representing the unfunded benefit obligations of the defined benefit and retiree healthcare plans. Refer to Note 12 to our audited consolidated financial statements for further discussion on pension and other post-retirement benefits. This table also does not include $11.5 million of unrecognized tax benefits as of December 31, 2009, as the Company is unable to make reasonably reliable estimates of when cash settlement, if any, will occur with a tax authority, as the timing of the examination and the ultimate resolution of the examination is uncertain. Refer to Note 11 to our audited consolidated financial statements for further discussion on income taxes.

The table below reflects our contractual obligations as of December 31, 2010. Amounts we pay in future periods may vary from those reflected in the table.


	Payments Due by Period
(Amounts in millions)	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Senior debt obligations principal⁽¹⁾	$	1,848.2	$	14.8	$	1,397.2	$	201.2	$	235.0
Senior debt obligations interest⁽²⁾		240.1		71.4		107.7		50.4		10.6
Capital lease obligations principal⁽³⁾		29.4		0.9		2.2		2.7		23.6
Capital lease obligations interest⁽³⁾		25.7		2.7		5.0		4.6		13.4
Other financing obligations principal⁽⁴⁾		12.1		1.1		1.5		0.0		9.5
Other financing obligations interest⁽⁴⁾		5.6		0.8		1.5		1.5		1.8
Operating lease obligations⁽⁵⁾		13.1		3.8		4.6		1.8		2.9
Non-cancelable purchase obligations⁽⁶⁾		3.8		1.9		1.9		0.0		0.0

Total⁽⁷⁾⁽⁸⁾	$	2,178.0	$	97.4	$	1,521.6	$	262.2	$	296.8

(1)	Represents the contractually required principal payments under the senior debt obligations in existence as of December 31, 2010 in accordance with the required payment schedule.

(2)

Represents the contractually required interest payments on the senior debt obligations in existence as of December 31, 2010 in accordance with the required payment schedule. Cash flows associated with the next interest payment to be made subsequent to December 31, 2010 on the variable rate debt were calculated using the interest rates in effect as of the latest interest rate reset date prior to December 31, 2010, plus the appropriate credit spread. The three-month LIBOR and EURIBOR rates used in this calculation were 0.30% and 1.01%, respectively. Cash flows associated with all other future interest payments to be made on our variable rate debt were calculated using the interest rates in effect as of December 31, 2010, plus the appropriate credit spread. The three-month LIBOR and EURIBOR rates used in these calculations were 0.30% and 1.01%, respectively.

(3)	Represents the contractually required payments under our capital lease obligations in existence as of December 31, 2010 in accordance with the required payment schedule. No assumptions were made with respect to renewing the lease term at its expiration date.

(4)	Represents the contractually required payments under our financing obligations in existence as of December 31, 2010 in accordance with the required payment schedule. No assumptions were made with respect to renewing the financing arrangements at their expiration dates.

(5)	Represents the contractually required payments under our operating lease obligations in existence as of December 31, 2010 in accordance with the required payment schedule. No assumptions were made with respect to renewing the lease obligations at the expiration date of their initial terms.

(6)	Represents the contractually required payments under our various purchase obligations in existence as of December 31, 2010. No assumptions were made with respect to renewing the purchase obligations at the expiration date of their initial terms, and no amounts were assumed to be prepaid.

(7)

Contractual obligations denominated in a foreign currency were calculated utilizing the U.S. dollar to local currency exchange rates in effect as of December 31, 2010. The most significant foreign currency denominated obligation relates to our Euro-denominated debt. The U.S. dollar to Euro exchange rate as of December 31, 2010 was $1.33 to €1.00.

(8)

This table does not include the contractual obligations associated with our defined benefit and other post-retirement benefit plans. As of December 31, 2010, we had recognized an accrued benefit liability of $43.7 million representing the unfunded benefit obligations of the defined benefit and retiree healthcare plans. Refer to Note 9 of our audited consolidated financial statements, included elsewhere in this Annual Report on Form 10-K, for additional information on pension and other post-retirement benefits, including expected benefit payments for the next 10 years. This table also does not include $17.0 million of unrecognized tax benefits as of December 31, 2010, as we are unable to make reasonably reliable estimates of when cash settlement, if any, will occur with a tax authority, as the timing of the examination and the ultimate resolution of the examination is uncertain. Refer to Note 8 of our audited consolidated financial statements, included elsewhere in this Annual Report on Form 10-K, for additional information on income taxes.

Legal Proceedings

We account for litigation and claims losses in accordance ASC Topic 450, Contingencies (“ASC 450”). ASC 450 loss contingency provisions are recorded for probable and estimable losses at our best estimate of a loss, or when a best estimate cannot be made, the minimum potential loss contingency is recorded. They are often developed prior to knowing the amount of the ultimate loss. These estimates require the application of considerable judgment, and are refined each accounting period as additional information becomes known. Accordingly, we are often initially unable to develop a best estimate of loss and therefore the minimum amount, which could be zero, is recorded. As information becomes known, the minimum loss amount can be increased, resulting in additional loss provisions, or a best estimate can be made also resulting in additional loss provisions. Occasionally, a best estimate amount is changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected. There can be no assurances that our recorded reserves will be sufficient to cover the extent of our costs and potential liability.

We have recorded litigation reserves of approximately $6.7 million as of December 31, 2009 for various claims and litigation matters, including those described in Item 3, “Legal Proceedings.” There can be no assurances, however, that this reserve will be sufficient to cover the extent of our costs and potential liability.

Inflation

We believe inflation has not had a material effect on our financial condition or results of operations in recent years.

Seasonality

Because of the diverse nature of the markets in which we compete, ~~our~~ revenue is only moderately impacted by seasonality. However, our controls business has some seasonal elements, specifically in the air-conditioning and refrigeration products which tend to peak in the first two quarters of the year as end-market inventory is built up for spring and summer sales.

Restructuring Activity

In December 2006, we acquired First Technology Automotive. As part of the integration of this business, we closed several manufacturing facilities and business centers, and terminated 143 employees. In accordance with ASC Topic 805, Business Combinations (“ASC 805”), we recognized restructuring liabilities of $9.9 million in purchase accounting and recognized other charges in the consolidated statement of operations totaling $0.9 million related to these actions. The total charges of $0.9 million are comprised of charges of $1.1 million recognized during fiscal year 2008 and a credit of $0.2 million recognized during fiscal year 2009. The activities associated with the First Technology Automotive acquisition were completed in fiscal year 2008, and we anticipate the remaining payments associated with contractual lease obligations to be paid through 2014 due primarily to contractual lease obligations.

In July 2007, we acquired Airpax. As part of the integration of this business, we closed several manufacturing facilities and business centers, and terminated 331 employees. In accordance with ASC 805, we recognized restructuring liabilities of $6.5 million in purchase accounting. The activities associated with the Airpax acquisition were completed in fiscal year 2009 and we anticipate remaining payments to be paid through 2010.

During fiscal years 2008 and 2009, in response to global economic conditions, we announced various actions to reduce the workforce in several business centers and manufacturing facilities throughout the world and to move certain manufacturing operations to low-cost countries. During fiscal year 2008, we recognized charges totaling $23.0 million, primarily related to severance, pension curtailment and settlement charges and other exit costs. During fiscal year 2009, we recognized charges totaling $18.3 million, of which $12.9 million relates to severance, $4.8 million relates to pension and $0.6 million relates to other exit costs. The total cost of these actions is expected to be $41.6 million excluding the impact of changes in foreign currency exchange rates, and affect 1,979 employees. The Company anticipates the actions described above to be completed during 2010 and the remaining payments paid through 2014 due primarily to contractual obligations.

For a reconciliation of the restructuring reserves referenced above refer to Note 8 to our audited consolidated financial statements, included elsewhere in this annual report.

Critical Accounting Policies and Estimates

~~Our~~To ~~discussion~~prepare ~~and analysis of results of operations and financial condition are based upon~~ our ~~consolidated~~ financial statements. ~~These financial statements have been prepared~~ in ~~accordance~~conformity with ~~U.S.~~ generally accepted accounting principles, ~~(“U.S.~~we ~~GAAP”).~~must ~~The preparation of these financial statements requires us to~~ make ~~estimates~~complex and subjective judgments ~~that~~in ~~affect~~ the ~~amounts~~selection ~~reported~~and inapplication ~~the~~of ~~financial~~accounting ~~statements~~policies. WeThe accounting ~~base~~policies ~~our~~that ~~estimates~~we onbelieve ~~historical~~are ~~experiences~~most ~~and~~critical ~~assumptions~~to ~~believed~~the toportrayal beof ~~reasonable~~our ~~under~~financial ~~the circumstances~~position and ~~re-evaluate~~results ~~them~~of onoperations anare ~~ongoing~~listed ~~basis~~below. ~~Those~~We ~~estimates~~believe ~~form~~these ~~the~~policies ~~basis~~require ~~for~~ our ~~judgments~~most ~~that~~difficult, ~~affect~~subjective ~~the~~and ~~amounts~~complex ~~reported~~judgments in estimating the effect ~~financial~~of ~~statements.~~inherent ~~Actual results could differ from our estimates under different assumptions or conditions~~uncertainties. ~~Our~~This ~~significant~~section ~~accounting~~should ~~policies, which may~~ be ~~affected~~read byin ~~our~~conjunction ~~estimates~~with ~~and assumptions, are more fully described in~~ Note 2 toof our audited consolidated financial statements, included elsewhere in this ~~annual~~Annual ~~report~~Report on Form 10-K, which includes other significant accounting policies.

AnRevenue ~~accounting~~recognition policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements. Management believes the following critical accounting policies reflect its most significant estimates and assumptions used in the preparation of the consolidated financial statements.

