What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-11-22 compared with 2021-11-23 · 117 added, 127 removed, 363 unchanged (40% of the section changed)

6 unchanged sentences

Risks Related to Adient's Global Business

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

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

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

1 unchanged sentence

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

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

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

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

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

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

Shipping costs also increased significantly in fiscal 2021.

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

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

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

The automotive industry has also experienced a period of significant price volatility (generally resulting in an increase in commodities, energy costs, freight costs, labor costs and other input costs), as well as encountering an environment of unfavorable foreign currency exposures and rising interest rates.

These input cost increases and other exposures will likely continue into fiscal 2023 and perhaps further into the future.

This environment of significant price volatility has resulted in, and may continue to result in, increased costs for Adient that may not be, or may only be partially, offset.

Adient also experienced constrained labor availability which has resulted in wage inflationary pressures, both internally and at key vendors.

Adient continues to assess any impact labor shortages and wage inflation might have on Adient's ability to perform its obligations.

Although Adient has developed and implemented strategies to mitigate the impact of supply chain disruptions along with the impact of higher input and other costs, these strategies, together with commercial negotiations with Adient's customers and suppliers, typically offset only a portion (less than 100%) of the adverse impact.

Additionally, Adient's operating model requires long lead times between the design and development of products and the launch of production.

This lead time requires Adient to secure vendor supply well in advance to minimize launch and production inefficiencies.

During such lead times, price commitments are subject to change and could lead to an inability of Adient to fully recover all such price changes.

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

4 unchanged sentences

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

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

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

If automakers experience a decline in the number of new vehicle sales, whether as a result of economic decline, the continuing

Adient plc | Form 10-K | 13

financial condition or results of operations.

effects of the COVID-19 pandemic, ongoing supply chain disruptions, increasing consumer borrowing rates or otherwise, then Adient may experience reductions in orders from these customers, incur write-offs of accounts receivable, incur impairment charges or require additional restructuring actions beyond its current restructuring plans, particularly if any of the automakers cannot adequately fund their operations or experience financial distress.

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

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

7 unchanged sentences

The COVID-19 pandemic poses the risk that Adient or its affiliates and joint ventures, employees, suppliers, customers and others may be restricted or prevented from conducting business activities for indefinite or intermittent periods of time, including as a result of employee health and safety concerns, shutdowns, shelter in place orders, travel restrictions and other actions and restrictions that may be requested or mandated by governmental authorities.

For example, the Company experienced a temporary shutdown of its facilities in the second quarter of fiscal 2020 in China as a result of government-mandated actions to control the spread of COVID-19.

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

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

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

For example, the Company experienced a temporary shutdown of its facilities in the second quarter of fiscal 2020 in China as a result of government-mandated actions to control the spread of COVID-19, and again in late March 2020, in the Americas and European regions coinciding with the shutdown of its customer facilities in these regions.

Furthermore, during fiscal 2022 the Company continued to see periodic or temporary shutdowns, from time to time, at its facilities in China as a result of the resurgence of COVID-19.

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

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

Additionally, restrictions on the Company's access to its manufacturing facilities or on support operations or workforce, or similar limitations for its distributors and suppliers, could continue to limit customer demand and/or the Company's capacity to meet customer demands and have a material adverse effect on the business, financial condition and results of operations.

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

While OSHA’s Emergency Temporary Standard (as announced in early fiscal 2022) has been withdrawn, state and local governments in which our business operates may implement or announce COVID-19 vaccination requirements applicable to certain of our employees.

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

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

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

Additionally, restrictions on the Company's access to its manufacturing facilities or on support operations or workforce, or similar limitations for its distributors and suppliers, could continue to limit customer demand and/or the Company's capacity to meet customer demands and have a material adverse effect on its business, financial condition and results of operations.

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

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

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

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

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

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

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

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

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

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

Adient plc | Form 10-K | 13

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

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

Adient plc | Form 10-K | 14

severity of COVID-19, the longevity of COVID-19 and the impact of COVID-19 on economic activity.

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

4 unchanged sentences

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

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

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

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

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

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

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

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

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

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

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

Fifth Circuit Court of Appeals pending additional court review.

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

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

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

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

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

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

Adient plc | Form 10-K | 14

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

4 unchanged sentences

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

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

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

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

3 unchanged sentences

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

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

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

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

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

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

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

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

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

1 unchanged sentence

Adient has significant operations in a number of countries outside the U.S., some of which are located in emerging markets.

