Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐Yes ☐ No ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐Yes ☐ No ☒ No

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 ☐ 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 ☐ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

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.

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~~registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

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

The aggregate market value of the common stock held by non-affiliates of the registrant was ~~not a public company as~~approximately $415 million based on the closing price of its common stock on the New York Stock Exchange on June 30, 2020, the last business day of ~~its most recently completed~~the registrant’s second fiscal ~~quarter~~quarter.

Indicate by check mark whether the registrant has filed all documents and ~~therefore, cannot calculate~~reports required to be filed by Sections 12, 13 or 15(d) of the ~~aggregate market value~~Securities Exchange Act of ~~its voting and non-voting common equity held~~1934 subsequent to the distribution of securities under a plan confirmed by ~~non-affiliates as of such date.~~a court. Yes ☐ No ☐

As of February ~~26, 2019,~~4, 2021, the registrant had ~~74,019,825~~75,813,634 shares of common stock, $0.001 par value, outstanding.

~~The following documents are~~ incorporated by reference into the Annual Report on Form 10-K: Portions of the registrant’s definitive Proxy Statement for its 2019 Annual Meeting of Stockholders are incorporated by reference into Part III of this Report.

On September 20, 2020 (the “Petition Date”), Garrett Motion Inc. (the “Company”) and certain of its subsidiaries (collectively, the “Debtors”) each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Debtors’ chapter 11 cases (the “Chapter 11 Cases”) are being jointly administered under the caption “In re: Garrett Motion Inc., 20-12212.”

On the Petition Date, the Debtors entered into a Restructuring Support Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “RSA”) with consenting lenders (the “Consenting Lenders”) holding, in the aggregate, approximately 61% of the aggregate outstanding principal amount of loans under that certain Credit Agreement, dated as of September 27, 2018, (as amended, restated, supplemented or otherwise modified from time to time, the “Prepetition Credit Agreement”) by and among the Company, as Holdings, Garrett LX III S.à r.l., as Lux Borrower, Garrett Borrowing LLC, as U.S. Co-Borrower, Garrett Motion S.à r.l., as Swiss Borrower, the Lenders and Issuing Banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Pursuant to the RSA, the Consenting Lenders and the Debtors agreed to the principal terms of a financial restructuring, to be implemented through a plan of reorganization under the Bankruptcy Code, and which could include the sale of all or substantially all of the assets of certain Debtors and of the stock of certain Debtors and other subsidiaries, as further described below. On January 6, 2021, the Debtors and Consenting Lenders holding no less than a majority of the aggregate outstanding principal amount of loans under the Prepetition Credit Agreement then held by all Consenting Lenders entered into Amendment No. 1 to the Restructuring Support Agreement (the “Amendment”), which, among other things, extended certain milestones contained in the RSA.

On the Petition Date, certain of the Debtors also entered into a share and asset purchase agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Stalking Horse Purchase Agreement”) with AMP Intermediate B.V. (the “Stalking Horse Bidder”) and AMP U.S. Holdings, LLC, each affiliates of KPS Capital Partners, LP (“KPS”), pursuant to which the Stalking Horse Bidder agreed to purchase, subject to the terms and conditions contained therein, substantially all of the assets of the Debtors. The Stalking Horse Purchase Agreement constituted a “stalking horse” bid that was subject to higher and better offers by third parties in accordance with the bidding procedures approved by the Bankruptcy Court in an order entered by the Bankruptcy Court after hearings on October 21, 2020 and October 23, 2020 (the “Bidding Procedures Order”). The Bidding Procedures Order permitted third parties to submit competing proposals for the purchase and/or reorganization of the Debtors and approved stalking horse protections for the Stalking Horse Bidder.

On October 6, 2020, the Bankruptcy Court entered an order granting interim approval of the Debtors’ entry into a Senior Secured Super-Priority Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”), with the lenders party thereto (the “DIP Lenders”) and Citibank N.A. as administrative agent (the “DIP Agent”). On October 9, 2020 (the “Closing Date”), the Company, the DIP Agent and the DIP Lenders entered into the DIP Credit Agreement. The DIP Credit Agreement provides for a senior secured, super-priority term loan (the “DIP Term Loan Facility”) in the principal amount of $200 million, $100 million of which was funded on the Closing Date and $100 million of which was subsequently funded on October 26, 2020, following entry of the Bankruptcy Court’s final order approving the DIP Term Loan Facility on October 23, 2020. The proceeds of the DIP Term Loan Facility are to be used by the Debtors to (a) pay certain costs, premiums, fees and expenses related to the Chapter 11 Cases, (b) make payments pursuant to any interim or final order entered by the Bankruptcy Court pursuant to any “first day” motions permitting the payment by the Debtors of any prepetition amounts then due and owing, (c) make certain adequate protection payments in accordance with the DIP Credit Agreement and (d) fund working capital needs of the Debtors and their subsidiaries to the extent permitted by the DIP Credit Agreement. On October 12, 2020, the Company, the DIP Agent and the DIP Lenders entered into the First Amendment to the DIP Credit Agreement (the “First DIP Amendment”). The First DIP Amendment eliminates the obligation for the Company to pay certain fees to the DIP Lenders in connection with certain prepayment events under the DIP Credit Agreement.

In accordance with the Bidding Procedures Order, the Debtors held an auction (the “Auction”) at which they solicited and received higher and better offers from KPS and from a consortium made up of Owl Creek Asset Management, L.P., Warlander Asset Management, L.P., Jefferies LLC, Bardin Hill Opportunistic Credit Master Fund LP, Marathon Asset Management L.P., and Cetus Capital VI, L.P., or affiliates thereof (collectively, the “OWJ Group”). In addition to the bids received at the Auction from KPS and the OWJ Group, the Debtors also received a transaction proposal in parallel from Centerbridge Partners, L.P., Oaktree Capital Management, L.P., Honeywell International Inc. and certain other investors and parties (collectively, the “CO Group”). The Auction was completed on January 8, 2021, at which point the Debtors filed with the Bankruptcy Court (i) an auction notice noting that a bid received from KPS was the successful bid at the Auction but that the Debtors were still considering the proposal from the CO Group, (ii) a plan of reorganization (as may be amended, restated, supplemented or otherwise modified from time to time, the “Plan”) and (iii) a related disclosure statement (as may be amended, restated, supplemented or otherwise modified from time to time, (the “Disclosure Statement”).

On October 1, 2018, ~~(the “Distribution Date”),~~ Garrett Motion Inc. became an independent publicly-traded company through a pro rata distribution (the “Distribution”) by Honeywell International Inc. (“Former Parent” or “Honeywell”) of 100% of the then-outstanding shares of Garrett to Honeywell’s stockholders (the “Spin-Off”). Each Honeywell stockholder of record received one share of Garrett common stock for every 10 shares of Honeywell common stock held on the record date. Approximately 74 million shares of Garrett common stock were distributed on October 1, 2018 to Honeywell stockholders. In connection with the Spin-Off, Garrett´s common stock began trading “regular-way” under the ticker symbol “GTX” on the New York Stock Exchange on October 1, 2018.

Unless the context otherwise requires, references to “Garrett,” “we,” “us,” “our,” and “the Company” in this Annual Report on Form 10-K refer to ~~(i) Honeywell’s Transportation Systems Business (the “Transportation Systems Business” or the “Business”) prior to the Spin-Off and (ii)~~ Garrett Motion Inc. and its subsidiaries following the ~~Spin-Off, as applicable.~~Spin-Off.

This Annual Report on Form 10-K contains financial information that was derived partially from the consolidated financial statements and accounting records of Honeywell. The accompanying consolidated and combined financial statements of Garrett (“Consolidated and Combined Financial Statements”) reflect the consolidated and combined historical results of operations, financial position and cash flows of Garrett, for ~~the 2018 period~~periods following the Spin-Off, and the Transportation Systems Business, for all periods prior to the Spin-Off, as it was historically managed in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Therefore, the historical consolidated and combined financial information may not be indicative of our future performance and does not necessarily reflect what our consolidated and combined results of operations, financial condition and cash flows would have been had the Business operated as a separate, publicly traded company during the entirety of the periods presented, particularly because of changes that we have experienced, and expect to continue to experience in the future, as a result of our separation from Honeywell, including changes in the financing, cash management, operations, cost structure and personnel needs of our business.

Throughout thisAnnual Report on Form 10-K,wereferencecertainindustrysources.Whilewe believethe compound annual growth rate(“CAGR”) and otherprojectionsof the industrysourcesreferencedinthisAnnual Report on Form 10-Kare reasonable,forecastsbased upon such data involveinherentuncertainties,and actualoutcomesare subjectto change based upon variousfactorsbeyond our control. All data from industry sources is provided as of the latest practicable date prior to the filing of this Annual Report on Form 10-K and may be subject to change.

This Annual Report on Form 10-K contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as ~~amended (the “Exchange Act”).~~amended. All statements other than statements of historical fact contained in this Annual Report, including without limitation statements regarding our future results of operations and financial position, the consequences and outcome of the Chapter 11 Cases, other potential claims against the Debtors related to the Chapter 11 Cases, the completion of the Transaction (including our global settlement with Honeywell), the impact of the delisting of our common stock from the New York Stock Exchange, the anticipated impact of the novel coronavirus (“COVID-19”) pandemic on our business, results of operations and financial position, expectations regarding the growth of the turbocharger and electric vehicle markets and ~~connected vehicle markets,~~other industry trends, the sufficiency of our cash and cash equivalents, anticipated sources and uses of cash, anticipated investments in our business, our business strategy, pending litigation, anticipated payments under our agreements with Honeywell, if our global settlement with Honeywell is not approved by the Bankruptcy Court, and the expected timing of those payments, anticipated interest expense, and the plans and objectives of management for future operations and capital expenditures are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions. The ~~forward-lookin~~gforward-looking statements in this Annual Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Annual Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, ~~including:~~including the factors described in Part I, Item 1A. “Risk Factors,” of this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission.

You should read this Annual Report and the documents that we reference ~~in this Annual Report~~herein completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Our business is subject to numerous risks and uncertainties, including those described in Part I Item 1A. “Risk Factors” in this Annual Report on Form 10-K. You should carefully consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include the following:

Our Company designs,manufacturesand sellshighly engineeredturbocharger andelectric-boosting technologiesfor light and ~~connected~~commercial vehicle ~~technologies for~~ original equipment manufacturers (“OEMs”)and the ~~aftermarket.~~global vehicle independent aftermarket as well as automotive software solutions.These OEMs in turn ship to consumers globally. We are a globaltechnologyleaderwith significantexpertisein deliveringproductsacrossgasoline,diesel,naturalgas and ~~electrified (hybrid~~ electric(hybridand fuelcell)powertrains. These products are key enablers for fuel economy and emission standards compliance.

Our productsare highly engineeredfor each individualpowertrainplatform,requiringclosecollaboration with our customersin the earliestyearsof powertrainand newvehicledesign. Our turbochargingand electric-boostingproductsenableour customersto improvevehicleperformancewhile addressingcontinuallyevolving and convergingregulationsthatmandatesignificantincreasesin fuelefficiencyand reductionsin exhaust emissionsworldwide.

We offer light vehicle gasoline, light vehicle diesel and commercial vehicle turbochargers that enhance vehicle performance, fuel economy and drivability. A turbocharger provides an engine with a controlled and pressurized air intake, which intensifies and improves the combustion of fuel to increase the amount of power sent through the transmission and to improve the efficiency and exhaust emissions of the engine. Marketpenetrationof light vehicleswith a turbochargeris expectedto increasefrom approximately ~~49%~~ 51% in ~~2018~~2020 to approximately ~~57%~~55% by ~~2022,~~2025, accordingto IHS ~~and other industry sources,~~ Markit (“IHS”),which webelievewill allow ~~our business~~ the turbocharger marketto grow at a fasterratethan overallautomobileproduction.

Building on our expertisein turbochargertechnology,wehave also developedelectric-boosting technologiestargetedfor use in electrifiedpowertrains,primarilyhybrid and fuelcellvehicles.Our products includeelectricturbochargersand electriccompressorsthatprovidemoreresponsivedrivingand optimizedfuel economy in electrifiedvehicles.Our early-stageand collaborativerelationshipswith our globalOEM customerbase have enabledus to increaseour knowledge of customerneeds for vehiclesafety, predictive maintenance, and advanced controllersto develop newconnectedand software-enabledproducts.

In addition,wehave emergingopportunitiesin technologies,productsand servicesthatsupportthe growing connectedvehiclemarket,which includesoftwarefocusedon automotivecybersecurityand integrated vehicle health management (“IVHM”). Our focus is developing solutions for enhancing cybersecurity of connected vehicles, as well as in-vehicle monitoring to provide maintenance diagnostics, which reduce vehicle downtime and repair costs. For example, our Intrusion Detection and Prevention System uses anomaly detection technology that functions like virus detection software to perform real-time data analysis to ensure every message received by a car’s computer is valid. Our IVHM tools detect intermittent faults and anomalies within complex vehicle systems to provide a more thorough understanding of the real-time health of a vehicle system and enable customers to fix faults before they actually occur. Weare collaboratingwith tier-onesupplierson automotivecybersecuritysoftwaresolutionsand with several majorOEMson IVHMtechnologies.

Our comprehensiveportfolioof turbocharger,electric-boostingand connectedvehicletechnologiesis supportedby our five research and development (“R&D”)centers, 1311 close-to-customerengineeringfacilitiesand 13 factories,which are strategicallylocatedaround the world. Our operationsin each regionhave self-sufficientsales,engineeringand productioncapabilities,makingus a nimblelocalcompetitor,while our standardizedmanufacturingprocesses, globalsupply chain, worldwide technologyR&Dand sizeenableus to deliverthe scalebenefits,technology leadership,cross-regionalsupportand extensiveresourcesof a globalenterprise.In high-growthregions, includingChina and India,wehave establisheda localfootprint,which has helped us securestrongpositions with in-regionOEMcustomerswhodemand localizedengineeringand manufacturingcontentbut also require the capabilitiesand trackrecordof a globalleader.

We also sellour technologiesin the globalaftermarketthrough our distributionnetwork of morethan ~~190~~200 distributorscovering160 countries. Through thisnetwork, weprovideapproximately5,300 part-numbersand productsto servicegaragesacrossthe globe. Garrett is a leadingbrand in the independent aftermarketfor both servicereplacementturbochargersas well as high-endperformanceand racing turbochargers.We estimatethatover ~~100~~110 millionvehicleson the road today utilizeour products, furthersupportingour globalaftermarketbusiness.

Leading technology,continuousinnovation,productperformanceand OEMengineeringcollaborationare centralto our customervalue propositionand a core partof our cultureand heritage.In 1962, weintroduceda turbochargerfor a mass-producedpassengervehicle.Since then, wehave introducedmany othernotable technologiesin mass-productionvehicles,such as turbochargerswith variablegeometryturbines,dual-boost compressors,ball-bearingrotorsand electronicallyactuatedcontrols,allof which vastlyimproveengine responsewhenacceleratingat low speeds and increasepower at higherspeeds and enablesignificant improvementsin overallengine fueleconomy and exhaustemissionsfor both gasolineand dieselengines.Our portfoliotoday includes~~morethan 1,400~~approximately 1,600 patentsand patentspending.

On the Petition Date, the Debtors each entered into the RSA and filed a voluntary petition for relief under the Bankruptcy Code in the Bankruptcy Court. The Chapter 11 Cases are being jointly administered under the caption “In re: Garrett Motion Inc., 20-12212.”

On the Petition Date, certain of ~~December 31, 2018,~~the Debtors also entered into the Stalking Horse Purchase Agreement with the Stalking Horse Bidder and AMP U.S. Holdings, LLC, each affiliates of KPS, pursuant to which the Stalking Horse Bidder agreed to purchase, subject to the terms and conditions contained therein, substantially all of the assets of the Debtors. The Stalking Horse Purchase Agreement constituted a “stalking horse” bid that was subject to higher and better offers by third parties in accordance with the bidding procedures approved by the Bankruptcy Court in the Bidding Procedures Order. The Bidding Procedures Order permitted third parties to submit competing proposals for the purchase and/or reorganization of the Debtors and approved stalking horse protections for the Stalking Horse Bidder.

On the Petition Date, we ~~employed approximately 6,000 full-time employees and 1,500 temporary and contract workers globally, including 1,200 engineers. Our Company was incorporated on March 14, 2018~~were notified by the New York Stock Exchange (the “NYSE”) that, as a ~~Delaware corporation~~result of the Chapter 11 Cases, and in accordance with Section 802.01D of the NYSE Listed Company Manual, that NYSE had commenced proceedings to delist our common stock from the NYSE. The NYSE indefinitely suspended trading of our common stock on September 21, 2020. We determined not to appeal the NYSE’s determination. On October 8, 2020, the NYSE filed a Form 25-NSE with the Securities and Exchange Commission, which removed our common stock from listing and registration on the NYSE effective as of the opening of business on October 19, 2020. The delisting of our common stock from NYSE has and could continue to limit the liquidity of our common stock, increase the volatility in the price of our common stock, and hinder our ability to raise capital.

In accordance with the Bidding Procedures Order, the Debtors held the Auction at which they solicited and received higher and better offers from KPS and the OWJ Group. In addition to the bids received at the Auction from KPS and the OWJ Group, the Debtors also received a transaction proposal in parallel from the CO Group. The Auction was completed on January 8, 2021, at which point the Debtors filed with the Bankruptcy Court (i) an auction notice noting that a bid received from KPS was the successful bid at the Auction but that the Debtors were still considering the proposal from the CO Group, (ii) the Plan and Disclosure Statement. On January 11, 2021, the Debtors, having determined that the proposal from the CO Group was a higher and better proposal than the successful bid of KPS at the Auction, entered into the PSA and announced their intention to pursue a restructuring transaction with the CO Group. As a result of the entry into the PSA, (i) the Debtors filed a supplemental auction notice with the Bankruptcy Court on January 11, 2021 describing the Debtors’ determination to proceed with the Transaction, (ii) the Debtors filed a revised Plan and related revised Disclosure Statement with the Bankruptcy Court on January 22, 2021 to implement the Transaction and (iii) the Stalking Horse Purchase Agreement became terminable, following which, on January 15, 2021, the Stalking Horse Bidder terminated the Stalking Horse Purchase Agreement and the Debtors subsequently paid a termination payment of $63 million and an expense reimbursement payment of $15.7 million to the Stalking Horse Bidder pursuant to the terms of the Stalking Horse Purchase Agreement and the Bidding Procedures Order.

Under the terms of the PSA and the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the indemnification and reimbursement agreement with Honeywell entered into on September 12, 2018 (the “Honeywell Indemnity Agreement”), that certain Indemnification Guarantee Agreement, dated as of September 27, 2018 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time), by and among Honeywell ASASCO 2 Inc. as payee, Garrett ASASCO as payor, and certain subsidiary guarantors as defined therein (the “Guarantee Agreement,” and together with the Honeywell Indemnity Agreement, the “Indemnity Agreements”) and the tax matters agreement with Honeywell, dated September 12, 2018 (the “Tax Matters Agreement”) and (b) the dismissal with prejudice of the lawsuits against Honeywell relating to the Honeywell Indemnity Agreement and the Tax Matters Agreement (the “Honeywell Litigation”) in exchange for (x) a $375 million cash payment by the company at emergence from chapter 11 (“Emergence”) and (y) new Series B Preferred Stock issued by the Company payable in installments of $35 million in 2022, and $100 million annually 2023-2030 (the “Series B Preferred Stock”).

On February 15, 2021, the Debtors and the CO Group agreed with certain of the Consenting Lenders to amend and restate the PSA so as to, among other things, add certain of the Consenting Lenders as parties thereto supporting the Plan.

The Debtors’ entry into and performance and obligations under the PSA and the EBCA are subject to approval by the Bankruptcy Court and other customary closing conditions. On February 9, 2021, the Equity Committee filed an objection to the Debtors’ motion seeking authority to enter into and perform under the PSA and the ECBA. A hearing on the matter is scheduled to take place in the Bankruptcy Court on February 16, 2021. There can be no assurances that the Debtors will obtain the approval of the Bankruptcy Court and complete the Transaction.

On January 24, 2021, representatives of the Equity Committee submitted a restructuring term sheet for the Atlantic Park Proposal. The Equity Committee subsequently filed with the Bankruptcy Court on February 5, 2021, a proposed plan of reorganization and related disclosure statement with respect to the Atlantic Park Proposal. The transactions contemplated under the Atlantic Park Proposal have been proposed as an alternative to the transactions contemplated under the Plan. In connection with the ~~Spin-Off from Honeywell,~~Atlantic Park Proposal, the Equity Committee filed a motion with the Bankruptcy Court seeking to modify the Debtors’ exclusive periods to file and solicit votes on a Chapter 11 plan. The Equity Committee’s motion is scheduled to be heard by the Bankruptcy Court on February 16, 2021. The Company has significant concerns with the feasibility of the Atlantic Park Proposal and has concluded that at this time the transactions contemplated under the Atlantic Park Proposal are not reasonably likely to lead to a higher and better alternative plan of reorganization as compared to the Plan.

For additional information regarding the Chapter 11 Cases, reorganization, the PSA, the ECBA and the Transaction, see “Explanatory Note” and Note 2, Reorganization and Chapter 11 Proceedings of the Notes to the Consolidated and Combined Financial Statements.

The ongoing global COVID-19 pandemic has created unparalleled challenges for the auto industry in the short-term. In the three months ended March 31, 2020, our manufacturing facility in Wuhan, China was shut down for six weeks in February and March and we ~~maintain~~saw diminished production in our ~~headquarters~~Shanghai, China facility for that same time period, which adversely impacted our net sales for the period. During the second quarter, our facilities in ~~Rolle, Switzerland. See “Basis~~China re-opened, however our manufacturing facilities in Mexicali, Mexico and Pune, India were shut down for five weeks and our manufacturing facilities in Europe operated at reduced capacity. During this time, we implemented a set of ~~Presentation” above~~hygiene and safety measures that complied with, and in many places exceeded local regulations in order to protect our employees while maintaining commitments vis-a-vis our customers. This combined with the fast recovery observed in all geographies has enabled us to ramp up production in most of our production sites to normal levels in the third quarter of 2020. This trend has been confirmed in the fourth quarter, despite the resurgence of infection rates in U.S. and European Union. If the COVID-19 pandemic drives new lockdown measures impacting our manufacturing facilities, our facilities may be forced to shut down or operate at reduced capacity again. Additional or continued facilities closures or reductions in operation could significantly reduce our production volumes and have a material adverse impact on our business, results of operations and financial condition.

Analyst consensus for ~~additional information on~~ the ~~Spin-Off.~~full year 2020 anticipates a 17% decrease in global light vehicle production, and for a 10% decline in commercial vehicle production, a larger drop than during the financial crisis in 2008 and 2009. In 2021, a partial recovery is expected with a rebound of light vehicle production of 14% and commercial vehicles of 6%. As a result, we estimate that a contraction of approximately 13% for the combined light and commercial vehicle turbocharger industry volume occurred in 2020 and we expect a rebound of 13% in 2021. We have prepared contingency plans for multiple scenarios that we believe will allow us to react swiftly to changes in customer demand while protecting Garrett’s long-term growth potential. The supplies needed for our operations were generally available throughout 2020. In limited circumstances, certain suppliers experienced financial distress during 2020, resulting in supply disruptions. However, during 2020, we implemented new procedures for monitoring of supplier risks associated with COVID-19 and the Chapter 11 Cases and believe we have substantially addressed such risks with manageable economic impacts

including use of Premium Freight or adjusted payment terms that are limited in time. In addition, we have implemented cost control measures and cash management actions, including:

The following charts show our percentage of revenues by geographic region and product line for the years ended December 31, 2020, 2019 and 2018 and the percentage change from the prior year comparable period.

We competein the globalturbochargermarketfor gasoline,dieseland naturalgas engines;in the electric- boostingmarketfor electrified ~~(hybrid~~ (hybridand fuelcell)vehiclepowertrains;and in the emergingconnectedvehicle softwaremarket.Asvehiclesbecomemoreelectrified,our electric-boostingproductsuse principles similar to our turbochargersto furtheroptimizeairintakeand thus further enhance performance,fueleconomy and exhaustemissionswith the help of an integratedhigh-speedelectric motor.Byusing a turbochargeror electric-boostingtechnology,an OEMcan deploy smaller,lighterpowertrains with betterfueleconomy and exhaustemissionswhile deliveringthe samepower and accelerationas larger, heavierpowertrains.Assuch, turbochargershave becomeone of the mosthighly effectivetechnologiesfor helpingglobalOEMsmeetincreasinglystricteremissionstandards.

~~Throughout this section of this Annual Report on Form 10-K, we reference certain industry sources. While we believe the compound annual growth rate~~ ~~(“CAGR”)~~ and other projections of the industry sources referenced in this Annual Report on Form 10-K are reasonable, forecasts based upon such data involve inherent uncertainties, and actual outcomes are subject to change based upon various factors beyond our control.

The global turbocharger market includes turbochargers for new light and commercial vehicles as well as turbochargers for replacement use in the global aftermarket. According to IHS and other ~~industry sources,~~experts, the global turbocharger market consisted of approximately 5144 million unit sales with an estimated total value of approximately ~~$12~~$10 billion in ~~2018.~~2020. Within the global turbocharger market, light vehicles accounted for approximately ~~88%~~90% of total unit volume and commercial vehicles accounted for the remaining ~~12%~~10%.

~~IHS and other industry sources~~Consultants project that the turbocharger production volume will grow at a CAGR of approximately 6%3% from ~~2018~~2019 through ~~2022,~~2025, driven mainly by ~~double-digit growth~~ in turbochargers for light vehicle gasoline engines and continued ~~low single-digit~~slow growth for commercial vehicles, offset by a ~~modest~~ decline in diesel turbochargers given a decline in diesel powertrains, particularly for light vehicles.Thisannualsalesestimate wouldaddapproximately ~~307~~ 372million new turbochargedvehiclesontheroadgloballybetween ~~2018~~ 2019and ~~2022.~~2025.

Current global economic conditions due to COVID-19 have adversely affected and may continue to adversely affect many industries including the Automotive sector. Analysts estimate that automotive industry revenue dropped 11% in 2020, compared to 2019, according to Standard & Poor’s Capital IQ. According to the same dataset, other industries that drive, in particular, Off-Highway commercial vehicle turbo demand, such as Oil and Gas (24%), Railroads (16%) or Marine (2%) recorded drops in industry revenue over the same period. Global GDP growth, while restarting in second half of 2020 on the back of global government stimulus programs, will remain 5 percentage points below pre-crisis forecasts at least until 2023, according to the OECD. Consequently, IHS reduced its light vehicle production volume forecast for 2025 from 102 million units that they forecasted in 2019 to 95 million units in their January 2021 light vehicle industry production volume forecast. While this resets the volume outlook for the automotive industry, the underlying growth drivers for the turbo industry remain unchanged: Growth in the overall vehicle industry (albeit from a lower base), increasingly tight fuel efficiency and ~~emissions standards.~~ ~~OEMsare facingincreasinglystrictconstraintsfor vehiclefuelefficiency~~emission standards, and ~~emissionsstandardsglobally.Regulatoryauthoritiesin key vehiclemarketssuch as the United States,the European Union, China, Japan, and Korea have institutedregulationsthatrequiresustained and significantimprovements~~in ~~CO2,NOxand particulatemattervehicleemissions.OEMsare required~~to~~evaluateand adopt varioussolutionsto addressthesestricterstandards.Turbochargersallow OEMsto reduce engine sizewithout sacrificingvehicleperformance,therebyincreasingfuelefficiencyand decreasingharmful emissions.Furthermore,turbochargersallow moreprecise“aircontrol”over both engine intakeand exhaust conditionssuch as gas pressures,flows and temperatures,enablingoptimizationof the combustionprocess.This combustionoptimizationis criticalto engine efficiency,exhaustemissions,power and transientresponseand enablessuch conceptsas exhaustgas recirculationfor dieselenginesand Miller-cycleoperationfor gasoline engines.Consequently, we believeturbochargingwill continueto be a key technologyfor automakersto meetfuturetough fueleconomy and emissionsstandardswithout sacrificingperformance.~~growing turbocharger penetration.

