Sensata Technologies B.V. Announces Fourth Quarter and Full Year 2007 Results

ALMELO, Netherlands, Feb. 6 /PRNewswire-FirstCall/ -- Sensata Technologies B.V. announces results of its operations for the fourth quarter and full year, 2007.

Highlights of the Fourth Quarter and Full Year Ended December 31, 2007

Fourth quarter 2007 net revenue was $373.0 million, which represents an increase of $78.5 million or 26.6 percent over the fourth quarter of 2006. Organically, net revenue would have grown by $26.1 million or 8.9 percent. Adjusted EBITDA(1) was $94.5 million, an increase of $8.5 million or 9.9 percent over the fourth quarter 2006 Adjusted EBITDA(1) of $86.0 million.

Full year ended December 31, 2007 net revenue was $1.40 billion, an increase of 19.6 percent from $1.17 billion for the same period in 2006. Organically, net revenue would have grown by $98.6 million or 8.4 percent. Adjusted EBITDA(1) increased to $358.8 million or 12.1 percent from $320.0 million for the same period in 2006.

Adjusted EBITDA(1) grew at a slower rate than net revenue due to an increased investment in research and development during 2007 and acquired business earnings that are lower as a percent of net revenue than organic earnings because synergies have not yet been fully realized.

Cash at December 31, 2007 grew by $6.1 million to $60.1 million compared to the third quarter cash balance of $54.0 million.

Tom Wroe, Chairman and Chief Executive Officer, said "2007 was a strong year for Sensata despite a global macroeconomic environment that weakened as the year progressed. We executed on three integration strategies for the acquisitions we have made since becoming a stand alone company and synergies are on track. In addition, we expected and achieved double-digit net revenue and Adjusted EBITDA(1) growth for the full year 2007, and we are cautiously optimistic that we'll be able to continue that growth in 2008. We will also continue to execute on our business strategy in 2008 and are committed to being a 'Partner, Employer and Neighbor of Choice'."

    (1) See Non-GAAP Measures for discussion of EBITDA and Adjusted EBITDA,
        including a reconciliation of these measures to GAAP Net (Loss) /
        Income

Jeff Cote, Chief Financial Officer, added "From a financial perspective, we ended 2007 on a high note despite the weakening U.S. housing market. Year- over-year, our Sensors business experienced both total and organic double digit net revenue growth and our Controls business produced a 16.5% increase in net revenue when we include our acquisitions."

Company Earnings Conference Call

The Company will conduct a conference call on February 6, 2008 at 10:30am (EST) to discuss the financial results for its fourth quarter and full year 2007. The U.S. dial-in number is 1-800-524-3357 and the non-U.S. dial-in number is 1-913-312-0717. The passcode number is 4792125. For those unable to participate in the conference call, a replay will be available for two weeks beginning on February 6, 2008 thru February 20, 2008. To access the replay, the U.S. dial-in number is 1-888-203-1112 and the non-U.S. dial-in number is 1-719-457-0820. The replay passcode is 4792125. The replay will also be available for one year on our website, http://www.sensata.com.

About Sensata Technologies B.V.

On April 27, 2006, Sensata Technologies B.V.("Sensata" or the "Successor"), a company owned by an affiliate of Bain Capital Partners, LLC, a leading global private investment firm, completed the acquisition of the Sensors & Controls business of Texas Instruments Incorporated ("S&C" or the "Predecessor").

Sensata is a leading designer and manufacturer of sensors and controls in each of the key applications in which it competes. Sensata has business and product development centers in Massachusetts, Maryland, Maine, the United Kingdom, The Netherlands and Japan; and manufacturing operations in Brazil, China, Korea, Malaysia, Mexico, and The Dominican Republic, as well as sales offices around the world. Sensata currently employs approximately 9,300 people worldwide.

The Company manufactures over 20,000 different products that are highly engineered and application specific and ships over one billion units each year.

