Adient plc 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 53 Consolidated Statements of Income (Loss) for the years ended September 30, 202 4 , 202 3 and 20 2 2 56 Consolidated Statements of Comprehensive Income (Loss) for the years ended September 30, 202 4 , 202 3 and 20 2 2 57 Consolidated Statements of Financial Position as of September 30, 202 4 and 202 3 58 Consolidated Statements of Cash Flows for the years ended September 30, 2024, 2023 and 2022 59 Consolidated Statements of Shareholders' Equity for the years ended September 30, 202 4 , 202 3 and 202 2 61 Notes to Consolidated Financial Statements 62 Schedule II - Valuation and Qualifying Accounts for the years ended September 30, 202 4 , 202 3 and 202 2 103 Adient plc | Form 10-K | 52 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Adient plc Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated statements of financial position of Adient plc and its subsidiaries (the “Company”) as of September 30, 2024 and 2023, and the related consolidated statements of income (loss), of comprehensive income (loss), of shareholders' equity and of cash flows for each of the three years in the period ended September 30, 2024, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. 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 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. Adient plc | Form 10-K | 53 Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Annual Goodwill Impairment Assessment As described in Notes 1, 6 and 17 to the consolidated financial statements, the Company’s goodwill balance, which is comprised of the Americas, Europe, the Middle East and Africa (EMEA), and Asia Pacific/China (Asia) reporting units (collectively, “the reporting units”), was $2,164 million as of September 30, 2024. Management reviews goodwill for impairment during the fourth fiscal quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. Fair value of the reporting units is estimated using an income approach utilizing discounted cash flow analyses. 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, as well as the discount rates. The principal considerations for our determination that performing procedures relating to the annual goodwill impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimates of operating margins for the Americas reporting unit, estimates of revenue, long-term growth rate, and operating margins, as well as the discount rate for the EMEA reporting unit, and estimates of revenue for the Asia reporting unit; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s reporting units. These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the reporting units; (ii) evaluating the appropriateness of the discounted cash flow analyses; (iii) testing the completeness and accuracy of underlying data used by management in the discounted cash flow analyses; and (iv) evaluating the reasonableness of the significant assumptions used by management related to estimates of operating margins for the Americas reporting unit, estimates of revenue, long-term growth rate, and operating margins, as well as the discount rate for the EMEA reporting unit, and estimates of revenue for the Asia reporting unit. Evaluating management’s assumptions related to estimates of revenue, long-term growth rate, and operating margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units, as applicable; (ii) the consistency with relevant industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the discounted cash flow analyses and the reasonableness of the long-term growth rate and discount rate assumptions. Adient plc | Form 10-K | 54 /s/ PricewaterhouseCoopers LLP Detroit, Michigan November 18, 2024 We have served as the Company’s auditor since 1957. Adient plc | Form 10-K | 55 Adient plc Consolidated Statements of Income (Loss) Year Ended September 30, (in millions, except per share data) 2024 2023 2022 Net sales $ 14,688 $ 15,395 $ 14,121 Cost of sales 13,760 14,362 13,314 Gross profit 928 1,033 807 Selling, general and administrative expenses 507 554 598 Restructuring and impairment costs 168 40 25 Equity income 90 84 75 Earnings before interest and income taxes 343 523 259 Net financing charges 189 195 215 Other pension expense (income) 21 33 ( 10 ) Income before income taxes 133 295 54 Income tax provision 32 — 94 Net income (loss) 101 295 ( 40 ) Income attributable to noncontrolling interests 83 90 80 Net income (loss) attributable to Adient $ 18 $ 205 $ ( 120 ) Earnings per share: Basic $ 0.20 $ 2.17 $ ( 1.27 ) Diluted $ 0.20 $ 2.15 $ ( 1.27 ) Shares used in computing earnings per share: Basic 89.5 94.5 94.8 Diluted 90.1 95.4 94.8 The accompanying notes are an integral part of the consolidated financial statements. Adient plc | Form 10-K | 56 Adient plc Consolidated Statements of Comprehensive Income (Loss) Year Ended September 30, (in millions) 2024 2023 2022 Net income (loss) $ 101 $ 295 $ ( 40 ) Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 204 ( 17 ) ( 250 ) Realized and unrealized gains (losses) on derivatives ( 32 ) 21 — Pension and postretirement plans — — 1 Other comprehensive income (loss) 172 4 ( 249 ) Total comprehensive income (loss) 273 299 ( 289 ) Comprehensive income (loss) attributable to noncontrolling interests 106 91 49 Comprehensive income (loss) attributable to Adient $ 167 $ 208 $ ( 338 ) The accompanying notes are an integral part of the consolidated financial statements. Adient plc | Form 10-K | 57 Adient plc Consolidated Statements of Financial Position September 30, (in millions, except share and per share data) 2024 2023 Assets Cash and cash equivalents $ 945 $ 1,110 Accounts receivable, less allowances of $ 24 and $ 15 , respectively 1,896 1,874 Inventories 758 841 Other current assets 487 491 Current assets 4,086 4,316 Property, plant and equipment - net 1,410 1,382 Goodwill 2,164 2,094 Other intangible assets - net 371 408 Investments in partially-owned affiliates 338 303 Assets held for sale 8 7 Other noncurrent assets 974 914 Total assets $ 9,351 $ 9,424 Liabilities and Shareholders' Equity Short-term debt $ 1 $ 2 Current portion of long-term debt 8 132 Accounts payable 2,552 2,526 Accrued compensation and benefits 358 400 Other current liabilities 759 678 Current liabilities 3,678 3,738 Long-term debt 2,396 2,401 Pension benefits 105 92 Other noncurrent liabilities 638 590 Long-term liabilities 3,139 3,083 Commitments and Contingencies (Note 19) Redeemable noncontrolling interests 91 57 Preferred shares issued, par value $ 0.001 ; 100,000,000 shares authorized zero shares issued and outstanding at September 30, 2024 — — Ordinary shares issued, par value $ 0.001 ; 500,000,000 shares authorized 84,866,763 shares issued and outstanding at September 30, 2024 — — Additional paid-in capital 3,712 3,973 Retained earnings (accumulated deficit) ( 885 ) ( 903 ) Accumulated other comprehensive income (loss) ( 693 ) ( 842 ) Shareholders' equity attributable to Adient 2,134 2,228 Noncontrolling interests 309 318 Total shareholders' equity 2,443 2,546 Total liabilities and shareholders' equity $ 9,351 $ 9,424 The accompanying notes are an integral part of the consolidated financial statements. Adient plc | Form 10-K | 58 Adient plc Consolidated Statements of Cash Flows Year Ended September 30, (in millions) 2024 2023 2022 Operating Activities Net income (loss) attributable to Adient $ 18 $ 205 $ ( 120 ) Income attributable to noncontrolling interests 83 90 80 Net income (loss) 101 295 ( 40 ) Adjustments to reconcile net income (loss) to cash provided (used) by operating activities: Depreciation 285 290 298 Amortization of intangibles 47 50 52 Pension and postretirement benefit expense (benefit) 27 38 ( 2 ) Pension and postretirement contributions, net ( 20 ) ( 17 ) ( 16 ) Equity in earnings of partially-owned affiliates, net of dividends received ( 17 ) ( 34 ) 4 (Gain) on sale of / impairment of nonconsolidated partially owned affiliates ( 1 ) 6 10 Premium paid on repurchase of debt — 7 38 Retrospective recoveries of Brazil indirect tax credits — — ( 29 ) Derivative loss on the 2021 Yanfeng Transaction — — 3 Deferred income taxes ( 1 ) ( 124 ) 5 Non-cash restructuring and impairment charges 9 — 14 Equity-based compensation 31 34 29 Other 7 ( 4 ) 17 Changes in assets and liabilities: Receivables 12 16 ( 576 ) Inventories 93 126 ( 62 ) Other assets ( 57 ) ( 26 ) 32 Accounts payable and accrued liabilities 90 ( 19 ) 485 Accrued income taxes ( 63 ) 29 12 Cash provided (used) by operating activities 543 667 274 Investing Activities Capital expenditures ( 266 ) ( 252 ) ( 227 ) Sale of property, plant and equipment 15 26 20 Settlement of derivative contracts — — ( 30 ) Acquisition of businesses, net of cash acquired — ( 6 ) ( 19 ) Business divestitures ( 2 ) 5 740 Other — ( 2 ) — Cash provided (used) by investing activities ( 253 ) ( 229 ) 484 Continued on next page Adient plc | Form 10-K | 59 Adient plc Consolidated Statements of Cash Flows (Continued) Year Ended September 30, (in millions) 2024 2023 2022 Financing Activities Increase (decrease) in short-term debt ( 1 ) ( 1 ) ( 14 ) Increase (decrease) in long-term debt — 1,002 — Repayment of long-term debt ( 137 ) ( 1,104 ) ( 987 ) Debt financing costs ( 5 ) ( 23 ) ( 1 ) Share repurchases ( 275 ) ( 65 ) — Cash paid to acquire a noncontrolling interest — — ( 153 ) Dividends paid to noncontrolling interests ( 72 ) ( 67 ) ( 106 ) Other ( 12 ) ( 13 ) ( 12 ) Cash provided (used) by financing activities ( 502 ) ( 271 ) ( 1,273 ) Effect of exchange rate changes on cash and cash equivalents 47 ( 4 ) ( 59 ) Increase (decrease) in cash and cash equivalents ( 165 ) 163 ( 574 ) Cash and cash equivalents at beginning of period 1,110 947 1,521 Cash and cash equivalents at end of period $ 945 $ 1,110 $ 947 The accompanying notes are an integral part of the consolidated financial statements. Adient plc | Form 10-K | 60 Adient plc Consolidated Statements of Shareholders' Equity (in millions) Ordinary Shares, par value Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Shareholders' Equity Attributable to Adient Shareholders' Equity Attributable to Noncontrolling Interests Total Equity Balance at September 30, 2021 $ — $ 3,991 $ ( 988 ) $ ( 627 ) $ 2,376 $ 342 $ 2,718 Net income (loss) — — ( 120 ) — ( 120 ) 45 ( 75 ) Foreign currency translation adjustments — — — ( 219 ) ( 219 ) ( 20 ) ( 239 ) Employee retirement plans — — — 1 1 — 1 Dividends paid to and other transactions with noncontrolling interests — — — — — ( 53 ) ( 53 ) Purchase of subsidiary shares from noncontrolling interest — 12 — — 12 ( 12 ) — Share based compensation and other — 23 — — 23 — 23 Balance at September 30, 2022 $ — $ 4,026 $ ( 1,108 ) $ ( 845 ) $ 2,073 $ 302 $ 2,375 Net income — — 205 — 205 63 268 Foreign currency translation adjustments — — — ( 18 ) ( 18 ) ( 2 ) ( 20 ) Realized and unrealized gains on derivatives — — — 21 21 — 21 Dividends paid to and other transactions with noncontrolling interests — — — — — ( 45 ) ( 45 ) Repurchase and retirement of ordinary shares — ( 65 ) — — ( 65 ) — ( 65 ) Share based compensation and other — 12 — — 12 — 12 Balance at September 30, 2023 $ — $ 3,973 $ ( 903 ) $ ( 842 ) $ 2,228 $ 318 $ 2,546 Net income — — 18 — 18 45 63 Foreign currency translation adjustments — — — 181 181 6 187 Realized and unrealized losses on derivatives — — — ( 32 ) ( 32 ) — ( 32 ) Dividends paid to and other transactions with noncontrolling interests — — — — — ( 60 ) ( 60 ) Repurchase and retirement of ordinary shares — ( 275 ) — — ( 275 ) — ( 275 ) Share based compensation and other — 14 — — 14 — 14 Balance at September 30, 2024 $ — $ 3,712 $ ( 885 ) $ ( 693 ) $ 2,134 $ 309 $ 2,443 The accompanying notes are an integral part of the consolidated financial statements. Adient plc | Form 10-K | 61 Adient plc Notes to Consolidated Financial Statements 1. Organization and Summary of Significant Accounting Policies Adient is a global leader in the automotive seating supplier industry and maintains relationships with the largest global automotive original equipment manufacturers, or OEMs. Adient's proprietary technologies extend into virtually every area of automotive seating solutions, including complete seating systems, frames, mechanisms, foam, head restraints, armrests and trim covers. Adient is an independent seat supplier with global scale and the capability to design, develop, engineer, manufacture, and deliver complete seat systems and components in every major automotive producing region in the world. Basis of Presentation The consolidated financial statements of Adient have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Principles of Consolidation Adient consolidates its wholly-owned subsidiaries and those entities in which it has a controlling interest. Investments in partially-owned affiliates are accounted for by the equity method when Adient does not have a controlling interest but is assessed to have significant influence on their operations. Certain figures for comparative periods were reclassified to conform to current period presentation. Consolidated VIEs Based upon the criteria set forth in the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 810, "Consolidation," Adient has determined that it was the primary beneficiary in two variable interest entities (“VIEs”) for the reporting periods ended September 30, 2024 and 2023, respectively, as Adient absorbs significant economics of the entities and has the power to direct the activities that are considered most significant to the entities. The two VIEs manufacture seating products in North America for the automotive industry. 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. 