What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-11-23 compared with 2020-11-30 · 421 added, 357 removed, 1357 unchanged (36% of the section changed)

34 unchanged sentences

We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Annual Report on Internal Control over Financial Reporting, management has excluded Chongqing Adient Automotive Components Co., Ltd.

and Adient (Langfang) Seating Co., Ltd.

from its assessment of internal control over financial reporting as of September 30, 2021, because they were acquired by the Company in a purchase business combination during 2021.

We have also excluded Chongqing Adient Automotive Components Co., Ltd.

and Adient (Langfang) Seating Co., Ltd.

from our audit of internal control over financial reporting.

Chongqing Adient Automotive Components Co., Ltd.

and Adient (Langfang) Seating Co., Ltd.

are subsidiaries whose total assets excluded from management’s assessment and our audit of internal control over financial reporting collectively represent approximately 5% of the consolidated total assets as of September 30, 2021.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Americas and EMEA Reporting Units Goodwill Impairment Assessments

As described in Notes 1 and 6 to the consolidated financial statements, the goodwill associated with the Americas and EMEA reporting units was $606 million and $368 million, respectively, as of September 30, 2020.

Annual Goodwill Impairment Assessment

As described in Notes 1 and 6 to the consolidated financial statements, the Company’s goodwill balance was $2,212 million as of September 30, 2021.

Management reviews goodwill for impairment during the fourth fiscal quarter or more frequently if events or changes in circumstances indicate the asset might be impaired.

Due to the COVID-19 pandemic and the significant interruption it has caused to the Company’s operations, management tested goodwill for impairment for each of its reporting units for the quarter ended March 31, 2020.

Fair value is estimated using an income approach.

This method requires management to make assumptions about future cash flows, including estimates of revenue and operating margins, and the discount rates.

As disclosed by management, the fair value of the Americas and EMEA reporting units exceeded 20% of its respective carrying value as of September 30, 2020.

The principal considerations for our determination that performing procedures relating to the Americas and EMEA reporting units goodwill impairment assessments is a critical audit matter are the significant judgment by management when developing the fair value measurement of the reporting units, which led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions for estimates of revenue and discount rates for the second quarter impairment assessment and revenue and operating margins, and the discount rates for the annual impairment assessment.

Fair value is estimated using an income approach utilizing discounted cash flow analyses.

This method requires management to make assumptions about estimates of the revenue and the operating margins, as well as the discount rates.

The principal considerations for our determination that performing procedures relating to the annual goodwill impairment assessment is a critical audit matter are the significant judgment by management when developing the fair value of the reporting units, which led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimates of the revenue and the operating margins, as well as the discount rates.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the Company’s reporting units.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimates, (ii) evaluating the appropriateness of the income approach, (iii) testing the completeness and accuracy of underlying data used, and (iv) evaluating the reasonableness of significant assumptions used by management related to estimates of revenue and discount rates for the second quarter impairment assessment and revenue and operating margins, and the discount rates for the annual impairment assessment.

Evaluating management’s assumptions related to estimates of revenue for the second quarter impairment assessment and revenue and operating margins for the annual impairment assessment involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units, (ii) the consistency with relevant industry data, and (iii) whether these assumptions were consistent with evidence obtained in

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s reporting units.

These procedures also included, among others (i) testing management’s process for developing the fair value estimates;

(ii) evaluating the appropriateness of the income approach;

(iii) testing the completeness and accuracy of underlying data used in the income approach;

and (iv) evaluating the reasonableness of significant assumptions used by management related to estimates of the revenue and the operating margins, as well as the discount rates.

Evaluating management’s assumptions related to estimates of the revenue and the operating margins involved evaluating whether the assumptions used by management were reasonable

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other areas of the audit.

considering (i) the current and past performance of the reporting units;

(ii) the consistency with relevant industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the income approach used by the Company and the reasonableness of the discount rates.

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Equity in earnings of partially-owned affiliates, net of dividends received (includes purchase accounting amortization of $ 5 , $ 3 and $ 4 , respectively)

24 ( 55 ) ( 55 )

Impairment of nonconsolidated partially owned affiliate 231 — 358

(Gain) on sale of / impairment of nonconsolidated partially owned affiliates ( 1,214 ) 231 —

Premium and transaction costs paid on repurchase of debt 50 — —

Retrospective recoveries of Brazil indirect tax credits ( 38 ) — —

Derivative loss on the 2021 Yanfeng Transaction 30 — —

Deferred income taxes 40 ( 33 ) 288

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Sale of property, plant and equipment 30 15 68

Settlement of cross-currency interest rate swaps 10 10 —

Settlement of derivative contracts ( 12 ) 10 10

Acquisition of businesses, net of cash acquired ( 211 ) — —

Business divestitures 785 499 —

Changes in long-term investments — ( 37 ) 3

Loans to affiliates 15 — —

Cash provided (used) by investing activities 347 166 ( 383 )

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Consolidated Statements of Cash Flows

Year Ended September 30,

(in millions) 2021 2020 2019

Financing Activities

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Consolidated Statements of Shareholders' Equity

(in millions) Ordinary Shares Additional Paid-in Capital Retained Earnings

(in millions) Ordinary Shares, par value Additional Paid-in Capital Retained Earnings

(Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Shareholders' Equity Attributable

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Realized and unrealized gains (losses) on derivatives — — — ( 1 ) ( 1 ) — ( 1 )

Employee retirement plans — — — ( 2 ) ( 2 ) — ( 2 )

Dividends declared ($ 0.275 per share)

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Realized and unrealized gains (losses) on derivatives — — — ( 20 ) ( 20 ) — ( 20 )

Employee retirement plans — — — ( 2 ) ( 2 ) — ( 2 )

Dividends declared ($ 0.275 per share)

— — ( 26 ) — ( 26 ) — ( 26 )

Dividends attributable to noncontrolling interests — — — — — ( 54 ) ( 54 )

1 unchanged sentence

Share based compensation and other — 12 — — 12 — 12

Adjustments from adoption of a new standard — — ( 4 ) — ( 4 ) — ( 4 )

Balance at September 30, 2020 $ — $ 3,974 $ ( 2,096 ) $ ( 665 ) $ 1,213 $ 322 $ 1,535

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Realized and unrealized gains (losses) on derivatives — — — 20 20 — 20

Employee retirement plans — — — 1 1 — 1

Dividends attributable to noncontrolling interests — — — — — ( 42 ) ( 42 )

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Share based compensation and other — 17 — — 17 1 18

Adjustments from adoption of a new standard — — ( 4 ) — ( 4 ) — ( 4 )

Balance at September 30, 2021 $ — $ 3,991 $ ( 988 ) $ ( 627 ) $ 2,376 $ 342 $ 2,718

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The consolidated financial statements of Adient have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S.

During fiscal 2020, Adient faced an unprecedented situation with the COVID-19 pandemic and the related significant interruption it had on Adient's operations.

Adient's China facilities (including both consolidated and non-consolidated joint ventures) were effectively shut down during the lunar New Year festival (at the end of January 2020) and did not return to operations until the end of March 2020.

All of Adient's plants in China are currently operating and all of its customer plants in China have re-opened.

During fiscal 2020, Adient faced an unprecedented situation with the coronavirus pandemic identified in late 2019 ("COVID-19") and the related significant interruption it had on Adient's operations.

Beginning in late March 2020, Adient experienced the shutdown of effectively all of its facilities in the Americas and European regions coinciding with the shutdown of its customer facilities in those regions.

Adient also experienced the shutdown of approximately 50 % of its plants in Asia (outside China) during late March and early April 2020.

During May and June 2020, production started to resume in the Americas, European and Asia (outside China) regions concurrent with Adient's customers resuming operations and production continued to ramp up throughout Adient’s fiscal fourth quarter in all regions in line with customer production.

As of September 30, 2020, virtually all of Adient's plants have resumed production, although production rates are well below pre-pandemic levels.

Virtually all of Adient's plants had resumed production by the end of first quarter of fiscal 2021.

During the second half of fiscal 2021, Adient faced, along with the entire global automotive industry, 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 OEM’s as a direct result of these supply chain disruptions.

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

Principles of Consolidations

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Investments in partially-owned affiliates are accounted for by the equity method when Adient's interest exceeds 20% and does not have a controlling interest.

During the second quarter of fiscal 2018, Adient recorded expense of $ 8 million for an out of period adjustment, primarily impacting cost of goods sold, to correct a prior period error related to an unrecorded obligation.

Adient has concluded that this adjustment was not material to previously reported financial statements nor to full year fiscal 2018 results.

Consolidated VIEs

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Adient's policy for engineering, research and development, and other design and development costs related to products that will be sold under long-term supply arrangements requires such costs to be expensed as incurred or capitalized if reimbursement from the customer is contractually assured.

Income related to recovery of these costs is recorded within selling, general and

Income related to recovery of these costs is recorded within selling, general and administrative expense in the consolidated statements of income.

At September 30, 2021 and 2020, Adient recorded within the

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administrative expense in the consolidated statements of income.

At September 30, 2020 and 2019, Adient recorded within the consolidated statements of financial position $ 293 million and $ 303 million, respectively, of engineering and research and development costs for which customer reimbursement is contractually assured.

consolidated statements of financial position $ 278 million and $ 293 million, respectively, of engineering and research and development costs for which customer reimbursement is contractually assured.

The reimbursable costs are recorded in other current assets if reimbursement will occur in less than one year and in other noncurrent assets if reimbursement will occur beyond one year.

52 unchanged sentences

Essentially all of Adient's sales are to the automotive industry.

Adient's most significant customers include Fiat Chrysler Automobiles N.V.

and Volkswagen Group which comprised 10 % and 10 % of consolidated net sales, respectively, in fiscal 2020, Fiat Chrysler Automobiles N.V.

and Volkswagen Group which comprised 11 % and 9 % of consolidated net sales, respectively, in fiscal 2019 and Fiat Chrysler Automobiles N.V.

Adient's most significant customers include Stellantis N.V.

and Volkswagen Group which comprised 13 % and 11 % of consolidated net sales, respectively, in fiscal 2021, Stellantis N.V.

and Volkswagen Group which comprised 10 % and 10 % of consolidated net sales, respectively, in fiscal 2020 and Stellantis N.V.

and Volkswagen Group which comprised 11 % and 9 % of consolidated net sales in fiscal 2019.

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Adient's intent is for such earnings to be reinvested by the subsidiaries or to be repatriated only when it would be tax efficient.

On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was signed and enacted into law, and is effective for tax years beginning on or after January 1, 2018, with the exception of certain provisions.

The Act includes a provision to tax global intangible low-taxed income ("GILTI") of foreign subsidiaries, which was effective for Adient beginning in fiscal year 2019.

Adient has made a policy election to treat taxes due under the GILTI provision as a current period expense in the reporting period in which the tax is incurred.

Refer to Note 17, "Income Taxes," of the notes to consolidated financial statements for Adient's income tax disclosures.

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Diluted $ 11.58 $ ( 5.83 ) $ ( 5.25 )

The effect of common stock equivalents which would have been anti-dilutive was excluded from the calculation of diluted earnings per share for fiscal 2021 and was immaterial.

Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share which for fiscal 2020 and 2019 is a result of being in a loss position.

1 unchanged sentence

Standards Adopted During Fiscal 2021

On October 1, 2019, Adient adopted Accounting Standards Codification Topic 842, "Leases" ("ASC 842").

The guidance requires lessees to recognize a lease liability and a right-of-use (ROU) asset for all leases with the exception of short-term leases whose terms are twelve months or less.

By applying the optional modified retrospective method, Adient recorded an adjustment as of the adoption date without any retrospective adjustments to comparative financial information.

Additionally, Adient elected the package of practical expedients permitted under ASC 842, and accordingly, did not reassess whether existing contracts contain leases, lease classifications, or the treatment of initial direct costs capitalized under the previous standard ("ASC 840").

Adient did not apply the "hindsight" practical expedient upon adoption.

Adient did elect to apply the practical expedient to not separate nonlease components from associated lease components.

Refer to Note 8, "Leases," of the notes to consolidated financial statements for additional information.

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ASU 2018-07, Compensation-Stock Compensation:

Improvements to Nonemployee Share-Based Payment Accounting, expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees.

ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment awards.

ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606.

The adoption of this guidance on October 1, 2019 did not have a material impact on Adient's consolidated financial statements for the fiscal year ended September 30, 2020.

On March 12, 2020, Adient adopted Accounting Standards Update 2020-04, Topic 848, " Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting " upon its issuance.

The guidance provides certain expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships.

The adoption did not have a material impact on Adient's consolidated financial statements for the fiscal year ended September 30, 2020.

Standards Effective After Fiscal 2020

Adient has considered the ASUs summarized below, effective after fiscal 2020, none of which are expected to significantly impact the consolidated financial statements:

Standard Pending Adoption Description Date Effective

ASU 2016-13, Financial Instruments-Credit Losses:

Measurement of Credit Losses on Financial Instruments ASU 2016-13 changes the impairment model for financial assets measured at amortized cost, requiring presentation at the net amount expected to be collected.

On October 1, 2020, Adient adopted Accounting Standards Codification 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments.

ASU 2016-13 changes the impairment model for financial assets measured at amortized cost, requiring presentation at the net amount expected to be collected.

The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts.

Available-for-sale debt securities with unrealized losses will now be recorded through an allowance for credit losses.

October 1, 2020

The adoption of this guidance on October 1, 2020 did not significantly impact Adient's consolidated financial statements for fiscal 2021.

ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ASU 2018-13 eliminates, adds, and modifies certain disclosure requirements for fair value measurements.

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, eliminates, adds, and modifies certain disclosure requirements for fair value measurements.

The amendments with respect to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are to be applied prospectively.

All other amendments are to be applied retrospectively to all periods presented.

October 1, 2020

ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General:

Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans The amendments in ASU 2018-14 eliminate, add, and modify certain disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The guidance is to be applied on a retrospective basis to all periods presented.

