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Item 8. Financial Statements and Supplementary Data

2022-11-22 compared with 2021-11-23 · 275 added, 424 removed, 1354 unchanged (34% of the section changed)

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Index to Consolidated Financial Statements Page

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Statements of Income (Loss) for the years ended September 30, 202 2 , 202 1 and 2 020

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Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based

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on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

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

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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.

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

Evaluating management’s assumptions related to estimates of the revenue and the operating margins 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;

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(Gain) on sale of / impairment of nonconsolidated partially owned affiliates 10 ( 1,214 ) 231

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

Premium paid on repurchase of debt 38 50 —

Retrospective recoveries of Brazil indirect tax credits ( 29 ) ( 38 ) —

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Debt financing costs ( 1 ) ( 8 ) ( 10 )

Cash dividends — — ( 26 )

Cash paid to acquire a noncontrolling interest ( 153 ) — —

Dividends paid to noncontrolling interests ( 106 ) ( 69 ) ( 71 )

Formation of consolidated joint venture — — 28

Other ( 12 ) ( 7 ) ( 2 )

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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 )

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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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Dividends attributable to noncontrolling interests — — — — — ( 53 ) ( 53 )

Change in noncontrolling interest share — — — — — ( 3 ) ( 3 )

Purchase of subsidiary shares from noncontrolling interest — 12 — — 12 ( 12 ) —

Share based compensation and other — 23 — — 23 — 23

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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 coronavirus pandemic identified in late 2019 ("COVID-19") 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 returned to operations by the end of March 2020.

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 of fiscal 2020 in all regions in line with customer production.

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.

The global automotive industry has continued to experience unprecedented supply chain and other disruptions over the past year related to semiconductor chip shortages, hostilities in Ukraine and localized COVID-19 lockdowns in China.

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

The automotive industry has also experienced a period of rising input costs and potential shortages related to energy (particularly in EMEA as a result of the conflict in Ukraine), freight and commodities as well as facing an environment of unfavorable foreign currency exchange and rising interest rates.

In addition, Adient, along with the automotive industry, has experienced and continues to face wage inflationary pressures as a result of constrained labor availability, particularly in certain jurisdictions in EMEA.

COVID-19 and related variants and sub-variants, also continues to be present throughout the world, including in all global and regional markets served by Adient.

The elevated COVID-19 rates in China led to lockdowns at various times during fiscal 2022, negatively impacting the automotive production levels in that region, along with creating further supply chain disruptions.

As a result of these disruptions, new vehicle sales continue to be significantly lower than historical and previously projected pre-pandemic sales levels.

Refer to the consolidated results of operations and segment analysis discussion below for additional information on the impacts of these items on Adient's results.

Refer to Note 3, "Acquisitions and Divestitures," of the notes to the consolidated financial statements for additional information on the impacts from the Russia/Ukraine conflict including Adient’s withdrawal from and sale of operations in Russia.

Principles of Consolidations

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Adient funds the entities' short-term liquidity needs through revolving credit facilities and has the power to direct the activities that are considered most significant to the entities through its key customer supply relationships.

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The carrying amounts and classification of assets (none of which are restricted) and liabilities included in Adient's consolidated statements of financial position for the consolidated VIEs are as follows:

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September 30,

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The allowance for doubtful accounts is based on historical experience, existing economic conditions and any specific customer collection issues Adient has identified.

Adient enters into supply chain financing programs in certain foreign jurisdictions to sell accounts receivable without recourse to third-party financial institutions.

Sales of accounts receivable are reflected as a reduction of accounts receivable on the consolidated statements of financial position and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows.

Adient enters into supply chain financing programs in certain domestic and foreign jurisdictions to either sell or discount accounts receivable without recourse to third-party institutions.

Sales or discounts of accounts receivable are reflected as a reduction of accounts receivable on the consolidated statements of financial position and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows.

As of September 30, 2022 and 2021, $ 269 million and $ 132 million have been funded under these programs, respectively.

Inventories are stated at the lower of cost or market.

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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

At September 30, 2022 and 2021, Adient recorded within the consolidated statements of financial position $ 239 million and $ 278 million, respectively, of engineering and research and development costs for which customer reimbursement is contractually assured.

The reimbursable costs are recorded in other

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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.

current assets if reimbursement will occur in less than one year and in other noncurrent assets if reimbursement will occur beyond one year.

At September 30, 2022, Adient had $ 73 million and $ 166 million of reimbursable costs recorded in current and noncurrent assets, respectively.

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The adoption of ASC 842 did not have any significant impact on the consolidated statement of income or cash flows.

Operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement dates.

Operating lease right-of-use (ROU) assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement dates.

ROU assets also include payments made in advance and exclude lease incentives.

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Adient also uses a market approach utilizing published multiples of earnings of comparable entities with similar operational and economic characteristics to further support the fair value estimates.

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

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Measurement." The estimated fair value is then compared with the carrying amount of the reporting unit, including recorded goodwill.

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 estimated fair value is then compared with the carrying amount of the reporting unit, including recorded goodwill.

An impairment is recorded to the extent the estimated fair value is below the carrying amount of the reporting unit.

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Intangible assets with definite lives are amortized over their estimated useful lives and are subject to impairment testing if events or changes in circumstances indicate that the asset might be impaired.

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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.

Refer to Note 16, "Impairment of Long-Lived Assets," of the notes to consolidated financial statements for information regarding the results of Adient's impairment analysis.

Impairment of Investments in Partially-Owned Affiliates

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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.

which comprised 12 % of consolidated net sales in fiscal 2022, Stellantis N.V.

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

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Foreign Currency Translation

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Substantially all of Adient's international operations use the respective local currency as the functional currency.

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Monetary assets and liabilities denominated in non-functional currencies are adjusted to reflect period-end exchange rates.

The resulting translation adjustments are accumulated as a component of accumulated other comprehensive income.

The resulting translation adjustments are accumulated as a component of

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accumulated other comprehensive income (AOCI).

The aggregate transaction gains (losses) included in net income for the years ended September 30, 2022, 2021 and 2020 were $ 6 million, $( 8 ) million and $( 25 ) million, respectively.

