What changed in this filing

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Item 1. Financial Statements

2024-04-25 compared with 2023-10-24 · 206 added, 413 removed, 404 unchanged (61% of the section changed)

3 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023 2022 2023 2022

(Dollars in millions, except per share amounts)

Net sales (Note 3)

$ 960 $ 945 $ 2,941 $ 2,705

Cost of goods sold 743 781

3 unchanged sentences

Interest expense 31 27

Loss on extinguishment of debt — — — 5

Non-operating income ( 5 ) ( 3 )

Reorganization items, net — — — 2

Income before taxes 81 108

2 unchanged sentences

preferred stock dividends (Note 15)

— ( 40 ) ( 80 ) ( 117 )

preferred stock deemed dividends (Note 15)

— — ( 232 ) —

Net income (loss) available for distribution $ 57 $ 65 $ ( 103 ) $ 161

Earnings (loss) per common share

Net income available for distribution $ 66 $ 41

Earnings per common share

Basic $ 0.28 $ 0.13

7 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023 2022 2023 2022

(Dollars in millions)

1 unchanged sentence

Foreign exchange translation adjustment 18 2

Defined benefit pension plan adjustment, net of tax 1 —

Changes in fair value of effective cash flow hedges, net of tax (Note 16)

( 2 ) 9 ( 3 ) 26

Changes in fair value of net investment hedges, net of tax (Note 16)

Total other comprehensive income, net of tax 32 64 23 126

Total other comprehensive income (loss), net of tax 41 ( 6 )

Comprehensive income $ 107 $ 75

2 unchanged sentences

CONSOLIDATED INTERIM BALANCE SHEETS

September 30,

2024 December 31,

24 unchanged sentences

EQUITY (DEFICIT)

Series A Preferred Stock, par value $ 0.001 ;

zero and 245,089,671 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Common Stock, par value $ 0.001 ;

1,000,000,000 and 1,000,000,000 shares authorized, 243,305,848 and 64,943,238 issued and 243,011,280 and 64,832,609 outstanding as of September 30, 2023 and December 31, 2022, respectively

1,000,000,000 and 1,000,000,000 shares authorized, 240,071,246 and 238,543,624 issued and 227,401,889 and 238,249,056 outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid–in capital 1,198 1,190

1 unchanged sentence

( 1,856 ) ( 1,922 )

Accumulated other comprehensive income (Note 17)

Accumulated other comprehensive income (loss) (Note 17)

Treasury Stock, at cost;

12,669,357 and 0 shares as of March 31, 2024 and December 31, 2023, respectively (Note 15)

Total deficit ( 735 ) ( 735 )

3 unchanged sentences

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollars in millions)

4 unchanged sentences

Amortization of deferred issuance costs 3 2

Interest payments, net of debt discount accretion — ( 19 )

Loss on extinguishment of debt — 5

Loss on remeasurement of forward purchase contract 13 —

Foreign exchange loss — 4

Foreign exchange loss (gain) 7 ( 2 )

Stock compensation expense 8 3

Pension expense

Change in fair value of derivatives 21 ( 54 )

Unrealized (gain) loss on derivatives ( 17 ) 10

Changes in assets and liabilities:

8 unchanged sentences

Expenditures for property, plant and equipment ( 32 ) ( 8 )

Re-couponing of cross-currency swap contract

Proceeds from cross-currency swap contracts

Net cash used for investing activities

1 unchanged sentence

Cash flows from financing activities:

Proceeds from issuance of long-term debt, net of debt financing costs 667 —

Payments of long-term debt ( 2 ) ( 2 )

Redemption of Series B Preferred Stock — ( 381 )

Repurchases of Series A Preferred Stock ( 580 ) ( 4 )

Repurchases of Common Stock ( 107 ) —

Payments of Additional Amounts for conversion of Series A Preferred Stock ( 25 ) —

Payments for preference dividends — ( 42 )

Payments for debt and revolving facility financing costs ( 2 ) ( 4 )

Other ( 3 ) —

2 unchanged sentences

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash ( 7 ) 4

Net decrease in cash, cash equivalents and restricted cash

( 85 ) ( 303 )

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of the period 260 248

6 unchanged sentences

CONSOLIDATED INTERIM STATEMENTS OF EQUITY (DEFICIT)

Preferred Stock Common Stock Additional

Preferred Stock Common Stock Treasury Stock Additional

Capital Retained

Deficit Accumulated Other

Comprehensive Income Total

Shares Amount Shares Amount

Comprehensive

(Loss)/Income Total

Shares Amount Shares Amount Shares Amount

(in millions)

2 unchanged sentences

Net income — — — — — — — 66 — 66

Other comprehensive loss, net of tax — — — — — — ( 6 ) ( 6 )

Dividends — — — — — ( 42 ) — ( 42 )

Stock-based compensation — — — — 3 — — 3

Balance at March 31, 2023 246 $ — 64 $ — $ 1,336 $ ( 1,446 ) $ 30 $ ( 80 )

Net income — — — — — 71 — 71

Repurchases of Series A Preferred Stock ( 70 ) — — — ( 366 ) ( 201 ) — ( 567 )

Repurchases of Common Stock — — ( 2 ) — — ( 18 ) — ( 18 )

Excise tax on share repurchases — — — — — ( 6 ) — ( 6 )

Other comprehensive loss, net of tax — — — — — — ( 3 ) ( 3 )

Issuance of Common Stock for preference dividends — — 26 — 209 ( 209 ) — —

Conversion of Series A Preferred Stock to Common Stock ( 176 ) — 176 — — ( 25 ) — ( 25 )

Stock-based compensation — — — — 5 — — 5

Balance at June 30, 2023 — $ — 264 $ — $ 1,184 $ ( 1,834 ) $ 27 $ ( 623 )

Net income — — — — — 57 — 57

Repurchases of Common Stock — — ( 21 ) — — ( 161 ) — ( 161 )

Share repurchases — — ( 12 ) — 12 ( 109 ) — — — ( 109 )

Excise tax on share repurchases — — — — — ( 1 ) — — — ( 1 )

Other comprehensive loss, net of tax — — — — — — 32 32

Shares issued under stock plan, net of shares withheld for employee taxes — — 1 — 1 ( 5 ) — — — ( 5 )

Other comprehensive income, net of tax — — — — — — — — 41 41

Stock-based compensation — — — — — — 8 — — 8

Balance at September 30, 2023

— $ — 243 $ — $ 1,188 $ ( 1,939 ) $ 59 $ ( 692 )

Preferred Stock Common Stock Additional

Balance at March 31, 2024 — $ — 227 $ — 13 $ ( 115 ) $ 1,198 $ ( 1,856 ) $ 38 $ ( 735 )

Preferred Stock Common Stock Treasury Stock Additional

Capital Retained

1 unchanged sentence

Comprehensive

(Loss)/Income Total

Shares Amount Shares Amount

Shares Amount Shares Amount Shares Amount

(in millions)

2 unchanged sentences

Net income — — — — — — — 81 — 81

Repurchases of Series A Preferred Stock — — — — ( 1 ) ( 1 ) — ( 2 )

Other comprehensive income, net of tax — — — — — — 23 23

Other comprehensive loss, net of tax — — — — — — — — ( 6 ) ( 6 )

Dividends — — — — — — — ( 42 ) — ( 42 )

Stock-based compensation — — — — — — 3 — — 3

1 unchanged sentence

246 $ — 64 $ — — $ — $ 1,336 $ ( 1,446 ) $ 30 $ ( 80 )

Net income — — — — — 85 — 85

Repurchases of Series A Preferred Stock — — — — ( 1 ) — — ( 1 )

Other comprehensive income, net of tax — — — — — — 39 39

Stock-based compensation — — — — 3 — — 3

Balance at June 30, 2022

246 $ — 64 $ — $ 1,329 $ ( 1,618 ) $ 58 $ ( 231 )

Net income — — — — — 105 — 105

Repurchases of Series A Preferred Stock — — — — ( 1 ) — — ( 1 )

Other comprehensive income, net of tax — — — — — — 64 64

Dividends declared — — — — — ( 42 ) — ( 42 )

Stock-based compensation — — — — 3 — — 3

Balance at September 30, 2022 246 $ — 64 $ — $ 1,331 $ ( 1,555 ) $ 122 $ ( 102 )

The Notes to the Consolidated Interim Financial Statements are an integral part of this statement.