October 1, 2020

ASU 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities ASU 2018-17 affects reporting entities that are required to determine whether they should consolidate a legal entity under the guidance within the Variable Interest Entities Subsections of Subtopic 810-10, Consolidation-Overall.

The adoption of this guidance on October 1, 2020 did not significantly impact Adient's consolidated financial statements for fiscal 2021.

ASU 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities, affects reporting entities that are required to determine whether they should consolidate a legal entity under the guidance within the Variable Interest Entities Subsections of Subtopic 810-10, Consolidation - Overall.

The adoption of this guidance on October 1, 2020 did not significantly impact Adient's consolidated financial statements for fiscal 2021.

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ASU 2020-04, Reference Rate Reform (Topic 848), provides optional expedients and exceptions for applying existing guidance to contract modifications, hedging relationships and other transactions when transitioning from using the London interbank Offered Rate (LIBOR) to using alternative reference rates.

The guidance was effective upon issuance.

The adoption of this guidance did not significantly impact Adient's consolidated financial statements for fiscal 2021.

Standards Effective After Fiscal 2021

Adient has considered the ASUs summarized below, effective after fiscal 2021, none of which are expected to significantly impact the consolidated financial statements:

Standard Pending Adoption Description Date Effective

ASU 2018-14 Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) ASU 20218-14 eliminates, adds, and modifies certain disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The guidance is to be applied on a retrospective basis.

October 1, 2021

3 unchanged sentences

October 1, 2021

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Standard Pending Adoption Description Date Effective

ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity by reducing the number of accounting models for convertible debt and convertible preferred stock.

9 unchanged sentences

In a typical arrangement with the customer, purchase orders are issued for pre-production activities which consist of engineering, design and development, tooling and prototypes for the manufacture and delivery of component parts.

Adient has concluded that these activities are not in the scope of ASC 606 and for that reason, there have been no changes to how Adient accounts for reimbursable pre-production costs.

Adient has concluded that these activities are not in the scope of ASC 606, “Revenue from Contracts with Customers,” and for that reason, there have been no changes to how Adient accounts for reimbursable pre-production costs.

Adient has elected to continue to include shipping and handling fees billed to customers in revenue, while including costs of shipping and handling in cost of sales.

2 unchanged sentences

Adient has evaluated the terms of its arrangements and determined that they do not contain significant financing components.

Contract assets primarily relate to the right to consideration for work completed, but not billed at the reporting date on contracts with customers.

Contract assets primarily relate to the right to consideration for work completed, but not billed at the reporting date on contracts

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with customers.

The contracts assets are transferred to receivables when the rights become unconditional.

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Acquisitions and Divestitures

Adient Aerospace, LLC ("Adient Aerospace") became operational on October 11, 2018 with Adient’s initial ownership position in Adient Aerospace being 50.01 %.

Initial contributions of $ 28 million were made during the first quarter of fiscal 2019 by each partner.

On October 25, 2019, Adient reached an agreement with Boeing in which Adient’s ownership position was reduced to 19.99 %, resulting in the deconsolidation of Adient Aerospace on that date, including $ 37 million of cash.

Adient recorded a $ 4 million loss as a result of the transaction in the Americas segment, including $ 21 million of allocated goodwill.

2021 Yanfeng Transaction

On March 12, 2021, Adient, Yanfeng Automotive Trim Systems Company Ltd.

(“Yanfeng”), Yanfeng Adient Seating Co., Ltd.

(“YFAS”), a joint venture owned, directly or indirectly, by Yanfeng ( 50.01 %) and Adient ( 49.99 %), and KEIPER Seating Mechanisms Co., Ltd.

(f/k/a Adient Yanfeng Seating Mechanisms Co., Ltd.

(“AYM” or "KEIPER"), a joint venture owned, directly or indirectly, by Yanfeng ( 50 %) and Adient ( 50 %), entered into a Master Agreement (the “2021 Agreement”), pursuant to which the parties have agreed to, among other things, the following transactions (collectively, the “2021 Yanfeng Transaction”).

The 2021 Yanfeng Transaction closed on September 30, 2021 (“Closing Date”).

Adient transferred all of the issued and outstanding equity interest in YFAS held by Adient, which represents 49.99 % of YFAS’s total issued and outstanding equity interest, to Yanfeng pursuant to the Equity Transfer Agreement, dated as of March 12, 2021, by and between Yanfeng and Adient, for CNY ¥ 8,064 million ($ 1,210 million), of which ¥ 3,446 million ($ 519 million) was paid by Yanfeng to Adient on the Closing Date, ¥ 4,618 million ($ 691 million) is payable by Yanfeng to Adient on or before December 21, 2021 (recorded as a receivable within other current assets on Adient’s consolidated statements of financial position as of September 30, 2021) , and;

YFAS transferred all of the issued and outstanding equity interests in Chongqing Yanfeng Adient Automotive Components Co., Ltd.

("CQYFAS") and Yanfeng Adient (Langfang) Seating Co., Ltd.

("YFASLF") held directly or indirectly by YFAS to Adient for a price of ¥ 1,754 million ($ 271 million) (the “YFAS JVs Acquisition”).

The YFAS JVs Acquisition was funded, in part, by annual cash dividends from YFAS and KEIPER, paid to shareholders of YFAS and KEIPER;

YFAS transferred all of the issued and outstanding equity interest in Yanfeng Adient Founder Motor Co., Ltd.

(“YFM”) held, directly or indirectly, by YFAS, which represented 70 % of YFM’s total issued and outstanding equity interest, to KEIPER for ¥ 71 million ($ 11 million) (the “YFM Sale”);

YFAS transferred all of the issued and outstanding equity interest in Nantong Yanfeng Adient Seating Trim Co., Ltd.

(“YFAT”) held, directly or indirectly, by YFAS, which represented 75 % of YFAT’s total issued and outstanding equity interest, to KEIPER for ¥ 113 million ($ 17 million) (the “YFAT Sale”);

Adient granted to Yanfeng a license of intellectual property for use on a non-exclusive and perpetual basis for a payment of ¥ 385 million ($ 59 million), and Yanfeng/YFAS granted to Adient a royalty-free, non-exclusive and perpetual intellectual property license of the Yanfeng/YFAS intellectual property;

YFAS declared and distributed dividends in the amounts and at the times as set forth in the 2021 Agreement to its shareholders (proportionately to their ownership interest, namely 50.01 % to Yanfeng and 49.99 % to Adient) of approximately ¥ 4,168 million ($ 635 million) in the aggregate.

YFAS paid an aggregate dividend of ¥ 2,809 million ($ 436 million) during the third quarter of fiscal 2021, and ¥ 1,359 million ($ 199 million) was distributed on the Closing Date.

In addition, on March 12, 2021, Adient, YFAS, Yanfeng and KEIPER, entered into an Ancillary Master Agreement (the “Ancillary Master Agreement”), pursuant to which the parties have agreed to, among other things, the following transactions (collectively, the “Ancillary Transactions”).

The Ancillary Transactions were also completed on the Closing Date.

Adient and Yanfeng amended the KEIPER Equity Joint Venture Contract, dated as of January 31, 2020, as amended, and the Articles of Association of KEIPER, dated as of September 9, 2013, as amended, to, among other things, (i) provide that KEIPER would declare and pay certain annual dividends to KEIPER’s shareholders with respect to each

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Adient Aerospace develops, manufactures, and sells a portfolio of seating products to airlines and aircraft leasing companies for installation on Boeing and other OEM commercial airplanes, for both production line-fit and retrofit configurations.

On December 31, 2019, Adient sold the RECARO automotive high performance seating systems business to a group of investors for de minimis proceeds.

As a result of the sale, Adient recorded a loss of $ 21 million during the quarter ending December 31, 2019.

For fiscal 2019, the RECARO business recorded $ 148 million of net sales and insignificant pre-tax income.

On January 31, 2020 (as amended on June 24, 2020), Adient, Yanfeng Automotive Trim Systems Company Ltd.

(“Yanfeng”), Adient Yanfeng Seating Mechanisms Co., Ltd.

(“AYM”), a joint venture owned, directly or indirectly, by Yanfeng ( 50 %) and Adient ( 50 %), Yanfeng Adient Seating Co., Ltd.

(“YFAS”), a joint venture owned, directly or indirectly, by Yanfeng ( 50.01 %) and Adient ( 49.99 %) and YFAI, a joint venture owned, directly or indirectly, by Yanfeng ( 70 %) and Adient ( 30 %), entered into a Master Agreement (the “Agreement”, collectively referred to as “Yanfeng transaction”), pursuant to which the parties have agreed, among other things, that:

• Adient would transfer all of the issued and outstanding equity interest in YFAI held, directly or indirectly, by Adient, which represents 30 % of YFAI’s total issued and outstanding equity interest, to Yanfeng for $ 369 million, of which $ 309 million was paid at the closing of the agreed transactions and the remaining $ 60 million will be paid on a deferred basis post-closing.

With respect to each YFAI fiscal year ending after the closing, starting with the year ending December 31, 2020, Adient will be paid an earnout in an amount equal to 30 % percent of YFAI’s distributable earnings for such year until such time as the $ 60 million deferred purchase price is fully paid;

of its 2021 to 2023 fiscal years and (ii) upon closing of the earlier of the YFAT Sales (as defined below) or YFM Sale, because of KEIPER’s ownership of YFAT and YFM, certain amendments relating thereto, including modifying the scope of KEIPER’s business to include the manufacture and sale of automotive seat trim products and micro-motors;

KEIPER and Yanfeng and KEIPER and Adient each entered into a long-term supply agreement.

In conjunction with the 2021 Yanfeng Transaction, Adient entered into an agreement (the “Boxun Agreement”) with Chongqing Boxun Industrial Co., Ltd.

Pursuant to such agreement, upon consummation of the YFAS JVs Acquisition, Adient has provided Boxun with the right to sell and, if exercised, Adient has agreed to purchase, all of the issued and outstanding equity interest in CQYFAS held by Boxun, which represents 25 % of CQYFAS’s total issued and outstanding equity interest (the “Boxun Equity Purchase”) for approximately ¥ 825 million ($ 126 million), subject to adjustment as set forth in the Boxun Agreement.

On October 29, 2021, Boxun exercised its right to sell its equity interest to Adient.

Adient expects such transaction to close in the second quarter of fiscal 2022, subject to various regulatory approvals and other customary closing conditions.

The total anticipated payment to Boxun approximates $ 194 million, including the value of the Boxun Equity Purchase along with historical dividends and other payments, which has been reflected as redeemable noncontrolling interest at September 30, 2021.

With the acquisitions of Boxun’s 25 % and YFAS’s 50 % interest of CQYFAS, Adient will own 100 % of CQYFAS.

In addition, in conjunction with the 2021 Yanfeng Transaction, Adient entered into agreements, whereby, Adient would:

(i) transfer all of the issued and outstanding equity interest in YFAT held, directly or indirectly, by Adient, which represents 25 % of YFAT’s total issued and outstanding equity interest, to KEIPER for ¥ 38 million ($ 6 million) (the “Adient YFAT Sale” and together with the YFAT Sale, the “YFAT Sales”);

(ii) transfer all of the issued and outstanding equity interest in Guangzhou Dongfeng Adient Seating Co., Ltd.

(“GZDFAS”) held by Adient, which represents 25 % of GZDFAS’s total issued and outstanding equity interest, to YFAS for ¥ 371 million ($ 56 million) (the “GZDFAS Sale”) and (iii) transfer all of the issued and outstanding equity interest in Hefei Adient Yunhe Automotive Seating Co., Ltd.

(“YHAS”) held by Adient, which represents 10 % of YHAS’s total issued and outstanding equity interest, to YFAS for ¥ 13 million ($ 2 million) (the “YHAS Sale,” together with the Adient YFAT Sale and GZDFAS Sale, each an “Additional Equity Sale” and collectively, the “Additional Equity Sales”).

The Additional Equity Sales were completed on the Closing Date.

Proceeds from the 2021 Yanfeng Transaction are expected to be used to pay down a portion of Adient’s debt, to pay for the Boxun Equity Purchase, and for general corporate purposes.

As a result of the 2021 Agreement, Adient received the remaining balance of proceeds from the sale of its interest in Yanfeng Global Automotive Interior Systems Co.

("YFAI"), a joint venture previously owned, directly or indirectly, by Yanfeng ( 70 %) and Adient ( 30 %), which was part of the 2020 Yanfeng Transaction (as defined and described below), in November 2021.

Additionally, the $ 92 million intangible asset established at the time of the YFAS contract extension was written off upon closing of the 2021 Yanfeng Transaction.

Upon completion of the 2021 Yanfeng Transaction on September 30, 2021, Adient started consolidating CQYFAS and YFASLF.

A gain of $ 61 million was recorded on Adient’s previously held interest in CQYFAS and is included in equity income in the consolidated statements of income.

The net purchase consideration of $ 271 million consisted of net cash consideration of $ 211 million (net of $ 60 million acquired).

The acquisition was accounted for using the acquisition method, and the operating results and cash flows of CQYFAS and YFASLF will be included in Adient's consolidated financial statements starting from October 1, 2021.

The acquisitions are expected to provide substantial synergies through vertical integration, purchasing and logistics improvements.

The acquisitions also provide for an immediate manufacturing presence in strategic locations in China.

Effective October 1, 2021, Adient changed the names of CQYFAS and YFASLF to Chongqing Adient Automotive Components Co., Ltd.

(CQADNT) and Adient (Langfang) Seating Co., Ltd.

(LFADNT), respectively.

Adient recorded a purchase price allocation for the assets acquired and liabilities assumed based on their estimated fair values as of the September 30, 2021 acquisition date.