~~Turbocharger penetration.~~ ~~The utilizationof turbochargersand electric-boostingtechnologieson vehicle powertrainsystemsis one of the mostcost-effectivesolutionsto addressstricterstandards,and OEMsare increasingtheiradoptionof thesetechnologies.IHSand otherindustrysourcesexpectturbochargerpenetration to increase~~ ~~globally~~ ~~fromapproximately49% in 2018 to approximately57% by 2022. IHS forecasts particularly strong turbocharger penetration growth for gasoline turbochargers, expecting an increase from approximately 36% in 2018 to 51% in 2022.~~

Growthin overallvehicleproduction. ~~Over the next 5 years, we~~After a decrease of 17% in Light Vehicle production and 10% in Commercial Vehicle production in 2020, consultants expect ~~that overall vehicle production will experience~~ a ~~modest CAGR of about 1~~stabilization in 2021. The global automotive industry is expected to ~~2%.~~reach pre-crisis volumes in 2022-2023. The shift from pure gasoline and diesel internal combustion engines to hybridized powertrains ~~will~~is expected to continue in response to increasingly strict fuel efficiency and regulatory standards. In parallel, the share of pure electric vehicles ~~will~~is expected to continue to increase from a low base as technology and supporting infrastructure continue to improve.

Global vehiclefuelefficiencyand emissionsstandards. OEMsare facingincreasinglystrictconstraintsfor vehiclefuelefficiencyand emissionsstandardsglobally.Regulatoryauthoritiesin key vehiclemarketssuch as the United States,the European Union, China, Japan, and Korea have institutedregulationsthatrequiresustained and significantimprovementsin CO2,NOxand particulatemattervehicleemissions.OEMsare requiredtoevaluateand adopt various

solutionsto addressthesestricterstandards.Turbochargersallow OEMsto reduce engine sizewithout sacrificingvehicleperformance,therebyincreasingfuelefficiencyand decreasingharmful emissions.Furthermore,turbochargersallow moreprecise“aircontrol”over both engine intakeand exhaust conditionssuch as gas pressures,flows and temperatures,enablingoptimizationof the combustionprocess.This combustionoptimizationis criticalto engine efficiency,exhaustemissions,power and transientresponseand enablessuch conceptsas exhaustgas recirculationfor dieselenginesand Miller-cycleoperationfor gasoline engines.Consequently, we believeturbochargingwill continueto be a key technologyfor automakersto meetfuturetough fueleconomy and emissionsstandardswithout sacrificingperformance.

Turbocharger penetration.The utilizationof turbochargersand electric-boostingtechnologieson vehicle powertrainsystemsis one of the mostcost-effectivesolutionsto addressstricterstandards,and OEMsare increasingtheiradoptionof thesetechnologies.IHSand otherindustrysourcesexpect total turbochargerpenetration to increase globally fromapproximately53% in 2020 to approximately56% by 2025. IHS forecasts particularly strong turbocharger penetration growth for gasoline turbochargers, expecting an increase from approximately 44% in 2020 to 56% in 2025.

Engine sizeand complexity. In orderto addressstricterfueleconomy standards,OEMshave usedturbochargersto reducethe averageengine sizeon theirvehiclesover timewithout compromisingperformance. Stricterpollutantsemissionsstandards(primarilyfor NOxand particulates)have drivenhigherturbochargeradoptionas well, which we believe will continuein the future,with a predicted totalautomotiveturbochargersalesvolumeCAGRof 6%3% between ~~2018~~2019 and ~~2022,~~2025, in an industrywith a predicted totalautomobilesalesvolumeCAGRof approximately2%1% over the sameperiod, in each case accordingto IHSand otherindustrysources. In addition,increasinglydemandingfueleconomy standardsrequirecontinuousincreasesin turbochargertechnologycontent(e.g., variablegeometry,electronicactuation,multiplestages,ballbearings,electricalcontrol,etc.)which resultsin steadyincreasesin averageturbochargercontentper vehicle.

Powertrain electrification. Toaddressstricterfueleconomy standards,OEMsalso have been increasingtheelectrificationof theirvehicleofferings,primarilywith the additionof hybrid vehicles,which have powertrains equipped with a gasolineor dieselinternalcombustionengine in combinationwith an electricmotor.IHS estimatesthathybrid vehicles globally will grow froma totalof approximately~~4.6~~5.3 millionvehiclesin ~~2018~~2019 to ~~a totalof approximately18.1~~29.5 million vehiclesby ~~2022,~~2025, representinga CAGRof ~~41%~~33%. The electrifiedpowertrainof hybrid vehicles enablesthe usage of highly synergisticelectric-boostingtechnologieswhich augmentstandardturbochargers with electricallyassistedboostingand electrical-generationcapability.Furthermore,the applicationof electric boostingextendsthe requirementfor engineeringcollaborationwith OEMsto includeelectricalintegration, softwarecontrols,and advanced sensing.Overall,thismove to electricboostingfurtherincreasesthe roleand value of turbochargingin improvingvehiclefueleconomy and exhaustemissions.

OEMs are also investing in full battery-electric vehicles ~~which have gained in popularity in recent years. However,~~to comply with increasingly tight regulatory targets across regions. IHS and other industry sources expect that they will compose ~~only 4%~~10% of total light and commercial vehicle production globally by ~~2022 due to their inherent limitations~~2025. Consumer adoption hinges on future battery cost – hence vehicle price - reductions,

increases in power density – hence driving range, and shorter recharging ~~time and their relatively high cost.~~times. As OEMs strive to solve ~~the~~these issues, ~~of full battery electric vehicles,~~ they are increasing investment in hydrogen fuel cell powered electric ~~vehicles.~~vehicles for demanding applications requiring long range, especially in the commercial vehicle space. These vehicles,likebatteryelectricvehicles,have fullyelectricmotor powertrains,but they relyon the hydrogen fuelcellto generatethe requiredelectricity.The hydrogen fuelcell also requiresadvanced electric-boostingtechnologyfor optimizationof sizeand efficiency.

Connected vehicles,autonomous vehicles,and shared vehicles.In addition to powertrain evolution, the market for connected ~~vehicles~~vehicle services is growing rapidly. According to Strategy&, a consulting firm, this market is expected to grow ~~38%~~34% per annum from approximately $3$8 billion in ~~2017~~2020 to approximately ~~$36~~$35 billion in 2025. Our IVHM, predictive maintenance, diagnostics and cybersecurity tools address this market. Their adoption should increase as advanced driver assistance features and ultimately autonomous driving increase requirements for vehicle functional safety. Simultaneously, our cybersecurity solutions protect those vehicles against outside interference to ensure correct functionality.

Vehicleownership in China and other high-growthmarkets. Vehicleownership in China and other emergingmarketsremainswell below ownership levelsin developedmarketsand will be a key driverof future vehicleproduction.At the sametime,thesemarketsare followingthe lead of developedcountriesby instituting stricteremissionstandards.Growth in productionvolumeand greaterpenetrationby largeglobalOEMsin these markets,along with evolvingemissionstandardsand increasingfueleconomy and vehicleperformancedemands, is drivingincreasingturbochargerpenetrationin high-growthregions.

We believethatwedifferentiateourselvesthrough the followingcompetitivestrengths:

We are a global leaderin the ~~$12~~$10 billionturbochargerindustry.We believe we will continueto benefitfromthe increasedadoptionof turbochargers,as well as our globaltechnologyleadership,comprehensiveportfolio, continuousproductinnovationand our deep-seatedrelationshipswith allglobalOEMs.We maintaina leadership positionacrossallvehicletypes, engine types and regions,including:

Commercial vehicles.Our Company tracesitsrootsto the 1950s whenwehelped develop a turbocharged commercialvehiclefor Caterpillar.We have maintainedour strategicrelationshipwith key commercialvehicle OEMsfor over 60 yearsas well as market-leadingpositionsacrossthe commercialvehiclemarketsfor both on- and off-highwayuse. Our productsimproveengine performanceand lower emissionson trucks,buses, agricultureequipment,constructionequipmentand miningequipmentwith engine sizesranging1.8Lto 105L.

High-growth regions. We have a strongtrackrecordservingglobaland emergingOEMs,including customersin China and India,with an in-market,for-marketstrategyand operatefullR&Dand three manufacturingfacilitiesin the high-growth regionsthatservelightand commercialvehicleOEMs.Our localpresencein high-growth regionshas helped us win business with key internationaland domesticChinese OEMs,and we~~have grown~~grew significantlyfasterthan the vehicleproductionin theseregions between 2013 and ~~2018 significantlyfasterthan the vehicleproductionin theseregions.~~2019.

We supply our productsto more than 60 OEMsglobally.Our top ten customersaccountedfor approximately ~~60%~~56% of net salesand our largestcustomer ~~represents~~ representedapproximately ~~13%~~ 10% of our net sales in ~~2018.~~ 2020.Withover 60 yearsin the turbochargerindustry,wehave developedstrongcapabilitiesworking with allmajorOEMs.We consistently meettheirstringentdesign, performanceand qualitystandardswhile achievingcapacityand deliverytimelines thatare criticalfor customersuccess.Our trackrecordof successfulcollaborations,as demonstratedby our strongclientbase and our abilityto successfullylaunch approximately100 productapplicationsannually,is well recognized.For example,wereceiveda 2017 AutomotiveNewsPACE™InnovationPartnershipAwardin supportingVolkswagen’s firstlaunch of an industry-leadingVNTturbochargedgasolineengine, which is justone exampleof our strongcollaborativerelationshipswith OEMs.Our regionalresearch,developmentand manufacturingcapabilitiesare a key advantagein helpingus to supply OEMsas they expand geographicallyand shifttowards standardizedenginesand vehicleplatformsglobally.

Wehaveanestimatedinstalledbaseofover~~100~~110millionvehiclesthatutilizeourproductsthroughourglobalnetworkof more than ~~190~~200distributorscovering160countries.OurGarrettaftermarketbrandhasstrongrecognitionacrossdistributorsandgaragesglobally,andisknownforboostingperformance,qualityandreliability.Ouraftermarketbusinesshashistoricallyprovidedastablestreamofrevenuesupportedbyourlargeinstalledbase.Asturbopenetrationratescontinuetoincrease,weexpectthatourinstalledbaseandaftermarketopportunitywillgrow.

We have led the revolutionin turbochargingtechnologyover the last60 yearsand maintaina leading technologyportfolioof ~~more than 1,400~~approximately 1,600 patentsand patentspending. We have a globallydeployed teamof more than ~~1,200~~1,250 engineersacrossfiveR&Dcentersand 1311 close-to-customerengineeringcenters.Our engineershave led the mainstreamcommercializationof severalleadingturbochargerinnovations,includingvariablegeometry turbines,dual-boostcompressors,ball-bearingrotors,electricallyactuatedcontrolsand air-bearingelectric compressorsfor hydrogen fuelcells.We maintaina cultureof continuousproductinnovation,introducingabout ten newtechnologiesper year and upgradingour existingkey productlinesapproximatelyevery 3 years.Outside of our turbochargerproductlines,weapply thiscultureof continuousinnovationto meetthe needs of our customersin newareas,particularlyin connectedautomotivetechnologies.We are developingsolutions, includingIVHMand cybersecuritysoftwaresolutions,thatleverageour knowledge of vehiclepowertrainsand experienceworking closelywith OEMmanufacturers.

Our geographicfootprintlocatesR&D,engineeringand manufacturingcapabilitiescloseto our customers, enablingus to tailortechnologiesand productsfor the specificvehicletypes sold in each geographicmarket.In allregionswhere weoperate,weleveragelow-costsourcingthrough our robustsupplierdevelopmentprogram, which continuallyworks to develop newsuppliers that are able to meetour specificquality,productivityand cost requirements.We nowsourcemorethan two-thirdsof our materialsfromlow-costcountriesand believeour high-quality,low-costsuppliernetwork to be a significantcompetitiveadvantage.We have investedheavilyto bring differentiatedlocalcapabilitiesto our customersin high-growthregions,includingChina and India.

In 2020 we ~~apply this~~ manufacturedmore than 87% ofourproductsinlow-costcountries,includingsevenmanufacturingfacilitiesinChina,India,Mexico,RomaniaandSlovakia.Wehavealong-standingcultureofleanmanufacturingexcellenceandcontinuousproductivityimprovement.Webelieveglobaluniformityandoperationalexcellenceacrossfacilitiesisakeycompetitiveadvantageinourindustrygiven that OEMengineplatformsareoftendesignedcentrallybutmanufacturedlocally,requiringsupplierstomeettheexactsamespecificationsacrossalllocations.

The Debtors, including Garrett, filed for relief under chapter 11 of ~~continuous innovation~~the Bankruptcy Code in September 2020, primarily with the intent to ~~meet~~restructure our balance sheet. Given the Company’s operational performance prior to the Petition Date, our day-to-day operations have been largely unaffected. If we are able to timely restructure our balance sheet, and accordingly emerge from the Chapter 11 Cases, Garrett expects to continue to invest in innovative technologies that address the needs of our customers in ~~new areas, particularly in connected automotive technologies. We are developing solutions, including IVHM~~the ongoing auto industry transformation. This continued investment into differentiated technology, coupled with our relentless focus on deep customer relations and ~~cybersecurity software solutions, that leverage~~ our ~~knowledge of vehicle powertrains and experience working closely with OEM manufacturers.~~

~~Our geographic footprint locates R&D, engineering and manufacturing~~global capabilities, ~~close to our customers, enabling~~will allow us to ~~tailor technologies and products for~~drive the specific vehicle types sold in each geographic market. In all regions where we operate, we leverage low-cost sourcing through our robust supplier development program, which continually works to develop new suppliers ~~that are~~ able to meet our specific quality, productivity and cost requirements. We now source more than two-thirds of our materials from low-cost countries and believe our high-quality, low-cost supplier network to be a significant competitive advantage. We have invested heavily to bring differentiated local capabilities to our customers in high-growth regions, including China and India.

We~~manufactureapproximatelythree quarters~~of~~ourproducts~~in~~low-costcountries,includingsevenmanufacturingfacilities~~in~~China,India,Mexico,RomaniaandSlovakia.~~We~~have~~a~~long-standingculture~~of~~leanmanufacturingexcellenceandcontinuousproductivityimprovement.~~We~~believeglobaluniformityandoperationalexcellenceacrossfacilities~~isa~~keycompetitiveadvantage~~in~~ourindustrygiven~~ ~~that~~ ~~OEMengineplatformsareoftendesignedcentrallybutmanufacturedlocally,requiringsuppliers~~to~~meettheexactsamespecificationsacrossalllocations.~~

~~We seek to continue to expand our~~ followingbusiness ~~by employing the following business~~ strategies:

We stand to benefitfromthe increasedadoptionof hybrid-electricand fuelcellvehiclesand the increased need for turbochargersassociatedwith increasedsalesvolumesfor theseengine types. IHSestimatesthatthe global productionof electrifiedvehicleswill increasefromapproximately ~~six~~7 millionvehiclesin ~~2018~~2019 to approximately 2442 millionvehiclesby ~~2022,~~2025, representingan annualizedgrowth rateof approximately ~~44%~~34%. OEMswill need to furtherimproveengine performancefor theirincreasinglyelectrifiedofferings,and our comprehensiveportfolio of turbochargerand electric-boostingtechnologiesare designed to help OEMsdo so. We expectto continueto investin productinnovationsand newtechnologiesand believethatweare well positionedto continueto be a technology-leaderin the propulsionof electrifiedvehicles.

~~IHS expects~~In 2020, after a steep drop in the first quarter due to strict lockdowns, vehicle production in ~~emerging markets~~China has experienced a very strong rebound which has partly compensated for the decline in the first quarter, with a full year drop of 5%, compared to ~~grow at an estimated CAGR of approximately 4% from 2018~~ 20%+ in other regions. IHSexpectsvehicleproductionin Chinato ~~2022.~~be stable next year. We plan to continueto strengthenour relationshipswith OEMsin high-growth,emerging regionsby demonstratingour technologyleadershipthrough our localresearch,developmentand manufacturing capabilities.Our localfootprintis expected to continueto providea strongcompetitiveedge in high-growthregionsdue to our abilityto work closelywith OEMsthroughoutallstagesof the productlifecycleincludingaftermarket support.For example,in China, our research

centerin Shanghai, our manufacturingfacilitiesin Wuhan and Shanghai and our morethan ~~950~~984 employeessupportour differentiatedend-to-endcapabilitiesand we believe will continue to supportkey platformwins in the Chinese market.Our operationsin China are expected to continueto benefitus as OEMs build globalplatformsin low cost regions.Our commitmentto providinghigh-touchtechnologysupportto OEMshas allowed us to be recognizedas a localplayerin otherkey high-growthregions,such as India.

Wehaveanopportunitytostrengthenourglobalnetworkof more than~~190~~200distributorsin160countriesbydeepeningourchannelpenetration,leveragingourwell-recognizedGarrettbrand,utilizingnewonlinetechnologiesforcustomerengagementandsales,andwideningtheproductportfolio.For example, in ~~160countries~~ by ~~deepeningourchannelpenetration,leveragingourwell-recognizedGarrettbrand,utilizingnewonlinetechnologiesforcustomerengagementandsales,andwideningtheproductportfolio.Forexample,~~2019 we~~have~~launched a global web-basedplatformprovidingself-servicetoolsaimed at connecting~~20,000~~garage technicians. In 2020 the platform attracted 170 thousand visitors and 22,000 registered garage technicians in ~~2019.~~ who used the platform to complete Garrett self-learning and certification steps.

We are activelyinvestingin softwareand servicesthatleverageour capabilitiesin powertrains,vehicle performancemanagement,and electrical/mechanicaldesign to capitalizeon the growth relatingto connected vehicles. ~~Approximately 35%~~More than 85% of passenger vehicles sold ~~globally~~ in ~~2015~~Europe and the United States and almost 50% of vehicles sold in China in 2020 were estimated to be connected in some way to the ~~Internet. By~~Internet according to Strategy&, a consultancy firm. According to the ~~end of the decade,~~same report, that number is expected to ~~exceed 90%.~~reach 100% in Europe and the United States and >90% in China by 2025. Building on the softwareand connectedvehiclecapabilitiesof our FormerParent,wehave assembleda teamof engineers,softwareand technicalexpertsand have opened newdesign centersin North America,Indiaand Czech Republic. We continueto conduct researchto determinekey areasof the marketwhere weare best positionedto leverageour existingtechnologyplatformsand capabilitiesto serveour customers.We executea portionof our connectivityinvestmentin collaborationwith OEMsand otherTier 1 suppliersand have multipleearly-stage trialswith customersunderway.

We maintaintechnicalengineeringcentersin major automotive productionregionsof the world to develop and provideadvanced products,processand manufacturingsupport to allof our manufacturingsites,and to provideour customers with localengineeringcapabilitiesand design developmentson a globalbasis.Asof December31, ~~2018,~~2020, we employedapproximately ~~1,200~~1,250 engineers.Our totalR&Dexpenseswere $111 million, $129 million and$128 millionfor the yearsended December31, 2020, 2019 and 2018, respectively. Additionally, the Company incurs engineering-related expenses ~~were approximately~~ ~~$128~~which are also included in Cost of goods sold of $13 million, ~~$119~~$5 million and ~~$112~~$10 million for the years ended December 31, ~~2018, 2017~~2020, 2019 and ~~2016, respectively.~~2018.

We currentlyhold approximately ~~1,400~~1,600 patentsand patentspending. Our current patents are expected to expire between 2021 and 2040. Whileno individualpatentor group of patents,taken alone, is consideredmaterialto our business,taken in the aggregate,thesepatentsprovide meaningfulprotectionfor our intellectualproperty.

The mostsignificantraw materialsweuse to manufactureour productsare grey iron, aluminum,stainless steeland a nickel-,iron- and chromium-basedalloy.Asof December31, ~~2018,~~2020, wehave not experiencedany significantshortageof raw materialsand normallydo not carryinventoriesof such raw materialsin excessof those reasonablyrequiredto meetour productionand shippingschedules.

Our globalcustomerbase includesnine of the ten largestlightvehicleOEMsand nine of the ten largest commercialvehicleengine makers.

Our ten largestapplicationsin ~~2018~~2020 were with seven differentOEMs. OEMsales were approximately ~~86%~~87% of our ~~2018~~2020 revenueswhile our aftermarketand otherproductscontributed ~~14%~~13%.

Our largest customer is Ford Motor Company (“Ford”). In ~~2018, 2017~~2020, 2019 and ~~2016,~~2018, Ford accounted for ~~13%~~10%, ~~14%~~12%, and ~~15%, respectively, of our total sales. In 2018, 2017 and 2016, our sales to Volkswagen AG (“Volkswagen”) were 8%, 8% and 10%~~13%, respectively, of our total sales.

We typicallysupply productsto our OEMcustomersthrough “open” purchaseorders,which are generally governed by termsand conditionsnegotiatedwith each OEM.Although the termsand conditionsvary fromcustomerto customer,they typicallycontemplatea relationshipunder which our customersare not required to purchasea minimumamountof productfromus. These relationshipstypicallyextend over the lifeof the relatedengine platform.Pricesare negotiatedwith respectto each businessaward, which may be subjectto adjustmentsunder certaincircumstances,such

as commodityor foreignexchange escalation/de-escalation clausesor for cost reductionsachievedby us. The termsand conditionstypicallyprovidethatweare subjectto a warrantyon the productssupplied.We may also be obligatedto sharein allor a partof recallcostsif the OEM recallsitsvehiclesfor defectsattributableto our products.

Individualpurchaseordersare terminablefor cause or non-performanceand, in mostcases,upon our insolvencyand certainchange of controlevents.In addition,many of our OEMcustomershave the option to terminatefor convenienceon certainprograms,which permitsour customersto imposepressureon pricing during the lifeof the vehicleprogram,and issuepurchasecontractsfor lessthan the durationof the vehicle program, ~~and issue purchase contracts for less than the duration of the vehicle program,~~ which potentiallyreducesour profitmarginsand increasesthe riskof our losingfuturesalesunder those purchasecontracts.We manufacture,and ship based on customerreleaseschedules,normallyprovidedon a weekly basis,which can vary due to cyclicalautomobileproductionor inventorylevelsthroughoutthe supply chain.

Although customerprogramstypicallyextend to futureperiods,and althoughthereis an expectationthatwe will supply certainlevelsof OEMproductionduring such futureperiods,customeragreementsincluding applicabletermsand conditionsdo not necessarilyconstitutefirmorders.Firmordersare generallylimitedto specificand authorizedcustomerpurchaseorderreleasesplacedwith our manufacturingand distributioncenters for actualproductionand orderfulfillment.Firmordersare typicallyfulfilledas promptlyas possiblefromthe conversionof availableraw materials,sub-componentsand work-in-processinventoryfor OEMordersand from currenton-hand finishedgoods inventoryfor aftermarketorders.The dollaramountof such purchaseorder releaseson hand and not processedat any point in timeis not believedto be significantbased upon the time frameinvolved.

We are subjectto the requirementsof environmentaland health and safetylaws and regulationsin each countryin which weoperate.These include, among other things,laws regulatingairemissions,water discharge,hazardousmaterials and waste management.We have an environmentalmanagementstructuredesignedto facilitateand supportour compliancewith theserequirementsglobally.Although it is our intentto complywith allsuch requirementsand regulations,wecannot provideassurancethatweare at alltimesin compliance.Environmentalrequirementsare complex,change frequentlyand have tended to becomemorestringentover time.Accordingly,wecannot assure thatenvironmentalrequirementswill not change or becomemorestringentover timeor thatour eventual environmentalcostsand liabilitieswill not be material.

Certainenvironmentallaws assessliabilityon currentor previousowners or operatorsof realpropertyfor the cost of removalor remediationof hazardoussubstances.At thistime,weare involvedin variousstagesof investigationand cleanuprelatedto environmentalremediationmattersat certainof our presentand former facilities.In addition,theremay be soilor groundwatercontaminationat severalof our propertiesresultingfrom historical,ongoing or nearby activities.

Asof December31, ~~2018,~~2020, the undiscountedreservefor environmentalinvestigationand remediationwas approximately $8$15.6 million.We do not currentlypossesssufficientinformationto reasonablyestimatethe amountsof environmentalliabilitiesto be recordedupon futurecompletionof studies,litigationor settlements, and wecannot determineeitherthe timingor the amountof the ultimatecostsassociatedwith environmental matters,which could be materialto our consolidated and combinedresultsof operationsand operatingcash flows in the periods recognizedor

paid. However, consideringour past experienceand existingreserves,wedo not expectthat environmentalmatterswill have a materialadverseeffecton our consolidated and combinedfinancialposition.

Additionally, ~~we are required~~ pursuant to the Honeywell Indemnity Agreement, Garrett ASASCO is obligated to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of ~~our Indemnification and Reimbursement~~this Honeywell Indemnity Agreement, ~~with Honeywell (the “Indemnification and Reimbursement Agreement”), we are~~Garrett ASASCO is responsible for paying to Honeywell such amounts, up to a cap of an amount equal to the Euro-to-U.S. dollar exchange rate determined by Honeywell as of a date within two business days prior to the date of the Distribution ~~Date Currency Exchange Rate~~ (1.16977 USD = 1 EUR) equivalent of $175 million ~~(exclusive of any late payment fees)~~ in respect of such liabilities arising in any given calendar year. ~~See “Risk Factors—Risks Relating to Our Business—We are subject to risks associated with the~~

~~Indemnification and Reimbursement Agreement, pursuant to which we are~~The payments that Garrett ASASCO is required to make ~~substantial cash payments~~ to Honeywell ~~measured in substantial part by reference~~pursuant to ~~estimates by~~the terms of the Honeywell ~~of certain of its liabilities”.~~Indemnity Agreement will not be deductible for U.S. federal income tax purposes. The ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. During the first quarter of 2020, Garrett ASASCO paid Honeywell the Euro-equivalent of $35 million in connection with the Honeywell Indemnity Agreement. Honeywell and Garrett agreed to defer the payment under the Honeywell Indemnity Agreement due May 1, 2020 to December 31, 2020 (the “Q2 Payment”), however we do not expect Garrett ASASCO to make payments to Honeywell under the Honeywell Indemnity Agreement during the pendency of the Chapter 11 Cases.

~~Employees~~Under the terms of the PSA and the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for, among other things, (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Indemnity Agreements and the Tax Matters Agreement and (b) the dismissal with prejudice of the Honeywell Litigation in exchange for (x) a $375 million cash payment at Emergence and (y) new Series B Preferred Stock.

Garrett’s mission to enable cleaner, safer vehicles is at the heart of its contribution to society. We develop solutions for the auto industry's most pressing sustainability issues, from emissions reduction to vehicle cybersecurity. Corporate responsibility is therefore a priority for the Company and its Board of Directors (the “Board”). The Board is responsible for promoting corporate responsibility and sustainability as well as monitoring adherence to Company standards. The Board manages oversight of sustainability through a Sustainability Committee, which is comprised of senior leaders in the business who assess and prioritize topics that are material for the business.

Garrett articulates its commitments to social and environmental considerations in the communities in which it operates in the Company’s Code of Business Conduct, which can be found on our website at www.garrettmotion.com under “Investors – Leadership & Governance.”

The Company intends to publish its first sustainability report in 2021 and to annually report progress on its sustainability commitments.

At Garrett, we place a high value on developing the right working environment and the right skillsets to advance our performance culture, support our growth strategy and ensure that the world at large can continue to benefit from breakthroughs in sustainable mobility. We invest in creating an inclusive, stimulating, and safe work environment where our employees can deliver their workplace best every day. As of December 31, ~~2018,~~2020, we employed approximately ~~6,000 full-time~~6,300 permanent employees and ~~1,500~~2,300 temporary and contract workers globally.

Diversity and Inclusion is one of Garrett’s four fundamentals. As such, we strive to ensure that our employees are each involved, supported, respected and connected. Embracing diverse thoughts and ideas through inclusion leads to a competitive advantage in the market, increased innovation as we generate new and better ideas, and customer-centric decision making.

For several years, the Company has supported awareness activities such as unconscious bias training and cultural adaptation assessments to foster an inclusive culture. In 2020, the Company took several steps to strengthen its approach to diversity, equity and inclusion. These include:

% of Female Representation in Garrett Workforce and Garrett 2025 Gender Diversity Ambition:

At Garrett, we encourage our employees to develop their skills and capabilities through a comprehensive Performance and Talent Management system. From annual goal-setting and performance reviews to learning opportunities for employees and leaders, Garrett helps its people align their professional experience with the Company’s business objectives and encourages them to take ownership of their development and career paths.

Our learning environment offers employees access to more than 1,000 online trainings that address a wide range of functional competencies, technical skills, and human skills. Learning can be self-paced, while Garrett’s growing online peer-to-peer learning communities also allow employees to easily access courses specific to their function and to share materials and ideas on the topics of interest. Dedicated programs support Garrett’s emerging leaders, and these were successfully transformed into virtual learning academies in 2020. Approximately ~~37%~~25,000 hours of training was delivered in 2020.

Garrett uses regular talent reviews to strengthen the Company’s internal development processes and to calibrate assessment of individual performance. Twice per year we hold succession planning meetings up to and including the Executive Level during which the bench-strength of teams are scrutinized and development plans for their talent are reviewed. Ahead of both annual and mid-year performance reviews, leaders hold calibration meetings to ensure that assessment ratings are consistent and fair amongst peer groups.