3 unchanged sentences

Background and Basis of Presentation

Garrett Motion Inc., (the “Company” or “Garrett”) designs, manufactures and sells highly engineered turbocharger and electric-boosting technologies for light and commercial vehicle original equipment manufacturers (“OEMs”) and the global vehicle independent aftermarket, as well as automotive software solutions.

These OEMs in turn ship to consumers globally.

We are a global technology leader with significant expertise in delivering products across gasoline, diesel, natural gas and electric (hybrid and fuel cell) power trains.

These products are key enablers for fuel economy and emission standards compliance.

Garrett Motion Inc.

(the “Company” or “Garrett”), is a cutting-edge technology leader delivering differentiated solutions for emission reduction and energy efficiency.

We design, manufacture, and sell highly engineered turbocharging, air and fluid compression, and high-speed electric motor technologies to original equipment manufacturers (“OEMs”) and distributors within the mobility and industrial space.

We have significant expertise in delivering products at scale for internal combustion engines using gasoline, diesel, natural gas, and hydrogen, as well as for zero emission technologies using hydrogen fuel cell systems, both for mobility and industrial use.

As our customers continue to progress on electrification, we are applying our technological pillars to develop highly engineered E-Powertrain and E-Cooling compressor products to support their ambition.

These products are key enablers for fuel economy, energy efficiency, thermal management, and compliance with emissions standards and overall greenhouse gas and other emission reduction targets.

Basis of Presentation

2 unchanged sentences

The unaudited Consolidated Interim Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and accompanying notes for the year ended December 31, 2023 included in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on February 15, 2024 (our “2023 Form 10-K”).

The results of operations for the three and nine months ended September 30, 2023 and cash flows for the nine months ended September 30, 2023 should not necessarily be taken as indicative of the entire year.

The results of operations and cash flows for the three months ended March 31, 2024 should not necessarily be taken as indicative of the entire year.

All amounts presented are in millions, except per share amounts.

2 unchanged sentences

It has been our practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires our businesses to close their books on a Saturday to minimize the potentially disruptive effects of quarterly closing on our business processes.

For differences in actual closing dates that are material to year-over-year comparisons of quarterly or year-to-date results, such differences have been adjusted for the three months ended September 30, 2022.

Our actual closing date for the three months ended September 30, 2022 was October 1, 2022 .

There was no difference in actual closing date for the three months ended September 30, 2023.

Our actual closing dates for the three months ended March 31, 2024 and 2023 were March 30, 2024 and April 1, 2023, respectively.

We evaluate segment reporting in accordance with ASC 280, Segment Reporting .

4 unchanged sentences

Actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

Capital Structure Transformation Transaction

On April 12, 2023, the Company entered into the Transaction (as defined in Note 15 below) to increase the attractiveness of the Company to investors, including simplifying the Company’s capital stock by converting all outstanding Series A Preferred Stock into a single class of Common Stock, subject to certain conditions.

In the Transaction, the Company repurchased and aggregate of 69,707,719 shares of Series A Preferred Stock from the C&O Investors (as defined below), and converted all remaining outstanding 175,337,712 shares of Series A Preferred Stock into an equivalent number of shares of Common Stock.

The total amounts paid to holders of Series A Preferred Stock in connection with the Transaction included aggregate cash payments of $ 605 million and the issuance of an

additional 25,577,517 shares of Common Stock in settlement of accumulated and unpaid preference dividends on the Series A Preferred Stock through June 30, 2023.

The Transaction was financed through a new Term Loan B for an aggregate principal amount of $ 700 million under the framework of the Company's existing credit agreement.

See Note 15, Series A Preferred Stock .

The Company recorded the following amounts in the Consolidated Interim Financial Statements related to the repurchase and conversion of its Series A Preferred Stock:

Movements for the Nine Months Ended

September 30, 2023

Consolidated Interim Balance Sheet:

(Dollars in millions)

Cash and cash equivalents $ ( 605 )

Preferred stock, Common stock and Additional Paid-in capital ( 157 )

Retained earnings ( 441 )

Nine Months Ended September 30, 2023

Consolidated Interim Statement of Operations:

(Dollars in millions)

Non-operating expenses $ 13

The Company also incurred $ 9 million of Transaction-related costs for the nine months ended September 30, 2023, primarily for legal and advisory services that are included in Selling, general and administrative expenses in the Consolidated Interim Statement of Operations.

See Note 14, Long-term Debt and Credit Agreement for discussion on the new Term Loan B and Note 15, Series A Preferred Stock for further discussion of the Transaction.

Summary of Significant Accounting Policies

The accounting policies of the Company are set forth in Note 3 to the Consolidated Financial Statements for the year ended December 31, 2023 included in our 2023 Form 10-K.

Recently Adopted Accounting Pronouncements

In September 2022, the FASB issued ASU 2022-04, Disclosure of Supplier Finance Program Obligations (Topic 405-50):

Disclosure of Supplier Finance Purchase Obligations.

The amendment in this update requires companies to disclose key terms of supplier financing programs used in connection with the purchase of goods and services, along with information about their obligations under these programs including a rollforward of those obligations.

The Company adopted the new guidance as of January 1, 2023.

See Note 10, Supplier Financing for disclosure related to the Company's supplier financing program obligations.

Accounting Standards Issued But Not Yet Adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued accounting standards update ("ASU") 2023-07, Segment Reporting (Topic 280) :

Improvements to Reportable Segment Disclosures .

The amendments in this update require companies with a single reportable segment to provide all existing segment disclosures, as well as requires incremental segment information to be disclosed.

The guidance is effective for fiscal years beginning after December 15, 2023 on a retrospective basis, and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently evaluating the guidance to determine the impact on its disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in this update increase the transparency around income tax information through improvements to disclosures primarily related to the rate reconciliation and income taxes paid information.

The guidance is effective for fiscal years beginning after December 15, 2024 on a prospective basis.

Early adoption is permitted.

The Company is currently evaluating the guidance to determine the impact on its disclosures.

There are no other recently issued, but not yet adopted, accounting pronouncements which are expected to have a material impact on the Company's Consolidated Interim Financial Statements and related disclosures.

Revenue Recognition and Contracts with Customers

1 unchanged sentence

Net sales by region (determined based on country of shipment) and channel are as follows:

Three Months Ended September 30, 2023

Three Months Ended September 30, 2022

OEM Aftermarket Other Total OEM Aftermarket Other Total

(Dollars in millions)

United States $ 147 $ 54 $ 2 $ 203 $ 134 $ 54 $ 1 $ 189

Europe 382 45 9 436 381 41 6 428

Asia 287 13 5 305 288 14 6 308

Other 9 6 1 16 14 6 — 20

$ 825 $ 118 $ 17 $ 960 $ 817 $ 115 $ 13 $ 945

Nine Months Ended September 30, 2023

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2024

Three Months Ended March 31, 2023

OEM Aftermarket Other Total OEM Aftermarket Other Total

9 unchanged sentences

Contract assets—January 1 $ 38 $ 46

Contract assets—September 30

Change in contract assets—(Decrease)/Increase $ ( 2 ) $ ( 12 )

Contract assets—March 31

Change in contract assets—Increase/(Decrease) $ 10 $ 20

Contract liabilities—January 1 $ ( 11 ) $ ( 8 )

Contract liabilities—September 30

Change in contract liabilities—(Increase)/Decrease $ ( 4 ) $ ( 4 )

Contract liabilities—March 31

( 10 ) ( 10 )

Change in contract liabilities—Decrease/(Increase) $ 1 $ ( 2 )

Research, Development & Engineering

4 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023 2022 2023 2022

(Dollars in millions)

1 unchanged sentence

Engineering-related expenses, net of customer (reimbursements) (1)

( 3 ) 4 ( 8 ) 13

$ 39 $ 42 $ 120 $ 125

(1) Engineering-related expenses include customer reimbursements of $ 10 million and $ 6 million for the three months ended September 30, 2023 and 2022, respectively, and $ 34 million and $ 15 million for the nine months ended September 30, 2023 and 2022, respectively.

