What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-11-23 compared with 2020-11-30 · 169 added, 130 removed, 321 unchanged (48% of the section changed)

6 unchanged sentences

Risks Related to Adient's Global Business

Adient's financial condition and results of operations have been, and are expected to continue to be, adversely affected by COVID-19.

The global outbreak of COVID-19 has caused a material adverse effect on the level of economic activity around the world, including in all markets served by Adient.

In response to this outbreak, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations.

General economic, credit, capital market and political conditions could adversely affect Adient's financial performance, Adient's ability to grow or sustain its businesses and Adient's ability to access the capital markets.

Adient competes around the world in various geographic regions and product markets.

Global economic conditions, including supply chain disruptions, inflationary concerns and labor availability, affect Adient's business.

As discussed in greater detail below, any future distress in the industries and/or markets where Adient competes could negatively affect Adient's revenues and financial performance in future periods, result in future restructuring charges, and adversely impact Adient's ability to grow or sustain its businesses.

The global automotive industry continues to experience widespread supply chain disruptions, primarily related to semiconductor chip shortages.

Although Adient’s seating products are not highly dependent directly on semiconductor chips, Adient is directly impacted by the lower production levels at the OEMs as a direct result of these supply chain disruptions.

These disruptions have led to unplanned downtime at Adient’s production facilities, often with very little warning, which creates operating inefficiencies and limits Adient’s ability to adequately mitigate such inefficiencies.

The automotive industry has also experienced a period of sustained price increases for commodities, primarily related to steel, and to a lesser extent petrochemicals.

Shipping costs also increased significantly in fiscal 2021.

These commodity and shipping cost increases will likely continue into fiscal 2022 and perhaps further into the future as demand increases and supply may remain constrained, which has resulted in, and may continue to result in, increased costs for Adient that may not be, or may only be partially, offset.

Adient is also closely monitoring labor availability and wage inflationary pressures, both internally and at key vendors, to assess any impact labor shortages and wage inflation might have on Adient’s ability to perform its obligations.

Although Adient has developed and implemented strategies to mitigate the impact of supply chain disruptions along with the impact of higher raw materials, commodity and shipping costs, these strategies, together with commercial negotiations with Adient’s customers and suppliers, typically offset only a portion of the adverse impact.

The capital and credit markets provide Adient with liquidity to operate and grow its business beyond the liquidity that operating cash flows provide.

A worldwide economic downturn and/or disruption of the credit markets likely would reduce Adient's access to capital necessary for its operations and executing its strategic plan.

If Adient's access to capital were to become constrained significantly, or if costs of capital increased significantly, due to lowered credit ratings, prevailing industry conditions, the volatility of the capital markets or other factors, Adient's financial condition, results of operations and cash flows likely would be adversely affected.

Unfavorable changes in the condition of the global automotive industry may adversely affect Adient's results of operations.

Adient's financial performance depends, in part, on conditions in the automotive industry.

Automotive production and sales are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences.

If automakers experience a decline in the number of new vehicle sales, whether as a result of economic decline, the continuing effects of the COVID-19 pandemic, ongoing supply chain disruptions, or otherwise, then Adient may experience reductions in orders from these customers, incur write-offs of accounts receivable, incur impairment charges or require additional restructuring actions beyond its current restructuring plans, particularly if any of the automakers cannot adequately fund their operations or experience financial distress.

Such adverse changes likely would have a negative impact on Adient's business,

Adient plc | Form 10-K | 12

financial condition or results of operations.

In addition, Adient relies in part on its customers’ forecasting of their expected needs, which forecasts can change rapidly and may not be accurate.

Any inaccurate forecast data received by customers could also have an adverse impact on Adient’s results of operations.

Adient's financial condition and results of operations have been, and could continue to be, adversely affected by COVID-19.

The global outbreak of COVID-19 has caused, and continues to cause, a material adverse effect on the level of economic activity around the world, including in all markets served by Adient.

Adient has implemented numerous measures attempting to manage and mitigate the effects of the virus.

While the Company has implemented measures to mitigate the impact of these measures on the results of operations, there can be no assurance that these measures will be successful now or in the event of future outbreaks.

While Adient has implemented measures to mitigate the impact of these measures on the results of operations, there can be no assurance that these measures will be successful now or in the event of future outbreaks.

Adient cannot predict the degree to, or the time period over, which its sales and operations will be affected by this ongoing outbreak and related preventative measures, and the effects could continue to be material.

2 unchanged sentences

Additionally, beginning in late March 2020, the Company experienced a temporary shutdown of effectively all of its facilities in the Americas and European regions coinciding with the shutdown of its customer facilities in these regions.

Further, certain government orders related to COVID-19 mitigation efforts may restrict Adient's ability to operate its business and may impact the financial condition and results of operations.

Furthermore, during fiscal 2021 the Company continued to see periodic or temporary shutdowns, from time to time, at its facilities as a result of the resurgence of COVID-19 in certain geographic areas.

In addition, certain government orders related to COVID-19 mitigation efforts may restrict Adient's ability to operate its business and may impact the financial condition and results of operations.

Finally, while other of its facilities have been designated by customers as an essential business to its customers’ business in jurisdictions in which facility closures have been mandated, the Company can give no assurance that this will not change in the future or that businesses will continue to be classified as essential in each of the jurisdictions in which Adient operates.

1 unchanged sentence

In addition, Adient has modified its business practices (including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences), and it may take further actions as may be required by government authorities, for the continued health and safety of the employees, or that the Company otherwise determines are in the best interests of the employees, customers, partners, and suppliers.

Further, the Company has experienced, and may continue to experience, disruptions or delays in its supply chain as a result of such actions, which is likely to result in higher supply chain costs to Adient in order to maintain the supply of materials and components for the products, resulting in increased costs and decreased profitability, which may have an adverse impact on Adient’s results of operations.

The Company's management of the impact of COVID-19 has and will continue to require significant investment of time from its management and employees, as well as resources across the global enterprise.