The preliminary purchase price adjustments and allocation is as follows:

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Fair value allocation

(in millions) CQADNT LFADNT

Cash $ 55 $ 5

Accounts receivable 296 2

Inventory 37 5

Property, plant and equipment 86 8

Other assets 46 2

Goodwill 180 8

Intangible assets 234 6

Accounts payable ( 252 ) ( 19 )

Other liabilities ( 127 ) ( 4 )

Subtotal 555 13

Interest already owned 103 —

Redeemable noncontrolling interest 194 —

Total purchase consideration 258 13

cash acquired 55 5

Net cash paid $ 203 $ 8

The values allocated to CQADNT and LFADNT’s intangible assets of $ 234 million and $ 6 million, respectively, primarily consist of customer relationships and patented technologies which are being amortized on a straight line basis over estimated useful lives of 10 to 12 years.

The assets were valued using a combination of an income approach and a relief from royalty approach.

These values are considered level 3 measurements under the U.S.

GAAP fair value hierarchy.

Key assumptions used in the valuation of customer relationships include a rate of return of 13.5 % and the life of the relationship of approximately 12 years.

Key assumptions used in the valuation of patented technologies include a rate of return of 13.5 % and the life of the technologies of approximately 10 years.

The allocation of the purchase price is based on the valuations performed to determine the fair value of the net assets as of the acquisition date.

The amounts allocated to goodwill and intangible assets along with fair value adjustments on property, plant and equipment and inventory reflect preliminary valuations.

Adient expensed $ 14 million of acquisition costs related to the 2021 Yanfeng Transaction during the year ended September 30, 2021.

If the acquisitions of CQADNT and LFADNT had occurred on October 1, 2019, Adient’s net sales and net income attributable to Adient for fiscal 2021 would have been $ 14,529 million and $ 1,142 million, respectively, and Adient’s net sales and net loss attributable to Adient for fiscal 2020 would have been $ 13,250 million and $( 527 ) million, respectively.

This unaudited pro forma information includes actual results of the entities and adjustments to amortization expense that would have been recognized due to acquired intangible assets, and related income tax effects.

The unaudited pro forma financial information is not indicative of the operational results that would have been obtained had the transactions actually occurred as of that date, nor is it necessarily indicative of Adient’s future operational results.

On March 31, 2021, Adient sold its 50 % equity interest in Shenyang Jinbei Adient Automotive Components Co., Ltd.

("SJA") to the joint venture partner for $ 58 million, which resulted in a $ 33 million one-time gain recognized during the second quarter of fiscal 2021.

The receivable was recorded as part of other current assets on March 31, 2021, and the net proceeds of $ 53 million were received on April 1, 2021.

On September 30, 2020, Adient closed on the sale of its automotive fabrics manufacturing business including the lamination business to Sage Automotive Interiors for net proceeds of approximately $ 170 million, net of $ 4 million of cash divested within the business.

Proceeds from the transaction are expected to be used by Adient for general corporate purposes or to potentially pay down a portion of Adient’s debt subject to the ongoing impact of the COVID-19 pandemic.

A minimal gain was recorded as a result of the transaction after allocating $ 80 million of goodwill to the disposed business.

The sale transaction included 11 facilities globally with the majority located in EMEA and approximately 1,300 employees.

For fiscal years 2020 and 2019, the

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fabrics manufacturing business recorded $ 99 million and $ 130 million of third party sales and a nominal amount and $ 8 million of pre-tax income, respectively.

2020 Yanfeng Transaction

On January 31, 2020 (as amended on June 24, 2020), Adient, Yanfeng, KEIPER, YFAS and YFAI entered into a Master Agreement (the “2020 Agreement”, collectively referred to as “2020 Yanfeng Transaction”), pursuant to which the parties have agreed, among other things, that:

With respect to each YFAI fiscal year ending after the closing, starting with the year ending December 31, 2020, Adient would be paid an earnout in an amount equal to 30 % percent of YFAI’s distributable earnings for such year until such time as the $ 60 million deferred purchase price is fully paid.

During the second quarter of fiscal 2021, a payment of $ 19 million was received by Adient based on YFAI's fiscal 2020 performance.

As described above, as a result of the 2021 Yanfeng Transaction, Adient received the remaining balance of proceeds from the sale of its interest in YFAI during November 2021.

• Adient and Yanfeng would amend the YFAS Joint Venture Contract, dated as of October 22, 1997, as amended, and the Articles of Association of YFAS, dated as of October 22, 1997, as amended, in each case in order to extend the term of the YFAS joint venture until December 31, 2038.

• Adient would transfer all patents, trademarks and copyrights, know-how, trade secrets and other intellectual property rights owned by Adient (or certain of its subsidiaries) and used exclusively in the conduct of Adient’s mechanism business as of the date of such transfer (the “Transferred IP”) to AYM for $ 20 million, and in connection with such transfer, (i) AYM will grant back to Adient a sole license with respect to the Transferred IP on a worldwide and royalty-free basis, (ii) Adient will grant AYM a worldwide and royalty-free license with respect to certain intellectual property rights owned by Adient (or certain of its subsidiaries) and used on a non-exclusive basis in the conduct of Adient’s mechanism business, and (iii) Adient and AYM will license to each other certain improvements to the Transferred IP, as well as certain other intellectual property rights developed or acquired by Adient, AYM or certain of their respective subsidiaries and relating to the mechanism business;

• Adient and Yanfeng would amend the AYM Equity Joint Venture Contract, dated as of September 9, 2013, as amended, and the Articles of Association of AYM, dated as of September 9, 2013, as amended to, among other things, (i) make certain governance changes such that Yanfeng will control and consolidate the results of AYM for financial reporting and accounting purposes, and (ii) expand AYM’s business and customer scope such that it may carry out its seating mechanism business anywhere in and outside of the People’s Republic of China, in each case, on the terms and subject to the conditions set forth in the Agreement and the relevant definitive agreements to be entered into in connection therewith.

As described further above, in connection with 2021 Yanfeng Transaction, Adient and Yanfeng subsequently agreed to end the YFAS partnership.

Upon consummation of the 2021 Yanfeng Transaction, Adient sold all of the issued and outstanding equity interest in YFAS held by Adient to Yanfeng;

• Adient would transfer all patents, trademarks and copyrights, know-how, trade secrets and other intellectual property rights owned by Adient (or certain of its subsidiaries) and used exclusively in the conduct of Adient’s mechanism business as of the date of such transfer (the “Transferred IP”) to AYM for $ 20 million, and in connection with such transfer, (i) AYM would grant back to Adient a sole license with respect to the Transferred IP on a worldwide and royalty-free basis, (ii) Adient would grant AYM a worldwide and royalty-free license with respect to certain intellectual property rights owned by Adient (or certain of its subsidiaries) and used on a non-exclusive basis in the conduct of Adient’s mechanism business, and (iii) Adient and AYM would license to each other certain improvements to the Transferred IP, as well as certain other intellectual property rights developed or acquired by Adient, AYM or certain of their respective subsidiaries and relating to the mechanism business;

• Adient and Yanfeng would amend the AYM Equity Joint Venture Contract, dated as of September 9, 2013, as amended, and the Articles of Association of AYM, dated as of September 9, 2013, as amended to, among other things, (i) make certain governance changes such that Yanfeng would control and consolidate the results of AYM for financial reporting and accounting purposes, and (ii) expand AYM’s business and customer scope such that it may carry out its seating mechanism business anywhere in and outside of the People’s Republic of China, in each case, on the terms and subject to the conditions set forth in the 2020 Agreement and the relevant definitive agreements to be entered into in connection therewith.

Subsequent to this, Adient and Yanfeng further agreed to revise and amend the AYM Equity Joint Venture Contract and Articles of Association of AYM, as further described above.

The transactions agreed on January 31, 2020, as amended on June 24, 2020, were cross-conditioned on each other and closed in accordance with the terms above on August 21, 2020.

Proceeds from the transactions of $ 329 million were received at closing and will be used by Adient for general corporate purposes or to potentially pay down a portion of Adient’s debt subject to the ongoing impacts of the COVID-19 pandemic.

The terms of the Master Agreement as described above are consistent with non-binding terms reached in December 2019.

Proceeds from the transactions of $ 329 million were received at closing, the majority of which was used by Adient to pay down a portion of Adient’s debt.

The terms of the 2020 Agreement as described above are consistent with non-binding terms reached in December 2019.

As a result of the January 31, 2020 agreement, as amended on June 24, 2020, described above, Adient concluded that indicators of other-than-temporary impairment were present related to the investment in YFAI as of December 31, 2019, June 30, 2020 and upon closing.

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Upon closing of the transaction, an additional $ 9 million of impairment was recorded due to receipt of proceeds in U.S.

The impairments were determined based on combining the fair value of consideration received for all transactions contemplated within the Master Agreement, including an estimated fair value of the YFAS joint venture extension, and allocating the total consideration received to the individual transactions based on relative fair values.

Adient estimated the fair value of the

The impairments were determined based on combining the fair value of consideration received for all transactions contemplated within the 2020 Agreement, including an estimated fair value of the YFAS joint venture extension, and allocating the total

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individual transactions using both an income approach and market approach.

consideration received to the individual transactions based on relative fair values.

Adient estimated the fair value of the individual transactions using both an income approach and market approach.

The inputs utilized in the fair value analyses of the transactions are classified as level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement" and primarily consisted of expected future operating margins and cash flows of YFAI, estimated production volumes, estimated dividend payments from YFAS over the extension period, estimated terminal values of YFAS, market comparables, weighted-average costs of capital (YFAI - 15.0 %, YFAS - 10.5 %), and noncontrolling interest discounts.

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In addition, upon the closing of the transaction, an intangible asset of $ 92 million was recorded associated with the YFAS joint venture extension to be amortized over the 18-year term of the extension.

A minimal gain was recorded as a result of the transaction after allocating $ 80 million of goodwill to the disposed business.

The sale transaction included 11 facilities globally with the majority located in EMEA and approximately 1,300 employees.

For fiscal years 2020 and 2019, the fabrics manufacturing business recorded $ 99 million and $ 130 million of third party sales and a nominal amount and $ 8 million of pre-tax income, respectively.

All of the divestiture transactions described above align with Adient's strategy of focusing on its core, high-volume seating business.

As noted above, as a result of the 2021 Yanfeng Transaction, upon consummation, Adient expects to write off the $ 92 million intangible asset established at the time of the YFAS contract extension.

On December 31, 2019, Adient sold the RECARO automotive high performance seating systems business to a group of investors for de minimis proceeds.

As a result of the sale, Adient recorded a loss of $ 21 million during the quarter ending December 31, 2019.

For fiscal 2019, the RECARO business recorded $ 148 million of net sales and insignificant pre-tax income.

Adient Aerospace

Adient Aerospace, LLC ("Adient Aerospace") became operational on October 11, 2018 with Adient’s initial ownership position in Adient Aerospace being 50.01 %.

Initial contributions of $ 28 million were made during the first quarter of fiscal 2019 by each partner.

Adient recorded a $ 4 million loss as a result of the transaction in the Americas segment, including $ 21 million of allocated goodwill.

All of the acquisitions and divestiture transactions described above align with Adient's strategy of focusing on its core, high-volume seating business.

Assets held for sale

During fiscal 2021, Adient committed to sell certain assets in France and Turkey.

As a result, these assets were classified as assets held for sale (including an allocation of $ 11 million of goodwill) and were required to be adjusted to the lower of fair value less cost to sell or carrying value.

This resulted in Adient recording an impairment charge of $ 9 million within restructuring and impairment costs on the consolidated statement of income (loss) related to the assets in France.

The impairment was measured using third party sales pricing to determine fair values of the assets.

The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." The sale of the assets in France was completed during the third quarter of fiscal 2021 for minimal proceeds while the sale of the assets in Turkey was completed in October 2021 for total expected proceeds of $ 48 million, of which $ 36 million was collected at closing.

During fiscal 2020, Adient committed to a plan to sell certain entities in China and certain properties in the U.S.

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The impairment was measured using third party sales pricing to determine fair values of the assets.

The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement."

During fiscal 2018, Adient committed to a plan to sell its Detroit, Michigan properties and its airplanes and actively marketed the sale of these assets.

As a result, these assets were classified as assets held for sale and were required to be adjusted to the lower of fair value less cost to sell or carrying value.

This resulted in an impairment charge of $ 49 million which was recorded within restructuring and impairment costs on the consolidated statement of income (loss) during fiscal 2018, of which $ 39 million related to Americas assets and $ 10 million related to corporate assets.

The impairment was measured using third party sales pricing to determine fair values of the assets.

The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." During the fourth quarter of fiscal 2018, one airplane was sold for $ 36 million.

During the first quarter of fiscal 2019, both the Detroit, Michigan properties and remaining airplane were sold for approximately $ 35 million.

The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." All of the sales transactions were completed during fiscal 2021 for a total of $ 5 million of proceeds.

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Inventories consisted of the following:

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Inventories $ 976 $ 685

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Property, Plant and Equipment

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As of September 30, 2020, Adient is the lessor of properties included in gross building and improvements for $ 36 million and accumulated depreciation of $ 28 million.

Refer to Note 16, "Impairment of Long-Lived Assets," of the notes to consolidated financial statements for additional information related to the fixed asset impairment charges in fiscal year 2019 related to the seat structure and mechanism operations.

Goodwill and Other Intangible Assets

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Balance at September 30, 2019 $ 638 $ 429 $ 1,083 $ 2,150

Business divestitures ( 21 ) ( 80 ) — ( 101 )

Currency translation and other ( 11 ) 19 — 8

Balance at September 30, 2020 $ 606 $ 368 $ 1,083 $ 2,057

Business acquisitions — — 188 188

Business divestitures — ( 11 ) — ( 11 )

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Balance at September 30, 2021 $ 607 $ 354 $ 1,251 $ 2,212

Refer to Note 3, "Acquisitions and Divestitures," of the notes to consolidated financial statements for additional information.

Adient evaluates its goodwill for impairment on an annual basis, or as facts and circumstances warrant.