We recognize revenue in accordance with ASC Topic 605, Revenue – Revenue Recognition. Revenue and related cost of revenue from product sales are recognized when the significant risks and rewards of ownership have been transferred, title to the product and risk of loss transfers to our customers and collection of sales proceeds is reasonably assured. Based on the above criteria, revenue is generally recognized when the product is shipped from our warehouse or, in limited instances, when it is received by the customer depending on the specific terms of the arrangement. Product sales are recorded net of trade discounts (including volume and early payment incentives), sales returns, value-added tax and similar taxes. Fees charged to our customers for shipping and handling are recorded in revenue. Shipping and handling costs are included in cost of revenue. Sales to customers generally include a right of return for defective or non-conforming product. Sales returns have not historically been significant to our net revenue and have been within our estimates.

We recognize revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as amended by SAB No. 104, Revenue Recognition. Revenue and related cost of revenue from product sales is recognized when the significant risks and rewards of ownership have been transferred, title to the product and risk of loss transfers to our customers and collection of sales proceeds is reasonably assured. Based on the above criteria, revenue is generally recognized when the product is shipped from our warehouse or, in limited instances, when it is received by the customer depending on the specific terms of the arrangement. Product sales are recorded net of trade discounts (including volume and early payment incentives), sales returns, value-added tax and similar taxes. Shipping and handling costs are included in cost of revenue. Sales to customers generally include a right of return. Sales returns have not historically been significant to our revenue and have been within the estimates made by management.

Many of our products are designed and engineered to meet customer specifications. These activities and the testing of our products to determine compliance with those specifications occur prior to any revenue being recognized. Products are then manufactured and sold to customers. Customer arrangements do not involve post-installation or post-sale testing and acceptance.

6660

Impairment of ~~Goodwill~~goodwill and ~~Other~~intangible ~~Intangible~~assets ~~Assets~~

Identification of reporting units. We have four reporting units: Sensors, Electrical Protection, Power Protection and Interconnection. These reporting units have been identified based on the definitions and guidance provided in ASC Topic 350, Intangibles—Goodwill and ~~other~~Other (“ASC 350”), which considers, among other things, the manner in which we operate our business and the availability of discrete financial information. We periodically review these reporting units to ensure that they continue to reflect the manner in which the business is operated. As businesses are acquired, we assign them to an existing reporting unit or create a new reporting ~~units~~unit.

Assignment of assets, liabilities and goodwill to each ~~reporting~~ reporting unit. Assets acquired and liabilities assumed are assigned to a reporting unit as of the date of acquisition. In the event we reorganize our business, we reassign the assets, (including goodwill,) and ~~the~~ liabilities toamong the affected ~~reporting~~ reporting units. Some assets orand liabilities relate to the operations of multiple reporting units. We allocate these assets and liabilities to the reporting units based on methods that we believe are reasonable and supportable. We apply that allocation method on a consistent basis from year to year. We view some assets and liabilities, such as cash and cash equivalents, our corporate offices, debt and deferred financing costs as being corporate in nature. Accordingly, we do not assign these assets and liabilities to our reporting units.

Accounting policies relating to goodwill and the goodwill impairment test. ~~Companies~~ Businesses acquired ~~in business combinations~~ are recorded at their fair value on the date of acquisition. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is recognized as goodwill. As of December 31, ~~2009~~2010, goodwill and other intangible assets totaled $1,~~530~~529.60 million and $~~865~~723.51 million, ~~representing~~respectively, or approximately 4845.1% and 2721.3% of our total assets, respectively.

In accordance with ASC 350, goodwill and intangible assets determined to have an indefinite useful life are not amortized. Instead, these assets are evaluated for impairment on an annual basis and whenever events or business conditions change that could more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. Our judgments regarding the existence of impairment indicators are based on several factors, including the performance of the end-markets served by our customers as well as the actual financial performance of our reporting units and their respective financial forecasts over the long-term. We perform our annual evaluation of goodwill and other intangible assets for impairment ~~at the reporting unit level~~ in the fourth quarter of each fiscal year.

The first step of our annual evaluation is to compare the estimated fair value of ~~the~~our reporting units to their respective carrying values to determine whether there is an indicator of potential impairment. ~~Our~~If ~~judgments~~the ~~regarding~~carrying ~~the~~amount of a reporting unit exceeds its estimated fair value, we conduct a ~~existence~~second step, in which we calculate the implied fair value of ~~impairment~~goodwill. ~~indicators~~If ~~are~~the ~~based~~carrying onamount ~~several~~of ~~factors~~the reporting unit’s goodwill exceeds the calculated implied fair value of that goodwill, ~~including~~an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the ~~performance~~same manner as the amount of goodwill recognized in a business combination. The fair value of the ~~end-markets~~reporting ~~served~~unit byis ~~our~~allocated ~~customers~~to all of the assets and liabilities of that unit (including any unrecognized intangible assets such as ~~well~~the assembled workforce) as if the ~~actual~~reporting ~~financial~~unit ~~performance~~had been acquired in a business combination at the date of ~~our~~assessment and the fair value of the reporting ~~units~~unit ~~and~~was ~~their~~the ~~respective~~purchase ~~financial~~price ~~forecasts~~paid ~~over~~to acquire the ~~long-term~~reporting unit.

IfEstimated ~~the~~fair ~~carrying~~value ~~amount~~for ofeach a reporting unit. ~~exceeds~~In ~~its~~connection ~~estimated~~with ~~fair~~our ~~value,~~2010 weannual impairment ~~conduct a second step~~review, ~~which is~~we ~~comprised~~estimated ~~of additional factors in assessing~~ the fair value of ~~goodwill.~~our ~~If the carrying amount of the~~ reporting ~~unit’s~~units ~~goodwill~~using ~~exceeds~~ the ~~calculated~~discounted ~~implied~~cash ~~fair~~flow ~~value~~method. ofFor ~~that~~this ~~goodwill~~method, anwe ~~impairment~~prepared ~~loss~~detailed isannual ~~recognized~~projections inof anfuture ~~amount~~cash ~~equal to~~flows ~~that~~for ~~excess.~~each ~~The~~reporting ~~implied~~unit ~~fair~~for ~~value~~fiscal ofyears ~~goodwill~~2011 isthrough ~~determined~~2015, the in“Discrete ~~the~~Projection ~~same~~Period.” ~~manner~~We asestimated the ~~amount~~value of ~~goodwill~~the ~~recognized~~cash inflows abeyond ~~business~~fiscal ~~combination.~~year ~~The~~2015, ~~fair~~or ~~value~~the of“Terminal ~~the~~Year,” ~~reporting~~by ~~unit~~applying isa ~~allocated~~multiple to ~~all of~~ the ~~assets~~projected ~~and~~fiscal ~~liabilities~~year of2015 ~~that~~EBITDA. ~~unit (including~~The ~~any~~cash ~~unrecognized~~flows ~~intangible~~from ~~assets such as~~ the ~~assembled~~Discrete Projection ~~workforce)~~Period asand if the ~~reporting~~Terminal ~~unit~~Year ~~had~~were ~~been~~discounted ~~acquired~~at inan aestimated ~~business~~weighted-average ~~combination~~cost ~~and~~of ~~the~~capital ~~fair~~appropriate ~~value~~for ofeach ~~the~~ reporting unit. ~~was~~The ~~the~~estimated ~~purchase~~weighted-average ~~price~~cost ~~paid~~of tocapital ~~acquire~~was ~~the~~derived, ~~reporting unit.~~in

~~Estimated~~61 ~~fair value for each reporting unit. In connection with our 2009 annual impairment review, we estimated the fair value of our reporting units using the discounted cash flow method.~~

For the discounted cash flow method, we prepared detailed annual projections of future cash flows for each reporting unit for fiscal years 2010 through 2014, the “Discrete Projection Period.” We estimated the value of the cash flows beyond fiscal year 2014, or the “Terminal Year,” by applying a multiple to the projected fiscal year 2014 EBITDA. The cash flows from the Discrete Projection Period and the Terminal Year were discounted at an

~~estimated weighted-average cost of capital appropriate for each reporting unit. The estimated weighted-average cost of capital was derived, in~~ part, from comparable companies appropriate to each ~~reporting~~ ~~unit. For the Interconnection~~ reporting unit~~, we prepared detailed annual projections of future cash flows and estimated the Terminal Year value by way of capitalizing these cash flows at a discount rate of 16~~.~~5%.~~ We believe that our procedures for estimating discounted future cash flows, including the Terminal Year valuation were reasonable, and consistent with accepted valuation practices.

We also ~~estimate~~estimated the fair value of our reporting units using the guideline company method. ~~For~~Under ~~the~~this ~~guideline company~~ method, we performed an analysis to identify a group of publicly-traded companies that were comparable to each reporting unit. We calculated an implied EBITDA multiple (e.g., ~~Invested~~invested ~~Capital~~capital/ EBITDA) for each of the guideline companies and selected either the high, low or average multiple depending on various facts and circumstances surrounding the reporting unit and applied it to that reporting units’ trailing twelve month EBITDA. Although we estimate the fair value of our reporting units using the guideline method, we do so for corroborative purposes, and place primary weight on the discounted cash flow method.

The preparation of the long-range forecasts, the selection of the discount rates and the estimation of the multiples used in valuing the Terminal Year involve significant judgments. Changes to these assumptions could affect the estimated fair value of our reporting units and could result in a goodwill impairment charge in a future period.

Goodwill impairment. During the fourth quarter of 2008, we determined that goodwill associated with the Interconnection reporting unit was impaired and recorded a charge of $13.2 million in the consolidated statements of operations. During the first quarter of 2009, we determined that goodwill associated with the Interconnection reporting unit had become further impaired and recorded a charge of $5.3 million. In addition, we determined that certain intangible assets associated with the Interconnection reporting unit had become impaired during the first quarter of 2009 and recorded a charge of $14.6 million. We believe that the global economic crisis, the economic conditions within the semiconductor end-market and an increase in the competitive landscape surrounding suppliers to the semiconductor end-market were all factors that led to the impairment of goodwill ~~and intangible assets~~. We believe that the global economic crisis and the economic conditions within the semiconductor end-market worsened from the fourth quarter of 2008 to the first quarter of 2009, leading to the second impairment charge.