The focus on managing and mitigating the impacts of COVID-19 on the business may cause the Company to divert or delay the application of its resources toward other or new initiatives or investments, which may cause a material adverse impact on the results of operations.

Adient plc | Form 10-K | 11

Adient may also experience impacts from market downturns and changes in consumer behavior related to pandemic fears and impacts on its workforce as a result of COVID-19.

The Company experienced significant decline in demand from its customers over certain periods of fiscal 2020 as a result of the impact of efforts to contain the spread of COVID-19.

In addition, customers may choose to delay or abandon projects on which the Company provides products and/or services in response to the adverse impact of COVID-19 and the measures to contain its spread have had on the global economy.

Further, the impacts of COVID-19 have caused significant uncertainty and volatility in the credit markets.

Furthermore, the impacts of COVID-19 have caused significant uncertainty and volatility in the credit markets.

Adient relies on the credit markets to provide it with liquidity to operate and grow its businesses beyond the liquidity that operating cash flows provide.

If the Company's access to capital were to become significantly constrained, or if costs of capital increased significantly due to the impact of COVID-19 including, volatility in the capital markets, a reduction in Adient's credit ratings or other factors, then the financial condition, results of operations and cash flows could be materially adversely affected.

If the COVID-19 pandemic becomes more pronounced in the markets in which the Company or its automotive industry customers operate, or there is a resurgence in the virus in markets currently recovering from the spread of COVID-19, then the Company's operations in areas impacted by such events could experience further materially adverse financial impacts due to market changes and other resulting events and circumstances.

Adient plc | Form 10-K | 13

If the COVID-19 pandemic becomes more pronounced in the markets in which the Company or its automotive industry customers operate, or there is a continued resurgence in the virus in markets currently recovering from the spread of COVID-19, then the Company's operations in areas impacted by such events could experience further materially adverse financial impacts due to market changes and other resulting events and circumstances.

The extent to which the COVID-19 outbreak continues to impact the Company's financial condition will depend on future developments that are highly uncertain and cannot be predicted, including new government actions or restrictions, new information that may emerge concerning the severity of COVID-19, the longevity of COVID-19 and the impact of COVID-19 on economic activity.

To the extent the COVID-19 pandemic materially adversely affects the Company's business and financial results, it may also have the effect of significantly heightening many of the other risks associated with the Company's business and indebtedness.

The COVID-19 pandemic could present significant challenges to Adient's liquidity.

The COVID-19 pandemic and other macroeconomic factors, such as supply chain disruptions, could present significant challenges to Adient's liquidity.

Adient's continued access to sources of liquidity depends on multiple factors, including global economic conditions, the COVID-19 pandemic’s effects on its customers and their production rates, the condition of global financial markets, the availability of sufficient amounts of financing, its operating performance and credit ratings.

1 unchanged sentence

Such working capital account balances fluctuate significantly depending on production levels and operating activities.

Adient also issued $600 million of senior secured notes due 2025 on April 20, 2020 to provide additional liquidity during the current COVID-19 pandemic.

Given the continued potential impacts of COVID-19, along with on-going supply chain disruptions and the potential reduction in customer orders or a required shutdown of Adient’s operations, the amount of accounts receivable or inventory may be significantly reduced, and Adient’s ability to borrow against its ABL Credit Facility could be significantly decreased, which may have a material adverse effect on its financial condition.

Adient issued $600 million of senior secured notes due 2025 on April 20, 2020 to provide additional liquidity during the current COVID-19 pandemic.

These notes will bear interest at 9% per annum and will result in higher levels of net financing charges over the term of these notes.

As a result of the impacts of the COVID-19 pandemic, Adient may be required to raise additional capital and its access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, its prospects and credit ratings.

Unfavorable changes in the condition of the global automotive industry may adversely affect Adient's results of operations.

Adient's financial performance will depend, in part, on conditions in the automotive industry.

Moreover, automotive production and sales are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences.

If automakers experience a decline in the number of new vehicle sales, whether as a result of economic decline, the continuing effects of the COVID-19 pandemic, or otherwise, then Adient may experience reductions in orders from these customers, incur write-offs of accounts receivable, incur impairment charges or require additional restructuring actions beyond its current restructuring plans, particularly if any of the automakers cannot adequately fund their operations or experience financial distress.

Such adverse changes likely would have a negative impact on Adient's business, financial condition or results of operations.

In addition, Adient relies in part on its customers’ forecasting of their expected needs, which forecasts can change rapidly and may not be accurate.

Any inaccurate forecast data received by customers could also have an adverse impact on Adient’s results of operations.

As a result of on-going impacts of the COVID-19 pandemic and other macroeconomic factors negatively impacting the global automotive industry, Adient may be required to raise additional capital and its access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, its prospects and credit ratings.

COVID-19 vaccination mandates adopted by federal, state and local governments, as well as by certain healthcare systems, could have a material adverse impact on our business and results of operations.

On September 9, 2021, President Biden issued an executive order requiring all employers with U.S.

government contracts to ensure that their U.S.-based employees, contractors, and subcontractors that work on or in support of U.S.

government contracts are fully vaccinated against COVID-19 by December 8, 2021.

The executive order includes on-site and remote U.S.-based employees, contractors and subcontractors and it only permits limited exceptions for medical and religious reasons.

On November 4, 2021, OSHA announced an emergency temporary standard (“ETS”) requiring employers with 100 or more employees must implement and enforce a mandatory COVID-19 vaccination policy, unless they adopt a policy requiring employees to choose to either be vaccinated or undergo weekly COVID-19 testing and wear a face covering at work by January 4, 2022.

On November 5, 2021, the ETS was stayed by the U.S.

Fifth Circuit Court of Appeals pending additional court review.

Multiple other lawsuits were filed regarding the ETS in various jurisdictions.