Due to the COVID-19 pandemic and the significant interruption it has caused to Adient’s operations, Adient tested goodwill for impairment for each of its reporting units for the quarter ended March 31, 2020 and also performed its annual goodwill test during the fourth quarter of fiscal 2020 using a fair value method based on management's judgments and assumptions regarding future cash flows.

Adient performed its annual goodwill impairment test during the fourth quarter of fiscal 2021 using a fair value method based on management's

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judgments and assumptions regarding future cash flows.

The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date.

Adient estimated the fair value of each of its reporting units using an income approach, which utilized Level 3 unobservable inputs.

These calculations contain uncertainties as they require management to make assumptions about market comparables, future cash flows, and the appropriate discount rates (based on weighted average cost of capital ranging from 15.0 % to 17.5 % as of March 31, 2020 and 16.0 % to 18.5 % as of September 30, 2020) to reflect the risk inherent in the future cash flows and to derive a reasonable enterprise value and related premium.

These calculations contain uncertainties as they require management to make assumptions about market comparables, future cash flows, and the appropriate discount rates (based on weighted average cost of capital ranging from 15.0 % to 17.5 %) to reflect the risk inherent in the future cash flows and to derive a reasonable enterprise value and related premium.

The estimated future cash flows reflect management's latest assumptions of the financial projections based on current and anticipated competitive landscape, including estimates of revenue based on production volumes over the foreseeable future and long-term growth rates, and operating margins based on historical trends and future cost containment activities.

The financial projections also considered the impact that COVID-19 is having on Adient’s current and future operations as well as the impact to new vehicle sales in future years.

The financial projections also considered the impact that the COVID-19 pandemic as well as the semiconductor shortages and higher commodity pricing and shipping costs are having on Adient’s current and future operations as well as the impact to new vehicle sales in future years.

As a result of the test, there was no goodwill impairment recorded for the fiscal year ended September 30, 2021.

A change in any of these estimates and assumptions, especially as it relates to the extent of the COVID-19 pandemic’s, the semiconductor shortages’ impacts on vehicle production volumes within the automotive industry, the impact of commodity pricing and shipping costs as well as the demand for new vehicle sales once the current operational disruptions are over, could produce significantly lower fair values of Adient's reporting units, which could have a material impact on its results of operations.

Due to the COVID-19 pandemic and the significant interruption it has caused to Adient’s operations in fiscal 2020, Adient tested goodwill for impairment for each of its reporting units for the quarter ended March 31, 2020 and also performed its annual goodwill test during the fourth quarter of fiscal 2020 (based on weighted average cost of capital ranging from 15.0 % to 17.5 % as of March 31, 2020 and 16.0 % to 18.5 % as of September 30, 2020).

As a result of the tests, there was no goodwill impairment recorded during the quarter ended March 31, 2020 or during the fourth quarter of fiscal 2020.

A change in any of these estimates and assumptions, especially as it relates to the extent of the COVID-19 pandemic’s impacts on vehicle production volumes within the automotive

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industry as well as the demand for new vehicle sales once the current operational interruptions are over, could produce significantly lower fair values of Adient's reporting units, which could have a material impact on its results of operations.

During fiscal 2019, as a result of the change in reportable segments during the second quarter, Adient conducted goodwill impairment analyses of the newly allocated goodwill balances under the new reportable segment structure and identified no impairment.

Adient also performed its annual goodwill impairment test during the fourth quarter of fiscal 2019 resulting in no goodwill impairment.

During the second quarter of fiscal 2018, Adient conducted goodwill impairment analyses of the allocated goodwill balances under the reportable segment structure at that time.

Adient also performed its annual goodwill impairment test during the fourth quarter of fiscal 2018.

Adient performed these impairment reviews for its reporting units, which had been determined to be Adient's reportable segments, using a fair value method based on management's judgments and assumptions or third party valuations.

The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date.

Adient estimated the fair value of its reportable segments using both a multiple of earnings approach and an income approach, both of which utilized Level 3 unobservable inputs.

These calculations contained uncertainties as they required management to make assumptions about market comparables, future cash flows, the appropriate discount rate (based on weighted average cost of capital) and growth rate to reflect the risk inherent in the future cash flows.

The estimated future cash flows reflected management's latest assumptions of the financial projections based on current and anticipated competitive landscape and product profitability based on historical trends.

A change in any of these estimates and assumptions could produce a different fair value, which could have a material impact on Adient's results of operations.

As a result of the second quarter 2018 goodwill analyses, Adient determined that goodwill associated with its seat structure and mechanism operations was fully impaired.

Consequently, a pre-tax goodwill impairment charge of $ 299 million was recognized in the consolidated statements of income (loss) within the restructuring and impairment costs line item.

The goodwill impairment charge represented a triggering event for additional impairment considerations of other long-lived assets, including an analysis of the recoverability of long-lived assets as of March 31, 2018.

No further goodwill or other long-lived asset impairments were identified during the second quarter of fiscal 2018.

No goodwill impairments were identified as of September 30, 2018.

Refer to Note 16, "Impairment of Long-Lived Assets," of the notes to the consolidated financial statements for information on long-lived asset impairment charges.

Adient's other intangible assets, primarily from business acquisitions valued based on independent appraisals, consisted of:

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Total intangible assets $ 785 $ ( 230 ) $ 555 $ 602 $ ( 159 ) $ 443

As part of the Yanfeng transaction, which closed during the fourth quarter of fiscal 2020, an intangible asset of $ 92 million was recorded associated with the YFAS joint venture extension to 2038 (reflected in the Miscellaneous line in the table above), to be amortized over the 18 -year term of the extension.

On September 30, 2021, Adient acquired CQADNT and LFADNT as part of the 2021 Yanfeng Transaction and recorded $ 176 million of customer relationships and $ 60 million of patented technology intangibles.

The values of the intangible assets were determined based on independent appraisals.

Adient evaluates its other intangible assets for impairment as facts and circumstances warrant.

As part of the 2020 Yanfeng Transaction, Adient recorded an intangible asset of $ 92 million associated with the YFAS joint venture extension to 2038 (reflected in the Miscellaneous line in the table above), to be amortized over the 18 -year term of the extension.

During the fourth quarter of fiscal 2021, Adient wrote off the remaining balance of the intangible asset ($ 86 million) as a result of the 2021 Yanfeng Transaction.

Refer to Note 3, "Acquisitions and Divestitures," of the notes to the consolidated financial statements for additional information.

During the third quarter of fiscal 2020, a pre-tax non-cash impairment of $ 27 million was recorded in the Asia segment related to customer relationship intangible assets of $ 24 million and other long-lived assets of $ 3 million within the Futuris China business due to an overall decline in forecasted operations within that business.

1 unchanged sentence

The impairments were calculated based on a fair value method using discounted cash flows that involves the use of management judgements and estimates related to forecasted revenue, operating costs and discount rates.

During the fourth quarter of fiscal 2018, of the $ 787 million long-lived asset impairment charge recognized, $ 19 million was attributable to a customer relationship intangible asset.

Refer to Note 18, “Segment Information,” and Note 16, "Impairment of Long-Lived Assets," of the notes to the consolidated financial statements for additional information.

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Changes in accruals related to pre-existing warranties (including changes in estimates) ( 2 ) 1

Changes in accruals related to business acquisitions 1 —

Changes in accruals related to business divestitures ( 1 ) ( 1 )

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Balance at end of period $ 23 $ 24

In the second quarter of fiscal 2019, Adient recorded $ 7 million of warranty expense to correct a prior period error related to incurred but not yet reported warranty expense.

Adient has concluded that this adjustment was not material to the consolidated financial statements for any period reported.

Adient adopted Accounting Standards Codification Topic 842, Leases ( ASC 842 ), and all the related amendments using the modified retrospective method, without adjusting the comparative financial information, on October 1, 2019.

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Adient's finance leases are not significant and are not included in the following disclosures.

The components of lease costs for the year ended September 30, 2020 were as follows:

The components of lease costs for the years ended September 30, 2021 and 2020 were as follows:

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(in millions) Year Ended September 30, 2020

Year Ended September 30,

(in millions) 2021 2020

Operating lease cost $ 125 $ 125

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Operating lease right-of-use assets and lease liabilities included in the consolidated statement of financial position were as follows:

(in millions) September 30, 2020

September 30,

(in millions) 2021 2020

Operating leases:

Operating lease right-of-use assets Other noncurrent assets $ 335 $ 334

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Operating lease liabilities - noncurrent Other noncurrent liabilities 246 244

Weighted average remaining lease term:

Operating leases 6 years 5 years

Weighted average discount rate:

Operating leases

Maturities of operating lease liabilities and minimum payments for operating leases having initial or remaining non-cancelable terms in excess of one year as of September 30, 2021 were as follows:

Fiscal years (in millions) Operating

Fiscal years (in millions) Operating Leases

Thereafter 71

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Present value of lease liabilities $ 335

Future minimum operating lease payments accounted for under ASC 840 at September 30, 2019 were as follows:

Fiscal years (in millions) Operating

After 2024 94

Total minimum lease payments $ 459

Supplemental cash flow information related to leases was as follows:

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(in millions) Year Ended September 30, 2020

Year Ended September 30,

(in millions) 2021 2020

Right-of-use assets obtained in exchange for lease obligations:

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Cash paid for amounts included in the measurement of lease liabilities $ 126 $ 125

The weighted average remaining lease term for Adient's operating leases as of September 30, 2020 was 5 years.

The weighted average discount rate for Adient's operating leases as of September 30, 2020 was 5.9 %.

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Adient’s finance leases were not significant to the consolidated financial statements during fiscal 2021 and 2020.

Refer to Note 9, "Debt and Financing Arrangements," of the notes to consolidated financial statements for additional information.

Debt and Financing Arrangements

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European Investment Bank Loan - EURIBOR plus 1.58 % due in 2022

Finance lease obligation 1 —

debt issuance costs ( 32 ) ( 55 )

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dollars, Euros, Pounds Sterling or Swedish Kroner.

The ABL Credit Agreement is secured on a first-priority lien on all accounts receivable, inventory and bank accounts (and funds on deposit therein) and a second-priority lien on all of the tangible and intangible assets

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of certain Adient subsidiaries.

As of September 30, 2021, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of $ 739 million (net of $ 59 million of letters of credit).

In addition, Adient US and Adient Global Holdings S.à r.l., a wholly-owned subsidiary of Adient, maintain a term loan credit agreement (the “Term Loan B Agreement”) providing for a 5 -year $ 800 million senior secured term loan facility that was fully drawn on closing.

The Term Loan B Agreement amortizes in equal quarterly installments at a rate of 1.00 % per annum of the original principal amount thereof, with the remaining balance due at final maturity on May 6, 2024.

Interest on the Term Loan B Agreement accrues at the Eurodollar rate plus an applicable margin equal to 4.25 % (with one 0.25 % step down based on achievement of a specific secured net leverage level starting with the fiscal quarter ending December 31, 2019).

In addition, Adient US and Adient Global Holdings S.à r.l., a wholly-owned subsidiary of Adient, maintain a term loan credit agreement (the “Term Loan B Agreement”) that initially provided for a 5 -year $ 800 million senior secured term loan facility that was fully drawn on closing.

The Term Loan B Agreement amortizes in equal quarterly installments at a rate of 1.00 % per annum of the original principal amount thereof, with the remaining balance originally due at final maturity on May 6, 2024.

Interest on the Term Loan B Agreement accrues at the Eurodollar rate plus an applicable margin originally equal to 4.25 % (with one 0.25 % step down based on achievement of a specific secured net leverage level starting with the fiscal quarter ending

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December 31, 2019).

The Term Loan B Agreement also permits Adient to incur incremental term loans in an aggregate amount not to exceed the greater of $ 750 million and an unlimited amount subject to a pro forma first lien secured net leverage ratio of not greater than 1.75 to 1.00 and certain other conditions.

Adient US is also a party to an indenture relating to the issuance of $ 800 million aggregate principal amount of Senior First Lien Notes.

The notes mature on May 15, 2026 and bear interest at a rate of 7.00 % per annum.

Interest on these notes is payable semi-annually in arrears on November 15 and May 15 of each year, commencing on November 15, 2019.

In April 2021, Adient amended the Term Loan B Agreement ("Amended Agreement") which, among other changes (i) extended the maturity date for loans outstanding to April 8, 2028, (ii) reduced the interest rate margin applicable thereunder by 0.75 % to 3.50 %, in the case of Eurodollar Rate loans, and 2.50 % (in the case of Base Rate loans) (in each case, with one 0.25 % step down based on achievement of a specified first lien secured net leverage level starting with the fiscal quarter ending December 31, 2021) and (iii) made certain other negative covenant and mandatory prepayment changes in connection therewith.

The amendment also established incremental term loans in an aggregate principal amount of $ 214 million resulting in total loans outstanding under the Amended Agreement of $ 1.0 billion.

Adient paid and capitalized $ 7 million as deferred financing costs related to the Amended Agreement and wrote off $ 8 million of previously deferred financing costs as a result of the debt extinguishment during the third quarter of fiscal 2021.

Adient US was also a party to an indenture relating to the issuance of $ 800 million aggregate principal amount of Senior First Lien Notes.

The notes originally mature on May 15, 2026 and bear interest at a rate of 7.00 % per annum.

Interest on these notes was payable semi-annually in arrears on November 15 and May 15 of each year, commencing on November 15, 2019.

During the second quarter of fiscal 2021, Adient repurchased $ 640 million of the outstanding balance of the Senior First Lien Notes at a price of 107 % of the principal plus $ 17 million of accrued and unpaid interest.

As a result, $ 9 million of previously deferred financing costs was written off to net financing charges.

During the third quarter of fiscal 2021, Adient redeemed the $ 160 million of remaining balance of the Senior First Lien Notes at a price of 103 % of the principal plus $ 4 million of accrued and unpaid interest, and wrote off $ 3 million of previously deferred financing costs as a result of the debt extinguishment.