The fair value and carrying value of the Interconnection reporting unit after the impairment charges in the first quarter of 2009 were $15.1 million and $14.1 million, respectively. The fair value and carrying value of the Interconnection reporting unit as of October 1, 2009 were $26.7 million and $14.7 million, respectively. ~~The~~Our ~~carrying~~financial ~~values~~performance changed significantly ofduring ~~goodwill~~2009. ~~and~~For ~~intangible~~example, ~~assets~~our ~~associated~~net ~~with~~revenue during the ~~Interconnection~~quarters ~~reporting~~ended ~~unit~~March 31, as2009, June 30, of2009, September 30, 2009 and December 31, 2009 ~~were~~was $3239.30 million, $255.4 million, $302.5 million and $10338.1 million, respectively. We believe these changes generally follow the pattern of the performance in the various end-markets served by our customers.

AsIn ofthe ~~October~~quarter 1ended December 31, ~~2009~~2010, we evaluated our goodwill ~~and indefinite-lived intangible assets~~ for impairment ~~at the reporting unit level~~ and determined that the fair ~~value~~values ~~exceeded~~of the reporting units exceeded their carrying ~~value~~values on that date. Should certain assumptions used in the development of the fair ~~value~~values of ~~its~~our reporting units change, we may be required to recognize additional goodwill orimpairments. ~~intangible~~The ~~assets~~estimated ~~impairments~~fair values of the Sensors, Electrical Protection, Power Protection and Interconnection reporting units used in those analyses exceeded their carrying values by approximately 215%, 180%, 60% and 190%, respectively.

~~Events~~We ~~that~~did ~~have~~not ~~occurred~~prepare ~~since~~updated ~~the~~interim ~~latest annual~~ goodwill impairment ~~assessment.~~analyses ~~Our~~as ~~financial~~of ~~performance changed significantly during 2009. For example, our net revenue during the quarters ended March~~December 31, ~~2009,~~2010 ~~June 30,~~for ~~2009,~~any ~~September 30~~reporting unit, ~~2009~~as ~~and~~we ~~December 31~~believed, ~~2009~~based ~~was~~on ~~$239.0~~our ~~million,~~financial ~~$255.4~~performance ~~million,~~during ~~$302.5~~the ~~million~~fourth ~~and~~quarter ~~$338.1~~of ~~million~~2010, ~~respectively. We~~ ~~believe~~the ~~these~~financial ~~changes~~forecasts ~~generally~~and ~~follow~~ the ~~pattern~~improvement ofin the ~~performance~~global ineconomy and the ~~various~~ end-markets ~~served by~~ our customers. ~~During the quarter ended December 31~~serve, ~~2009,~~that wethere ~~prepared~~were ~~our~~no ~~annual~~indicators ~~goodwill impairment analyses. The estimated fair values~~ of ~~the~~potential ~~Sensors, Electrical Protection, Power Protection and Interconnection reporting units used in those analyses exceeded their carrying values by 147~~impairments.~~1%,~~ ~~116.3%, 26.1% and 81.3%, respectively.~~

68Types of events that could result in a goodwill impairment. As noted above, the preparation of the long-range forecasts, the selection of the discount rates and the estimation of the multiples or long-term growth rates used in valuing the Terminal Year involve significant judgments. Changes to these assumptions could affect the estimated fair value of our reporting units and could result in a goodwill impairment charge in a future period. We believe that a “double-dip” in the global economy, a scenario in which there is a short period of growth

We following ~~did~~the ~~not~~bottom ~~prepare updated interim goodwill impairment analyses as~~ of ~~December 31~~a recession, ~~2009 for~~followed ~~any~~immediately ~~reporting~~by ~~unit,~~another assharp wedecline ~~believed,~~that ~~based~~results onin ~~our~~another ~~financial~~recession ~~performance~~could ~~during~~require ~~the~~us ~~fourth~~to ~~quarter~~revise ofour ~~2009,~~long-term ~~the~~projections ~~financial~~and ~~forecasts~~could ~~and~~reduce the multiples ~~improvement~~applied into the ~~global~~Terminal ~~economy~~Year ~~and~~value. ~~the~~Such ~~end-markets~~revisions ~~our~~could ~~customers~~result ~~serve,~~in ~~that~~a ~~there~~goodwill ~~were~~impairment nocharge ~~indicators~~in ~~of potential~~the ~~impairments~~future.

~~Types~~Indefinite-lived ofintangible ~~events~~assets. ~~that~~We ~~could~~perform ~~result~~an inannual aimpairment ~~goodwill~~review ~~impairment.~~of Asour ~~noted~~indefinite-lived ~~above,~~intangible ~~the~~assets ~~preparation~~unless ofevents ~~the~~occur ~~long-range~~which ~~forecasts,~~trigger the ~~selection~~need offor ~~the~~an ~~discount~~earlier ~~rates~~impairment ~~and~~review. ~~the~~The ~~estimation~~impairment ofreview ~~the~~requires ~~multiples~~management orto ~~long-term~~make ~~growth~~assumptions ~~rates~~about ~~used~~future inconditions ~~valuing~~impacting the ~~Terminal~~value ~~Year~~of ~~involve~~the ~~significant~~indefinite-lived ~~judgments.~~intangible ~~Changes~~assets, toincluding ~~these~~projected ~~assumptions~~growth ~~could affect the estimated fair~~rates, ~~value~~cost of ~~our~~capital, ~~reporting~~effective ~~units~~tax ~~and~~rates, ~~could~~royalty ~~result~~rates, inmarket ashare ~~goodwill~~and ~~impairment~~other ~~charge~~items. inDuring athe ~~future~~fourth ~~period.~~quarter Weof ~~believe~~2010, ~~that~~we aevaluated ~~“double~~our indefinite-~~dip”~~lived inintangible ~~the~~assets ~~global~~for ~~economy,~~impairment aand ~~scenario~~determined inthat ~~which~~the ~~there~~fair isvalues ~~a short period~~ of ~~growth~~the ~~following~~indefinite-lived trade ~~the~~names ~~bottom~~exceeded oftheir ~~a recession,~~carrying ~~followed~~values ~~immediately~~at bythat ~~another~~time. ~~sharp~~Should ~~decline~~certain ~~that~~assumptions ~~results~~used in ~~another~~the ~~recession~~development ~~could~~of ~~require~~the usfair tovalue ~~revise~~of our ~~long~~indefinite-~~term~~lived ~~projections~~intangible ~~and~~assets ~~could~~change, ~~reduce~~we ~~the~~may ~~multiples~~be ~~applied~~required to ~~the~~recognize ~~Terminal~~impairments ~~Year~~of ~~value.~~these ~~Such~~intangible ~~revisions could result in a goodwill impairment charge in the future~~assets.

~~Indefinite~~Definite-~~Lived~~lived ~~Intangible~~intangible ~~Assets~~assets. WeReviews ~~perform~~are anregularly ~~annual~~performed ~~impairment~~to ~~review~~determine whether facts or circumstances exist that indicate the carrying values of our ~~indefinite~~definite-lived intangible assets ~~unless~~are ~~events~~impaired. ~~occur~~The ~~which~~recoverability ~~trigger~~of these assets is assessed by comparing the ~~need~~projected ~~for~~undiscounted annet ~~earlier~~cash ~~impairment~~flows ~~review~~associated with those assets to their respective carrying amounts. ~~The~~If ~~impairment~~the ~~review~~sum ~~requires~~of ~~management~~the toprojected ~~make~~undiscounted ~~assumptions~~net ~~about~~cash ~~future~~flows ~~conditions~~falls ~~impacting~~below the carrying value of the ~~indefinite-~~assets, ~~lived~~the impairment charge is based on the excess of the carrying amount over the fair value of those assets. We determine fair value by using the appropriate income approach valuation methodology depending on the nature of the intangible ~~assets~~asset. During the first quarter of 2009, ~~including~~we ~~projected~~determined ~~growth~~that ~~rates~~certain intangible assets associated with the Interconnection reporting unit were impaired, and ~~cost~~we recorded a charge of ~~capital,~~$14.6 ~~effective~~million. ~~tax~~We ~~rates,~~believe ~~royalty~~that ~~rates~~the global economic crisis, ~~market~~the ~~share~~economic conditions within the semiconductor end-market and ~~other~~an ~~items~~increase in the competitive landscape surrounding suppliers to the semiconductor end-market were all factors that led to the impairment of intangible assets.