(1) Engineering-related expenses include customer reimbursements of $ 8 million and $ 11 million for the three months ended March 31, 2024 and 2023, respectively.

Certain engineering expenses related to long-term supply arrangements are capitalized when defined criteria, such as the existence of a contractual guarantee for reimbursement, are met.

As of March 31, 2024 and December 31, 2023, $ 15 million and $ 12 million , respectively, of such contractually reimbursable costs were capitalized.

These amounts are recorded within Other current assets in the Consolidated Interim Balance Sheet.

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023 2022 2023 2022

(Dollars in millions)

1 unchanged sentence

Effective tax rate 18.5 % 25.0 %

The effective tax rate for the three months ended September 30, 2023 is lower than the effective rate for the three months ended September 30, 2022 primarily related to an increase in global research and development benefits, lower taxes on non-U.S.

earnings partially offset by nondeductible expenses, and a prior year non-recurring decrease in withholding taxes on undistributed earnings.

The effective tax rate for the nine months ended September 30, 2023 is higher than the effective rate for the nine months ended September 30, 2022 primarily related to a prior year non-recurring decrease in withholding taxes on undistributed earnings and nondeductible expenses, partially offset by increase in global research and development benefit and lower taxes on non-U.S.

The effective tax rate for the three months ended September 30, 2023 was lower than the U.S.

federal statutory rate of 21% primarily related to a decrease in the annual effective tax rate driven by lower taxes on international operations, partially offset by nondeductible transaction costs.

The effective tax rate for the nine months ended September 30, 2023 was higher than the U.S.

federal statutory rate of 21% primarily related to nondeductible expenses and tax reserves, partially offset by lower taxes on non-U.S.

earnings and global research and development benefits.

The effective tax rates for the three months ended March 31, 2024 and 2023 were 18.5 % and 25.0 %, respectively.

The change in the effective tax rate for the three months ended March 31, 2024 compared to the prior period is primarily related to reversal of tax reserves and lower U.S.

taxes on international operations, partially offset by increased withholding taxes.

The effective tax rate for the three months ended March 31, 2024 was lower than the U.S.

federal statutory rate of 21% primarily related to reversals of tax reserves, lower taxes on non-U.S.

earnings, and global research and development benefits partially offset by U.S.

taxes on international operations and withholding taxes.

Accounts, Notes and Other Receivables—Net

September 30,

2024 December 31,

4 unchanged sentences

Less—Allowance for expected credit losses

Trade receivables include $ 44 million and $ 46 million of unbilled customer contract asset balances as of September 30, 2023 and December 31, 2022, respectively.

Trade receivables include $ 48 million and $ 38 million of unbilled customer contract asset balances as of March 31, 2024 and December 31, 2023, respectively.

These amounts are billed in accordance with the terms of customer contracts to which they relate.

8 unchanged sentences

Bank notes sold to third-party financial institutions without recourse are likewise accounted for as true sales.

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

(Dollars in millions)

1 unchanged sentence

Guaranteed bank notes sold without recourse — —

The expenses related to the sale of trade receivables and guaranteed bank notes are recognized within Other expense, net in the Consolidated Interim Statements of Operations.

Such expenses amounted to $ 1 million and $ 3 million for the three and nine months ended September 30, 2023, respectively, and were immaterial for the three and nine months ended September 30, 2022.

September 30,

The expenses related to the sale of trade receivables and guaranteed bank notes are recognized within Other expense, net in the Consolidated Interim Statements of Operations, and were immaterial for the three months ended March 31, 2024 and 2023 .

2024 December 31,

2 unchanged sentences

Guaranteed bank notes sold but not yet collected by the bank from the customer — —

As of September 30, 2023 and December 31, 2022, the Company had no guaranteed bank notes pledged as collateral .

As of March 31, 2024 and December 31, 2023, the Company had no guaranteed bank notes pledged as collateral .

Inventories—Net

September 30,

2024 December 31,

4 unchanged sentences

Less—Reserves ( 42 ) ( 41 )

September 30,

2024 December 31,

4 unchanged sentences

Pension and other employee related 11 11

Designated cross-currency swaps 71 74

Derivatives designated as net investment hedges 56 37

Designated and undesignated derivatives 44 46

4 unchanged sentences

The supplier financing obligations and guaranteed bank notes outstanding are recorded within Accounts payable in our Consolidated Interim Balance Sheet.

September 30,

2024 December 31,

3 unchanged sentences

Accrued Liabilities

September 30,

2024 December 31,

5 unchanged sentences

Income and other taxes 37 42

Advanced discounts from suppliers, current 4 8

Customer advances and deferred income (1)

2 unchanged sentences

Accrued freight 8 9

Dividends payable — 42

Designated and undesignated derivatives 8 12

Other (primarily operating expenses) (2)

(1) Customer advances and deferred inco me include $ 12 million and $ 8 million of contract liabilities as of September 30, 2023 and December 31, 2022, respectively.

(1) Customer advances and deferred inco me include $ 10 million and $ 9 million of contract liabilities as of March 31, 2024 and December 31, 2023, respectively.

See Note 3, Revenue Recognition and Contracts with Customers .

(2) Includes $ 3 million and $ 3 million of environmental liabilities as of September 30, 2023 and December 31, 2022, respectively.

(2) Includes $ 3 million and $ 5 million of environmental liabilities as of March 31, 2024 and December 31, 2023, respectively.

The Company accrues repositioning costs related to projects to optimize its product costs and right-size our organizational structure.

5 unchanged sentences

Usage—cash ( 9 ) — ( 9 )

Non-cash asset write-offs — ( 2 ) ( 2 )

Balance at September 30, 2023

Balance at March 31, 2024

$ 11 $ — $ 11

2 unchanged sentences

Balance at December 31, 2022

$ 10 $ — $ 10

Charges 5 2 7

Usage—cash ( 2 ) — ( 2 )

Balance at September 30, 2022

Non-cash asset write-offs — ( 2 ) ( 2 )

Balance at March 31, 2023

$ 12 $ — $ 12

Other Liabilities

September 30,

2024 December 31,

1 unchanged sentence

Income taxes $ 95 $ 99

Designated and undesignated derivatives 7 20

Pension and other employee related 21 23

L ong-term lease liability (Note 13)

Long-term lease liability (Note 13)

Advanced discounts from suppliers 3 3

6 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023 2022 2023 2022

(Dollars in millions)

2 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023 2022 2023 2022

(Dollars in millions)

1 unchanged sentence

Operating cash outflows from operating leases

$ 3 $ 3 $ 10 $ 9

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

1 unchanged sentence

Supplemental balance sheet information related to operating leases is as follows:

September 30,

2024 December 31,

3 unchanged sentences

Other liabilities 35 33

September 30,

2024 December 31, 2023

1 unchanged sentence

Weighted-average discount rate 6.08 % 5.69 %

Maturities of operating lease liabilities as of September 30, 2023 were as follows:

Maturities of operating lease liabilities as of March 31, 2024 were as follows:

(Dollars in millions)

3 unchanged sentences

Long-term Debt and Credit Agreements

The principal outstanding and carrying amounts of our long-term debt as of September 30, 2023 and December 31, 2022 are as follows:

Due Interest Rate September 30,

Long Term Debt

On April 30, 2021, the Company entered into a credit agreement (as amended from time to time, the "Credit Agreement") with JPMorgan Chase Bank, N.A.

as administrative agent.

The Credit Agreement provides for the following long-term senior secured financing (collectively, the "Term Loan Facilities"):

• 2021 Dollar Term Facility:

a seven-year secured first-lien U.S.

Dollar term loan facility for $ 715 million;

• 2023 Dollar Term Facility :

a five-year secured first-lien U.S.