World-class health and safety considerations are integrated into Garrett’s procedures and processes. Our management systems apply global standards that are currently transitioning from OHSAS 18001 to ISO 45001 and that provide protection of human health during normal and emergency situations. Compliance with our standards and local regulatory requirements is monitored through a company-wide audit process. The timely development and implementation of process improvement and corrective action plans are closely monitored.

From early 2020, Garrett’s global Health and Safety team worked tirelessly to deliver and implement best practice safety guidelines relating to COVID-19. A global safety campaign was rolled out alongside dedicated employee newsletters to support the entire workforce with rules on staying safe and healthy. An ergonomics survey for employees working from home was also deployed to evaluate and drive any corrective measures required.

The particular focus on the health of our employees to address the challenges posed by COVID-19 also provided a benefit in the focus on their safety with a further reduction in our Total Case Incident Rate (“TCIR”). TCIR is measured as the number of recordable injuries and illnesses multiplied by 200,000 and then that number is divided by the total number of hours worked by employees. TCIR decreased from 0.23 in 2018 to 0.11 in 2019 and then to 0.09 in 2020.

Garrett’s Rewards programs are rooted in our “Be well, work well” principle, and aim to support employees in achieving the right work-life balance. We invest significant time and resources in establishing compensation programs that are both competitive and equitable. We constantly evaluate our positions for market competitiveness and adjust when necessary with the goal of ensuring the retention of top talent and continuation of equitable pay practices.

As part of our commitment to the well-being of our employees, Garrett offers an Employee Assistance Program (EAP). It is an external counseling service designed to assist employees with personal, family, or workplace matters. This service is confidential and is also available to each employee’s dependents.

In late 2020, Garrett made a number of well-being resources available to all its connected employees, including useful links and techniques for managing mental and physical health, in addition to dedicated online events.

Garrett’s Performance Management system aims to ensure that two-way dialogue is ongoing between employees and managers, punctuated by both an annual and a mid-year review, which provides employees the opportunity to express their opinions and ideas in terms of their development goals and career aspirations.

In 2020, Garrett piloted its first Employee Engagement Survey with a pilot program with one third of its workforce across three continents and achieved a very strong aggregated participation rate of 91%. The Company intends to roll out the Engagement Survey globally in 2021 and to set a baseline engagement score which will be monitored bi-annually.

Garrett’s strategy is to build positive, direct, business-focused working relationships with all employees in order to drive business results. Garrett respects employees’ rights and their wish to be part of employee representative bodies including unions, work councils and employee forums. The Company understands the value of collective bargaining in its labor and employee relations strategy and the importance of trust in its working relationships. Approximately 40% of the Company’s permanent employees (including both full-time ~~employees~~and part-time employees) are represented by unions and works ~~councils.~~councils under current collective bargaining agreements.

Garrett closely monitors employee turnover to measure retention and define improvement actions as and where necessary. As of December 2020, the Company’s annual turnover for 2020 was 9.01%.

Garrett places a high value on Science, Technology, Engineering and Math (“STEM”) research and learning opportunities that provide young people with the skills needed to develop the future of sustainable mobility. The Company sponsors higher education institutes in several countries to further critical research in technical areas and provide students with opportunities to study STEM programs.

Garrett’s Internship Programs enable students to connect theoretical knowledge with practical responsibilities in the spirit of ‘living laboratories’ during which they are encouraged to take ownership of business projects and define tactics to meet the project goals. Despite the challenging context of COVID-19, Garrett offered 100 internships in 10 countries in 2020.

Garrett also runs a Graduate Program which in 2020 provided 11 graduates in 3 countries with a unique 2-year opportunity to gain experience and exposure to Garrett’s cutting-edge technologies while at the same time building their leadership skills in a fast-paced and professional work environment.

The Company sponsors Formula SAE and Formula Student teams in several countries and in 2020 sponsored the European BEST Engineering Competition (EBEC), the biggest international technical competition in Central Europe, where Garrett defined an assignment for 24 students around the concept of sustainable Future Mobility.

Prior to COVID-19 Garrett teams regularly held open days for school children in their host communities, with a specific focus on encouraging girls to take an interest in STEM. With many host communities forced into lockdown in 2020 Garrett supported local first responders in several countries with the donation of PPE, and also provided food and sanitation products for 2,000 vulnerable families around Garrett’s Indian sites. Garrett is currently working on several projects to support distance learning in its host communities in 2021.

Our businessis typically moderatelyseasonal.Our primaryNorth Americancustomershistoricallyreduceproduction during the month of July and haltoperationsfor approximatelyone week in December;our European customers generallyreduceproductionduring the monthsof July and August and for one week in December;and our Chinese customersoftenreduceproductionduring the periodsurroundingthe Chinese NewYear. Shut-down periodsin the restof the world generallyvary by country.In addition,automotiveproductionis traditionally reducedin the monthsof July, August and Septemberdue to the launch of partsproductionfor newvehicle models.Accordingly,our resultsreflectthisseasonality. Our sales predictability in the short term might also be impacted by sudden changes in customer demand, driven by our OEM customers’ supply chain management.

We also typically experience seasonality in cash flow, as a relatively small portion of our full year cash flow is typically generated in the first quarter of the year and a relatively large portion in the last quarter. This seasonality in cash flow is mostly caused by timing of supplier payments for capital expenditures, changes in working capital balances related to the sales seasonality discussed above, and incentive payments.

These trends were less significant during 2020 as a result of the COVID-19 pandemic, but we expect them to continue in the future once the pandemic is resolved.

~~The SEC maintains an internet site that contains reports, proxy~~Our Company was incorporated on March 14, 2018 as a Delaware corporation in connection with the Spin-Off from Honeywell, and ~~information statements, and other~~we maintain our headquarters in Rolle, Switzerland. For additional information regarding ~~issuers that file electronically with~~ the ~~SEC, such as us,~~Spin-Off, see “Basis of Presentation” at ~~http://www.sec.gov~~. the beginning of this Annual Report on Form 10-K.

This Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, as well as all amendments and other reports filed with or furnished to the SEC, are also available free of charge on our internet site at https://www.garrettmotion.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Youshould carefullyconsiderallof the informationin thisAnnual Report on Form 10-K and each of the risks described below, which we believe are the principal risks we face. Anyof the followingriskscould materiallyand adverselyaffectour business,financialconditionand results of operationsand the actualoutcomeof mattersas to which forward-lookingstatementsare made in this Annual Report on Form 10-K. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations.

~~Industry~~Our ability to successfully operate during and ~~economic conditions may adversely affect~~reorganize the ~~markets and operating conditions of our customers, which in turn can affect demand for our products and services and our results of operations.~~

~~We are dependent on the continued growth, viability and financial stability of our customers. A substantial portion of our customers are OEMs~~Debtors in the ~~automotive industry. This industry~~Chapter 11 Cases is subject to rapid technological change often driven by regulatory changes, vigorous competition, short product life cycles and cyclical and reduced consumer demand patterns. In addition to general economic conditions, automotive sales and automotive vehicle production also depend on other factors, such as supplier stability, factory transitions, capacity constraints, the costs and availability of consumer credit, consumer confidence and consumer preferences. When our customers are adversely affected by these factors, we may be similarly affected to the extent that our customers reduce the volume of orders for our products. Economic declines and corresponding reductions in automotive sales and production by our customers, particularly with respect to light vehicles, have in the past had, and may in the future have, a significant adverse effect on our business, results of operations and financial condition.

Even if overall automotive sales and production remain stable, changes in regulations and consumer preferences may shift consumer demand away from the types of vehicles we prioritize or towards the types of vehicles where our products generate smaller profit margins. A decrease in consumer demand for the specific types of vehicles that have traditionally included our turbocharger products, such as a decrease in demand for diesel-fueled vehicles in favor of gasoline-fueled vehicles, or lower-than-expected consumer demand for specific types of vehicles where we anticipate providing significant components as part of our strategic growth plan, such as a decrease in demand for vehicles utilizing electric-hybrid and fuel cell powertrains in favor of full battery electric vehicles, could have a significant effect on our business. If we are unable to anticipate significant changes in consumer sentiment, or if consumer demand for certain vehicle types changes more than we expect, our results of operations and financial condition could be adversely affected.

Sales in our aftermarket operations are also directly related to consumer demand and spending for automotive aftermarket products, which may be affected by additional factors such as the average useful life of OEM parts and components, severity of regional weather conditions, highway and roadway infrastructure deterioration and the average number of miles vehicles are driven by owners. Improvements in technology and product quality are extending the longevity of vehicle component parts, which may result in delayed or reduced aftermarket sales. Our results of operations and financial condition could be adversely affected if we fail to respond in a timely and appropriate manner to changes in the demand for our aftermarket products.

~~Changes in legislation or government regulations or policies can have a significant impact on our results of operations.~~

The sales and margins of our business are directly impacted by government regulations, including safety, performance and product certification regulations, particularly with respect to emissions, fuel economy and energy efficiency standards for motor vehicles. Increased public awareness and concern regarding global climate change may result in more regional and/or federal requirements to reduce or mitigate the effects of greenhouse gas emissions. While such requirements can promote increased demand for our turbochargers and other products, several markets in which we operate are undertaking efforts to more strictly regulate or ban vehicles powered by certain older-generation diesel engines. If such efforts are pursued more broadly throughout the market than we have anticipated, such efforts may impact demand for our aftermarket products and consequently affect our results of operations.

~~In the long-term,severalof the marketsin which weoperateare contemplatingor undertakingmulti-decade effortsto transitionaway frominternalcombustionenginesin favorof hybrid or full-batteryelectricvehicles.~~

Conversely, in the U.S., the current political administration has signaled that it may support efforts to slow or even reverse the adoption of environmental regulations. If requirements to reduce or mitigate the effects of greenhouse gas emissions are weakened or rolled back, whether in the U.S. or elsewhere in our markets, customer demand for our turbochargers could fall, negatively affecting our results of operations.

~~Our future growth is largely~~ dependent upon our ability to ~~develop new technologies~~obtain Bankruptcy Court approval of the Debtors’ motions, the outcome of Bankruptcy Court rulings and ~~introduce new products with acceptable margins that achieve market acceptance or correctly anticipate regulatory changes.~~the progress of the Chapter 11 Cases in general, including the length of time the Debtors will operate in the Chapter 11 Cases.

For the duration of the Chapter 11 Cases, the Debtors are subject to the supervision of the Bankruptcy Court. The ~~global automotive component supply industry is highly competitive. Our future growth rate depends upon a number of factors, including our~~Debtors’ ability ~~to: (i) identify emerging technological trends in our targetend-markets~~; (ii) develop and maintain competitive products; (iii) enhance our products by adding innovative features that differentiate our products from those of our competitors; (iv) develop, manufacture and bring compelling new products to market quickly and cost effectively; and (v) attract, develop and retain individuals with the requisite technical expertise and understanding of customers’ needs to develop new technologies and introduce new products.

We have identified a trend towards increased development and adoption by OEMs of hybrid-electric powertrains, fuel cell powertrains and associated electric boosting technologies in preference to pure battery electric cars, which continue to ~~face range, charging time~~operate in the ordinary course, and ~~sustainability issues. Our results of operations could be adversely affected if our estimates regarding adoption and penetration rates~~ for ~~hybrid-electric and fuel cell powertrains or for pure battery electric cars are incorrect.~~

Failure to protect our intellectual property or allegations that we have infringed the intellectual property of others could adversely affect our business, financial condition and results of operations.

The protection of our intellectual property may require us to spend significant amounts of money. Further, the steps we take to protect our intellectual property may not adequately protect our rights or prevent others from infringing, violating or misappropriating our intellectual proprietary rights. Any impairment of our intellectual property rights, including due to changes in U.S. or foreign intellectual property laws or the absence of effective legal protections or enforcement measures, could adversely impact our businesses, financial condition and results of operations.

In addition, as we adopt new technology, we face an inherent risk of exposure to the claims of others that we have allegedly violated their intellectual property rights. Successful claims that we infringe on the intellectual property rights of others could require us to enter into royalty or licensing agreements on unfavorable terms, or cause us to incur substantial monetary liability. We may also be prohibited preliminarily or permanently from further use of the intellectual property in question or be required to change our business practices to stop the infringing use, which could limit our ability to compete effectively. In addition, our customer agreements may require us to indemnify the customer for infringement. The time and expense of defending against these claims, whether meritorious or not, may have a material and adverse impact on our profitability, can be time-consuming and costly and may divert management’s attention and resources away from our businesses. Furthermore, the publicity we may receive as a result of infringing intellectual property rights may damage our reputation and adversely impact our existing customer relationships and our ability to develop ~~new business.~~

~~We may incur materiallosses~~and~~costs~~ execute our business plan, continue as a ~~resultof warranty claims,including product recalls,~~going concern and~~product liabilityactionsthat may be brought against us.~~

~~Depending on~~ ultimately successfully reorganize the ~~terms under which we supply products to an auto manufacturer, we may be required to guarantee or offer warranties for~~Debtors, are subject to:

These risks and uncertainties could affect our products and to bear the costs of recalls, repair or replacement of such products pursuant to new vehicle warranties. There can be no assurance that we will have adequate reserves to cover such recall, repair and replacement costs. In the event that any of our products fails to perform as expected, we may face direct exposure to warranty and product liability claims or may be required to participate in a government or self-imposed recall involving such products. Our customers that are not end users, such as auto manufacturers, may face similar claims or be obliged to conduct recalls of their own, and in such circumstances, they may seek contribution from us. Our agreements with our customers typically do not contain limitation of liability clauses, so if any such claims or contribution requests exceed our available insurance, or if there is a product recall, there could be a material adverse impact on our results of operations. In addition, a recall claim could require us to review our entire product portfolio to assess whether similar issues are present in other product lines, which could result in significant disruption to our business, and could have a further adverse impact on our results of operations. We cannot assure you that we will not experience any material warranty or product liability claim losses in the future or that we will not incur significant costs to defend such claims.

~~The operational constraints and financial distress of third parties could adversely impact our business and results of operations.~~

~~Our results of~~ operations, financial condition and ~~cash flows~~our ultimate ability to successfully reorganize the Debtors in various ways. For example, negative events associated with the Chapter 11 Cases could be adversely ~~affected~~affect the Debtors’ or our non-debtor affiliates’ relationships with suppliers, service providers, customers and other third parties, which in turn could materially adversely affect our operations and financial condition. During the Chapter 11 Cases, the Debtors will need the prior approval of the Bankruptcy Court for transactions outside the ordinary course of business, which may limit the Debtors’ ability to respond timely to certain events or take advantage of opportunities. Additionally, if ~~our third-party suppliers lack sufficient quality control~~creditors or ~~if there are~~other third parties raise significant ~~changes in their financial~~objections or ~~business condition. If our third-party manufacturers fail to deliver products, parts and components of sufficient quality on time and at reasonable prices, we~~take other actions against the Debtors before the Bankruptcy Court, this could have ~~difficulties fulfilling our orders on similar terms or at all, sales and profits could decline, and our commercial reputation could be damaged. See “—Raw material price fluctuations,~~ the ~~ability~~effect of ~~key suppliers to meet quality and delivery requirements, or catastrophic events can increase the cost of our products and services, impact~~significantly delaying our ability to confirm and consummate the Plan and the Transaction and, to the extent applicable, to meet ~~commitments to customers~~the milestones set forth in the RSA and ~~cause us to incur significant liabilities.” If we fail to adequately assess~~ the creditworthiness and operational reliability of existing or future suppliers, if there is any unanticipated deterioration in their creditworthiness and operational reliability, or if our suppliers do not perform or adhere to our existing or future contractual arrangements, any resulting increase in nonperformance by them, our inability to otherwise obtain the supplies or our inability to enforce the terms of the contract or seek other remediesPSA, which could have a material adverse effect on our business, operations, financial condition and our ultimate ability to successfully reorganize the Debtors. During the Chapter 11 Cases, we expect our financial results to continue to be volatile as restructuring activities and expenses (including legal and other advisor costs), any contract terminations and rejections, and claims assessments may significantly impact our Consolidated and Combined Financial Statements. Because of ~~operations.~~

~~Work stoppages, other disruptions,~~the risks and uncertainties associated with the Chapter 11 Cases, we cannot accurately predict or quantify the ultimate impact of events that occur during the Chapter 11 Cases that may be inconsistent with our plans, or the ~~need to relocate any~~ultimate length of time which the Chapter 11 Cases may continue.

The Chapter 11 Cases, the DIP Credit Agreement and the PSA limit the flexibility of our ~~facilities could significantly disrupt~~management team in running our business.

Our ~~geographic footprint emphasizes locatingresearch~~Senior Secured Super-Priority Debtor-in-Possession Credit Agreement (as amended, restated, supplemented or otherwise modified from time to time the “DIP Credit Agreement”) entered into in connection with the Chapter 11 Cases, imposes a number of restrictions on the Debtors. Specifically, the Debtors are subject to certain affirmative covenants, including, without limitation, covenants requiring the Debtors to provide financial information, budgets and ~~development (“R&D”), engineering~~other information to the agent and ~~manufacturing capabilities in close physical proximity~~the lenders under the DIP Credit Agreement, as well as negative covenants, including, without limitation, relating to ~~our customers, thereby enabling us to adopt technologies~~the incurrence of additional debt, liens and ~~products for~~ the ~~specific vehicle types sold~~making of investments and restricted payments, in each ~~geographic market. Because our facilities offer localized services~~case as set forth in ~~this manner, a work stoppage or other disruption at one or more~~the DIP Credit Agreement. Restrictions under the DIP Credit Agreement on the ability of our ~~R&D, engineering or manufacturing and assembly facilities in a given region could have material adverse effects~~non-Debtor subsidiaries to incur debt, as well as on ~~our business, especially insofar as it impacts~~ our ability to ~~serve customers~~invest in ~~that region. Moreover, due~~our non-Debtor subsidiaries, and repay intercompany loans owing to ~~unforeseen circumstances or factors~~our non-Debtor subsidiaries, could impact the availability of liquidity to our non-Debtor affiliates. The Debtors’ ability to comply with these provisions may be affected by events beyond our control ~~we may be forced~~and our failure to ~~relocate our operations from one~~comply or ~~more of our existing facilities to new facilities and may incur substantial costs, experience program delays and sacrifice proximity to customers and geographic markets as~~obtain a ~~result, potentially for an extended period of time.~~

The automotive industry relies heavily on “just-in-time” delivery of components during the assembly and manufacture of vehicles, and when we fail to make timely deliveries in accordance with our contractual obligations, we generally have to absorb our own costs for identifying and solving the “root cause” problem as well as expeditiously producing replacement components or products. We typically must also carry the costs associated with “catching up,” such as overtime and premium freight. Additionally, if we are the cause for a customer being forced to halt production, the customer may seek to recoup all of its losses and expenses from us. These losses and expenses could be significant, and may include consequential losses such as lost profits.

~~In addition, asignificantdisruption~~waiver in the ~~supply of a key componentdue to a work stoppageor otherdisruptionat one of our suppliersor any othersuppliercould impactour abilityto make timelydeliveriesto our customersand, accordingly,have a materialadverseeffecton our financialresults.Wherea customerhaltsproductionbecause of anothersupplierfailingto deliveron time,or as a resultof a work stoppageor otherdisruption,it is unlikely~~event we~~will be fullycompensated,if at all.~~

~~We may not realize sales represented by awarded business or effectively utilize our manufacturing capacity.~~

~~When we win a bid to offer products and services to an OEM customer, the customer typically does not commit to award us its business until a separate contract has been negotiated, generally~~ cannot comply, with a ~~term ranging from one year to~~covenant could result in an event of default under the life of the model (usually three to seven years). Once business has been awarded, the OEM customer typically retains the ability to terminate the arrangement without penalty and does not commit to purchase a minimum volume of products while the contract is in effect.

In light of the foregoing, while we estimate awarded business using certain assumptions, including projected future sales volumes, the volume and timing of sales to our customers may vary due to: variation in demand for our customers’ products; our customers’ attempts to manage their inventory; design changes; changes in our customers’ manufacturing strategy; the success of customers’ goods and models; and acquisitions of or consolidations among customers. A significant decrease in demand for certain key models or a group of related models sold by any of our major customers, or the ability of a manufacturer to re-source and discontinue purchasing from us its requirements for a particular model or group of models,DIP Credit Agreement, which could have a material adverse effect on us. In particular, we may be unable to forecast the level of customer orders with sufficient certainty to allow us to optimize production schedules and maximize utilization of manufacturing capacity. Any excess capacity would cause us to incur increased fixed costs in our products relative to the net revenue we generate, which could have an adverse effect on our results of operations, particularly during economic downturns. Similarly, a significant failure or inability to adapt to increased production or desired inventory levels (including as a result of accelerated launch schedules for new automobile and truck platforms), comply with customer specifications and manufacturing requirements more generally or respond to other unexpected fluctuations, as well as any delays or other problems with existing or new products (including program launch difficulties) could result in financial penalties, increased costs, loss of sales, loss of customers or potential breaches of customer contracts, which could have an adverse effect on our profitability and results of operations.

If actual production orders from our customers are not consistent with the projections we use in calculating the amount of our awarded business, or if we are unable to improve utilization levels for manufacturing lines that consequently are underutilized and correctly manage capacity, the increased expense levels will have an adverse effect on our business, financial condition and results of ~~operations, and we could realize substantially less revenue over the life of these projects than the currently projected estimate.~~

~~We may not be able to successfully negotiate pricing terms with our customers, which may adversely affect our results of~~ operations.

~~We negotiate sales prices annually with our automotive customers. Our customer supply agreements generally require step-downs in component pricing over the period of production.~~ In addition, ~~our customers often reserve the right to terminate their supply contracts at any time, which enhances their ability~~continued compliance with or failure to obtain ~~price reductions. OEMs have also exercised significant influence over their suppliers, including us, because~~a waiver for covenants restricting the ~~automotive component supply industry is highly competitive and serves a limited number~~incurrence of ~~customers. Based on these factors, our status as a Tier I supplier (one that supplies vehicle components directly~~debt by non-Debtor subsidiaries or the making of investments in, or the repayment of intercompany loans owing to, ~~manufacturers) and~~non-Debtor subsidiaries could limit the ~~fact that our customers’ product programs typically last a number~~availability of years and are anticipated to encompass large volumes, our customers are able to negotiate favorable pricing, and any cost-cutting initiatives that our customers adopt generally will result in increased downward pressure on our pricing. Any resulting impactsliquidity to our sales levels and margins, or the failure of our technologies or products to gain market acceptance due to more attractive offerings by our competitors, could over time significantly reduce our revenues and adversely affect our competitive standing and prospects. In particular, large commercial settlements with our customers may adversely affect our results of operations.

~~We are subjectto the economic,political,regulatory,foreignexchange andother risksof international operations.~~

We have created a geographic footprint that emphasizes locating R&D, engineering and manufacturing capabilities in close physical proximity to our customers. Our international geographic footprint subjects us to many risks, including: exchange control regulations; wage and price controls; antitrust and environmental regulations; employment regulations; foreign investment laws; monetary and fiscal policies and protectionist measures that may prohibit acquisitions or joint ventures, establish local content requirements, or impact trade volumes; import, export and other trade restrictions (such as embargoes); violations by our employees of ~~anti-corruption~~ ~~laws; changes in regulations regarding transactions with state-owned enterprises; nationalization of private enterprises; natural and man-made disasters, hazards and losses;~~ ~~global health risks and pandemics;~~ backlash from foreign labor organizations related to our restructuring actions; violence, civil and labor unrest; acts of terrorism; and our ability to hire and maintain qualified staff and maintain the safety of our employees in these regions. Additionally, certain of the markets in which we operate have adopted increasingly strict data privacy and data protection requirements or may require local storage and processing of data or similar requirements. The European Commission has approved a data protection regulation, known as the General Data Protection Regulation ~~(“GDPR”),~~ that came into force in May 2018. The GDPR includes operational requirements for companies that receive or process personal data of residents of the European Union, and includes significant penalties for ~~non-compliance. The GDPR and similar data protection measures may increase the cost and complexity of our ability to deliver our services.~~

As negotiations relating to the future terms of the U.K.’s relationship with the European Union proceed, our manufacturing operations in Cheadle and the businesses of our customers and suppliers could be negatively impacted if tariffs or other restrictions are imposed on the free flow of goods to and from the U.K. Similarly, President Donald Trump’s decisions in March 2018 to impose both an ad valorem tariff on steel products imported into the United States and a separate set of tariffs on certain Chinese imports, and the resulting discussions about potential retaliatory tariffs from the E.U., China and other countries, could result in the creation of further barriers to trade. Such barriers could adversely affect the businesses of our customers and suppliers,non-Debtor affiliates, which could ~~in turn negatively~~also adversely impact our ~~sales~~business, financial condition and results of operations.

In addition to the restrictions applicable to the Debtors’ in the Chapter 11 Cases, we are also subject to operating covenants that apply to the Debtors under PSA. These covenants generally require us to operate in the ordinary course of business, to refrain from taking certain enumerated actions and to affirmatively take other ~~instabilities~~enumerated actions. Such covenants limit the flexibility of our management to respond to various events and ~~uncertainties arising~~circumstances that may arise from the global geopolitical environment, along with the cost of compliance with increasingly complex and often conflicting regulations worldwide, can impair our flexibility in modifying product, marketing, pricing or other strategies for growing our businesses,time to time, including as ~~well as our ability to improve productivity and maintain acceptable operating margins.~~

As a result of ~~our global presence, a significant portion of our revenues are denominated in currencies other than~~ the ~~U.S. dollar whereas a significant amount of our payment obligations are denominated in U.S.~~ d~~ollars, which exposes us~~Chapter 11 Cases. There can be no assurances that we will be able to ~~foreign exchange risk. We monitor and seek to reduce~~obtain appropriate waivers from such ~~risk through hedging activities; however, foreign exchange hedging activities bear a financial cost and may not always be available to us or be successful in eliminating such volatility.~~

Finally, we generate significant amounts of cash that is invested with financial and non-financial counterparties. While we employ comprehensive controls regarding global cash management to guard against cash or investment loss and to ensure our ability to fund our operations and commitments, a material disruption to the counterparties with whom we transact business could expose us to financial loss.

~~We have invested substantial resources in specific foreign markets where we expect growth and we~~covenants as may be ~~unable to timely alter our strategies should such expectations not be realized.~~

We have identified certain countries, such as China and India, as key high-growth geographic markets. We believe these markets are likely to experience substantial long-term growth, and accordingly have made and expect to continue to make substantial investments in numerous manufacturing operations, technical centers, R&D activities and other infrastructure to support anticipated growth in these areas. If market demand for evolving vehicle technologies in these regions does not grow as quickly as we anticipate,necessary or if we are unable to deepen existing and develop additional customer relationships in these regions, we may fail to realize expected rates of return, or even incur losses, on our existing investments and may be unable to timely redeploy the invested capital to take advantage of other markets or product categories, potentially resulting in lost market share to our competitors. In particular, our ability to remain competitive and continue to grow in these regions depends in part on the absence of competing state-sponsored domestic businesses. If a state-sponsored operation entered a local market as a competitor, it might have access to significant social and financial capital that would enable it to overcome the ordinary barriers to entry in the turbocharger industry and acquire potentially significant market share at our expense.

~~We could be adverselyaffectedby our leading marketpositionin certainmarkets.~~

We believe that we are a market leader in the turbocharger industry in many of the markets in which we operate. Although we believe we have acted properly in the markets in which we have significant market share, we could face allegations of abuse of our market position or of collusion with other market participants, which could result in negative publicity and adverse regulatory action by the relevant authorities, including the imposition of monetary fines, all ofadvisable, which could adversely ~~affect~~impact our ~~financial condition~~business and ~~results of~~ operations.

We may not be able to ~~obtain additional capital that we need in the future on favorable terms or at all.~~

We may require additional capital in the future to finance our growth and development, upgrade and improve our manufacturing capabilities, implement further marketing and sales activities, fund ongoing R&D activities, satisfy regulatory and environmental compliance obligations, satisfy indemnity obligations to Honeywell, and meet general working capital needs. Our capital requirements will depend on many factors, including acceptance of and demand for our products, the extent to which we invest in new technology and R&D projects and the status and timing of these developments. If our access to capital were to become constrained significantly, or if costs of capital increased significantly, due to lowered credit ratings, prevailing industry conditions, ~~the solvency~~complete any Bankruptcy Court-approved reorganization of our ~~customers, a material decline in demand~~Company or sales of our Company or assets through the chapter 11 process, or we may not be able to realize adequate consideration for suchreorganization or ~~our products,~~ ~~the volatility of the capital markets or other factors, our financial condition, results of operations and cash flows could be adversely affected.~~ ~~These conditions may~~sales, which would adversely affect our ~~ability to obtain targeted credit ratings.~~financial condition.