~~Definite-Lived~~Impairment ~~Intangible~~of ~~Assets~~long-lived assets. ~~Reviews~~We ~~are~~periodically re-evaluate ~~regularly~~carrying ~~performed~~values toand ~~determine~~estimated ~~whether~~useful ~~facts~~lives of long-lived assets whenever events or ~~circumstances~~changes ~~exist~~in ~~that~~circumstances indicate that the carrying ~~values~~amount of ~~our~~the ~~definite-lived~~related ~~intangible~~ assets tomay not be ~~held~~ ~~and~~recoverable. ~~used~~We ~~are~~use ~~impaired.~~estimates ~~The~~of ~~recoverability~~undiscounted ofcash ~~these~~flows from long-lived assets isto ~~assessed~~determine bywhether ~~comparing~~ the ~~projected~~carrying ~~undiscounted~~value ~~net~~of ~~cash~~such ~~flows~~assets ~~associated~~is ~~with~~recoverable ~~those~~over the assets’ toremaining ~~their~~useful ~~respective~~lives. ~~carrying~~These ~~amounts.~~estimates Ifinclude ~~the~~assumptions ~~sum~~about offuture ~~the~~conditions ~~projected~~within ~~undiscounted~~us ~~net~~and ~~cash flows~~the ~~falls~~industry. ~~below~~If ~~the~~an ~~carrying~~asset ~~value~~is ofdetermined to ~~the~~be ~~assets~~impaired, the impairment ~~charge~~ is ~~based on~~ the ~~excess~~amount ofby which the carrying ~~amount~~value ~~over~~of the ~~fair~~asset ~~value~~exceeds ofits ~~those~~fair ~~assets~~value. ~~Fair~~These ~~value~~evaluations isare ~~determined~~performed byat ~~using~~a ~~the~~level ~~appropriate~~where ~~income~~discrete ~~approach~~cash ~~valuation~~flows ~~methodology depending~~may onbe ~~the~~attributed ~~nature~~to ofeither ~~the~~an ~~intangible~~individual asset. or a group of assets.

~~Impairment~~Income oftaxes Long-Lived Assets. We periodically re-evaluate carrying values and estimated useful lives of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the related assets may not be recoverable. We use estimates of undiscounted cash flows from long-lived assets to determine whether the book value of such assets is recoverable over the assets’ remaining useful lives. These estimates include assumptions about future conditions within the Company and the industry. If an asset is determined to be impaired, the impairment is measured by the amount by which the carrying value of the asset exceeds its fair value. These evaluations are performed at a level where discrete cash flows may be attributed to either an individual asset or a group of assets.

~~Inventories~~As part of the process of preparing our financial statements, we are required to estimate our provision for income taxes in each of the jurisdictions in which we operate. This involves estimating our actual current tax exposure, including assessing the risks associated with tax audits, together with assessing temporary differences resulting from the different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and record a valuation allowance to reduce the deferred tax assets to an amount that, in our judgment, is more likely than not to be recovered.

Inventories are stated at the lower of cost or estimated net realizable value. Cost for raw materials, work-in-process and finished goods is determined on a first-in, first-out basis and includes material, labor and applicable manufacturing overhead as well as transportation and handling costs. We conduct quarterly inventory reviews for salability and obsolescence. Allowances are determined by comparing inventory levels of individual materials and parts to historical usage rates, current backlog and estimated future sales and by analyzing the age of inventory, in order to identify specific components of inventory that are judged unlikely to be sold. Provisions to the inventory allowance are recognized regularly based on the analysis described above and could have a material adverse impact on our financial condition and results of operations.

Income Taxes

As part of the process of preparing our financial statements, we are required to estimate our provision for income taxes in each of the jurisdictions in which we operate. This involves estimating our actual current tax exposure, including assessing the risks associated with tax audits, together with assessing temporary differences

resulting from the different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and record a valuation allowance to reduce the deferred tax assets to an amount that, in our judgment, is more likely than not to be recovered.

Management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance recorded against our deferred tax assets. The valuation allowance is based on our estimates of future taxable income and the period over which we expect the deferred tax assets to be recovered. Our assessment of future taxable income is based on historical experience and current and anticipated market and economic conditions and trends. In the event that actual results differ from these estimates or we adjust our estimates in the future, we may need to adjust our valuation allowance, which could materially impact our consolidated financial position and results of operations.

Pension and ~~Other~~ ~~Post~~post-~~Retirement~~employment ~~Benefit~~benefit ~~Plans~~plans

We sponsor various pension and ~~other~~ post-~~retirement~~employment benefit plans covering our employees in several countries. The estimates of our obligations and related expense of these plans recorded in our financial statements are based on certain assumptions. The most significant assumptions relate to the discount rate, expected return on plan assets and rate of increase in healthcare costs. Other assumptions used include employee demographic factors such as compensation rate increases, retirement patterns, employee turnover rates and mortality rates. These assumptions are updated annually by us. The difference between these assumptions and actual experience results in the recognition of an asset or liability based upon a net actuarial (gain)/loss. If total net (gain)/loss exceeds a threshold of 10% of the greater of the projected benefit obligation or the market related value of plan assets, it is subject to amortization and recorded as a component of net periodic pension cost over the average remaining service lives of the employees participating in the benefit plan.

statements are based on certain assumptions. The most significant assumptions relate to the discount rate, expected return on plan assets and rate of increase in healthcare costs. Other assumptions used include employee demographic factors such as compensation rate increases, retirement patterns, employee turnover rates and mortality rates. These assumptions are updated annually by us. The difference between these assumptions and actual experience results in the recognition of an asset or liability. If total net actuarial (gain)/loss exceeds a threshold of 10% of the greater of the projected benefit obligation or the market related value of plan assets, it is subject to amortization and recorded as a component of net periodic pension cost over the average remaining service lives of the employees participating in the benefit plan.

The discount rate reflects the current rate at which the pension and other post-retirement liabilities could be effectively settled considering the timing of expected payments for plan participants. It is used to discount the estimated future obligations of the plans to the present value of the liability reflected in our financial statements. In estimating this rate, we consider rates of return on high-quality fixed income investments included in various published bond indexes, adjusted to eliminate the effect of call provisions and differences in the timing and amounts of cash outflows related to the bonds.

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

The rate of increase in healthcare costs directly impacts the estimate of our future obligations in connection with our post-~~retirement~~employment medical benefits. Our estimate of healthcare cost trends is based on historical increases in healthcare costs under similarly designed plans, the level of increase in healthcare costs expected in the future and the design features of the underlying plans.

Share-Based Payment Plans

~~In December 2004, the FASB issued guidance now codified within~~ ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ~~ASC 718~~ requires that ~~new,~~a ~~modified~~company ~~and~~measure ~~unvested~~at fair value any new or modified share-based compensation arrangements with employees, such as stock options and restricted stock units, ~~be measured at fair value~~ and ~~recognized~~recognize as compensation expense over the requisite service period.

~~Our~~Prior to our IPO, our outstanding option awards ~~are~~were divided into three tranches. The first tranche is subject to time vesting. The second and third tranches are subject to time vesting and, additionally, the completion of a liquidity event that results in specified returns on the Sponsors’ investment. During the third quarter of 2009, Tranche 3 options were converted to Tranche 2 options. During the first quarter of 2010 we completed our IPO, which converted all Tranche 2 and 3 options to time vesting only.

70The fair value of the Tranche 1 options are estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Key assumptions used in estimating the grant-date fair value of these options are as follows: the fair value of the ordinary shares, dividend yield, expected volatility, risk-free interest rate and expected term. The expected term of the time vesting options was based on the “simplified” methodology prescribed by Staff Accounting Bulletin (“SAB”) No. 107 (“SAB 107”), in which the expected term is determined by computing the mathematical mean of the average vesting period and the contractual life of the options. We utilize the simplified method for options granted due to the lack of historical exercise data necessary to provide a reasonable basis upon which to estimate the term. Also, because of our lack of history as a public company, we consider the historical and implied volatility of publicly-traded companies within our industry when selecting the appropriate volatility to apply to the options. Ultimately, we utilize the implied volatility to calculate the fair value of the options as it provides a forward-looking indication and may offer insight into expected industry volatility. The risk-free interest rate is based on the yield for a U.S. Treasury security having a maturity similar to the expected life of the related grant. The forfeiture rate is based on our estimate of forfeitures by plan participants based on historical forfeiture rates. The dividend yield is based on management’s judgment with input from our board of directors.