Dollar term loan facility for $ 500 million;

• Euro Term Facility :

a seven-year secured first-lien Euro term loan facility for € 450 million.

The principal outstanding and carrying amounts of our long-term debt as of March 31, 2024 and December 31, 2023 are as follows:

Due Interest Rate March 31,

2024 December 31,

6 unchanged sentences

Total long-term debt $ 1,633 $ 1,643

Credit Facilities

On April 30, 2021, the Company entered into a credit agreement (as amended from time to time, the "Credit Agreement") providing for senior secured financing, consisting of a seven-year secured first-lien U.S.

Dollar term loan facility initially in the amount of $ 715 million (the “2021 Dollar Term Facility”), a seven-year secured first-lien Euro term loan facility initially in the amount of € 450 million (the “Euro Term Facility”) and a five-year senior secured first-lien revolving credit facility initially in the amount of $ 300 million providing for multi-currency re volving loans (the “Revolving Facility”).

The maximum amount of borrowings available under the Revolving Facility was increased to $ 475 million in 2022.

On April 27, 2023, the Company entered into Amendment No.

3 (the "Third Amendment") to the Credit Agreement, which provided for additional financing consisting of a five-year secured first-lien U.S.

Dollar term loan facility initially in the amount of $ 700 million (the “2023 Dollar Term Facility”, together with the 2021 Dollar Term Facility and Euro Term Facility, the "Term Loan Facilities", and together with the Revolving Facility, the "Credit Facilities").

The full amount of the 2023 Dollar Term Facility was drawn on June 6, 2023 (the "Closing Date"), and the proceeds were primarily used to finance the repurchases of the Series A Preferred Stock as part of the Transaction, and pay fees and expenses incurred in connection with the Third Amendment.

The 2023 Dollar Term Facility will mature on April 30, 2028.

Prior to maturity, the 2023 Dollar Term Facility will be repaid quarterly in an amount equal to, during the first two years occurring after the Closing Date, 7.50 % per annum of the aggregate principal amount, and thereafter, 10.00 % per annum.

The Term Borrowers may also prepay the 2023 Dollar Term Facility at any time in whole or in part without premium or penalty, subject to certain exceptions (including for (i) customary breakage and redeployment costs in the case of prepayment of term benchmark rate loans and (ii) 2023 Dollar Term Facility repricing events occurring during the period from the Closing Date to the date that is twelve months following the Closing Date).

The Third Amendment also provided for (i) an increase in the maximum borrowing amount under the Revolving Facility by $ 95 million (the “Incremental Revolving Commitment”) to an aggregate amount of $ 570 million;

and (ii) an extension of the maturity date for the Revolving Facility by two years from April 30, 2026 to April 30, 2028 (or January 30, 2028 if any of the currently outstanding term loans or term loans under the 2023 Dollar Term Facility maturing as of April 30, 2028 remain outstanding as of such date).

The Incremental Revolving Commitment has the same terms and is generally subject to the same conditions applicable to the existing revolving facility under the Credit Agreement, except for fees paid in connection with the arrangement of the increased amount.

Revolving Facility and Letters of Credit

The Credit Agreement also provides for a senior secured first-lien revolving credit facility providing for multi-currency re volving loans (the “Revolving Facility”).

The Revolving Facility matures on April 30, 2028 and has a maximum borrowing amount available of $ 570 million.

Under the Revolving Facility, the Company may use up to $ 125 million for the issuance of letters of credit to its subsidiaries.

Letters of credit are available for issuance under the Credit Agreement on terms and conditions customary for financings of this kind, which issuances reduce availability under the Revolving Facility.

As of September 30, 2023, the Company had no loans outstanding under the Revolving Facility, no outstanding letters of credit, and available borrowing capacity of approximately $ 570 million.

As of March 31, 2024, the Company had no loans outstanding under the Revolving Facility, no outstanding letters of credit, and available borrowing capacity of $ 570 million.

Separate from the Revolving Facility, the Company has a bilateral letter of credit facility in the amount of $ 15 million, which matures on April 30, 2026.

As of September 30, 2023, the Company had $ 12 million utilized and $ 3 million of remaining available capacity under such facility.

Minimum scheduled principal repayments of the Credit Facilities as of September 30, 2023 are as follow:

September 30,

(Dollars in millions)

Thereafter 1,567

Total debt payments $ 1,677

As of March 31, 2024, the Company had $ 12 million utilized and $ 3 million of remaining available capacity under such facility.

Interest Rate and Fees

6 unchanged sentences

In addition to paying interest on outstanding borrowings under the Revolving Facility, we are also required to pay a quarterly commitment fee based on the average daily unused portion of the Revolving Facility during such quarter, which is determined by our leverage ratio and ranges from 0.25 % to 0.50 % per annum.

The Credit Agreement contains certain mandatory prepayment provisions in the event that we incur certain types of indebtedness, receive net cash proceeds from certain non-ordinary course asset sales or other dispositions of property, or have excess cash flow (calculated on an annual basis with the required prepayment equal to 50 %, 25 % or 0 % of such excess cash flow, subject to compliance with certain leverage ratios), in each case subject to terms and conditions customary for financings of this kind.

On July 31, 2023, the Company made an early repayment in the amount of $ 200 million on the 2023 Dollar Term Facility.

The early repayment resulted in incremental amortization on debt issuance cost in the amount of $ 9 million, included within Interest Expense in the Consolidated Interim Statement of Operations .

excess cash flow, subject to compliance with certain leverage ratios), in each case subject to terms and conditions customary for financings of this kind.

Certain Covenants

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The Revolving Facility also contains a financial covenant requiring the maintenance of a consolidated total leverage ratio of not greater than 4.7 times as of the end of each fiscal quarter if, on the last day of any such fiscal quarter, the aggregate amount of loans and letters of credit (excluding backstopped or cash collateralized letters of credit and other letters of credit with an aggregate face amount not exceeding $ 30 million) outstanding under the Revolving Facility exceeds 35 % of the aggregate commitments in effect thereunder on such date.

As of September 30, 2023, the Company was in compliance with all covenants.

Series A Preferred Stock

On April 12, 2023 (the “Transaction Date”), the Company entered into separate definitive agreements (the “Agreements”) with each of Centerbridge Partners, L.P.

and funds managed by Oaktree Capital Management, L.P.

(collectively, the “C&O Investors”) to effect a series of integrated transactions (collectively the “Transaction”) designed to increase the attractiveness of the Company to investors, including by simplifying the Company’s capital structure by converting all outstanding Series A Preferred Stock into a single class of Common Stock, subject to certain conditions.

As part of the Agreements, the holders of a majority of the outstanding shares of the Series A Preferred Stock authorized and approved the amendment and restatement of the certificate of designations for the Series A Preferred Stock (as amended, the “Certificate of Designations”) to, among other things, require the conversion of all shares of Series A Preferred Stock into shares of the Company’s common stock (the “2023 Conversion”), subject to the repurchase by the Company of a portion of the shares of Series A Preferred Stock held by the C&O Investors (the “Series A Repurchase”).

Under the terms of the Agreements, the Company agreed to repurchase a total of $ 570 million (“Base Repurchase Price”) of shares of Series A Preferred Stock from the C&O Investors at a cash price of $ 8.10 per share which was subsequently adjusted to equal the volume-weighted average price of the Common Stock for the fifteen trading days following the announcement of the transactions (the “ 15 Days VWAP”), subject to a minimum price of $ 7.875 per share and a maximum price of $ 8.50 per share.

The 15 Days VWAP was subsequently established at a value of $ 8.177 per share.

As part of the Transaction, all holders of Series A Preferred Stock, including the C&O Investors, received approximately 0.104379 shares of Common Stock, being an amount equal to $ 0.853509 per share of Series A Preferred Stock, valued at the 15 Days VWAP, representing accumulated and unpaid preference dividends on each share of Series A Preferred Stock through June 30, 2023 (the “Accumulated Dividends”), as well as $ 0.144375 per share of Series A Preferred Stock, representing the preference dividends that would have accrued on the Series A Preferred Stock through September 30, 2023 (the “Additional Amounts”).