~~Moreover, we have historically relied on Honeywell for assistance in satisfying our capital requirements.~~ ~~As a result of~~ ~~the Spin-Off, we~~ ~~are no longer~~ ~~able to rely on the earnings, assets or cash flow of Honeywell, and Honeywell will not provide funds to finance our capital requirements.~~ ~~We are also~~ responsible for obtaining and maintaining sufficient working capital and other funds to satisfy our cash requirements independent of Honeywell, and debt or equity financing may not be available to us on terms we find acceptable, if at all. Incurring additional debt may significantly increase our interest expense and financial leverage, and our level of indebtedness could restrict our ability to fund future development and acquisition activities. Also, regardless of the terms of our debt or equity financing, our agreementsThe Debtors’ performance and obligations under the ~~Tax Matters Agreement~~PSA and the ECBA are subject to approval by the Bankruptcy Court and the Transaction is subject to other customary closing conditions, including receipt of regulatory approvals or clearances. There can be no assurance that ~~address compliance~~we will be able to obtain approval and complete the proposed reorganization, or any other significant reorganization transaction, including as a result of objections from our stakeholders. Such objections from stakeholders could result from stakeholders’ preference for an alternative plan of reorganization than that contemplated by the PSA and the ECBA, such as the Atlantic Park Proposal (including with ~~Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”) may limit our ability to issue stock.~~ ~~We may need additional~~ ~~capital resources~~ ~~in the future in order~~ ~~to meet our projected operating needs, capital expenditures and other cash requirements, and if~~any subsequent modifications). If we are unable to ~~obtain sufficient resources for our operating needs, capital expenditures~~complete a reorganization of the Company in the Chapter 11 Cases, including in accordance with the terms of the PSA and ~~other cash requirements for any reason, our business, financial condition~~the ECBA, it may be necessary to seek additional funding sources, or convert from the Chapter 11 reorganization process to a Chapter 7 liquidation process. If one or more sales of the Company’s assets are completed, they may not generate the anticipated or desired outcomes (including with respect to consideration received).

For more information on the PSA and ~~results~~ the ECBA, see Note 2, Reorganization and Chapter 11 Proceedings of ~~operations could be adversely affected. See “Risks Relating~~the Notes to the ~~Spin-Off — We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate~~ ~~effectively~~ ~~as an independent, publicly traded company,~~Consolidated and ~~we may experience increased costsdue to our separation from Honeywell~~.”Combined Financial Statements.

~~We are subject to risks associated with the Indemnification and Reimbursement Agreement,~~The resolution pursuant to ~~which we are required to make substantial cash payments to~~the PSA of Honeywell’s claims against our bankruptcy estates and our litigation with Honeywell ~~measured in substantial part by reference to estimates by Honeywell~~requires approval of ~~certain of its liabilities.~~the Bankruptcy Court.

In connection with the Spin-Off, we entered into ~~an Indemnification~~certain agreements with Honeywell, including the Indemnity Agreements and ~~Reimbursement~~the Tax Matters Agreement, ~~pursuant~~which have given rise to ~~which~~significant claims by Honeywell against our bankruptcy estates and have led to litigation between us and Honeywell.

Under the Honeywell Indemnity Agreement, we ~~have an obligation~~are required to make cash payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to Honeywell’s legacy Bendix friction materials (“Bendix”) business in the United States as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of our business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities.

The amount payable by ~~the Company~~us in respect of such liabilities arising in any given year will be payable in Euros, subject to a cap (denominated in Euros) equal to $175 million, calculated by reference to the Distribution Date Currency Exchange Rate. The cap is exclusive of any late payment fees up to 5% per annum.

~~For example, if in any given year, Honeywell’s annual liabilities including associated legal costs~~The Tax Matters Agreement contains covenants and indemnification obligations that ~~are within the scope~~address compliance with Section 355 of the Indemnification and Reimbursement Agreement totaled $200 million, and if Honeywell’s associated insurance receipts and other specified recoveries totaled $20 million (resulting in a net amount of $180 million), then our payment obligation in respect of that year would be based upon 90%Code, are intended to preserve the tax-free nature of the ~~net amount ($162 million), payable in Euros, calculated by reference~~Spin-Off, and outline Honeywell’s and our post-spin rights, responsibilities, and obligations regarding tax-related matters (including tax liabilities, tax attributes, tax returns and tax contests). The Tax Matters Agreement provides, among other things, that, following the Spin-Off date of October 1, 2018, we are responsible and will indemnify Honeywell for all taxes, including income taxes, sales taxes, value-added and payroll taxes, relating to Garrett for all periods, including periods prior to the ~~Distribution Date Currency Exchange Rate (1.16977 USD = 1 EUR) (totaling~~

~~approximately€138.5 million). However,if in any given year, such liabilitiesincludingassociatedlegalcoststotaled$250 million,and the associated insurancereceiptsand otherspecifiedrecoveriestotaled$30 million,then our paymentobligationin respectof thatyear would be capped at approximately€149.6 million(which equals$175 milliondividedby the DistributionDate Currency Exchange Rate of 1.16977 USD = 1 EUR) even though 90%~~completion date of the ~~net amountis higherat $198 million (€169.3 millioncalculatedby reference~~toSpin-Off. Additionally, the ~~DistributionDate Currency Exchange Rate of 1.16977 USD = 1 EUR).~~

~~The Indemnification and Reimbursement~~Tax Matters Agreement provides that ~~the agreement will terminate upon the earlier~~Garrett ASASCO is to make payments to a subsidiary of ~~(x) December 31, 2048 or (y) December 31st~~Honeywell for a portion of Honeywell’s net tax liability under Section 965(h)(6)(A) of the ~~third consecutive year during which certain~~Internal Revenue Code for mandatory transition taxes that Honeywell determined is attributable to us (the “MTT Claim”).

In December 2019, we commenced a lawsuit against Honeywell in connection with the Honeywell Indemnity Agreement for declaratory judgment, breach of contract, breach of fiduciary duties, aiding and abetting breach of fiduciary duties, corporate waste, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. Our lawsuit seeks, among other things, to establish that the Honeywell Indemnity Agreement is unenforceable in whole or in part because Honeywell has failed to establish the prerequisites for indemnification under New York law, and improperly seeks indemnification for amounts ~~owed~~attributable to punitive damages and intentional misconduct. Following the commencement of the Chapter 11 Cases, the Debtors removed the lawsuit against Honeywell to the Bankruptcy Court and also initiated litigation against Honeywell regarding the value and validity of its claims under the Honeywell Indemnity Agreement and the Tax Matters Agreement.

Under the terms of the PSA and the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Indemnity Agreements and the Tax Matters Agreement and (b) the dismissal with prejudice of the Honeywell Litigation in exchange for (x) a $375 million cash payment at Emergence and (y) the Series B Preferred Stock. The Company will have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to $584 million as of Emergence (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make a partial payment of the Series B Preferred Stock, reducing the present value to $400 million, at any time within 18 months of Emergence. In every case the duration of future liabilities to Honeywell will be reduced from 30 years prior to the Chapter 11 filing to a maximum of nine years.

Our entry into and performance under the PSA and the terms of the PSA, the Transaction and the Plan remain subject to approval by the Bankruptcy Court. There can be no assurances that we will obtain the approval of the Bankruptcy Court and consummate the Transaction.

For more information on the risks related to the approval of the Plan, see “We may not be able to complete any Bankruptcy Court-approved reorganization of our Company or sales of our Company or assets through the chapter 11 process, or we may not be able to realize adequate consideration for such reorganization or sales, which would adversely affect our financial condition”.

Operating under Bankruptcy Court protection for a long period of time may harm our business.

A long period of operations under Bankruptcy Court protection could have a material adverse effect on our business, financial condition, results of operations and liquidity. During the pendency of the Chapter 11 Cases, our senior management may be required to spend a significant amount of time and effort dealing with the reorganization instead of focusing exclusively on our business operations. A prolonged period of operating under Bankruptcy Court protection also may make it more difficult to retain management and other key personnel necessary to the success and growth of our business. In addition, as the length of the Chapter 11 Cases increases, the risk that customers and suppliers will lose confidence in our ability to reorganize our business successfully may also increase, and such customers and suppliers may seek to establish alternative commercial relationships.

Delay of the Chapter 11 Cases could impact our ability to maintain our operations during the Chapter 11 Cases.

If the Chapter 11 Cases take longer than expected to conclude, the Debtors may exhaust or lose access to the DIP Term Loan Facility. Any of these factors could result in the need for substantial additional funding. A number of other factors, including the Chapter 11 Cases, our recent financial results, our substantial indebtedness and the competitive environment we face, may adversely affect the availability and terms of funding that might be available to us during the pendency of the Chapter 11 Cases. As such, we may not be able to source capital at rates acceptable to us, or at all, to fund our current operations. The inability to obtain necessary additional funding on acceptable terms could have a material adverse impact on us and on our ability to sustain our operations during the Chapter 11 Cases.

Our ability to prosecute the Chapter 11 Cases and obtain confirmation of the Plan may be contested by third parties with litigation.

Certain of the Debtors’ creditors and other parties-in-interest may object to and commence litigation against the Debtors during the course of the Chapter 11 Cases, the outcome of which is uncertain. Such litigation may prolong the Chapter 11 Cases and may make it difficult for the Debtors to reach the contractual milestones for the case within the timeframes set out in each of the PSA and RSA.

In certain instances, a Chapter 11 proceeding may be converted to a proceeding under Chapter 7.

There can be no assurance as to whether the Debtors will successfully reorganize under the Chapter 11 Cases. If the Bankruptcy Court finds that it would be in the best interest of creditors and/or the Debtors, the Bankruptcy Court may convert the Chapter 11 Cases to proceedings under Chapter 7. In such ~~year were less than $25 million as converted into Euros~~event, a Chapter 7 trustee would be appointed or elected to liquidate the Debtors’ assets for distribution in accordance with the priorities established by the Bankruptcy Code. The Debtors believe that liquidation under Chapter 7 would result in significantly smaller distributions being made to the Debtors’ creditors than those provided for in a Chapter 11 plan of reorganization because of (i) the likelihood that the assets would have to be sold or otherwise disposed of in a disorderly fashion over a short period of time rather than reorganizing or selling in a controlled manner the Debtors’ businesses as a going concern, (ii) additional administrative expenses involved in the appointment of a Chapter 7 trustee, and (iii) additional expenses and claims, some of which would be entitled to priority, that would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of operations.

Trading in our securities during the pendency of the Chapter 11 Cases poses substantial risks.

~~Following~~Transaction under the ~~Spin-Off~~PSA contemplate the reinstatement or cash-out of the Company’s stockholders, such terms remain subject to approval by the Bankruptcy Court and the Company’s stockholders are cautioned that it is possible that the Company’s stockholders will receive nothing in ~~2018,~~exchange for their common stock upon the completion of the Chapter 11 Cases and that the common stock will have no value and that trading in securities of the Company ~~paid Honeywell $41 million~~during the pendency of the Chapter 11 Cases will be highly speculative and will pose substantial risks. The delisting of our common stock from New York Stock Exchange has limited and could continue to limit the liquidity of our common stock, increase the volatility in ~~connection~~the price of our common stock, and hinder our ability to raise capital. If the Plan is not confirmed by the Bankruptcy Court, it is possible the Company’s outstanding common stock may be cancelled and extinguished upon confirmation of a different plan of reorganization by the Bankruptcy Court. In such an event, the Company’s stockholders may be entitled to receive recovery on account of their equity interests, but the amount of any such recovery is highly uncertain and there may be no such recovery. Trading prices for the Company’s common stock and other securities may bear little or no relation to actual recovery, if any, by holders thereof in the Company’s Chapter 11 Cases. Accordingly, the Company urges extreme caution with respect to existing and future investments in its securities.

Our common stock was delisted from NYSE and is currently traded on the ~~Indemnification~~OTC Pink Sheets market maintained by the OTC Market Group, Inc., which involves additional risks compared to being listed on a national securities exchange.

Trading in our common stock was suspended on September 21, 2020 and ~~Reimbursement Agreement. Prior~~ removed from listing on NYSE on October 19, 2020. We will not be able to relist our common stock on a national securities exchange during our Chapter 11 process, although our common stock is now quoted on the OTC Pink Sheets market maintained by the OTC Market Group, Inc. under the trading symbol “GTXMQ”. We may be unable to relist our common stock on a national securities exchange after our Emergence. The lack of listing on a national securities exchange may impair the ability of holders of our common stock to sell their shares at the time they wish to sell them or at a price that they consider reasonable. The lack of listing on a national securities exchange may also reduce the fair market value of the shares of our common stock. Furthermore, because of the limited market and generally low volume of trading in our common stock, the price of our common stock could be more likely to be affected by broad market fluctuations, general market conditions, fluctuations in our operating results, changes in the markets’ perception of our business, and announcements made by us, our competitors, parties with whom we have business relationships or third parties with interests in the Chapter 11 Cases.

Industry andeconomicconditionsmay adverselyaffectthe marketsandoperatingconditionsof our customers,whichin turn can affectdemand for our products andservicesandour resultsof operations.

We are dependenton the continuedgrowth, viabilityand financialstabilityof our customers.Asubstantial portionof our customersare OEMsin the automotiveindustry.This industryis subjectto rapidtechnological change oftendrivenby regulatorychanges, vigorouscompetition,shortproductlifecyclesand cyclicaland reducedconsumerdemand patterns.In additionto generaleconomicconditions,automotivesalesand automotive vehicleproductionalso depend on otherfactors,such as supplierstability,factorytransitions,capacity constraints,the costsand availabilityof consumercredit,consumerconfidenceand consumerpreferences.When our customersare adverselyaffectedby thesefactors,wemay be similarlyaffectedto the ~~Spin-Off, Honeywell’s asbestos-related Bendix liability payments~~extentthatour customersreducethe volumeof ordersfor our products.Economicdeclinesand correspondingreductionsin automotivesalesand productionby our customers,particularlywith respectto lightvehicles,have in the past had, and may in the futurehave, a significantadverseeffecton our business,resultsof operationsand financial condition.

Even if overallautomotivesalesand productionremainstable,changes in regulationsand consumer preferencesmay shiftconsumerdemand away fromthe types of vehiclesweprioritizeor towards the types of vehicleswhere our productsgeneratesmallerprofitmargins.Adecreasein consumerdemand for the ~~years 2017~~ specific types of vehiclesthat have traditionallyincludedour turbochargerproducts,such as a decreasein demand for diesel-fueledvehiclesin favorof gasoline-fueledvehicles,or lower-than-expectedconsumerdemand for specific types of vehicleswhere weanticipateprovidingsignificantcomponentsas partof our strategicgrowth plan, such as a decreasein demand for vehiclesutilizingelectric-hybridand ~~2016~~fuelcellpowertrainsin favorof fullbattery electricvehicles,could have a significanteffecton our business.If weare unable to anticipatesignificant changes in consumersentiment,or if consumerdemand for certainvehicletypes changes morethan weexpect, our resultsof operationsand financialconditioncould be adverselyaffected.

Sales in our aftermarketoperationsare also directlyrelatedto consumerdemand and spending for automotiveaftermarketproducts,which may be affectedby additionalfactorssuch as the averageusefullifeof OEMpartsand components,severityof regionalweatherconditions,highway and roadway infrastructure deteriorationand the averagenumberof milesvehiclesare drivenby owners. Improvementsin technologyand productqualityare extendingthe longevityof vehiclecomponentparts,which may resultin delayedor reduced aftermarketsales.Our resultsof operationsand financialconditioncould be adverselyaffectedif wefailto respond in a timelyand appropriatemannerto changes in the demand for our aftermarketproducts.

The COVID-19 pandemic has adversely impacted and is expected to further adversely impact our business and results of operations.

During 2020, the novel coronavirus disease, COVID-19, spread across the world, including ~~any legal fees,~~throughout Asia, the United States and Europe. The outbreak and government measures taken in response had and continue to have a significant adverse impact, both direct and indirect, on our businesses and the economy. Our manufacturing facility in Wuhan, China was shut down for six weeks in February and March 2020 and we saw diminished production in our Shanghai, China facility for that same time period, which were ~~$223 million~~the primary drivers of the decrease in sales in the Asia region during the three months ended March 31, 2020. While our facilities in China re-opened in the second quarter, our manufacturing facilities in Mexicali, Mexico and ~~$201 million, respectively,~~Pune, India were shut down and ~~Honeywell’s associated insurance receipts for 2017~~our manufacturing facilities in Europe operated at reduced capacity. This significantly reduced our production volumes and ~~2016 were $20 million~~had a material adverse impact on our business, results of operations and ~~$37 million, respectively.~~

financial condition. In the ~~event~~third quarter, the fast recovery observed in all geographies enabled us to ramp up production in most of our production sites to normal levels. This recovery continued in the fourth quarter with a very strong demand especially in China and Europe. However, if the COVID-19 pandemic drives new lockdown measures impacting our manufacturing facilities, our facilities may be forced to shut down or operate at reduced capacity again which will continue to negatively impact our revenues. We have also faced limitations on our employee resources, including because of stay-at-home orders from local governments, new Paid Time Off policies, employee furloughs, state-funded layoffs, sickness of employees or their families or the desire of employees to avoid contact with large groups of people. The pandemic has also diverted management resources and the prolonged work-from-home arrangements have created business continuity and cybersecurity risks.

Certain of our customers have been similarly affected and are experiencing closures and labor shortages. As a result of such closures, we have experienced weakened demand from our customers, who have not been able to accept orders or have delayed or canceled orders, which has negatively affected our revenues. If this trend continues, our revenues will continue to be negatively impacted.

The COVID-19 pandemic continues to rapidly evolve. The extent to which the outbreak impacts our business, liquidity and financial results will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the availability and effectiveness of any vaccines or treatments, the duration of the pandemic, travel restrictions and social distancing in the European Union, China and other countries, the duration and extent of business closures or business disruptions and the effectiveness of actions taken to contain the disease. If we or our customers experience prolonged shutdowns or other business disruptions beyond current expectations, our ability to conduct our business in the manner and within planned timelines could be materially and adversely impacted, and our business and financial results may continue to be adversely affected.

Our leveraged capital structure and liabilities to Honeywell may pose significant challenges to our overall strategic and financial flexibility and have a material adverse effect on our business, liquidity position and financial position.

Our leverage ratio remains high and, unless addressed in the Chapter 11 Cases, we expect that it will remain so for at least the next several quarters.

This high leverage is exacerbated by Garrett ASASCO’s purported significant liabilities and obligations to Honeywell ~~enters into~~under the Honeywell Indemnity Agreement and the tax matters agreement with Honeywell, dated September 12, 2018 (the “Tax Matters Agreement”). Under the terms of the PSA and the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or ~~substantially all~~related to the Indemnity Agreements and the Tax Matters Agreement and (b) the dismissal with prejudice of the ~~asbestos-related Bendix claims~~Honeywell Litigation in exchange for (x) a $375 million cash payment at Emergence and (y) the Series B Preferred Stock. The terms of the PSA, the Transaction and the Plan remain subject to approval by the Bankruptcy Court. There can be no assurances that we will obtain the approval of the Bankruptcy Court and consummate the Transaction.

Our current leveraged capital structure poses significant challenges to our overall strategic and financial flexibility and may impair our ability to gain or hold market share in the ~~United States,~~highly competitive automotive supply market. This leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage. In addition, our business has been and may continue to be significantly impacted by the ~~Indemnification~~COVID-19 pandemic and ~~Reimbursement Agreement provides that~~related response measures, which has had adverse consequences for our leverage. See “The COVID-19 pandemic has adversely impacted and is expected to further adversely impact our business and results of operations.” above for more information. The COVID-19 pandemic and related response measures may continue to have an impact, and if we are ~~obligated~~ unable to ~~pay 90%~~manage through these challenges, our leverage ratio, capital structure or liquidity may be further adversely effected. On September 20, 2020, the Debtors filed the Chapter 11 Cases in order to address this leveraged capital structure. However, because of the ~~amount paid~~risks and uncertainties associated with the Chapter 11 Cases, we cannot accurately predict or ~~payable by Honeywell~~quantify the ultimate impact of events that occur during the Chapter 11 Cases on our leverage, capital structure, liabilities or liquidity position, and we may not be successful in ~~connection with such global settlement payment, less 90% of insurance receipts relating to such liabilities, and in such event, we are required to pay an amount equal~~addressing these challenges through or following the Chapter 11 Cases. See risks related to the ~~Distribution Date Currency Exchange Rate equivalent~~ Chapter 11 Cases above for more information.

Changesin legislationor governmentregulationsor policiescan have a significantimpacton demand for our products and our resultsof ~~$175 million per year until~~ operations.

The salesand marginsof our businessare directlyimpactedby governmentregulations,includingsafety, performanceand productcertificationregulations,particularlywith respectto emissions,fueleconomy and energy efficiencystandardsfor motorvehicles.Increasedpublicawarenessand concernregardingglobalclimate change may resultin moreregionaland/orfederalrequirementsto reduceor mitigatethe ~~amount payable~~effectsof greenhouse gas emissions.Whilesuch requirementscan promoteincreaseddemand for our turbochargersand otherproducts, severalmarketsin which weoperateare undertakingeffortsto morestrictlyregulateor ban vehiclespowered by certainolder-generationdieselengines.If such effortsare pursued morebroadlythroughoutthe marketthan we have anticipated,such effortsmay impactdemand for our aftermarketproductsand consequentlyaffectour resultsof operations.

In the long-term,severalof the marketsin which weoperateare contemplatingor undertakingmulti-decade effortsto transitionaway frominternalcombustionenginesin favorof hybrid or full-batteryelectricvehicles.

Although weexpecta significantnumberof hybridswill be turbocharged,if weoverestimatethe turbo penetrationratein hybridsor if a transitionto battery-electricvehiclesis pursued morebroadlythroughoutthe market,or is implementedmorerapidlythan wehave anticipated,the demand for our productscould be impacted and our resultsof operationsconsequentlycould be affected. This is a risk existing in particular in Europe. In the US, with the change in presidential administration, we expect to see a move to adoption of new environmental regulations, which presents similar risks as in Europe in the long-term, depending on how regulatory targets for fuel efficiency and emissions in the 2025-30 timeframe will be set.

Our future growth is largely dependent upon our ability to develop new technologies and introduce new products with acceptable margins that achieve market acceptance or correctly anticipate regulatory changes.

The globalautomotivecomponentsupply industryis highly competitive.Our futuregrowth ratedepends upon a numberof factors,includingour abilityto: (i)identifyemergingtechnologicaltrendsin our targetend-markets;(ii)develop and maintaincompetitiveproducts;(iii)enhance our productsby adding innovativefeatures thatdifferentiateour productsfromthose of our competitors;(iv)develop, manufactureand bring compelling newproductsto marketquicklyand cost effectively;and (v) attract,develop and retainindividualswith the requisitetechnicalexpertiseand understandingof customers’needs to develop newtechnologiesand introduce newproducts.

We have identified a trend towards increased development and adoption by OEMs of hybrid-electric powertrains, fuel cell powertrains and associated electric boosting technologies, especially on commercial vehicle applications, as pure battery-electric vehicles continue to face range, charging time and sustainability issues on those applications. Our results of operations could be adversely affected if our estimates regarding adoption and penetration rates for hybrid-electric and fuel cell powertrains or for pure battery electric cars are incorrect.

Failure to protectour intellectualpropertyor allegationsthat wehave infringedthe intellectualpropertyof others could adverselyaffectour business, financialconditionandresultsof operations.

We relyon a combinationof patents,copyrights,trademarks,tradenames,tradesecretsand otherproprietary rights,as well as contractualarrangements,includinglicenses,to establish,maintainand protectour intellectual propertyrights.Effectiveintellectualpropertyprotectionmay not be available,or wemay not be able to acquire or maintainappropriateregisteredor unregisteredintellectualproperty,in every countryin which wedo business. Furthermore, in some areas of our business the established industry maturity of product technology may leave limited opportunity for new intellectual property to differentiate our products. Accordingly,our intellectualproperty may not be sufficient on its own to provide us a strong product differentiation and competitive advantage, which in ~~respect~~ turn could weaken our ability to secure business awards from our customers and/or our ability to achieve targeted product profitability.

The protectionof ~~such global settlement payment is less than~~ our intellectualpropertymay requireus to spend significantamountsof money. Further, the stepswetake to protectour intellectualpropertymay not adequatelyprotectour rightsor preventothersfrom infringing,violatingor misappropriatingour intellectualproprietaryrights.Anyimpairmentof our intellectual propertyrights,includingdue to changes in U.S.or foreignintellectualpropertylaws or the absenceof effective legalprotectionsor enforcementmeasures,could adverselyimpactour businesses,financialconditionand results of operations.

International technical export control regulations and trade conflicts may limit our ability to use certain intellectual property in our products in some regions of the world or customers may require assured access to intellectual property through open source-code, joint ownership of intellectual property, free license, or other measures. These constraints could cause us difficulty in securing business awards from our customers, protecting our competitive technology differentiation, and/or our ability to achieve targeted product profitability.

In addition,as weadopt newtechnology,wefacean ~~amount equal~~ inherentriskof exposureto the ~~Distribution Date Currency Exchange Rate equivalent~~ claimsof ~~$175 million. During~~ othersthat ~~time,~~we have allegedlyviolatedtheirintellectualpropertyrights.Successfulclaimsthatweinfringeon the ~~annual payment by~~ intellectual propertyrightsof otherscould requireus to ~~Honeywell of an amount equal to the Distribution Date Currency Exchange Rate equivalent of $175 million will be first allocated towards~~ ~~asbestos-related~~ liabilities arising outside of the scope of the global settlement and environmental-related liabilities and then towards the global settlement payment. Payment amounts will be deferred to the extent that the payment thereof would cause a specified event of default under certain indebtedness, including our principal credit agreemententerinto royaltyor licensingagreementson unfavorableterms or cause us to incursubstantialmonetaryliability.We may also be prohibitedpreliminarilyor permanentlyfrom furtheruse of the intellectualpropertyin questionor be requiredto change our businesspracticesto stop the infringinguse, which could limitour abilityto competeeffectively.In addition,our customeragreementsmay requireus to indemnifythe customerfor infringement.The timeand expense of defendingagainsttheseclaims, whether meritoriousor not, may have a materialand adverseimpacton our profitability,can be time-consuming and costlyand may divertmanagement’sattentionand resourcesaway fromour businesses.Furthermore,the publicitywemay receiveas a resultof infringingintellectualpropertyrightsmay damageour reputationand adverselyimpactour existingcustomerrelationshipsand our abilityto develop newbusiness.

We may incur materiallossesandcostsas a resultof warranty claims,including product recalls,andproduct liabilityactionsthat may be brought against us.

Depending on the termsunder which wesupply productsto an auto manufacturer,wemay be requiredto guaranteeor offerwarrantiesfor our productsand to bear the costsof recalls,repairor replacementof such productspursuantto newvehiclewarranties.There can be no assurancethatwewill have adequatereservesto cover such recall,repairand replacementcosts.In the event thatany of ourproductsfailsto performas expected,wemay facedirectexposureto warrantyand productliabilityclaimsor may be requiredto participate in a governmentor self-imposedrecallinvolvingsuch products.Ourcustomersthatare not end users,such as auto manufacturers,may facesimilarclaimsor be obligedto conduct recallsof theirown,and in such circumstances,they may seek contributionfromus. Our agreementswith our customersdo not always include limitationof liabilityclauses or, in certain situations or legal jurisdictions, such limitation of liability clauses may not be ~~compliant~~ fully valid. If any such claimsor contributionrequestsexceed our availableinsurance,or if thereis a productrecall,therecould be a materialadverseimpacton our resultsof operations.In addition,a recallclaimcould requireus to review our entireproductportfolioto assesswhether similarissuesare presentin otherproductlines,which could resultin significantdisruptionto our businessand could have a furtheradverse impacton our resultsof operations.We cannot assureyou thatwewill not experienceany materialwarrantyor productliabilityclaimlossesin the futureor thatwewill not incursignificantcoststo defend such claims.

Theoperationalconstraintsandfinancialdistressof third partiescould adverselyimpactour business and resultsof operations.

Our resultsof operations,financialconditionand cash flows could be adverselyaffectedif our third-party supplierslack sufficientqualitycontrolor if thereare significantchanges in theirfinancialor businesscondition. If our third-partymanufacturersfailto deliverproducts,partsand componentsof sufficientqualityon timeand at reasonableprices,wecould have difficultiesfulfillingour orderson similartermsor at all,salesand profitscould decline,and our commercialreputationcould be damaged.See “Rawmaterialpricefluctuations,the abilityof key suppliersto meetqualityand deliveryrequirements,or catastrophiceventscan increasethe cost of our productsand services,impactour abilityto meetcommitmentsto customersand cause us to incursignificant liabilities.”If wefailto adequatelyassessthe creditworthinessand operationalreliabilityof existingor future suppliers,if thereis any unanticipateddeteriorationin theircreditworthinessand operationalreliability,or if our suppliersdo not performor adhereto our existingor futurecontractualarrangements,any resultingincreasein nonperformanceby them,our inabilityto otherwiseobtainthe suppliesor our inabilityto enforcethe termsof the contractor seek otherremediescould have a materialadverseeffecton our financialconditionand resultsof operations.