Safe Harbor Statement

This earnings release and our statements on our earnings calls contain forward-looking statements, which may involve risks or uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Factors that might cause these differences include, but are not limited to: our ability to integrate acquired businesses, including Airpax Holdings, Inc., and our ability to realize synergies related to our integration of acquisitions; fundamental changes in the industries in which we operate, including economic declines that impact the sales of any of the products manufactured by our customers that use our sensors or controls; continued pricing and other pressures from our customers; general economic, political, business and market risks associated with our non-U.S. operations; risks associated with establishing and maintaining internal control over financial reporting in compliance with Section 404 of the Sarbanes-Oxley Act of 2002; fluctuations in foreign currency exchange and interest rates; competition in our markets; risks associated with our substantial indebtedness, leverage and debt service obligations; our ability to realize revenue or achieve anticipated gross operating margins from products subject to existing purchase orders; fluctuations in the cost and/or availability of manufactured components and raw materials; labor costs and disputes; our dependence on third parties for certain transportation, warehousing and logistics services; material disruptions at any of our manufacturing facilities; our ability to develop and implement technology in our product lines; litigation and disputes involving us, including the extent of product liability and warranty claims asserted against us; our ability to protect our intellectual property and know-how; our exposure to claims that our products or processes infringe on the intellectual property rights of others; the costs of compliance with various laws and regulations applicable to our operations, including environmental, health and safety laws and export controls, and responding to potential liabilities under these laws; non-performance by our suppliers; our ability to attract and retain key personnel; our ability to operate as a stand-alone company, including our ability to raise additional funds when needed; and, the possibility that our controlling shareholder's interests will conflict with ours or yours. For a discussion of potential risks and uncertainties, please refer to the risk factors listed in our SEC filings. Copies of our filings are available from our Investor Relations department or from the SEC website, www.sec.gov.

Non-GAAP Measures

EBITDA and Adjusted EBITDA are non-GAAP measures of profitability. EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. They are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP or as alternatives to cash flow from operating activities as measures of our liquidity. Adjusted EBITDA is a required measure in our bank reporting. We define EBITDA as earnings before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA by adjusting EBITDA to exclude non-cash expenses, one-time charges associated with becoming a stand-alone company or integrating acquisitions, and charges associated with becoming a public company ("acquisition and transition expenses"), and significant nonrecurring items. We believe Adjusted EBITDA provides investors with helpful information with respect to our operations and cash flows. We include it to provide additional information with respect to our ability to meet our future debt service, capital expenditures and working capital requirements. Our EBITDA and Adjusted EBITDA measures have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, our EBITDA and Adjusted EBITDA measures should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. You should compensate for these limitations by relying primarily on our GAAP results and using these measures supplementally. See the tables below which reconcile net (loss)/income to EBITDA and Adjusted EBITDA.

The following table reconciles Net (Loss) to EBITDA and Adjusted EBITDA for the fourth quarter 2007 and 2006.

    ($ in 000s)

                                                          Successor

                                                 Three Months     Three Months
                                                     Ended            Ended
                                                  December 31      December 31
                                                     2007             2006

    Net (Loss)                                    $(80,198)         $(65,050)
     Provision for income taxes                     21,033            23,999
     Interest expense, net                          51,737            42,079
     Depreciation & amortization                    50,817            41,799
    EBITDA                                          43,389            42,827
     Acquisition and transition
      expenses                                      13,567             9,668
     Write-off of inventory
      step-up                                           --               446
     Currency translation losses
      on debt                                       35,939            31,605
     Stock compensation,
      management fees and other                      1,642             1,500
    ADJUSTED EBITDA*                               $94,537           $86,046


    -- *See accompanying basis of presentation and discussion of Non-GAAP
       measures.
    -- Adjusted EBITDA excludes transition expenses, and significant non-
       recurring items as well as non-cash expenses from EBITDA.

The following table reconciles Net (Loss)/Income to EBITDA and Adjusted EBITDA for the full years ended December 31, 2007 and 2006.

    ($ in 000s)

                             Successor                  Successor  Predecessor

                       Full Year   Pro-forma              Period     Period
                         Ended    and Combined Combined  April 27- January 1-
                      December 31  Full Year   Full Year  Dec 31    April 26
                         2007        2006*       2006*     2006       2006

    Net (Loss)/Income  $(252,509) $(108,913)  $(166,934) $(212,304)  $45,370
     Provision for
      income taxes        62,504     74,356      74,356     48,560    25,796
     Interest expense,
      net                188,587    119,523     164,104    163,593       511
     Depreciation &
      amortization       189,382    120,797     120,797    111,188     9,609
    EBITDA               187,964    205,763     192,323    111,037    81,286
     Acquisition and
      transition
      expenses            41,687     31,603      31,603     18,725    12,878
     Acquired in-process
      research and
      development          5,700         --          --         --        --
     Write-off of
      inventory step-up    4,454     25,017      25,017     25,017        --
     Currency
      translation
      losses on debt     111,946     52,079      65,519     65,519        --
     Stock compensation,
      management fees
      and other            7,015      5,492       5,492      3,917     1,575
    ADJUSTED EBITDA*    $358,766   $319,954    $319,954   $224,215   $95,739


    -- *See accompanying basis of presentation and discussion of Non-GAAP
       measures.
    -- Adjusted EBITDA excludes transition expenses, and significant non-
       recurring items as well as non-cash expenses from EBITDA.