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: September 30, (in millions) 2024 2023 Current assets $ 285 $ 265 Noncurrent assets 98 121 Total assets $ 383 $ 386 Current liabilities $ 241 $ 228 Noncurrent liabilities 12 13 Total liabilities $ 253 $ 241 Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The consolidated financial statements reflect management's estimates as of the reporting date. Actual results could differ from those estimates. Adient plc | Form 10-K | 62 Fair Value of Financial Instruments The fair values of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values. See Note 10, “Derivative Instruments and Hedging Activities,” and Note 11, “Fair Value Measurements,” of the notes to consolidated financial statements for fair value of financial instruments, including derivative instruments and hedging activities. Cash and Cash Equivalents Adient considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash is managed by legal entity, with cash pooling agreements in place for all participating entities on a global basis, as applicable. Receivables Receivables consist of amounts billed and currently due from customers and revenues that have been recognized for accounting purposes but not yet billed to customers. Adient extends credit to customers in the normal course of business and maintains allowances resulting from the inability or unwillingness of customers to make required payments. The allowances are established based on historical data along with Adient’s assessment of expected credit losses that reflects current and forecasted industry and economic conditions, in accordance with ASC Topic 326, Financial Instruments - Credit Losses. 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 both September 30, 2024 and 2023, $ 170 million was funded under these programs. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs. Pre-Production Costs Related to Long-Term Supply Arrangements Adient's policy for engineering, research and development, and other design and development costs related to products that will be sold under long-term supply arrangements requires such costs to be expensed as incurred or capitalized if reimbursement from the customer is contractually assured. Income related to recovery of these costs is recorded within selling, general and administrative expense in the consolidated statements of income. At September 30, 2024 and 2023, Adient recorded within the consolidated statements of financial position $ 310 million and $ 274 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. At September 30, 2024, Adient had $ 108 million and $ 202 million of reimbursable costs recorded in current and noncurrent assets, respectively. At September 30, 2023, Adient had $ 104 million and $ 170 million of reimbursable costs recorded in current and noncurrent assets, respectively. Costs for molds, dies and other tools used to make products that will be sold under long-term supply arrangements are capitalized within property, plant and equipment if Adient has title to the assets or has the non-cancelable right to use the assets during the term of the supply arrangement. Capitalized items, if specifically designed for a supply arrangement, are amortized over the term of the arrangement; otherwise, amounts are amortized over the estimated useful lives of the assets. At September 30, 2024 and 2023, approximately $ 50 million and $ 53 million, respectively, of costs for molds, dies and other tools were capitalized within property, plant and equipment which represented assets to which Adient had title. In addition, at September 30, 2024, Adient recorded within the consolidated statements of financial position in other current and noncurrent assets $ 156 million and $ 25 million, respectively, of costs for molds, dies and other tools for which customer reimbursement is contractually assured. At September 30, 2023, Adient recorded within the consolidated statements of financial position in other current and noncurrent assets $ 151 million and $ 11 million, respectively, of costs for molds, dies and other tools for which customer reimbursement is contractually assured. Adient plc | Form 10-K | 63 Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is provided over the estimated useful lives of the respective assets using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. The estimated useful lives range from 3 to 40 years for buildings and improvements and from 3 to 15 years for machinery and equipment. Leases 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. Lease terms may include options to extend or terminate the lease when it is reasonably certain that such options are to be exercised. Adient uses its incremental borrowing rate, which is the rate of interest it would pay to borrow on a collateralized basis over a similar term to the lease in a similar economic environment, for discounting lease consideration as most lease agreements do not provide an implicit rate. Refer to Note 8, “Leases” of the notes to consolidated financial statements for more information regarding Adient’s leases. Goodwill and Other Intangible Assets Goodwill reflects the cost of an acquisition in excess of the fair values assigned to identifiable net assets acquired. Adient reviews goodwill for impairment during the fourth fiscal quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. Adient performs impairment reviews for its reporting units, which have been determined to be Adient's reportable segments using a fair value method based on management's judgments and assumptions or third-party valuations. The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. In estimating the fair value, Adient primarily uses an income approach utilizing discounted cash flow analyses. 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 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. No goodwill impairment has been recorded in fiscal 2024, 2023 or 2022. As a result of macroeconomic factors impacting Adient and the automotive industry, a heightened risk of impairment exists for the EMEA reporting unit as the difference between its fair value and carrying value is less than 10% as of September 30, 2024. The decrease in EMEA’s fair value is driven by lower forecasted vehicle volumes from weakening consumer demand, slower consumer adoption of electric vehicles, overcapacity in the industry resulting in pricing pressure, intensifying competition from Chinese imports and lower exports to China from EMEA as domestic brands expand in China. As a result of the heightened risk of impairment, Adient will continuously assess the changing macroeconomic conditions in EMEA including the outlook for consumer demand for vehicles and other factors impacting the region, along with the need for further restructuring actions, all of which impact Adient’s ability to achieve its projected long-term operating performance. Refer to Note 6, “Goodwill and Other Intangible Assets,” of the notes to the consolidated financial statements for additional information. 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. Impairment of Long-Lived Assets Adient reviews long-lived assets, including property, plant and equipment, operating lease ROU assets 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 360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 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. 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. Adient plc | Form 10-K | 64 Impairment of Investments in Partially-Owned Affiliates Adient monitors its investments in partially-owned affiliates for indicators of other-than-temporary declines in value on an ongoing basis. If Adient determines that an other-than-temporary decline in value has occurred, it recognizes an impairment loss, which is measured as the difference between the recorded book value and the fair value of the investment. Fair value is generally determined using an income approach based on discounted cash flows or negotiated transaction values. Refer to Note 18, “Nonconsolidated Partially-Owned Affiliates,” of the notes to consolidated financial statements for more information on Adient’s partially-owned affiliates. Revenue Recognition Adient provides production and service parts to its customers under awarded multi-year programs. The duration of a program is generally consistent with the life cycle of a vehicle, however, an awarded program does not reach the level of a performance obligation until Adient receives either a purchase order and/or a materials release from the customer for a specific number of parts at a specified price, at which point an enforceable contract exists. Sales revenue is recognized at the point in time when parts are shipped and control has transferred to the customer, at which point an enforceable right to payment exists. Contracts may provide for annual price reductions over the production life of the awarded program, and prices are adjusted on an ongoing basis to reflect changes in product content/cost and other commercial factors. The amount of revenue recognized reflects the consideration that Adient expects to be entitled to in exchange for such products based on purchase orders, annual price reductions and ongoing price adjustments. Refer to Note 2, “Revenue Recognition,” of the notes to consolidated financial statements for information on Adient's revenue recognition. Customers Essentially all of Adient’s sales are to the automotive industry. Volkswagen Group comprised 13 % and 11 % of consolidated net sales in fiscal 2024 and 2023, respectively, primarily within the EMEA segment. Ford Motor Company comprised 12 % and 11 % of consolidated net sales in fiscal 2024 and 2023, respectively, across all segments. Stellantis N.V. comprised 10 % and 12 % of consolidated net sales in fiscal 2023 and 2022, respectively, primarily within the Americas segment. Research and Development Costs Expenditures for research activities relating to product development and improvement (other than those expenditures that are contractually guaranteed for reimbursement from the customer) are charged against income as incurred and included within selling, general and administrative expenses in the consolidated statements of income. Such expenditures for the years ended September 30, 2024, 2023 and 2022 were $ 372 million, $ 362 million and $ 322 million, respectively. A portion of these costs associated with these activities are reimbursed by customers in the amounts of $ 280 million, $ 250 million and $ 194 million for the fiscal years ended September 30, 2024, 2023 and 2022, respectively. Government Assistance Adient periodically receives government incentives in the forms of cash grants which are based on making qualifying capital investments in property, plant and equipment. Such assistance is initially recorded as a reduction to property, plant and equipment. Once in use, the balance is systematically recognized in the statements of income as the asset is depreciated over the useful life of the underlying asset. Adient also periodically receives government assistance for creating new job opportunities and maintaining a certain number of employees. Such employment-related incentives are normally deferred as current or noncurrent liabilities as appropriate. These benefits are recognized in the statements of income as a reduction of expense when Adient has met or is expected to meet all related contractual obligations. The impact of government assistance received by Adient and related balances for all periods presented were immaterial. Foreign Currency Translation Adient's international operations, in general, use the respective local currency as the functional currency. Assets and liabilities of international entities have been translated at period-end exchange rates, and income and expenses have been translated using average exchange rates for the period. 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 AOCI. The aggregate transaction gains (losses) included in net income for the years ended September 30, 2024, 2023 and 2022 were $( 3 ) million, $ 4 million and $ 6 million, respectively. Adient plc | Form 10-K | 65 Derivative Financial Instruments 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, 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. Restructuring Costs Adient recognizes restructuring costs that are probable and reasonably estimable related to separation programs that have been approved by and are committed to by management. In these situations, the affected employees are identified and it is unlikely that actions required to complete the separation plan will change significantly. Costs associated with benefits that are contingent on the employee continuing to provide services are recorded over the required service period. All other costs associated with restructuring activities are expensed as incurred. Stock-Based Compensation Stock-based compensation is initially measured at the fair value of the awards on the grant date and is recognized in the financial statements over the period the employees are required to provide services in exchange for the awards. The fair value of restricted stock awards is based on the number of units granted and the stock price on the grant date. 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 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. Refer to Note 12, “Stock-Based Compensation,” of the notes to consolidated financial statements for Adient's stock based compensation disclosures. Pension and Postretirement Benefits Adient utilizes a mark-to-market approach for recognizing pension and postretirement benefit expenses, including measuring the market related value of plan assets at fair value and recognizing actuarial gains and losses in the fourth quarter of each fiscal year or at the date of a remeasurement event. Refer to Note 14, “Retirement Plans,” of the notes to consolidated financial statements for disclosure of Adient's pension and postretirement benefit plans. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and other loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Adient records a valuation allowance that primarily represents operating and other loss carryforwards for which realization is uncertain. Management judgment is required in determining Adient's provision for income taxes, deferred tax assets and liabilities, and the valuation allowance recorded against Adient's net deferred tax assets. Adient reviews the realizability of its deferred tax assets on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or combined group recording the net deferred tax asset are considered, along with any other positive or negative evidence. Since future financial results may differ from previous estimates, periodic adjustments to Adient's valuation allowances may be necessary. Adient is subject to income taxes in Ireland, the U.S. and other non-U.S. jurisdictions. Judgment is required in determining its worldwide provision for income taxes and recording the related assets and liabilities. In the ordinary course of Adient's business, there are many transactions and calculations where the ultimate tax determination is uncertain. Adient's income tax returns for various fiscal years remain under audit by the respective tax authorities. Although the outcome of tax audits is always uncertain, management believes that it has appropriate support for the positions taken on its tax returns and that its annual tax provisions included amounts sufficient to pay assessments, if any, which may be proposed by the taxing authorities. 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. Adient plc | Form 10-K | 66 Adient does not generally provide for additional income taxes which would become payable upon repatriation of undistributed earnings of wholly owned foreign subsidiaries. Adient's intent is for such earnings to be reinvested by the subsidiaries or to be repatriated only when it would be tax efficient. Refer to Note 16, “Income Taxes,” of the notes to consolidated financial statements for Adient's income tax disclosures. Earnings Per Share The following table shows the computation of basic and diluted earnings per share: Year Ended September 30, (in millions, except per share data) 2024 2023 2022 Numerator: Net income (loss) attributable to Adient $ 18 $ 205 $ ( 120 ) Denominator: Shares outstanding 89.5 94.5 94.8 Effect of dilutive securities 0.6 0.9 — Diluted shares 90.1 95.4 94.8 Earnings per share: Basic $ 0.20 $ 2.17 $ ( 1.27 ) Diluted $ 0.20 $ 2.15 $ ( 1.27 ) The effect of common stock equivalents which would have been anti-dilutive was excluded from the calculation of diluted earnings per share for fiscal 2024 and 2023 and was immaterial. Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share for fiscal 2022 which is a result of being in a loss position. New Accounting Pronouncements Standards Adopted During Fiscal 2024 On October 1, 2023, Adient adopted Accounting Standards Codification (“ASU”) 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations , which requires disclosures of key terms of Adient's material supplier finance program. Refer to Note 9, "Debt and Financing Arrangements," of the notes to consolidated financial statements for additional information. Standards Effective After Fiscal 2024 Adient has considered the new standards that are summarized below, each to be effective after fiscal 2024: Adient plc | Form 10-K | 67 Standard to be Adopted Description Date Effective ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures The ASU requires additional disclosures on significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”). The ASU also requires additional disclosures of an amount for other segment items by reportable segment and a description of its composition. October 1, 2024 ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures The ASU requires disclosure of additional details about the reporting entity's reconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes. The ASU also requires further disaggregation of income tax amounts paid by federal, state and foreign, as well as by material jurisdiction. October 1, 2025 SEC Climate Disclosure Rules Final Rule 33-11275 In March 2024, the SEC adopted the final rule surrounding disclosures of the impacts and risks of climate-related matters that have a material impact on Adient's operations and consolidated financial statements. These disclosures would be required in annual reports and registration statements and would discuss Scope 1 and Scope 2 greenhouse gas emissions along with other climate-related information such as severe weather events and other natural conditions. In April 2024, the SEC voluntarily stayed the climate disclosure rules pending judicial review. Adient is monitoring the outcome and evaluating the impact of these rules on its consolidated financial statements and related disclosures. October 1, 2025 (under final rules which are now stayed) ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense: Disaggregation Disclosures (Subtopic 220-40) The ASU requires disclosures of specified information about certain costs and expenses in the notes to financial statements at each interim and annual reporting period, including: the amounts of purchases of inventory, employee compensation, depreciation, intangible asset amortization, and a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. It also requires disclosures of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. October 1, 2027 2. Revenue Recognition Adient generates revenue through the sale of automotive seating solutions, including complete seating systems and the components of complete seating systems. Adient provides production and service parts to its customers under awarded multi-year programs. The duration of a program is generally consistent with the life cycle of a vehicle, however, the program can be canceled at any time without cause by the customer. Programs awarded to Adient to supply parts to its customers do not contain a firm commitment by the customer for volume or price and do not reach the level of a performance obligation until Adient receives either a purchase order and/or a materials release from the customer for a specific number of parts at a specified price, at which point an enforceable contract exists. Sales revenue is generally recognized at the point in time when parts are shipped and control has transferred to the customer, at which point an enforceable right to payment exists. Contracts may provide for annual price reductions over the production life of the awarded program, and prices are adjusted on an ongoing basis to reflect changes in product content/cost and other commercial factors. The amount of revenue recognized reflects the consideration that Adient expects to be entitled to in exchange for such products based on purchase orders, annual price reductions and ongoing price adjustments (some of which are accounted for as variable consideration and subject to being constrained), net of the impact, if any, of consideration paid to the customer. Approximately 1 % of net sales recorded in fiscal 2024 were related to product sales transacted in prior fiscal years. In pursuit of new program awards, Adient at times agrees to make upfront payments to customers. Each time such a payment is made, Adient evaluates its nature, the underlying economics, legal and compliance ramifications, and other relevant factors and circumstances. These payments are deemed to be consideration payable to customers and are generally recognized as a reduction to revenue once mutually agreed. Certain upfront payments, however, are capitalized as other current and noncurrent assets if they are determined to be incremental, attributable only to the specific new program being awarded, and recoverable. As products under the new program are sold to the customer, the capitalized amount is amortized and recognized as a reduction to revenue over the term of the program, typically between three and seven years. Adient assesses recoverability of the capitalized amounts on an on-going basis. Any amounts that are concluded to be no longer recoverable are immediately recognized as a reduction to revenue. As of September 30, 2024 and 2023, Adient maintained capitalized upfront payments of Adient plc | Form 10-K | 68 $ 155 million and $ 126 million, respectively, within other noncurrent assets. In a typical arrangement with the customer, purchase orders are issued for pre-production activities which consist of engineering, design and development, tooling and prototypes for the manufacture and delivery of component parts. Adient has concluded that these activities are not in the scope of ASC 606, “Revenue from Contracts with Customers.” 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. Payment terms with customers are established based on customary industry and regional practices and do not contain significant financing components. Contract assets primarily relate to the right to consideration for work completed, but not billed at the reporting date on contracts with customers. 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 material contract assets or liabilities exist at September 30, 2024. 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. Therefore, Adient has elected to apply the practical expedient in ASC 606, paragraph 606-10-50-14 and does not disclose information about the remaining performance obligations that have an original expected duration of one year or less. Refer to Note 17, “Segment Information,” of the notes to consolidated financial statements for disaggregated revenue by geographical market. 3. Acquisitions and Divestitures 2024 Transaction In November 2023, Adient finalized the sale of 51 % of its interest (previously held 100 %) in Adient (Langfang) Seating Co., Ltd. ("LFADNT") in China for ¥ 44 million ($ 6 million), resulting in the deconsolidation of LFADNT, including $ 9 million of cash. Adient recorded an $ 8 million loss as a result of the transaction in the Asia segment, including $ 5 million of allocated goodwill. 2023 Transactions Adient completed the acquisition of Nantong Yanfeng Adient Seating Trim Co., Ltd. (“YFAT”) from KEIPER Seating Mechanisms Co., Ltd. (“KEIPER”), in April 2023 for ¥ 150 million ($ 23 million). Adient made an initial deposit of ¥ 75 million ($ 12 million) in fiscal 2022, which represents 50 % of the purchase price (reflected within other current assets as of September 30, 2022). During fiscal 2023, Adient paid the remaining purchase price of ¥ 75 million ($ 11 million). The acquisition was accounted for using the acquisition method, and the operating results and cash flows of YFAT are included in Adient's consolidated financial statements starting from May 2023. The acquisition is expected to provide additional synergies within the Asia segment. Adient recorded a purchase price allocation for the assets acquired and liabilities assumed based on their fair values as of the April 2023 acquisition date, which included $ 13 million of goodwill and $ 5 million of acquired cash. 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. If the acquisition of YFAT had occurred on October 1, 2021, its impact on Adient's net sales and net income attributable to Adient for fiscal 2022 and fiscal 2023 would have been immaterial. Upon acquisition, YFAT was renamed as Adient (Nantong) Automotive Seating Components Co., Ltd. 2022 Transactions In conjunction with the 2021 and 2020 Yanfeng Transactions (as defined and described in Form 10-K for the fiscal year ended September 30, 2021), Adient received total proceeds of $ 693 million during fiscal 2022 from sales of its interests in two nonconsolidated partially-owned affiliates in China. Assets held for sale 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, which resulted in an impairment charge of $ 6 million. Also, the sale of certain operations in EMEA which were classified as held for sale in fiscal 2021 was completed in fiscal 2022 for total proceeds of $ 46 million. Adient plc | Form 10-K | 69 4. Inventories Inventories consisted of the following: September 30, (in millions) 2024 2023 Raw materials and supplies $ 582 $ 644 Work-in-process 29 34 Finished goods 147 163 Inventories $ 758 $ 841 5. Property, Plant and Equipment Property, plant and equipment consisted of the following: September 30, (in millions) 2024 2023 Buildings and improvements $ 1,031 $ 990 Machinery and equipment 3,245 3,097 Construction in progress 152 148 Land 86 84 Total property, plant and equipment 4,514 4,319 Less: accumulated depreciation ( 3,104 ) ( 2,937 ) Property, plant and equipment - net $ 1,410 $ 1,382 There were no material finance leases included in net property, plant and equipment at September 30, 2024 and 2023. As of September 30, 2024, Adient is the lessor of properties included in gross building and improvements for $ 14 million and accumulated depreciation of $ 10 million. As of September 30, 2023, Adient is the lessor of properties included in gross building and improvements for $ 13 million and accumulated depreciation of $ 9 million. 6. Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill are as follows: (in millions) Americas EMEA Asia Total Balance at September 30, 2022 $ 607 $ 295 $ 1,155 $ 2,057 Business acquisitions — — 13 13 Currency translation and other 2 22 — 24 Balance at September 30, 2023 $ 609 $ 317 $ 1,168 $ 2,094 Business divestiture — — ( 5 ) ( 5 ) Currency translation and other ( 3 ) 24 54 75 Balance at September 30, 2024 $ 606 $ 341 $ 1,217 $ 2,164 Refer to Note 3, “Acquisitions and Divestitures,” of the notes to consolidated financial statements for additional information. Adient performed its annual goodwill impairment test during the fourth quarter of fiscal year 2024 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 Adient plc | Form 10-K | 70 (based on weighted average cost of capital ranging from 15.5 % to 18.5 %) to reflect the risk inherent in the future cash flows and to derive a reasonable enterprise value and related premium. The estimated future cash flows reflect management's latest assumptions of the financial projections based on current and anticipated competitive landscape, including estimates of revenue based on production volumes over the foreseeable future and long-term growth rates, and operating margins based on historical trends and future cost containment activities. The financial projections considered the impact of the various issues causing uncertainty in the automotive industry such as weaker vehicle demand impacted by new vehicle affordability and a high interest rate environment, slower global adoption of electric vehicles by consumers, volatile commodity pricing, and persistent inflationary pressures. Specifically in the EMEA region, where Adient recorded significant restructuring charges during fiscal 2024, a heightened risk of impairment exists as the difference between its fair value and carrying value is less than 10%. The EMEA reporting unit maintains $ 341 million of goodwill at September 30, 2024. The decrease in EMEA’s fair value is driven by lower forecasted vehicle volumes from weakening consumer demand, slower consumer adoption of electric vehicles, overcapacity in the industry resulting in pricing pressure, intensifying competition from Chinese imports and lower exports to China from EMEA as domestic brands expand in China. No goodwill impairment was recorded in fiscal 2024; however, if further degradation in the economic conditions in the EMEA region occur or if significantly higher levels of restructuring actions are needed in the region, the EMEA reporting unit may incur significant impairment of goodwill and other long-lived assets. Adient generally assumes operating margins in future years will normalize over time as it is believed that this is consistent with a market participant view. The current year results are not indicative of future market participant expectations primarily due to the current challenging market conditions as mentioned above. While revenue is not expected to return to historical levels, there are expectations for enhanced profitability and cash flows driven by near-term efficiency actions, strategic review of portfolio and reduction of capital expenditures. Long-term profitability and cash flows will also be impacted by the expiration of underperforming contracts and more profitable business starting in fiscal 2026 along with restructuring benefits taking full effect. Further, the high levels of recent restructurings and the associated significant costs of such actions in the EMEA region are not expected to persist for the long-term at comparable levels. Adient's other intangible assets, primarily from business acquisitions valued based on independent appraisals, consisted of: September 30, 2024 September 30, 2023 (in millions) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Intangible assets Patented technology $ 81 $ ( 39 ) $ 42 $ 79 $ ( 32 ) $ 47 Customer relationships 563 ( 246 ) 317 550 ( 201 ) 349 Trademarks and other 25 ( 13 ) 12 41 ( 29 ) 12 Total intangible assets $ 669 $ ( 298 ) $ 371 $ 670 $ ( 262 ) $ 408 Amortization of other intangible assets for the fiscal years ended September 30, 2024, 2023 and 2022 was $ 47 million, $ 50 million and $ 52 million, respectively. Adient anticipates amortization for fiscal 2025, 2026, 2027, 2028 and 2029 will be approximately $ 47 million, $ 46 million, $ 40 million, $ 32 million and $ 32 million, respectively. 7. Product Warranty Adient offers warranties to its customers depending upon the specific product and terms of the customer purchase agreement. A typical warranty program requires that Adient replace defective products within a specified time period from the date of sale. Adient records an estimate for future warranty-related costs based on actual historical return rates and other known factors. Based on analysis of return rates and other factors, Adient's warranty provisions are adjusted as necessary. Adient monitors its warranty activity and adjusts its reserve estimates when it is probable that future warranty costs will be different than those estimates. Adient's product warranty liability is recorded in the consolidated statements of financial position in other current liabilities. The changes in Adient's total product warranty liability are as follows: Adient plc | Form 10-K | 71 September 30, (in millions) 2024 2023 Balance at beginning of period $ 21 $ 21 Accruals for warranties issued during the period 7 8 Settlements made (in cash or in kind) during the period ( 6 ) ( 8 ) Balance at end of period $ 22 $ 21 8. Leases Adient's lease portfolio consists of operating leases for real estate including production facilities, warehouses and administrative offices, equipment such as forklifts, computer servers, laptops and fleet vehicles. Adient has elected not to record leases with an initial term of 12 months or less on its consolidated statement of financial position. A lease liability and corresponding ROU asset are recognized based on the present value of lease payments. To determine the present value of lease payments, Adient uses its incremental borrowing rate as of lease commencement. The incremental borrowing rate (IBR) is defined as the rate Adient would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Adient primarily derives its IBR from its debt portfolio, adjusted for collateralization, lease term and jurisdictional factors. The components of lease costs for the years ended September 30, 2024, 2023 and 2022 were as follows: Year Ended September 30, (in millions) 2024 2023 2022 Operating lease cost $ 108 $ 108 $ 117 Short-term lease cost 29 29 20 Total lease cost $ 137 $ 137 $ 137 Operating lease right-of-use assets and lease liabilities included in the consolidated statement of financial position were as follows: September 30, (in millions) 2024 2023 Operating leases: Operating lease right-of-use assets Other noncurrent assets $ 248 $ 241 Operating lease liabilities - current Other current liabilities $ 78 $ 77 Operating lease liabilities - noncurrent Other noncurrent liabilities 168 163 $ 246 $ 240 Weighted average remaining lease term: Operating leases 5 years 5 years Weighted average discount rate: Operating leases 6.2 % 6.1 % Maturities of operating lease liabilities and minimum payments for operating leases having initial or remaining non-cancelable terms in excess of one year as of September 30, 2024 were as follows: Adient plc | Form 10-K | 72 Fiscal years (in millions) Operating Leases 2025 $ 91 2026 64 2027 46 2028 28 2029 15 Thereafter 47 Total lease payments 291 Less: imputed interest ( 45 ) Present value of lease liabilities $ 246 Supplemental cash flow information related to leases was as follows: Year Ended September 30, (in millions) 2024 2023 2022 Right-of-use assets obtained in exchange for lease obligations: Operating leases (non-cash activity) $ 84 $ 35 $ 52 Operating cash flows: Cash paid for amounts included in the measurement of lease liabilities $ 108 $ 108 $ 116 Adient’s finance leases were not significant to the consolidated financial statements during fiscal 2024, 2023 and 2022. Refer to Note 9, “Debt and Financing Arrangements,” of the notes to consolidated financial statements for additional information. 9. Debt and Financing Arrangements Long-term and short-term debt consisted of the following: September 30, (in millions) 2024 2023 Long-term debt: 8.25 % Notes due 2031 $ 500 $ 500 7.00 % Secured Notes due 2028 500 500 Term Loan B due in 2031 632 635 4.875 % Notes due in 2026 795 795 3.50 % Notes due in 2024 — 130 Other bank borrowings and finance lease obligations 5 4 Less: debt issuance costs ( 28 ) ( 31 ) Gross long-term debt 2,404 2,533 Less: current portion 8 132 Net long-term debt $ 2,396 $ 2,401 Short-term debt: Other bank borrowings (1) 1 2 Total short-term debt $ 1 $ 2 (1) The weighted average interest rates on short-term debts, based on levels of debt maintained in various jurisdictions, were 5.4 % and 10.1 % at September 30, 2024 and 2023, respectively. Adient plc | Form 10-K | 73 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 and certain other restrictions, including a minimum fixed charge coverage ratio. The ABL Credit Facility, as amended in November 2022, is set to mature on November 2, 2027, subject to certain springing maturity provisions. Adient paid $ 7 million in debt issuance costs for the amended ABL Credit Facility and 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. Letters of credit are limited to the lesser of (x) $ 150 million and (y) the aggregate unused amount of commitments under the ABL Credit Facility then in effect. Subject to certain conditions, the ABL Credit Facility may be expanded by up to $ 250 million in additional commitments. Loans under the ABL Credit Facility may be denominated, at the option of Adient, in U.S. Dollars, Euros, Pounds Sterling or Swedish Krona. It also provides flexibility for future amendments to the ABL Facility to incorporate certain sustainability-based pricing provisions. 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. Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to Term SOFR, 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 %. As of September 30, 2024, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of approximately $ 779 million (net of $ 11 million of letters of credit). In addition, Adient Global Holdings S.à r.l., a wholly-owned subsidiary of Adient, maintains a senior secured term loan facility (the “Term Loan B Agreement”) that had an outstanding balance of $ 632 million as of September 30, 2024. During fiscal 2023, Adient prepaid $ 350 million of the Term Loan B Agreement principal, and wrote off $ 2 million of previously deferred financing costs to net financing charges. During fiscal 2024, the Term Loan B Agreement was amended to reduce the applicable margin from 3.25 % to 2.75 % and extend final maturity to January 31, 2031 (which maturity was previously April 8, 2028). Adient incurred $ 5 million of costs associated with the modification, of which $ 4 million was recorded as deferred financing costs. 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. 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. 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; create, assume, incur or guarantee certain indebtedness; pay dividends or make other distributions on, or repurchase or redeem, Adient’s capital stock or certain other debt; make other restricted payments; and consolidate or merge with, or convey, transfer or lease all or substantially all of Adient’s and its restricted subsidiaries’ assets, to another person. These covenants are subject to a number of other limitations and exceptions set forth in the agreements. The agreements also provide for customary events of default, including, but not limited to, cross-default clauses with other debt arrangements, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving Adient and its significant subsidiaries. During fiscal 2023, Adient Global Holdings Ltd. (“AGH”), a wholly-owned subsidiary of Adient, issued (i) $ 500 million (net proceeds of $ 494 million) in aggregate principal amount of 7 % senior secured notes due 2028 and (ii) $ 500 million (net proceeds of $ 494 million) in aggregate principal amount of 8.250 % senior unsecured notes due 2031. Interest on both of these notes are paid on April 15 and October 15 each year, beginning on October 15, 2023. These notes contain covenants that are usual and customary. The total net proceeds of $ 988 million along with cash on hand were used primarily to redeem $ 350 million of the senior secured term loan facility under the Term Loan B Agreement as described above, and repurchase € 700 million ($ 743 million) of the 3.50 % unsecured notes due 2024 as described below. Adient paid $ 16 million in debt issuance costs for these new debt issuances. AGH also maintains 4.875 % USD-denominated unsecured notes due 2026. The aggregate principal amount of these notes was $ 795 million as of September 30, 2024 and 2023. AGH also paid the remaining balance of its 3.50 % Euro denominated unsecured notes of € 123 million ($ 132 million) in August 2024 upon final maturity. During fiscal 2023, Adient repurchased € 700 million ($ 743 million) of the 3.50 % unsecured notes due 2024 at a premium of € 7 million ($ 7 million) plus € 3 million ($ 3 million) of accrued and unpaid interest, and expensed € 2 million ($ 2 million) of previously deferred financing costs to net financing charges. Adient plc | Form 10-K | 74 During fiscal 2022, Adient repurchased the entirety of its $ 600 million, 9.00 % Senior First Lien Notes due 2025 at a premium of $ 34 million plus $ 19 million of accrued interest. Principal payments required on long-term debt during the next five years are as follows: Year Ended September 30, (in millions) 2025 2026 2027 2028 2029 Thereafter Principal payments $ 8 $ 803 $ 7 $ 506 $ 6 $ 1,102 Net Financing Charges Adient's net financing charges in the consolidated statements of income (loss) contained the following components: Year Ended September 30, (in millions) 2024 2023 2022 Interest expense, net of capitalized interest costs $ 191 $ 186 $ 161 Banking fees and debt issuance cost amortization 18 20 22 Interest income ( 28 ) ( 22 ) ( 9 ) Premium paid on repurchase of debt — 7 38 Derivative loss on Yanfeng transaction — — 3 Net foreign exchange 8 4 — Net financing charges $ 189 $ 195 $ 215 Banking fees in fiscal 2023 and 2022 includes $ 4 million and $ 8 million, respectively, of one-time accelerated-deferred financing fee charges associated with voluntary repayments of debt. Total interest paid on both short and long-term debt for the fiscal years ended September 30, 2024, 2023 and 2022 was $ 187 million, $ 132 million and $ 192 million, respectively. Other Arrangements 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 both September 30, 2024 and September 30, 2023, $ 170 million was funded under these programs. Adient also has a program with an external financial institution under which Adient's suppliers can sell their receivables from Adient to the financial institution at their sole discretion. Adient is not a party to the agreements between the participating suppliers and the financial institution. Adient's obligation under the program is to pay the original amounts of supplier invoices to the financial institution on the original invoice dates. No fees are paid and no assets are pledged by Adient. The payment terms for trade payables can range from 45 days to 120 days depending on types of services and goods being purchased. The payment terms for molds, dies and other tools that are acquired as part of pre-production activities are in general longer, and are normally dependent on the terms which Adient has agreed with its customers. As of September 30, 2024, and September 30, 2023, Adient's liabilities related to this program were $ 76 million and $ 50 million, respectively. Cash flows related to the program are all presented within operating activities in Adient's consolidated statements of cash flows. 