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The fair values of all derivatives are recorded in the consolidated statements of financial position.

The change in a derivative's fair value is recorded each period in current earnings or accumulated other comprehensive income (AOCI), depending on whether the derivative is designated as part of a hedge transaction and if so, the type of hedge transaction.

The change in a derivative's fair value is recorded each period in current earnings or accumulated other comprehensive income, depending on whether the derivative is designated as part of a hedge transaction and if so, the type of hedge transaction.

Refer to Note 10, "Derivative Instruments and Hedging Activities," and Note 11, "Fair Value Measurements," of the notes to consolidated financial statements for disclosure of Adient's derivative instruments and hedging activities.

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The fair value of performance-based share unit, or PSU, awards is based on the stock price at the grant date and the assessed probability of meeting future performance targets.

The fair value of option awards is measured on the grant date using the Black-Scholes option-pricing model.

The fair value of each stock appreciation right, or SAR, is estimated using a similar method described for stock options.

The fair value of cash settled awards are recalculated at the end of each reporting period and the liability and expense are adjusted based on the new fair value.

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Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year.

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Adient does not generally provide for additional income taxes which would become payable upon repatriation of undistributed earnings of wholly owned foreign subsidiaries.

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Refer to Note 16, "Income Taxes," of the notes to consolidated financial statements for Adient's income tax disclosures.

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Earnings Per Share

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Standards Adopted During Fiscal 2022

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.

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, 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.

On October 1, 2021, Adient adopted Accounting Standards Codification (ASU) 2018-14 Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20).

ASU 2018-14 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.

The adoption of this guidance on October 1, 2021 did not significantly impact Adient's consolidated financial statements for fiscal 2022.

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.

On October 1, 2021, Adient adopted ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

ASU 2019-12 modifies ASC 740, Income Taxes, by simplifying accounting for income taxes.

As part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements, the FASB’s amendments may impact both interim and annual reporting periods.

The adoption of this guidance on October 1, 2021 did not significantly impact Adient's consolidated financial statements for fiscal 2022.

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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 2022

Adient has considered the ASUs summarized below, effective after fiscal 2022, none of which are expected to significantly impact the consolidated financial statements:

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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.

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.

October 1, 2022

ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes ASU 2019-12 modifies ASC 740, Income Taxes, by simplifying accounting for income taxes.

ASU 2021-10, Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance The ASU requires annual disclosures of:

i) information about the nature of government assistance transactions and the related accounting policy used to account for the transactions, ii) the balance sheet and income statement line items affected by the transactions, and the amounts for each financial statement line item, and iii) significant transaction terms and conditions.

October 1, 2022

ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations The ASU requires buyers of goods and services to disclose information about supplier finance programs if such arrangements are used to manage their payables.

The disclosures should include both qualitative and quantitative information including key terms and the amount of outstanding obligations.

October 1, 2023

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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.

Adient includes shipping and handling fees billed to customers in revenue, while including costs of shipping and handling in cost of sales.

Taxes collected from customers are excluded from revenue and credited directly to obligations to the appropriate government agencies.

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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

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with customers.

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

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

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

Contract liabilities primarily relate to contracts where advance payments or deposits have been received, but performance obligations have not yet been satisfied and revenue has not been recognized.

No significant contract assets or liabilities were identified at September 30, 2021.

No significant contract assets or liabilities exist at September 30, 2022.

As described above, the issuance of a purchase order and/or a materials release by the customer represents the point at which an enforceable contract with the customer exists.

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Refer to Note 17, "Segment Information," of the notes to consolidated financial statements for disaggregated revenue by geographical market.

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Acquisitions and Divestitures

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(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”).

(“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 agreed to, among other things, transactions that resulted in the sale of Adient’s 49.99 % interest in YFAS to Yanfeng, the sale of Adient’s ownership interests in 3 other related joint ventures (ranging from 10 % to 25 %) to YFAS/KEIPER, and the purchase of YFAS’s 50 % interest in Chongqing Adient Automotive Components Co., Ltd.

(“CQADNT”) and YFAS’s 100 % interest in Adient (Langfang) Seating Co., Ltd.

(“LFADNT”) (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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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.

As a result of the 2021 Yanfeng Transaction, Adient received net cash proceeds of $ 1,141 million ($ 489 million in September 2021 and $ 652 million in December 2021) for the sale of Adient’s 49.99 % interest in YFAS to Yanfeng, $ 100 million as the final cash dividend from YFAS, $ 59 million for the sale of Adient’s ownership interests in the 3 other related joint ventures, $ 54 million for granting a license of intellectual property to Yanfeng for use on a non-exclusive and perpetual basis, and a business consulting fee of $ 13 million.

Adient also made a net payment of $ 211 million to Yanfeng related to the purchase CQADNT and LFADNT (the purchase price of $ 271 million, less $ 60 million cash acquired) on the Closing Date.

In conjunction with the 2021 Yanfeng Transaction, Adient provided Chongqing Boxun Industrial Co., Ltd.

(“Boxun”), which owned 25 % of CQADNT, an option to sell its interest in CQADNT.

This option was reflected as $ 194 million of redeemable noncontrolling interest on Adient’s statement of financial position as of September 30, 2021.

Boxun exercised its option in October 2021, and Adient acquired Boxun’s 25 % interest effective January 2022.

The total payment to Boxun from Adient was approximately $ 200 million, of which $ 15 million of historical dividends were paid in December 2021, and $ 185 million, including $ 32 million of historical dividends, was paid later in fiscal 2022.

With the acquisitions of Boxun’s 25 % and YFAS’s 50 % interest of CQADNT, Adient owns 100 % of CQADNT effective January 2022.

As a result of the 2021 Agreement, Adient received $ 41 million during fiscal 2022 representing 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 in Form 10-K for the fiscal year ended September 30, 2021).

The acquisition of CQADNT and LFADNT was accounted for using the acquisition method, and the operating results and cash flows of CQADNT and LFADNT have been included in Adient's consolidated financial statements since 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.