As part of the Transaction, following the effectiveness of the Certificate of Designations which occurred on June 6, 2023, the Company completed all steps of the Transaction as follows:

• The Company paid $ 580 million to the C&O Investors in connection with the repurchase of 69,707,719 shares of Series A Preferred Stock, comprising of the Base Repurchase Price as well as $ 10 million ($ 0.144375 for each repurchased share) in consideration of the Additional Amounts on the repurchased shares of Series A Preferred Stock.

• The remaining 175,337,712 shares of Series A Preferred Stock outstanding following such repurchase were converted into 175,337,712 shares of Common Stock (in accordance with the customary procedures of the Company’s transfer agent, for shares held in registered form, and of the Depository Trust Company, for shares held in street name).

Following the completion of the 2023 Conversion, trading of the Series A Preferred Stock on Nasdaq was suspended;

• As part of the 2023 Conversion, the Company also paid $ 25 million ($ 0.144375 for each converted share) to the holders of Series A Preferred Stock in consideration of the Additional Amounts on the shares of Series A Preferred Stock that were converted;

• Issued 25,577,517 shares of Common Stock to all holders of Series A Preferred Stock (equal to $ 0.853509 per share, valued at the 15 Days VWAP, adjusted to avoid the issuance of fractional shares of Common Stock), in consideration of the Accumulated Dividends of an aggregate amount of $ 209 million.

Cash payments for fractional shares were immaterial.

The Agreements were accounted for as freestanding physically settled forward purchase contracts.

The Agreements were initially recorded at fair value and then remeasured through earnings until the establishment of the 15 Days VWAP, whereupon the Agreements were subsequently measured based on the amount of consideration to be paid at settlement.

A Monte-Carlo simulation model was used to determine the Transaction Date fair value of the Agreements by simulating a range of possible future stock prices for the Company through the expected settlement date of the Agreements.

The significant assumptions utilized in estimating the fair value of the Agreements include:

(i) a dividend yield of 0.0 %;

(ii) an expected volatility of 40.0 %;

(iii) a risk-free interest rate of 4.23 % based on observed interest rates from the Treasury Constant Maturity yield curve consistent with the simulation term;

and (iv) a starting share price of $ 8.25 based on the market price of the Company’s common stock as of the Transaction Date.

The initial fair value of the Agreements represented a forward purchase liability of $ 4 million.

A loss of $ 13 million was recognized in Non-operating expense in the Consolidated Interim Statement of Operations to reflect the subsequent remeasurement of fair value of the Agreements due to changes in the market price of the Company’s Common Stock.

The difference between the fair value of consideration transferred under the Agreements and the carrying value of the repurchased Series A Preferred Stock, amounting to $ 201 million, was recorded to Retained Deficit as a deemed dividend on the repurchase of shares of Series A Preferred Stock from the C&O Investors as part of the Transaction.

A liability for excise tax, amounting to $ 6 million, was also recorded to Retained Deficit as a deemed dividend.

In connection with the 2023 Conversion, the Company also recognized a deemed dividend on the 2023 Conversion for $ 25 million, corresponding to the Additional Amounts paid to the holders of Series A Preferred Stock on the shares of Series A Preferred Stock that were converted.

As part of the Agreements, the C&O Investors have agreed with the Company to certain changes to their governance rights under the Company’s governance documents, including a reduction of their existing board nomination rights, as well as lock-up restrictions on their equity securities of the Company for up to twelve months , and certain limits on their ability to purchase additional equity securities of the Company and to voting limitations, in each case for a period of up to eighteen months .

On April 12, 2023, the Company also announced an increase in its share repurchase authorization to $ 250 million.

Under the share repurchase program, the Company may repurchase shares of Common Stock in open market transactions, privately negotiated purchases and other transactions from time to time.

The following table summarizes the effects of the Transaction on the Consolidated Interim Balance Sheet as of September 30, 2023 and the Consolidated Interim Statement of Operations and Consolidated Interim Statement of Cash Flows for the nine months ended September 30, 2023 :

Series A Repurchase 2023 Conversion Settlement of Accumulated Dividends Excise tax on share repurchase Total

(Dollars in millions)

Consolidated Interim Balance Sheet - increase/(decrease):

Cash and cash equivalents $ ( 580 ) $ ( 25 ) $ — $ — $ ( 605 )

Accrued liabilities — — — 6 6

As of March 31, 2024, the Company was in compliance with all covenants.

Preferred Stock

Common Stock — — — — —

Additional Paid-in capital ( 366 ) — 209 — ( 157 )

Retained earnings ( 201 ) ( 25 ) ( 209 ) ( 6 ) ( 441 )

Consolidated Interim Statement of Operations:

Non-operating expenses 13 — — — 13

Consolidated Interim Statement of Cash Flows

Repurchases of Series A Preferred Stock ( 580 ) — — — ( 580 )

Payments for Additional Amounts for conversion of Series A Preferred Stock — ( 25 ) — — ( 25 )

The Company has also incurred $ 9 million of Transaction-related costs for the nine months ended September 30, 2023, primarily for legal and advisory services that are included in Selling, general and administrative expenses in the Consolidated Interim Statement of Operations.

On April 12, 2023 the Company entered into separate definitive agreements with each of Centerbridge Partners, L.P.

and funds managed by Oaktree Capital Management, L.P.

to effect a series of integrated transactions (collectively the “Transaction”) designed to increase the attractiveness of the Company to investors, including by simplifying the Company’s capital structure by converting all outstanding Series A Preferred Stock into a single class of Common Stock, subject to certain conditions.

On June 6, 2023, the Company completed all steps of the Transaction and with no remaining shares of Series A Preferred Stock outstanding as of the date.

Please refer to Note 21, Equity , to the Consolidated Financial Statements for the year ended December 31, 2023 included in our 2023 Form 10-K.

Treasury Stock

Treasury stock represents shares of the Company's Common Stock that have been issued and subsequently repurchased by the Company or withheld to satisfy withholding tax obligations in connection with equity award vestings, and that have not been retired or cancelled.

The Company accounts for treasury stock under the cost method and includes treasury stock as a component of Equity (Deficit) on the Consolidated Interim Balance Sheet.

The Company accounts for the reissuance of treasury stock using the average cost method.

The Company did not reissue or retire any shares of treasury stock during the three months ended March 31, 2024.

Share Repurchase Program

On February 12, 2024, the Board of Directors authorized a new $ 350 million share repurchase program valid until December 31, 2024.

The Company may repurchase shares from time to time under the program through various methods, including in open market transactions, block trades, privately negotiated transactions, and otherwise.

The timing, as well as the number and value of shares repurchased under the program, will depend on a variety of factors.

The Company is not obligated to purchase any shares under the repurchase program, and the program may be suspended, modified, or discontinued at any time without prior notice.

As of March 31, 2024, the Company has repurchased $ 109 million of Common Stock, with $ 241 million remaining under the share repurchase program.

These shares are held as treasury stock.

Financial Instruments and Fair Value Measures

Our credit, market and foreign currency risk management policies are described in Note 19, Financial Instruments and Fair Value Measures , to the Consolidated Financial Statements for the year ended December 31, 2023 included in our 2023 Form 10-K.

As of September 30, 2023 and December 31, 2022, we had contracts with aggregate gross notional amounts of $ 2,884 million and $ 2,621 million, respectively, to hedge interest rates and foreign currencies, principally the U.S.

As of March 31, 2024 and December 31, 2023, we had contracts with aggregate gross notional amounts of $ 969 million and $ 1,171 million, respectively, to hedge foreign currencies, principally the U.S.

Dollar, Swiss Franc, British Pound, Euro, Chinese Yuan, Japanese Yen, Mexican Peso, New Romanian Leu, Czech Koruna, Australian Dollar and Korean Won.

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The FASB’s accounting guidance 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 (exit price).

Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022:

Financial and

nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2024 and December 31, 2023:

Notional Amounts Assets Liabilities

September 30,

2024 December 31, 2023

September 30,

2024 December 31, 2023

September 30,

2024 December 31, 2023

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Designated forward currency exchange contracts $ 419 $ 456 $ 12 $ 11 (a) $ 7 $ 6 (c)

Designated cross-currency swaps 1,015 715 71 74 (b) — —

Designated interest-rate swaps 200 — 1 — (b) — —

Designated cross-currency swaps 1,015 1,015 56 37 (b) 6 17 (d)

Designated interest-rate swaps 200 200 — — — —

Total designated instruments 1,634 1,671 68 48 13 23

Undesignated instruments:

Undesignated interest rate swaps 879 1,024 65 76 (b) — —

Undesignated interest rate swaps 895 917 44 46 (b) 1 3 (d)

Undesignated forward currency exchange contracts 550 715 6 1 (a) 1 6 (c)

4 unchanged sentences

As of September 30, 2023, the Company had outstanding interest rate swaps with aggregate notional amounts of € 830 million ($ 879 million based on September 30, 2023 foreign exchange rates) and $ 200 million, with maturities of April 2024, July 2024, October 2024, April 2025, April 2026, April 2027 and April 2028.

The Company uses interest rate swaps specifically to mitigate variable interest risk exposure on its long-term debt portfolio.

The $ 200 million interest rate swaps have been designated as cash flow hedges.

The designated interest rate swaps' fair value were net assets of $ 1 million as of September 30, 2023.

The Company executed cross-currency swaps which have been designated as net investment hedges of its Euro-denominated operations and cash flow hedges to hedge the foreign currency exposure from foreign currency-denominated debt.

In May 2023, the Company re-couponed the cross-currency swap contracts which have been designated as net investment hedges and received a cash settlement of $ 9 million.

As of September 30, 2023, an aggregate notional amount of € 615 million was designated as net investment hedges of the Company’s investment in Euro-denominated operations and € 280 million was designated as cash flow hedges.

The cross-currency swaps’ fair values were net assets o f $ 71 million as of September 30, 2023.

Our Consolidated Interim Statements of Comprehensive Income include Changes in fair value of net investment hedges and cash flow hedges, net of tax, of $ 20 million and $ 18 million, during the three and nine months ended September 30, 2023, respectively, related to these designated cross-currency swaps.

No ineffectiveness has been recorded on the designated cross-currency hedges.

The Company's forward currency exchange contract under our cash flow hedging program are assessed as highly effective and are designated as cash flow hedges.

Gains and losses on derivatives qualifying as cash flow hedges are recorded in Accumulated other comprehensive income until the underlying transactions are recognized in earnings.

(d) Recorded within Other liabilities

Cash Flow Hedges

During 2023, the Company entered into float-to-fixed interest rate swap contracts with an aggregate notional amount of $ 200 million and maturities in July 2024 and October 2024.

Changes in the fair value of the interest rate swap contracts are recorded in Accumulated Other Comprehensive Income ("AOCI") and will be reclassified to Interest expense in the Consolidated Interim Statement of Operations upon maturity.

The Company also has outstanding forward currency exchange contracts with maturities up to 18 months and an aggregate notional amount of $ 419 million and $ 456 million as of March 31, 2024 and December 31, 2023, respectively.

These forward currency exchange contracts have been designated as cash flow hedges to mitigate foreign currency exposures primarily on our inventory purchases and manufacturing costs.

The gains and losses on the forward currency exchange contracts are recorded in AOCI and reclassified to Cost of goods sold in the Consolidated Interim Statement of Operations when the underlying transactions are recognized in earnings.

In order to mitigate interest rate and foreign currency risk on its 2023 Dollar Term Facility, the Company has an outstanding float-to-fixed cross-currency swap contract comprised of an amortizing swap with an aggregate notional amount of € 280 million ($ 300 million) and notional exchanges in June 2026, June 2027 and June 2028.

Changes in the fair value of the cross-currency swap contract are recognized in AOCI and reclassified to Non-operating income in the Consolidated Statement of Operations, based upon changes in the spot rate remeasurement of the underlying debt.

The net interest settlements on the cross-currency swap contract are recorded in Interest expense in the Consolidated Interim Statements of Operations.

All of the Company's cash flow hedges are assessed as highly effective.

For the three months ended March 31, 2024 and 2023, the Company recorded a gain of $ 3 million, net of tax, and a loss of $ 3 million, net of tax, respectively, in Other comprehensive income.

Net Investment Hedges

The Company has designated float-to-float cross-currency swaps with an aggregate notional amount of € 615 million ($ 715 million) as net investment hedges of its Euro-denominated operations.

The fair values of the net investment hedges were net assets o f $ 56 million and $ 37 million as of March 31, 2024 and December 31, 2023 , respectively.

Our Consolidated Interim Statements of Comprehensive Income include Changes in fair value of net investment hedges, net of tax, of a $ 19 million gain and a $ 5 million loss for the three months ended March 31, 2024 and 2023 , respectively.

No ineffectiveness has been recorded on the net investment hedges.

Non-Designated Derivatives

As of March 31, 2024 and December 31, 2023 , the Company has outstanding float-to-fixed interest rate swap contracts with an aggregate notional amount of € 830 million ($ 895 million and $ 917 million, respectively) and maturities of April 2024, July 2024, October 2024, April 2025, April 2026, April 2027 and April 2028.

Changes in the fair value of the undesignated interest rate swap contracts are recorded in Interest expense in the Consolidated Interim Statements of Operations.

The Company also has outstanding forward currency exchange contracts with maturities generally up to 3 months and an aggregate notional amount of $ 550 million and $ 715 million as of March 31, 2024 and December 31, 2023, respectively .

These derivatives are not designated as hedging instruments and are adjusted to fair value through Non-operating income in the Consolidated Interim Statements of Operations.

Fair Value Measurement

The foreign currency exchange, interest rate swap and cross-currency swap contracts are valued using market observable inputs.

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The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value:

September 30, 2023

March 31, 2024

December 31, 2023

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Accumulated Other Comprehensive Income

The changes in Accumulated Other Comprehensive Income by component are set forth below:

Fair Value of

Changes in Fair Value of

Net Investment Hedges Pension

Total Accumulated

Comprehensive

The changes in AOCI by component are set forth below:

Three Months Ended

(Dollars in millions)

Balance at December 31, 2022

$ ( 44 ) $ 13 $ 85 $ ( 18 ) $ 36

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income

— ( 20 ) — — ( 20 )

Net current period other comprehensive income 8 ( 3 ) 18 — 23

Balance at September 30, 2023

$ ( 36 ) $ 10 $ 103 $ ( 18 ) $ 59

Fair Value of

Changes in Fair Value of

Net Investment Hedges Pension

Total Accumulated

Comprehensive

Foreign Exchange Translation Adjustment

Balance at beginning of period $ ( 57 ) $ ( 44 )

Other comprehensive income (loss) before reclassifications 18 2

Balance at end of period ( 39 ) ( 42 )

Pension Adjustments

Balance at beginning of period ( 20 ) ( 18 )

Other comprehensive income (loss) before reclassifications (1)

Balance at end of period ( 19 ) ( 18 )

Changes in Fair Value of Effective Cash Flow Hedges

Balance at beginning of period ( 2 ) 13

Other comprehensive income (loss) before reclassifications (2)

Amounts reclassified from AOCI, net ( 9 ) ( 8 )

Balance at end of period 1 10

Changes in Fair Value of Net Investment Hedges

Balance at beginning of period 76 85

Other comprehensive income (loss) before reclassifications, net (3)

Balance at end of period 95 80

Accumulated other comprehensive income, end of period $ 38 $ 30

(1) There were no income tax effects for the three months ended March 31, 2024.

(2) Net of tax expense (benefit) of $ 4 million and $ 0 million for the three months ended March 31, 2024 and 2023, respectively.

(3) Net of tax expense (benefit) of $ 4 million and $( 3 ) million for the three months ended March 31, 2024 and 2023, respectively.