The pending lawsuits are expected to be consolidated before a federal circuit court, which circuit is then expected to rule on whether previous grants or denials of temporary stays will stand and to weigh in on the constitutionality of and other challenges to the ETS mandate.

Additionally, many state and local governments in which our business operates have implemented or announced COVID-19 vaccination requirements applicable to certain of our employees, and additional vaccination mandates may be announced in the future.

It is currently not possible to predict with certainty the impact these vaccination mandates will have on our business, especially on our workforce.

Our implementation of these requirements may result in costs to us in the form of vaccinations or testing of employees.

These requirements may also result in attrition in our workforce, including attrition of critically skilled labor, and difficulty securing future labor needs, which could have a material adverse effect on our business, financial condition, and results of operations.

Risks associated with joint venture partnerships may adversely affect Adient's business and financial results.

Adient plc | Form 10-K | 14

Adient has entered into several joint ventures worldwide and may enter into additional joint ventures in the future.

1 unchanged sentence

Adient may compete against its joint venture partners in certain of its markets and certain negotiations with its customers may negatively impact its joint venture business with those same customers.

Disagreements with Adient's

Adient plc | Form 10-K | 12

business partners may impede Adient's ability to maximize the benefits of its partnerships and/or may consume management time and other resources to negotiate, and which could lead to, among other things, dissolution, liquidation and/or modification of the joint venture terms.

Disagreements with Adient's business partners may impede Adient's ability to maximize the benefits of its partnerships and/or may consume management time and other resources to negotiate, and which could lead to, among other things, dissolution, liquidation and/or modification of the joint venture terms.

Adient's joint venture arrangements may require Adient, among other matters, to pay certain costs or to make certain capital investments or to seek its joint venture partner's consent to take certain actions.

Adient does not control the ability to collect cash dividends from its non-consolidated joint ventures.

In addition, Adient does not control the financial reporting of its non-consolidated joint ventures, which may impact the Company’s ability to complete its financial statements in a timely manner.

In addition, Adient does not control the financial reporting of its non-consolidated joint ventures, which may impact the Company’s ability to complete its financial statements in a timely or accurate manner.

Delays in the collection of dividends, even by a few days, could adversely affect Adient's financial position and cash flows.

3 unchanged sentences

The above risks, if realized, could result in a material adverse effect on Adient's business and financial results.

Adient competes around the world in various geographic regions and product markets.

Global economic conditions affect Adient's business.

As discussed in greater detail below, any future financial distress in the industries and/or markets where Adient competes could negatively affect Adient's revenues and financial performance in future periods, result in future restructuring charges, and adversely impact Adient's ability to grow or sustain its businesses.

The capital and credit markets provide Adient with liquidity to operate and grow its business beyond the liquidity that operating cash flows provide.

A worldwide economic downturn and/or disruption of the credit markets likely would reduce Adient's access to capital necessary for its operations and executing its strategic plan.

On June 23, 2016, the U.K.

voted in a national referendum to withdraw from the European Union and in March 2017 the U.K.

invoked Article 50 of the Treaty on European Union, which began the U.K.’s withdrawal from the European Union.

formally left the European Union on January 31, 2020 and entered into a transition period which is due to end on December 31, 2020, during which the U.K.

and the European Union will seek to agree on the terms of their future relationship.

While negotiations are ongoing between the U.K.

and the European Union, these have been difficult and inconclusive to date and there is a significant risk that the transition period will end on December 31, 2020 without agreement on a future trading relationship.

Uncertainties in connection with the future of the U.K.

and its relationship with the European Union have caused and may continue to cause disruptions to capital and currency markets worldwide.

The consequences of a withdrawal by the U.K.

from the European Union and the impact on markets, as well as the impact on Adient’s operations, remain highly uncertain, in particular, in respect of the U.K.’s future access to the European Single Market, its future regulatory environment and the free movement of capital and labor.

This market volatility may lead to an increase in Adient’s cost of borrowing or the availability of credit, which may adversely impact Adient’s financial performance.

The U.K.’s withdrawal from the European Union may also have a detrimental effect on Adient’s customers and suppliers, which would, in turn, adversely affect Adient’s revenues and financial condition.

In addition, the U.K.’s withdrawal from the European Union may also result in legal uncertainty and potentially divergent national laws and regulations as new legal relationships between the U.K.

and the European Union are established.

The impact of the potential risks outlined above is likely to be significantly more material if the terms of a future trading relationship between the U.K.

and the European Union have not been agreed by December 31, 2020 and if the transition period is not extended beyond that point.

To date, the U.K.

government's position has been that it will not seek to extend the transition period.

Furthermore, non-consolidated joint ventures present various risks, including the risk that we may be slower or less able to identify or react to problems affecting our non-consolidated joint ventures than we would for a wholly-owned subsidiary or consolidated joint venture.

In addition, these arrangements may cause us to be slower to detect compliance related problems and make our design of effective internal controls more challenging.

Each of these challenges may be more costly to implement, and the risk of failure potentially higher, than would be the case in a more centralized structure.

Depending on the nature of the problems, the failure to identify, detect or react could materially adversely affect our business, financial condition or results of operations.

Risks associated with Adient's non-U.S.

4 unchanged sentences

Adient is therefore subject to foreign currency risks and foreign exchange exposure.

Adient plc | Form 10-K | 13

Adient employs financial instruments to hedge some of its transactional foreign exchange exposure, these activities do not insulate Adient completely from those exposures.

While Adient employs financial instruments to hedge some of its transactional foreign exchange exposure, these activities do not insulate Adient completely from those exposures.

Exchange rates can be volatile and could adversely impact Adient's financial results and the comparability of results from period to period.

Our use of financial instruments to limit this risk, is guided by strict policies and processes and the success of our hedging programs depends primarily on the performance of the business in comparison with our forecasted sales proceeds and costs.

If we incorrectly forecast these and other related factors, the transactions we have entered into may have an adverse impact on our financial results.

No assurance can be given that our judgment in this respect will be correct.

There are other risks that are inherent in Adient's non-U.S.