The ABL Credit Facility, Term Loan B Agreement and the Senior First Lien Notes due 2026 contain covenants that are usual and customary for facilities and debt instruments of this type and that, among other things, restrict the ability of Adient and its restricted subsidiaries to:

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The loan bears interest at the 6-month EURIBOR rate plus 158 basis points.

Adient amended the EIB loan agreement as of June 30, 2020 to increase the net leverage ratio to 6.75 x from 5.25 x at June 30, 2020.

The net leverage ratio requirements of 5.25 x at September 30, 2020 and future step downs to 4.50 x by the second quarter of fiscal 2021 were not adjusted.

Adient is compliant with the net leverage ratio at September 30, 2020.

However, due to the rise in COVID-19 infections across Europe and the Americas and the potential disruption to vehicle production that might occur at its customers, there is uncertainty whether compliance with this net leverage ratio over the next 12 months is achievable, which could require Adient to either obtain another amendment or waiver or to pay down the EIB loan.

As a result, Adient has classified this debt as short term debt at September 30, 2020.

Adient is compliant with the net leverage ratio at September 30, 2021 and expects to be compliant for the remainder of the term.

During the first quarter of fiscal 2021, Adient repaid $ 16 million of the EIB loan, triggered in part by the redemption of debt in the prior year.

Adient repaid $ 20 million of the EIB loan in May 2021, triggered by the prior year sale of the fabrics business.

On April 20, 2020, Adient US offered $ 600 million (net proceeds of $ 591 million) aggregate principal amount of 9.00 % Senior First Lien Notes due 2025.

These notes will mature on April 15, 2025, provided that if Adient Global Holdings Ltd (“AGH”) has not refinanced (or otherwise redeemed) in whole its outstanding 3.50 % unsecured notes due 2024 or any refinancing indebtedness thereof that matures earlier than 91 days prior to the maturity date of the Senior First Lien Notes due 2025 on or prior to May 15, 2024, these notes will mature on May 15, 2024.

Interest on these notes will be paid on April 15 and October 15 each year, beginning on October 15, 2020.

These notes will mature on April 15, 2025, provided that if AGH has not refinanced (or otherwise redeemed) in whole its outstanding 3.50 % unsecured notes due 2024 or any refinancing indebtedness thereof that matures earlier than 91 days prior to the maturity date of the Senior First Lien Notes due 2025 on or prior to May 15, 2024, these notes will mature on May 15, 2024.

Interest on these notes is due on April 15 and October 15 each year, beginning on October 15, 2020.

These notes contain covenants that are usual and customary, similar to the covenants on the Senior First Lien Notes due 2026 as described above.

Adient incurred $ 10 million of debt issuance cost associated with this new debt in fiscal 2020.

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Principal payments required on long-term debt during the next five years are as follows:

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September 30,

8 unchanged sentences

Interest income ( 7 ) ( 11 ) ( 11 )

Gain on partial extinguishment of debt ( 3 ) — —

Premium paid on repurchase of debt 49 — —

Derivative loss on Yanfeng transaction 30 — —

(Gain) on extinguishment of debt — ( 3 ) —

Net financing charges $ 311 $ 220 $ 182

Banking fee expense in fiscal 2019 includes $ 13 million of one-time deferred financing fee charges associated with Adient's former debt arrangements.

Banking fees in fiscal 2021 and 2019 includes $ 20 million and $ 13 million, respectively, of one-time accelerated-deferred financing fee charges associated with voluntary repayments of debt and the amendment and extension of Adient's Term Loan B agreement.

Total interest paid on both short and long-term debt for the fiscal years ended September 30, 2021, 2020 and 2019 was $ 229 million, $ 203 million and $ 137 million, respectively.

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This contract expired prior to September 30, 2020.

Adient entered into cross-currency interest rate swaps during fiscal 2018 to selectively hedge portions of its net investment in Europe.

The currency effects of the cross-currency interest rate swaps are reflected in the AOCI account within shareholders’

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equity attributable to Adient, where they offset gains and losses recorded on Adient’s net investment in Europe.

During the second quarter of fiscal 2020, Adient settled one remaining cross-currency interest rate swap for $ 10 million in proceeds, resulting in no outstanding Euro denominated cross-currency interest rate swaps as of September 30, 2020.

Adient entered into cross-currency interest rate swaps during fiscal 2018 to selectively hedge portions of its net investment in Europe.

The currency effects of the cross-currency interest rate swaps are reflected in the AOCI account within shareholders’ equity attributable to Adient, where they offset gains and losses recorded on Adient’s net investment in Europe.

During the second quarter of fiscal 2020, Adient settled one remaining cross-currency interest rate swap for $ 10 million in proceeds.

There are no outstanding Euro denominated cross-currency interest rate swaps as of September 30, 2021.

Adient entered into a cross-currency interest rate swap during fiscal 2019 to selectively hedge portions of its net investment in Japan.

The currency effects of the cross-currency interest rate swap is reflected in the AOCI account within shareholders' equity attributable to Adient, where they offset gains and losses recorded on Adient's net investment in Japan.

As of September 30, 2020, Adient had one cross-currency interest rate swap outstanding totaling approximately ¥ 11 billion designated as a net investment hedge in Adient's net investment in Japan.

The currency effects of the cross-currency interest rate swap was reflected in the AOCI account within shareholders' equity attributable to Adient, where they offset gains and losses recorded on Adient's net investment in Japan.

The contract matured during the fourth quarter of fiscal 2021.

There was no outstanding Japanese yen denominated cross-currency interest rate swap outstanding as of September 30, 2021.

Adient purchased interest rate caps during fiscal 2019 to selectively limit the impact of USD LIBOR increases on its interest payments related to Adient's Term Loan B Agreement.

1 unchanged sentence

As of September 30, 2021, Adient had two outstanding interest rate caps with a total notional amount of approximately $ 200 million.

During the third quarter of fiscal 2021, in conjunction with the Term Loan B Amendment as discussed in Note 9, "Debt and Financing Arrangements," Adient de-designated these two contracts, the impact of which was not material.

Adient entered into a ¥ 950 million foreign exchange forward contract during the first quarter of fiscal 2020 to selectively hedge portions of its net investment in China.

1 unchanged sentence

The forward contract matured in June 2020.

In conjunction with the 2021 Yanfeng Transaction as described in Note 3, "Acquisitions and Divestitures," Adient entered into two forward foreign currency exchange contracts in April 2021 with total notional amount of approximately ¥ 7,482 million ($ 1,123 million) in order to economically hedge the expected proceeds.

One contract matured at the end of the fourth quarter of fiscal 2021 which resulted in a net cash payment of $ 14 million, and the other contract will mature at the end of the first quarter of fiscal 2022.

These contracts were treated as freestanding financial instruments with fair value changes recorded in earnings.

These contracts resulted in realized and unrealized losses of $ 14 million and $ 16 million, respectively, during fiscal 2021.

Refer to Note 9, "Debt and Financing Arrangements," of the notes to consolidated financial statements for more information.

The following table presents the location and fair values of derivative instruments and other amounts used in hedging activities included in Adient's consolidated statements of financial position:

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Foreign currency exchange derivatives $ 8 $ 5 $ — $ —

Cross-currency interest rate swaps — 12 — —

Other noncurrent assets

Foreign currency exchange derivatives — — 1 —

Interest rate cap — 1 — —

Cross-currency interest rate swaps — 1 — —

Total assets $ 8 $ 5 $ 1 $ —

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Adient enters into International Swaps and Derivatives Associations (ISDA) master netting agreements with counterparties that permit the net settlement of amounts owed under the derivative contracts.

The master netting agreements generally provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.

The master netting agreements generally provide for

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net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.

Adient has not elected to offset the fair value positions of the derivative contracts recorded in the consolidated statements of financial position.

1 unchanged sentence

As of September 30, 2021 and 2020, no cash collateral was received or pledged under the master netting agreements.

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The gross and net amounts of derivative instruments and other amounts used in hedging activities are as follows:

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Fair Value Measurements

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ASC 820, "Fair Value Measurement," defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

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Observable inputs such as quoted prices in active markets;

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Other noncurrent assets

Interest rate cap — — — —

Foreign currency exchange derivatives 1 — 1 —

Total assets $ 9 $ — $ 9 $ —

1 unchanged sentence

Foreign currency exchange derivatives $ 24 $ — $ 24 $ —

Cross currency interest rate swaps 1 — 1 —

Other noncurrent liabilities

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Foreign currency exchange derivatives $ 5 $ — $ 5 $ —

Cross-currency interest rate swaps 12 — 12 —

Other noncurrent assets

Foreign currency exchange derivatives 1 — 1 —

Cross-currency interest rate swaps 1 — 1 —

Interest rate cap 1 — 1 —

Total assets $ 5 $ — $ 5 $ —

1 unchanged sentence

Foreign currency exchange derivatives $ 34 $ — $ 34 $ —

Cross currency interest rate swaps 1 — 1 —

Other noncurrent liabilities

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The changes in fair value of foreign currency exchange derivatives not designated as hedging instruments under ASC 815 are recorded in the consolidated statements of income.

Cross-currency interest rate swaps Adient selectively uses cross-currency interest rate swaps to hedge portions of its net investments.

During fiscal 2018, Adient entered into two floating to floating cross-currency interest rate swaps totaling approximately € 160 million designated as net investment hedges in Adient's net investment in Europe.

One of the cross-currency interest rate swaps was settled during fiscal 2019 while the other was settled during fiscal 2020.

During fiscal 2019, Adient entered into one floating to floating cross-currency interest rate swap totaling ¥ 11 billion designated as a net investment hedge in Adient's net investment in Japan.

As of September 30, 2020, Adient had one ¥ 11 billion cross-currency interest rate swap outstanding.

Interest rate caps Adient selectively uses interest rate caps to limit the impact of floating rate interest payment increases on its Term Loan B Agreement.

Cross-currency interest rate swaps Adient determines the fair value of a cross-currency interest rate swap contract using a market approach which is based on quoted market price for similar instruments in markets.

All significant inputs are corroborated by observable market data for the term of such a contract.

Adient selectively uses cross-currency interest rate swaps to hedge portions of its net investments.

As of September 30, 2021, Adient had no cross-currency interest rate swaps outstanding.

Interest rate caps Adient determines the fair value of an interest rate cap contract using a market approach which is based on quoted market price for identical or similar instruments in markets.

All significant inputs are corroborated by observable market data for the term of such a contract.

Adient selectively uses interest rate caps to limit the impact of floating rate interest payment increases on its Term Loan B Agreement.

The interest rate caps are designated as cash flow hedges under ASC 815.

2 unchanged sentences

The fair value of long-term debt, which was $ 3.8 billion and $ 4.1 billion at September 30, 2021 and 2020, respectively, was determined primarily using market quotes classified as Level 1 inputs within the ASC 820 fair value hierarchy.

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Stock-Based Compensation

Adient provides certain key employees equity awards in the form of restricted stock units (RSU) and performance share units (PSUs) under the Adient plc 2016 Omnibus Incentive Plan (the Plan) and provides directors with share awards under the Adient plc 2016 Director Share Plan.

Adient provides certain key employees equity awards in the form of restricted stock units (RSU) and performance share units (PSUs) under the Adient plc 2016 Omnibus Incentive Plan and the Adient plc 2021 Omnibus Incentive Plan (collectively, the Plan).

Adient also provides directors with share awards under the Adient plc 2016 Director Share Plan and the Adient plc 2021 Omnibus Incentive Plan.

These 2016 plans were adopted in conjunction with the separation.

The 2021 plan was adopted in March 2021.

Total stock-based compensation cost included in the consolidated statements of income was $ 36 million, $ 15 million and $ 20 million for the fiscal years ended September 30, 2021, 2020 and 2019, respectively.

No income tax benefits were recognized in the consolidated statements of income for the share-based compensation arrangements in any of these years due to tax valuation allowances in those years.

No material income tax benefits were

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recognized in the consolidated statements of income for the share-based compensation arrangements in any of these years due to tax valuation allowances in those years.

In conjunction with the separation, previously outstanding stock-based compensation awards granted under the former Parent's equity compensation programs prior to the separation and held by certain executives and employees of Adient were adjusted and converted into new Adient equity awards using a formula designated to preserve the intrinsic value of the awards.

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A summary of the status of nonvested restricted stock awards at September 30, 2021, and changes for the fiscal year then ended, is presented below:

Price Shares/Units

Price Restricted Shares/Units

Nonvested, September 30, 2020

$ 22.27 1,334,839

Granted $ 28.88 548,458

2 unchanged sentences

Nonvested, September 30, 2021

$ 26.01 1,148,888

At September 30, 2021, Adient had approximately $ 18 million of total unrecognized compensation cost related to nonvested restricted stock arrangements granted.

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The PSUs are generally contingent on the achievement of predetermined performance goals over a three-year performance period as well as on the award holder's continuous employment until the vesting date.

Each PSU that is earned will be settled with an ordinary share of Adient following the completion of the

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performance period except for certain non-U.S.

Each PSU that is earned will be settled with an ordinary share of Adient following the completion of the performance period except for certain non-U.S.

employees or those who elected to defer a portion or all of past awards until retirement, which would then be settled in cash.

Cash settled awards are recorded in Adient's consolidated statements of financial position as a liability and adjusted each reporting period for changes in share value until the settlement of the award.

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A summary of the status of Adient's nonvested PSUs at September 30, 2021, and changes for the fiscal year then ended is presented below:

Price Shares/Units

Price Performance Shares/Units

Nonvested, September 30, 2020

$ 26.07 903,401

Granted $ 27.84 379,629

2 unchanged sentences

Nonvested, September 30, 2021

$ 24.40 1,223,180

At September 30, 2021, Adient had approximately $ 14 million of total unrecognized compensation cost related to nonvested performance share units granted.