Work stoppages,other disruptions,or the need to relocateany of our facilitiescould significantlydisruptour business.

Our geographicfootprintemphasizeslocating,engineeringand manufacturingcapabilitiesin close physicalproximityto our customers,therebyenablingus to adopt technologiesand productsfor the specific vehicletypes sold in each geographicmarket.Because our facilitiesofferlocalizedservicesin thismanner,a work stoppageor otherdisruptionat one or moreof our R&D,engineeringor manufacturingand assembly facilitiesin a given regioncould have materialadverseeffectson our business,especiallyinsofaras it impacts our abilityto servecustomersin thatregion. For example, our manufacturing facility in Wuhan, China was shut down in 2020 due to the COVID-19 outbreak, causing us to delay certain shipments to our customers. Moreover,due to unforeseencircumstancesor factorsbeyond our control,wemay be forcedto relocateour operationsfromone or moreof our existingfacilitiesto newfacilities and may incursubstantialcosts,experienceprogramdelaysand sacrificeproximityto customersand geographic marketsas a result,potentiallyfor an extendedperiodof time.

The automotiveindustryreliesheavilyon “just-in-time”deliveryof componentsduring the assemblyand manufactureof vehicles,and whenwefailto make timelydeliveriesin accordancewith ~~certain financial covenants~~ our contractual obligations,wegenerallyhave to absorb our owncostsfor identifyingand solvingthe “rootcause”problemas well as expeditiouslyproducingreplacementcomponentsor products.We typicallymustalso carrythe costs associatedwith “catchingup,” such as overtimeand premiumfreight.Additionally,if weare the cause for a customerbeing forcedto haltproduction,the customermay seek to recoup allof itslossesand expensesfromus. These lossesand expensescould be significant,and may includeconsequentiallossessuch as lostprofits.

In addition, asignificantdisruptionin the supply of a key componentdue to a work stoppageor otherdisruptionat one of our suppliersor any othersuppliercould impactour abilityto make timelydeliveriesto our customersand, accordingly,have a materialadverseeffecton our financialresults.Wherea customerhaltsproductionbecause of anothersupplierfailingto deliveron time,or as a resultof a work stoppageor otherdisruption,it is unlikely wewill be fullycompensated,if at all.

We may not realizesalesrepresentedby awarded business or effectivelyutilizeour manufacturingcapacity.

When wewin a bid to offerproductsand servicesto an OEMcustomer,the customertypicallydoes not committo award us itsbusinessuntila separatecontracthas been negotiated,generallywith a termrangingfrom one year to the lifeof the model(usuallythreeto seven years).Once businesshas been awarded, the OEM customertypicallyretainsthe abilityto terminatethe arrangementwithout penaltyand does not committo purchasea minimumvolumeof productswhile the contractis in effect.

In lightof the foregoing,while weestimateawarded businessusing certain ~~indebtedness,~~ assumptions,includingprojected futuresalesvolumes,the volumeand timingof salesto our customersmay vary due to: variationin demand for our customers’products;our customers’attemptsto managetheirinventory;design changes;changes in our customers’manufacturingstrategy;the successof customers’goods and models;and acquisitionsof or consolidationsamong customers.Asignificantdecreasein demand for certainkey modelsor a group of related modelssold by any of our majorcustomers,or the abilityof a manufacturerto re-sourceand discontinue purchasingfromus itsrequirementsfor a particularmodelor group of models,could have a materialadverse effecton us. In particular,wemay be unable to forecastthe levelof customerorderswith sufficientcertaintyto allow us to optimizeproductionschedulesand maximizeutilizationof manufacturingcapacity.Anyexcess capacitywould cause us to incurincreasedfixedcostsin our productsrelativeto the net revenuewegenerate, which could have an adverseeffecton our resultsof operations,particularlyduring economicdownturns. Similarly,a significantfailureor inabilityto adapt to increasedproductionor desiredinventorylevels(including as a resultof acceleratedlaunch schedulesfor newautomobileand truckplatforms),complywith customer specificationsand manufacturingrequirementsmoregenerallyor respond to otherunexpectedfluctuations,as well as any delaysor otherproblemswith existingor newproducts(includingprogramlaunch difficulties)could resultin financialpenalties,increasedcosts,loss of sales,loss of customersor potentialbreachesof customer contracts,which could have an adverseeffecton our ~~principal credit agreement~~ profitabilityand resultsof operations.

If actualproductionordersfromour customersare not consistentwith the projectionsweuse in calculating the amountof our awarded business,or if weare unable to improveutilizationlevelsfor manufacturinglinesthat consequentlyare underutilizedand correctlymanagecapacity,the increasedexpense levelswill have an adverse effecton our business,financialconditionand resultsof operations,and wecould realizesubstantiallyless revenueover the lifeof theseprojectsthan the currentlyprojectedestimate.

We may not be able to successfullynegotiatepricingtermswith our customers,whichmay adverselyaffectour resultsof operations.

We negotiatesalespricesannuallywith our automotivecustomers.Our customersupply agreements generallyrequirestep-downsin componentpricingover the periodof production.In addition,our customers oftenreservethe rightto terminatetheirsupply contractsat any time,which enhancestheirabilityto obtainprice reductions.OEMshave also exercisedsignificantinfluenceover theirsuppliers,includingus, becausethe automotivecomponentsupply industryis highly competitiveand servesa ~~pro forma basis, including the maximum total leverage ratio (ratio~~ limitednumberof ~~debt~~ customers.Based on thesefactors,our statusas a Tier I supplier(one thatsuppliesvehiclecomponentsdirectlyto ~~consolidated EBITDA as defined by the credit agreement, which excludes any amounts owed to Honeywell under the Indemnification and Reimbursement Agreement),~~ manufacturers)and the ~~minimum interest coverage ratio.~~ factthatour customers’productprogramstypicallylasta numberof yearsand are anticipatedto encompass largevolumes,our customersare able to negotiatefavorablepricing,and any cost-cuttinginitiativesthatour customersadopt generallywill resultin increaseddownwardpressureon our pricing.Anyresultingimpactsto our saleslevelsand margins,or the failureof our technologiesor productsto gain marketacceptancedue to more attractiveofferingsby our competitors,could over timesignificantlyreduceour revenuesand adverselyaffect our competitivestandingand prospects.In ~~each calendar quarter,~~particular,largecommercialsettlementswith our customersmay adverselyaffectour resultsof operations.

We are subjectto the economic,political,regulatory,foreignexchange andother risksof international operations.

We have createda geographicfootprintthatemphasizeslocatingR&D,engineeringand manufacturing capabilitiesin closephysicalproximityto our customers.Our internationalgeographicfootprintsubjectsus to many risks,including:exchange controlregulations;wage and pricecontrols;antitrustand environmental regulations;employmentregulations;foreigninvestmentlaws; monetaryand fiscalpoliciesand protectionist measuresthatmay prohibitacquisitionsor jointventures,establishlocalcontentrequirements,or impacttrade volumes;import,exportand othertraderestrictions(such as embargoes);violationsby our employeesof anti-corruptionlaws;changes in regulationsregardingtransactionswith state-ownedenterprises;nationalizationof privateenterprises;naturaland man-madedisasters,hazardsand losses;global health risks and pandemics; backlashfromforeignlabororganizationsrelatedto our restructuringactions;violence,civiland labor unrest;actsof terrorism;and our abilityto hireand maintainqualifiedstaffand maintainthe safetyof our employeesin theseregions.Additionally,certainof the marketsin which weoperatehave adopted increasingly strictdata privacyand data protectionrequirementsor may requirelocalstorageand processingof data or similar requirements.The European Commissionhas approved a data protectionregulation,knownas the GeneralData ProtectionRegulation(“GDPR”), thatcameinto forcein May 2018. The GDPRincludes operationalrequirementsfor companiesthatreceiveor processpersonaldata of residentsof the European Union and includes significantpenaltiesfor non-compliance.The GDPRand similardata protectionmeasuresmay increasethe cost and complexityof our ability to ~~pay dividends~~deliverour services.

Following the U.K.’s withdrawal from the European Union on January 31, 2020, the U.K. entered into a transition period during which it continued its ongoing and ~~repurchase capital stock~~complex negotiations with the European Union relating to the future trading relationship between the U.K. and European Union. The transition period ended on December 31, 2020, before which the United Kingdom and the European Commission reached an agreement on the future trading relationship between the parties (the “UK-EU Trade and Cooperation Agreement” OR “TCA”). On December 30, 2020 the U.K. Parliament approved the European (Future Relationship) Bill, thereby ratifying the TCA. The TCA is subject to formal approval by the European Parliament and the Council of the European Union before it comes into effect and has been applied provisionally since January 1, 2021. Significant political and economic uncertainty remains about whether the terms of the relationship will differ materially from the terms before withdrawal. Our manufacturing operations in ~~such calendar quarter will~~Cheadle and the businesses of our customers and suppliers could be ~~restricted until any amounts payable under~~negatively impacted if tariffs or other restrictions are imposed on the ~~Indemnification~~free flow of goods to and ~~Reimbursement Agreement~~from the U.K. Trade tensions between the United States and China, and other countries have escalated in ~~such quarter (including any deferred payment amounts) are paid~~recent years. Any U.S. tariff impositions against Chinese exports have generally been followed by retaliatory Chinese tariffs on U.S. exports to ~~Honeywell and we will~~China. We may not be ~~required~~able to ~~use available restricted payment capacity under our debt agreements to make payments in respect~~mitigate the impacts of any future tariffs, and our business, results of operations and financial position would be materially adversely affected by such ~~deferred amounts. Payment of deferred amounts and certain~~tariffs. Further changes in U.S. trade policies, tariffs, taxes, export restrictions or other amounts (which are not expected to be material) could cause the amount we are required to pay under the Indemnification and Reimbursement Agreement in any given year to exceed an amount equal to the Distribution Date Currency Exchange Rate equivalent of $175 million per year (exclusive of any late payment fees up to 5% per annum). All amounts payable under the Indemnification and Reimbursement Agreement will be guaranteed by certain of our subsidiaries that act as guarantors under our principal credit agreement, subject to certain exceptions. Under the Indemnification and Reimbursement Agreement, we are also subject to certain of the affirmative and negative covenants to which we are subject under our principal credit agreement. Further, pursuant to the Indemnification and Reimbursement Agreement, our ability to (i) amendtrade barriers, or ~~replace our principal credit agreement, (ii) enter into another credit agreement and make amendments~~restrictions on raw materials or waivers thereto, or (iii) enter into or amend or waive any provisions under other agreements, in each case, in a manner that would adversely affect the rights of Honeywell under the Indemnification and Reimbursement Agreement, will be subject to Honeywell’s prior written consent. This consent right will significantlycomponents may limit our ability to ~~engage in many types~~produce products, increase our manufacturing costs, decrease our profit margins, reduce the competitiveness of ~~significant transactions~~our products, or inhibit our ability to sell products or purchase raw materials or components, which would have a material adverse effect on ~~favorable terms (or at all), including, but not limited to, equity~~our business, results of operations and ~~debt financings, liability management transactions, refinancing transactions, mergers, acquisitions, joint ventures~~financial condition. These and other ~~strategic transactions.~~

~~This agreementmay have materialadverseeffects~~oninstabilities and uncertainties arising from the global geopolitical environment, along with the cost of compliance with increasingly complex and often conflicting regulations worldwide, can impair our ~~liquidityand cash flows and on~~flexibility in modifying product, marketing, pricing or other strategies for growing our ~~resultsof operations,regardlessof whether weexperiencea declinein net sales.The agreementmay also requireus to accruesignificantlong-termliabilitieson our consolidated and combinedbalancesheet,the amountsof which will be dependent on factorsoutsideof our control,includingHoneywell’sresponsibilityto manageand determinethe outcomesof claimsunderlyingthe liabilities.~~As~~of December31, 2018, wehave accrued$1,244 millionof liabilityin connectionwith Bendix-relatedasbestos~~businesses, as well as ~~environmental-related liability payments~~our ability to improve productivity and ~~accounts payable and non-United States asbestos-related liability payments and accounts payable,representingthe estimatedliabilityfor pending claimsas well as future claimsexpectedto be asserted. The liabilitiesrelatedto the Indemnificationand ReimbursementAgreementmayhave~~ maintain acceptable operating margins.

Asa ~~significantnegativeimpacton the calculationof key financialratiosand othermetricsthatare important to investors,ratingagenciesand securitiesanalystsin evaluatingour creditworthinessand the value~~ resultof our ~~securities.Accordingly,~~globalpresence,a significantportionof our ~~access~~revenuesare denominatedin currenciesother than the U.S.dollarwhereas a significantamountof our paymentobligationsare denominatedin U.S. dollars,which exposes us to ~~capital~~foreignexchange risk.We monitorand seek to reducesuch riskthrough hedging activities; however, foreignexchange hedging activitiesbear a financialcost and may not always be availableto us or be successfulin eliminatingsuch volatility.

Finally,wegeneratesignificantamountsof cash thatis investedwith financialand non-financial counterparties.Whileweemploycomprehensivecontrolsregardingglobalcash managementto guard against cash or investmentloss and to ensureour abilityto fund our operationsand commitments,a materialdisruption to the counterpartieswith whom wetransactbusinesscould expose usto financialloss.

We have investedsubstantialresourcesin specificforeignmarketswhere weexpectgrowth andwemay be ~~materiallyadverselyaffected~~unable to timelyalterour strategiesshould such expectationsnot be realized.

We have identifiedcertaincountries,such as China and ~~the value of your investmentin our company may decline.Moreover,the paymentsthat~~weIndia,as key high-growthgeographicmarkets.We believethesemarketsare ~~required~~likelyto experiencesubstantiallong-termgrowth, and accordinglyhave made and expectto continueto make substantialinvestmentsin numerousmanufacturingoperations,technicalcenters, R&Dactivitiesand otherinfrastructureto ~~Honeywell pursuant~~supportanticipatedgrowth in theseareas.If marketdemand for evolvingvehicletechnologiesin theseregionsdoes not grow as quicklyas weanticipate,or if weare unable to deepen existingand develop additionalcustomerrelationshipsin theseregions,wemay failto realizeexpected ratesof return,or even incurlosses,on our

existinginvestmentsand may be unable to timelyredeploythe ~~terms~~ investedcapitalto take advantageof ~~that agreementwill not be deductiblefor U.S.federalincometax purposes.~~

~~Although we~~ othermarketsor productcategories,potentiallyresultingin lostmarket shareto our competitors.In particular,our abilityto remaincompetitiveand continueto grow in theseregions depends in parton the absenceof competingstate-sponsoreddomesticbusinesses.If a state-sponsoredoperation entereda localmarketas a competitor,it mighthave accessto ~~certain information regarding these liabilities as we may reasonably request for certain purposes, as well as~~ significantsocialand financialcapitalthatwould enableit to overcomethe ~~ability~~ ordinarybarriersto ~~participate~~ entryin ~~periodic standing meetings with Honeywell’s special counsel responsible for management~~the turbochargerindustryand acquirepotentially significantmarketshareat our expense.

We believethatweare a marketleaderin the turbochargerindustryin many of the ~~underlying claims,~~marketsin which we operate.Although webelievewehave actedproperlyin the ~~payment obligations under this agreement relate to legal proceedings that~~marketsin which we ~~will not control,~~ have significantmarketshare, wecould faceallegationsof abuse of our marketpositionor of collusionwith othermarketparticipants,which could resultin negativepublicityand ~~we accordingly do not expect to be able to make definitive decisions regarding settlements~~adverseregulatoryactionby the relevantauthorities,includingthe impositionof monetaryfines,allof which could adversely affect our financial condition and results of operations.

A deterioration in industry, economic or ~~other outcomes that could influence our potential related exposure.~~

~~The Indemnification and Reimbursement Agreement also includes other obligations that~~financial conditions may ~~impose significant operating and financial restrictions on us and our subsidiaries and limit~~restrict our ability to ~~engage~~ access the capital markets on favorable terms.

We may requireadditionalcapitalin ~~actions that~~the futureto financeour growth and development,upgrade and improveour manufacturingcapabilities,implementfurthermarketingand salesactivities,fund ongoing R&D activities,satisfyregulatoryand environmentalcomplianceobligations,satisfyindemnity obligationsto Honeywell, and meetgeneralworking capitalneeds. Our capitalrequirementswill depend on many factors,includingacceptanceof and demand for our products,the extentto which weinvestin new technologyand R&Dprojectsand the statusand timingof thesedevelopments.If our accessto capitalwere to becomeconstrainedsignificantly,or if costsof capitalincreasedsignificantly,due to lowered creditratings, prevailingindustryconditions, the solvency of our customers, a material decline in demand for our products,the volatilityof the capitalmarketsor otherfactors,our financialcondition, resultsof operationsand cash flows could be adverselyaffected. These conditions may be adversely affect our ability to obtain targeted credit ratings.

We may need additionalcapitalresourcesin the future in order tomeetour ~~long-term best interests.~~projectedoperatingneeds,capitalexpendituresand othercashrequirements,andifweareunableto obtainsufficientresourcesforouroperatingneeds,capitalexpendituresandothercashrequirementsforanyreason, ourbusiness,financialconditionandresultsofoperationscouldbeadverselyaffected.

Raw material price fluctuations, the ability of key suppliers to meet quality and delivery requirements, or catastrophic events can increase the cost of our products and services, impact our ability to meet commitments to customers and cause us to incur significant liabilities.

The cost and availabilityof raw materials ~~(including,~~ (including,but not limitedto, grey iron, aluminum,stainlesssteel and a nickel,iron and chromium-basedalloy)is a key elementin the cost of our products.Our inabilityto offset materialpriceinflationthrough increasedpricesto customers,formulaor long-termfixedpricecontractswith suppliers,productivityactionsor through commodityhedges could adverselyaffectour resultsof operations.

We obtaincomponentsand otherproductsand servicesfromnumeroussuppliersand othervendors throughoutthe world. Many majorcomponentsand productequipmentitemsare procuredor subcontractedon a single-or sole-sourcebasis.Although webelievethatsourcesof supply for raw materialsand componentsare generallyadequate,it is difficultto predictwhat effectsshortagesor priceincreasesmay have in the future. Short-or long-termcapacityconstraintsor financialdistressat any point in our supply chain could disruptour operationsand adverselyaffectour financialperformance,particularlywhenthe affectedsuppliersand vendors are the sole sourcesof productsthatwe requireor thathave unique capabilities,or whenour customers have directedus to use those specificsuppliersand vendors. Our abilityto manageinventoryand meetdelivery requirementsmay be constrainedby our suppliers’inabilityto scaleproductionand adjustdeliveryof long-lead timeproductsduring timesof volatiledemand. Our inabilityto fillour supply needs would jeopardizeour ability to fulfillobligationsunder commercialcontracts,and could resultin reducedsalesand profits,contractpenalties or terminations,and damageto customerrelationships.

Failure to increase productivity through sustainable operational improvements, as well as an inability to successfully execute repositioning projects or to effectively manage our workforce, may reduce our profitability or adversely impact our business.

Our profitability and margin growth are dependent upon our ability to drive sustainable improvements. In addition, we seek productivity and cost savings benefits through repositioning actions and projects, such as consolidation of manufacturing facilities, transitions to cost-competitive regions, workforce reductions, asset impairments, product line rationalizations and other cost-saving initiatives. Risks associated with these actions include delays in execution of the planned initiatives, additional unexpected costs, realization of fewer than estimated productivity improvements and adverse effects on employee morale. We may not realize the full operational or financial benefits we expect, the recognition of these benefits may be delayed and these actions may potentially disrupt our operations. In addition, organizational changes, attrition, labor relations difficulties, or workforce stoppage could have a material adverse effect on our business, reputation, financial position and results of operations.

Ouroperationsandthe prior operationsof predecessorcompaniesexpose us to the risk of material environmentalliabilities.

We are subjectto potentiallymaterialliabilitiesrelatedto the investigationand cleanupof environmental hazardsand to claimsof personalinjuriesor propertydamagesthatmay arisefromhazardoussubstancereleases and exposures.We are also subjectto potentiallymaterialliabilitiesrelatedto the complianceof our operations with the requirementsof variousfederal,state,localand foreigngovernmentsthatregulatethe dischargeof materialsinto the environmentand the generation,handling,storage,treatmentand disposalof and exposureto hazardoussubstances.If weare found to be in violationof theselaws and regulations,wemay be subjectto substantialfinesand criminalsanctions and be requiredto installcostlyequipmentor make operationalchanges to achievecompliancewith such laws and regulations.In addition,changes in laws, regulationsor government enforcementof policiesconcerningthe environment,the discoveryof previouslyunknowncontaminationor new informationrelatedto individualcontaminatedsites,the establishmentof stricterstateor federaltoxicity standardswith respectto certaincontaminants,or the impositionof newclean-uprequirementsor remedial techniques,could requireus to incuradditionalcurrentlyunanticipatedcostsin the futurethatwould have a negativeeffecton our financialconditionor resultsof operations.

We cannot predictwith certaintythe outcomeof litigationmatters,governmentproceedingsandother contingenciesanduncertainties.

We are or may be party to a numberof lawsuits,investigationsand disputes(some of which involvesubstantialamountsclaimed)arisingout of our currentand historicalbusiness,including mattersrelatingto our Honeywell Indemnity Agreement, commercialtransactions,productliability(includinglegacyasbestosclaimsinvolvingthe frictionmaterialslegacybusiness),prioracquisitionsand divestitures,employment,employeebenefitsplans, intellectualproperty,antitrust,importand export,and environmental,healthand safetymatters, as well as securities litigation, tax proceedings and litigation related to our debt. For additional information regarding our pending legal proceedings, see Part I, Item 3, “Legal Proceedings”.We cannot predict with certainty the outcome of legal proceedings or contingencies. The costs incurred in litigation ~~matters, government proceedings~~can be substantial and ~~other contingencies~~result in the diversion of management’s attention and ~~uncertainties.~~resources.

~~In the ordinary course of business, we~~We may also make certain commitments, including representations, warranties and indemnities relating to current and past operations, including those related to divested businesses, and issue guarantees of third-party obligations. We are subject to a number of lawsuits, investigations and disputes (some of which involve substantial amounts claimed) arising out of our current and historical business, including matters relating to commercial transactions, product liability (including legacy asbestos claims involving the friction materials legacy business), prior acquisitions and divestitures, employment, employee benefits plans, intellectual property, antitrust, import and export, and environmental, health and safety matters. Our potential liabilitiesare subjectto change over timedue to newdevelopments,changes in settlementstrategyor the impact of evidentiaryrequirements,and wemay becomesubjectto or be requiredto pay damageawards or settlements thatcould have a materialadverseeffecton our resultsof operations,cash flows and financialcondition.If we were requiredto make payments,such paymentscould be significantand could exceed the amountswehave accruedwith respectthereto,adverselyaffectingour business,financialconditionand resultsof operations. Whilewemaintaininsurancefor certainrisks,the amountof our insurancecoveragemay not be adequateto cover the totalamountof allinsuredclaimsand liabilities.The incurrenceof significantliabilitiesfor which there is no or insufficientinsurancecoveragecould adverselyaffectour resultsof operations,cash flows, liquidityand financialcondition.

We depend onthe recruitmentandretentionof qualifiedpersonnel, andour failureto attractandretainsuch personnel could adverselyaffectour business, financialconditionandresultsof operations.

Dueto the complexnatureof our business,our futureperformanceis highly dependentupon the continued servicesof our key engineeringpersonnel,scientistsand executiveofficers, the developmentof additionalmanagementpersonneland the hiringof new qualifiedengineering,manufacturing,marketing,salesand managementpersonnelfor our operations. Competitionfor qualifiedpersonnelin our industryis intense,and wemay not be successfulin attractingor retainingqualifiedpersonnel.The loss of key employees,our inabilityto attractnewqualifiedemployeesor adequatelytrainemployees,or the delay in hiringkey personnel,could negativelyaffectour business,financial conditionand resultsof operations.

~~System or service failures, including as a result of cyber or other security incidents, could disrupt business operations, result in the loss of critical~~ OurU.S.and ~~confidential information, and adversely impact our reputation and results of operations.~~

Pursuant to our Transition Services Agreement with Honeywell, we continue to rely on Honeywell’s information technology and engineering systems. In addition, we deploy and maintain our own IT and engineering systems. Our and Honeywell’s systems involve sensitive information and may be conducted in hazardous environments. As a result, we are subject to systems or service failures, not only resulting from our own or Honeywell’s failures or the failures of third-party service providers, natural disasters, power shortages or terrorist attacks, but also from exposure to cyber or other security threats. Global cybersecurity threats and incidents can range from uncoordinated individual attempts to gain unauthorized access to IT systems to sophisticated and targeted measures known as advanced persistent threats,

~~directedat the Company, Honeywell, our or Honeywell’sproducts,our or Honeywell’scustomersand/orour or Honeywell’sthird-partyserviceproviders,includingcloud providers.There has been an increasein the frequencyand sophisticationof cyber and othersecuritythreatswe face,and our customersare increasinglyrequiringcyber and othersecurityprotectionsand mandatingcyber and othersecuritystandardsin our products.~~

Cyber and other security incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (our own or that of third parties) and the disruption of business operations. Moreover, employee error or malfeasance, faulty password management or other intentional or inadvertent non-compliance with our security protocols may result in a breach of our information systems. Cyber and other security incidents aimed at the software embedded in our products could lead to third-party claims that our product failures have caused a similar range of damages to our customers, and this risk is enhanced by the increasingly connected nature of our products.

The potential consequences of a material cyber or other security incident include financial loss, reputational damage, litigation with third parties, theft of intellectual property, fines levied by the United States Federal Trade Commission, diminution in the value of our investment in research, development and engineering, and increased cyber and other security protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect our competitiveness and results of operations. In addition to any costs resulting from contract performance or required corrective action, these incidents could generate increased costs or loss of revenue if our customers choose to postpone or cancel previously scheduled orders or decide not to renew any of our existing contracts.

The costs related to cyber or other security incidents may not be fully insured or indemnified by other means. The successful assertion of a large claim against us with respect to a cyber or other security incident could seriously harm our business. Even if not successful, these claims could result in significant legal and other costs, may be a distraction to our management and harm our customer relationships, as well as our reputation.

~~Our U.S. and~~ non-U.S.tax liabilitiesare dependent, in part, uponthe distributionof incomeamong various jurisdictionsin whichweoperate.

Our futureresultsof operationscould be adverselyaffectedby changes in the effectivetax rateas a resultof a change in the mix of earningsin countrieswith differingstatutorytax rates,changes in tax laws, regulations and judicialrulings ~~(or~~(or changes in the interpretationthereof),changes in generallyacceptedaccounting principles,changes in the valuationof deferredtax assetsand liabilities,the resultsof auditsand examinationsof previouslyfiledtax returnsand continuingassessmentsof our tax exposuresand variousothergovernmentalenforcementinitiatives.Our tax expense includesestimatesof tax reservesand reflectsotherestimatesand assumptions,includingassessmentsof our futureearningswhich could impactthe valuationof our deferredtax assets.Changes in tax laws or regulations,includingmulti-jurisdictionalchanges enactedin responseto the guidelinesprovidedby the Organizationfor EconomicCo-operationand Development to addressbase erosionand profitshifting,will increasetax uncertaintyand may adverselyimpactour provisionfor incometaxes.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act instituted fundamental changes to the taxation of multinational corporations. The Tax Act includes changes to the taxation of foreign earnings by implementing a dividend exemption system, expansion of the current anti-deferral rules, a minimum tax on low-taxed foreign earnings and new measures to deter base erosion. The Tax Act also includes a permanent reduction in the corporate tax rate to 21%, repeal of the corporate alternative minimum tax, expensing of capital investment, and limitation of the deduction for interest expense. Furthermore, as part of the transition to the new tax system, a one-time transition tax was imposed on a U.S. shareholder’s historical undistributed earnings of foreign affiliates. Although the Tax Act was generally effective January 1, 2018, GAAP requires recognition of the tax effects of new legislation during the reporting period that includes the enactment date, which was December 22, 2017.