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

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:

The purchase price adjustments and allocation is as follows:

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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 values allocated to CQADNT and LFADNT’s intangible assets of $ 234 million and $ 6 million, respectively, primarily consisted of customer relationships and patented technologies which are being amortized on a straight line basis over estimated useful lives of 3 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.

These values were 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.

Key assumptions used in the valuation of customer relationships included 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 included a rate of return of 13.5 % and the life of the technologies of approximately 3 years.

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

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

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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.

In fiscal 2022, Adient entered into an agreement whereby Adient would purchase all of the issued and outstanding equity interest in Nantong Yanfeng Adient Seating Trim Co., Ltd.

(“YFAT”) held by KEIPER for ¥ 150 million ($ 24 million).

Adient made an initial deposit of ¥ 75 million ($ 12 million) in fiscal 2022, which represents 50 % of the estimated purchase price (reflected within other current assets as of September 30, 2022).

The transaction is subject to a public bidding process and other customary regulatory approvals, and is expected to be completed during the first half of fiscal 2023.

The remaining 50 % of the estimated purchase price will be paid at the time of completion of the transaction.

Also in fiscal 2022, Adient has entered into agreements whereby Adient would transfer all of the issued and outstanding equity interests in two joint ventures in China held directly by Adient, each of which represents 25 % of their total issued and outstanding equity interests, to Yanfeng for $ 3 million.

As a result, Adient concluded that indicators of other-than-temporary impairment were present related to the investments in these joint ventures, and recorded a non-cash impairment charge of $ 3 million during the second quarter of fiscal 2022.

The transactions are expected to be completed during the first half of fiscal 2023.

Russia/Ukraine conflict

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Following Russia's invasion of Ukraine in February 2022, Adient determined to withdraw from the Russian market.

Adient recorded a charge of $ 5 million during fiscal 2022 in conjunction with completion of the withdrawal from and sale of its Russian operations for one ruble.

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.

Proceeds from the transaction were used by Adient for general corporate purposes and to pay down a portion of Adient’s debt.

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.

The sale transaction included 11 facilities globally and approximately 1,300 employees.

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

2020 Yanfeng Transaction

• 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 would 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 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.

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, 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.

Upon entering into a formal agreement to sell the YFAI investment, Adient determined that other-than-temporary impairment did exist and recorded a $ 216 million non-cash impairment of Adient's YFAI investment during the quarter ended December 31, 2019.

As a result of the June 24, 2020 modifications to the agreement described above, Adient recorded $ 6 million of additional non-cash impairment of Adient's YFAI investment during the quarter ended June 30, 2020.

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 2020 Agreement, including an estimated fair value of the YFAS joint venture extension, and allocating the total

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

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 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 in fiscal 2020, $ 19 million in fiscal 2021, and $ 41 million in fiscal 2022.

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.

The intangible asset was subsequently written off in fiscal 2021 as a result of the 2021 Yanfeng Transaction.

As a result of the January 31, 2020 agreement, Adient concluded that indicators of other-than-temporary impairment were present related to the investment in YFAI and recorded a non-cash impairment of $ 231 million in fiscal 2020.

The impairment was 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 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.

As a result of the pending divestiture of the YFAI investment and the corresponding impairment, Adient ceased recognizing equity income from YFAI subsequent to December 31, 2019 (YFAI equity income was $ 40 million in fiscal year 2019).

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.

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.

As a result of the pending divestiture of the YFAI investment and the corresponding impairment, Adient ceased recognizing equity income from YFAI.

During fiscal 2020, Adient sold the RECARO automotive high performance seating systems business (“RECARO”) to a group of investors for de minimis proceeds.

As a result of the sale, Adient recorded a loss of $ 21 million.

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.

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.

Initial contributions of $ 28 million were made by each partner.

During fiscal 2020, 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.

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Assets held for sale

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During fiscal 2022, Adient committed to sell certain assets in EMEA.

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 $ 6 million.

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

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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." 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.

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 in fiscal 2021 for minimal proceeds while the sale of the assets in Turkey was completed in fiscal 2022 for total proceeds of $ 46 million, of which $ 36 million was collected at closing, and $ 10 million was collected later in fiscal 2022.

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." All of the sales transactions were completed during fiscal 2021 for a total of $ 5 million of proceeds.

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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." These sales transactions were completed during fiscal 2021 for a total of $ 5 million of proceeds.

Inventories consisted of the following:

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Property, plant and equipment - net $ 1,377 $ 1,607

There were no material leased capital assets included in net property, plant and equipment at September 30, 2021 and 2020.

There were no material finance leases included in net property, plant and equipment at September 30, 2022 and 2021.

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As of September 30, 2022, Adient is the lessor of properties included in gross building and improvements for $ 12 million and accumulated depreciation of $ 8 million.

As of September 30, 2021, Adient is the lessor of properties included in gross building and improvements for $ 15 million and accumulated depreciation of $ 9 million.

A correction of approximately $ 1.4 billion to reduce the carrying value of buildings and improvements, machinery and equipment and accumulated depreciation as of September 30, 2021 was recorded related to previously disposed assets.

Goodwill and Other Intangible Assets

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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

Business acquisitions — — 188 188

Business divestitures — ( 11 ) — ( 11 )

Currency translation and other — ( 59 ) ( 96 ) ( 155 )

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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.

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.

Adient performed its annual goodwill impairment test during the fourth quarter of fiscal 2022 using a fair value method based on management's judgments and assumptions regarding future cash flows.

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 17.5 % to 21.0 %) 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 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.

The financial projections considered the impact that the COVID-19 pandemic, supply-chain disruptions, higher commodity, shipping and energy costs, and the Russia/Ukraine conflict 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 fiscal year 2022.

A change in any of these estimates and assumptions, especially as it relates to the extent of the COVID-19 pandemic’s, supply-chain disruptions’ impacts on vehicle production volumes within the automotive industry, the impact of commodity, shipping and energy costs, the impact of the Russia/Ukraine conflict 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.

Adient performed its annual goodwill test during the fourth quarter of fiscal 2021 using the same method and assumptions as described above (based on weighted average cost of capital ranging from 15.0 % to 17.5 %).

As a result of the tests, there was no goodwill impairment recorded in fiscal 2021.