4 unchanged sentences

backlash from foreign labor organizations related to Adient's restructuring actions;

natural and man-made disasters, global health epidemics such as COVID-19, hazards and losses;

natural and man-made disasters;

global health epidemics (such as COVID-19);

hazards and losses;

violence, civil and labor unrest;

and possible terrorist attacks.

On June 23, 2016, the U.K.

voted in a national referendum to withdraw from the European Union and in March 2017 the U.K.

invoked Article 50 of the Treaty on European Union, which began the U.K.’s withdrawal from the European Union.

formally left the European Union on January 31, 2020 and entered into a transition period which ended on December 31, 2020.

On December 30, 2020, the U.K.

and the European Union entered into an agreement regarding their future relationship, the Trade and Cooperation Agreement, which was ratified by the parties and entered into full force on May 1, 2021.

However, significant political and economic uncertainties remain in connection with the future of the U.K.

and its relationship with the

Adient plc | Form 10-K | 15

European Union.

These uncertainties have caused and may continue to cause disruptions to capital and currency markets worldwide.

The consequences of the withdrawal by the U.K.

from the European Union and the impact on markets, as well as the impact on Adient’s operations, remain highly uncertain.

Adient's business in China is subject to aggressive competition and is sensitive to economic and market conditions.

Maintaining a strong position in the Chinese market is a key component of Adient's strategy.

Adient's business in China is conducted primarily through joint ventures.

Adient's business in China has historically been conducted primarily through joint ventures.

The automotive supply market in China is highly competitive, with competition from many of the largest global manufacturers and numerous smaller domestic manufacturers.

2 unchanged sentences

In addition to the risks imposed by U.S.

economic trade policy discussed above, Adient's business in China is sensitive to economic, political and market conditions that drive automotive sales volumes in China.

If Adient is unable to maintain its position in the Chinese market, continue joint venture relationships, or if vehicle sales in China decrease or do not continue to increase, then Adient's business and financial results may be adversely affected.

economic trade policy discussed further below, Adient's business in China is sensitive to economic, political and market conditions that drive automotive sales volumes in China.

If Adient is unable to maintain its position in the Chinese market, or if vehicle sales in China decrease or do not continue to increase, then Adient's business and financial results may be adversely affected.

Changes in U.S.

administrative policy, including changes to existing trade agreements and any resulting changes in international trade relations, may have an adverse effect on Adient.

There is currently significant uncertainty about the future relationship between the U.S.

There is continued uncertainty about the future relationship between the U.S.

and various other countries, most significantly China, with respect to trade policies, treaties, government regulations and tariffs.

presidential administration under President Trump called for substantial changes to U.S.

foreign trade policy with respect to China and other countries, including the possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the U.S.

While the results of the U.S.

presidential election could lead to different approaches in U.S.

foreign trade policy with China as well as other countries, there remains much uncertainty.

Changes in U.S.

Under the Biden administration, changes in U.S.

administrative policy could lead to changes to existing trade agreements, greater restrictions on free trade generally, and significant increases in tariffs on goods imported into the U.S., particularly tariffs on products manufactured in Mexico and China, among other possible changes.

15 unchanged sentences

Any such changes may limit Adient's future acquisitions, divestitures or operations.

Violations of antitrust laws may result in penalties, sanctions and/or fines, and may also result in costly and time-consuming

Adient plc | Form 10-K | 14

governmental investigations, any or all of which could have an adverse effect on Adient's business, financial condition and results of operations and reputation.

Violations of antitrust laws may result in penalties, sanctions and/or fines, and may also result in costly and time-consuming governmental investigations, any or all of which could have an adverse effect on Adient's business, financial condition and results of operations and reputation.

Risks Related to Adient's Operations

Increases in the costs and restrictions on the availability of raw materials, energy, commodities, freight, labor and product components could adversely affect Adient's financial performance.

Raw material, energy, commodity, freight and labor costs can be volatile.

Although Adient has developed and implemented strategies to mitigate the impact of higher raw material, energy, commodity, freight and labor costs these strategies, together with commercial negotiations with Adient's customers and suppliers, typically offset only a portion of the adverse impact.

Certain of these strategies also may limit Adient's opportunities in a declining commodity environment.

In addition, the

Adient plc | Form 10-K | 16

availability of raw materials, commodities, transportation and product components fluctuates from time to time due to factors outside of Adient's control.

Due to a variety of global factors, the automotive industry has been experiencing, and may continue to experience, supply chain disruptions from an insufficient availability of semiconductor chips.

As a result of these disruptions, the automotive industry has seen a decrease in the volume of automobile production, which has resulted in, and may continue to result in, decreased sales, without a corresponding decrease in labor costs, for Adient.

In addition, the automotive industry has seen a period of sustained price increases for commodities, primarily related to steel, and to a lesser extent petrochemicals, that may continue into the future as demand increases and supply may remain constrained, which has resulted in, and may continue to result in, increased costs for Adient.

If the costs of raw materials, energy, commodities, freight costs and product components increase or the availability thereof is restricted, it could adversely affect Adient's financial condition, operating results and cash flows.

Adient operates in the highly competitive automotive supply industry.

18 unchanged sentences

In addition, to the extent Adient experiences product launch difficulties (which could be the result of a wide range of factors, including the production readiness of Adient's and its suppliers' manufacturing facilities and manufacturing processes, as well as factors related to tooling, equipment, employees, initial product quality and other factors), vehicle production at Adient’s customers could be significantly delayed or shut down.

Such situations could result in significant financial penalties to Adient, a diversion of personnel and financial resources to improving launches rather than investment in continuous process improvement or other growth initiatives, and could result in Adient’s customers shifting work away from Adient to a competitor, all of which could result in loss of revenue, loss of market share and likely would have an adverse effect on Adient’s profitability and cash flows.

Adient's failure to successfully launch material new or takeover business, or Adient's inability to accurately estimate the cost to design, develop and launch new or takeover business, likely would have an adverse effect on Adient's profitability and results of operations.