Long-term economic uncertainty in some of the regions of the world in which Adient operates, such as Asia, South America and Europe and other emerging markets, could result in the disruption of markets and negatively affect cash flows from Adient's operations to cover its capital needs and debt service requirements.

Long-term economic or political uncertainty in some of the regions of the world in which Adient operates, such as Asia, South America and Europe and other emerging markets, could result in the disruption of markets and negatively affect cash flows from Adient's operations to cover its capital needs and debt service requirements.

Adient plc | Form 10-K | 15

In addition, as a result of Adient's global presence, a significant portion of its revenues and expenses is denominated in currencies other than the U.S.

8 unchanged sentences

protectionist measures that may prohibit acquisitions or joint ventures, or impact trade volumes;

unsettled political conditions;

unsettled political conditions or instability;

government-imposed plant or other operational shutdowns;

3 unchanged sentences

hazards and losses;

armed conflict, territorial disputes or acts of aggression in Asia, South America, Europe or otherwise;

violence, civil and labor unrest;

and possible terrorist attacks.

On June 23, 2016, the U.K.

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

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

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

On December 30, 2020, the U.K.

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

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

and its relationship with the

Adient plc | Form 10-K | 15

European Union.

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

The consequences of the withdrawal by the U.K.

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

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

However, certain economic uncertainties remain in connection with the future of the U.K.

and its relationship with the European Union.

These uncertainties have caused and may continue to cause disruptions to capital and currency markets worldwide as well as cause disruptions on Adient’s operations.

Russia’s invasion of Ukraine in February 2022 has resulted in significant uncertainty and instability in global supply chains and availability of certain commodities and raw materials.

Although Adient has no operations in Ukraine and its operation in Russia has since been disposed, certain of its suppliers as well as customers depend on commodities and other material supplies that originate in Ukraine or Russia.

In response to Russia’s invasion in Ukraine, a number of countries, including the United States, the United Kingdom and members of the European Union, have implemented economic sanctions on Russia and certain Russian enterprises including several large banks.

The conflict has also led to increases in the cost of energy and the potential for energy shortages, especially in Europe.

If the conflict continues or expands, it may trigger a series of additional economic and other sanctions which in turn could further disrupt the global automotive supply chains by limiting supplies of key components and increasing inflationary pressures.

The continued conflict could have broader adverse impacts on Adient's business, cash flows, financial condition and results of operations.

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

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

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

Adient's business in China is conducted through both consolidated subsidiaries and nonconsolidated joint ventures.

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

13 unchanged sentences

as a result of such changes, likely would have an adverse effect on Adient's business, financial condition or results of operations.

Adient plc | Form 10-K | 16

The regulation of Adient's international operations, and any failure of Adient to comply with those regulations, could adversely affect its business, results of operations and reputation.

15 unchanged sentences

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

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

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

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

In addition, the

Adient plc | Form 10-K | 16

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

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

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

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

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

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

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

In addition, the automotive industry has seen a period of sustained price increases for commodities, primarily related to steel, and to a lesser extent petrochemicals, and more recently energy costs in Europe.

Adient has also experienced constrained labor availability which has resulted in wage inflationary pressures, both internally and at key vendors.

These increases may continue into the future as demand increases and as supply may remain constrained, which has resulted in, and may continue to result in, increased costs for Adient.

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

Adient operates in the highly competitive automotive supply industry.

8 unchanged sentences

Developments or assertions by or against Adient relating to intellectual property rights, or any inability to protect Adient's rights, could have an adverse impact on its business and competitive position.

In addition, any of Adient's competitors may foresee the course of market development more accurately than Adient, develop products that are superior to Adient's products, produce similar products at a lower cost than Adient, or adapt more quickly than Adient to new technologies or evolving customer requirements.

Adient plc | Form 10-K | 17

lower cost than Adient, or adapt more quickly than Adient to new technologies or evolving customer requirements.

Adient cannot provide assurances that certain of Adient’s products will not become obsolete or that Adient will be able to achieve the technological advances that may be necessary to remain competitive.

10 unchanged sentences

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

Adient plc | Form 10-K | 17

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

7 unchanged sentences

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

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

Similarly, if one or more of Adient's customers were to experience a work stoppage, such as those resulting from labor strikes, customer stoppages as a result of COVID-19-related governmental shutdowns, ongoing supply chain disruptions, or otherwise, that customer would likely halt or limit purchases of Adient's products, which could result in the shutdown of the related Adient manufacturing facilities and or other cost-reduction initiatives.

