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Sensata Technologies Holding N.V.'s SEC Filings

S-1/A
SENSATA TECHNOLOGIES HOLDING PLC filed this Form S-1/A on 03/09/2010
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The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the years ended December 31, 2009, 2008 and 2007, such derivatives were used to hedge the variable cash flows associated with existing variable rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. For the years ended December 31, 2009, 2008 and 2007, the Company recorded no ineffectiveness in earnings and no amounts were excluded from the assessment of effectiveness.

 

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable rate debt. As of December 31, 2009, the Company estimates that an additional $11,040 will be reclassified from accumulated other comprehensive loss to interest expense during the year ending December 31, 2010.

 

As of December 31, 2009, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

 

Interest Rate Derivatives

   Notional
(in millions)
   Effective Date    Maturity Date    Index    Strike Rate

Interest Rate Swap

   $ 115.0    July 27, 2006    January 27, 2011    3-month LIBOR    5.377%

Interest Rate Collars

   245.0    July 28, 2008    April 27, 2011    3-month EURIBOR   

3.55% - 4.40%

Interest Rate Cap

   100.0    March 5, 2009    April 29, 2013    3-month EURIBOR    5.00%

Interest Rate Cap

   $ 600.0    March 5, 2009    April 29, 2013    3-month LIBOR    5.00%

 

Foreign Currency Risk

 

Consistent with the Company’s risk management objective and strategy to reduce exposure to variability in cash flows on its outstanding debt, in December 2009, the Company executed a foreign currency call option. This instrument was not designated for hedge accounting treatment in accordance with ASC 815. Changes in the fair value of derivatives not designated in hedging relationships are recorded in the statement of operations as a gain or loss within Currency translation gain/(loss) and other, net. During the year ended December 31, 2009, the Company recognized a net loss of $82 associated with this derivative. As of December 31, 2009, the Company had the following outstanding derivative that was not designated as a hedge in qualifying hedging relationships:

 

Non-Designated Derivative

   Notional
(in millions)
   Effective Date    Maturity Date    Strike Rate

Euro Call Option

   100.0    December 21, 2009    May 24, 2010    $1.55 to €1.00

 

Commodity Risk

 

The Company’s objective in using commodity forward contracts is to offset a portion of its exposure to the potential change in prices associated with certain commodities, including silver, gold, nickel, aluminum and copper, used in the manufacturing of its products. The terms of these forward contracts fix the price at a future date for various notional amounts associated with these commodities. These instruments were not designated for hedge accounting treatment in accordance with ASC 815. In accordance with ASC 815, the Company recognizes the change in fair value of these derivatives in the statement of operations as a gain or loss as a component of Currency translation gain/(loss) and other, net.

 

The Company had the following outstanding commodity forward contracts that were not designated as hedges in qualifying hedging relationships as of December 31, 2009:

 

     Notional    Effective Date    Weighted-Average
Forward Price

Silver

   273,695 troy oz    December 23, 2009    $ 16.85

Gold

   1,984 troy oz    December 22, 2009    $ 1,097.15

Nickel

   207,912 pounds    October 23, 2009    $ 8.43

Aluminum

   1,886,077 pounds    October 23, 2009    $ 1.02

 

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