~~The~~Since ~~fair~~completion ~~value~~of our Parent’s IPO in March 2010, we have valued ordinary shares in connection with the issuance of share based payment awards using the ~~Tranche~~closing 1price ~~options~~of ~~are~~our ~~estimated~~Parent’s stock on the New York Stock Exchange (“NYSE”) on the date of the grant. ~~using~~Prior to our Parent’s stock being traded on the NYSE, we ~~Black-Scholes-Merton~~relied ~~option-pricing~~on ~~model.~~valuation ~~Key~~analyses ~~assumptions~~to ~~used~~determine fair value of our Parent’s ordinary shares in ~~estimating~~connection with the ~~grant~~issuance of share-~~date~~based ~~fair~~payment ~~value~~awards. ofThe ~~these~~assumptions ~~options~~required ~~are~~by asthese ~~follows:~~valuation analyses involved the ~~fair~~use ~~value~~of significant judgments and estimates. Each valuation analysis of ~~the~~our Parent’s ordinary shares, ~~dividend~~utilized ~~yield/interest~~a ~~yield,~~combination ~~expected~~of ~~volatility~~the discounted cash flow method and the guideline company method. For the discounted cash flow method, ~~risk-free~~we ~~interest~~prepared detailed annual projections of ~~rate~~future ~~and~~cash ~~expected~~flows ~~term~~over a period of five fiscal years (the “Discrete Projection Period”). ~~The~~We ~~expected~~estimated ~~term~~the total value of the ~~time~~cash ~~vesting~~flow ~~options~~beyond ~~was~~the ~~based~~final onfiscal year (the “~~simplified~~Terminal Year”) ~~methodology~~by ~~prescribed~~applying bya ~~SAB~~multiple ~~No. 107~~to our Terminal Year net earnings before interest, taxes, depreciation and amortization (“~~SAB 107~~EBITDA”). The ~~expected~~cash ~~term~~flows isfrom ~~determined~~the byDiscrete ~~computing~~Projection Period and the ~~mathematical~~Terminal ~~mean~~Year were discounted at an estimated weighted-average cost of ~~the~~capital. The estimated weighted-average ~~vesting~~cost ~~period~~of ~~and~~capital was derived, in part, from the ~~contractual~~median ~~life~~capital structure of ~~the~~comparable ~~options~~companies within similar industries. We ~~utilize~~believe ~~the~~that ~~simplified~~our ~~method~~procedures for ~~options~~estimating ~~granted~~discounted ~~due~~future tocash flows, including the ~~lack~~Terminal ofYear valuation, ~~historical~~were ~~exercise~~reasonable ~~data~~and ~~necessary~~consistent towith ~~provide~~accepted avaluation ~~reasonable~~practices. ~~basis~~For ~~upon~~the ~~which~~guideline tocompany ~~estimate~~method, ~~the~~we ~~term.~~performed Wean ~~consider~~analysis ~~the historical~~to ~~and~~identify ~~implied~~a ~~volatility~~group of publicly-traded companies ~~within~~that were comparable to us. Many of our ~~industry~~competitors ~~when~~are ~~selecting~~smaller, privately-held ~~the~~companies ~~appropriate~~or ~~volatility~~divisions towithin ~~apply~~large publicly-traded companies. Therefore, in order to ~~the~~develop ~~options.~~market-based ~~Ultimately~~multiples, we ~~utilize~~used ~~the~~data ~~implied~~from ~~volatility~~publicly-traded companies that we believe operate in industries similar to ~~calculate~~our ~~the~~own. ~~fair~~We calculated an implied EBITDA multiple (e.g., enterprise value/EBITDA) for each of the ~~options~~guideline ascompanies ~~it provides~~and aselected ~~forward-looking~~the ~~indication~~high ~~and~~multiple ~~may~~to ~~offer~~apply ~~insight~~to ~~into~~our ~~expected~~projected ~~industry~~EBITDA ~~volatility~~for the next fiscal year. ~~The~~Because ~~risk-free~~the ~~interest~~resulting ~~rate~~enterprise isvalue ~~based~~under onthis guideline company method has generally been within 10% of the ~~yield~~enterprise ~~for~~value aunder ~~U.S.~~the ~~Treasury~~discounted ~~security~~cash ~~having~~flow amethod, ~~maturity~~we ~~similar~~utilized the average of the two methods to determine the ~~expected~~fair ~~life~~value of the ~~related~~ordinary ~~grant~~shares. ~~The~~In addition, we applied a marketability ~~dividend~~discount ~~yield~~to isthe ~~based~~implied onvalue ~~management’s~~of ~~judgment~~equity. We believe that this approach is consistent with ~~input~~the ~~from~~principles ~~our~~and ~~board~~guidance set forth in the 2004 AICPA Practice Aid on Valuation of ~~directors~~Privately-Held-Company Equity Securities Issued as Compensation.

~~We perform contemporaneous valuations to estimate the fair value of the Company’s ordinary shares in connection with the issuance of share~~Off-~~based~~Balance ~~payment~~Sheet ~~awards.~~Arrangements We rely on these valuation analyses in determining the fair value of the share-based payment awards. The assumptions required by these valuation analyses involve the use of significant judgments and estimates on the part of management.

~~For~~From ~~significant~~time ~~awards,~~to ~~such as the one on September 4~~time, ~~2009~~we ~~and~~execute ~~the~~contracts ~~one~~that onrequire ~~December~~us 9,to ~~2009,~~indemnify the ~~valuation~~other ~~analysis~~parties ofto the ~~ordinary shares of the Company utilizes a combination of the discounted cash flow method and the guideline company method~~contracts. ~~For~~These ~~less~~indemnification ~~significant~~obligations ~~awards,~~arise wein ~~rely~~two ~~solely on the discounted cash flow method~~contexts. ~~For the discounted cash flow method~~First, wein ~~prepare~~connection ~~detailed~~with ~~annual~~any ~~projections~~asset ofsales by ~~future cash flows over a period of five fiscal years~~us, or the ~~“Discrete~~ ~~Projection~~asset ~~Period.”~~sale Weagreement ~~estimate~~typically ~~the~~contains ~~total~~standard ~~value~~provisions ofrequiring ~~the~~us ~~cash~~to ~~flow~~indemnify ~~beyond~~ the ~~final~~purchaser ~~fiscal~~against ~~year~~breaches by ~~applying~~us aof ~~multiple~~representations toand ~~the~~warranties ~~final~~contained ~~projected~~in ~~fiscal year EBITDA, or~~ the ~~“Final Fiscal Year~~agreement.” ~~The~~These ~~cash~~indemnities ~~flows~~are ~~from~~generally ~~the Discrete~~subject ~~Projection~~to ~~Period~~time and liability ~~the Final Fiscal Year are discounted at an estimated weighted-average cost of capital~~limitations. ~~The~~Second, ~~estimated~~we ~~weighted-average~~enter ~~cost~~into ofagreements ~~capital is derived,~~ in ~~part, from~~ the ~~median~~ordinary ~~capital~~course ~~structure~~ of ~~comparable~~business, ~~companies within~~such ~~similar~~as ~~industries.~~sales Weagreements, ~~believe~~which ~~that~~contain ~~our~~indemnification ~~procedures~~provisions ~~for~~relating ~~estimating~~to ~~discounted~~product ~~future cash flows~~quality, ~~including~~intellectual ~~the~~property ~~Final~~infringement ~~Fiscal Year valuation, are reasonable~~ and ~~consistent~~other ~~with accepted valuation practices~~typical indemnities. ~~For~~In ~~the~~certain ~~guideline company method~~cases, ~~we perform~~indemnification anobligations ~~analysis~~arise toby ~~identify~~law. aWe ~~group~~believe ~~of publicly-traded companies~~ that ~~are comparable to~~ our ~~company.~~indemnification ~~Many~~obligations ofare ~~the~~consistent ~~companies~~ with ~~whom~~other ~~we compete are smaller, privately-held~~ companies ~~or divisions within large publicly-traded companies. Therefore,~~ in order to develop market-based multiples, we turn to publicly-traded companies that we believe operate in industries similar to our own. We calculate an implied EBITDA multiple (enterprise value/EBITDA) for each of the ~~guideline~~markets ~~companies and select the appropriate multiple to apply to our EBITDA (our fiscal year 2010 projected EBITDA~~ in ~~the~~which ~~case~~we ~~of the awards issued on September 4, 2009 and December 9, 2009) depending on the facts and circumstances~~compete. ~~For~~Performance ~~the awards issued on September 4, 2009 and December 9, 2009, the resulting enterprise value~~ under ~~this~~any ~~guideline company method was within 10%~~ of ~~the~~these ~~enterprise~~indemnification obligations ~~value~~would ~~under~~generally ~~the~~be ~~discounted~~triggered ~~cash~~by ~~flow~~a ~~method.~~breach ~~For these grants, we utilized the average~~ of the ~~two methods~~terms ~~to determine the fair value~~ of the ~~ordinary~~contract ~~shares.~~or Inby ~~addition, we apply~~ a ~~marketability~~third-party ~~discount (6~~claim.0% ~~for~~Any ~~the~~future ~~awards~~liabilities ~~issued~~due ~~on September 4, 2009 and 5.0% for the award issued on December 9, 2009)~~ to ~~the~~these ~~implied~~indemnities ~~value~~cannot ofbe ~~equity.~~reasonably ~~We believe~~estimated ~~that~~or ~~the overall approach is consistent with the principles and guidance set forth in the 2004 AICPA Practice Aid on Valuation of Privately-Held-Company Equity Securities Issued as Compensation~~accrued.

~~The~~In ~~fair~~May ~~value~~2009, ofSensata ~~the~~Technologies, ~~Tranche~~Inc. 2(“STI”), ~~and~~our 3indirect ~~options~~and ~~are~~wholly-owned ~~estimated~~subsidiary, onnegotiated ~~the~~a ~~date~~transition ofproduction agreement ~~grant~~with ~~using~~Engineered ~~the~~Materials ~~Monte~~Solutions, ~~Carlo~~LLC, ~~Simulation~~or ~~Approach.~~“EMS,” ~~Key~~to ~~assumptions used~~ensure ~~include those described above for determining~~ the ~~fair~~continuation ~~value~~ of ~~Tranche~~supply 1of ~~options~~certain inmaterials. ~~addition~~EMS tois ~~assumed~~a ~~time~~wholly-owned tosubsidiary ~~liquidity and probability~~ of anWickeder ~~initial~~Westfalenstahl ~~public offering versus a disposition~~Gmbh. The ~~assumed~~Electrical ~~time~~Contact toSystems, ~~liquidity~~or ~~and~~“ECS,” business ~~probability~~unit of ~~an initial~~EMS ~~public~~was ~~offering~~our ~~versus~~primary asupplier ~~disposition~~for ~~are~~electrical ~~based~~contacts onused ~~management’s~~in ~~judgment~~the ~~with~~manufacturing ~~input~~of ~~from~~certain of our ~~board~~controls ~~of directors~~products. IfWe aentered ~~liquidity~~into ~~event~~the ~~occurs,~~transition weproduction ~~will~~agreement bein ~~required~~order to ~~recognize~~support ~~compensation~~the ~~expense~~ECS ~~over~~business ~~the~~unit, ~~remaining~~which ~~service~~was ~~period~~at ofrisk ~~the~~of ~~awards,~~closing. ~~including~~We aextended ~~cumulative~~the ~~catch-up~~transition ~~adjustment~~production ~~for~~agreement ~~previously~~with ~~unrecognized~~EMS ~~compensation~~on ~~expense~~February 4, ~~regardless~~2010, ofand ~~whether~~it orexpired ~~not~~on ~~the~~May 31, ~~Sponsors~~2010. ~~achieve~~We ~~the~~have ~~specified~~transitioned ~~returns.~~to Asalternative ofsuppliers ~~December 31,~~for ~~2009,~~these ~~there was $21~~materials.2 ~~million~~A letter of ~~unrecognized compensation~~credit ~~expense~~issued ~~related~~ to ~~non-vested~~the ~~Tranche~~consignor 2under ~~options,~~a silver ~~including~~consignment ~~former~~agreement ~~Tranche~~was 3cancelled ~~options~~in ~~that~~August ~~were~~2010. ~~converted~~We tosettled ~~Tranche~~the 2agreements ~~options~~with ~~during~~ the ~~three~~consignor ~~months~~and ~~ended~~EMS ~~September 30,~~during ~~2009.~~the Wethird ~~expect~~quarter ~~a public offering~~ of ~~our~~2010 ~~Parent,~~for ~~if successful,~~an toimmaterial ~~qualify as a liquidity event~~amount.