In addition in certain instances we may be unable to adjust our staffing levels to correspond to a customer’s work stoppage such that we incur increased labor costs along with a decrease in production.

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

Adient may be unable to realize the expected benefits of its restructuring actions, which could adversely affect its profitability and operations.

Adient plc | Form 10-K | 18

In order to align Adient's resources with its strategies, operate more efficiently and control costs and to realign its businesses, with customer and market needs and operating conditions, Adient has periodically announced, and in the future may continue to announce, restructuring plans, which may include workforce reductions, global plant closures and consolidations, asset impairments and other cost reduction initiatives.

9 unchanged sentences

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

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

To the extent that any disruptions or security breach results in a loss or damage to Adient's data, or an inappropriate disclosure of confidential, proprietary or customer information, it could cause significant damage to Adient's reputation, affect Adient's relationships with its customers, lead to claims against Adient and ultimately harm its business.

A material network breach in the security of Adient's IT systems could lead to vendor payments being paid to fraudulent bank accounts and the theft of Adient's intellectual property, trade secrets, customer information, human resources information or other confidential information.

To the extent that any disruptions or security breach results in a loss or damage to Adient's data, or an inappropriate disclosure of confidential, proprietary or customer information, it could cause significant damage to Adient's reputation, affect Adient's relationships with its customers and vendors, lead to claims against Adient and ultimately harm its business.

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

Adient plc | Form 10-K | 18

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

10 unchanged sentences

The automotive industry is increasingly focused on the development of advanced driver assistance technologies, with the goal of developing and introducing a commercially-viable, fully automated driving experience.

There has also been an increase in consumer preferences for mobility on demand services, such as car- and ride-sharing, as opposed to automobile ownership, which may result in a long term reduction in the number of vehicles per capita.

There has also been an increase in consumer preferences for mobility on demand services, such as car- and ride-sharing, as opposed to automobile ownership,

Adient plc | Form 10-K | 19

which may result in a long term reduction in the number of vehicles per capita.

These evolving areas have also attracted increased competition from entrants outside the traditional automotive industry.

13 unchanged sentences

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

Adient plc | Form 10-K | 19

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

5 unchanged sentences

Such regulatory uncertainty extends to future incentives for energy efficient vehicles and costs of compliance, which may impact the demand for Adient's products and Adient's results of operations.

There is a growing consensus that greenhouse gas emissions are linked to global climate changes.

Climate changes, such as extreme weather conditions, create financial risk to Adient's business.

The effects of climate change, such as extreme weather conditions, create financial risk to Adient's business.

For example, the demand for Adient's products and services may be affected by unseasonable weather conditions.

3 unchanged sentences

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

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

Specifically, certain customers are beginning to require that

Adient plc | Form 10-K | 20

Adient provide information on its plans and goals relating to certain climate-related matters such as greenhouse gas emissions and renewable energy.

The enhanced stakeholder focus on ESG issues relating to Adient requires the continuous monitoring of various and evolving standards and the associated reporting requirements.

A failure to adequately meet stakeholder expectations may result in the loss of business, diluted market valuation, an inability to attract customers or an inability to attract and retain top talent.

A failure to adequately meet stakeholder expectations or achieve its ESG-related goals may result in the loss of business, diluted market valuation, an inability to attract customers or an inability to attract and retain top talent.

As of the date of this filing, Adient has made several public commitments regarding our intended reduction of carbon emissions, including commitments to science-based targets to reduce carbon emissions from its operations and the operations of its customers.

Although Adient intends to meet these commitments, it may be required to expend significant resources to do so, which could increase its operational costs.

Further, there can be no assurance that any of Adient’s commitments will be achieved, or that any future investments it makes to achieve such targets and goals will meet investor expectations or any binding or non-binding legal standards regarding sustainability performance.

Moreover, Adient may determine that it is in the best interest of the Company and its shareholders to prioritize other business, social, governance or sustainable investments over the achievement of our current commitments based on economic, regulatory and social factors, business strategy or pressure from investors, activist groups or other stakeholders.

If Adient is unable to meet these commitments, then it could incur adverse publicity and reaction from investors, activist groups and other stakeholders, which could adversely impact the perception of the Company and its products and services by current and potential customers, as well as investors, which could in turn adversely impact its results of operations.

Risks related to Adient's defined benefit retirement plans may adversely impact Adient's results of operations and cash flow.