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

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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.

During 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.

During the second quarter of fiscal 2019, of the $ 66 million long-lived asset impairment charge recognized, $ 4 million was attributable to a customer relationship intangible asset.

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.

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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Amortization of other intangible assets for the fiscal years ended September 30, 2022, 2021 and 2020 was $ 52 million, $ 45 million and $ 37 million, respectively.

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Settlements made (in cash or in kind) during the period ( 9 ) ( 8 )

Currency translation ( 1 ) —

Balance at end of period $ 21 $ 23

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.

As a result, financial information for reporting periods beginning on or after October 1, 2019 are presented in accordance with ASC 842.

Upon adoption, Adient recognized right-of-use (ROU) assets of $ 380 million and corresponding lease liabilities of $ 384 million on October 1, 2019.

The adoption date ROU asset balance was adjusted by $ 4 million, reflecting impairment of ROU assets for certain real estate leases (within the North America and Europe asset groups) of which the Company determined the carrying value of the initial operating lease ROU asset exceeded its fair value.

The adjustment was recorded as an increase to the opening accumulated deficits.

The adoption of ASC 842 did not have any significant impact on the consolidated statement of income or cash flows.

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Adient's lease portfolio consists of operating leases for real estate including production facilities, warehouses and administrative offices, equipment such as forklifts and computer servers and laptops, and fleet vehicles.

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Adient primarily derives its IBR from its debt portfolio, adjusted for collateralization, lease term and jurisdictional factors.

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

The components of lease costs for the years ended September 30, 2022 and 2021 were as follows:

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Year Ended September 30,

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Present value of lease liabilities $ 267

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Supplemental cash flow information related to leases was as follows:

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Cash paid for amounts included in the measurement of lease liabilities $ 116 $ 126 $ 125

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Adient’s finance leases were not significant to the consolidated financial statements during fiscal 2022 and 2021.

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9.00 % Notes due in 2025

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

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Short-term debt:

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

Other bank borrowings (1)

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(1) The weighted average interest rates on short-term debts, based on levels of debt maintained in various jurisdictions, were 6.0 % and 3.8 % at September 30, 2022 and 2021, respectively.

Adient US LLC ("Adient US"), a wholly owned subsidiary of Adient, together with certain of Adient's other subsidiaries, maintains an asset-based revolving credit facility (the “ABL Credit Facility”), which provides for a revolving line of credit up to $ 1,250 million, including a North American subfacility of up to $ 950 million and a European subfacility of up to $ 300 million, subject to borrowing base capacity.

The ABL Credit Facility will mature on May 6, 2024, subject to a springing maturity date 91 days earlier if certain amounts remain outstanding at that time under the Term Loan B Agreement (defined below).

Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to the Eurodollar rate plus an applicable margin of 1.50 % to 2.00 %.

The ABL Credit Facility was set to mature on May 6, 2024, subject to a springing maturity date 91 days earlier if certain amounts remain outstanding at that time under the Term Loan B Agreement (defined below).

Adient will pay a commitment fee of 0.25 % to 0.375 % on the unused portion of the commitments under the asset-based revolving credit facility based on average global availability.

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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 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”) 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

The ABL Credit Agreement is secured on a first-

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December 31, 2019).

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 of certain Adient subsidiaries.

On November 24, 2021, Adient entered into an amendment to its ABL Credit Facility (the “2021 ABL Amendment”) to amend certain terms and provisions, including to (i) change the interest rate benchmark rates applicable under the ABL Credit Facility for borrowings denominated in euro, Swedish krona and pounds sterling to EURIBOR, STIBOR, and SONIA, in each case subject to certain adjustments, and (ii) update the provisions in our ABL Credit Facility by which U.S.

dollar LIBOR will eventually be replaced with SOFR or another interest rate benchmark, in each case, to reflect the most recent standards and practices used in the industry.

Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to LIBOR, in the case of amounts outstanding in dollars, EURIBOR, in the case of amounts outstanding in euros, STIBOR, in the case of amounts outstanding in Swedish krona and SONIA, in the case of amounts outstanding in pounds sterling, in each case, plus an applicable margin of 1.50 % to 2.00 %.

On November 2, 2022, Adient entered into an amendment to its ABL Credit Facility (the “2022 ABL Amendment”) to amend certain terms and provisions, including to (i) extend its maturity date to November 2, 2027 (subject to certain springing maturity provisions), (ii) replace LIBOR with Term SOFR as the benchmark rate of interest for U.S.

dollar borrowings thereunder and (iii) provide flexibility for future amendments to the ABL Credit Facility to incorporate certain sustainability-based pricing provisions.

Other key terms and conditions of the facility remain unchanged.

As of September 30, 2022, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of $ 899 million (net of $ 13 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, as amended in fiscal 2021, (the “Term Loan B Agreement”) that provides for a $ 1.0 billion senior secured term loan facility.

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 April 8, 2028.

Interest on the Term Loan B Agreement accrues at the Eurodollar rate plus an applicable margin equal to 3.25 %.

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.

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 paid $ 7 million related to the fiscal 2021 amendment along with expensing $ 8 million of previously deferred financing costs to net financing charges.

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:

The notes were set to mature on May 15, 2026 and bore 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.

During fiscal 2021, Adient repurchased the full amount of the outstanding balance of the Senior First Lien Notes at a premium of $ 50 million plus $ 21 million of accrued and unpaid interest.

As a result, $ 12 million of previously deferred financing costs were expensed to net financing charges.

The ABL Credit Facility and Term Loan B Agreement 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:

create certain liens and enter into sale and lease-back transactions;

6 unchanged sentences

Adient Global Holdings Ltd.

(“AGH”), a wholly-owned subsidiary of Adient, maintains $ 900 million aggregate principal amount of 4.875 % USD-denominated unsecured notes due 2026.

(“AGH”), a wholly-owned subsidiary of Adient, previously maintained $ 900 million aggregate principal amount of 4.875 % USD-denominated unsecured notes due 2026.

During the fourth quarter of fiscal 2020, Adient redeemed $ 103 million of face value of these notes, resulting in a remaining balance of $ 797 million as of September 30, 2020.