Adient may not be able to successfully negotiate pricing and other terms with its customers or may be unable to achieve product cost reductions that offset customer-imposed price reductions, both of which may adversely affect its results of operations.

Adient plc | Form 10-K | 17

Adient negotiates sales price adjustments and other contractual terms periodically with its automotive customers.

6 unchanged sentences

Work stoppages, including those at Adient’s customers, and similar events could significantly disrupt Adient's business.

Adient plc | Form 10-K | 15

Because the automotive industry relies heavily on just-in-time delivery of components during the assembly and manufacture of vehicles, a work stoppage at one or more of Adient's manufacturing and assembly facilities could have adverse effects on the business.

Similarly, if one or more of Adient's customers were to experience a work stoppage, such as what occurred during the General Motors labor strike occurring in fall 2019 and/ or customer stoppages as a result of COVID-related governmental shutdowns or otherwise, that customer would likely halt or limit purchases of Adient's products, which could result in the shutdown of the related Adient manufacturing facilities and or other cost-reduction initiatives.

Similarly, if one or more of Adient's customers were to experience a work stoppage, such as those resulting from the General Motors labor strike occurring in fall 2019, customer stoppages as a result of COVID-19-related governmental shutdowns, resulting from ongoing supply chain disruptions, or otherwise, that customer would likely halt or limit purchases of Adient's products, which could result in the shutdown of the related Adient manufacturing facilities and or other cost-reduction initiatives, in addition in certain instances we may be unable to adjust our staffing levels to correspond to a customer’s work stoppage such that we incur increased labor costs along with a decrease in production.

A significant disruption in the supply of a key component due to a work stoppage at one of Adient's suppliers or any other supplier could have the same consequences, and accordingly, have an adverse effect on Adient's financial results.

7 unchanged sentences

Adient relies upon the capacity, reliability and security of its IT and data security infrastructure, as well as its ability to expand and continually update this infrastructure in response to the changing needs of its business.

If Adient experiences a problem with the functioning of an important IT system or a security breach of Adient's IT systems, due to failure to timely upgrade systems or during system upgrades and/or new system implementations, the resulting disruptions could have an adverse effect on Adient's business.

If Adient experiences a problem with the functioning of an important IT system or a security breach of Adient's IT systems, including a potential ransomware attack, due to failure to timely upgrade systems or during system upgrades and/or new system implementations, the resulting disruptions could have an adverse effect on Adient's business.

Adient and certain of its third-party vendors receive and store personal information in connection with Adient's human resources operations and other aspects of Adient's business.

Despite Adient's implementation of security measures, Adient's IT systems, like those of other companies, are vulnerable to damages from computer viruses, natural disasters, unauthorized access, cyber-attack and other similar disruptions.

Any system failure, accident or security breach could result in disruptions to Adient's operations.

Any system failure, accident or cyber security breach or incident could result in disruptions to Adient's operations.

A material network breach in the security of Adient's IT systems could include the theft of Adient's intellectual property, trade secrets, customer information, human resources information or other confidential information.

1 unchanged sentence

In addition, Adient may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

Adient plc | Form 10-K | 18

In addition, legislators and/or regulators in countries in which Adient operates are increasingly adopting or revising privacy, information security and data protection laws.

5 unchanged sentences

or in other countries where Adient has significant operations could materially affect deferred tax assets and liabilities on Adient's statements of financial position and income tax provision on Adient's statements of income.

Adient plc | Form 10-K | 16

Adient is also subject to tax audits for both direct and indirect taxes by governmental authorities on a worldwide basis.

1 unchanged sentence

Negative unexpected results from one or more such tax audits could adversely affect Adient's results of operations.

Increases in the costs and restrictions on the availability of raw materials, energy, commodities and product components could adversely affect Adient's financial performance.

Raw material, energy and commodity costs can be volatile.

Although Adient has developed and implemented strategies to mitigate the impact of higher raw material, energy and commodity costs, these strategies, together with commercial negotiations with Adient's customers and suppliers, typically offset only a portion of the adverse impact.

Certain of these strategies also may limit Adient's opportunities in a declining commodity environment.

In addition, the availability of raw materials, commodities and product components fluctuates from time to time due to factors outside of Adient's control.

If the costs of raw materials, energy, commodities and product components increase or the availability thereof is restricted, it could adversely affect Adient's financial condition, operating results and cash flows.

If Adient does not respond appropriately, the evolution of the automotive industry towards autonomous vehicles and mobility on demand services could adversely affect Adient’s business.

16 unchanged sentences

However, the final amounts determined to be due related to these matters could differ materially from Adient's recorded estimates.

Any changes in consumer credit availability or cost of borrowing could adversely affect Adient's business.

Adient plc | Form 10-K | 19

Any changes in consumer credit availability or cost of borrowing could adversely affect Adient's business.

Declines in the availability of consumer credit and increases in consumer borrowing costs have negatively impacted global automotive sales and resulted in lower production volumes in the past.

10 unchanged sentences

Adient could also face indirect financial risks passed through the supply chain, and process disruptions due to physical climate changes could result in price modifications for Adient's products and the resources needed to produce them.

Further, customer, investor, and employee expectations in areas such as the environment, social matters and corporate governance (ESG) have been rapidly evolving and increasing.

Furthermore, customer, investor, and employee expectations in areas such as the environment, social matters and corporate governance (ESG) have been rapidly evolving and increasing.

Specifically, certain customers are beginning to require that Adient provide information on its plans relating to certain climate-related matters such as greenhouse gas emissions.

3 unchanged sentences

Significant changes in actual investment return on defined benefit plan assets, discount rates, mortality assumptions and other factors could adversely affect Adient's results of operations and the amounts of contributions Adient must make to its defined benefit plans in future periods.

For example, Adient has recorded significant mark-to-market adjustments on the revaluation of its pension obligations that have negatively impacted its overall results the past two years.