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Outstanding, September 30, 2020

$ 40.09 511,499

Exercised $ 42.06 ( 395,420 )

1 unchanged sentence

Outstanding, September 30, 2021

$ 32.77 93,790 1.6 $ 2

Exercisable, September 30, 2021

$ 32.77 93,790 1.6 $ 2

Former Parent outstanding and exercisable, September 30, 2021

$ 25.71 55,592 1 $ 2

Adient outstanding and exercisable, September 30, 2021

$ 43.05 38,198 2.6 $ —

Total outstanding and exercisable, September 30, 2021

$ 32.77 93,790 1.6 $ 2

There were no stock options granted in fiscal years 2021, 2020 and 2019, respectively.

13 unchanged sentences

Outstanding, September 30, 2020

$ 32.78 171,100

Exercised $ 30.14 ( 53,844 )

1 unchanged sentence

Outstanding, September 30, 2021

$ 33.29 103,884 1.8 $ 3

Exercisable, September 30, 2021

$ 33.29 103,884 1.8 $ 3

Former Parent outstanding and exercisable, September 30, 2021

$ 33.00 94,340 1.8 $ 3

Adient outstanding and exercisable, September 30, 2021

$ 36.17 9,544 1.7 $ —

Total outstanding and exercisable, September 30, 2021

$ 33.29 103,884 1.8 $ 3

In conjunction with the exercise of SARs, Adient made payments of $ 2 million, $ 1 million and $ 1 million during the fiscal years ended September 30, 2021, 2020 and 2019, respectively.

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Dividends ( 14 ) ( 23 ) ( 29 )

Change in noncontrolling interest share — — 1

Business acquisition 194 — —

Ending balance $ 240 $ 43 $ 51

During March 2017, Adient declared a dividend of $ 0.275 per ordinary share, which was paid in April 2017.

In July 2017, Adient declared a dividend of $ 0.275 per ordinary share, which was paid in August 2017.

In September 2017, Adient declared a dividend of $ 0.275 per ordinary share, which was paid in November 2017.

In November 2017, Adient declared a dividend of $ 0.275 per ordinary share, which was paid in February 2018.

In March 2018, Adient declared a dividend of $ 0.275 per ordinary share, which was paid in May 2018.

In June 2018, Adient declared a dividend of $ 0.275 per ordinary share, which was paid in August 2018.

In October 2018, Adient declared a dividend of $ 0.275 per ordinary share, which was paid in November 2018.

Adient suspended its cash dividends following the dividend paid in the first quarter of fiscal 2019.

Refer to Note 3, “Acquisitions and Divestitures,” of the notes to the consolidated financial statements for more information on the business acquisition addition of redeemable noncontrolling interest.

Retirement Plans

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For pension plans with accumulated benefit obligations (ABO) that exceed plan assets, the projected benefit obligation (PBO), ABO and fair value of plan assets of those plans were $ 204 million, $ 182 million and $ 72 million, respectively, as of September 30, 2021 and $ 225 million, $ 201 million and $ 79 million, respectively, as of September 30, 2020.

For pension plans with PBO that exceed plan assets, PBO, ABO and fair value of plan assets of those plans were $ 204 million, $ 182 million and $ 72 million, respectively, as of September 30, 2021 and $ 226 million, $ 202 million and $ 80 million, respectively, as of September 30, 2020.

In fiscal 2021, Adient paid contributions to the defined benefit pension plans of $ 23 million.

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Adient's investment policies employ an approach whereby a mix of equities, fixed income and alternative investments are used to maximize the long-term return of plan assets for a prudent level of risk.

The investment portfolio primarily contains a

The investment portfolio primarily contains a diversified blend of equity and fixed income investments.

Equity investments are diversified across domestic and non-domestic

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diversified blend of equity and fixed income investments.

Equity investments are diversified across domestic and non-domestic stocks, as well as growth, value and small to large capitalizations.

stocks, as well as growth, value and small to large capitalizations.

Fixed income investments include corporate and government issues, with short-, mid- and long-term maturities, with a focus on investment grade when purchased and a target duration close to that of the plan liability.

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Redemptions —

Unrealized gain 1

Asset value as of September 30, 2021 $ 7

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3.06 % 2.91 % 1.71 % 1.87 %

Rate of compensation increase NA NA 3.64 % 3.54 %

Rate of compensation increase N/A N/A 3.06 % 3.64 %

(1) Plan assets and obligations are determined based on a September 30 measurement date.

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$ ( 16 ) $ 21 $ 53

A $ 15 million settlement gain was recorded in fiscal 2018 related to the termination of a postretirement plan.

Pension Benefits

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Restructuring and Impairment Costs

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To better align its resources with its overall strategies and reduce the cost structure of its global operations to address the softness in certain underlying markets, Adient commits to restructuring plans as necessary.

During fiscal 2020, Adient committed to a restructuring plan ("2020 Plan") of $ 205 million.

Of the restructuring costs recorded, $ 20 million relates to the Americas segment, $ 175 million relates to the EMEA segment and $ 10 million relates to the Asia segment.

The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions.

The restructuring actions are expected to be substantially completed by fiscal 2024.

Also recorded in fiscal 2020 is $ 20 million of prior year underspend.

The following table summarizes the changes in Adient's 2020 Plan reserve:

(in millions) Employee Severance and Termination Benefits Other Currency

Translation Total

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During fiscal 2021, Adient committed to a restructuring plan ("2021 Plan") of $ 27 million that was offset by $ 16 million of prior year underspend.

Of the restructuring costs recorded, $ 23 million related to the EMEA segment, $ 3 million related to the Americas segment, and $ 1 million relates to the Asia segment.

The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions and lease contract terminations.

The restructuring actions are expected to be substantially completed in fiscal 2022.

(in millions) Employee Severance and Termination Benefits Total

Original reserve $ 27 $ 27

Utilized—cash ( 5 ) ( 5 )

Noncash adjustment—other — ( 2 ) 1 ( 1 )

Balance at September 30, 2021 $ 22 $ 22

During fiscal 2020, Adient committed to a restructuring plan ("2020 Plan") of $ 205 million.

Of the restructuring costs recorded, $ 81 million relates to the EMEA segment, $ 16 million relates to the Americas segment and $ 8 million relates to the Asia segment.

Of the restructuring costs recorded, $ 20 million relates to the Americas segment, $ 175 million relates to the EMEA segment and $ 10 million relates to the Asia segment.

The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions.

The restructuring actions are expected to be substantially completed by fiscal 2024.

Also recorded in fiscal 2019 is $ 16 million of prior year underspend, a $ 9 million increase to a prior year reserve and $ 6 million of recoveries from a customer related to previous restructuring charges.

Also recorded in fiscal 2020 is $ 20 million of underspend related to prior year plan reserves.

The restructuring actions are expected to be substantially completed by fiscal 2022.

The following table summarizes the changes in Adient's 2020 Plan reserve:

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Utilized—cash ( 35 ) — — ( 35 )

Utilized—noncash — ( 1 ) ( 2 ) ( 3 )

Noncash adjustment—other — ( 2 ) 1 ( 1 )

Balance at September 30, 2020 $ 168 $ — $ 1 $ 169

Utilized—cash $ ( 87 ) $ — $ — ( 87 )

Utilized—noncash — — 2 2

Noncash adjustment—underspend ( 7 ) — — ( 7 )

Noncash adjustment—underspend/other $ ( 6 ) $ — $ 1 ( 5 )

Balance at September 30, 2021 $ 75 $ — $ 2 $ 77

In fiscal 2018, Adient committed to a restructuring plan ("2018 Plan") of $ 71 million that was offset by $ 20 million of underspend in the 2016 Plan and $ 5 million of underspend related to other plan years.

Of the restructuring costs recorded, $ 52 million relates to the EMEA segment, $ 10 million relates to the Asia segment and $ 9 million relates to the Americas segment.

In fiscal 2019 there was adjustment to this plan which resulted in additional $ 9 million of charges.

This is the total amount expected to be incurred for this restructuring plan.

During fiscal 2019, Adient committed to a restructuring plan ("2019 Plan") of $ 105 million.

Of the restructuring costs recorded, $ 81 million relates to the EMEA segment, $ 16 million relates to the Americas segment and $ 8 million relates to the Asia segment.

The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions.

The restructuring actions are expected to be substantially completed by fiscal 2022.

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The following table summarizes the changes in Adient's 2019 Plan reserve:

(in millions) Employee Severance and Termination Benefits Other Currency

Translation Total

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(in millions) Employee Severance and Termination Benefits Other Currency Translation Total

Original Reserve $ 101 $ 4 $ — $ 105

2 unchanged sentences

Balance at September 30, 2019 $ 69 $ 3 $ ( 2 ) $ 70

Reserve adjustment 9 — — 9

Utilized—cash ( 30 ) — — ( 30 )

3 unchanged sentences

Utilized—cash ( 24 ) — — ( 24 )

Utilized—noncash — — 1 1

Noncash adjustment—underspend ( 7 ) — — ( 7 )

Noncash adjustment—underspend/other — ( 3 ) 1 ( 2 )

Balance at September 30, 2021 $ 8 $ — $ 1 $ 9

In fiscal 2017, Adient committed to a restructuring plan ("2017 Plan") and recorded $ 46 million of restructuring and impairment costs in the consolidated statements of income.

Of the restructuring costs recorded, $ 34 million relates to the EMEA segment, $ 7 million relates to the Americas segment and $ 5 million relates to the Asia segment.

This is the total amount expected to be incurred for this restructuring plan.

The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions and plant closures.

The restructuring actions were substantially completed in fiscal 2020.

There were no material changes during fiscal 2020 to the 2017 Plan reserve balance at September 30, 2020 of $ 3 million.

In fiscal 2016, Adient committed to a restructuring plan ("2016 Plan") and recorded $ 332 million of restructuring and impairment costs in the consolidated statements of income.

This is the total amount expected to be incurred for this restructuring plan.

The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions, plant closures and asset impairments.

Of the restructuring and impairment costs recorded, $ 298 million relates to the EMEA segment, $ 32 million relates to the Americas segment and $ 2 million relates to the Asia segment.

The asset impairment charge recorded during fiscal 2016 related primarily to information technology assets within the EMEA segment that will not be used going forward by Adient.

The restructuring actions are expected to be substantially complete in fiscal 2021.

There were no material changes during fiscal 2020 to the 2016 Plan reserve balance at September 30, 2020 of $ 25 million.

Since the announcement of the 2016 Plan in fiscal 2016, Adient has experienced lower employee severance and termination benefit cash payouts than previously calculated of approximately $ 20 million, due to changes in cost reduction actions.

The planned workforce reductions disclosed for the 2016 Plan have been updated for Adient's revised actions.

During fiscal 2021, there was $ 20 million of cash utilized against the 2018, 2017 and 2016 Plan's reserve balances.

The majority of the cash utilized during the period was related to the 2016 Plan's reserve balance.

The 2018, 2017, and 2016 Plan's reserve balances at September 30, 2021 were $ 3 million, $ 2 million, and $ 2 million, respectively.

Adient's restructuring plans have included workforce reductions of approximately 18,000 .

1 unchanged sentence

As of September 30, 2021, approximately 15,000 of the employees have been separated from Adient pursuant to the restructuring plans.

In addition, the restructuring plans included twenty-three plant closures.

As of September 30, 2020, seventeen of the twenty-three plants have been closed.

In addition, the restructuring plans included twenty-five plant closures.

As of September 30, 2021, nineteen of the twenty-five plants have been closed.

Adient's management closely monitors its overall cost structure and continually analyzes each of its businesses for opportunities to consolidate current operations, improve operating efficiencies and locate facilities in low cost countries in close proximity to customers.

1 unchanged sentence

Because of the importance of new vehicle sales by major automotive manufacturers to operations, Adient is affected by the general business conditions in the automotive industry.

Future adverse developments in the automotive industry, particularly related to the COVID-19 pandemic, could impact Adient's liquidity position, lead to impairment charges and/or require additional restructuring of its operations.

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Future adverse developments in the automotive industry, particularly related to the COVID-19 pandemic and supply chain disruptions, could impact Adient's liquidity position, lead to impairment charges and/or require additional restructuring of its operations.

Impairment of Long-Lived Assets

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If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals.

During the fourth quarter of fiscal 2020, a pre-tax non-cash impairment of $ 21 million was recorded on certain assets held for sale (of which $ 12 million related to America’s assets and $ 9 million related to China’s assets), and $ 5 million was recorded in the Asia segment related to long-lived assets within a separate China entity due to an overall decline in the forecasted operations within that business.

During the first quarter of fiscal 2021, Adient committed to a plan to sell certain assets in France.

As a result, these assets were classified as assets held for sale and were required to be adjusted to the lower of fair value less cost to sell or carrying value.

Adient recorded an impairment charge of $ 9 million within restructuring and impairment costs on the consolidated statement of income (loss).

Refer to Note 3, “Acquisitions and Divestitures” of the notes to the consolidated financial statements for additional information on assets held for sale.

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operations within that business.

2 unchanged sentences

Refer to Note 6, "Goodwill and Other Intangible Assets," of the notes to the consolidated financial statements for additional information on impairment of customer relationship intangible assets.

Refer to Note 19, “Nonconsolidated Partially-Owned Affiliates,” of the notes to the consolidated financial statements for information on the fiscal 2020 impairment of investments in partially owned affiliates.

During the fourth quarter of fiscal 2019, Adient recorded impairment on certain assets held for sale resulting in an impairment charge of $ 12 million which was recorded within restructuring and impairment costs on the consolidated statement of income (loss).

8 unchanged sentences

During the first quarter of fiscal 2019, impairments of $ 6 million were recorded related to assets held for sale.

In the fourth quarter of fiscal 2018, Adient concluded it had triggering events requiring assessment of impairment for certain of its long-lived assets in the seat structure and mechanism operations due to the significant performance issues that persisted in fiscal 2018 and the resulting actions to turn around such operations identified during the fiscal 2019 planning process.

As a result, Adient reviewed the long-lived assets for impairment and recorded a $ 787 million non-cash pre-tax impairment charge within restructuring and impairment costs on the consolidated statements of income (loss).