Adient recorded a gain of $ 3 million associated with this partial redemption.

AGH also maintains € 1.0 billion aggregate principal amount of 3.50 % unsecured notes due 2024.

Adient further redeemed $ 2 million of the notes during fiscal 2021, resulting in a remaining balance of $ 795 million as of September 30, 2022 and 2021.

AGH also previously maintained € 1.0 billion aggregate principal amount of 3.50 % unsecured notes due 2024.

In fiscal 2022, Adient repurchased € 177 million ($ 198 million) of the 3.50 % unsecured notes due 2024 at a premium of € 3 million ($ 4 million) plus € 3 million ($ 3 million) of accrued and unpaid interest, and expensed € 1 million ($ 1 million) of previously deferred financing costs to net financing charges.

As of September 30, 2022, the remaining balance of this debt was € 823 million ($ 809 million).

Adient Germany Ltd.

KG, a wholly owned subsidiary of Adient, maintains € 135 million in an unsecured term loan from the European Investment Bank (“EIB”) due in 2022.

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

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 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.

KG, a wholly owned subsidiary of Adient, previously maintained € 135 million ($ 156 million) in an unsecured term loan from the European Investment Bank (“EIB”) due in 2022.

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

During fiscal 2021, Adient repaid $ 36 million of the EIB loan, triggered in part by the

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redemption of debt and the sale of the fabrics business in the prior year.

Adient fully repaid the remaining balance of the EIB loan in May 2022 upon its maturity.

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

These notes were set to 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 was due on April 15 and October 15 each year, beginning on October 15, 2020.

These notes contained covenants that were usual and customary, similar to the covenants as described above.

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

In fiscal 2022, Adient repurchased the full $ 600 million of 9.00 % Senior First Lien Notes due 2025 at a premium of $ 34 million plus $ 19 million of accrued and unpaid interest, and expensed $ 7 million of previously deferred financing costs to net financing charges.

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

Adient plc | Form 10-K | 80

September 30,

24 unchanged sentences

Gains and losses on derivative contracts offset gains and losses on underlying foreign currency exposures.

These contracts have been designated as cash flow hedges under ASC 815, "Derivatives and Hedging," and the hedge gains or losses due to changes in fair value are initially recorded as a component of accumulated other comprehensive income (AOCI) and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings.

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subsequently reclassified into earnings when the hedged transactions occur and affect earnings.

During the second quarter of fiscal 2020, as a result of the COVID-19 impacts and the resulting interruptions to Adient's operations, a loss of $ 2 million related to ineffective hedges was reclassified to the consolidated statement of income.

All contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates at September 30, 2022 and 2021, respectively.

As of September 30, 2021, the € 1.0 billion aggregate principal amount of 3.50 % euro-denominated unsecured notes due 2024 was designated as a net investment hedge to selectively hedge portions of Adient's net investment in Europe.

As of September 30, 2022, the € 823 million ($ 809 million) aggregate principal amount of 3.50 % euro-denominated unsecured notes due 2024 was designated as a net investment hedge to selectively hedge portions of Adient's net investment in Europe.

The currency effects of Adient's euro-denominated bonds 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 fourth quarter of fiscal 2020, Adient entered into a foreign exchange forward contract (¥ 1.6 billion) associated with the sale proceeds of the 2020 Yanfeng transaction.

This contract expired prior to September 30, 2020.

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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 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.

The contract matured during fiscal 2021.

There was no outstanding Japanese yen denominated cross-currency interest rate swap outstanding as of September 30, 2022.

1 unchanged sentence

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

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.

The currency effects of the forward contract 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 China.

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.

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

The contracts matured in fiscal 2022.

As of September 30, 2022, Adient had no outstanding interest rate caps.

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 fiscal 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 fiscal 2021 which resulted in a net cash payment of $ 14 million, and the other contract matured in 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.

These contracts resulted in realized and unrealized losses of $ 14 million and $ 16 million, respectively, during fiscal 2021, and realized losses of $ 3 million during fiscal 2022.

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

Adient entered into a ¥ 150 million ($ 23 million) foreign exchange forward contract during the second quarter of fiscal 2022 to selectively hedge portions of its net investment in China.

The currency effects of the forward contract are reflected in the AOCI account within shareholder’s equity attributable to Adient, where they offset gains and losses recorded on Adient’s net investment in China.

The forward contract matured in early fiscal 2023.

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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:

15 unchanged sentences

Foreign currency exchange derivatives $ 20 $ 11 $ — $ 13

Cross-currency interest rate swaps — 1 — —

Other noncurrent liabilities

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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

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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.

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.

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

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The following table presents the location and amount of the effective portion of pretax gains (losses) on cash flow hedges reclassified from AOCI into Adient's consolidated statements of income:

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(in millions) Year Ended

7 unchanged sentences

Foreign currency exchange derivatives Cost of sales $ — $ ( 4 ) $ ( 4 )

Equity swap Selling, general and administrative — — ( 13 )

Foreign currency exchange derivatives Net financing charges ( 33 ) ( 30 ) 1

5 unchanged sentences

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.

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Refer to Note 14, "Retirement Plans," of the notes to consolidated financial statements for fair value tables of pension assets.

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Fair Value Measurements Using:

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Foreign currency exchange derivatives $ 20 $ — $ 20 $ —

Other noncurrent assets

Foreign currency exchange derivatives 1 — 1 —

Total assets $ 20 $ — $ 20 $ —

4 unchanged sentences

Total liabilities $ 23 $ — $ 23 $ —

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Fair Value Measurements Using:

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

Other noncurrent assets

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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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.

As of September 30, 2021, Adient had two interest rate caps outstanding totaling approximately $ 200 million.

The fair value of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values.

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

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

As of September 30, 2022, Adient had no interest rate caps outstanding.

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The fair value of long-term debt, which was $ 2.4 billion and $ 3.8 billion at September 30, 2022 and 2021, respectively, was determined primarily using market quotes classified as Level 1 inputs within the ASC 820 fair value hierarchy.