For example, Adient has recorded mark-to-market adjustments on the revaluation of its pension obligations that have significantly impacted its overall results the past two years.

Generally accepted accounting principles in the U.S.

9 unchanged sentences

Unfavorable changes in the ratings that rating agencies assign to Adient's debt may ultimately negatively impact Adient's access to the debt capital markets and increase the costs Adient incurs to borrow funds.

Future tightening in the credit markets and a reduced level of liquidity in many financial markets due to turmoil in the financial and banking industries could adversely affect Adient's access to the debt capital markets or the price Adient pays to issue debt.

A downgrade in Adient's ratings or volatility in the financial markets causing limitations to the debt capital markets could have an adverse effect on Adient's business or Adient's ability to meet its liquidity needs.

Future tightening in the credit markets and a reduced level of liquidity in many financial markets due to turmoil in the financial and banking industries could adversely affect

Adient plc | Form 10-K | 20

Adient's access to the debt capital markets or the price Adient pays to issue debt.

There can be no assurance that Adient would be able to obtain additional financing or refinancing and failure to obtain such additional financing or refinancing could have a material adverse impact on our operations.

Adient may incur or assume significantly more debt in the future.

If Adient incurs more debt in the future and does not retire existing debt, the risks described above could increase.

Adient's debt obligations could adversely affect Adient's business, profitability and the ability to meet its obligations.

As of September 30, 2021, Adient's total consolidated indebtedness approximated $3.7 billion.

This significant amount of debt could potentially have important consequences to Adient and its debt and equity investors, including:

This significant amount of debt could potentially have adverse consequences to Adient and its debt and equity investors, including:

• making it more difficult to satisfy other obligations;

4 unchanged sentences

In July 2017, the head of the United Kingdom Financial Conduct Authority announced the desire to phase out the use of LIBOR by the end of 2021.

Although the impact is uncertain at this time, the elimination of LIBOR could have an adverse impact on our business, results of operations, or financial condition.

Although certain jurisdictions have phased out LIBOR, or will phase out LIBOR in the near future, the impact remains uncertain at this time, the elimination of LIBOR could have an adverse impact on our business, results of operations, or financial condition.

Specifically, the use of an alternative reference rate could result in increased borrowing costs in the future.

At this time, no consensus exists as to what rate or rates may become acceptable alternatives to LIBOR and Adient is unable to predict the effect of any such alternatives on our business, results of operations or financial condition.

Adient's business success depends on attracting and retaining qualified personnel.

Although Adient has started incorporating alternatives to LIBOR in its debt agreements, the long-term effect of the transition from LIBOR is uncertain.

Adient's business success depends on attracting and retaining qualified personnel and our attempts to fully reopen our offices and operate under a hybrid working environment may not be successful.

Adient's ability to sustain and grow its business requires it to hire, retain and develop a highly skilled and diverse management team and workforce.

2 unchanged sentences

Additionally, any unplanned turnover or inability to attract and retain key employees could have a negative effect on Adient's results of operations.

Further, certain of the recent austerity measures related to employee compensation, along with the on-going unpredictability of production schedules, could result in employees pursuing other employment opportunities outside of Adient.

The COVID-19 pandemic caused Adient to modify its workforce practices, including having the vast majority of employees work from home.

As we reopen our offices, we are considering operating under a “hybrid” working environment, meaning that the majority of our employees will have the flexibility to work remotely at least some of the time, for the foreseeable future.

The hybrid working environment may impair Adient’s ability to maintain its collaborative and innovative culture, and may cause disruptions among employees, including decreases in productivity, challenges in communications between on-site and off-site employees and, potentially, employee dissatisfaction and attrition.

If our attempts to safely reopen offices and operate under a hybrid working environment are not successful, our business could be adversely impacted.

Adverse developments affecting, or the financial distress of, one or more of Adient's suppliers or other third party counterparties could adversely affect Adient's financial performance.

4 unchanged sentences

This could adversely affect our customer relations and business.

In certain instances, entire industries may experience short-term capacity constraints.

Additionally, Adient's production capacity, and that of Adient's customers and suppliers, may be adversely affected by natural disasters.

In certain instances, as seen with respect to semiconductors, entire industries may experience short-term capacity constraints.

Additionally, Adient's production capacity, and that of Adient's customers and suppliers, may

Adient plc | Form 10-K | 21

be adversely affected by natural disasters.

Any such significant disruption could adversely affect Adient's financial performance.

4 unchanged sentences

In addition, it is possible that Adient's customers could elect to manufacture its products internally or increase the extent to which they require Adient to utilize specific suppliers or materials in the manufacture of its products.

The loss of business with respect to, the lack of commercial success of or an increase in directed component sourcing for a vehicle model for which Adient is a

Adient plc | Form 10-K | 19

significant supplier could reduce Adient's sales or margins and thereby adversely affect Adient's financial condition, operating results and cash flows.

The loss of business with respect to, the lack of commercial success of or an increase in directed component sourcing for a vehicle model for which Adient is a significant supplier could reduce Adient's sales or margins and thereby adversely affect Adient's financial condition, operating results and cash flows.

Shifts in market shares among vehicles, vehicle segments or shifts away from vehicles on which Adient has significant content or overall changes in consumer demand could have an adverse effect on Adient's profitability.

1 unchanged sentence

Shifts in market shares among vehicles or vehicle segments, including as a result of the autonomous vehicle market, particularly shifts away from vehicles on which Adient has significant content and shifts away from vehicle segments in which Adient's sales may be more heavily concentrated, could have an adverse effect on Adient's profitability.

Similarly, certain vehicles or vehicle segments Adient supplies may be disproportionately impacted by overall industry disruptions (i.e., semiconductor supply chain disruptions) such that Adient’s sales may be adversely effected relative to the industry in general or our competitors, which could have a negative effect on Adient’s business.