10. Derivative Instruments and Hedging Activities Adient selectively uses derivative instruments to reduce Adient's market risk associated with changes in foreign currency. Under Adient's policy, the use of derivatives is restricted to those intended for hedging purposes; the use of any derivative instrument for speculative purposes is strictly prohibited. A description of each type of derivative utilized to manage Adient's risk is included in the following paragraphs. In addition, refer to Note 11, “Fair Value Measurements,” of the notes to consolidated financial statements for information related to the fair value measurements and valuation methods utilized by Adient for each derivative type. Adient plc | Form 10-K | 75 Adient has global operations and participates in the foreign exchange markets to minimize its risk of loss from fluctuations in foreign currency exchange rates. Adient primarily uses foreign currency exchange contracts to hedge certain foreign exchange rate exposures. Adient hedges 70 % to 90 % of the nominal amount of each of its known foreign exchange transactional exposures. 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 AOCI and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings. All contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates at September 30, 2024 and 2023, respectively. The € 123 million ($ 132 million) aggregate principal amount of 3.50 % Euro-denominated unsecured notes due August 2024 was previously 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 notes 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 first quarter of fiscal 2024, Adient de-designated these notes as a net investment hedge concurrent with entering into a foreign exchange forward contract designated as a fair value hedge of the principal balance on the 3.50 % notes. The impact of foreign currency changes on the notes and the contract were recorded in net financing charges until payment of the notes and maturity of the foreign exchange forward contract in August 2024. During the second quarter of fiscal 2024, Adient entered into a ¥ 685 million ($ 96 million) foreign exchange forward contract to selectively hedge portions of its net investment in China. Adient de-designated the majority of the contracted amount during fourth quarter of fiscal 2024, resulting in an outstanding contract amount of ¥ 120 million ($ 17 million) as of September 30, 2024. The contract matured in October 2024, the impact of which was not material. During the third quarter of fiscal 2024, Adient entered into an additional ¥ 570 million ($ 78 million) contract to selectively hedge portions of its net investment in China. The contract is set to mature in October 2025. Adient entered into a ¥ 240 million ($ 35 million) foreign exchange forward contract during the second quarter of fiscal 2023 to selectively hedge portions of its net investment in China. The currency effects of the forward contract were 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. During fiscal 2023, the foreign exchange forward contract matured, the impact of which was not material. Adient entered into a ¥ 150 million ($ 23 million) foreign exchange forward contract during 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 shareholders’ 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, the impact of which was not material. Adient plc | Form 10-K | 76 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: Derivatives and Hedging Activities Designated as Hedging Instruments under ASC 815 Derivatives and Hedging Activities Not Designated as Hedging Instruments under ASC 815 September 30, (in millions) 2024 2023 2024 2023 Other current assets Foreign currency exchange derivatives $ 9 $ 30 $ 6 $ 4 Other noncurrent assets Foreign currency exchange derivatives 1 — 2 — Total assets $ 10 $ 30 $ 8 $ 4 Other current liabilities Foreign currency exchange derivatives $ 32 $ 8 $ — $ — Other noncurrent liabilities Foreign currency exchange derivatives 9 6 — — Long-term debt Foreign currency denominated debt — 130 — — Total liabilities $ 41 $ 144 $ — $ — Adient enters into International Swaps and Derivatives Associations master netting agreements with counterparties that permit the net settlement of amounts owed under the derivative contracts. The master netting agreements generally provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event. Adient has not elected to offset the fair value positions of the derivative contracts recorded in the consolidated statements of financial position. Collateral is generally not required of Adient or the counterparties under the master netting agreements. As of September 30, 2024 and 2023, no cash collateral was received or pledged under the master netting agreements. The gross and net amounts of derivative instruments and other amounts used in hedging activities are as follows: Assets Liabilities September 30, (in millions) 2024 2023 2024 2023 Gross amount recognized $ 18 $ 34 $ 41 $ 144 Gross amount eligible for offsetting ( 9 ) ( 12 ) ( 9 ) ( 12 ) Net amount $ 9 $ 22 $ 32 $ 132 The following table presents the effective portion of pretax gains (losses) recorded in other comprehensive income related to cash flow hedges: Year Ended September 30, (in millions) 2024 2023 2022 Foreign currency exchange derivatives $ ( 2 ) $ 89 $ 8 Adient plc | Form 10-K | 77 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: (in millions) Year Ended September 30, 2024 2023 2022 Foreign currency exchange derivatives Cost of sales $ 46 $ 66 $ 6 During the next twelve months, $ 23 million of pretax loss on cash flow hedges are expected to be reclassified from AOCI into Adient's consolidated statements of income. The following table presents the location and amount of pretax gains (losses) on fair value hedge activity in Adient's consolidated statements of income: (in millions) Year Ended September 30, 2024 2023 2022 Foreign currency exchange derivatives Net financing charges $ 1 $ — $ — The following table presents the location and amount of pretax gains (losses) on derivatives not designated as hedging instruments recognized in Adient's consolidated statements of income (loss): (in millions) Year Ended September 30, 2024 2023 2022 Foreign currency exchange derivatives Cost of sales $ ( 8 ) $ 8 $ — Foreign currency exchange derivatives Net financing charges 22 ( 10 ) ( 33 ) Total $ 14 $ ( 2 ) $ ( 33 ) The effective portion of pretax gains (losses) recorded in currency translation adjustment (“CTA”) within other comprehensive income (loss) related to net investment hedges was $( 5 ) million, $( 67 ) million and $ 151 million for the fiscal years ended September 30, 2024, 2023 and 2022, respectively. For the years ended September 30, 2024, 2023 and 2022, respectively, no significant gains or losses were reclassified from CTA into income for Adient's outstanding net investment hedges. For the years ended September 30, 2024, 2023 and 2022, no gains or losses were recognized in income for the ineffective portion of cash flow hedges. 11. Fair Value Measurements ASC 820, "Fair Value Measurement," defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions. ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Adient plc | Form 10-K | 78 Recurring Fair Value Measurements The following tables present Adient's fair value hierarchy for those assets and liabilities measured at fair value. Refer to Note 14, “Retirement Plans,” of the notes to consolidated financial statements for fair value tables of pension assets. Fair Value Measurements Using: (in millions) Total as of September 30, 2024 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Other current assets Foreign currency exchange derivatives $ 15 $ — $ 15 $ — Other noncurrent assets Foreign currency exchange derivatives 3 — 3 — Total assets $ 18 $ — $ 18 $ — Other current liabilities Foreign currency exchange derivatives $ 32 $ — $ 32 $ — Other noncurrent liabilities Foreign currency exchange derivatives 9 — 9 — Total liabilities $ 41 $ — $ 41 $ — Fair Value Measurements Using: (in millions) Total as of September 30, 2023 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Other current assets Foreign currency exchange derivatives $ 34 $ — $ 34 $ — Total assets $ 34 $ — $ 34 $ — Other current liabilities Foreign currency exchange derivatives $ 8 $ — $ 8 $ — Other noncurrent liabilities Foreign currency exchange derivatives 6 — 6 — Total liabilities $ 14 $ — $ 14 $ — Valuation Methods Foreign currency exchange derivatives Adient selectively hedges anticipated transactions and net investments that are subject to foreign exchange rate risk primarily using foreign currency exchange hedge contracts. The foreign currency exchange derivatives are valued under a market approach using publicized spot and forward prices. Changes in fair value on foreign exchange derivatives accounted for as hedging instruments under ASC 815 are initially recorded as a component of AOCI and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings. These contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates at September 30, 2024 and 2023, respectively. The changes in fair value of foreign currency exchange derivatives not designated as hedging instruments under ASC 815 are recorded in the consolidated statements of income. The fair value of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values. The fair value of long-term debt, which was $ 2.4 billion and $ 2.5 billion at September 30, 2024 and 2023, respectively, was determined primarily using market quotes classified as Level 1 inputs within the ASC 820 fair value hierarchy. Adient plc | Form 10-K | 79 12. Stock-Based Compensation Adient provides certain key employees equity awards in the form of restricted stock units (“RSU”) and performance share units (“PSUs”) under the Adient plc 2016 Omnibus Incentive Plan and the Adient plc 2021 Omnibus Incentive Plan (collectively, the “Plan”). Adient also provides directors with share awards under the Adient plc 2016 Director Share Plan and the Adient plc 2021 Omnibus Incentive Plan. Total stock-based compensation cost included in the consolidated statements of income was $ 31 million, $ 34 million and $ 29 million for the fiscal years ended September 30, 2024, 2023 and 2022, respectively. 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. The following tables present activity related to the granting of awards during the year ended September 30, 2024 along with the composition of outstanding and exercisable awards at September 30, 2024. Restricted Stock The Plan provides for the award of restricted stock or restricted stock units to certain employees. These awards are typically share settled except for certain non-U.S. employees which are settled in cash. Cash settled awards are recorded in Adient's consolidated statements of financial position as a liability and adjusted each reporting period for changes in share value until the settlement of the award. Restricted stock awards typically vest over a three year period following the grant date. The Plan allows for different vesting terms on specific grants with approval by Adient's Board of Directors. A summary of the status of nonvested restricted stock awards at September 30, 2024, and changes for the fiscal year then ended, is presented below: Weighted Average Price Restricted Shares/Units Nonvested, September 30, 2023 $ 38.32 962,089 Granted 32.55 888,994 Vested 36.50 ( 443,946 ) Forfeited 33.99 ( 216,473 ) Nonvested, September 30, 2024 $ 35.36 1,190,664 At September 30, 2024, Adient had approximately $ 19 million of total unrecognized compensation cost related to nonvested restricted stock arrangements granted. That cost is expected to be recognized over a weighted-average period of 1.9 years. Performance Share Awards The Plan permits the grant of PSU awards. The number of PSUs granted is equal to the PSU award value divided by the closing price of a Adient ordinary share at the grant date. The PSUs are generally contingent on the achievement of predetermined performance goals over a three-year performance period as well as on the award holder's continuous employment until the vesting date. Each PSU that is earned will be settled with an ordinary share of Adient following the completion of the performance period except for certain non-U.S. employees which are settled in cash. Cash settled awards are recorded in Adient's consolidated statements of financial position as a liability and adjusted each reporting period for changes in share value until the settlement of the award. Adient plc | Form 10-K | 80 A summary of the status of Adient's nonvested PSUs at September 30, 2024, and changes for the fiscal year then ended is presented below: Weighted Average Price Performance Shares/Units Nonvested, September 30, 2023 $ 36.87 858,583 Granted 32.99 538,680 Vested 27.84 ( 304,418 ) Forfeited 34.88 ( 285,216 ) Nonvested, September 30, 2024 $ 38.39 807,629 At September 30, 2024, Adient had approximately $ 8 million of total unrecognized compensation cost related to nonvested performance share units granted. That cost is expected to be recognized over a weighted-average period of 1.9 years. 