Reclassifications from AOCI to income were as follows:

Three Months Ended March 31,

(Dollars in millions)

Balance at December 31, 2021

$ ( 43 ) $ 7 $ 41 $ ( 9 ) $ ( 4 )

Other comprehensive income before reclassifications

13 43 87 — 143

Amounts reclassified from accumulated other comprehensive income

— ( 17 ) — — ( 17 )

Net current period other comprehensive income 13 26 87 — 126

Balance at September 30, 2022

$ ( 30 ) $ 33 $ 128 $ ( 9 ) $ 122

Changes in Fair Value of Effective Cash Flow Hedges

Reclassification forward currency exchange contracts to Cost of goods sold $ ( 2 ) $ ( 9 )

Reclassification cross-currency swaps to Interest expense ( 2 ) —

Reclassification cross-currency swaps to Non-operating income ( 7 ) —

Tax effect on reclassification to income 2 1

Amounts reclassified from AOCI, net $ ( 9 ) $ ( 8 )

Earnings Per Share

For the three months ended September 30, 2023, basic earnings per share ("EPS") is computed using the weighted-average number of common shares outstanding during the period.

For the nine months ended September 30, 2023 as well as the three and nine months ended September 30, 2022, basic earnings per share is calculated using the two-class method as our Series A Preferred Stock, which was converted into Common Stock pursuant to the Transaction, was considered a participating security.

For the three months ended March 31, 2024, basic earnings per share ("EPS") is computed using the weighted-average number of common shares outstanding during the period.

For the three months ended March 31, 2023, basic earnings per share was calculated using the two-class method as our Series A Preferred Stock, which was considered a participating security prior to its conversion into Common Stock and cancellation pursuant to the Transaction.

The two-class method requires an allocation of earnings to all securities that participate in dividends with common shares, such as our Series A Preferred Stock, to the extent that each security may share in the entity’s earnings.

Basic earnings per share are then calculated by dividing undistributed earnings allocated to common stock by the weighted average number of common shares outstanding for the period.

The Series A Preferred Stock was not included in the computation of basic earnings per share in periods in which we have a net loss, as the Series A Preferred Stock was not contractually obligated to share in our net losses.

Diluted earnings per share for the three months ended September 30, 2023 is calculated based on the weighted-average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the treasury stock method.

Diluted earnings per share for the nine months ended September 30, 2023 as well as the three and nine months ended September 30, 2022 is calculated using the more dilutive of the two-class or if-converted methods.

Diluted earnings per share for the three months ended March 31, 2024 is calculated based on the weighted-average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the treasury stock method.

Diluted earnings per share for the three months ended March 31, 2023 is calculated using the more dilutive of the two-class or if-converted methods.

The two-class method uses net income available to common shareholders and assumes conversion of all potential shares other than the participating securities.

The if-converted method uses net income and assumes conversion of all potential shares including the participating securities.

The details of the EPS calculations for the three and nine months ended September 30, 2023 and 2022 are as follows:

The details of the EPS calculations for the three months ended March 31, 2024 and 2023 are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(Dollars in millions except per share)

2 unchanged sentences

preferred stock dividend — ( 40 )

preferred stock deemed dividends — — ( 232 ) —

Net (loss) income available for distribution

57 65 ( 103 ) 161

Net income available for distribution

earnings allocated to participating securities — ( 32 )

Net (loss) income available to common shareholders

$ 57 $ 14 $ ( 103 ) $ 34

Net income available to common shareholders

Weighted average common shares outstanding - Basic 236,664,129 64,896,081

1 unchanged sentence

Diluted earnings per share:

Two-class Two-class Two-class

Weighted average common shares outstanding - Basic 236,664,129 64,896,081

3 unchanged sentences

EPS – Diluted $ 0.28 $ 0.13

For the periods where a net loss attributable to common shareholders is present, dilutive securities have been excluded from the calculation of diluted net loss per share attributable to common stockholders as including them would have been anti-dilutive.

For the nine months ended September 30, 2023, the weighted-average number of unvested RSUs and other contingently issuable shares excluded from the computations was 1,349,442 shares.

Related Party Transactions

We lease certain facilities and receive property maintenance services from Honeywell International Inc.

(“Honeywell”), which is a holder of our Common Stock and was also a holder of our Series A Preferred Stock prior to the 2023 Conversion as discussed below and in Note 15, Series A Preferred Stock .

We also contract with Honeywell for the occasional purchase of certain goods and services.

Lease and service agreements were made at commercial terms prevalent in the market at the time they were executed.

Honeywell is not considered a related party subsequent to the 2023 Conversion.

Our payments under the agreements with Honeywell during the period that Honeywell was considered a related party are as follow:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(Dollars in millions)

Payments under agreements with Honeywell

$ — $ 2 $ 2 $ 6

Our payments under the agreements with Honeywell are included in Cost of goods sold and Selling, general and administrative expenses in our Consolidated Interim Statements of Operations.

Related to the agreements with Honeywell, our Consolidated Balance Sheet at December 31, 2022 includes liabilities of $ 10 million.

Liability balances are primarily related to lease contracts of $ 7 million as of December 31, 2022.

As discussed in Note 15, Series A Preferred Stock , in order to effect the Transaction, on April 12, 2023, the Company entered into separate definitive agreements with each of Centerbridge Partners, L.P.

(“Centerbridge”) and funds managed by Oaktree Capital Management, L.P.

(“Oaktree”), each of which is a holder of our Common Stock and appoints a director to our Board of Directors.

Additionally, Mr.

Kevin Mahony, who serves as a Managing Director of Centerbridge, and Mr.

Steven Tesoriere, who serves as a Managing Director of Oaktree, have been appointed to our Board of Directors as designees of Centerbridge and Oaktree, respectively.

As described more fully in Note 15, Series A Preferred Stock , in connection with the Transaction, we paid to Centerbridge and Oaktree an aggregate of approximately $ 570 million for the repurchase of shares of Series A Preferred Stock, plus an aggregate of approximately $ 10 million and 7,276,036 shares of Common Stock representing the Additional Amounts and Accumulated Dividends in respect of the repurchased shares of Series A Preferred Stock.

Additionally, in connection with the conversion of the Series A Preferred Stock, we issued to Centerbridge and Oaktree an aggregate of 65,334,277 shares of Common Stock, plus Additional Amounts and Accumulated Dividends of approximately $ 9 million and 6,819,540 shares of Common Stock.

In connection with the conversion of our Series A Preferred Stock, we issued to Honeywell, as a holder of our Series A Preferred Stock, 4,196,330 shares of Common Stock upon the conversion of an equivalent number of shares of Series A Preferred Stock, plus Additional Amounts and Accumulated Dividends of approximately $ 1 million and 438,009 shares of Common Stock.

Additionally, Mr.

John Petry, a director on our Board, serves as Managing Member of Sessa Capital (Master), L.P., which indirectly held shares of our Series A Preferred Stock prior to the conversion.

In connection with the conversion of our Series A Preferred Stock, we issued to Sessa Capital and its affiliates, as holder of our Series A Preferred Stock, 16,592,384 shares of Common Stock upon the conversion of an equivalent number of shares of Series A Preferred Stock, plus Additional Amounts and Accumulated Dividends of approximately $ 2 million and 1,731,900 shares of Common Stock.

We contract with Trane Technologies ("Trane") for the occasional purchase of goods and services.

Trane is considered a related party as Mr.

Paul Camuti, a director on our Board of Directors since February 9, 2024, serves as an executive officer of Trane.

Our payments under the agreements with Trane for the three months ended March 31, 2024, as well as any liabilities due to Trane as of March 31, 2024, were immaterial.

For the three months ended March 31, 2023, Trane was not considered a related party.

Commitments and Contingencies

Securities Litigation

On September 25, 2020, a putative securities class action complaint was filed against Garrett Motion Inc.

and certain current and former Garrett officers and directors in the United States District Court for the Southern District of New York.

The case bears the caption :

Steven Husson, Individually and On Behalf of All Others Similarly Situated, v.