                  SENSATA TECHNOLOGIES B.V. AND PREDECESSOR
                           Statement of Operations
                        (In thousands of U.S. Dollars)

                                                          Successor

                                                Three Months     Three Months
                                                   Ended            Ended
                                                December 31      December 31
                                                   2007             2006

    Net revenue                                   $373,018        $294,565
    Operating costs and expenses:
      Cost of revenue                              258,028         190,811
      Research and Development                      13,219           7,593
      Selling, general and
      administrative                                73,602          65,828
    Total operating costs and
     expenses                                      344,849         264,232
    Profit from operations                          28,169          30,333
    Interest (expense)/income, net                 (51,737)        (42,079)
    Currency translation (loss)/
     gain and other                                (35,597)        (29,305)
    (Loss)/income before taxes                     (59,165)        (41,051)
    Provision for income taxes                      21,033          23,999
    Net (Loss)/income                             $(80,198)       $(65,050)
    Adjusted EBITDA*                               $94,537         $86,046


    -- *See accompanying basis of presentation and discussion of Non-GAAP
       Measures
    -- Certain prior period amounts have been re-classified to allow
       comparison to current year presentation.



                  SENSATA TECHNOLOGIES B.V. AND PREDECESSOR
                           Statement of Operations
                        (In thousands of U.S. Dollars)

                        Successor                       Successor  Predecessor
                        Full Year   Pro-forma              Period    Period
                          Ended   and Combined  Combined  April 27- January 1-
                       December 31   Full Year  Full Year  Dec 31    April 26
                           2007        2006*      2006*     2006       2006

    Net revenue       $1,404,013   $1,174,107  $1,174,107   $798,507  $375,600
    Operating costs
     and expenses:
      Cost of
       revenue           956,333      794,323     794,323    538,867   255,456
      Research and
       Development        45,062       29,853      29,853    21,051     8,802
      Acquired
       in-process
       research and
       development         5,700          --           --        --        --
      Selling,
       general and
       administrative    292,862      214,887     214,887   175,107    39,780
    Total operating
     costs and
     expenses          1,299,957    1,039,063   1,039,063   735,025   304,038
    Profit from
     operations          104,056      135,044     135,044    63,482    71,562
    Interest
     (expense)/income,
     net                (188,587)    (119,523)   (164,104) (163,593)     (511)
    Currency
     translation
     (loss)/gain
     and other          (105,474)     (50,078)    (63,518)  (63,633)      115
    (Loss)/income
     before taxes       (190,005)     (34,557)    (92,578) (163,744)   71,166
    Provision for
     income taxes         62,504       74,356      74,356    48,560    25,796
    Net (Loss)/income  $(252,509)   $(108,913)  $(166,934)$(212,304)  $45,370
    Adjusted EBITDA*    $358,766     $319,954    $319,954  $224,215   $95,739


    -- *See accompanying basis of presentation and discussion of Non-GAAP
       Measures.
    -- Certain prior period amounts have been re-classified to allow
       comparison to current year presentation.


    SENSATA TECHNOLOGIES B.V. AND PREDECESSOR

    NOTES TO Statement of Operations

Basis of Presentation

On April 27, 2006, Sensata Technologies B.V., a company owned by an affiliate of Bain Capital Partners, LLC, a leading global private investment firm, completed the acquisition of the Sensors & Controls business of Texas Instruments Incorporated (the Sensata Acquisition). In connection with the acquisition, a new accounting basis was established for the Company as of the acquisition date. Financial information for the Predecessor and Successor periods have been separated by a line on the face of the statement of operations to highlight that the financial information for such periods have been prepared under two different historical cost bases of accounting.

Deferred Payment Certificates (DPCs) issued in connection with the Sensata acquisition were originally classified as debt on the Company's Balance Sheet. On September 21, 2006, the DPCs were restructured to their original intended classification as equity with an effective date of April 27, 2006. However, for accounting purposes, the DPCs are classified as debt until the September 21 date of the restructuring of the instrument. Effective September 21, 2006, the principal amount of the DPCs ($768.3 million), related interest ($44.6 million), and foreign exchange losses ($13.4 million) were capitalized into equity as additional paid-in capital.

The Pro-forma and combined column on the Statement of Operations eliminates these amounts through December 31, 2006 to reflect the results of operations as if the DPCs were never issued.

US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. In addition, the combined financial information for the year ended December 31, 2006 combines periods with different bases of accounting. Actual results may vary materially from these estimates and assumptions.