5 unchanged sentences

Total stock-based compensation cost included in the consolidated statements of income was $ 29 million, $ 36 million and $ 15 million for the fiscal years ended September 30, 2022, 2021 and 2020, respectively.

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.

No material 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.

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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Outstanding stock awards related to the former Parent stock are not included in Adient's dilutive share calculation.

The following tables present activity related to the conversion and granting of awards during the year ended September 30, 2021 along with the composition of outstanding and exercisable awards at September 30, 2021 for remaining former Parent and new Adient awards.

The following tables present activity related to the granting of awards during the year ended September 30, 2022 along with the composition of outstanding and exercisable awards at September 30, 2022 for remaining former Parent and Adient awards.

Restricted Stock

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That cost is expected to be recognized over a weighted-average period of 1.7 years.

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Performance Share Awards

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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, 2022, and changes for the fiscal year then ended is presented below:

35 unchanged sentences

The total intrinsic value of options exercised by Adient employees during the fiscal years ended September 30, 2022, 2021 and 2020 was approximately $ 1 million, $ 7 million and $ 1 million, respectively, primarily consisting of former Parent awards.

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Stock Appreciation Rights

5 unchanged sentences

The fair value of each SAR award is recalculated at the end of each reporting period and the liability and expense are adjusted based on the new fair value.

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A summary of SAR activity at September 30, 2022, and changes for the year then ended, is presented below:

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In conjunction with the exercise of SARs, Adient made payments of $ 2 million, $ 2 million and $ 1 million during the fiscal years ended September 30, 2022, 2021 and 2020, respectively.

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Equity and Noncontrolling Interests

21 unchanged sentences

The following table presents changes in the redeemable noncontrolling interests:

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Year Ended September 30,

2 unchanged sentences

Net income 35 25 19

Foreign currency translation adjustments ( 8 ) ( 4 ) 3

Dividends ( 66 ) ( 14 ) ( 23 )

Business acquisition — 194 —

Change in noncontrolling interest share ( 153 ) — —

Foreign currency translation adjustments ( 11 ) ( 8 ) ( 4 )

Ending balance $ 45 $ 240 $ 43

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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pension plans equals or exceeds the minimum requirements of the Employee Retirement Income Security Act of 1974.

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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 $ 129 million, $ 112 million and $ 37 million, respectively, as of September 30, 2022, and $ 204 million, $ 182 million and $ 72 million, respectively, as of September 30, 2021.

10 unchanged sentences

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

Equity investments are diversified across domestic and non-domestic 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.

9 unchanged sentences

Adient's plan assets by asset category, are as follows:

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Fair Value Measurements Using:

16 unchanged sentences

Total $ 283 $ 72 $ 148 $ 7 $ 56

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Fair Value Measurements Using:

26 unchanged sentences

The fair value of hedge funds is determined by the custodian.

The custodian obtains valuations from underlying managers based on market quotes for the most liquid assets and alternative methods for assets that do not have sufficient trading activity to derive prices.

The custodian obtains valuations from underlying managers based on market quotes for the most liquid assets and alternative methods for assets that do not have sufficient trading

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activity to derive prices.

Adient and custodian review the methods used by the underlying managers to value the assets.

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Furthermore, while Adient believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

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The following sets forth a summary of changes in the fair value of pension assets measured using significant unobservable inputs (Level 3):

2 unchanged sentences

Redemptions —

Unrealized gain 1

Asset value as of September 30, 2021 $ 7

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The table that follows contains the ABO and reconciliations of the changes in the PBO, the changes in plan assets and the funded status:

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Pension Benefits

5 unchanged sentences

Interest cost 11 9

Plan participant contributions — —

Actuarial (gain) loss ( 169 ) ( 29 )

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Settlements and curtailments ( 1 ) ( 16 )

Divestitures — ( 1 )

Currency translation adjustment ( 56 ) 16

5 unchanged sentences

Net amount recognized $ ( 57 ) $ ( 81 )

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Pension Benefits

11 unchanged sentences

pension plans, Adient consistently uses the relevant country specific benchmark indices for determining the various discount rates.

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Accumulated Other Comprehensive Income

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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 2022, Adient committed to a restructuring plan ("2022 Plan") of $ 25 million that was offset by $ 10 million of prior year underspend.

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

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

(in millions) Employee Severance and Termination Benefits Currency

Translation Total

Original reserve $ 25 $ — $ 25

Utilized - cash ( 6 ) — ( 6 )

Noncash adjustment - other — ( 1 ) ( 1 )

Balance at September 30, 2022 $ 19 $ ( 1 ) $ 18

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3 unchanged sentences

The restructuring actions are expected to be substantially completed in fiscal 2023.

(in millions) Employee Severance and Termination Benefits Total

(in millions) Employee Severance and Termination Benefits Currency

Translation Total

Original reserve $ 27 $ — $ 27

1 unchanged sentence

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, $ 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 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:

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

Original Reserve $ 203 $ 2 $ — $ 205

Utilized - cash ( 16 ) — ( 16 )

1 unchanged sentence

Balance at September 30, 2022 $ 5 $ ( 2 ) $ 3

Utilized—cash $ ( 87 ) $ — $ — ( 87 )

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

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

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.

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 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.

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

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

Original Reserve $ 101 $ 4 $ — $ 105

Utilized—cash ( 32 ) — — ( 32 )

Utilized—noncash — ( 1 ) ( 2 ) ( 3 )

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

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

9 unchanged sentences

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

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

As of September 30, 2022, eighteen 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.

2 unchanged sentences

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

Adient reviews long-lived assets, including property, plant and equipment and other intangible assets with definite lives, for impairment whenever events or changes in circumstances indicate that the asset's carrying amount may not be recoverable.

Adient conducts its long-lived asset impairment analyses in accordance with ASC 360, "Impairment or Disposal of Long-Lived Assets." ASC 360 requires Adient to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows.

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.

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

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operations within that business.

All of the fiscal 2020 impairment charges are recorded 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.

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).

In the second quarter of fiscal 2019, 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 declines in actual and forecasted performance that worsened during the second quarter of fiscal 2019 as compared to originally forecasted results.

As a result, Adient reviewed the long-lived assets for impairment and recorded a $ 66 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 March 31, 2019 in support of current programs.