13. Equity and Noncontrolling Interests The following table presents changes in AOCI attributable to Adient: Year Ended September 30, (in millions) 2024 2023 2022 Foreign currency translation adjustments Balance at beginning of period $ ( 854 ) $ ( 836 ) $ ( 617 ) Aggregate adjustment for the period, net of tax 181 ( 18 ) ( 219 ) Balance at end of period (1) ( 673 ) ( 854 ) ( 836 ) Realized and unrealized gains (losses) on derivatives Balance at beginning of period 13 ( 8 ) ( 8 ) Current period changes in fair value, net of tax ( 1 ) 79 6 Reclassification to income, net of tax ( 31 ) ( 58 ) ( 6 ) Balance at end of period ( 19 ) 13 ( 8 ) Pension plans Balance at beginning of period ( 1 ) ( 1 ) ( 2 ) Net reclassifications to AOCI — — 1 Balance at end of period ( 1 ) ( 1 ) ( 1 ) Accumulated other comprehensive income (loss), end of period $ ( 693 ) $ ( 842 ) $ ( 845 ) (1) Foreign currency translation adjustments as of September 30, 2024 and 2023 include gains (losses) on designated net investment hedge instruments of $( 4 ) million and $ 76 million, respectively. During the next twelve months, no significant gains or losses are expected to be reclassified from AOCI into Adient's consolidated statements of income. Adient consolidates certain subsidiaries in which the noncontrolling interest party has within their control the right to require Adient to redeem all or a portion of its interest in the subsidiary. These redeemable noncontrolling interests are reported at their estimated redemption value. Any adjustment to the redemption value impacts retained earnings but does not impact net income. Redeemable noncontrolling interests which are redeemable only upon future events, the occurrence of which is not currently probable, are recorded at carrying value. The following table presents changes in the redeemable noncontrolling interests: Adient plc | Form 10-K | 81 Year Ended September 30, (in millions) 2024 2023 2022 Beginning balance $ 57 $ 45 $ 240 Net income (1) 38 27 35 Dividends ( 21 ) ( 18 ) ( 66 ) Change in noncontrolling interest share — — ( 153 ) Foreign currency translation adjustments 17 3 ( 11 ) Ending balance $ 91 $ 57 $ 45 (1) During fiscal 2024, a $ 5 million adjustment was recorded to increase income attributable to noncontrolling interest related to fiscal 2023. The change in noncontrolling interests in fiscal 2022 relates to Adient’s acquisition of the remaining 25 % interest in Chongqing Adient Automotive Components Co., Ltd. Repurchases of Equity Securities In November 2022, Adient’s Board of Directors authorized the repurchase of Adient’s ordinary shares up to an aggregate purchase price of $ 600 million with no expiration date. Under the share repurchase authorization, Adient’s ordinary shares may be purchased either through discretionary purchases on the open market, by block trades or privately negotiated transactions. The number of ordinary shares repurchased, if any, and the timing of repurchases will depend on a number of factors, including share price, trading volume and general market conditions, as well as on working capital requirements, general business conditions and other factors. During fiscal 2023, Adient repurchased and immediately retired 1,756,777 of its ordinary shares at an average purchase price per share of $ 37.00 . The aggregate amount of cash paid to repurchase the shares was $ 65 million. During fiscal 2024, Adient repurchased and immediately retired 9,424,668 of its ordinary shares at an average purchase price per share of $ 29.18 . The aggregate amount of cash paid to repurchase the shares was $ 275 million. As of September 30, 2024, the remaining aggregate amount of authorized repurchases was $ 260 million. 14. Retirement Plans Pension Benefits Adient maintains non-contributory defined benefit pension plans covering primarily non-U.S. employees and a limited number of U.S. employees. The benefits provided are primarily based on years of service and average compensation or a monthly retirement benefit amount. Funding for non-U.S. plans observes the local legal and regulatory limits. Funding for U.S. pension plans equals or exceeds the minimum requirements of the Employee Retirement Income Security Act of 1974. 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 $ 162 million, $ 144 million and $ 52 million, respectively, as of September 30, 2024, and $ 155 million, $ 137 million and $ 48 million, respectively, as of September 30, 2023. For pension plans with a PBO that exceed plan assets, the PBO, ABO and fair value of plan assets of those plans were $ 162 million, $ 144 million and $ 52 million, respectively, as of September 30, 2024 and $ 155 million, $ 137 million and $ 48 million, respectively, as of September 30, 2023. In fiscal 2024, Adient paid contributions to the defined benefit pension plans of $ 20 million. Contributions of at least $ 10 million in cash to its defined benefit pension plans are expected in fiscal 2025. Projected benefit payments from the plans as of September 30, 2024 are estimated as follows (in millions): Adient plc | Form 10-K | 82 2025 $ 23 2026 25 2027 26 2028 25 2029 24 2030-2033 146 Savings and Investment Plans Adient sponsors various defined contribution savings plans that allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with plan specified guidelines. Under specified conditions, Adient will contribute to certain savings plans based on the employees' eligible pay and/or will match a percentage of the employee contributions up to certain limits. Matching contributions expense in connection with these plans amounted to $ 38 million, $ 46 million and $ 23 million for fiscal years 2024, 2023 and 2022, respectively. Plan Assets Adient's investment policies employ an approach whereby a mix of equities, fixed income and alternative investments are used to maximize the long-term return of plan assets for a prudent level of risk. The investment portfolio primarily contains a diversified blend of equity and fixed income investments. Equity investments are diversified across domestic and non-domestic stocks, as well as growth, value and small to large capitalizations. 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. Investment and market risks are measured and monitored on an ongoing basis through regular investment portfolio reviews, annual liability measurements and periodic asset/liability studies. The majority of the real estate component of the portfolio is invested in a diversified portfolio of high-quality, operating properties with cash yields greater than the targeted appreciation. Investments in other alternative asset classes, including hedge funds and commodities, diversify the expected investment returns relative to the equity and fixed income investments. As a result of Adient's diversification strategies, there are no significant concentrations of risk within the portfolio of investments. Adient's actual asset allocations are in line with target allocations. Adient rebalances asset allocations as appropriate, in order to stay within a range of allocation for each asset category. The expected return on plan assets is based on Adient's expectation of the long-term average rate of return of the capital markets in which the plans invest. The average market returns are adjusted, where appropriate, for active asset management returns. The expected return reflects the investment policy target asset mix and considers the historical returns earned for each asset category. Adient's plan assets by asset category, are as follows: Fair Value Measurements Using: (in millions) Total as of September 30, 2024 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Net Asset Value (NAV) Pension Cash $ 5 $ 5 $ — $ — $ — Equity Securities Domestic 2 2 — — — International - Developed 19 19 — — — Fixed Income Securities Government 150 33 90 — 27 Corporate/Other 70 29 29 — 12 Hedge Fund 38 — 38 — — Real Estate 9 — — — 9 Total $ 293 $ 88 $ 157 $ — $ 48 Adient plc | Form 10-K | 83 Fair Value Measurements Using: (in millions) Total as of September 30, 2023 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Net Asset Value (NAV) Pension Cash $ 6 $ 6 $ — $ — $ — Equity Securities Domestic 1 1 — — — International - Developed 17 17 — — — International - Emerging — — — — — Fixed Income Securities Government 128 30 75 — 23 Corporate/Other 59 24 25 — 10 Hedge Fund 34 — 34 — — Real Estate 18 — — 4 14 Total $ 263 $ 78 $ 134 $ 4 $ 47 The following is a description of the valuation methodologies used for assets measured at fair value. Cash: The fair value of cash is valued at cost. Equity Securities: The fair value of equity securities is determined by direct quoted market prices. The underlying holdings are direct quoted market prices on regulated financial exchanges. Fixed Income Securities: The fair value of fixed income securities is determined by direct or indirect quoted market prices. If indirect quoted market prices are utilized, the value of assets held in separate accounts is not published, but the investment managers report daily the underlying holdings. The underlying holdings are direct quoted market prices on regulated financial exchanges. Hedge Funds: 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. Adient and custodian review the methods used by the underlying managers to value the assets. Adient believes this is an appropriate methodology to obtain the fair value of these assets. Real Estate: The fair value of certain investments in real estate is deemed Level 3 since these investments do not have a readily determinable fair value and requires the fund managers independently to arrive at fair value by calculating NAV per share. In order to calculate NAV per share, the fund managers value the real estate investments using any one, or a combination of, the following methods: independent third-party appraisals, discounted cash flow analysis of net cash flows projected to be generated by the investment and recent sales of comparable investments. Assumptions used to revalue the properties are updated every quarter. Adient believes this is an appropriate methodology to obtain the fair value of these assets. Investments at NAV : For mutual or collective funds where a NAV is not publicly quoted, the NAV per share is used as a practical expedient and is based on the quoted market prices of the underlying net assets of the fund as reported daily by the fund managers. Funds valued based on NAV per share as a practical expedient are not categorized within the fair value hierarchy. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. 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. Adient plc | Form 10-K | 84 The following sets forth a summary of changes in the fair value of pension assets measured using significant unobservable inputs (Level 3): (in millions) Real Estate Pension Asset value as of September 30, 2022 $ 7 Redemptions ( 2 ) Unrealized gain ( 1 ) Asset value as of September 30, 2023 $ 4 Redemptions ( 4 ) Asset value as of September 30, 2024 $ — Funded Status The table that follows contains the ABO and reconciliations of the changes in the PBO, the changes in plan assets and the funded status: Pension Benefits (in millions) 2024 2023 Accumulated Benefit Obligation $ 366 $ 331 Change in Projected Benefit Obligation: Projected benefit obligation at beginning of year $ 349 $ 340 Service cost 5 5 Interest cost 19 18 Actuarial loss (gain) 28 ( 15 ) Benefits paid ( 28 ) ( 20 ) Curtailments, settlements and other ( 6 ) ( 6 ) Currency translation adjustment 17 27 Projected benefit obligation at end of year $ 384 $ 349 Change in Plan Assets: Fair value of plan assets at beginning of year $ 263 $ 283 Actual return on plan assets 26 ( 23 ) Employer contributions, net 20 17 Benefits paid ( 28 ) ( 20 ) Curtailments, settlements and other ( 6 ) ( 14 ) Currency translation adjustment 18 20 Fair value of plan assets at end of year $ 293 $ 263 Funded status $ ( 91 ) $ ( 86 ) Amounts recognized in the statement of financial position consist of: Pension plan assets (other noncurrent assets) $ 19 $ 22 Pension benefits (of which $ 5 million and $ 16 million are included in accrued compensation and benefits, respectively) ( 110 ) ( 108 ) Net amount recognized $ ( 91 ) $ ( 86 ) Adient plc | Form 10-K | 85 Pension Benefits U.S. Plans Non-U.S. Plans 2024 2023 2024 2023 Weighted Average Assumptions (1) : Discount rate (2) 4.99 % 5.87 % 4.75 % 5.60 % Rate of compensation increase N/A N/A 4.82 % 4.53 % (1) Plan assets and obligations are determined based on a September 30 measurement date. (2) Adient considers the expected benefit payments on a plan-by-plan basis when setting assumed discount rates. As a result, Adient uses different discount rates for each plan depending on the plan jurisdiction, the demographics of participants and the expected timing of benefit payments. For the U.S. pension plan, Adient uses a discount rate provided by an independent third-party calculated based on an appropriate mix of high quality bonds. For the non-U.S. pension plans, Adient consistently uses the relevant country specific benchmark indices for determining the various discount rates. Accumulated Other Comprehensive Income The amounts in AOCI on the consolidated statements of financial position, exclusive of tax impacts, that have not yet been recognized as components of net periodic benefit cost at September 30, 2024 and 2023 were $ 2 million and $ 2 million, respectively, related to pension benefits. The amounts in AOCI expected to be recognized as components of net periodic benefit cost over the next fiscal year for pension and postretirement benefits are not significant. Net Periodic Benefit Cost The tables that follow contain the components and key assumptions of net periodic benefit cost related to Adient’s pension plans: Pension Benefits (in millions) 2024 2023 2022 Components of Net Periodic Benefit Cost (Credit): Service cost $ 6 $ 5 $ 7 Interest cost 19 18 10 Expected return on plan assets ( 12 ) ( 12 ) ( 14 ) Net actuarial loss (gain) 13 19 ( 7 ) Settlement loss 1 8 1 Net periodic benefit cost (credit) $ 27 $ 38 $ ( 3 ) Pension Benefits U.S. Plans Non-U.S. Plans 2024 2023 2022 2024 2023 2022 Expense Assumptions: Discount rate 5.87 % 5.51 % 3.06 % 5.60 % 4.98 % 2.14 % Expected return on plan assets 6.75 % 6.75 % 6.75 % 4.95 % 4.53 % 3.20 % Rate of compensation increase N/A N/A NA 4.53 % 4.43 % 4.05 % Adient plc | Form 10-K | 86 15. Restructuring and Impairment Costs Restructuring 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. Adient, in general, records costs associated with separation programs when management has approved the plan for separation, the affected employees