Garrett Motion Inc., Olivier Rabiller, Alessandro Gili, Peter Bracke, Sean Deason, and Su Ping Lu , Case No.

1:20-cv-07992-JPC (SDNY) (the “Husson Action”).

The Husson Action asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as amended (the "Exchange Act"), for securities fraud and control person liability.

On September 28, 2020, the

plaintiff sought to voluntarily dismiss his claim against Garrett Motion Inc.

in light of the Company’s bankruptcy;

this request was granted.

On October 5, 2020, another putative securities class action complaint was filed against certain current and former Garrett officers and directors in the United States District Court for the Southern District of New York.

This case bears the caption:

The Gabelli Asset Fund, The Gabelli Dividend & Income Trust, The Gabelli Value 25 Fund Inc., The Gabelli Equity Trust Inc., SM Investors LP and SM Investors II LP, on behalf of themselves and all others similarly situated, v.

Su Ping Lu, Olivier Rabiller, Alessandro Gili, Peter Bracke, Sean Deason, Craig Balis, Thierry Mabru, Russell James, Carlos M.

Cardoso, Maura J.

Clark, Courtney M.

Enghauser, Susan L.

Main, Carsten Reinhardt, and Scott A.

Tozier , Case No.

1:20-cv-08296-JPC (SDNY) (the “Gabelli Action”).

The Gabelli Action also asserted claims under Sections 10(b) and 20(a) of the Exchange Act.

On November 5, 2020, another putative securities class action complaint was filed against certain current and former Garrett officers and directors in the United States District Court for the Southern District of New York.

This case bears the caption:

Joseph Froehlich, Individually and On Behalf of All Others Similarly Situated, v.

Olivier Rabiller, Allesandro Gili, Peter Bracke, Sean Deason, and Su Ping Lu , Case No.

1:20-cv-09279-JPC (SDNY) (the “Froehlich Action”).

The Froehlich Action also asserted claims under Sections 10(b) and 20(a) of the Exchange Act.

The actions were assigned to Judge John P.

On November 24, 2020, competing motions were filed seeking the appointment of lead plaintiff and lead counsel and the consolidation of the Husson, Gabelli, and Froehlich Actions.

On December 8, 2020, counsel for the plaintiffs in the Gabelli Action — the Entwistle & Cappucci law firm — filed an unopposed stipulation and proposed order that would (1) appoint the plaintiffs in the Gabelli Action — the “Gabelli Entities” — the lead plaintiffs;

(2) would appoint Entwistle & Cappucci as lead counsel for the plaintiff class;

and (3) consolidate the Gabelli Action, the Husson Action, and the Froehlich Action (the “Consolidated D&O Action”).

On January 21, 2021, the Court granted the motion to consolidate the actions and granted the Gabelli Entities’ motions for appointment as lead plaintiff and for selection of lead counsel.

On February 25, 2021, plaintiffs filed a Consolidated Amended Complaint.

The Company’s insurer, AIG, has accepted the defense, subject to the customary reservation of rights.

The Company agreed with the Gabelli Entities and their lead counsel to permit a class claim to be recognized in the bankruptcy court and to have securities claims against the Company to be litigated in the district court alongside the Consolidated D&O Action.

The Gabelli Entities have agreed that any recoveries against Garrett Motion Inc.

on account of securities claims litigated through the class claim are limited to available insurance policy proceeds.

On July 2, 2021, the bankruptcy court entered an order approving the joint request from the Company and the Gabelli Entities to handle the securities claims against Garrett Motion Inc.

in this manner.

The Gabelli Entities were authorized and, on July 22, 2021, filed a second amended complaint to add claims against Garrett Motion Inc.

On August 11, 2021, Garrett Motion Inc., Olivier Rabiller, Alessandro Gili, Peter Bracke, Sean Deason, Russell James, Carlos Cardoso, Maura Clark, Courtney Enghauser, Susan Main, Carsten Reinhardt, and Scott Tozier filed a motion to dismiss with respect to claims asserted against them.

On the same day, Su Ping Lu, who is represented separately, filed a motion to dismiss with respect to the claims asserted against her.

Lead plaintiffs’ opposition to the motions to dismiss was filed on October 26, 2021, and the defendant's reply briefs were filed on or before December 8, 2021.

On March 31, 2022, the judge dismissed the complaints entirely - Su Ping Lu's motion to dismiss was granted with prejudice while the court granted the plaintiffs 30 days to file a third amended complaint against the Company and the other defendants.

On May 2, 2022, the plaintiffs filed a Third Amended Complaint (“TAC”) against all of the foregoing Defendants apart from Alessandro Gili and Su Ping Lu.

On June 24, 2022, defendants moved to dismiss the TAC in its entirety, with prejudice.

Plaintiffs filed their opposition on August 16, 2022, and defendants filed their reply brief on September 23, 2022.

On September 22, 2022, the action was reassigned from Judge John P.

Cronan to Judge Jennifer L.

Rochon, who was recently appointed.

On March 31, 2023, the action was dismissed with prejudice.

The plaintiffs filed an appeal and the defendants' opposition is due on October 31, 2023.

In 2020, various securities class action complaints were filed against Garrett Motion Inc.

and certain current and former Garrett officers and directors in the United States District Court for the Southern District of New York asserting claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, for alleged securities fraud and control person liability.

In March 2022, the trial court dismissed with prejudice the claims against certain of the defendants, and in March 2023, the trial court dismissed with prejudice all remaining claims.

In April 2023, the plaintiffs appealed the trial court’s decision to the United States Court of Appeals for the Second Circuit, and in April 2024 the Second Circuit affirmed dismissal of the claims.

Management did not believe an adverse outcome in this matter was probable, and therefore no accrual has been recorded.

Brazilian Tax Matter

1 unchanged sentence

The infraction notice results in a loss contingency that may or may not ultimately be incurred by the Company.

estimated total amount of the contingency as of September 30, 2023 was $ 37 million including penalties and interest.

The estimated total amount of the contingency as of March 31, 2024 was $ 39 million including penalties and interest.

The Company believes, based on management’s assessment and the advice of external legal counsel, that it has meritorious arguments in connection with the infraction notice and any liability for the infraction notice is currently not probable.

7 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(Dollars in millions)

Warranty and product performance guarantees at beginning of period $ 27 $ 28

Accruals for warranties/guarantees issued during the year

Accruals for warranties/guarantees issued during the period

Settlement of warranty/guarantee claims

( 2 ) ( 2 ) ( 9 ) ( 10 )

Foreign currency translation ( 1 ) —

Warranty and product performance guarantees at end of period

$ 26 $ 29 $ 26 $ 29

Other Commitments and Contingencies

13 unchanged sentences

We expect to make contributions of cash and/or marketable securities of approximately $ 7 million to our non-U.S.

pension plans to satisfy regulatory funding standards in 2023, of which $ 6 million has been contributed as of September 30, 2023.

pension plans to satisfy regulatory funding standards in 2024, of which $ 1 million has been contributed as of March 31, 2024.

Net periodic benefit costs for our significant defined benefit plans include the following components:

Three Months Ended September 30, Nine Months Ended September 30,

Plans Non-U.S.

Three Months Ended March 31,

Plans Non-U.S.

5 unchanged sentences

Amortization of prior service (credit) — — — —

$ — $ ( 1 ) $ — $ — $ — $ ( 1 ) $ 1 $ 1

Total $ — $ — $ 1 $ —

For both our U.S.

1 unchanged sentence

This approach provides a more precise measurement of service and interest costs by improving the correlation between projected cash flows and their corresponding spot rates.

Subsequent Events

On April 3, 2024, the Company divested its equity interest in an unconsolidated joint venture for approximately $ 58 million, subject to customary debt and working capital adjustments, with cash consideration received on divestiture date of $ 46 million.

The carrying value of the equity method investment amounted to $ 21 million as of March 31, 2024, and is included in Investments and long-term receivables on the Consolidated Interim Balance Sheet.

On April 10, 2024, the Company made an early debt repayment of $ 100 million on its 2023 Dollar Term Facility.

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

What changed 10-Q

Item 1. Financial Statements