Increases in energy costs or other factors (e.g., climate change concerns) may also shift consumer demand away from motor vehicles that typically have higher interior content that Adient supplies, such as light trucks, crossover vehicles, minivans and sports utility vehicles, to smaller vehicles having less interior content.

10 unchanged sentences

the loss of, or changes in, automobile supply contracts, sourcing strategies or customer claims with Adient's major customers or suppliers;

lack of commodity availability and unfavorable commodity pricing;

increased freight or shipping costs resulting from extreme weather conditions or supply chain disruptions, lack of commodity availability and unfavorable commodity pricing;

start-up expenses associated with new vehicle programs or delays or cancellations of such programs;

5 unchanged sentences

interruption of supply of certain single-source components;

the potential introduction of similar or superior technologies;

the potential introduction of similar or superior

Adient plc | Form 10-K | 22

technologies;

changing nature and prevalence of Adient's joint ventures and relationships with its strategic business partners;

4 unchanged sentences

This authorization would need to be renewed by Adient's shareholders upon its expiration (i.e., at least every five years).

The Adient articles of association authorize the allotment of shares (which will be subject to the limits provided for in the NYSE Listed Company Manual) for a period of five years from the date of their adoption, which authorization will need to be renewed by ordinary resolution, being a resolution passed by a simple majority of votes cast, upon expiration but may be sought more frequently for additional five-year terms (or any shorter period).

Our current authorization is due to expire in October 2021 and we anticipate seeking a new authorization at our 2021 Annual General Meeting and in subsequent years.

Initially, the Adient articles of association authorized the allotment of shares for a period of five years from the date of their adoption, which authorization would have expired in October 2021.

At its 2021 Annual General Meeting of Shareholders, Adient’s shareholders renewed this authorization until September 2022 (unless previously renewed, varied or revoked).

This authorization will need to be further renewed by ordinary resolution, being a resolution passed by a simple majority of votes cast, prior to expiration.

We anticipate seeking another authorization at our 2022 Annual General Meeting and annually thereafter.

Should this authorization not be approved, our ability to issue equity could be limited which could adversely affect our securities holders.

1 unchanged sentence

however, it is possible for the Adient articles of association, or shareholders in general meeting, to exclude preemptive rights.

Adient plc | Form 10-K | 20

exclusion of preemptive rights may be for a maximum period of up to five years from the date of adoption of the articles of association, if the exclusion is contained in the articles of association, or from the date of the shareholder resolution, if the exclusion is by shareholder resolution;

Such an exclusion of preemptive rights may be for a maximum period of up to five years from the date of adoption of the articles of association, if the exclusion is contained in the articles of association, or from the date of the shareholder resolution, if the exclusion is by shareholder resolution;

in either case, this exclusion would need to be renewed by Adient's shareholders upon its expiration (i.e., at least every five years).

The Adient articles of association exclude preemptive rights for a period of five years from the date of adoption of the Adient articles of association, which exclusion will need to be renewed by special resolution, being a resolution passed by not less than 75% of votes cast, upon expiration but may be sought more frequently for additional five-year terms (or any shorter period).

Our current authorization is due to expire in October 2021 and we anticipate seeking a new authorization at our 2021 Annual General Meeting and in subsequent years.

Initially the Adient articles of association excluded preemptive rights for a period of five years from the date of adoption of the Adient articles of association, which exclusion would have expired in October 2021.

At its 2021 Annual General Meeting of Shareholders, Adient’s shareholders renewed this authorization until September 2022.

This authorization will need to be renewed by special resolution, being a resolution passed by not less than 75% of votes cast, upon expiration.

We anticipate seeking another authorization at our 2022 Annual General Meeting and annually thereafter.

Should this authorization not be approved, our ability to issue equity could be limited which could adversely affect our securities holders.

Adient’s Articles of Association permit Adient by ordinary resolution of the shareholders to declare dividends, provided that the directors have made a recommendation as to its amount.

The dividend may not exceed the amount recommended by the directors.

The directors may also decide to continue to pay interim dividends if it appears to them that the profits available for distribution justify the payment.

When recommending or declaring the payment of a dividend, the directors will be required under Irish law to comply with their duties, including considering Adient's future financial requirements.

The laws of Ireland differ from the laws in effect in the U.S.

24 unchanged sentences

As an Irish company, Adient is governed by the Irish Companies Act 2014, which differs in some material respects from laws generally applicable to U.S.

corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits.

corporations and shareholders, including, among others, differences relating to interested director

Adient plc | Form 10-K | 23

and officer transactions and shareholder lawsuits.

Likewise, the duties of directors and officers of an Irish company generally are owed to Adient only.

5 unchanged sentences

The Company’s effective tax rate could be volatile and materially change as a result of changes in tax laws, mix of earnings and other factors.

Adient plc | Form 10-K | 21

A change in tax laws is one of many factors that impact the Company’s effective tax rate.

Congress, the Organization for Economic Co-operation and Development and other government agencies in jurisdictions where Adient and its affiliates do business have had an extended focus on issues related to the taxation of multinational corporations.

One example is in the area of "base erosion and profit shifting," including situations where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates.

Congress, the Organization for Economic Co-operation and Development (“OECD”) and other government agencies in jurisdictions where Adient and its affiliates do business have had an extended focus on issues related to the taxation of multinational corporations.

One example is in the area of base erosion and profit shifting (“BEPS”), including situations where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates.

As a result, the tax laws in the U.S.

and other countries in which the Company and its affiliates do business could change on a prospective or retroactive basis, and any such changes could adversely impact Adient and its affiliates, including potential adverse impacts to the Company's effective tax rate.

In particular, the U.S.

Tax Cuts and Jobs Act (the “Act”), enacted on December 22, 2017, contained significant changes to corporate taxation.

Changes include, but are not limited to, a newly created tax on “base erosion” payments, a newly created minimum tax on certain earnings of foreign subsidiaries and additional limitations on the deductibility of interest expense.

The guidance on these provisions (and other provisions of the Act) remains limited.