71Because we purchase various types of raw materials and component parts from suppliers, such as from EMS as described above, we may be materially and adversely affected by failure of those suppliers to perform as

~~The~~ expected. ~~forfeiture~~This ~~rate~~non-performance ismay ~~based~~consist onof ~~our~~delivery ~~estimated~~delays ~~forfeitures~~or failures caused by ~~plan~~production ~~participants~~issues ~~due~~or todelivery of non-conforming products. This risk of non-performance may also result from the ~~lack~~insolvency or bankruptcy of ~~historical~~one ~~forfeiture~~or ~~data~~more ~~necessary~~of our suppliers. Our efforts to ~~provide~~protect aagainst ~~reasonable~~and ~~basis~~to ~~upon~~minimize ~~which~~these risks may not always be effective. As we continually review the performance and price competitiveness of our suppliers, we may occasionally seek to ~~estimate~~engage new suppliers with which we have little or no experience. For example, we do not have a ~~rate~~prior relationship with all of the suppliers that we are qualifying for the supply of contacts. The use of new suppliers can pose technical, quality and other risks. See Item 1A, “Risk Factors,” included elsewhere in this Annual Report on Form 10-K.

We granted the following share-based awards during the year ended December 31, 2009:

Grant Date	Number ofoptions	Number ofrestrictedstock units	OriginalExercisePrice		ModifiedExercisePrice		Fair valueof ordinaryshares ondate of grant		Fair value ofordinaryshares ondate of mostrecentmodification		Intrinsicvalue pershare basedon fair valueof ordinaryshares as ofDecember 31,2009
May 21, 2009(1)	75,000	—	$	6.30	$	14.80	$	6.30	$	17.48	$	5.23
September 4, 2009(2)	950,000	—		7.00		14.80		14.80		17.48		5.23
December 9, 2009	350,000	—		17.48		NA		17.48		NA		2.55
December 9, 2009	—	380,900		NA		NA		17.48		NA		20.03

(1) The award granted on May 21, 2009 for 75,000 options was cancelled and reissued on September 4, 2009. The exercise price of the reissued award increased from $6.30 to $7.00. On December 8, 2009, the award was again cancelled and reissued. The exercise price of the reissued award increased from $7.00 to $14.80.

(2) On December 8, 2009, all of the awards granted on September 4, 2009 were cancelled and reissued. The Board determined that the exercise price of the options granted on September 4, 2009 was established at less than the fair market value of the underlying shares. The exercise price of these options was reset on December 8, 2009 to $14.80, the fair market value of the ordinary shares on September 4, 2009. All other terms and provisions of the options granted, including the dates of vesting, remained unchanged and in full force and effect.

During 2009, we amended our First Amended and Restated Sensata Technologies Holding B.V. 2006 Management Option Plan to increase the ordinary shares reserved for issuance and to change the vesting rules by changing the performance measure of Tranche 3 options to equal that of the Tranche 2 options. Refer to Item 11, “Executive Compensation—Compensation Discussion and Analysis—Components of Compensation—Equity Compensation,” for further discussion of our share-based payment plans.

Recent Accounting Pronouncements

InRecently ~~October 2009, the Financial Accounting Standards Board (“FASB”)~~ issued ~~Accounting Standards Update (“ASU”) No. 2009-13, Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 establishes the~~ accounting ~~and~~standards ~~reporting guidance for arrangements including multiple revenue-generating activities, and provides amendments~~ to ~~the~~ ~~criteria~~be ~~for~~adopted ~~separating deliverables, and measuring and allocating arrangement consideration to one or more units of accounting. The amendments~~ in ASU 2009-13 also establish a selling price hierarchy for determining the selling price of a deliverable. Significantly enhanced disclosures are also required to provide information about a vendor’s multiple-deliverable revenue arrangements, including information about the nature and terms, significant deliverables, and its performance within arrangements. The amendments also require providing information about the significant judgments made and changes to those judgments and about how the application of the relative selling-price method affects the timing or amount of revenue recognition. The amendments in ASU 2009-13 are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, or January 1, 2011 ~~for the Company. Early application is permitted. We are currently evaluating the potential effect, if any, the adoption of ASU 2009-13 will have on our financial position or results of operations.~~

In ~~June~~October 2009, the Financial Accounting Standards Board (“FASB”) issued ~~guidance~~Accounting ~~now~~Standards ~~codified~~Update ~~within~~(“ASU”) ~~ASC~~No. 2009-13, ~~Topic~~Multiple-Deliverable ~~810~~Revenue Arrangements, ~~Consolidation (~~or “~~ASC~~ASU ~~810”)~~2009-13.” ~~ASC~~ASU ~~810~~2009-13 ~~requires~~establishes anthe ~~enterprise~~accounting and reporting guidance for arrangements that include multiple revenue-generating activities, and provides amendments to ~~perform~~the ancriteria ~~analysis~~for separating deliverables, and measuring and allocating arrangement consideration to ~~determine~~one ~~whether~~or more units of accounting. The amendments in ASU 2009-13 also establish a hierarchy for determining the selling price of a deliverable. Enhanced disclosures are also required to provide information about ~~enterprise~~a vendor’s ~~variable~~multiple-deliverable ~~interest~~revenue arrangements, including information about the nature and terms of the arrangement, significant deliverables, and the vendor’s performance within arrangements. The amendments also require providing information about the significant judgments made and changes to those judgments and about how the application of the relative selling-price method affects the timing or ~~interests~~amount ~~give~~of itrevenue arecognition. ~~controlling~~The ~~financial~~amendments ~~interest~~in ASU 2009-13 are effective prospectively for revenue arrangements entered into or materially modified in afiscal ~~variable~~years ~~interest~~beginning ~~entity~~on or after June 15, 2010, or January 1, 2011 for us. ~~This~~Early ~~analysis~~application ~~identifies~~is ~~the~~permitted. ~~primary~~The adoption of ASU 2009-13 will not have a material impact on our financial position or results of operations.

72Other new pronouncements issued but not effective until after January 1, 2011 are not expected to have a significant effect on our financial position or results of operations.

Accounting standards adopted during the year ended December 31, 2010

In February 2010, the FASB issued ASU 2010-09, Amendments to Certain Recognition and Disclosure Requirements, (“ASU 2010-09”), which eliminated the requirement under Accounting Standards Codification (“ASC”) Topic 855, Subsequent Events (“ASC 855”) for SEC registrants to disclose the date through which they have evaluated subsequent events in the financial statements. ASU 2010-09 was effective upon issuance, and we adopted its provisions as of the issuance of the Quarterly Report for the period ended March 31, 2010. The adoption of ASU 2010-09 was for disclosure purposes only and did not have any effect on our financial position or results of operations.

In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements (“ASU 2010-06”), which amended ASC Topic 820, Fair Value Measurement and Disclosure (“ASC 820”) to require a number of additional disclosures regarding fair value measurements. In addition to the new disclosure requirements, ASU 2010-06 amended ASC 820 to clarify that reporting entities are required to provide fair value measurement disclosures for each class of assets and liabilities. Prior to the issuance of ASU 2010-06, the guidance in ASC 820 required separate fair value disclosures for each major category of assets and liabilities. ASU 2010-06 also clarified the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. Except for the requirement to disclose information about purchases, sales, issuance and settlements in the reconciliation of recurring Level 3 measurements on a gross basis, all of the provisions of ASU 2010-06 were effective for interim

~~beneficiary~~and ofannual areporting ~~variable~~periods ~~interest~~beginning ~~entity~~after asDecember 15, ~~one~~2009. ~~with~~We ~~the~~adopted ~~power~~these toprovisions ~~direct~~as ~~the activities~~ of aJanuary 1, ~~variable~~2010. ~~interest~~The ~~entity~~requirement ~~that~~to ~~most~~separately ~~significantly~~disclose ~~impact~~purchases, ~~the~~sales, ~~entity’s~~issuances ~~economic performance~~ and ~~the~~settlements ~~obligation to absorb losses~~ of ~~the~~recurring ~~entity~~Level ~~that~~3 ~~could~~measurements ~~potentially be significant to the variable interest. The guidance~~ is effective asfor ~~of the beginning of the~~ annual reporting ~~period~~periods ~~commencing~~beginning after ~~November~~December 15, ~~2009~~2010, or January 1, ~~2010~~ 2011 for us,. ~~with~~The ~~early~~ adoption ~~prohibited.~~of WeASU do2010-06 did not ~~expect~~and ~~the~~will ~~adoption~~not to have aany ~~material~~ effect on our financial position or results of operations.

In June 2009, the FASB issued guidance now codified within ASC Topic 810, Consolidation (“ASC 810”), which requires entities to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as one with the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and obligation to absorb losses of the entity that could potentially be significant to the variable interest. The ~~Company~~guidance ~~adopted~~was effective as of the ~~following~~beginning ~~accounting~~of ~~standards~~the ~~during~~annual ~~fiscal~~reporting ~~year~~period commencing after November 15, 2009:. We adopted these provisions as of January 1, 2010. The adoption of the guidance codified within ASC 810 did not have any effect on our financial position or results of operations.