12 unchanged sentences

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

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

Adient plc | Form 10-K | 20

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

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

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

6 unchanged sentences

• making it more difficult to satisfy other obligations;

Adient plc | Form 10-K | 21

• increasing the risk of a future credit ratings downgrade of its debt, which could increase future debt costs and limit the future availability of debt financing;

2 unchanged sentences

• limiting Adient's ability to borrow additional funds as needed.

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

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

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

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

Certain jurisdictions have or are in the process of phasing out LIBOR.

The long-term impact of this change remains uncertain at this time, including whether alternative reference rates could increase borrowing costs.

Adient has started, and will continue, to incorporate alternatives to LIBOR in its debt agreements.

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

4 unchanged sentences

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

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

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

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

As Adient reopens its offices, it is operating under a “hybrid” working environment, meaning that the majority of its employees will have the flexibility to work remotely at least some of the time, for the foreseeable future.

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

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

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

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

5 unchanged sentences

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

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

Adient plc | Form 10-K | 21

be adversely affected by natural disasters.

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

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

4 unchanged sentences

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

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

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

Adient plc | Form 10-K | 22

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

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

5 unchanged sentences

Adient may not pay dividends on its ordinary shares, which may impact Adient’s investor base.

Adient previously disclosed that it does not have plans to pay dividends on its ordinary shares following the dividend paid in the first quarter of fiscal 2019.

Adient currently does not have plans to pay dividends on its ordinary shares.

The timing, declaration, amount and payment of future dividends to shareholders will fall within the discretion of Adient's board of directors.

14 unchanged sentences

interruption of supply of certain single-source components;

the potential introduction of similar or superior

Adient plc | Form 10-K | 22

technologies;

the potential introduction of similar or superior technologies;

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

2 unchanged sentences

As an Irish public limited company, certain capital structure decisions require shareholder approval, which may limit Adient's flexibility to manage its capital structure.

Irish law provides that a board of directors may allot shares (or rights to subscribe for or convertible into shares) only with the prior authorization of shareholders, such authorization for a maximum period of five years, each as specified in the articles of association or relevant shareholder resolution.

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

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

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

Irish law provides that a board of directors may allot shares (or rights to subscribe for or convertible into shares) only with the prior authorization of shareholders.

Most recently, at its 2022 Annual General Meeting, Adient's shareholders renewed this authorization until September 2023 (unless previously renewed, varied or revoked).

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

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

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

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

Irish law also generally provides shareholders with preemptive rights when new shares are issued for cash;

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

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

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

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

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

however, it is possible for shareholders to vote to exclude preemptive rights in a general meeting.

Most recently, at its 2022 Annual General

Adient plc | Form 10-K | 23

Meeting, Adient's shareholders renewed this authorization until September 2023 (unless previously renewed, varied or revoked).

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

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

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

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

25 unchanged sentences

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

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

Adient plc | Form 10-K | 23

and officer transactions and shareholder lawsuits.

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

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

10 unchanged sentences

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

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

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

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

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

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

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (the IRA) into law.

The corporate tax provisions include (a) the creation of a 15% corporate minimum tax and (b) a nondeductible 1% excise tax on share buy-backs

Adient plc | Form 10-K | 24

of covered corporations.

Neither of these provisions are in effect for fiscal 2022 and Adient continues to monitor the impact, if any, for subsequent years.

Following the passing of the IRA and the upcoming election cycle, it is uncertain whether additional U.S.

corporate tax reform could be expected.

There are a number of corporate income tax topics that were not addressed in the IRA that could be raised in the future, for example:

increasing the U.S.

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

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

1 unchanged sentence

The outline provides for two primary “Pillars”;

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

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

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

Following the agreement in October 2021, progress has been made on implementation of Pillar Two, with the Model Rules for implementation being released in December 2021 and related commentary in March 2022.

While the OECD remains committed to its original timeline (initial implementation in 2023), there is no global consensus.

The enactment of Pillar Two is contingent upon the independent actions of participating countries to enact law changes.

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

13 unchanged sentences

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

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

Adient plc | Form 10-K | 24

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

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

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

10 unchanged sentences

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

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

Adient plc | Form 10-K | 25

former Parent assumed by Adient pursuant to the separation arrangements and in respect of the conduct of the parties post-separation.

Adient may be subject to substantial liabilities under these indemnifications.

16 unchanged sentences

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

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

Adient plc | Form 10-K | 25

ordinary shares in certain circumstances.

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

4 unchanged sentences

Unresolved Staff Comments

Adient plc | Form 10-K | 26

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

What changed 10-K

Item 1A. Risk Factors