Consequently, it is possible that the application of these provisions (and other provisions of the Act), could adversely impact Adient’s effective tax rate.

Further, the results of the U.S.

presidential election could lead to changes in tax laws that could negatively impact the Company’s effective tax rate.

Prior to the U.S.

presidential election, President-Elect Biden proposed an increase in the U.S.

corporate income tax rate from 21% to 28%, doubling the rate of tax on certain earnings of foreign subsidiaries, the creation of a 10% penalty on certain imports and a 15% minimum tax on worldwide book income.

Democratic control of the White House and Congress may lead to changes in U.S.

tax laws that could negatively impact the Company’s effective tax rate.

The White House and both bodies of Congress have independently issued U.S.

tax reform proposals in 2021 that vary in detail but are consistent in theme – increase the U.S.

corporate tax rate, increase the rate of tax on certain earnings of foreign subsidiaries, modify the base erosion and anti-abuse tax (“BEAT”) rules to target outbound payments to low-taxed jurisdictions, and further limit interest expense deductibility.

If any or all of these (or similar) proposals are ultimately enacted into law, in whole or in part, they could have a negative impact to Adient’s effective tax rate.

In October 2021, the OECD released an outline that describes the conceptual agreement between 136 countries on fundamental reforms to international tax rules.

The outline provides for two primary “Pillars”;

however, only Pillar Two, which provides for a global minimum corporate tax rate of 15%, is expected to be applicable to Adient (Pillar One is not expected to be applicable as Adient doesn’t currently meet the turnover threshold – EUR 20 billion).

The OECD outline suggests that these reforms be implemented by 2023, but is contingent upon the independent actions of participating countries to enact law changes.

If enacted into law, in whole or in part, this proposed change to international tax rules could have a negative impact to Adient’s effective tax rate.

Currently, the Company incurs losses in certain countries where it does not receive a financial statement benefit, and the Company operates in countries which have different statutory rates.

12 unchanged sentences

federal tax purposes, the ability of Adient's U.S.

affiliates to use certain attributes or deductions, the Adient group's effective tax rate and/or future tax planning for the Adient group, and any such changes could have prospective or retroactive application to Adient, its shareholders and affiliates, and/or the separation and distribution.

affiliates to use certain attributes or deductions, the Adient group's effective tax rate and/or future tax planning for the Adient group, and any

Adient plc | Form 10-K | 24

such changes could have prospective or retroactive application to Adient, its shareholders and affiliates, and/or the separation and distribution.

Recent legislative and other proposals have aimed to expand the scope of U.S.

corporate tax residence, including in such a way as could cause Adient and/or its affiliates to be treated as U.S.

corporate tax residence.

Under such proposals, Adient and/or its affiliates could be treated as U.S.

corporations if the management and control of Adient or such affiliates were determined to be located primarily in the U.S.

In addition, recent legislative and other proposals have aimed to expand the scope of Section 7874, or otherwise address certain perceived issues arising in connection with so-called inversion transactions.

This includes recently proposed legislation to limit the ability of certain “inverted domestic corporations” to avail themselves of certain benefits under the CARES Act.

Such proposals, if made retroactively effective to transactions completed during the period in which the separation occurred, could cause Adient and/or its affiliates to be treated as U.S.

corporations for U.S federal tax purposes.

In such case, the Adient group would be subject to substantially greater U.S.

If enacted, these proposals could cause the Adient group to be subject to substantially greater U.S.

tax liability than currently contemplated.

1 unchanged sentence

Adient separated from Johnson Controls International plc in 2016.

The separation arrangements with the former parent company provide for, among other things, the principal corporate transactions required to effect the separation, certain

Adient plc | Form 10-K | 22

conditions to the separation and provisions governing the relationship between Adient and the former parent company with respect to and resulting from the separation, including ongoing relationships.

The separation arrangements with the former parent company provide for, among other things, the principal corporate transactions required to effect the separation, certain conditions to the separation and provisions governing the relationship between Adient and the former parent company with respect to and resulting from the separation, including ongoing relationships.

Among other things, the separation arrangements provide for indemnification obligations designed to make Adient financially responsible for substantially all liabilities that may exist relating to its business activities, whether incurred prior to or after the separation, as well as those obligations of the former Parent assumed by Adient pursuant to the separation arrangements and in respect of the conduct of the parties post-separation.

17 unchanged sentences

In addition, several mandatory provisions of Irish law could prevent or delay an acquisition of Adient.

For example, Adient will be subject to various provisions of Irish law relating to mandatory bids, voluntary bids, requirements to make a cash offer and minimum price requirements, as well as substantial acquisition rules and rules requiring the disclosure of interests in Adient ordinary shares in certain circumstances.

Adient plc | Form 10-K | 25

ordinary shares in certain circumstances.

Also, Irish companies, including Adient, may only alter their memorandum of association and articles of association with the approval of the holders of at least 75% of Adient's shares present and voting in person or by proxy at a general meeting of Adient (and certain provisions of Adient's memorandum of association and articles of association may only be amended with the approval of the holders of at least 80% in nominal value of Adient's issued ordinary shares.

2 unchanged sentences

In addition, no distribution or dividend may be paid or made by Adient unless the net assets of Adient are equal to, or exceed, the aggregate of Adient's called up share capital plus non-distributable reserves and the distribution does not reduce Adient's net assets below such aggregate.

Non-distributable reserves include the share premium account, the capital redemption reserve fund and the

Adient plc | Form 10-K | 23

amount by which Adient's accumulated unrealized profits that have not been previously utilized by any capitalization exceed Adient's accumulated unrealized losses that have not previously been written off in a reduction or reorganization of capital.

Non-distributable reserves include the share premium account, the capital redemption reserve fund and the amount by which Adient's accumulated unrealized profits that have not been previously utilized by any capitalization exceed Adient's accumulated unrealized losses that have not previously been written off in a reduction or reorganization of capital.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors