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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-37757
ADNT.jpg
Adient plc
(exact name of Registrant as specified in its charter)
Ireland98-1328821
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 3 Dublin Landings, North Wall Quay, Dublin 1, Ireland D01 H104
(Address of principal executive offices)
734-254-5000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of exchange on which registered
Ordinary Shares, par value $0.001ADNTNew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☑  No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☑  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes  ☐  No  

At December 31, 2023, 91,245,859 ordinary shares were outstanding.



Adient plc
Form 10-Q
For the Three Months Ended December 31, 2023

TABLE OF CONTENTS

Adient plc | Form 10-Q | 2


PART I - FINANCIAL INFORMATION

Item 1.Unaudited Financial Statements

Adient plc
Consolidated Statements of Income
(unaudited)

Three Months Ended
December 31,
(in millions, except per share data)20232022
Net sales$3,660 $3,699 
Cost of sales3,414 3,468 
Gross profit246 231 
Selling, general and administrative expenses147 138 
Restructuring and impairment costs11 7 
Equity income23 28 
Earnings before interest and income taxes111 114 
Net financing charges44 41 
Other pension expense (income)2 9 
Income before income taxes65 64 
Income tax provision (benefit)20 31 
Net income45 33 
Income attributable to noncontrolling interests25 21 
Net income attributable to Adient$20 $12 
Earnings per share:
Basic$0.22 $0.13 
Diluted$0.21 $0.13 
Shares used in computing earnings per share:
Basic92.9 95.1 
Diluted93.6 95.9 

The accompanying notes are an integral part of the consolidated financial statements.

Adient plc | Form 10-Q | 3


Adient plc
Consolidated Statements of Comprehensive Income
(unaudited)




Three Months Ended
December 31,
(in millions)20232022
Net income $45 $33 
Other comprehensive income, net of tax:
Foreign currency translation adjustments142 106 
Realized and unrealized gains on derivatives9 25 
Other comprehensive income 151 131 
Total comprehensive income196 164 
Comprehensive income attributable to noncontrolling interests38 37 
Comprehensive income attributable to Adient $158 $127 

The accompanying notes are an integral part of the consolidated financial statements.

Adient plc | Form 10-Q | 4


Adient plc
Consolidated Statements of Financial Position
(unaudited)




(in millions, except share and per share data)December 31, 2023September 30, 2023
Assets
Cash and cash equivalents$990 $1,110 
Accounts receivable - net
1,661 1,874 
Inventories833 841 
Other current assets590 491 
Current assets4,074 4,316 
Property, plant and equipment - net1,401 1,382 
Goodwill2,138 2,094 
Other intangible assets - net401 408 
Investments in partially-owned affiliates322 303 
Assets held for sale7 7 
Other noncurrent assets954 914 
Total assets$9,297 $9,424 
Liabilities and Shareholders' Equity
Short-term debt$7 $2 
Current portion of long-term debt137 132 
Accounts payable2,422 2,526 
Accrued compensation and benefits329 400 
Restructuring reserve54 51 
Other current liabilities599 627 
Current liabilities3,548 3,738 
Long-term debt2,403 2,401 
Pension and postretirement benefits95 92 
Other noncurrent liabilities578 590 
Long-term liabilities3,076 3,083 
Commitments and Contingencies (Note 17)
Redeemable noncontrolling interests57 57 
Preferred shares issued, par value $0.001; 100,000,000 shares authorized,
Zero shares issued and outstanding at December 31, 2023
  
Ordinary shares issued, par value $0.001; 500,000,000 shares authorized,
91,245,859 shares issued and outstanding at December 31, 2023
  
Additional paid-in capital3,872 3,973 
Accumulated deficit(883)(903)
Accumulated other comprehensive income (loss)(704)(842)
Shareholders' equity attributable to Adient2,285 2,228 
Noncontrolling interests331 318 
Total shareholders' equity2,616 2,546 
Total liabilities and shareholders' equity$9,297 $9,424 

The accompanying notes are an integral part of the consolidated financial statements.

Adient plc | Form 10-Q | 5

Adient plc
Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
December 31,
(in millions)20232022
Operating Activities
Net income attributable to Adient$20 $12 
Income attributable to noncontrolling interests25 21 
Net income45 33 
Adjustments to reconcile net income to cash provided (used) by operating activities:
Depreciation72 69 
Amortization of intangibles11 12 
Pension and postretirement expense (benefit)3 9 
Pension and postretirement contributions, net(10)(3)
Equity in earnings of partially-owned affiliates, net of dividends received(6)(16)
Deferred income taxes(6)(1)
Equity-based compensation13 8 
Other (3)
Changes in assets and liabilities, excluding impact of acquisitions/divestitures:
Receivables234 167 
Inventories29 22 
Other assets(81)(47)
Restructuring reserves(9)(27)
Accounts payable and accrued liabilities(256)(191)
Accrued income taxes2 12 
Cash provided (used) by operating activities41 44 
Investing Activities
Capital expenditures(55)(61)
Sale of property, plant and equipment14 15 
Acquisition of businesses, net of cash acquired (6)
Proceeds from business divestitures(3)3 
Other (1)
Cash provided (used) by investing activities(44)(50)
Financing Activities
Increase (decrease) in short-term debt5  
Increase (decrease) in long-term debt 2 
Repayment of long-term debt (2)
Debt financing costs (7)
Share repurchases(100) 
Dividends paid to noncontrolling interests(48)(50)
Share based compensation and other(12)(12)
Cash provided (used) by financing activities(155)(69)
Effect of exchange rate changes on cash and cash equivalents38 29 
Increase (decrease) in cash and cash equivalents(120)(46)
Cash and cash equivalents at beginning of period1,110 947 
Cash and cash equivalents at end of period$990 $901 

The accompanying notes are an integral part of the consolidated financial statements.
Adient plc | Form 10-Q | 6

Adient plc
Notes to Consolidated Financial Statements
(unaudited)





1. Organization and Summary of Significant Accounting Policies

Adient is a global leader in the automotive seating supplier industry. Adient has a leading market position in the Americas, Europe and China, and has longstanding 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 unaudited consolidated financial statements of Adient have been prepared in accordance with the rules and regulations of the US Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These interim consolidated financial statements include all adjustments (consisting of normal recurring adjustments) that management believes are necessary for a fair statement of the results of operations, financial position and cash flows of Adient for the interim periods presented. Interim results are not necessarily indicative of full-year results as Adient, along with the automotive industry, continues to be impacted by supply chain disruptions, inflationary pressures and volatile commodity pricing on certain input costs, along with the impacts of higher interest rates and volatility in consumer demand.

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's interest exceeds 20% and does not have a controlling interest.
Consolidated VIEs
Based upon the criteria set forth in the Financial Accounting Standards Board (the FASB) 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 December 31, 2023, and September 30, 2023, 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 is restricted) and liabilities included in Adient's consolidated statements of financial position for the consolidated VIEs are as follows:

(in millions)December 31, 2023September 30, 2023
Current assets$237 $265 
Noncurrent assets112 121 
Total assets$349 $386 
Current liabilities$172 $228 
Noncurrent liabilities12 13 
Total liabilities$184 $241 

Adient plc | Form 10-Q | 7


Earnings Per Share
The following table shows the computation of basic and diluted earnings per share:
Three Months Ended
December 31,
(in millions, except per share data)20232022
Numerator:
Net income attributable to Adient$20 $12 
Denominator:
Shares outstanding92.9 95.1 
Effect of dilutive securities0.7 0.8 
Diluted shares93.6 95.9 
Earnings per share:
Basic$0.22 $0.13 
Diluted$0.21 $0.13 
The effect of common stock equivalents which would have been anti-dilutive was immaterial and excluded from the calculation of diluted earnings per share for the three months ended December 31, 2023 and 2022.

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

Standards Effective After Fiscal 2024

Adient has considered the ASUs that are summarized below, each to be effective after fiscal 2024, which are not expected to significantly impact the consolidated financial statements:

Standard to be AdoptedDescriptionDate 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


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
Adient plc | Form 10-Q | 8


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 during the first quarter of fiscal 2024 were related to product sales transacted in prior fiscal years.

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.

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

Contract assets primarily relate to the right to consideration for work completed, but not billed at the reporting date on contracts with customers. The contract assets are transferred to receivables when the rights become unconditional. Contract liabilities primarily relate to contracts where advance payments or deposits have been received, but performance obligations have not yet been satisfied and revenue has not been recognized. No significant contract assets or liabilities exist at September 30, 2023 or at December 31, 2023. 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 15, "Segment Information," of the notes to consolidated financial statements for disaggregated revenue by geographical market.


3. Acquisitions and Divestitures

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.

In April 2023, Adient completed the acquisition of Nantong Yanfeng Adient Seating Trim Co., Ltd. (“YFAT”) from KEIPER Seating Mechanisms Co., Ltd. (“KEIPER”) 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 has provided 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.

Adient plc | Form 10-Q | 9



4. Inventories

Inventories consisted of the following:

(in millions)December 31, 2023September 30, 2023
Raw materials and supplies$629 $644 
Work-in-process33 34 
Finished goods171 163 
Inventories$833 $841 


5. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill are as follows:

(in millions)AmericasEMEAAsiaTotal
Balance at September 30, 2023$609 $317 $1,168 $2,094 
Business divestiture (1)
  (5)(5)
Currency translation and other1 19 29 49 
Balance at December 31, 2023
$610 $336 $1,192 $2,138 

(1) Refer to Note 3, "Acquisitions and Divestitures," for information on the sale of 51% of Adient's interest in LFADNT.

Refer to Note 15, "Segment Information," of the notes to consolidated financial statements for more information on Adient's reportable segments.

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

 December 31, 2023September 30, 2023
(in millions)Gross
Carrying
Amount
Accumulated
Amortization
NetGross
Carrying
Amount
Accumulated
Amortization
Net
Intangible assets
Patented technology$80 $(34)$46 $79 $(32)$47 
Customer relationships556 (214)342 550 (201)349 
Trademarks   17 (17) 
Miscellaneous25 (12)13 24 (12)12 
Total intangible assets$661 $(260)$401 $670 $(262)$408 

Amortization of intangible assets for the three months ended December 31, 2023 and 2022 was $11 million and $12 million, respectively.


Adient plc | Form 10-Q | 10


6. Product Warranties

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:
Three Months Ended
December 31,
(in millions)20232022
Balance at beginning of period$21 $21 
Accruals for warranties issued during the period4 2 
Settlements made (in cash or in kind) during the period(2)(4)
Currency translation 1 
Balance at end of period$23 $20 


7. Leases

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

The components of lease costs included in the consolidated statement of income for three months ended December 31, 2023 and 2022 were as follows:

Three Months Ended
December 31,
(in millions)20232022
Operating lease cost$27 $26 
Short-term lease cost7 8 
Total lease cost$34 $34 

Adient plc | Form 10-Q | 11


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

(in millions)December 31, 2023September 30, 2023
Operating leases:
Operating lease right-of-use assetsOther noncurrent assets$245$241
Operating lease liabilities - currentOther current liabilities$81$77
Operating lease liabilities - noncurrentOther noncurrent liabilities163163
$244$240
Weighted average remaining lease term:
Operating leases5 years5 years
Weighted average discount rate:
Operating leases6.5 %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 December 31, 2023 are as follows:

Operating leases
Fiscal years (in millions)December 31, 2023
2024 (excluding the three months ended December 31, 2023)
$72 
202573 
202649 
202734 
202821 
Thereafter43 
Total lease payments292 
Less: imputed interest(48)
Present value of lease liabilities$244 

Supplemental cash flow information related to leases is as follows:

Three Months Ended
December 31,
(in millions)20232022
Right-of-use assets obtained in exchange for lease obligations:
Operating leases (non-cash activity)$16 $8 
Operating cash flows:
Cash paid for amounts included in the measurement of lease liabilities$27 $26 


Adient plc | Form 10-Q | 12


8. Debt and Financing Arrangements

Long-term and short-term debt consisted of the following:

(in millions)December 31, 2023September 30, 2023
Long-term debt:
8.25% Notes due 2031
$500 $500 
7.00% Secured Notes due 2028
500 500 
Term Loan B due in 2028635 635 
4.875% Notes due in 2026
795 795 
3.50% Notes due in 2024
136 130 
Other bank borrowings and finance lease obligations3 4 
Less: debt issuance costs(29)(31)
Gross long-term debt2,540 2,533 
Less: current portion137 132 
Net long-term debt$2,403 $2,401 
Short-term debt:
Other bank borrowings$7 $2 
Total short-term debt$7 $2 

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 Kroner. 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 December 31, 2023, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of $938 million (net of $12 million of letters of credit).

In addition, Adient US and Adient Global Holdings S.à r.l., a wholly-owned subsidiary of Adient, maintain a senior secured term loan facility (the "Term Loan B Agreement"), that had an outstanding balance of $635 million as of September 30, 2023 and December 31, 2023, which is maintained fully at Adient Global Holdings S.à r.l and is due at final maturity on April 8, 2028. Interest on the Term Loan B Agreement accrues at Term SOFR plus an applicable margin equal to 3.25%. The Term Loan B Agreement also permits Adient to incur incremental term loans in an aggregate amount not to exceed the greater of $750 million and an unlimited amount subject to a pro forma first lien secured net leverage ratio of not greater than 1.75 to 1.00 and certain other conditions. In January 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.

Adient plc | Form 10-Q | 13


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 will be 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, 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 December 31, 2023 and September 30, 2023.

AGH also previously maintained €823 million aggregate principal amount of 3.50% unsecured notes due in August 2024. During fiscal 2023, Adient repurchased €700 million ($743 million) of the 3.50% unsecured notes 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. As of December 31, 2023, the remaining balance of this debt was €123 million ($136 million) and is classified as current portion of long-term debt on the consolidated statement of financial position.

Net Financing Charges

Adient's net financing charges in the consolidated statements of income contained the following components:

Three Months Ended
December 31,
(in millions)20232022
Interest expense, net of capitalized interest costs$48 $41 
Banking fees and debt issuance cost amortization4 4 
Interest income(9)(4)
Net foreign exchange1  
Net financing charges$44 $41 

Total interest paid on both short and long-term debt for the three months ended December 31, 2023 and 2022 was $60 million and $20 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 December 31, 2023, $85 million was funded under these programs compared to $170 million as of September 30, 2023.

Adient plc | Form 10-Q | 14


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 December 31, 2023, and September 30, 2023, Adient's liabilities related to this program were $57 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.


9. 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 10, "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 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 accumulated other comprehensive income (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 December 31, 2023 and September 30, 2023, respectively.
The €123 million ($136 million) aggregate principal amount of 3.50% euro-denominated unsecured notes due 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 bonds 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 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 are recorded in net financing charges until payment of the notes and maturity of the foreign exchange forward contract in August 2024.

In January 2024, Adient entered into a ¥685 million ($96 million) foreign exchange forward contract to selectively hedge portions of its net investment in China. The contract is set to mature in October 2024.

Adient plc | Form 10-Q | 15


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
(in millions)December 31, 2023September 30, 2023December 31, 2023September 30, 2023
Other current assets
Foreign currency exchange derivatives$38 $30 $5 $4 
Other noncurrent assets
Foreign currency exchange derivatives1    
Total assets$39 $30 $5 $4 
Other current liabilities
Foreign currency exchange derivatives$4 $8 $ $ 
Other noncurrent liabilities
Foreign currency exchange derivatives1 6   
Long-term debt
Foreign currency denominated debt 130   
Total liabilities$5 $144 $ $ 

Adient enters into International Swaps and Derivatives Associations (ISDA) master netting agreements with counterparties that permit the net settlement of amounts owed under the derivative contracts. The master netting agreements generally provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event. 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 December 31, 2023 and September 30, 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:

AssetsLiabilities
(in millions)December 31, 2023September 30, 2023December 31, 2023September 30, 2023
Gross amount recognized$44 $34 $5 $144 
Gross amount eligible for offsetting(5)(12)(5)(12)
Net amount$39 $22 $ $132 

The following table presents the effective portion of pretax gains (losses) recorded in other comprehensive income related to cash flow hedges:

Three Months Ended
December 31,
(in millions)20232022
Foreign currency exchange derivatives$26 $32 

Adient plc | Form 10-Q | 16


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)Three Months Ended
December 31,
20232022
Foreign currency exchange derivativesCost of sales$15 $7 
During the next twelve months, $29 million of pretax gains 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)Three Months Ended
December 31,
20232022
Foreign currency exchange derivativesNet financing charges$6 $ 
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:

(in millions)Three Months Ended
December 31,
20232022
Foreign currency exchange derivativesCost of sales$1 $3 
Foreign currency exchange derivativesNet financing charges9 9 
Total$10 $12 

Adient had no outstanding net investment hedges during the three months ended December 31, 2023. The effective portion of pretax gains (losses) recorded in currency translation adjustment (CTA) within other comprehensive income related to net investment hedges was $(69) million for the three months ended December 31, 2022. For the three months ended December 31, 2023 and 2022, no gains or losses were reclassified from CTA into income for Adient's outstanding net investment hedges. For the three months ended December 31, 2023 and 2022, no ineffectiveness was recognized in the consolidated statements of income resulting from cash flow hedges.


10. 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-Q | 17


Recurring Fair Value Measurements
The following tables present Adient's fair value hierarchy for those assets and liabilities measured at fair value:
 Fair Value Measurements Using:
(in millions)
Total as of
December 31, 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$43 $ $43 $ 
Other noncurrent assets
Foreign currency exchange derivatives1  1  
Total assets$44 $ $44 $ 
Other current liabilities
Foreign currency exchange derivatives4  4  
Other noncurrent liabilities
Foreign currency exchange derivatives1  1  
Total liabilities$5 $ $5 $ 

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 derivatives6  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 December 31, 2023 and September 30, 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 $2.6 billion and $2.5 billion at December 31, 2023 and September 30, 2023, respectively, was determined primarily using market quotes classified as Level 1 inputs within the ASC 820 fair value hierarchy.


Adient plc | Form 10-Q | 18


11. Equity and Noncontrolling Interests

For the three months ended December 31, 2023:

(in millions)Ordinary SharesAdditional Paid-in CapitalRetained Earnings
(Accumulated Deficit)
Accumulated Other Comprehensive Income (Loss)Shareholders' Equity Attributable
 to Adient
Shareholders' Equity Attributable to Noncontrolling InterestsTotal Equity
Balance at September 30, 2023
$ $3,973 $(903)$(842)$2,228 $318 $2,546 
Net income — 20 20 12 32 
Foreign currency translation adjustments— — — 129 129 5 134 
Realized and unrealized gains (losses) on derivatives— — — 9 9 — 9 
Dividends attributable to noncontrolling interests— — — —  (4)(4)
Repurchases of common stock— (100)— — (100)— (100)
Share based compensation and other— (1)— — (1) (1)
Balance at December 31, 2023
$ $3,872 $(883)$(704)$2,285 $331 $2,616 

For the three months ended December 31, 2022:

(in millions)Ordinary SharesAdditional Paid-in CapitalRetained Earnings
(Accumulated Deficit)
Accumulated Other Comprehensive Income (Loss)Shareholders' Equity Attributable
 to Adient
Shareholders' Equity Attributable to Noncontrolling InterestsTotal Equity
Balance at September 30, 2022
$ $4,026 $(1,108)$(845)$2,073 $302 $2,375 
Net income— — 12 — 12 14 26 
Foreign currency translation adjustments— — — 90 90 5 95 
Realized and unrealized gains (losses) on derivatives— — — 25 25 — 25 
Dividends attributable to noncontrolling interests— — — —  (4)(4)
Share based compensation and other— (8)— — (8) (8)
Balance at December 31, 2022
$ $4,018 $(1,096)$(730)$2,192 $317 $2,509 

Adient plc | Form 10-Q | 19



The following table presents changes in AOCI attributable to Adient:

Three Months Ended
December 31,
(in millions)20232022
Foreign currency translation adjustments
Balance at beginning of period$(854)$(836)
Aggregate adjustment for the period, net of tax129 90 
Balance at end of period (1)
$(725)$(746)
Realized and unrealized gains (losses) on derivatives
Balance at beginning of period$13 $(8)
Current period changes in fair value, net of tax21 31 
Reclassification to income, net of tax(12)(6)
Balance at end of period$22 $17 
Pension and postretirement plans
Balance at beginning of period$(1)$(1)
Balance at end of period$(1)$(1)
Accumulated other comprehensive income (loss), end of period$(704)$(730)

(1) The ending balance of foreign currency translation adjustments as of December 31, 2023 and 2022 include cumulative net investment hedge gains of $74 million and $75 million, respectively. During the next twelve months, no 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:

Three Months Ended
December 31,
(in millions)20232022
Beginning balance$57 $45 
Net income (1)
13 7 
Dividends(21)(18)
Foreign currency translation adjustments8 11 
Ending balance$57 $45 

(1) During the first quarter of fiscal 2024, a $5 million adjustment was recorded to increase income attributable to noncontrolling interest related to the three months ended September 30, 2023.

Repurchases of Equity Securities

In November 2022, Adient’s board of directors authorized the repurchase of the Company’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 year 2023, Adient repurchased and immediately retired 1,756,777 shares 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 the first quarter of fiscal 2024, Adient repurchased and immediately retired 3,003,358 shares of its
Adient plc | Form 10-Q | 20


ordinary shares at an average purchase price per share of $33.32. The aggregate amount of cash paid to repurchase the shares was $100 million. As of December 31, 2023, the remaining aggregate amount of authorized repurchases was $435 million.


12. Retirement Plans

Adient maintains non-contributory defined benefit pension plans covering primarily non-U.S. employees and a limited number of U.S. employees. The following table contains the components of net periodic benefit cost:

Three Months Ended
December 31,
(in millions)20232022
Service cost$1 $1 
Interest cost5 4 
Expected return on plan assets(3)(3)
Net actuarial and settlement/curtailment (gain) loss 8 
Net periodic benefit cost$3 $10 

The interest cost, expected return on plan assets, and net actuarial and settlement/curtailment (gain) loss components of net periodic benefit cost are included in other pension expense (income) in the consolidated statements of income. During the first quarter of fiscal 2023, Adient recorded an $8 million curtailment loss associated with employee termination benefit plans in the Americas segment.


13. Restructuring and Impairment Costs

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

During the first quarter of fiscal 2024, Adient committed to a restructuring plan ("2024 Plan") resulting in charges of $11 million. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions in EMEA and Americas. The restructuring actions are expected to be substantially completed by fiscal 2025. 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.

For the three months ended December 31, 2023:

(in millions)Employee Severance and Termination BenefitsCurrency
Translation
Total
Balance at September 30, 2023$56 $(5)$51 
2024 Plan charges11  11 
Utilized - cash(9) (9)
Noncash and other adjustments 1 1 
Balance at December 31, 2023
$58 $(4)$54 

Adient plc | Form 10-Q | 21


For the three months ended December 31, 2022:

(in millions)Employee Severance and Termination BenefitsCurrency
Translation
Total
Balance at September 30, 2022$69 $(9)$60 
2023 Plan charges7  7 
Utilized - cash(27) (27)
Noncash and other adjustments 5 5 
Balance at December 31, 2022$49 $(4)$45 

Adient's restructuring plans include workforce reductions of approximately 13,000 employees. Restructuring charges associated with employee severance and termination benefits are paid over the severance period granted to each employee or on a lump sum basis in accordance with individual severance agreements. As of December 31, 2023, approximately 11,000 of the employees have been separated from Adient pursuant to the restructuring plans. In addition, the restructuring plans included twenty-six plant closures. As of December 31, 2023, twenty-two of the twenty-six plants have been closed.

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


14. Income Taxes

In calculating the provision for income taxes, Adient uses an estimate of the annual effective tax rate based upon the facts and circumstances known at each interim period. On a quarterly basis, the actual effective tax rate is adjusted, as appropriate, based on changes in facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter. For the three months ended December 31, 2023, Adient’s income tax expense was $20 million equating to an effective tax rate of 31%. The three month income tax expense was higher than the Irish statutory rate of 12.5% primarily due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances and foreign tax rate differentials. For the three months ended December 31, 2022 Adient’s income tax expense was $31 million equating to an effective tax rate of 48%. The three month income tax expense was higher than the Irish statutory rate of 12.5% primarily due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances and foreign tax rate differentials.

Valuation Allowances

As a result of the Company's first quarter 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 recorded in Luxembourg during the three months ended December 31, 2023, would not be realized and established a valuation allowance, which did not have a material impact on Adient’s consolidated financial statements.

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, the Company believes that there is a reasonable 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
Adient plc | Form 10-Q | 22


recognition of certain deferred tax assets which could generate a material income tax benefit for the period in which such release is recorded.

Uncertain Tax Positions

At December 31, 2023, Adient had gross tax effected unrecognized tax benefits of $537 million. If recognized, $168 million of Adient's unrecognized tax benefits would impact the effective tax rate. Total net accrued interest at December 31, 2023 was approximately $31 million (net of tax benefit). The interest and penalties accrued for the three months ended December 31, 2023 was $2 million. At December 31, 2022, Adient had gross tax effected unrecognized tax benefits of $522 million. If recognized, $122 million of Adient's unrecognized tax benefits would impact the effective tax rate. Total net accrued interest at December 31, 2022 was approximately $25 million (net of tax benefit). The interest and penalties accrued for the three months ended December 31, 2022 was $2 million. Adient recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.


15. Segment Information

Adient manages its business on a geographic basis and operates in the following three reportable segments for financial reporting purposes: (i) Americas, which is inclusive of North America and South America; (ii) Europe, Middle East, and Africa ("EMEA"); and (iii) 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, 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.

 Three Months Ended
December 31,
(in millions)20232022
Net Sales
Americas$1,647 $1,724 
EMEA1,268 1,182 
Asia770 821 
Eliminations(25)(28)
Total net sales$3,660 $3,699 
Adient plc | Form 10-Q | 23



Three Months Ended
December 31,
(in millions)20232022
Adjusted EBITDA
Americas$80 $69 
EMEA45 28 
Asia114 138 
Corporate-related costs (1)
(23)(23)
Restructuring and impairment costs (2)
(11)(7)
Purchase accounting amortization (3)
(11)(12)
Restructuring related charges (4)
9 (3)
Depreciation
(72)(69)
Stock based compensation (5)
(13)(8)
Other items (6)
(7)1 
Earnings before interest and income taxes111 114 
Net financing charges(44)(41)
Other pension income (expense) (7)
(2)(9)
Income before income taxes$65 $64 

Notes:

(1) Corporate-related costs not allocated to the segments include executive office, communications, corporate development, legal and corporate finance.
(2) Reflects qualified restructuring charges for costs that are directly attributable to restructuring activities and meet the definition of restructuring under ASC 420 and non-recurring impairment charges.
(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 directly attributable to restructuring activities, but do not meet the definition of restructuring under ASC 420. The three months ended December 31, 2023 includes a $10 million gain on sale of a restructured facility.
(5) During the three months ended December 31, 2023, a $5 million adjustment was recorded to increase equity-based compensation expense related to a retired executive's equity awards that should have been recognized in prior periods.
(6) The three months ended December 31, 2023 includes 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), and a $2 million one-time divestiture related tax impact at an affiliate, partially offset by a $3 million non-recurring gain on contract related settlement. The three months ended December 31, 2022 includes a $1 million non-recurring adjustment to certain of Adient's investments in nonconsolidated partially-owned affiliates in Asia, and $1 million of indirect tax recoveries in Brazil, partially offset by $1 million of transaction costs.

(7) The three months ended December 31, 2022 includes an $8 million curtailment loss associated with employee termination benefit plans in the Americas segment.


Adient plc | Form 10-Q | 24


Geographic Information

Revenue by geographic area is as follows:

Net Sales
 Three Months Ended
December 31,
(in millions)20232022
Americas
United States$1,422 $1,553 
Mexico632 607 
Other Americas86 95 
Regional elimination(493)(531)
1,647 1,724 
EMEA
Spain180 154 
Germany224 248 
Poland249 209 
Czech Republic195 228 
Other EMEA769 667 
Regional elimination(349)(324)
1,268 1,182 
Asia
China374 398 
Korea122 138 
Thailand122 141 
Japan93 87 
Other Asia71 65 
Regional elimination(12)(8)
770 821 
Inter-segment elimination(25)(28)
Total$3,660 $3,699 


16. 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 as of December 31, 2023 and September 30, 2023. Equity in the net income of nonconsolidated partially-owned affiliates are reported in the "Equity income" line in the consolidated statements of income for the three months ended December 31, 2023 and 2022, respectively.

Adient plc | Form 10-Q | 25


Adient maintains total investments in partially-owned affiliates of $322 million and $303 million at December 31, 2023 and September 30, 2023, respectively. Operating information for nonconsolidated partially-owned affiliates is as follows:

Three Months Ended
December 31,
(in millions)20232022
Income statement data:
Net sales$1,037 $976 
Gross profit$93 $101 
Net income$49 $60 
Net income attributable to the entity$48 $59 

Refer to Note 3, "Acquisitions and Divestitures," of the notes to consolidated financial statements for transactions involving Adient's investments in nonconsolidated partially-owned affiliates.


17. Commitments and Contingencies

Adient is involved in various lawsuits, claims and proceedings incident to the operation of its businesses, including those pertaining to product liability, casualty environmental, safety and health, intellectual property, employment, commercial and contractual matters, and various other matters. 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 $4 million and $4 million at December 31, 2023 and September 30, 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.


18. 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 net sales to and purchases from related parties included in the consolidated statements of income:

Three Months Ended
December 31,
(in millions)20232022
Net sales to related partiesNet sales$66 $58 
Purchases from related partiesCost of sales103 114 

Adient plc | Form 10-Q | 26


The following table sets forth the amount of accounts receivable due from and payable to related parties in the consolidated statements of financial position:

(in millions)December 31, 2023September 30, 2023
Accounts receivable due from related partiesAccounts receivable$28 $26 
Accounts payable due to related partiesAccounts payable53 67