Of the $ 66 million impairment charge, $ 62 million related to fixed assets, and $ 4 million related to customer relationship intangible assets.

The impairment was measured under a market approach utilizing appraisal techniques to determine fair values of the impaired assets.

This method is consistent with methods Adient employed in prior periods to value other long-lived assets.

The inputs utilized in the analysis are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair value measurement" and primarily consist of estimated salable values and third party appraisal techniques such as market comparables.

To the extent that the 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.

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

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.

Consolidated income (loss) before income taxes and noncontrolling interests for the years ended September 30, 2022, 2021, and 2020 is as follows:

6 unchanged sentences

Income before income taxes and noncontrolling interests $ 54 $ 1,439 $ ( 429 )

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

7 unchanged sentences

Other Foreign 5 40 ( 33 )

40 ( 33 ) 288

Income tax provision $ 94 $ 249 $ 57

2 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,

9 unchanged sentences

Foreign exchange ( 2 ) — ( 1 )

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

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

Audit settlements and change in uncertain tax positions ( 2 ) 24 56

1 unchanged sentence

Impairment of subsidiaries — 35 ( 24 )

Tax impact of corporate equity transactions 133 ( 77 ) —

Other 12 9 ( 3 )

Tax impact of corporate equity and business restructuring transactions 30 133 ( 77 )

Income tax provision $ 94 $ 249 $ 57

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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%.

The income tax expense was higher than the Irish statutory rate of 12.5% for fiscal 2022 primarily due 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 related to the release of valuation allowances in certain jurisdictions.

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.

The income tax expense was higher than the Irish statutory rate of 12.5% for fiscal 2021 primarily due 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 2019 primarily due to the recognition of valuation allowances in Luxembourg, Poland, and the United Kingdom, the repatriation of foreign earnings, changes in uncertain tax positions and the impact of recognizing no tax benefit for losses in jurisdictions with valuation allowances.

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

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Net deferred tax asset/(liability)

$ ( 87 ) $ ( 78 )

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Operating lease liabilities 61 79

Foreign currency adjustments — 17

Research and development 27 23

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Indirect tax credits 25 18

Foreign currency adjustments 8 —

Operating lease right-of-use assets 61 79

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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 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.

As a result of Adient's fiscal 2022 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 Canada, Japan, and other jurisdictions would not be realized and recorded income tax expense of $ 12 million, $ 3 million and $ 3 million, respectively, to establish valuation allowances.

In addition, Adient determined it was more likely than not that certain deferred tax assets acquired as part of the 2021 Yanfeng Transaction would not be realized and recorded a net adjustment to goodwill of $ 7 million, primarily to establish valuation allowances.

Additionally, Adient determined it was more likely than not that deferred tax assets in the Czech Republic and other jurisdictions would be realizable and recorded income tax benefit of $ 11 million and $ 2 million, respectively, to release 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.

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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 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

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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.

and other foreign jurisdictions.

The following table provides the earliest open tax year by major jurisdiction for which Adient could be subject to income tax examination by the tax authorities:

Tax Jurisdiction Earliest Year Open

Czech Republic 2013

Hong Kong 2015

Luxembourg 2014

United Kingdom 2015

United States 2017

With few exceptions, Adient is no longer subject to income tax examination by U.S.

federal, state or local tax authorities or by non-U.S.

tax authorities for years before 2014.

Adient regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves.

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Ending balance $ 499 $ 499 $ 483

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.

During the next twelve months, it is likely 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.

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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.

Adient has recorded a deferred tax liability of approximately $ 35 million as of September 30, 2022 on the undistributed earnings of certain consolidated and unconsolidated foreign affiliates for which Adient does not have an indefinite reinvestment assertion.

Adient 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, 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, 2022 were $ 77 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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Impacts of Tax Legislation and Change in Statutory Tax Rates

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

Adient does not expect the provisions of the legislation to have a significant impact on the effective tax rate or the income tax payable and deferred income tax positions of the Company.

On March 27, 2020, the House passed the Coronavirus Aid, Relief, and Economic Security Act (The CARES Act), also known as the Third COVID-19 Supplemental Relief bill, and the president signed the legislation into law.

Adient does not expect the provisions of the legislation to have a significant impact on the effective tax rate or the income tax payable and deferred income tax positions of the Company.

During the fourth quarter of 2019, certain deferred tax liabilities were remeasured to reflect a reduction in withholding tax rate on the earnings of our nonconsolidated partially owned affiliates resulting in a benefit of $ 9 million.

During the third quarter of fiscal 2019, Luxembourg enacted legislation reducing the nominal corporate tax rate to 17% from 18%.

For Adient, this reduced its aggregate income tax rate to 24.9 % from 26.0 % and applies retroactively to the fiscal 2019 tax year.

As a result of the law change, Adient recorded income tax expense of $ 10 million related to the write down of deferred tax assets.

During the first quarter of fiscal 2019, GAAS (a subsidiary of Adient in China) was approved for High and New Tech Enterprise status for the three-year period of 2018 to 2020, thereby reducing their tax rate from 25% to 15%.

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.

During fiscal years 2022, 2021, and 2020, 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.

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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.

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.

During the fourth quarter of fiscal 2020, Adient sold its investment in YFAI and its automotive fabrics manufacturing business.

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

The tax benefits associated with the sales of the YFAI investment and automotive fabrics manufacturing business were $ 12 million and $ 3 million, respectively.

During the third quarter of fiscal 2020, an impairment charge of $ 27 million was recorded in the Asia segment related to customer relationship intangible assets.

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 impairment charge was $ 5 million.

During the first quarter of fiscal 2020, Adient recognized a pre-tax non-cash impairment of $ 216 million in equity income related to Adient's YFAI investment.

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 $ 4 million.

An additional impairment of $ 6 million was recorded in the third quarter of fiscal 2020 related to this investment, with no additional tax benefit being recorded.

In fiscal 2019, Adient committed to a significant restructuring plan (“2019 Plan”) and recorded a net $ 92 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 $ 5 million tax benefit, which was negatively impacted by geographic mix and Adient’s current tax position in these jurisdictions.