In August 2009, the FASB issued ASU 2009-05, Measuring Liabilities at Fair Value (“ASU 2009-05”). ASU 2009-05 provides guidance on measuring the fair value of liabilities in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”). ASU 2009-05 describes various valuation methods that can be applied to estimating the fair values of liabilities, requires the use of observable inputs and minimizes the use of unobservable valuation inputs. ASU 2009-05 is effective for the first interim or annual reporting period commencing after August 27, 2009, which was October 1, 2009 for us. The adoption of ASU 2009-05 did not have any effect on our financial position or results of operations.

In June 2009, the FASB issued guidance now codified within ASC Topic 105, Generally Accepted Accounting Principles (“ASC 105”). ASC 105 establishes the FASB Accounting Standards Codification (the “Codification”) as the single source of authoritative non-governmental U.S. GAAP. ASC 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. Rules and interpretative releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The Codification superseded all existing non-SEC accounting and reporting standards, and all other non-grandfathered, non-SEC accounting literature not included in the Codification became non-authoritative. The provisions of ASC 105 are effective for interim and annual reporting periods ending after September 15, 2009. We adopted ASC 105 in our interim reporting for the period ended September 30, 2009. The adoption of ASC 105 is for disclosure purposes only and did not have any effect on our financial position or results of operations.

In May 2009, the FASB issued guidance now codified within ASC Topic 855, Subsequent Events (“ASC 855”). ASC 855 establishes standards for accounting for and disclosing subsequent events (events which occur after the balance sheet date but before financial statements are issued or are available to be issued). ASC 855 requires an entity to disclose the date subsequent events were evaluated and whether that evaluation took place on the date financial statements were issued or were available to be issued. We adopted these amendments within our interim reporting for the period ended June 30, 2009. The adoption did not have a material effect on our financial position or results of operations.

In April 2009, the FASB issued guidance now codified within ASC 820. ASC 820 removes leasing transactions and related guidance from its scope. These amendments delay the effective date for nonfinancial assets and nonfinancial liabilities, except for items recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008, or January 1, 2009 for the Company. We adopted these amendments on January 1, 2009. The adoption did not have a material effect on our financial position or results of operations. In addition, ASC 820 provides further guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased and for identifying circumstances that indicate a transaction is not orderly. ASC 820 requires disclosure in interim and annual reporting periods of the inputs and valuation techniques used to measure fair value and a discussion of changes in valuation techniques and related inputs. These amendments are effective for interim reporting periods ending after June 15, 2009, or June 30, 2009 for us, and shall be applied prospectively, with early adoption permitted. We adopted these amendments in our interim reporting for the period ended June 30, 2009. The adoption did not have a material effect on our financial position or results of operations.

In April 2009, the FASB issued guidance now codified within ASC Topic 825, Financial Instruments (“ASC 825”). ASC 825 requires disclosure about the fair value of financial instruments for interim reporting periods as well as in annual financial statements in a form that makes it clear whether the fair value and carrying amounts represent assets or liabilities and how the carrying amounts are classified within the statement of financial position. These amendments are effective for interim reporting periods ending after June 15, 2009, or June 30, 2009 for us, with early adoption permitted, and do not require disclosures for earlier periods presented for comparative purposes at adoption. We adopted these amendments in our interim reporting for the period ended June 30, 2009. The adoption is for disclosure purposes only and did not have any effect on our financial position or results of operations.

In December 2008, the FASB issued guidance now codified within ASC Topic 715, Compensation—Retirement Benefits (“ASC 715”). ASC 715 provides guidance on an employer’s disclosures about plan assets of a defined benefit plan or other post-retirement plans, enabling users of the financial statements to assess the inputs and valuation techniques used to develop fair value measurements of plan assets at the annual reporting date. Disclosures shall provide users an understanding of significant concentrations of risk in plan assets. The guidance shall be applied prospectively for fiscal years ending after December 15, 2009, with early application permitted. We adopted the guidance in our annual reporting for the year ended December 31, 2009. The adoption is for disclosure purposes only and did not have any effect on our financial position or results of operations.

In April 2008, the FASB issued guidance now codified within ASC Topic 350, Intangibles—Goodwill and Other (“ASC 350”). ASC 350 outlines the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of recognized intangible assets. The intent of this guidance is to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset in accordance with ASC 350 and other U.S. GAAP authoritative literature. These amendments shall be applied prospectively to all intangible assets acquired after its effective date. We adopted these amendments effective January 1, 2009. The adoption did not have a material effect on our financial position or results of operations.

In March 2008, the FASB issued guidance now codified within ASC Topic 815, Derivatives and Hedging (“ASC 815”). ASC 815 expands the disclosure requirements for derivative instruments and hedging activities requiring enhanced disclosure of how derivative instruments impact a company’s financial statements, why companies engage in such transactions and a tabular disclosure of the effects of such instruments and related hedged items on a company’s financial position, results of operations and cash flows. The Company adopted these amendments on January 1, 2009 on a prospective basis and has included the required disclosures in Note 19. The adoption did not have a material effect on our financial position or results of operations.

In December 2007, the FASB issued guidance now codified within ASC Topic 810, Consolidation (“ASC 810”). ASC 810 requires entities to report non-controlling minority interests in subsidiaries as equity in consolidated financial statements. The amendments are effective for fiscal years beginning on or after December 15, 2008 and were adopted by us on January 1, 2009 on a prospective basis. The adoption did not have a material effect on our financial position or results of operations.

In December 2007, the FASB issued guidance now codified within ASC Topic 805, Business Combinations (“ASC 805”). ASC 805 requires the acquiring entity in a business combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair value and also changes other practices. ASC 805 also changes the definition of a business to exclude consideration of certain resulting outputs used to generate revenue. ASC 805 is effective for fiscal years beginning after December 15, 2008, or January 1, 2009 for the Company, and should be applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009. We adopted ASC 805 on January 1, 2009. The adoption did not have a material effect on our financial position or results of operations.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to changes in interest rates and foreign currency exchange rates because we finance certain operations through fixed and variable rate debt instruments and denominate our transactions in a variety of foreign currencies. We are also exposed to changes in the prices of certain commodities (primarily metals) that we use in production. Changes in these rates and commodity prices may have an impact on future cash flow and earnings. We manage these risks through normal operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments.

We do not enter into financial instruments for trading or speculative purposes.

By using derivative instruments, we are subject to credit and market risk. The fair market value of the derivative instruments is determined by using valuation models whose inputs are derived using market observable inputs, including interest rate yield curves, as well as foreign exchange and commodity spot and forward rates, and reflects the asset or liability position as of the end of each reporting period. When the fair value of a derivative contract is positive, the counterparty owes us, thus creating a receivable risk for us. We are exposed to counterparty credit risk in the event of non-performance by counterparties to our derivative agreements. We minimize counterparty credit (or repayment) risk by entering into transactions with major financial institutions of investment grade credit rating.

Our exposure to market risk is not hedged in a manner that completely eliminates the effects of changing market conditions on earnings or cash flow.

Interest Rate Risk

Given the leveraged nature of our company, we have significant exposure to changes in interest rates. From time to time, we may execute a variety of interest rate derivative instruments to manage interest rate risk. Consistent with our risk management objective and strategy to reduce exposure to variability in cash flows relating to interest payments on our outstanding and forecasted debt, we have executed interest rate swaps, interest rate collars and interest rate caps. These derivatives are accounted for in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”)

In June 2006, we executed U.S. dollar interest rate swap contracts covering $485.0 million of variable rate debt. The interest rate swaps amortize from $485.0 million on the effective date to $25.0 million at maturity in January 2011. We entered into the interest rate swaps to hedge a portion of our exposure to potentially adverse movements in the LIBOR variable interest rates of the debt by converting a portion of our variable rate debt to fixed rates.

~~The~~67 swaps are accounted for in accordance with ASC 815, Derivatives and Hedging (“ASC 815”). No ineffective portion was recorded to earnings during fiscal years 2009, 2008 or 2007. The critical terms of the interest rate swap are identical to those of the designated variable rate debt under our Senior Secured Credit Facility. The 3-month LIBOR rate was 0.25% as of December 31, 2009.

The terms of the swap as of December 31, 2009 are as follows:

Current Notional PrincipalAmount (U.S. dollars in millions)		Final Maturity Date		Receive Variable Rate		Pay Fixed Rate
$115.0		January 27, 2011		3-month LIBOR		5.377%

In June 2006, we executed several Euro interest rate collar contracts covering €750.0 million of variable rate debt. Since June 2006, certain Euro interest rate collars have expired. These contracts hedge the risk of changes in cash flows attributable to changes in interest rates above the cap rate and below the floor rate on a portion of our Euro-denominated debt. In other words, we are protected from paying an interest rate higher than the cap rate, but will not benefit if the benchmark interest rate falls below the floor rate. At interest rates between the cap rate and the floor rate, we will make payments on our Euro-denominated variable rate debt at prevailing market rates. The 3-month EURIBOR rate was 0.70% as of December 31, 2009.

No ineffective portion was recorded to earnings during fiscal years 2010, 2009 or 2008. The critical terms of the ~~remaining~~interest ~~collars~~rate swap are identical to those of the designated variable rate debt under our Senior Secured Credit Facility. The 3-month LIBOR rate was 0.30% as of December 31, ~~2009~~2010 ~~are~~and 0.25% as ~~follows:~~of December 31, 2009.

Current Notional Principal Amount (Euros in millions)

Amortization

Effective Date

Maturity Date

Cap

At Prevailing Market Rates Between

Floor

€245.0

Amortizing

July 28, 2008

April 27, 2011

4.40%

3.55%-4.40%

3.55%

The terms of the swap as of December 31 are shown in the following table:


Year	Current Notional Principal Amount (U.S. dollars in millions)	Maturity Date	Index	Strike Price
2010	$ 25.0	January 27, 2011	3 Month LIBOR	5.377%
2009	$115.0	January 27, 2011	3 Month LIBOR	5.377%

The terms of the collars as of December 31 are shown in the following table:

Year

Current Notional

Principal

Amount

(Euros in millions)

Amortization

Effective Date

Maturity Date

Cap

At Prevailing
Market Rates
Between

Floor

2010

€190.0

Amortizing

July 28, 2008

April 27, 2011

4.40%

3.55% – 4.40%

3.55%

2009

€245.0

Amortizing

July 28, 2008

April 27, 2011

4.40%

3.55% – 4.40%

3.55%

In March 2009, we purchased interest rate caps in order to hedge the risk of changes in cash flows attributable to changes in interest rates above the cap rates on a portion of our U.S. dollar and Euro-denominated term loans.

The terms of the interest rate caps as of December 31, 2010 and 2009 are asshown ~~follows~~in the following table:

Current Notional Principal Amount (in millions)

Amortization

~~Effective Date~~

~~Maturity~~Effective Date

~~Cap~~

Maturity Date

Cap

$600.0

~~Amortizing~~

Amortizing

~~March 5, 2009~~

~~April 29, 2013~~

March 5, 2009

~~5.00%~~

April 29, 2013

5.00

€100.0

~~Amortizing~~

Amortizing

~~March 5, 2009~~

~~April 29, 2013~~

March 5, 2009

~~5.00%~~

April 29, 2013

5.00

As of December 31, ~~2009~~ 2010, we had Euro-denominated debt of €~~698~~557.76 million ($~~1,002~~739.17 million).

The significant components of our long-term debt are as follows:

(Amounts in thousands)	Weighted-AverageInterest Rate			Outstandingbalance as ofDecember 31, 2009			Fair valueas ofDecember 31, 2009
(Dollars in millions)	Weighted-AverageInterest Rate				Outstandingbalance as ofDecember 31, 2010				Fair valueas ofDecember 31, 2010
Senior secured term loan facility (denominated in U.S. dollars)	~~2.75~~	%2.09	%	$	~~916.7~~$	907.3	$	~~819.1~~	$	884.0
Senior secured term loan facility (€384.4 million)	3.56	%			551.4			476.2
Senior secured term loan facility (€380.5 million)		2.79	%			504.7				482.8
Senior Notes (denominated in U.S. dollars)	~~8.00~~	%8.00	%		~~340.0~~	201.2		~~333.0~~		206.9
Senior Subordinated Notes (€177.3 million)	9.00	%			254.3			240.6
Senior Subordinated Notes (€177.1 million)		9.00	%			235.0				248.6
Senior Subordinated Notes (€137.0 million)	11.25	%			196.5			194.5
Total(1)					$	1,848.2			$	1,822.3
Total(1)				$	2,258.9		$	2,063.4

(1)	Total outstanding balance excludes capital leases and other financing obligations of $41.5 million.

Sensitivity Analysis

As of December 31, 2010, we had total U.S. dollar and Euro-denominated variable rate debt with an outstanding balance of $1,412.0 million issued under our Senior Secured Credit Facility, as follows:

•

$907.3 million of U.S. dollar-denominated variable rate debt. An increase of 100 basis points in the LIBOR rate would result in additional annual interest expense of $9.2 million. This increase would not be offset by our variable to fixed interest rate swaps as of December 31, 2010.

•

€380.5 million (equivalent to $504.7 million as of December 31, 2010) of Euro-denominated variable rate debt. An increase of 100 basis points in the EURIBOR rate would result in additional annual interest expense of $5.1 million at an exchange rate of $1.33 to €1.00 as of December 31, 2010. Depending upon prevailing EURIBOR rates, this increase may be offset by a reduction in interest expense resulting from our €190 million of interest rate collars.

We have $201.2 million of 8.0% fixed rate debt. If market rates relating to this debt increased/(decreased) by 100 basis points, the fair value of the debt would (decrease)/increase by $6.1 million.

We have €177.1 million (equivalent to $235.0 million as of December 31, 2010) of 9.0% fixed rate debt. If market rates relating to this debt increased/(decreased) by 100 basis points, the fair value of the debt would (decrease)/increase by $10.5 million.

As of December 31, 2009, we had Euro-denominated debt of €698.7 million ($1,002.1 million).

The significant components of our long-term debt were as follows:


(Dollars in millions)	Weighted- Average Interest Rate			Outstanding balance as of December 31, 2009		Fair value as of December 31, 2009
Senior secured term loan facility (denominated in U.S. dollars)		2.75	%	$	916.7	$	819.1
Senior secured term loan facility (€384.4 million)		3.56	%		551.4		476.2
Senior Notes (denominated in U.S. dollars)		8.00	%		340.0		333.0
Senior Subordinated Notes (€177.3 million)		9.00	%		254.3		240.6
Senior Subordinated Notes (€137.0 million)		11.25	%		196.5		194.5

Total⁽¹⁾				$	2,258.9	$	2,063.4

(1)	Total outstanding balance excludes capital leases and other financing obligations of $41.9 million.

AsSensitivity ofAnalysis ~~December 31, 2009, we had total U.S. dollar and Euro-denominated variable rate debt with an outstanding balance of $1,468.1 million issued under our Senior Secured Credit Facility, as follows:~~

•As ~~$916.7~~of ~~million~~December of31, 2009, we had U.S. dollar and Euro-denominated variable rate debt. Anwith ~~increase~~an ofoutstanding ~~100~~balance ~~basis points in the LIBOR rate would result in additional annual interest expense~~ of $91,468.31 million. ~~This~~issued ~~increase~~under ~~would~~our beSenior ~~offset~~Secured byCredit aFacility, ~~reduction~~as offollows: ~~$3.2 million in interest expense resulting from the Company’s $115.0 million of variable to fixed interest rate swaps adjusted for quarterly amortization.~~

• ~~€384.4 million (equivalent to~~ $~~551~~916.47 million as of ~~December~~U.S. ~~31,~~dollar-denominated ~~2009) of~~ variable rate debt. An increase of 100 basis points in the ~~EURIBOR~~LIBOR rate would ~~result~~have resulted in additional annual interest expense of $59.63 million ~~at an exchange rate of $1~~.43 toThis ~~€1.00 as of December 31, 2009. Depending upon prevailing EURIBOR rates, this~~ increase ~~may~~would behave been offset by a reduction of $3.2 million in interest expense resulting from our ~~€245~~$115.0 million of variable to fixed interest rate ~~collars~~swaps adjusted for quarterly amortization.

We• ~~have $340~~€384.0 4 million of(equivalent 8to $551.0%4 ~~fixed~~million ~~rate~~as ~~debt.~~of IfDecember ~~market~~31, ~~rates~~2009) ~~relating~~of tovariable ~~this~~rate debt. ~~increased/(decreased)~~An byincrease of 100 basis points, in the ~~fair~~EURIBOR ~~value~~rate would have resulted in additional annual interest expense of ~~the~~$5.6 ~~debt~~million ~~would~~at ~~(decrease)/~~an exchange rate of $1.43 to €1.00 as of December 31, 2009. Depending upon prevailing EURIBOR rates, this increase may have been offset by ~~$11~~a reduction in interest expense resulting from our €245.90 million. of interest rate collars.

WeAs ~~have~~of ~~€177.3 million~~December ~~(equivalent~~31, to2009, we had $~~254~~340.30 million as of ~~December 31, 2009) of 9~~8.0% fixed rate debt. If market rates relating to this debt increased/(decreased) by 100 basis points, the fair value of the debt would have (~~decrease~~decreased)/~~increase~~increased by $11.3 9 million.

7669

We ~~have~~had €~~137~~177.0 3 million (equivalent to $~~196~~254.53 million as of December 31, 2009) of 119.250% fixed rate debt. If market rates relating to this debt increased /(decreased) by ~~1 percentage~~100 ~~point~~basis points, the fair value of the debt would have (~~decrease~~decreased)/~~increase~~ increased by $611.23 million.

We had €137.3 million (equivalent to $196.5 million as of December 31, 2009) of 11.25% fixed rate debt. If market rates relating to this debt (decreased)/ increased by 1 percentage point, the fair value of the debt would increased/ (decreased) by $6.2 million.

Foreign Currency Risks

We are also exposed to market risk from changes in foreign currency exchange rates which could affect operating results as well as our financial position and cash flows. We monitor our exposures to these market risks and generally employ operating and financing activities to offset these exposures where appropriate. If we do not have operating or financing activities to sufficiently offset these exposures, from time to time, we may employ derivative financial instruments such as swaps, collars, forwards, options or other instruments to limit the volatility to earnings and cash flows generated by these exposures. Derivative financial instruments are executed solely as risk management tools and not for trading or speculative purposes. We may employ derivative contracts in the future which are not designated for hedge accounting treatment inunder ~~accordance with~~ ASC 815 which may result in volatility to earnings depending upon fluctuations in the underlying markets.

Our foreign currency exposures include the Euro, Japanese yen, Mexican peso, Chinese renminbi, Korean won, Malaysian ringgit, Dominican Republic peso, ~~Great~~British ~~Britain~~ pound, ~~and~~ Brazilian real and Singapore dollar. However, the primary foreign currency exposure relates to the U.S. dollar to Euro exchange rate.

Consistent with our risk management objective and strategy to reduce exposure to variability in cash flows on our outstanding debt, in December 2009, we executed a foreign currency call option. This instrument was not designated ~~for~~as a hedge for accounting ~~treatment in accordance with ASC 815~~purposes. In accordance with ASC 815, we recognized the change in the fair value of the derivative in the statement of operations as a gain or loss within Currency translation gain~~/(loss)~~ and other, net. ~~During fiscal year 2009, we recognized a net loss of $0.1 million associated with this derivative.~~

The terms of the Euro call option as of December 31, 2009 ~~are~~

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