~~In addition,pursuantto the terms of the Tax MattersAgreement,~~we~~are requiredto make paymentsto a subsidiary of Honeywell in an amountpayablein Euros (calculatedby referenceto the DistributionDate Currency Exchange Rate) representingthe net tax liabilityof Honeywell under the mandatorytransitiontax attributableto us, as determinedby Honeywell. Following the Spin-Off, Honeywell has determinedthe portionof itsnet tax liabilityattributableto us is $240 million.The amountwill be payablein installmentsover 8 yearsand may be adjustedat Honeywell’sdiscretionin the event of an auditadjustmentor otherwise. In connection with the Tax Matters Agreement, we paid Honeywell the Euro-equivalent of $19 million during the fourth quarter of 2018. Furthermore,Honeywell will control any subsequenttax auditsor legalproceedingswith respectto the mandatorytransitiontax, and accordinglywe do not expectto be able to make definitivedecisionsregardingsettlementsor otheroutcomesthatcould influenceour potentialrelatedexposure.~~

Because wehave officersanddirectorswholiveoutsideof the United States,you may have noeffective recourseagainst them for misconductandmay not be able to receivecompensationfor damages to the value of your investmentcaused by wrongful actionsby our directorsandofficers.

We have officersand directorswholiveoutsideof the United States.Asa result,it may be difficultfor investorsto enforcewithin the U.S.any judgmentsobtainedagainstthose officersand directors or obtain judgmentsagainstthemoutsideof the U.S.thatare based on the civilliabilityprovisionsof the federalor state securitieslaws of the U.S.Investorsmay not be able to receivecompensationfor damagesto the value of their investmentcaused by wrongful actionsby our directorsand officers.

Ouremergingopportunitiesin technology,products andservicesdepend in part onintellectualpropertyand technologylicensedfromthird parties.

Anumberof our emergingopportunitiesin technology,productsand servicesrelyon key technologies developedor licensedfromthirdparties.While ~~none~~the majority of our currentproductofferingsare not coveredby third-party licenses, many of our emergingtechnologyofferingsthatweare developing use softwarecomponentsor otherintellectualpropertylicensedfromthirdparties,includingboth through proprietaryand open sourcelicenses. Should such emergingproductsbecomea significantpartof our productofferings,our relianceon third-party licensesmay presentvariousrisksto our business. These third-partysoftwarecomponentsmay becomeobsolete, defectiveor incompatiblewith futureversionsof our emergingtechnologyofferings, our relationshipwith thesethirdpartiesmay deteriorate,or our agreementswith thesethirdpartiesmay expireor be terminated.We may facelegalor businessdisputeswith licensorsthatmay threatenor lead to the disruptionof inbound licensing relationships.In orderto remainin compliancewith the termsof our licenses,wemustcarefullymonitorand manageour use of third-partycomponents,includingboth proprietaryand open sourcelicensetermsthatmay requirethe licensingor publicdisclosureof our intellectualpropertywithout compensationor on undesirable terms.Additionally,some of theselicensesmay not be availablefor use in the futureon termsthatmay be acceptableor thatallow our emergingproductofferingsto remaincompetitive.Our inabilityto obtainlicensesor rightson favorabletermscould have a materialeffecton our emergingtechnologyofferings. Moreover,it ispossiblethatas a consequenceof a futuremergeror acquisitionwe may be involved in,thirdpartiesmay obtain licensesto some of our intellectualpropertyrightsor our businessmay be subjectto certainrestrictionsthatwere not in placepriorto such transaction.Because the availabilityand cost fromthirdpartiesdepends upon the willingnessof thirdpartiesto deal with us on the termswerequest,thereis a riskthatthirdpartieswholicense our competitorswill eitherrefuseto licenseus at all,or refuseto licenseus on termsequallyfavorableto those grantedto our competitors.Consequently,wemay lose a competitiveadvantagewith respectto theseintellectual propertyrightsor wemay be requiredto enterinto costlyarrangementsin orderto obtaintheserights.

If the Spin-Off were determinednot to qualifyas tax-freefor U.S.federalincometax purposes, wecould have anindemnificationobligationto Honeywell,whichcould adverselyaffectour business, financialcondition andresultsof operations.

If, as a resultof any of our representationsbeing untrueor our covenantsbeing breached,the Spin-Offwere determinednot to qualifyfor non-recognitionof gain or loss under Section355 and relatedprovisionsof the Code,wecould be requiredto indemnifyHoneywell for the resultingtaxesand relatedexpenses.Further, if any pre-spin restructuring activities that were initiated by Honeywell were determined to be taxable and benefit the Company, we could be required to indemnify Honeywell. Those amounts could be material.Anysuch indemnificationobligationcould adverselyaffectour business,financialcondition and resultsof operations.

In addition,if weor our stockholderswere to engage in transactionsthatresultedin a 50% or greaterchange by vote or value in the ownership of our stock during the four-yearperiodbeginningon the date thatbegins two yearsbeforethe date of the Distribution,the Spin-Offwould generallybe taxableto Honeywell, but not to stockholders,under Section355(e),unlessit were establishedthatsuch transactionsand the Spin-Offwere not partof a plan or seriesof relatedtransactions.If the Spin-Offwere taxableto Honeywell due to such a 50% or greaterchange in ownership of our stock, Honeywell would recognizegain equal to the excessof the fairmarket value on the DistributionDate of our commonstock distributedto Honeywell stockholdersover Honeywell’stax basisin our commonstock, and wegenerallywould be requiredto indemnifyHoneywell for the tax on such gain and relatedexpenses.Those amountswould be material.Anysuch indemnificationobligationcould adversely affectour business,financialconditionand resultsof operations.

~~We have agreed to numerous restrictions to preserve~~Under the ~~non-recognition treatment~~terms of the ~~Spin-Off, which may reduce our strategic~~PSA and ~~operating flexibility.~~

~~We have agreed in~~the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Indemnity Agreements and the Tax Matters Agreement ~~to covenants~~ and ~~indemnification obligations that address compliance~~(b) the dismissal with ~~Section 355~~prejudice of the ~~Code~~Honeywell Litigation in exchange for (x) a $375 million cash payment at Emergence and ~~are intended to preserve~~(y) the ~~tax-free nature~~Series B Preferred Stock. The terms of the ~~Spin-Off. These covenants include certain restrictions~~PSA, the Transaction and the Plan remain subject to approval by the Bankruptcy Court. There can be no assurances that we will obtain the approval of the Bankruptcy Court and consummate the Transaction.

For more information on ~~our activity for a period~~the risks related to the approval of ~~two years following~~ the Spin-Off, unless Honeywell gives its consent for us to take a restricted action, which Honeywell is permitted to grant or withhold at its sole discretion. These covenants and indemnification obligations may limit our ability to pursue strategic transactions or engage in new businesses or other transactions that may maximize the value of our business, and might discourage or delay a strategic transaction that our stockholders may consider favorable.

Plan, see “We may ~~be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off.~~

~~We believe that, as an independent, publicly traded company, we will~~not be able to among other things, design and implement corporate strategies and policies that are better targeted to our business’s areas of strength and differentiation, better focus our financial and operational resources on those specific strategies, create effective incentives for our management and employees that are more closely tied to our business performance, provide investors more flexibility and enable us to achieve alignment with a more natural stockholder base and implement and maintain a capital structure designed to meet our specific needs. We may be unable to achieve some or all of the benefits that we expect to achieve as an independent company in the time we expect, if at all, for a variety of reasons, including: (i) ~~operating as a stand-alone public company following~~ ~~the Spin-Off will require significant amounts~~complete any Bankruptcy Court-approved reorganization of our ~~management’s time and effort, which may divert management’s attention from operating and growing~~Company or sales of our ~~business; (ii)~~Company or assets through the chapter 11 process, or we may be more susceptible to market fluctuations and other adverse events than if we were still a part of Honeywell; and (iii) our businesses will be less diversified than Honeywell’s businesses prior to the separation. If we fail to achieve some or all of the benefits that we expect to achieve as an independent company, or do not achieve them in the time we expect, our business, financial condition and results of operations could be adversely affected.

~~We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate~~ ~~effectively~~ ~~as an independent, publicly traded company, and we may experience increased costsdue to our separation from Honeywell~~.

We have historically operated as part of Honeywell’s corporate organization, and Honeywell has provided us with various corporate functions. Due to the separation, Honeywell no longer has an obligation to provide us with assistance other than certain transition and other services~~. The agreements providing for these~~ services do not include every service that we have received from Honeywell in the past, and Honeywell is only obligated to provide the transition services for limited periods following completion of the Spin-Off. The agreements were entered into on arms-length terms similar to those that would be agreed with an unaffiliated third party such as a buyer in a sale transaction, but because we did not have an independent board of directors or a management team independent of Honeywell representing our interests while the agreements were being negotiated, it is possible that we might have been able to achieve more favorable terms if the circumstances differed. We will rely on Honeywell to satisfy its performance and payment obligations under our transition services agreement and other agreements related to the Spin-Off, and if Honeywell does not satisfy such obligations, we could incur operational difficulties or losses.

~~Following the cessationof theseagreements,~~we~~will need to provide internallyor obtainfromunaffiliatedthirdpartiesthe services~~we~~will no longerreceivefromHoneywell. These servicesincludelegal,accounting,informationtechnology,softwaredevelopment,human resourcesand other infrastructuresupport,the effectiveand appropriateperformanceof which are criticalto our operations.We may be unable to replacetheseservicesin a timelymanneror on termsand conditionsas favorableas those we receivefromHoneywell. Because our businesshistoricallyoperatedas partof the wider Honeywell organization,~~we~~may be unable to successfullyestablishthe infrastructureor implementthe changes necessaryto operateindependently,or may incuradditionalcoststhatcould adverselyaffectour business.In particular,our abilityto positionand marketourselvesas a providerof connectedvehiclesoftwarecould be adverselyaffected by our loss of accessto Honeywell’sdevelopmentplatforms.If wefailto obtainthe qualityof servicesnecessary to operateeffectivelyor incurgreatercostsin obtainingtheseservices,our business,financialconditionand resultsof operationsmay be adverselyaffected.~~

As we build our information technology infrastructure and transition our data to our own systems, we could incur substantial additional costs and experience temporary business interruptions, and our accounting and other management systems and resources may not be ~~adequately prepared~~able to ~~meet the financial reporting and other requirements to~~realize adequate consideration for such reorganization or sales, which ~~we are subject.~~

~~We are in the process of installing and implementing~~ ~~informationtechnologyinfrastructure~~to~~supportcertain ofourbusinessfunctions,includingaccountingandreporting,manufacturingprocesscontrol,customerservice, inventorycontrolanddistribution.~~We~~mayincursubstantiallyhighercoststhancurrentlyanticipated~~as~~we transitionfromtheexistingtransactionalandoperationalsystemsanddatacenters~~we~~currentlyuse~~as~~partof Honeywell.~~Ifwe~~areunable~~to~~transitioneffectively,~~we~~mayincurtemporaryinterruptions~~in~~businessoperations. Anydelay~~in~~implementing,~~or~~operationalinterruptionssufferedwhileimplementing,ournewinformation technologyinfrastructurecoulddisruptourbusinessandhave~~a~~materialadverseeffect~~on~~ourresults~~of~~operations.~~

In addition, if we are unable to replicate or transition certain systems, our ability to comply with regulatory requirements could be impaired. As a result of the Spin-Off, we are directly subject to reporting and other obligations under the Exchange Act. Beginning with our second required Annual Report on Form 10-K, we intend to comply with Section 404 of the Sarbanes Oxley Act of 2002, as amended (the “Sarbanes Oxley Act”), which will require annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm addressing these assessments. These reporting and other obligations may place significant demands on management, administrative and operational resources, including accounting systems and resources.

The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. Under the Sarbanes Oxley Act, we are required to maintain effective disclosure controls and procedures and internal control over financial reporting. To comply with these requirements, we may need to upgrade our systems, implement additional financial and management controls, reporting systems and procedures and hire additional accounting and finance staff. We expect to incur additional annual expenses for the purpose of addressing these, and other public company reporting, requirements. If we are unable to upgradewould adversely affect our financial and management controls, reporting systems, information technology systems and procedures in a timely and effective fashion, our ability to comply with financial reporting requirements and other rules that apply to reporting companies under the Exchange Act could be impaired. Any failure to achieve and maintain effective internal controls could have a material adverse effect on our business, financial condition, results of operations and cash flow. See “—Risks Relating to Our Common Stock and the Securities Market—If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired and investors’ views of us could be harmed.”

~~We have a~~ ~~limited~~ ~~operatinghistoryas anindependent, publiclytraded company, andour historical consolidated andcombined financialinformation prior to the Spin-Offis not necessarilyrepresentativeof the results~~we~~wouldhave achievedas an independent, publiclytraded company andmay not be a reliableindicatorof our future results.~~

~~We derived much of the financial information included in this Annual~~ ~~Report on Form 10-K~~ from Honeywell’s consolidated financial statements, and this information does not necessarily reflect the results of operations and financial position we would have achieved as an independent, publicly traded company during the periods presented, or those that we will achieve in the future. This is primarily because of the following factors:

~~Due to our separation from Honeywell~~,we~~also faceadditionalcostsand demandson management’stimeassociated with being an independent,publiclytradedcompany, includingcostsand demandsrelatedto corporate governance,investorand publicrelationsand publicreporting.While~~we~~have been profitableas partof Honeywell, wecannot assureyou thatour profitswill continueat a similarlevelnow that~~we~~are an independent, publiclytradedcompany.~~condition”.

Our indebtedness could adversely affect our business, financial condition and results of operations.

In connectionwith the Spin-Off,weincurredsubstantialindebtednessin an aggregateprincipal amountof approximately$1,660 million,of which $1,628 millionof the net proceedswere transferredto Honeywell substantiallyconcurrentlywith the consummationof the Spin-Off. In connection with the Chapter 11 Cases, we incurred ~~substantial~~an additional indebtedness in an aggregate principal amount of ~~approximately $1,660 million, of which $1,628 million of the net proceeds were transferred to Honeywell substantially concurrently with the consummation of the Spin-Off.~~$200 million.

We historically relied upon Honeywell to fund our working capital requirements and other cash requirements. We are now responsible for servicing our own debt and obtaining and maintaining sufficient working capital and other funds to satisfy our cash requirements. Due to our separation from Honeywell, and the commencement of the Chapter 11 Cases our access to and cost of debt financing will be different from ~~the~~our historical access to and cost of debt ~~financing under Honeywell.~~financing. Differences in access to and cost of debt financing may result in differences in the interest rate charged to us on financings, as well as the amount of indebtedness, types of financing structures and debt markets that may be available to us.

Our abilityto make paymentson and to refinanceour indebtedness,includingthe debt incurredin connectionwith the Spin-Off and the Chapter 11 Cases,as well as any futuredebt thatwemay incur,will depend on our abilityto generate cash in the futurefromoperations,financingsor assetsales.Our abilityto generatecash is subjectto general economic,financial,competitive,legislative,regulatoryand otherfactorsthatare beyond our control.

Thetermsof ~~the~~our indebtednesswe~~incurredin connection with the~~ ~~Spin-Off~~ ~~restricts~~restrictour current andfuture operations,particularlyour abilityto incur debt that wemay need to fund initiativesin response to changes in our business, the industriesin whichweoperate,the economy and governmentalregulations.

The terms of ~~the indebtedness we incurred in connection with the Spin-Off~~our Prepetition Credit Agreement and DIP Credit Agreement includea numberof restrictivecovenantsthatimposesignificantoperatingand financialrestrictionson us and our subsidiariesand limitour abilityto engage in actionsthatmay be in our long-termbest interests.These may restrictour and our subsidiaries’abilityto take some or allof the followingactions:

Furthermore, the lenders of this indebtedness have required that we pledge our assets as security for our repayment obligations and that we abide by certain financial or operational covenants. Our ability to comply with such covenants and restrictions may be affected by events beyond our control, including prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. A breach of any of these covenants, if applicable, could result in an event of default under the terms of this indebtedness. If an event of default occurred, the lenders would have the right to accelerate the repayment of such debt, and the event of default or acceleration could result in the acceleration of the repayment of any other debt to which a cross-default or cross-acceleration provision applies. We might not have, or be able to obtain, sufficient funds to make these accelerated payments, and lenders could then proceed against any collateral. Any subsequent replacement of the agreements governing such indebtedness or any new indebtedness could have similar or greater restrictions. The occurrence and ramifications of an event of default could adversely affect our business, financial condition and results of operations. Moreover, as a result of all of these restrictions, we may be limited in how we conduct our business and pursue our strategy, unable to raise additional debt financing to operate during general economic or business downturns, or unable to compete effectively or to take advantage of new business opportunities.

~~Uncertainty relating~~ Furthermore,the lendersof thisindebtednesshave requiredthatwepledge our assetsas security for our repaymentobligationsand thatweabide by certainfinancialor operationalcovenants.Our abilityto complywith such covenantsand restrictions has been and may continue to be affectedby eventsbeyond our control,includingprevailing economic, political, social,financialand industryconditions, such as the ~~LIBOR calculation process and potential phasing out of LIBOR after 2021 may adversely affect the market value of our current or future debt obligations.~~COVID-19 pandemic.

The ~~London Inter-bank Offered Rate (“LIBOR”)~~commencement of the Chapter 11 Cases constituted an event of default that accelerated our obligations and ~~certain~~terminated undrawn commitments, as applicable, under the Prepetition Credit Agreement. The Prepetition Credit Agreement provides that as a result of the commencement of the Chapter 11 Cases, the principal, interest and all other ~~interest “benchmarks” may~~amounts due thereunder shall be ~~subject~~immediately due and payable. Any efforts to ~~regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in~~enforce the past or cause other unanticipated consequences. The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to stop encouraging or requiring banks to submit LIBOR rates after 2021, and it is unclear if LIBOR will cease to exist or if new methods of calculating LIBOR will evolve. If LIBOR ceases to exist or if the methods of calculating LIBOR change from their current form, interest rates on our debtpayment obligations under the ~~term loan B facility~~Prepetition Credit Agreement are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Prepetition Credit Agreement are subject to the applicable provisions of the Bankruptcy Code.

Under the DIP Credit Agreement, a breachof any of thecovenants listed above,if applicable, could resultin an event of default.If an event of defaultoccurred,the lenders under our ~~principal credit agreement may~~DIP Credit Agreement would have the rightto accelerate the repaymentof such debt. We mightnot have, or be able to obtain,sufficient funds to make theseaccelerated payments,and lenderscould then proceedagainstany collateral. Anysubsequentreplacement of the agreements governingsuch indebtedness, or any newindebtednesscould have similar or greaterrestrictions.The occurrenceand ramificationsof an event of defaultcould adversely ~~affected.~~affectour business,financial conditionand resultsof operations.

~~Ourcustomers,prospectivecustomers,suppliersor other companieswith whom~~we~~conduct business may need assurances that our financialstability~~on~~a stand-alonebasis is sufficientto satisfytheirrequirementsfor doing or continuing to do business with them.~~

Some of our customers, prospective customers, suppliers or other companies with whom we conduct business may need assurances that our financial stability on a stand-alone basis is sufficient to satisfy their requirements for doing or continuing to do business with them. Any failure of parties to be satisfied with our financial stability could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may have potentialbusiness conflictsof interestwith Honeywellwith respectto our past andongoing relationships.

Conflictsof interestmay arisebetween Honeywell and us in a numberof areasrelatingto our past and ongoing relationships,including:

The Chapter 11 Cases may exacerbate any potential conflicts and make resolution of any potential conflicts more difficult to achieve outside of the Bankruptcy Court. We may not be able to resolveany potentialconflicts,and, even if wedo so, the resolutionmay be less favorableto us than if wewere dealingwith a party with whom we were not previously affiliated.

Certainof our directorsandemployeesmay have actual or potentialconflictsof interestbecause of theirfinancialinterestsin Honeywell.

Because of theirformerpositionswith Honeywell, certainof our executiveofficersand directorsownequityinterestsin Honeywell. Continuing ownership of Honeywell sharescould create,or appearto create,potentialconflictsof interestif weand Honeywell facedecisionsthatcould have implicationsfor both usand Honeywell.

Theallocationof intellectualpropertyrightsbetween Honeywellandusas part of the Spin-Off, andour shared use of certainintellectualpropertyrights, could adverselyimpactour reputation,our abilityto enforcecertainintellectualpropertyrightsthat are importantto us andour competitiveposition.

In connectionwith the Spin-Off,weenteredinto agreementswith Honeywell governingthe allocation of intellectualpropertyrightsrelatedto our business.These agreements could adverselyaffectour positionand optionsrelatingto intellectualpropertyenforcement,licensing negotiationsand monetization.We also may not have sufficientrightsto grantsublicensesof intellectual propertyused in our business.These circumstancescould adverselyaffectour abilityto protectour competitive positionin the industry.

An active tradingmarketfor our common stock may not be available, and our stock pricemay fluctuatesignificantly.

The marketpriceof our commonstock may fluctuatewidely, depending on many factors,some of which may be beyond our control,including:

~~We may not be able to resolve any potential conflicts, and, even if we do so, the resolution may be less favorable to us than if we were dealing with~~ ~~a party with whom we were not previously affiliated~~.

~~Certain of our directors and employees may have actual or potential conflicts of interest because of their financial interests in Honeywell.~~

Because of their current or former positions with Honeywell, certain of our executive officers and directors own equity interests in Honeywell. Continuing ownership of Honeywell shares could create, or appear to create, potential conflicts of interest if we and Honeywell face decisions that could have implications for both us and Honeywell.

The allocation of intellectual property rights between Honeywell and us as part of the Spin-Off, and our shared use of certain intellectual property rights, could adversely impact our reputation, our ability to enforce certain intellectual property rights that are important to us and our competitive position.

In connection with the Spin-Off, we entered into agreements with Honeywell governing the allocation of intellectual property rights related to our business. These agreements could adversely affect our position and options relating to intellectual property enforcement, licensing negotiations and monetization. We also may not have sufficient rights to grant sublicenses of intellectual property used in our business. These circumstances could adversely affect our ability to protect our competitive position in the industry.

~~An active trading market for our common stock may not be sustained, and our stock price may fluctuate significantly.~~

Our stock has only been trading since the Spin-Off, and an active trading market for our common stock may not be sustained in the future. The lack of an active market may make it more difficult for stockholders to sell our shares and could lead to our share price being depressed or volatile.

~~We cannot predictthe pricesat which our commonstock may tradeor whether the combinedmarketvalue of a shareof our commonstock and a shareof Honeywell’scommonstock will be less than, equal to or greaterthan the marketvalue of a shareof Honeywell commonstock priorto the Spin-Off.The marketpriceof our commonstock may fluctuatewidely, depending on many factors,some of which may be beyond our control,including:~~

Lowtradingvolumefor our stock, which may occur if an activetradingmarketis not ~~sustained,~~available, among otherreasons,would amplifythe effectof the above factorson our stock pricevolatility. The delisting of our common stock from New York Stock Exchange has limited and could continue to limit the liquidity of our common stock, increase the volatility in the price of our common stock, and hinder our ability to raise capital.

Should the marketpriceof our stockdrop significantly,stockholdersmay institutesecuritiesclassaction lawsuitsagainstus.Alawsuitagainstus could cause us to incursubstantialcostsand could divertthe time and attentionof our managementand otherresources.

~~There is a material weakness in internal control over financial reporting related to the supporting evidence for our liability to Honeywell under the Indemnification and Reimbursement Agreement.~~

In accordance with the terms of the Indemnification and Reimbursement Agreement, our Consolidated and Combined Balance Sheets reflect a liability of $1,244 million in Obligations payable to Honeywell as of December 31, 2018 (the “Indemnification Liability”). The amount of the Indemnification Liability is based on information provided to us by Honeywell with respect to Honeywell’s assessment of its own asbestos-related liability payments and accounts payable as of such date and is calculated in accordance with the terms of the Indemnification and Reimbursement Agreement. Honeywell estimates its future liability for asbestos-related claims based on a number of factors.

In the course of preparing this Annual Report on Form 10-K and our Consolidated and Combined Financial Statements for the year ended December 31, 2018, our management determined that there is a material weakness Certain provisionsin our ~~internal control over financial reporting relating to the supporting evidence for our liability to Honeywell under the Indemnification~~Amended and ~~Reimbursement Agreement. Specifically, we were unable to independently verify the accuracy~~ RestatedCertificateof ~~the certain information Honeywell provided to us that we used to calculate the amount of our Indemnification Liability, including information provided in Honeywell's actuary report~~ Incorporationand ~~the amounts of settlement values~~Amended and ~~insurance receivables. For example, Honeywell did not provide us with sufficient information to make an independent assessment of the probable outcome of the underlying asbestos proceedings~~ RestatedBy-Lawsand ~~whether certain insurance receivables are recoverable.~~Delaware law may discouragetakeovers.

~~It is possible that, in future periods, new information may become available relating to the amount~~ Severalprovisionsof Honeywell’s underlying asbestos-related liability payments and accounts payable as of December 31, 2018 that could cause the amount of the Indemnification Liability reported on our Consolidated and Combined Balance Sheets in this Annual Report on Form 10-K to change, possibly materially, which could lead to a restatement of our Consolidated and Combined Financial Statements.

If we are unable to remediate this material weakness or if we or our independent registered public accounting firm identify future deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, or in the event of any restatement of our Consolidated and Combined Financial Statements, the market price of shares of common stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which could have a material adverse effect on our results of operations and financial condition.

~~We plan to evaluate whether to pay cash dividends on our common stock in the future, and the terms of our indebtedness will limit our ability to pay dividends on our common stock.~~

~~We plan to evaluate~~ ~~whether to pay cash dividendsto our stockholders.The timing,declaration,amountand paymentof futuredividendsto stockholders,if any, will fallwithin the discretionof our board of directors.The Board’s decisionsregardingthe paymentof dividendswill depend on considerationof many factors,such as our financialcondition,earnings,sufficiencyof distributablereserves, opportunitiesto retainfutureearningsfor use in the operationof our businessand to fund futuregrowth, capital requirements,debt serviceobligations,obligationsunder the Indemnificationand ReimbursementAgreement, legalrequirements,regulatoryconstraintsand otherfactorsthatthe Board deemsrelevant.Additionally,the termsof the indebtedness~~we~~intendto incurin connectionwith the Spin-Offand obligationsunder the Indemnificationand ReimbursementAgreementeach will limitour abilityto pay cash dividends.There can be no assurancethat~~we~~will pay a dividendin the futureor continueto pay any dividendif wedo commencepaying dividends.~~

Your percentage ownership in us may be diluted in the future because of equity issuances for acquisitions, capital market transactions or otherwise, including equity awards that we will be granting to our directors, officers and other employees. We expect that shares of our common stock will be issuable upon the future vesting of certain Honeywell equity awards held by our employees that converted into Garrett equity awards in connection with the Spin-Off. ~~Our Board has adopted~~ ~~and Honeywell, as our sole shareholder,~~ ~~approved, the 2018 Stock Incentive Plan of Garrett and its Affiliates (the~~ ~~“Equity~~ Plan”) for the benefit of certain of our current and future employees and other service providers. Our non-employee directors will be eligible to participate in the 2018 Stock Incentive Plan for Non-Employee Directors. Awards made under such plans will have a dilutive effect on our earnings per share, which could adversely affect the market price of our common stock.

~~In addition,~~ our Amended and RestatedCertificateof Incorporation, authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our common stock with respect to dividends and distributions, as our board of directors may generally determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant the holders of preferred stock the right to elect some number of the members of our board of directors in all events or upon the happening of specified events, or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences that we could assign to holders of preferred stock could affect the residual value of our common stock.

~~From time-to-time,~~we~~may opportunisticallyevaluateand pursue acquisitionopportunities,including acquisitionsfor which the considerationthereofmay consistpartiallyor entirelyof newly-issuedsharesof ourcommonstock and, therefore,such transactions, if consummated,would dilutethe voting power and/orreducethe value of our commonstock.~~

~~Certain provisions in our~~ Amended and Restated ~~Certificate of Incorporation and Amended and Restated~~ By-Lawsand Delaware law may discourage, ~~takeovers.~~

~~Several provisions of our Amended and Restated Certificate of Incorporation, Amended and Restated By-Laws and Delaware law may discourage,~~ delay or preventa mergeror acquisition.These include,among others, provisionsthat:

These and otherprovisionsof our Amended and RestatedCertificateof Incorporation,Amended and RestatedBy-Lawsand Delaware law may discourage,delay or preventcertaintypes of transactionsinvolvingan actualor a threatenedacquisitionor change in controlof Garrett,includingunsolicitedtakeoverattempts,even though the transactionmay offerour stockholdersthe opportunityto selltheirsharesof our commonstock at a priceabove the prevailingmarketprice.

Under the terms of the Transaction under the PSA, the Plan, if confirmed by the Bankruptcy Court, may result in the removal or alteration of some or all of these provisions, subject to negotiation of definitive corporate governance documentation with the CO Group. There can be no assurances that any definitive corporate governance documentation with the CO Group will not continue to discourage, delay or prevent certain types of transactionsinvolving an actual or a threatenedacquisitionor change in control of Garrett,including unsolicitedtakeover attempts,even though the transactionmay offer our stockholdersthe opportunity to sell their shares of our common stock at a price above the prevailingmarket price.