During the second quarter of fiscal 2019, Adient recognized a pre-tax impairment charge on long-lived assets of $ 66 million.

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 $ 2 million, which was negatively impacted by geographic mix and Adient’s current tax position in these jurisdictions.

During fiscal 2022, Adient recognized a one-time gain of $ 32 million associated with the retrospective recovery of indirect tax credits in Brazil resulting from the Company’s prioritization of those credits, resulting in net tax expense of $ 4 million.

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

Adient also recognized tax benefits of $ 13 million related to the write-off of deferred tax liabilities associated with Chinese joint ventures’ distributions of unremitted earnings that were reinvested in a wholly-owned Chinese subsidiary.

In addition, Adient recognized an additional $ 38 million pre-tax gain related to Brazil indirect tax credits as a result of a favorable supreme court ruling resulting in tax expense of $ 13 million.

In fiscal 2020, Adient committed to a restructuring plan generating a $ 6 million tax benefit.

Adient also sold its investment in YFAI and its automotive fabrics manufacturing business, generating tax benefits of $ 16 million and $ 3 million, respectively.

Segment Information

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Other items (7)

22 ( 16 ) ( 9 )

Earnings (loss) before interest and income taxes 259 1,726 ( 195 )

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(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).

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.

During fiscal 2022, an impairment charge of $ 4 million related to the withdrawal from and sale of its operations in Russia, and a held-for-sale impairment charge of $ 6 million were recorded in EMEA.

Included in restructuring charges in fiscal 2021 is $ 10 million of held for sale and other non-cash impairment charges in EMEA.

Included in restructuring charges in fiscal 2020 is a non-cash pre-tax impairment related to intangible assets of $ 24 million, held for sale asset impairments of $ 21 million, $ 8 million of other long-lived asset impairments, all within Asia, and $ 175 million of charges in EMEA which primarily related to workforce reductions.

Refer to Note 15, "Restructuring and Impairment Costs," 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.

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(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.

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(5) Fiscal 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 Asia.

Fiscal 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) Fiscal 2022 includes $ 3 million and $ 7 million of non-cash impairments of certain of Adient's investments in nonconsolidated partially-owned affiliates in Asia and EMEA, respectively.

Fiscal 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.

Fiscal 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.

(7) Fiscal 2022 reflects $ 8 million of transaction costs, a one-time gain of $ 32 million associated with the retrospective recovery of indirect tax credits in Brazil, a $ 14 million charge related to a non-recurring contract related settlement, $ 1 million of allowance for doubtful accounts resulting from the withdrawal from and sale of operations in Russia, and $ 2 million of loss on finalization of asset sale in Turkey.

Fiscal 2021 reflects a one-time gain of $ 38 million associated with the retrospective recovery of indirect tax credits in Brazil (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.

Fiscal 2020 includes $ 15 million of transaction costs and $ 1 million of tax adjustments at YFAI.

Additional Segment Information

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Capital Expenditures 104 73 50 — 227

(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 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.

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

Specific reconciling items for equity income represents $ 10 million of non-cash impairments of Adient's investments in partially-owned affiliates, $ 1 million of restructuring related charges, $ 2 million of purchase accounting amortization, $ 7 million of a non-recurring customer termination charge at an affiliate in Asia, partially offset by a $ 7 million non-recurring gain on sale of land use rights at an affiliate in China.

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

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Capital Expenditures 131 104 25 — 260

(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

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

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charge for tax adjustments associated with YFAI.

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

related charges.

Corporate-related assets primarily include cash, deferred income tax assets, and receivables related to the 2021 Yanfeng Transaction.

Year Ended September 30, 2020

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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.

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

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

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Geographic Information

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Total $ 14,121 $ 13,680 $ 12,670

Adient started consolidating CQADNT in China after completing the acquisition on September 30, 2021.

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

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9 unchanged sentences

Other EMEA 223 310

China 111 125

Thailand 41 38

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Equity in the net income of nonconsolidated partially-owned affiliates are reported in the "Equity income" line in the consolidated statements of income (loss).

Adient maintains total investments in partially-owned affiliates of $ 0.3 billion and $ 0.7 billion at September 30, 2021 and 2020, respectively.

Adient maintains total investments in partially-owned affiliates of $ 286 million and $ 335 million at September 30, 2022 and 2021, respectively.

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

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(CFAA) 49.0 % 49.0 %

Yanfeng Adient Seating Co., Ltd.

(YFAS) — % 49.9 %

Year Ended September 30,

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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.

As a result, Adient concluded that indicators of other-than-temporary impairment were present related to the investment in YFAI and recorded a $ 231 million non-cash impairment of Adient’s YFAI investment, during fiscal 2020.

The impairment was determined based on combining the fair value of consideration received for all transactions contemplated as part of the Yanfeng transaction and has been recorded within equity income in the consolidated statements of income (loss).

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

During the fourth quarter of fiscal 2022, Adient and KEIPER modified an existing supply agreement, resulting in reductions in Adient’s purchase prices on certain products.

Such modifications resulted in reductions of $ 14 million and $ 17 million in Adient’s cost of sales and equity income, respectively, during fiscal 2022.

Commitments and Contingencies

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They do, however, take into account the likely share other parties will bear at remediation sites.

It is difficult to estimate Adient's ultimate level of liability at many remediation sites due to the large number of other parties that may be involved, the complexity of determining the relative liability among those parties, the uncertainty as to the nature and scope of the investigations and remediation to be conducted, the uncertainty in the application of law and risk assessment, the various choices and costs associated with diverse technologies that may be used in corrective actions at the sites, and the often quite lengthy periods over which eventual remediation may occur.

It is difficult to estimate Adient's ultimate level of liability at many remediation sites due to the large number of other parties that may be involved, the complexity of determining the relative liability among those parties, the uncertainty as to the nature and scope of the investigations and remediation to be conducted, the uncertainty in the application of law and risk assessment, the various choices and costs associated with diverse technologies that may be used in corrective actions at the sites, the often quite lengthy periods over which eventual remediation may occur, and changing environmental laws.

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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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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Year Ended September 30,

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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