are identified, and it is unlikely that actions required to complete the separation plan will change significantly. Costs associated with benefits that are contingent on the employee continuing to provide service are accrued over the required service period. All other costs associated with restructuring activities are expensed as incurred. During fiscal 2024, Adient committed to a restructuring plan of $ 169 million that was offset by prior period underspend of $ 1 million and $ 9 million of cost reimbursement committed by a customer. The fiscal 2024 charges are mostly related to termination benefits in Europe. The 2024 Plan is being implemented in response to the macroeconomic factors occurring in the European automotive market causing reduced production volumes and to ensure Adient maintains a competitive cost structure by reducing operating, administrative and engineering costs, and increasing efficiencies. Restructuring actions associated with these specific plans will primarily occur in fiscal years 2025 and 2026 and are expected to be substantially complete by fiscal year 2027. Restructuring costs are included in restructuring and impairment costs in the consolidated statements of income. The following tables summarize the changes in Adient's restructuring reserve. (in millions) Employee Severance and Termination Benefits Currency Translation and Other Total Balance at September 30, 2021 $ 112 $ 3 $ 115 2022 Plan charges 25 — 25 Utilized - cash ( 57 ) — ( 57 ) Noncash adjustment - (under) overspend and other ( 11 ) ( 12 ) ( 23 ) Balance at September 30, 2022 $ 69 $ ( 9 ) $ 60 2023 Plan charges 39 — 39 Utilized - cash ( 53 ) — ( 53 ) Noncash adjustment - (under) overspend and other 1 4 5 Balance at September 30, 2023 $ 56 $ ( 5 ) $ 51 2024 Plan charges 169 — 169 Utilized - cash ( 43 ) — ( 43 ) Noncash adjustment - (under) overspend and other ( 1 ) 6 5 Balance at September 30, 2024 $ 181 $ 1 $ 182 Current restructuring reserve - other current liabilities $ 87 Noncurrent restructuring reserve - other noncurrent liabilities 95 Balance at September 30, 2024 $ 182 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. This ongoing analysis includes a review of its manufacturing, engineering, purchasing and administrative functions, as well as the overall global footprint for all its businesses. Because of the importance of new vehicle sales by automotive manufacturers, Adient is affected by the general business conditions in the automotive industry. Future adverse developments in the automotive industry could impact Adient's liquidity position, lead to impairment charges and/or require additional restructuring of its operations. Impairment During fiscal 2024, Adient recorded an impairment loss of $ 9 million on its investment in Adient Aerospace. The impairment is included in restructuring and impairment costs in the consolidated statement of income (loss). Adient plc | Form 10-K | 87 16. Income Taxes Consolidated income (loss) before income taxes and noncontrolling interests for the years ended September 30, 2024, 2023, and 2022 is as follows: Year Ended September 30, (in millions) 2024 2023 2022 Ireland $ ( 13 ) $ ( 1 ) $ ( 2 ) United States ( 361 ) ( 178 ) ( 595 ) Other Foreign 507 474 651 Income before income taxes and noncontrolling interests $ 133 $ 295 $ 54 The components of the provision (benefit) for income taxes are as follows: Year Ended September 30, (in millions) 2024 2023 2022 Current Ireland $ — $ — $ ( 1 ) US - Federal and State 5 4 6 Other Foreign 28 120 84 33 124 89 Deferred Ireland — — 1 US - Federal and State — 1 ( 1 ) Other Foreign ( 1 ) ( 125 ) 5 ( 1 ) ( 124 ) 5 Income tax provision $ 32 $ — $ 94 The significant components of Adient's income tax provision are summarized in the following tables. These amounts do not include the impact of income tax expense related to Adient’s nonconsolidated partially-owned affiliates, which is netted against equity income on the consolidated statements of income (loss). The reconciliation between the Irish statutory income tax rate, and Adient’s effective tax rate is as follows: Adient plc | Form 10-K | 88 Year Ended September 30, (in millions) 2024 2023 2022 Tax expense at Ireland statutory rate $ 17 $ 37 $ 7 State and local income taxes, net of federal benefit ( 15 ) ( 5 ) ( 38 ) Foreign tax rate differential 9 22 ( 1 ) Notional interest deduction ( 6 ) ( 6 ) ( 6 ) Credits and incentives ( 12 ) ( 7 ) ( 15 ) Repatriation of foreign earnings 18 24 24 Foreign exchange 17 ( 7 ) ( 2 ) Impact of tax rate changes ( 1 ) — ( 3 ) Audit settlements and change in uncertain tax positions ( 43 ) ( 8 ) ( 2 ) Change in valuation allowance 90 ( 61 ) 94 Tax adjustments to value of investments ( 38 ) — — Tax impact of corporate equity and business restructuring transactions 1 1 30 Other ( 5 ) 10 6 Income tax provision $ 32 $ — $ 94 The income tax expense was higher than the Irish statutory rate of 12.5% for fiscal 2024 due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances, the repatriation of foreign earnings, tax expense related to foreign exchange remeasurements of tax balances primarily in Mexico, and tax expense from the establishment of valuation allowances at certain subsidiaries, partially offset by tax benefits from the release of uncertain tax positions due to audit closures and from the release of valuation allowances at certain subsidiaries. No items included in the other category are individually, or when appropriately aggregated, significant. The income tax expense was lower than the Irish statutory rate of 12.5% for fiscal 2023 primarily due to the release of valuation allowances in Mexico, partially offset by the inability to recognize a tax benefit for losses in jurisdictions with valuation allowances, the repatriation of foreign earnings, and foreign tax rate differentials. 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 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. Adient’s foreign tax rate differential primarily comprises two components. First is the difference in foreign tax rates from the Irish statutory tax rate that will fluctuate with the mix of income and losses in multiple jurisdictions with higher or lower statutory tax rates. Second is the elimination of the effects, at the Irish statutory tax rate, on the amount of income reported for nonconsolidated partially-owned affiliates whose corresponding income tax expense is already netted against equity income on the consolidated statements of income and reflected in income (loss) before income taxes. During fiscal 2024, 2023 and 2022, significant income and loss jurisdictions include Brazil, China, Germany, Luxembourg, Mexico, Thailand, the United Kingdom, and the United States, with federal statutory tax rates ranging between 16% and 34%, which are all above the Irish statutory rate of 12.5%. Due to the significant jurisdictions in which it operates having statutory tax rates higher than the Irish statutory rate of 12.5%, Adient generally expects that foreign tax rate differentials will continue to result in net expense when its consolidated subsidiaries generate net pretax income and overall pretax income does not consist primarily of equity income from nonconsolidated partially-owned affiliates. In periods in which Adient’s consolidated subsidiaries generate net losses, or overall pretax income consists primarily of equity income reported from nonconsolidated partially-owned affiliates, Adient generally expects that foreign tax rate differentials will result in a net benefit. During fiscal 2024 and 2023, Adient’s pretax income was primarily generated by Adient’s consolidated subsidiaries, resulting in a net foreign tax rate differential expense. During fiscal 2022, Adient’s pretax income consisted primarily of income of nonconsolidated partially-owned affiliates whose corresponding Adient plc | Form 10-K | 89 income tax expense is netted against equity income on the consolidated statements of income, with the elimination of the effects at the Irish statutory tax rate resulting in a net foreign tax rate differential benefit. For fiscal 2024, the foreign tax differential expense of $ 9 million includes $ 20 million related to the higher tax expense resulting from the tax rate differential primarily from the mix of income and losses in the significant jurisdictions listed above with higher statutory tax rates than Ireland, which was partially offset by $ 11 million related to the elimination of the tax effects of the equity income from nonconsolidated partially-owned affiliates whose corresponding income tax expense is already netted in income before income taxes. For fiscal 2023, the foreign tax differential expense of $ 22 million includes $ 33 million related to the higher tax expense resulting from the tax rate differential primarily from the mix of income and losses in the significant jurisdictions listed above with higher statutory tax rates than Ireland, which was partially offset by $ 11 million related to the elimination of the tax effects of the equity income from nonconsolidated partially-owned affiliates whose corresponding income tax expense is already netted in income before income taxes. For fiscal 2022, the foreign tax differential benefit of $ 1 million includes $ 9 million related to the elimination of the tax effects of the equity income from nonconsolidated partially-owned affiliates, partially offset by $ 8 million related to the higher tax expense resulting from tax rate differential primarily related to the mix of income and losses in Adient’s consolidated subsidiaries with tax rates higher than Ireland. Deferred taxes are classified in the consolidated statements of financial position as follows: September 30, (in millions) 2024 2023 Other noncurrent assets $ 245 $ 253 Other noncurrent liabilities ( 191 ) ( 206 ) Net deferred tax asset $ 54 $ 47 Temporary differences and carryforwards which gave rise to deferred tax assets and liabilities included: September 30, (in millions) 2024 2023 Deferred tax assets: Accrued expenses and reserves $ 123 $ 135 Employee and retiree benefits 24 25 Net operating loss and other carryforwards 1,400 1,293 Property, plant and equipment 114 113 Intangible assets 112 132 Operating lease liabilities 57 55 Research and development 102 66 1,932 1,819 Valuation allowances ( 1,769 ) ( 1,655 ) 163 164 Deferred tax liabilities: Unremitted earnings of foreign subsidiaries 39 38 Indirect tax credits — 10 Operating lease right-of-use assets 57 55 Other 13 14 109 117 Net deferred tax asset $ 54 $ 47 Adient plc | Form 10-K | 90 At September 30, 2024, Adient had available net operating loss carryforwards of approximately $ 4.7 billion which are available to reduce future tax liabilities. Net operating loss carryforwards of $ 2.4 billion will expire at various dates between 2025 and 2044, with the remainder having an indefinite carryforward period. Net operating loss carryforwards of $ 3.4 billion are offset by a valuation allowance. Adient reviews the realizability of its deferred tax assets on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or combined group recording the net deferred tax asset are considered, along with any other positive or negative evidence. All of the factors that Adient considers in evaluating whether and when to establish or release all or a portion of the deferred tax asset valuation allowance involve significant judgment. Since future financial results may differ from previous estimates, periodic adjustments to Adient's valuation allowances may be necessary. Given current earnings and anticipated future earnings at certain subsidiaries, Adient believes that there is a possibility that sufficient positive evidence may become available that would allow the release of all, or a portion of, valuation allowances at certain subsidiaries within the next twelve months. A release of valuation allowances, if any, would result in the recognition of certain deferred tax assets which could generate a material income tax benefit for the period in which such release is recorded. As a result of Adient's fiscal 2024 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 would be realizable and recorded an income tax benefit of $ 14 million in China, $ 8 million in Mexico, $ 7 million in France, and $ 6 million in Japan to release valuation allowances. In addition, Adient determined it was necessary to establish valuation allowances on certain deferred tax assets in Poland and Mexico, recording tax expense of $ 14 million and $ 5 million, respectively. 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. During fiscal 2024, the valuation allowance in Luxembourg increased by $ 38 million related to tax adjustments to the value of certain investments, with an offsetting increase in net operating loss carryforwards and no net impact to tax expense. As a result of Adient's fiscal 2023 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 Mexico would be realizable and recorded an income tax benefit of $ 114 million to release valuation allowances. In addition, Adient determined it was necessary to release valuation allowances and establish valuation allowances in other jurisdictions that did not have a material impact on Adient’s financial statements. 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. 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 is subject to income taxes in Ireland, the U.S. and other foreign jurisdictions. 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. For the year ended September 30, 2024, Adient believes that it is more likely than not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial statements. However, the final determination with respect to tax audits and any related litigation could be materially different from Adient’s estimates. For the years ended September 30, 2024, 2023 and 2022, Adient had gross tax effected unrecognized tax benefits of $ 422 million, $ 527 million, and $ 499 million, respectively. If recognized, $ 106 million of Adient's unrecognized tax benefits would impact the effective tax rate. Total net accrued interest for the years ended September 30, 2024, 2023 and 2022, was approximately $ 21 million, $ 31 million and $ 22 million, respectively (net of tax benefit). Adient recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. Adient plc | Form 10-K | 91 During fiscal 2024, Adient settled audits in various jurisdictions that resulted in a $ 115 million reduction to its unrecognized tax benefits, of which $ 63 million was recorded as a tax benefit. The remaining difference primarily offset other changes in deferred tax balances. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Year Ended September 30, (in millions) 2024 2023 2022 Beginning balance $ 527 $ 499 $ 499 Additions for tax positions related to the current year 6 2 62 Additions for tax positions of prior years 18 50 2 Reductions for tax positions of prior years ( 9 ) ( 5 ) ( 52 ) Settlements with taxing authorities ( 115 ) ( 11 ) ( 3 ) Statute closings ( 5 ) ( 8 ) ( 9 ) Ending balance $ 422 $ 527 $ 499 During the next twelve months, it is possible that tax audit resolutions or applicable statute of limitation lapses could result in a significant change in the balance of gross unrecognized tax benefits. Given the number of years, jurisdictions and positions subject to examination, Adient is unable to estimate the full range of possible adjustments to the balance of unrecognized tax benefits. Adient has recorded a deferred tax liability of approximately $ 39 million as of September 30, 2024 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 years ended September 30, 2024, 2023 and 2022 were $ 96 million, $ 94 million and $ 77 million, respectively. 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 Adient. During fiscal years 2024, 2023, and 2022, other tax legislation was adopted in various jurisdictions. These law changes did not have a material impact on the consolidated financial statements. Tax Impact of One-Time Items 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 Adient’s prioritization of those credits, resulting in net tax expense of $ 4 million. 17. Segment Information Adient manages its business on a geographic basis and operates in the following three reportable segments for financial reporting purposes: 1) Americas, which is inclusive of North America and South America; 2) Europe, the Middle East and Africa (“EMEA”) and 3) Asia Pacific/China (“Asia”). Adient evaluates the performance of its reportable segments using an adjusted EBITDA metric defined as income before income taxes and noncontrolling interests, excluding net financing charges, restructuring and impairment costs, restructuring related-costs, net mark-to-market adjustments on pension and postretirement plans, transaction gains/losses, purchase accounting amortization, depreciation, stock-based compensation and other non-recurring items (“Adjusted EBITDA”). Also, Adient plc | Form 10-K | 92 certain corporate-related costs are not allocated to the segments. The reportable segments are consistent with how management views the markets served by Adient and reflect the financial information that is reviewed by its chief operating decision maker. The following table summarizes net sales and adjusted EBITDA by reportable segment for fiscal 2024, 2023 and 2022: (in millions) Americas EMEA Asia Corporate/Eliminations Consolidated Fiscal 2024 Net sales $ 6,763 $ 5,029 $ 2,989 $ ( 93 ) $ 14,688 Adjusted EBITDA $ 375 $ 155 $ 439 $ ( 89 ) $ 880 Fiscal 2023 Net sales $ 7,220 $ 5,195 $ 3,085 $ ( 105 ) $ 15,395 Adjusted EBITDA $ 336 $ 232 $ 464 $ ( 94 ) $ 938 Fiscal 2022 Net sales $ 6,557 $ 4,764 $ 2,926 $ ( 126 ) $ 14,121 Adjusted EBITDA $ 242 $ 138 $ 383 $ ( 88 ) $ 675 The following is a reconciliation of Adient's reportable segments' adjusted EBITDA to income before income taxes: Year Ended September 30, (in millions) 2024 2023 2022 Adjusted EBITDA Americas $ 375 $ 336 $ 242 EMEA 155 232 138 Asia 439 464 383 Subtotal 969 1,032 763 Corporate-related costs (1) ( 89 ) ( 94 ) ( 88 ) Restructuring and impairment costs (2) ( 168 ) ( 40 ) ( 25 ) Purchase accounting amortization (3) ( 48 ) ( 52 ) ( 54 ) Restructuring related activities (4) — 2 ( 6 ) Loss on disposal transactions (5) ( 7 ) ( 6 ) — Depreciation ( 285 ) ( 290 ) ( 298 ) Equity based compensation ( 31 ) ( 34 ) ( 29 ) Other items (6) 2 5 ( 4 ) Earnings before interest and income taxes 343 523 259 Net financing charges ( 189 ) ( 195 ) ( 215 ) Other pension income (expense) ( 21 ) ( 33 ) 10 Income before income taxes $ 133 $ 295 $ 54 Notes: (1) Corporate-related costs not allocated to the segments include executive office, communications, corporate development, legal and corporate finance. (2) Reflects restructuring charges for costs that are probable and reasonably estimable and one-time asset impairments. During fiscal 2024, an impairment charge of $ 9 million related to Adient’s investment in Adient Aerospace was recorded. 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. Refer to Note 15, “Restructuring and Impairment Costs,” of the notes to the consolidated financial statements for more information. Adient plc | Form 10-K | 93 (3) Reflects amortization of intangible assets including those related to partially owned affiliates recorded within equity income. (4) Reflects restructuring-related charges for costs that are recorded as incurred or as earned and other non-recurring impacts that are directly attributable to restructuring activities. Fiscal 2024 and 2023 also each include a non-recurring $ 10 million gain on the sale of two restructured facilities in Americas. (5) Fiscal 2024 reflects an $ 8 million loss on sale of 51 % of Adient's interest in LFADNT (as described in Note 3, "Acquisitions and Divestitures," of the notes to consolidated financial statements), partially offset by a $ 1 million gain on sale of a nonconsolidated partially-owned affiliate. Fiscal 2023 reflects $ 3 million and $ 3 million of non-cash impairment related to certain of Adient's investments in nonconsolidated partially-owned affiliates in Asia and EMEA, respectively, (6) Fiscal 2024 reflects a $ 3 million non-recurring gain on a contract related settlement and $ 1 million of indirect tax recoveries in Brazil, partially offset by $ 1 million of transaction costs and a $ 1 million one-time divestiture related impact at an affiliate. Fiscal 2023 reflects $ 4 million of one-time divestiture gain at an affiliate and $ 4 million of a gain associated with the retrospective recovery of indirect tax credits in Brazil, partially offset by $ 3 million of transaction costs. 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, $ 8 million of transaction costs, a $ 14 million charge related to a non-recurring contract related settlement, $ 1 million of accounts receivable allowances resulting from the withdrawal from and sale of operations in Russia, and $ 2 million of loss on finalization of asset sale in Turkey, partially offset by a gain of $ 32 million associated with the retrospective recovery of indirect tax credits in Brazil. Additional Segment Information Year Ended September 30, 2024 Reportable Segments Reconciling Items (1) Consolidated (in millions) Americas EMEA Asia Net Sales $ 6,763 $ 5,029 $ 2,989 $ ( 93 ) $ 14,688 Equity Income 3 15 73 ( 1 ) 90 Total Assets 2,863 2,349 3,185 954 9,351 Depreciation 127 112 46 — 285 Amortization 12 2 33 — 47 Capital Expenditures 100 107 59 — 266 (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 $ 1 million of purchase accounting amortization. Corporate-related assets primarily include cash and assets held for sale. Year Ended September 30, 2023 Reportable Segments Reconciling Items (1) Consolidated (in millions) Americas EMEA Asia Net Sales $ 7,220 $ 5,195 $ 3,085 $ ( 105 ) $ 15,395 Equity Income 3 16 71 ( 6 ) 84 Total Assets 3,122 2,252 2,930 1,120 9,424 Depreciation 133 107 50 — 290 Amortization 12 3 35 — 50 Capital Expenditures 114 81 57 — 252 (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 $ 6 million of non-cash impairments of Adient's investments in partially-owned affiliates, $ 2 million of restructuring related charges, and $ 2 million of purchase accounting amortization, partially offset by a $ 4 million gain on sale of certain assets at affiliates in China. Corporate-related assets primarily include cash and assets held for sale. Adient plc | Form 10-K | 94 Year Ended September 30, 2022 Reportable Segments Reconciling Items (1) Consolidated (in millions) Americas EMEA Asia Net Sales $ 6,557 4,764 $ 2,926 ( 126 ) $ 14,121 Equity Income — 12 76 ( 13 ) 75 Total Assets 3,073 2,166 2,959 960 9,158 Depreciation 130 116 52 — 298 Amortization 12 4 36 — 52 Capital Expenditures 104 73 50 — 227 (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. Adient plc | Form 10-K | 95 Geographic Information Financial information relating to Adient's operations by geographic area is as follows: Net Sales Year Ended September 30, (in millions) 2024 2023 2022 Americas United States $ 5,893 $ 6,530 $ 5,876 Mexico 2,634 2,661 2,427 Other Americas 314 338 377 Regional Elimination ( 2,078 ) ( 2,309 ) ( 2,123 ) 6,763 7,220 6,557 EMEA Germany 942 1,046 862 Poland 939 963 770 Czech Republic 756 900 962 Other EMEA 3,736 3,714 3,462 Regional Elimination ( 1,344 ) ( 1,428 ) ( 1,292 ) 5,029 5,195 4,764 Asia China 1,420 1,385 1,374 Thailand 496 564 508 Korea 488 534 534 Japan 344 373 264 Other Asia 294 284 270 Regional Elimination ( 53 ) ( 55 ) ( 24 ) 2,989 3,085 2,926 Inter-segment elimination ( 93 ) ( 105 ) ( 126 ) Total $ 14,688 $ 15,395 $ 14,121 Adient plc | Form 10-K | 96 Long-Lived Assets (consisting of net property, plant and equipment) Year Ended September 30, (in millions) 2024 2023 Americas United States $ 420 $ 446 Mexico 151 152 Other Americas 17 18 588 616 EMEA Germany 127 127 Poland 155 131 Czech Republic 35 30 Other EMEA 233 228 550 516 Asia China 115 113 Thailand 52 45 Korea 23 22 Japan 62 51 Other Asia 20 19 272 250 Total $ 1,410 $ 1,382 18. Nonconsolidated Partially-Owned Affiliates Investments in the net assets of nonconsolidated partially-owned affiliates are reported in the "Investments in partially-owned affiliates" line in the consolidated statements of financial position. 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 $ 338 million and $ 303 million at September 30, 2024 and 2023, respectively. Operating information for nonconsolidated partially-owned affiliates is as follows: % ownership at September 30, Name of key partially-owned affiliate 2024 2023 KEIPER Seating Mechanisms Co., Ltd. (“KEIPER”) 50.0 % 50.0 % Changchun FAWAY Adient Automotive Systems Co. Ltd. (“CFAA”) 49.0 % 49.0 % Year Ended September 30, (in millions) 2024 2023 2022 Income statement data: Net sales $ 3,783 $ 3,791 $ 4,039 Gross profit $ 368 $ 346 $ 374 Net income $ 184 $ 173 $ 189 Net income attributable to the entity $ 182 $ 171 $ 187 Adient plc | Form 10-K | 97 September 30, (in millions) 2024 2023 Balance sheet data: Current assets $ 2,072 $ 1,800 Noncurrent assets $ 730 $ 756 Current liabilities $ 1,875 $ 1,639 Noncurrent liabilities $ 269 $ 283 During fiscal 2023, Adient concluded that indicators of other-than-temporary impairment were present related to nonconsolidated partially-owned affiliates in Asia and EMEA, and recorded non-cash impairment charges of $ 3 million and $ 3 million as a result, respectively. In fiscal 2023 and 2022, Adient and KEIPER have modified existing supply agreements, resulting in reductions in Adient’s purchase prices on certain products. Such modifications resulted in reductions of $ 25 million and $ 34 million in Adient’s cost of sales and equity income, respectively, during fiscal 2023. The modifications resulted in reductions of $ 14 million and $ 17 million in Adient’s cost of sales and equity income, respectively, during fiscal 2022. 19. Commitments and Contingencies Adient is involved in various lawsuits, claims and proceedings incident to the operation of its businesses, including those pertaining to product liability, casualty, environmental, safety and health, intellectual property, employment, trade compliance, commercial and contractual matters, and various other matters. Although the outcome of any such lawsuit, claim or proceeding cannot be predicted with certainty and some may be disposed of unfavorably to Adient, it is management's opinion that none of these will have a material adverse effect on Adient's financial position, results of operations or cash flows. Costs related to such matters were not material to the periods presented. Adient accrues for potential environmental liabilities when it is probable a liability has been incurred and the amount of the liability is reasonably estimable. Reserves for environmental liabilities totaled $ 3 million and $ 4 million at September 30, 2024 and 2023, respectively. Adient reviews the status of its environmental sites on a quarterly basis and adjusts its reserves accordingly. Such potential liabilities accrued by Adient do not take into consideration possible recoveries of future insurance proceeds. 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, 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. 20. Related Party Transactions In the ordinary course of business, Adient enters into transactions with related parties, such as equity affiliates. Such transactions consist of the sale or purchase of goods and other arrangements. 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): Year Ended September 30, (in millions) 2024 2023 2022 Net sales to related parties Net sales $ 251 $ 253 $ 247 Purchases from related parties Cost of sales 399 397 434 Adient plc | Form 10-K | 98 The following table sets forth the location and amount of accounts receivable due from and payable to related parties in Adient's consolidated statements of financial position: September 30, (in millions) 2024 2023 Accounts receivable due from related parties Accounts receivable $ 28 $ 26 Accounts payable due to related parties Accounts payable 114 67 Average receivable and payable balances with related parties remained consistent with the period end balances shown above. Adient plc | Form 10-K | 99 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.