OurAmended andRestatedCertificateof Incorporationdesignatesthe courts of the State of Delaware as the sole andexclusiveforum for certaintypesof actionsandproceedingsthat may be initiatedby our stockholders,whichcould limitour stockholders’abilityto obtain a favorablejudicialforum for disputeswith us or our directors,officersor other employees.

OurAmendedandRestatedCertificateofIncorporationprovides,inallcasestothefullestextentpermittedbylaw,unlessweconsentinwritingtotheselectionofanalternativeforum,theCourtofChancerylocatedwithin theStateofDelawarewillbethesoleandexclusiveforumforanyderivativeactionorproceedingbroughtonbehalfofGarrett,anyactionassertingaclaimofbreachofafiduciarydutyowedbyanyof our directors, officers or other employees or stockholders to us or ourstockholders,anyactionassertingaclaimarisingpursuanttotheDelawareGeneralCorporateLaw(“DGCL”)orastowhichtheDGCLconfersjurisdictionontheCourtofChancerylocatedintheStateofDelawareoranyactionassertingaclaimgovernedbytheinternalaffairsdoctrineoranyotheractionassertingan“internalcorporateclaim”asthattermisdefinedinSection115oftheDGCL.However,iftheCourtofChancerywithintheStateofDelawaredoesnothavejurisdiction,theactionmaybebroughtinanyotherstateorfederalcourtlocatedwithintheStateofDelaware.Anypersonorentitypurchasingorotherwiseacquiringorholdinganyinterestinsharesofourcapitalstockwillbedeemedtohavenoticeofandtohaveconsentedtotheseprovisions.Thisprovisionmaylimitastockholder’sabilitytobringaclaiminajudicialforumthatitfindsfavorablefordisputeswithusorourdirectors,officersorotheremployees,whichmaydiscouragesuchlawsuits.Alternatively,ifacourtweretofindthisprovisionofourAmendedandRestatedCertificateofIncorporationinapplicableto,orunenforceableinrespectof,oneormoreofthespecifiedtypesofactionsorproceedings,wemayincuradditionalcostsassociatedwithresolvingsuchmattersinotherjurisdictions.

Systemor servicefailures,including as a resultof cyber or other securityincidents,could disrupt business operations,resultin the loss of criticalandconfidentialinformation,andadverselyimpactour reputationandresultsof operations.

We deploy and maintainIT and engineeringsystems. Our systems involvesensitiveinformationand may be conductedin hazardousenvironments.Asa result,weare subjectto systemsor servicefailures,not only resultingfromour failuresor the failuresof third-partyservice providers,naturaldisasters,power shortagesor terroristattacks,but also fromexposureto cyber or othersecurity threats.Global cybersecuritythreatsand incidentscan range fromuncoordinatedindividualattemptsto gain unauthorizedaccessto IT systemsto sophisticatedand targetedmeasuresknownas advanced persistentthreats, directedat the Company, ourproducts,our customersand/orour third-partyserviceproviders,includingcloud providers.There has been an increasein the frequencyand sophisticationof cyber and othersecuritythreatswe face,and our customersare increasinglyrequiringcyber and othersecurityprotectionsand mandatingcyber and othersecuritystandardsin our products.

Cyber and othersecurityincidents, depending on theirnatureand scope, could potentiallyresultin the misappropriation,destruction,corruptionor unavailabilityof criticaldata and confidentialor proprietaryinformation(our ownor thatof thirdparties)and the disruptionof businessoperations.Moreover,employeeerroror malfeasance,faultypassword managementor otherintentionalor inadvertentnon-compliancewith our securityprotocolsmay resultin a breachof our informationsystems.Cyber and othersecurityincidentsaimedat the softwareembeddedin our productscould lead to third-partyclaimsthatour productfailureshave caused a similarrange of damagesto our customers,and thisriskis enhanced by the increasinglyconnectednatureof our products.

The potentialconsequencesof a materialcyber or othersecurityincidentincludefinancialloss, reputational damage,litigationwith thirdparties,theftof intellectualproperty,finesleviedby the United StatesFederalTrade Commission,diminutionin the value of our investmentin research,developmentand engineering,and increased cyber and othersecurityprotectionand remediationcostsdue to the increasingsophisticationand proliferationof threats,which in turn could adverselyaffectour competitivenessand resultsof operations.In additionto any costsresultingfromcontractperformanceor requiredcorrectiveaction, ~~asserting~~theseincidentscould generateincreased costsor loss of revenueif our customerschoose to postpone or cancelpreviouslyscheduledordersor decidenot to renew any of our existingcontracts.

The costsrelatedto cyber or othersecurityincidentsmay not be fullyinsuredor indemnifiedby other means.The successfulassertionof a largeclaim ~~arising pursuant~~ againstus with respectto ~~the Delaware General Corporate Law~~ ~~(“DGCL”)~~orasto ~~which the DGCL confers jurisdiction~~ on ~~the Court~~ of ~~Chancery located~~ in ~~the State~~ of ~~Delaware~~ or ~~any action asserting~~ a ~~claim governed~~ by ~~the internal affairs doctrine~~ cyber or ~~any~~ othersecurityincident could seriouslyharmour business.Even if not successful,theseclaimscould resultin significantlegaland other ~~action asserting~~ an ~~“internal corporate claim”~~ as ~~that term~~ is ~~defined~~ in ~~Section 115~~ of ~~the DGCL. However,~~ if ~~the Court~~ of ~~Chancery within the State~~ of ~~Delaware does not have jurisdiction, the action~~ costs,may be ~~brought~~ in ~~any other state~~ or ~~federal court located within the State~~ of ~~Delaware. Any person~~ or ~~entity purchasing~~ or ~~otherwise acquiring~~ or ~~holding any interest~~ in ~~shares~~ of a distractionto our ~~capital stock will~~ be ~~deemed~~ to ~~have notice~~ ofmanagementand ~~to have consented~~ to ~~these provisions. This provision may limit a stockholder’s ability~~ to ~~bring a claim~~ in ~~a judicial forum that~~ it ~~finds favorable for disputes with~~ usorharmour ~~directors, officers~~ or ~~other employees, which may discourage such lawsuits. Alternatively,~~ if ~~a court were~~ to ~~find this provision~~ ofcustomerrelationships, as well as our ~~Amended and Restated Certificate~~ of ~~Incorporation inapplicable to,~~ or ~~unenforceable~~ in ~~respect of, one~~ or ~~more~~ of ~~the specified types~~ of ~~actions~~ or ~~proceedings, we may incur additional costs associated with resolving such matters~~ in ~~other jurisdictions.~~reputation.

If wefailto maintainproper andeffectiveinternalcontrols,our abilityto produce accurateandtimely financialstatementscould be impairedandinvestors’views of us could be harmed.

We are required ~~annual report on form 10-K, we will need~~ to perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as

requiredby Section404 of the Sarbanes-OxleyAct of 2002. If weare not able to complywith the requirementsof Section404, ~~in a timelymanner,~~the marketpriceof sharesof commonstock could declineand wecould be subjectto sanctionsor investigations by the SEC or otherregulatoryauthorities,which wouldrequireadditionalfinancialand managementresources.

Our ability to successfully comply with Section 404 requires us to be able to prepare timely and accurate financial statements. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls, may cause our operations to suffer, and we may be unable to conclude that our internal control over financial reporting is effective, and our independent registered public accounting firm may provide an adverse opinion on our internal control over financial reporting. In the course of preparing our Annual Report on Form 10-K and our Consolidated and Combined Financial Statements for the year ended December 31, 2018, our management determined that there was a material weakness in our internal control over financial reporting relating to the supporting evidence for our liability to Honeywell under the Honeywell Indemnity Agreement that has since been remediated. Even ifthough we ~~were to conclude,~~have concluded, and our auditors ~~were to concur,~~have concurred, that that our internal control over financial reporting ~~provided reasonable assurance regarding the reliability~~was effective as of ~~financial reporting and the preparation of financial statements for external purposes~~December 31, 2020, we could identify additional material weaknesses in ~~accordance with GAAP, because of its inherent limitations,~~our internal control over financial reporting ~~might not prevent~~in the future, which could cause us to have to restate our Consolidated and Combined Financial Statements. In the event of an additional material weakness or ~~detect fraud or misstatements. This, in turn, could have an adverse impact on trading prices for our~~restatement, the market price of shares of common stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which could have a material adverse effect on our results of operations and financial condition.

Your percentageownership in usmay be dilutedin the futurebecauseof equityissuances pursuant to the Plan, if confirmed,for acquisitions,capitalmarkettransactionsor otherwise,includingequityawards thatwemay grantto our directors,officersand otheremployees.Our Board has adopted and Honeywell, as our sole shareholder,approved, the 2018 Stock IncentivePlan of Garrett and itsAffiliates(the“Equity Plan”)for the benefitof certainof our currentand futureemployees and otherserviceproviders.Our non-employeedirectorsare eligibleto participatein the 2018 Stock IncentivePlan for Non-EmployeeDirectors.Awards made under such plans will have a dilutiveeffecton our earningsper share,which could adverselyaffectthe marketpriceof our ~~ability~~commonstock.

Under the terms of the Transaction, if approved by the Bankruptcy Court, the CO Group and certain of our existing stockholders will be issued Series A Preferred Stock which will be convertible in certain circumstances into shares of common stock. Any such conversion may significantly dilute the percentage ownership of our current stockholders.

In addition,our Amended and RestatedCertificateof Incorporationauthorizesus to ~~access~~issue,without the ~~capital markets. See “—Risks Relating to the Spin-Off—As we build~~approvalof our ~~information technology infrastructure~~ stockholders,one or moreclassesor seriesof preferredstock having such designation,powers, preferencesand ~~transition our data to our own systems, we could incur substantial additional costs and experience temporary business interruptions, and our accounting~~ relative,participating,optionaland other ~~management systems~~ specialrights,includingpreferencesover our common stock with respectto dividendsand ~~resources~~ distributions,as our board of directorsmay ~~not be adequately prepared~~ generallydetermine.The termsof one or moreclassesor seriesof preferredstock could dilutethe voting power or reducethe value of our common stock. For example,wecould grantthe holdersof preferredstock the rightto ~~meet~~electsome numberof the ~~financial reporting~~ members of our board of directorsin alleventsor upon the happening of specifiedevents,or the rightto veto specified transactions.Similarly,the repurchaseor redemptionrightsor liquidationpreferencesthatwecould assignto holdersof preferredstock could affectthe residualvalue of our commonstock.

From time-to-time,wemay opportunisticallyevaluateand ~~other requirements to~~pursue acquisitionopportunities,including acquisitionsfor which ~~we are subject.”~~the considerationthereofmay consistpartiallyor entirelyof newly-issuedsharesof ourcommonstock and, therefore,such transactions, if consummated,would dilutethe voting power and/orreducethe value of our commonstock.

We have createda geographicfootprintthatemphasizeslocatingR&D,engineeringand manufacturing capabilitiesin closephysicalproximityto our customers,therebyenablingus to manage our environmental footprint to meet our sustainability targets and to adopt technologiesand products for the specificvehicletypes sold in each geographicmarket.Over the past severalyears,wehave invested heavilyto be closeto our Chinese, Indianand otherhigh-growthregionOEMcustomersto be able to offer world-leadingtechnologies,localizedengineeringsupportand unparalleledmanufacturingproductivity.

Asof December31, ~~2018,~~2020, weownedor leased13 manufacturingsites,fiveR&Dcentersand 1311 close-to- customerengineeringsites.We also have many smallersalesoffices,warehouses,cybersecurityand IVHMsites and otherinvestmentsstrategicallylocatedthroughoutthe world. The followingtableshows the ownership and regional distributionof our manufacturingsites,R&Dcentersand customerengineeringsites:

We ~~frequently~~ continually and proactivelyreview our realestateportfolioand develop footprintstrategiesto supportour customers’ globalplans, while at the sametimesupportingour technicalneeds and optimizingoperatingcost base. We ~~believe~~ expectour evolvingportfoliowill meetcurrentand anticipatedfutureneeds.

On December 2, 2019, the Company and its subsidiary, Garrett ASASCO Inc., filed a Summons with Notice in the Commercial Division of the Supreme Court of the State of New York, County of New York (the “NY Supreme Court”) commencing an action (the “Action”) against Honeywell, certain of Honeywell’s subsidiaries and certain of Honeywell’s employees for declaratory judgment, breach of contract, breach of fiduciary duties, aiding and abetting breach of fiduciary duties, corporate waste, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. On January 15, 2020, the Company and Garrett ASASCO Inc. filed a Complaint in the NY Supreme Court in connection with the Action. The lawsuit arises from the Honeywell Indemnity Agreement. The Company is seeking declaratory relief, compensatory damages in an amount to be determined at trial rescission of the Honeywell Indemnity Agreement, attorneys’ fees and costs, and such other and further relief as the Court may deem just and proper. Among other claims, Garrett asserts that Honeywell is not entitled to indemnification because it improperly seeks indemnification for amounts attributable to punitive damages and intentional misconduct, and because it has failed to establish other prerequisites for indemnification under New York law. Specifically, the claim asserts that Honeywell has failed to establish its right to indemnity for each and every asbestos settlement of the thousands for which it seeks indemnification. The Action seeks to establish that the Honeywell Indemnity Agreement is not enforceable, in whole or in part. On March 5, 2020, Honeywell filed a “Notice of Motion to Dismiss Garrett’s Complaint.” On September 20, 2020, Garrett and certain of its subsidiaries each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York. On September 23, 2020, Garrett removed the Action to the United States District Court for the Southern District of New York, and on September 24, 2020, the Action was referred to the Bankruptcy Court, where the case is currently pending. A pre-trial conference took place on October 22, 2020. The Court heard argument on Honeywell’s pending motion to dismiss on November 18, 2020; the Court has not yet issued a decision. On November 2, 2020, the Garrett entities that are Debtors and Debtors in Possession filed a Motion Pursuant to Sections 105(a) and 502(c) To Establish Procedures for Estimating The Maximum Amount Of Honeywell’s Claims And Related Relief (the “Motion”). The Court heard argument on the Motion on November 18. The Court ordered an estimation proceeding to take place to estimate all of Honeywell’s claims against the Garrett entities that are Debtors and Debtors in Possession. On December 18, 2020, Honeywell filed proofs of claim in the Chapter 11 Cases, asserting that the Company owes at least $1.9 billion. The Bankruptcy Court was scheduled to estimate the amount of Honeywell’s claims in an estimation proceeding that was scheduled to commence on February 1, 2021. As noted below, the estimation proceeding has been stayed by order of the Bankruptcy Court.

On January 11, 2021, the Company announced that it had agreed to settle Honeywell’s claims as part of the Plan. The Plan is subject to various conditions, including approval by the Bankruptcy Court. Under the Plan settlement, Honeywell would receive a $375 million payment and Series B Preferred Stock payable in installments of $35 million in 2022, and $100 million annually 2023-2030. The Company would have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to $584 million as of the Emergence (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make a partial payment of the Series B Preferred Stock, reducing the present value to $400 million, at any time within 18 months of Emergence.

On January 15, 2021, the Bankruptcy Court ordered that the Action and the estimation proceeding both be stayed pending the Bankruptcy Court’s consideration of Plan. The confirmation hearing for the Plan is currently scheduled to take place in April 2021, however, the hearing may be rescheduled for a later date.

The Debtors’ Chapter 11 Cases are being jointly administered under the caption “In re: Garrett Motion Inc., 20-12212.” For additional information regarding the Chapter 11 Cases, see Note 1 Background and Basis of Preparation and Note 2 Reorganization and Chapter 11 Proceedings of the Notes to the Consolidated and Combined Financial Statements.

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 asserts claims under Sections 10(b) and 20(a) of 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 asserts 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 asserts claims under Sections 10(b) and 20(a) of the Exchange Act.

All three cases seek compensatory damages as well as interest, fees and costs. All three actions are currently assigned to Judge John P. Cronan. Su Ping Lu filed a waiver of service in the Gabelli Action on November 10, 2020. 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; (3) consolidate the Gabelli Action, the Husson Action, and the Froehlich Action; (4) set a date by which lead plaintiff would file a consolidated amended complaint by February 25, 2021; and (5) set a date by which defendants shall respond to a consolidated amended complaint of April 26, 2021. On January 21, 2021, the district court issued an order consolidating the three actions as In re Garrett Motion Inc. Securities Litigation, Case Number 20 Civ. 7992 (JPC), and appointing the Gabelli entities as the lead plaintiffs.

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

The Bankruptcy Court has set a bar date of March 1, 2021 for, among others, current and former shareholders to file securities-related claims against the Company. We are ~~involved in various lawsuits,~~not yet able to assess the likelihood that any such claims ~~and proceedings incident~~will

be allowed. To the extent allowed, each holder of such claims shall be entitled to receive, (x) its pro rata share of the ~~operation~~aggregate cash payments received or recoverable from any insurance policies of our businesses, including those pertaining to product liability, product safety, environmental, safety and health, intellectual property, employment, commercial and contractual matters and various other matters. Although the ~~outcome~~Company on account of any such ~~lawsuit,~~allowed claims and (y) solely to the extent that such payments are less than the amount of its allowed claim, such treatment that is consistent with section 1129 of the Bankruptcy Code and otherwise acceptable to the Debtors and the parties to the PSA in accordance with the PSA.

In September 2020, the Brazilian tax authorities issued an infraction notice against Garrett Motion Industria Automotiva Brasil Ltda, challenging the use of certain tax credits between January 2017 and February 2020. The infraction notice results in a loss contingency that may or may not ultimately be incurred by the Company. The estimated total amount of the contingency as of December 31, 2020 was $29 million including penalties and interest. The Company appealed the infraction notice on October 23, 2020. 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. Accordingly, no accrual is required at this time.

On November 13, 2020, certain of the Debtors (the “Plaintiffs”) filed a complaint in the Bankruptcy Court against the indenture trustee (the “Indenture Trustee”) of the 5.125% senior notes due 2026 (the “Senior Notes”) seeking declaratory judgment on two claims for relief that the Debtors do not owe, and the holders of the Senior Notes (the “Noteholders”) are not entitled to, any make-whole premium under the Indenture (the “Make-Whole” and such litigation, the “Make-Whole Litigation”). Certain Noteholders have contended in these Chapter 11 Cases that the Noteholders are entitled to payment of the Make-Whole under the terms of the Indenture, which provide for the payment of the Make-Whole if the Debtors exercise their right to redeem the Senior Notes prior to maturity, as a result of the Debtors’ commencement of their Chapter 11 Cases. The Plaintiffs believe that the Noteholders are not entitled to any Make-Whole because the Debtors have not exercised their right of redemption as contemplated by the Indenture and, in the alternative, the Make-Whole should be disallowed as unmatured interest pursuant to Section 502(b)(2) of the Bankruptcy Code. On January 8, 2021, the Indenture Trustee filed an answer to the Debtors’ complaint. Pursuant to the PSA, the Debtors have agreed to suspend all litigation activities related to and stay the Make-Whole Litigation through Emergence (the “Effective Date”) and to dismiss with prejudice such proceedings upon Emergence.

For additional information regarding our legal proceedings, see Note 23, Commitments and Contingencies of the Notes to the Consolidated and Combined Financial Statements.

We are involvedin various other lawsuits,claimsand proceedingsincidentto the operationof ourbusinesses, includingthose pertainingto productliability,productsafety,environmental,safetyand health,intellectual property,employment,commercialand contractualmattersand variousothermatters.Although the outcomeof any such lawsuit,claimor proceedingcannot be predictedwith certaintyand some may be disposedof unfavorablyto us, wedo not currentlybelievethatsuch lawsuits,claimsor proceedingswill have a material adverseeffecton our financialposition,resultsof operationsor cash flows. We accruefor potentialliabilitiesin a mannerconsistentwith accountingprinciplesgenerallyacceptedin the United States.Accordingly,weaccruefor a liabilitywhenit is probablethata liabilityhas been incurredand the amountof the liabilityis reasonably estimable.

~~Additionally,in connectionwith our entryinto the Indemnificationand ReimbursementAgreement,~~we~~are requiredto make paymentsto Honeywell for a certainamountof Honeywell’sasbestos-relatedliability paymentsand accountspayable,primarilyrelatedto the Bendix businessin the United States, as well as certainenvironmental-relatedliabilitypaymentsand accountspayableand non-UnitedStatesasbestos-relatedliability paymentsand accountspayable, in each case relatedto legacyelementsof the Business, includingthe legalcosts of defendingand resolvingsuch liabilities,less90% of Honeywell’snet insurancereceiptsand, as may be applicable,certainotherrecoveriesassociatedwith such liabilities.~~

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

On October 1, 2018, we became an independent publicly-traded company through a pro rata distribution by Honeywell of 100% of the outstanding shares of us to Honeywell's stockholders (the “Spin-Off”). Each Honeywell stockholder of record received one share of our common stock for every 10 shares of Honeywell common stock held on the record date. Approximately 74 million shares of our common stock were distributed on October 1, 2018 to Honeywell stockholders. In connection with the separation, our common stock began trading "regular-way" under the ticker symbol "GTX" on the New York Stock Exchange on October 1, 2018. On September 20, 2020, the Company was notified by the New York Stock Exchange (the “NYSE”) that, as a result of the Chapter 11 Cases, and in accordance with Section 802.01D of the NYSE Listed Company Manual, the NYSE had commenced proceedings to delist the Company’s common stock from the NYSE. The NYSE indefinitely suspended trading of the Company’s common stock on September 21, 2020. The Company determined not to appeal the NYSE’s determination. On October 8, 2020, the NYSE filed a Form 25 to initiate the delisting of the common stock of the Company, and the delisting became effective at the opening of business on October 19, 2020. Trading of the Company’s common stock now occurs on the OTC Pink Market under the symbol “GTXMQ.” Any over-the-counter market quotations of the Company’s common stock reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

As of February ~~26, 2019,~~4, 2021, there were ~~39,319~~36,208 stockholders of record of our common stock.

We ~~currently intend~~are unable to ~~retain all available funds and any future earnings to fund~~pay dividends during the ~~development and growth~~pendency of ~~our business and to repay indebtedness, and therefore we~~the Chapter 11 Cases. We do not anticipate ~~declaring or~~ paying any cash dividends ~~on our common stock~~ in the foreseeable future. The timing, declaration, amount and payment of future dividends to stockholders, if any, will fall within the discretion of our Board. Among the items we will consider when establishing a dividend policy will be the capital needs of our business and opportunities to retain future earnings for use in the operation of our business and to fund future growth. Additionally, the terms of our Senior Credit Facilities and obligations under the Indemnification and Reimbursement Agreement each will limit our ability to pay cash dividends. There can be no assurance that we will pay a dividend in the future or continue to pay any dividend if we do commence the payment of dividends.

The following graph and table illustrate the total return from October 1, 2018 through December 31, ~~2018,~~2020, for (i) our common stock, (ii) the Standard and Poor’s (“S&P”) Small Cap 600 Index, ~~and~~ (iii) the average stock performance of a group consisting of ~~our~~the peer companies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Peer Group”), consisting ~~for the three months ended December 31, 2018~~ of BorgWarner Inc., Allison Transmission Holdings, Inc., and Delphi Technologies ~~Plc.~~Plc, and (iv) the average stock performance of a group consisting of the Company’s peer companies for the year ended December 31, 2020 (“2020 Peer Group”), consisting of Adient plc, Allison Transmission Holdings, Inc., American Axle & Manufacturing Holdings, Inc., Aptiv PLC, Autoliv Inc., BorgWarner Inc., Dana Incorporated, Gentex Corporation, Lear Corporation, Magna International Inc. Tenneco Inc., Visteon Corporation and Veoneer, Inc. In 2020, the Company expanded its peer group following consolidation among the 2019 Peer Group. Delphi Technologies plc (“Delphi”) was previously included in the Company’s 2019 Peer Group and was acquired by BorgWarner Inc. during the year ended December 31, 2020. Accordingly, Delphi has been included in the 2019 Peer Group only through the date it was acquired. The Company will cease presenting the 2019 Peer Group in future years.

The 2020 Peer Group is used routinely by management for benchmarking purposes. The graph and the table assume that $100 was invested on October 1, 2018 in each of our common stock, the S&P Small Cap 600 Index, ~~and~~ the common stock of ~~our~~the 2019 Peer Group and the 2020 Peer Group, and that any dividends were reinvested. The comparisons reflected in the graph and table are not intended to forecast the future performance of our common stock and may not be indicative of our future performance.

There were no purchases of equity securities by the issuer or affiliated purchasers during the quarter ended December 31, ~~2018.~~2020.

The followingtablespresentcertainselectedhistorical consolidated and combinedfinancialinformationas of and for each of the yearsin the five-yearperiodended December31, ~~2018.~~2020. Prior to the Spin-Off on October 1, 2018, our historical financial statements were prepared on a stand-alone combined basis and were derived from the consolidated financial statements and accounting records of Honeywell. Accordingly, for periods prior to October 1, 2018, our financial statements are presented on a combined basis and for the periods subsequent to October 1, 2018 are presented on a consolidated basis (collectively, the historical financial statements for all periods presented are referred to as “Consolidated and Combined Financial Statements”). The selected historical consolidated and combined financial data as of December 31, ~~2018~~2020 and ~~2017~~2019 and for the years ended December 31, ~~2018, 2017,~~2020, 2019, and ~~2016~~2018 are derivedfrom the historicalaudited Consolidated and Combined FinancialStatements as included in this Form 10-K. The selected historical ~~consolidated and~~ combined financial data as of December 31, 2018, 2017 and 2016 and for the ~~year~~years ended December 31, ~~2015~~2017 and 2016 are derived from historical audited combined financial statements not included in this Annual Report on Form 10-K.

Theselectedhistorical consolidated and combinedfinancialdata as presentedbelowshouldbereadinconjunctionwith“Management’sDiscussionandAnalysisof ~~December 31, 2015~~ FinancialConditionand ~~2014~~ ResultsofOperations”and ~~for the year ended December 31, 2014 are derived from~~ our ~~unaudited combined financial information.~~

~~The selected historical~~ ~~consolidated and~~ ~~combined financial data presented below should~~ be ~~read~~ in ~~conjunction~~ ~~with~~ ~~“Management’s Discussion and Analysis~~ of ~~Financial Condition and Results~~ of ~~Operations” and our~~ historical Consolidated andCombinedFinancialStatementsandtheaccompanyingNotestheretoincludedelsewhereinthis Annual Report on Form 10-K.Foreachoftheperiodspresented prior to the Spin-Off,ourbusinesswaswhollyownedbyHoneywell.Thefinancialinformationincludedfor these periodsmaynotnecessarilyreflectourfinancialposition,resultsofoperationsandcashflowsinthefutureorwhatourfinancialposition,resultsofoperationsandcashflowswouldhavebeenhadwebeenanindependent,publiclytradedcompanyduringsuch periods.Inaddition,ourhistorical consolidated andcombinedfinancialinformationdoesnotreflectchangesthatwehave experienced or expect to continue to experience in the future as a result of our separation from Honeywell, including changes in the financing, operations, cost structure and personnel needs of our business.

Further,thehistorical consolidated andcombinedfinancialinformationincludesallocationsofcertainHoneywellcorporateexpenses, asdescribedinNote 3 27RelatedPartyTransactionswithHoneywellin our Consolidated and Combined Financial Statements.Webelievetheassumptionsandmethodologiesunderlyingtheallocationoftheseexpensesarereasonable. However,suchexpensesmaynotbeindicativeoftheactuallevelofexpensethatwewouldhaveincurredifwehadoperatedasanindependent,publiclytradedcompanyorofthecostsexpectedtobeincurredinthefuture.

	Year Ended December 31,														Year Ended December 31,
	2018			2017				2016		2015			2014		2020		2019		2018			2017				2016
	(Dollars in millions except per share amounts)														(Dollars in millions except per share amounts)
Selected Statement of Operations Information:
Net sales	$	3,375		$	3,096			$	2,997	$	2,908	⁽¹⁾	$	3,345	$	3,034	$	3,248	$	3,375		$	3,096			$	2,997
Net income (loss)	$	1,180	⁽²⁾	$	(983	)	⁽³⁾	$	199	$	254		$	235	$	80	$	313	$	1,206	⁽¹⁾	$	(983	)	⁽²⁾	$	199

Earnings per common share ⁽⁴⁾⁽³⁾
Basic:	$	15.93		$	(13.27	)		$	2.69	$	3.43		$	3.17	$	1.06	$	4.20	$	16.28		$	(13.27	)		$	2.69
Diluted:	$	15.86		$	(13.27	)		$	2.69	$	3.43		$	3.17	$	1.05	$	4.12	$	16.21		$	(13.27	)		$	2.69
Weighted average common shares ⁽⁴⁾⁽³⁾
Basic:		74,059,240			74,070,852				74,070,852		74,070,852			74,070,852		75,543,461		74,602,868		74,059,240			74,070,852				74,070,852
Diluted:		74,402,148			74,070,852				74,070,852		74,070,852			74,070,852		76,100,509		75,934,373		74,402,148			74,070,852				74,070,852

It is management’s intent to provide non-GAAP financial information to supplement the understanding of our business ~~operation~~operations and performance, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the most directly comparable GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be comparable to other similarly titled measures used by other companies. Additionally, the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company’s operating results as reported under GAAP.