The impairment charge related to long-lived assets in North America and Europe asset groups as of September 30, 2018 in support of current programs.

Of the $ 787 million impairment charge, $ 768 million relates to fixed assets and $ 19 million relates to customer relationship intangible asset.

The impairment was measured, depending on the asset, either under an income approach utilizing forecasted discounted cash flows or a market approach utilizing appraisal techniques to determine fair values of the impaired assets.

These methods are consistent with the methods Adient employed in prior periods to value other long-lived assets.

The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement" and primarily consist of expected future operating margins and cash flows, estimated production volumes, weighted average cost of capital rates ( 13.0 %), estimated salable values and third-party appraisal techniques such as market comparables.

To the extent that profitability on current or future programs decline as compared to forecasted profitability or if adverse changes occur to key assumptions or other fair value measurement inputs, further impairment of long-lived assets could occur in the future.

Refer to Note 6, "Goodwill and Other Intangible Assets," and Note 5, "Property, Plant and Equipment," of the notes to the consolidated financial statements for additional information.

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See Note 19, "Nonconsolidated Partially-Owned Affiliates," for information on the fiscal 2020 and 2018 impairment of investments in partially owned affiliates.

Consolidated income (loss) before income taxes and noncontrolling interests for the years ended September 30, 2021, 2020, and 2019 is as follows:

6 unchanged sentences

Income before income taxes and noncontrolling interests $ 1,439 $ ( 429 ) $ 2

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The components of the provision (benefit) for income taxes are as follows:

12 unchanged sentences

The reconciliation between the Irish statutory income tax rate, and Adient’s effective tax rate is as follows:

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September 30,

10 unchanged sentences

Impact of enacted tax rate changes ( 26 ) ( 3 ) ( 5 )

Impact of U.S.

tax reform — — 210

Change in uncertain tax positions 56 107 97

Audit settlements and change in uncertain tax positions 24 56 107

Change in valuation allowance ( 85 ) 332 503

3 unchanged sentences

Income tax provision $ 249 $ 57 $ 410

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The income tax expense was higher than the Irish statutory rate of 12.5% for fiscal 2021 primarily due to to the inability to recognize a tax benefit for losses in jurisdictions with valuation allowances, the establishment of valuation allowances in certain jurisdictions, and the repatriation of foreign earnings, partially offset by tax benefits from audit settlements, the write-off of deferred tax liabilities related to withholding taxes, and withholding taxes on the 2021 Yanfeng Transaction at a rate lower than the Irish statutory rate of 12.5%.

No items included in the other category are individually, or when appropriately aggregated, significant.

The income tax expense was higher than the Irish statutory rate of 12.5% for fiscal 2020 primarily due to the inability to recognize a tax benefit for losses in jurisdictions with valuation allowances, the repatriation of foreign earnings, and changes in uncertain tax positions, partially offset by the tax benefits related to the impairment and sale of Adient’s YFAI investment, sale of Adient’s automotive fabrics manufacturing business, and impairment charges recorded in the Asia segment.

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No items included in the other category are individually, or when appropriately aggregated, significant.

The effective rate was lower than the Irish statutory rate of 12.5 % for fiscal 2018 primarily due to the charge to recognize the impact of U.S.

tax reform legislation, repatriation of foreign earnings, and changes in uncertain tax positions and valuation allowances, partially offset by benefits from global tax planning, notional interest deductions, foreign tax rate differentials, and impairment deductions.

No items included in the other category are individually, or when appropriately aggregated, significant.

The foreign tax rate differential benefit for fiscal 2020 is primarily driven by losses earned in jurisdictions where the statutory rate is greater than 12.5 % and by the pretax book income of nonconsolidated partially-owned affiliates whose corresponding income tax expense is netted against equity income on the consolidated statements of income.

The foreign tax rate differential benefit for fiscal 2019 is primarily driven by losses earned in jurisdictions where the statutory rate is greater than 12.5 % and by the pretax book income of nonconsolidated partially-owned affiliates whose corresponding income tax expense is netted against equity income on the consolidated statements of income.

The foreign tax rate differential benefit for fiscal 2018 was primarily driven by losses earned in jurisdictions where the statutory rate is greater than 12.5 %.

The foreign tax rate differential benefits for fiscal 2019 through fiscal 2021 are primarily driven by losses earned in jurisdictions where the statutory rate is greater than 12.5% and by the pretax book income of nonconsolidated partially-owned affiliates whose corresponding income tax expense is netted against equity income on the consolidated statements of income.

Deferred taxes are classified in the consolidated statements of financial position as follows:

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Unremitted earnings of foreign subsidiaries 32 41

Indirect tax credits 18 —

Operating lease right-of-use assets 79 80

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Since future financial results may differ from previous estimates, periodic adjustments to Adient's valuation allowances may be necessary.

As a result of Adient's fiscal 2020 analysis of the realizability of its worldwide deferred tax assets, and after considering tax planning initiatives and other positive and negative evidence, Adient determined it was more likely than not that deferred tax assets in certain jurisdictions would not be realized.

These valuation allowances did not have a material impact on the consolidated financial statements.

As a result of Adient’s fiscal 2021 analysis of the realizability of its worldwide deferred tax assets, and after considering tax planning initiatives and other positive and negative evidence, Adient determined it was more likely than not that certain deferred tax assets in the Czech Republic, Korea, Mexico, and other jurisdictions would not be realized and recorded income tax expense of $ 5 million, $ 5 million, $ 8 million, and $ 4 million, respectively, to establish valuation allowances.

Adient continues to record valuation allowances on certain deferred tax assets in Germany, Hungary, Luxembourg, Mexico, Poland, Spain, the United Kingdom, the U.S.

and other jurisdictions as it remains more likely than not that they will not be realized.

As a result of Adient's fiscal 2019 analysis of the realizability of its worldwide deferred tax assets, and after considering tax planning initiatives and other positive and negative evidence (including the external debt refinancing, the related incremental net financing costs, and the restructuring of the internal financing which occurred in the third quarter of fiscal 2019 and including the long-lived asset impairment recorded in the second quarter of fiscal 2019), Adient determined it was more likely than not that deferred tax assets in Luxembourg (Q3), the United Kingdom (Q3) and certain Poland entities (Q2) would not be realized and recorded income tax expense of $ 229 million, $ 25 million and $ 43 million, respectively, to establish valuation allowances.

These valuation allowances did not have a material impact on the consolidated financial statements.

Adient plc | Form 10-K | 99

As a result of Adient's fiscal 2018 analysis of the realizability of its worldwide deferred tax assets, and after considering tax planning initiatives and other positive and negative evidence (including the seat structure and mechanism operations long-lived asset impairment recorded in the fourth quarter of fiscal 2018), Adient determined that it was more likely than not that deferred tax assets within the following jurisdictions would not be realized and recorded net valuation allowances as income tax expense in the fourth quarter of fiscal 2018:

Belgium ($ 12 million), Canada ($ 6 million), Germany ($ 175 million), Hungary ($ 14 million), Mexico ($ 117 million), Poland ($ 8 million), Romania ($ 9 million), and the U.S.

($ 281 million).

Germany, Hungary, Mexico, Poland, Romania, and the U.S.

cumulative loss positions were all adversely impacted by the seat structure and mechanism operations performance issues and resulting long-lived asset impairment.

In addition, as a result of Adient's fiscal 2018 analysis, Adient determined that it was more likely than not that deferred tax assets within Brazil would be realized.

Therefore, Adient released $ 76 million of valuation allowance as an income tax benefit in the fourth quarter of fiscal 2018.

than not that deferred tax assets in Luxembourg (Q3), the United Kingdom (Q3) and certain Poland entities (Q2) would not be realized and recorded income tax expense of $ 229 million, $ 25 million and $ 43 million, respectively, to establish valuation allowances.

Adient is subject to income taxes in Ireland, the U.S.

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Adient recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

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A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

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Ending balance $ 499 $ 483 $ 414

During the next twelve months, it is reasonably possible that tax audit resolutions or applicable statute of limitation lapses could reduce the unrecognized tax benefits and income tax expense.

Adient does not anticipate that this will result in a material impact to its consolidated financial statements.

Adient has $ 16.8 billion of undistributed foreign earnings of which $ 409 million is deemed permanently reinvested and no deferred taxes have been provided on such earnings.

During the next twelve months, it is reasonably possible that tax audit resolutions or applicable statute of limitation lapses could result in a significant change in the balance of gross unrecognized tax benefits.

Given the number of years, jurisdictions and positions subject to examination, Adient is unable to estimate the full range of possible adjustments to the balance of unrecognized tax benefits.

Adient plc | Form 10-K | 100

Adient has recorded a deferred tax liability of approximately $ 32 million as of September 30, 2021 on the undistributed earnings of certain consolidated and unconsolidated foreign affiliates for which the Company does not have an indefinite reinvestment assertion.

The Company has not provided for deferred taxes on the remainder of undistributed earnings from consolidated foreign affiliates because such earnings should not give rise to additional tax liabilities upon repatriation or are considered to be indefinitely reinvested.

It is not practicable to determine the unrecognized deferred tax liability on these earnings because the actual tax liability, if any, is dependent on circumstances existing when remittance occurs.

Income taxes paid for the fiscal year ended September 30, 2020 were $ 98 million.

Income taxes paid for the fiscal year ended September 30, 2021 were $ 78 million, excluding $ 134 million of withholding taxes on the 2021 Yanfeng Transaction.

Income taxes paid for the fiscal year ended September 30, 2020 were $ 98 million.

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As a result, a $ 7 million income tax benefit was recorded on the reduction of deferred tax liabilities and a reduction of 2018 calendar year income taxes.

On December 22, 2017, the Act was signed and enacted into law, and is effective for tax years beginning on or after January 1, 2018, with the exception of certain provisions.

As a fiscal year taxpayer, Adient was not subject to the majority of the provisions until fiscal year 2019, however the statutory tax rate reduction was effective January 1, 2018.

The Act reduced the U.S.

corporate tax rate from 35% to 21%.

Adient’s fiscal 2018 income tax expense reflects the benefit from the reduced rate of 24.5 % resulting from the application of Internal Revenue Code, Section 15 which provides for a proration of the newly enacted rate during that fiscal year.

This benefit was offset by a non-cash tax expense of $ 106 million related to the remeasurement of Adient’s net deferred tax assets at the lower statutory rate, a non-cash estimated tax expense of $ 100 million related to recording a valuation allowance to reflect the reduced benefit Adient expects to realize as a result of being subject to the Base Erosion and Anti-avoidance Tax ("BEAT"), and tax expense of $ 4 million related to the transition tax imposed on previously untaxed earnings and profits.

During the first quarter of fiscal 2019, Adient completed its accounting for the Act BEAT valuation allowance resulting in no change to the $ 100 million income tax impact estimated in fiscal 2018.

Adient plc | Form 10-K | 97

During fiscal years 2021, 2020, and 2019, other tax legislation was adopted in various jurisdictions.

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Tax Impact of One-Time Items

During the fourth quarter of fiscal 2021, Adient recognized $ 134 million of withholding tax expense associated with the 2021 Yanfeng Transaction.

Refer to Note 3, “Acquisitions and Divestitures,” of the notes to the consolidated financial statements for additional information regarding this transaction.

During the fourth quarter of fiscal 2021, Adient recognized tax benefits of $ 3 million related to audit settlements.

During the fourth quarter of fiscal 2021, Adient recognized a tax benefit of $ 2 million related to the write-off of a deferred tax liability associated with a Chinese joint venture’s distribution of unremitted earnings.

The distribution was reinvested in a wholly-owned Chinese subsidiary, thereby exempting the distribution from withholding tax.

The investment in the wholly-owned subsidiary is intended to be indefinitely reinvested, warranting the derecognition of the pre-existing deferred tax liability.

During the third quarter of fiscal 2021, Adient recognized an additional $ 30 million pre-tax gain related to Brazil indirect tax credits as a result of a favorable supreme court ruling.

The tax expense associated with this gain was $ 10 million.

During the third quarter of fiscal 2021, Adient recognized a tax benefit of $ 11 million related to the write-off of a deferred tax liability associated with a Chinese joint venture’s distribution of unremitted earnings.

The distribution was reinvested in a wholly-owned Chinese subsidiary, thereby exempting the distribution from withholding tax.

The investment in the wholly-owned subsidiary is intended to be indefinitely reinvested, warranting the derecognition of the pre-existing deferred tax liability.

Adient plc | Form 10-K | 101

During the second quarter of fiscal 2021, Adient recognized a $ 33 million pre-tax gain related to the sale of its equity interest in SJA.

The withholding tax expense associated with this gain was $ 5 million.

During the first quarter of fiscal 2021, Adient recognized an $ 8 million pre-tax gain related to Brazil indirect tax credits.

The tax expense associated with this gain was $ 3 million.

In fiscal 2020, Adient committed to a restructuring plan (“2020 Plan”) of $ 205 million.

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The tax benefit associated with the impairment charge was $ 2 million, which was negatively impacted by geographic mix and Adient’s current tax position in these jurisdictions.

In fiscal 2018, Adient committed to a significant restructuring plan (“2018 Plan”) and recorded a net $ 46 million of restructuring and impairment costs in the consolidated statements of income.

Refer to Note 15, "Restructuring and Impairment Costs," of the notes to the consolidated financial statements for additional information.

The restructuring costs generated a $ 6 million tax benefit, which was negatively impacted by geographic mix and Adient’s current tax position in these jurisdictions.

The disclosed tax benefit is prior to valuation allowances recorded during the fourth quarter of fiscal 2018.

During the fourth quarter of fiscal 2018, Adient recognized a pre-tax impairment charge on long-lived assets of $ 787 million within the seat structure and mechanism operations.

Refer to Note 16, "Impairment of Long-Lived Assets," of the notes to the consolidated financial statements for additional information.

The tax benefit associated with the impairment charge was $ 185 million, which was negatively impacted by geographic mix and Adient’s current tax position in these jurisdictions.

The disclosed tax benefit is prior to valuation allowances recorded during the fourth quarter of fiscal 2018.

In addition during the fourth quarter of fiscal 2018, Adient recognized a pre-tax non-cash impairment charge of $ 358 million in equity income related to Adient’s YFAI investment balance within the Interiors segment.

Refer to Note 19, "Nonconsolidated Partially-Owned Affiliates," of the notes to the consolidated financial statements for additional information.

The tax benefit associated with the impairment charge was $ 36 million.

During the third and fourth quarters of fiscal 2018, Adient recognized a net pre-tax impairment charge of $ 49 million related to assets classified as held for sale.

Refer to Note 3, "Acquisitions and Divestitures," of the notes to the consolidated financial statements for additional information.

The tax benefit associated with the impairment charge was $ 14 million.

The disclosed tax

Adient plc | Form 10-K | 98

benefit is prior to valuation allowances recorded during the fourth quarter of fiscal 2018.

During the second quarter of fiscal 2018, Adient recognized a pre-tax goodwill impairment charge of $ 299 million related to the seat structure and mechanism operations.

Refer to Note 6, "Goodwill and Other Intangible Assets," of the notes to the consolidated financial statements for additional information.

The tax benefit associated with the goodwill impairment charge was $ 20 million.

Segment Information

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The reportable segments are consistent with how management views the markets served by Adient and reflect the financial information that is reviewed by its chief operating decision maker.

Adient plc | Form 10-K | 102

September 30,

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Total net sales $ 13,680 $ 12,670 $ 16,526

Adient plc | Form 10-K | 99

September 30,

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( 78 ) ( 80 ) ( 97 )

Becoming Adient costs (2)

Restructuring and impairment costs (2)

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( 9 ) ( 20 ) ( 31 )

Loss on business divestitures - net (6)

Impairment of nonconsolidated partially owned affiliate (7)

Gain (loss) on business divestitures - net (5)

( 26 ) ( 13 ) —

Depreciation (8)

Gain on sale / (impairment) of nonconsolidated partially-owned affiliates (6)

1,214 ( 231 ) —

( 285 ) ( 295 ) ( 278 )

Stock based compensation

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(1) Corporate-related costs not allocated to the segments include executive office, communications, corporate development, legal and corporate finance.

(2) Reflects incremental expenses associated with becoming an independent company.

(2) Reflects restructuring charges for costs that are directly attributable to restructuring activities and meet the definition of restructuring under ASC 420 and non-recurring impairment charges.

Included in restructuring charges in fiscal 2021 is a $ 9 million held for sale non-cash impairment charge in EMEA, and a $ 1 million non-cash pre-tax impairment charge related to long-lived assets in EMEA.

Included in restructuring charges in fiscal 2020 is a non-cash pre-tax impairment related to China intangible assets of $ 24 million, held for sale asset impairments of $ 21 million, and $ 8 million of other long-lived asset impairments.

Included in restructuring charges in fiscal 2019 is a $ 66 million non-cash pre-tax impairment charge related to long-lived assets ($ 11 million in the Americas and $ 55 million in EMEA) and an $ 18 million non-cash impairment charge related to assets held for sale ($ 6 million in the Americas and $ 12 million in Asia).

Included in restructuring charges in fiscal 2018 is a non-cash pre-tax impairment charge of $ 1,086 million in the seat structure and mechanism operations ($ 787 million related to long-lived assets and $ 299 million related to goodwill), and a $ 49 million non-cash impairment charge related to assets held for sale.

Refer to Note 5, "Property, Plant and Equipment," Note 6, "Goodwill and Other Intangible Assets," Note 15, "Restructuring and Impairment Costs," and Note 16, "Impairment of Long-Lived Assets," of the notes to the consolidated financial statements for more information.

Refer to Note 6, "Goodwill and Other Intangible Assets," Note 15, "Restructuring and Impairment Costs," and Note 16, "Impairment of Long-Lived Assets," of the notes to the consolidated financial statements for more information.

(3) Reflects amortization of intangible assets including those related to partially owned affiliates recorded within equity income.

(5) Reflects restructuring related charges for costs that are directly attributable to restructuring activities, but do not meet the definition of restructuring under ASC 420 along with restructuring costs at partially owned affiliates recorded within equity income.

(6) Reflects $ 21 million loss of sale of RECARO and $ 4 million loss on deconsolidation of Aerospace, partially offset by a $ 12 million gain on completion of the Yanfeng transaction.

(7) Reflects non-cash impairment charges related to Adient's YFAI investment balance, which has been recorded within the equity income line in the consolidated statements of income.

The fiscal 2020 impairment was recorded in conjunction with the Yanfeng transaction.

(8) For the year ended September 30, 2018, depreciation excludes $ 7 million, which is included in restructuring related charges discussed above.

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(9) For the year ended September 30, 2018, stock based compensation excludes $ 10 million which is included in Becoming Adient costs discussed above.

(10) The year ended September 30, 2020 primarily includes $ 15 million of transaction costs and $ 1 million of tax adjustments at YFAI.

The year ended September 30, 2019 primarily includes $ 4 million of integration costs associated with the acquisition of Futuris, $ 3 million of transaction costs and $ 2 million of tax adjustments at YFAI.

The year ended September 30, 2018 primarily includes $ 22 million of integration costs associated with the acquisition of Futuris, $ 11 million of non-recurring consulting fees related to the seat structure and mechanism operations, an $ 8 million charge related to the impact of the U.S.

tax reform at YFAI and $ 8 million of prior period adjustments.

(4) Reflects restructuring related charges for costs that are directly attributable to restructuring activities, but do not meet the definition of restructuring under ASC 420 along with restructuring costs at partially owned affiliates recorded within equity income.

(5) The year ended September 30, 2021 includes a $ 21 million loss associated with certain aspects of the 2021 Yanfeng Transaction and a $ 5 million loss on sale of non-core assets in China.

The year ended September 30, 2020 includes a $ 21 million loss of sale of RECARO and $ 4 million loss on deconsolidation of Aerospace, partially offset by a $ 12 million gain on completion of the 2020 Yanfeng Transaction.

(6) The year ended September 30, 2021 includes a gain associated with the 2021 Yanfeng Transaction of $ 1,181 million and a gain of $ 33 million on the sale of Adient's interest in SJA.

The year ended September 30, 2020 includes non-cash impairment charges related to Adient's YFAI investment balance recorded in conjunction with the 2020 Yanfeng Transaction.

All of these impacts have been recorded within the equity income line in the consolidated statements of income.

(7) The year ended September 30, 2021 reflects a one-time gain of $ 38 million associated with the retrospective recovery of indirect tax credits in Brazil resulting from a favorable court ruling (of which $ 36 million relates to recoveries covering the past 20 years and is adjusted out of Americas' segment results), a $ 5 million gain on previously held interest at YFAS in an affiliate, and $ 19 million of transaction costs.

The year ended September 30, 2020 includes $ 15 million of transaction costs and $ 1 million of tax adjustments at YFAI.

The year ended September 30, 2019 includes $ 4 million of integration costs associated with the acquisition of Futuris, $ 3 million of transaction costs and $ 2 million of tax adjustments at YFAI.

Additional Segment Information

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(1) Reconciling items include the elimination of intercompany transactions, corporate-related assets and amounts to reconcile to consolidated totals.

Specific reconciling items for equity income represents a $ 231 million non-cash impairment of Adient's YFAI investment, $ 8 million of restructuring related charges, $ 3 million of purchase accounting amortization and a $ 1 million charge for tax adjustments associated with YFAI.

Specific reconciling items for equity income represents a gain associated with the 2021 Yanfeng Transaction of $ 1,181 million, a gain of $ 33 million on the sale of Adient's interest in SJA, a $ 5 million gain on previously held interest at YFAS, offset by $ 5 million of purchase accounting amortization and $ 1 million of restructuring related charges.

Corporate-related assets primarily include cash and deferred income tax assets.

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Capital Expenditures 138 164 24 — 326

(1) Reconciling items include the elimination of intercompany transactions, corporate-related assets, depreciation and amortization, and amounts to reconcile to consolidated totals.

Specific reconciling items included in equity income are $ 4 million of purchase accounting amortization related to the YFAI joint venture, $ 5 million of restructuring related charges and $ 2 million of tax adjustments at YFAI.

Corporate-related assets primarily include cash and deferred income tax assets.

(1) Reconciling items include the elimination of intercompany transactions, corporate-related assets and amounts to reconcile to consolidated totals.

Adient plc | Form 10-K | 104

charge for tax adjustments associated with YFAI.

Corporate-related assets primarily include cash and deferred income tax assets.

Year Ended September 30, 2019

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(1) Reconciling items include the elimination of intercompany transactions, corporate-related assets, depreciation and amortization, and amounts to reconcile to consolidated totals.

Specific reconciling items included in equity income are a $ 358 million non-cash impairment charge related to Adient's YFAI investment balance, $ 22 million of purchase accounting amortization related to the YFAI joint venture, $ 10 million of restructuring related charges and a $ 8 million charge related to the impact of the U.S.

tax reform at YFAI.

Corporate-related assets primarily include cash, deferred income tax assets, and Adient's aviation assets.

Corporate-related assets primarily include cash and deferred income tax assets.

Geographic Information

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Germany 180 203

Poland 145 142

Czech Republic 41 44

Other EMEA 310 337

All countries 192 225

Thailand 38 40

Other Asia 48 50

Total $ 1,607 $ 1,581

In the third quarter of fiscal 2019, Adient's Indonesia operations recorded an $ 8 million adjustment to increase cost of sales and to decrease primarily current assets to correct prior period misstatements.

Adient has concluded that these adjustments were not material to the consolidated financial statements for any period reported.

Nonconsolidated Partially-Owned Affiliates

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Operating information for nonconsolidated partially-owned affiliates is as follows:

% ownership at September 30,

Name of key partially-owned affiliate 2021 2020

Adient Yanfeng Seating Mechanism Co., Ltd.

(AYM) 50.0 % 50.0 %

KEIPER Seating Mechanisms Co., Ltd.

(KEIPER, previously AYM)

50.0 % 50.0 %

Changchun FAWAY Adient Automotive Systems Co.

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(YFAS) — % 49.9 %

Yanfeng Global Automotive Interiors Systems Co., Ltd.

(YFAI) — % 30.0 %

Year Ended September 30,

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Noncontrolling interests $ — $ 105

During fiscal 2020, Adient entered into an agreement to transfer all of the issued and outstanding equity interest in YFAI held, directly or indirectly, by Adient, which represents 30 % of YFAI’s total issued and outstanding equity interest, to Yanfeng Automotive Trim Systems Company Ltd.

On March 31, 2021, Adient sold its 50 % equity interest in SJA to the joint venture partner for $ 58 million.

The income statement data above includes SJA’s results for the first six months of fiscal 2021.

On September 30, 2021, Adient sold all of the issued and outstanding equity interest in YFAS held, directly or indirectly, by Adient, which represented 49.99 % of YFAS’s total issued and outstanding equity interest to Yanfeng, the joint venture partner, for ¥ 8,064 million ($ 1,210 million) as part of the 2021 Yanfeng Transaction.

As a result, the balance sheet data as of September 30, 2021 above excludes those of SJA and YFAS.

It also excludes that of CQADNT as Adient started consolidating CQADNT after completing the acquisition of additional interest on September 30, 2021.

Refer to Note 3, “Acquisitions and Divestitures,” of the notes to the consolidated financial statements for additional information.

During fiscal 2020, Adient entered into an agreement to transfer all of the issued and outstanding equity interest in YFAI held, directly or indirectly, by Adient, which represented 30 % of YFAI’s total issued and outstanding equity interest, to Yanfeng Automotive Trim Systems Company Ltd.

for $ 369 million as part of the 2020 Yanfeng Transaction.

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Refer to Note 3, “Acquisitions and Divestitures,” of the notes to the consolidated financial statements for additional information.

During the fourth quarter of fiscal 2018, Adient concluded that indicators of potential impairment were present related to the investment in YFAI based on the declines in operating performance during fiscal 2018 along with declines in projections of the YFAI business for the foreseeable future.

Accordingly, Adient deemed such issues to represent an other-than-temporary decline and undertook an impairment analysis to determine the fair value of the investment in YFAI, which was completed under an income approach utilizing discounted cash flows to derive a fair value of the investment in YFAI.

Based on the fair value, the carrying value of the investment in YFAI exceeded fair value by $ 358 million, and as such Adient recorded a non-cash impairment charge within equity income in the consolidated statements of income (loss) for that amount in the fourth quarter of 2018.

The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement" and primarily consist of expected future operating margins and cash flows of YFAI, estimated production volumes, weighted average cost of capital ( 12.5 %) and noncontrolling interest discounts.

Commitments and Contingencies

Adient is involved in various lawsuits, claims and proceedings incident to the operation of its businesses, including those pertaining to product liability, casualty environmental, safety and health, intellectual property, employment, commercial and contractual matters, and various other matters.

Adient is involved in various lawsuits, claims and proceedings incident to the operation of its businesses, including those pertaining to product liability, casualty, environmental, safety and health, intellectual property, employment, trade compliance, commercial and contractual matters, and various other matters.

Although the outcome of any such lawsuit, claim or proceeding cannot be predicted with certainty and some may be disposed of unfavorably to Adient, it is management's opinion that none of these will have a material adverse effect on Adient's financial position, results of operations or cash flows.

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Nevertheless, Adient does not currently believe that any claims, penalties or costs in connection with known environmental matters will have a material adverse effect on Adient's financial position, results of operations or cash flows.

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Related Party Transactions

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Subsequent to the separation, transactions with the former Parent and its businesses represent third-party transactions.

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The following table sets forth the location and amounts of net sales to and purchases from related parties included in Adient's consolidated statements of income (loss):

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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 8. Financial Statements and Supplementary Data