Year Ended December 31,

2018

2017

2016

Net income (loss)  — GAAP

$
1,180

$
(983
)

$
199

Net interest (income) expense

12

(6
)

(9
)
Tax (benefit) expense

(784
)

1,349

51

Depreciation

72

64

59

EBITDA (Non-GAAP)

$
480

$
424

$
300

Other operating expenses, net (which
   consists of indemnification, asbestos and
   environmental expenses)⁽²⁾

120

130

183

Non-operating (income) expense⁽³⁾

(4
)

1

3

Stock compensation expense⁽⁴⁾

21

15

12

Repositioning charges⁽⁵⁾

2

20

46

Foreign exchange (gain) loss on debt, net
   of related hedging (gain) loss

(7
)

—

—

Non-recurring Spin-Off costs⁽⁶⁾

6

—

—

Adjusted EBITDA (Non-GAAP)⁽⁷⁾

$
618

$
590

$
544

	Year Ended December 31,
	2020			2019		2018
	(Dollars in millions)
Net income — GAAP	$	80		$	313	$	1,206
Net interest expense (income)		76			61		12
Tax expense (benefit)		39			33		(810	)
Depreciation		86			73		72
EBITDA (Non-GAAP)	$	281		$	480	$	480
Other expense, net (which consists of indemnification, asbestos and environmental expenses)⁽²⁾		45			40		120
Non-operating (income) expense⁽³⁾		5			8		(2	)
Reorganization items, net⁽⁴⁾		73			-		-
Stock compensation expense⁽⁵⁾		10			18		21
Repositioning charges⁽⁶⁾		10			2		2
Foreign exchange (gain) loss on debt, net of related hedging (gain) loss		(38	)		7		(7	)
Spin-off costs⁽⁷⁾		-			28		6
Professional service costs⁽⁸⁾		52			-		-
Capital Tax expense ⁽⁹⁾		2			-		-
Adjusted EBITDA (Non-GAAP)	$	440		$	583	$	620

In addition, our management may use Adjusted EBITDA in setting performance incentive targets in order to align performance measurement with operational performance.

Adjusted EBITDA (Non-GAAP) decreased by $143 million in 2020 compared to 2019. The decrease was primarily due to unfavorable impacts of volume ($94 million), selling, general and administrative expenses ($28 million), productivity, net of mix ($26 million), inflation ($13 million) and price ($18 million), partially offset by the favorable impact of lower research and development expenses ($18 million) and foreign exchange rates including the prior year’s hedge losses ($18 million).

Cash flow from operations less Expenditures for property, plant and equipment⁽¹⁾

Cash flow from operations less Expenditures for property, plant and equipment (non-GAAP) decreased by $195 million in 2020 versus 2019, primarily due to a decrease in net income, net of deferred taxes of $226 million and unfavorable impact from working capital of $194 million, partially offset by a decrease in Obligations to Honeywell of $149 million and an increase of $54 million in other items (mainly accrued liabilities). Additionally, Expenditures for property, plant and equipment expenses decreased by $22 million.

Item 7. Management’sDiscussion andAnalysis of FinancialConditionand Resultsof Operations

The following discussion and analysis of our financial condition and results of operations, which we refer to as our “MD&A,” should be read in conjunction with our Consolidated and Combined Financial Statements and related notes thereto and other financial information appearing elsewhere in this ~~Information Statement.~~Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many important factors, including those set forth in the "Risk Factors" section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in, or implied, by these forward-looking statements.

The followingManagement’sDiscussionand Analysisof FinancialCondition and Resultsof Operationsis intendedto help you understandthe resultsof operationsand financialconditionof Garrett Motion Inc. for the yearsended December31, ~~2018, 2017~~2020, 2019 and ~~2016.~~ 2018. Unless the context otherwise requires, references to “Garrett,” “we,” “us,” “our,” and “the Company” refer to (i) Honeywell’s Transportation Systems Business (the “Transportation Systems Business” or the “Business”) prior to our spin-off from Honeywell International Inc. (the “Spin-Off”) and (ii) Garrett Motion Inc. and its subsidiaries following the Spin-Off, as applicable. References to the “Debtors” refer to the Company and certain of its subsidiaries that each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Debtors’ chapter 11 cases (the “Chapter 11 Cases”) are being jointly administered under the caption “In re: Garrett Motion Inc., 20-12212.”

Garrett designs,manufacturesand sellshighly engineeredturbochargerand electric-boosting technologiesfor lightand commercialvehicle ~~OEMs~~ original equipment manufacturers (“OEMs”)and the globalvehicle ~~and~~ independent ~~aftermarket.~~ aftermarket as well as automotive software solutions.These OEMsin turn ship to consumersglobally.We are a globaltechnologyleaderwith significantexpertisein deliveringproductsacrossgasoline,diesel, natural gasand electric ~~(hybrid~~ (hybridand fuelcell)powertrains.These productsare key enablersfor fueleconomy and emissionstandardscompliance.

Marketpenetrationof vehicleswith a turbochargeris expectedto increasefromapproximately ~~49%~~53% in ~~2018~~2020 to approximately ~~57%~~56% by ~~2022,~~2025, accordingto IHS ~~and other industry sources,~~ Markit (“IHS”), which webelievewill allow ~~our business~~ the turbocharger marketto grow at a fasterratethan overallautomobileproduction. ~~The~~We expect that the powertrain mix evolution trends will remain mostly unchanged, which should support the turbocharger industry in the short to medium term. In particular, the reduction of battery electric vehicle (“BEV”) incentives in China from June 2019 and the change in new energy vehicles (“NEV”) credit policy in November 2019, led to a drop in BEV penetration in China between July 2019 and June 2020. Renewed sales incentives, especially in Tier 2 and Tier 3 cities, as well as non-financial incentives such as more generous license-plate quotas for major metropolitan areas, bolstered Chinese BEV penetration in the second half of 2020. In Europe, the COVID-19 stimulus packages are mostly directed to electric vehicles, but we do not expect a material adverse impact on the turbocharger market in the short term, as selling price, charging time, charging infrastructure availability and profitability issues for OEMs remain challenged to adoption. However, in the long term, a revision of CO2 reduction targets by 2030 proposed by the E.U. could drive an increase of BEV penetration in Europe beyond currently forecasted levels. The turbochargermarketvolumegrowth ~~was~~is expected to be particularlystrongin China and otherhigh-growth ~~regions.~~regions in the same period.

~~The growth trajectory for turbochargers is expected~~In the short to ~~continue,~~medium term, we believe that turbo penetration will grow as ~~the technology is~~turbos remain one of the mostcost- ~~effective solutions for OEMs~~efficient levers to ~~address strict constraints for vehicle~~ improve thefuelefficiencyof conventional Gasolineand ~~emissions standards. As a result, OEMs are increasing their adoption of turbocharger technologies across gasoline and diesel engines~~ Diesel vehiclesas well as ~~hybrid-electric~~ hybridand fuel- cellvehicles.

Growth in the turbomarketis expected in all regions, with special mention for high-growthregions in Asia where risingincomelevelscontinue to drive long-term automotiveand vehiclecontentdemand. While these positive factors do not isolate the turbo industry from fluctuations in global vehicle production volumes, such factors may mitigate the negative impact of macroeconomic cycles, or the negative impact of a shift from light vehicle Diesel to light vehicle Gasoline engines.

In ~~recent years,~~addition, specific to Garrett’s reorganization and Chapter 11 Cases (as defined below), financial situation and high debt leverage, we have ~~also~~ seen ~~a shift in demand from diesel engines to gasoline engines.~~

In particular, the commercial vehicle OEM market and light vehicle gasoline markets in China and other high-growth regions have increased due to favorable economic conditions and rising income levels which have led to an increase in ~~automotive~~potential risk developing with some OEMs questioning whether to award (or award less) new business to Garrett in the next few years, which has impacted our long term revenue expectations. In the shorter term, financial stability concerns could also drive some OEMs to consider dual sourcing some of the high volume engine platforms, already awarded to Garrett, in order to balance perceived supply risk and ~~vehicle content demand. While~~possibly shift volumes to the ~~respective growth rates may potentially decline~~second source supplier.

For additional information regarding trends facing our industry, our reorganization and Chapter 11 Cases as well as the ~~local markets mature, we continue to expect an increase in future vehicle production utilizing turbocharger technologies as vehicle ownership remains well below ownership levels in developed markets.~~

~~On October 1, 2018, the Company became an independent publicly-traded company through a pro rata distribution by Honeywell of 100%~~impact of the ~~then-outstanding shares of Garrett to Honeywell’s stockholders. Each Honeywell stockholder of record received one share of Garrett common stock for every 10 shares of Honeywell common stock held~~COVID-19 pandemic on ~~the record date. Approximately 74 million shares of Garrett common stock were distributed on October~~our business, see Part I, Item 1, ~~2018 to Honeywell stockholders. In connection with the separation, Garrett´s common stock began trading “regular-way”~~“Business” under the ~~ticker symbol “GTX” on~~headings “Our Industry”, “Reorganization and Chapter 11 Proceedings” and “Impact of the ~~New York Stock Exchange on October 1, 2018.~~

~~In connection with the separation, we entered into several~~agreements with Honeywell that govern the future relationship between us and Honeywell and impose certain obligations on us following the Spin-Off and which may cause us to incur new costs, including the following:

~~A description of each of these agreements is included in a Current Report on Form 8-K filed with the SEC on October 1, 2018.~~

In addition, we entered into an Indemnification and Reimbursement Agreement (the “Indemnification and Reimbursement Agreement”) and a Tax Matters Agreement (the “Tax Matters Agreement”) with Honeywell on September 12, 2018, each of which is described in this MD&A.COVID-19 Pandemic”, respectively.

Prior to the Spin-Off on October 1, 2018, our historical financial statements were prepared on a stand–alone basis and derived from the consolidated financial statements and accounting records of Honeywell. Accordingly, for periods prior to October 1, 2018, our financial statements are presented on a combined basis and for the periods subsequent to October 1, 2018 are presented on a consolidated basis (collectively, the historical financial statements for all periods presented are referred to as “Consolidated and Combined Financial Statements”). The Consolidated and Combined Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The historical consolidated and combined financial information may not be indicative of our future performance and does not necessarily reflect what our consolidated and combined results of operations, financial condition and cash flows would have been had the Business operated as a separate, publicly traded company during the periods presented, particularly because of changes that we have experienced and expect to continue to experience in the future as a result of our separation from Honeywell, including changes in the financing, cash management, operations, cost structure and personnel needs of our business.

~~For periods prior to the Spin-Off,~~ ~~the Consolidated and Combined Financial Statements include certain assets and liabilities that were held at~~Liabilities under the Honeywell corporate level prior to the Spin-Off but are specifically identifiable or otherwise allocable to the Business. Additionally, Honeywell provided certain services, such as legal, accounting, information technology, human resources and other infrastructure support, on behalf of the Business. The cost of these services has been allocated to the Business on the basis of the proportion of revenues. We consider these allocations to be a reasonable reflection of the benefits received by the Business. Actual costs that would have been incurred if the Business had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. We consider the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefits received by the Business during the periods presented.

~~Subsequent to the completionof the Spin-Off,~~we ~~have incurred and continue to~~ ~~expectto incurexpendituresconsistingof employee-relatedcosts,coststo startup certainstand-alonefunctionsand informationtechnologysystems,and otherone-timetransactionrelatedcosts.Recurringstand-alonecostsincludeestablishingthe internalaudit,treasury, investorrelations,tax and corporatesecretaryfunctionsas well as the annual expensesassociatedwith running an independentpubliclytradedcompany includinglistingfees,compensationof non-employeedirectors,related board of directorfeesand otherfeesand expensesrelatedto insurance,legaland externalaudit.Recurringstand- alone coststhatdifferfromhistoricalallocationsmay have an impacton profitabilityand operatingcash flows but webelievethe impactwill not be significant.~~As~~a stand-alonepubliccompany, wedo not expectour recurringstand-alonecorporatecoststo be materiallyhigherthan the expenseshistoricallyallocatedto us from Honeywell.~~Indemnity Agreement

~~For~~ the periods prior to the Spin-Off, our Consolidated and Combined Financial Statements reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities primarily related to the Bendix legacy Honeywell business, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. However, this recognition model differs from the recognition model applied subsequent to the Spin-Off. In periods subsequent to the Spin-Off, theThe accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of the ~~Indemnification~~indemnification and ~~Reimbursement Agreement (the “Indemnification and Reimbursement Agreement”)~~reimbursement agreement with Honeywell ~~entered into on September 12, 2018,~~(as amended, the “Honeywell Indemnity Agreement”), under which ~~we are~~Garrett ASASCO is required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. The ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. During the ~~fourth~~first quarter of ~~2018, we~~2020, Garrett ASASCO paid Honeywell the Euro-equivalent of ~~$41~~$35 million in connection with the Honeywell Indemnity Agreement. Honeywell and Garrett agreed to defer the payment from Garrett ASASCO under the Honeywell Indemnity Agreement due May 1, 2020 to December 31, 2020 (the “Q2 Payment”), however we do not expect Garrett ASASCO to make payments to Honeywell under the Honeywell Indemnity Agreement during the pendency of the Chapter 11 Cases. The Plan (as defined below), if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for, among other things, the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Honeywell Indemnity Agreement, that certain Indemnification Guarantee Agreement, dated as of September 27, 2018 (as amended, restated, amended and ~~Reimbursement~~restated, supplemented, or otherwise modified from time to time), by and among Honeywell ASASCO 2 Inc. as payee, Garrett ASASCO as payor, and certain subsidiary guarantors as defined therein (the “Guarantee Agreement,” and together with the Honeywell Indemnity Agreement, the “Indemnity Agreements”) and the Tax Matters Agreement.

On ~~October 19, 2018, Honeywell disclosed~~December 2, 2019, the Company and Garrett ASASCO, filed a Summons with Notice in ~~its Quarterly Report on Form 10-Q for~~ the ~~quarter ended September 30, 2018 (the “Honeywell Form 10-Q”) that the~~Commercial Division of ~~Enforcement~~the Supreme Court of the ~~Securities~~State of New York, County of New York (the “NY Supreme Court”) commencing an action (the “Action”) against Honeywell, certain of Honeywell’s subsidiaries and ~~Exchange Commission (the “SEC”) has opened an investigation into~~certain of Honeywell’s ~~prior accounting~~employees for ~~liability for unasserted Bendix-related asbestos claims. In addition, Honeywell noted that it revised certain previously-issued financial statements to correct~~declaratory judgment, breach of contract, breach of fiduciary duties, aiding and abetting breach of fiduciary duties, corporate waste, breach of the ~~time period associated~~implied covenant of good faith and fair dealing, and unjust enrichment. On January 15, 2020, the Company and Garrett ASASCO, filed a Complaint in the NY Supreme Court in connection with the ~~determination of appropriate accruals for legacy Bendix asbestos-related liability for unasserted claims.~~

~~Our restated carve-out financial statements included~~Action. The lawsuit arises from the Honeywell Indemnity Agreement. The Company is seeking declaratory relief; compensatory damages in our Form 10 already contemplate these revisions, consistent with Honeywell’s previous disclosure in its Form 8-K filed with the SEC on August 23, 2018. These revisions are also contemplated in our Combined Interim Financial Statements for the three and nine months ended September 30, 2018. The Indemnification and Reimbursement Agreement has not been amended and otherwise remains unchanged.

~~Prior~~an amount to ~~the filing~~be determined at trial; rescission of the Honeywell ~~Form 10-Q with~~Indemnity Agreement; attorneys’ fees and costs and such other and further relief as the ~~SEC, our management was not aware~~Court may deem just and proper. There can be no assurance as to the time and resources that will be required to pursue these claims or the ultimate outcome of the ~~SEC’s investigation into~~lawsuit. Among other claims, Garrett asserts that Honeywell is not entitled to indemnification because it improperly seeks indemnification for amounts attributable to punitive damages and intentional misconduct, and because it has failed to establish other prerequisites for indemnification under New York law. Specifically, the claim asserts that

Honeywell has failed to establish its right to indemnity for each and every asbestos settlement of the thousands for which it seeks indemnification. The Action seeks to establish that the Honeywell Indemnity Agreement is not enforceable, in whole or in part. On March 5, 2020, Honeywell filed a “Notice of Motion to Dismiss Garrett’s Complaint”. On September 20, 2020, Garrett and certain of its subsidiaries each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York. On September 23, 2020, Garrett removed the Action to the United States District Court for the Southern District of New York, and on September 24, 2020, the Action was referred to the Bankruptcy Court, where the case is currently pending. The defendants’ motion to dismiss the Action is pending.

On December 18, 2020, Honeywell filed proofs of claim in the Chapter 11 Cases, asserting that the Company owes at least $1.9 billion in respect of such claims. The Bankruptcy Court was scheduled to estimate the amount of Honeywell’s ~~prior accounting.~~claims in a estimation proceeding that was scheduled to commence on February 1, 2021. As noted below, the estimation proceeding has been stayed by order of the Bankruptcy Court.

Under the settlement embodied in the Plan, Honeywell would receive a $375 million payment and Series B Preferred Stock payable in installments of $35 million in 2022, and $100 million annually 2023-2030. The Company would have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to $584 million as of the Emergence (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make a partial payment of the Series B Preferred Stock, reducing the present value to $400 million, at any time within 18 months of Emergence.

On January 15, 2021, the Bankruptcy Court ordered that the Action and the estimation proceeding both be stayed pending the Bankruptcy Court’s consideration of the Plan. The confirmation hearing for the Plan is currently scheduled to take place in April 2021, however, the hearing may be rescheduled for a later date.

Results of Operationsfor the Years EndedDecember 31, 2020, 2019 and2018 ~~2017 and 2016~~

The change in net sales compared to ~~the~~ prior year period is attributable to the following:

Our net sales for ~~2018~~2020 were ~~$3,375~~$3,034 million, ~~an increase~~a decrease of ~~$279~~$214 million or ~~9.0% (5.6% excluding~~6.6% (despite a positive impact of 1.3% due to foreign currency translation), from ~~$3,096~~$3,248 million in ~~2017, primarily driven by increases~~2019. The decrease in sales ~~volume partially offset by price reductions. The increase in sales volume, net of price reductions,~~ was primarily driven by light vehicles OEM products ~~growth~~decline of ~~approximately $220~~$78 million, commercial vehicles OEM products ~~growth~~decline of ~~approximately $59~~$75 million, aftermarket products decline of $47 million and ~~aftermarket~~other products ~~growth~~decline of ~~approximately $8~~$14 million.

Our light vehicles OEM product ~~growth~~decline was primarily driven by lower diesel volumes in Europe and Asia and lower gasoline volumes in Europe, partially offset by increased gasoline volumes in ~~Europe,~~ China ~~North America, and South Korea,~~ as a result of increased turbocharger penetration in gasoline engines and new product launches. ~~Additionally, there were increased diesel volumes~~The decrease in ~~China and Japan partially offset~~net sales for commercial vehicles OEM products was mainly driven by lower ~~diesel~~ volumes ~~to our OEM customers~~ in Europe and ~~South Korea.~~North America. The ~~commercial vehicles OEM~~decrease in

aftermarket product ~~growth~~sales was primarily driven by volume ~~increases~~decreases in Europe and North ~~America and Europe. Our slight aftermarket~~America. The decrease in other net sales ~~increase~~ was primarily driven by ~~higher volumes~~a decrease in prototype volumes.

Due to the COVID-19 pandemic, our manufacturing facility in Wuhan, China, was shut down for six weeks in February and March 2020 and we saw diminished production in our Shanghai, China facility for the same time period, which were the primary drivers of the decrease in sales in the Asia region during the three months ended March 31, 2020. Since our facilities in China re-opened in the middle of March, the production of those facilities in China has recovered significantly with an increase in net sales of 32% during the remainder of 2020 compared to the same period in 2019.

Our manufacturing facilities in Mexicali, Mexico and Pune, India were shut down for five weeks in April and May 2020 and we saw diminished production in our European manufacturing facilities for that same time period, which were the primary drivers of the decrease in sales in the Europe ~~partially offset by lower volumes in Japan.~~and North America regions during 2020.

Our net sales for ~~2017~~2019 were ~~$3,096~~$3,248 million, ~~an increase~~a decrease of ~~$99~~$127 million or ~~3.3% (2.4% excluding~~3.8% (including a negative impact of 4.0% due to foreign currency translation), from ~~$2,997~~$3,375 million in ~~2016, primarily driven by increases~~2018. The decrease in sales ~~volume partially offset by price reductions. The increase in sales volume, net of price reductions,~~ was primarily driven by light vehicles OEM products decline of $57 million, commercial vehicles OEM products ~~growth~~decline of ~~approximately $124~~$39 million,⁽¹⁾~~, partially offset by declines in our light vehicles OEM~~ aftermarket products decline of ~~approximately $51~~$20 million and other products decline of $10 million.

~~The commercial vehicles OEM product growth was primarily driven by volume increases in China, North America and Europe.~~

Our light vehicles OEM product decline was primarily driven by lower diesel volumes ~~to our OEM customers~~ in Europe ~~North America~~ and ~~South Korea,~~Asia, partially offset by ~~increased~~higher gasoline volumes ~~in China and South Korea,~~ as a result of increased turbocharger penetration in gasoline ~~engines. Our~~engines and new product launches. The decrease in net sales for commercial vehicles OEM products is mainly driven by lower volumes in Europe and North America. The decrease in aftermarket product sales ~~were approximately flat, with volume increases in North America offset~~was primarily driven by a volume decrease in Europe.

Cost of goods sold for ~~2018~~2020 was ~~$2,599~~$2,478 million, ~~an increase~~a decrease of ~~$238~~$59 million or ~~10.1%,~~2.3% from ~~$2,361~~$2,537 million in ~~2017. This increase~~2019. The decrease was primarily ~~driven by an increase~~due to a decrease in direct material costs and labor ~~of approximately $215 million, or 12%, (principally due to an increase in volume).~~costs, driven by decreased volumes.

Gross profit percentage decreased by 3.6 percentage points primarily due to unfavorable impacts from mix and price ~~(approximately 3.1~~(2.4 percentage ~~point impact)~~points), unfavorable impacts from inflation (0.5 percentage points), unfavorable impact from repositioning costs (0.3 percentage points), and ~~inflation (approximately 1~~other factors (2.2 percentage ~~point impact)~~points), including higher costs from premium freight and higher one time fixed costs, partially offset by ~~higher~~favorable impact of productivity ~~(approximately 3.0~~including lower volume leverage (1.5 percentage ~~point impact)~~points) and ~~net reductions in repositioning~~the favorable impacts from foreign and ~~other costs (approximately 0.6~~exchange rates (0.3 percentage ~~point impact)~~points).

Cost of goods sold for ~~2017~~2019 was ~~$2,361~~$2,537 million, a decrease of $4$62 million or ~~0.2%,~~2.4% from ~~$2,365~~$2,599 million in ~~2016.~~

~~This~~2018. The decrease was primarily ~~driven by~~due to a ~~reduction~~decrease in ~~repositioning~~direct material costs ~~of approximately $26 million. Direct material~~ and labor costs ~~were approximately flat in 2017 compared to 2016 (principally~~of $113 million primarily due to achanges in foreign exchange rates and increases in productivity of $98 million, partially offset by unfavorable impacts from volume and mix of $141 million and other impacts of $8 million.

Gross profit percentage decreased by 1.1 percentage points primarily due to unfavorable impacts from mix (2.8 percentage points), price (0.9 percentage points) and the unfavorable impacts from inflation (0.7 percentage points), partially offset by the favorable impact of productivity ~~net~~(3.1 percentage points) and the favorable impact of ~~inflation,~~foreign exchange rates (0.2 percentage points).

Selling, general and administrative expenses increased in 2020 compared to 2019 by $28 million, mainly due to an increase of $52 million of professional service fees, primarily related to the strategic planning activities before the decision to file for relief under chapter 11 of the Bankruptcy Code in September 2020, $4 million of bad debt related to customer bankruptcy and $3 million pension costs increase, partially offset by ~~increased volume~~$31 million of cost saving actions implemented to ease the impact of COVID-19 on our financial performance, including merit freezes, state funded lay-offs, unpaid leaves and ~~foreign currency translation). R&D costs increased by $11 million.~~

~~Gross profit percentage increased primarily due to higher productivity net of inflation (approximately 4.5 percentage point impact) and net~~ reductions in ~~repositioning~~travel expenses and ~~other~~professional services, as well as one-time Spin-off costs (approximately 0.6 percentage point impact), partially offset by impacts from mix and price (approximately 2.1 percentage point impact) and unfavorable foreign currency translation (approximately 0.1 percentage point impact).incurred in the prior year period.

Selling, general and administrative expenses were flat for ~~2018~~2019 compared ~~with 2017~~to 2018 leading to ~~a decline~~an increase in expenses as a percentage of sales.

Other expense, net increased in 2020 compared to 2019 by $6 million. The increase was attributable to a $12 million increase in legal fees incurred in connection with the Honeywell Indemnity Agreement, partially offset by a $8 million decrease in litigation-related expenses in connection with the pending litigation against Honeywell.

Other expense, net decreased in 2019 by $80 million compared to 2018. For 2019, Other expense, net of $40 million primarily reflects $28 million of legal fees incurred in connection with the Honeywell Indemnity Agreement, $11 million of legal fees in connection with the pending litigation against Honeywell, and $1 million in factoring and notes receivables discount fees. For 2018, Other expense, net of $120 million was primarily driven by asbestos-related charges, net of probable insurance recoveries of $131 million.

Interest expense increased in 2020 compared to 2019 by $11 million, mainly due to $16 million of higher outstanding Revolving Credit Facility drawings, additional fees associated with the amendment of our Credit Agreement, higher interest margins, post-petition Banks’ cancellations of cross-currency interest rate swaps and ~~administrative~~supplementary DIP financing, partially offset by $5 million of lower interest expense ~~for 2017~~on our Term Loans due to voluntary prepayments in 2019.

Interest expense in 2019, was ~~$249~~$68 million, an increase of ~~$52~~$49 million ~~or 26.4%,~~ from ~~$197~~$19 million in ~~2016. This~~2018. The increase was primarily driven by a net increase in information technology (IT) costs of approximately $35 million, primarily due to higher corporate allocations from Honeywell. Allocations of corporate expenses from Honeywell are not necessarily indicative of future expenses and do not necessarily reflect the results that the Business would have experienced as an independent company for the periods presented. Additionally, selling costs increased by approximately $6 millioninterest expense related to ~~investments for our software offerings.~~

For the periods prior to the Spin-Off, our Consolidated and Combined Financial Statements reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities primarily related to the Bendix legacy Honeywell business, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. For the nine months ended September 30, 2018 prior to the Spin-Off over the same period in 2017, Other expense, net increased by $3 million due to a $6 million increase in environmental charges, partially offset by a $3 million decrease in asbestos charges.

Following the Spin-Off in 2018, the accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of the Indemnification and Reimbursement Agreement as described above in the Asbestos-Related and Environmental Liabilities section. During the fourth quarter of 2018, we recognized a $16 million benefit related to a reduction in Honeywell´s long-term estimate of asbestos claims experience, net of legal fees for the quarter, in connection to the Indemnification and Reimbursement Agreement, in comparison to a $1 million environmental charge in the same period of 2017.

Other expense, net for 2017, was $130 million, a decrease of $53 million, or 29.0%, from $183 million in 2016. This decrease was primarily driven by lower asbestos charges, net of insurance recoveries, in the year.

~~Following the Spin-Off, interest expense primarily relates to interest on~~ our long-term debt. ~~In connection with our long-term debt and revolving credit facility, we estimate that annual interest expense will be approximately $74 million for 2019.~~ Prior to the Spin-Off, interest expense was primarily related to related party notes from cash pool arrangements with our Former Parent which were settled in cash prior to the Spin-Off. Interest expense for 2018, was $19 million, an increase of $11 million from $8 million in 2017. This increase was primarily driven by interest expense related to our long-term debt of $17 million partially offset by a decrease in related party notes interest expense of $5 million. Interest expense for 2017 increased by $1 million compared to 2016. See Note 3 Related Party Transactions with Honeywell and Note 14 Long-term Debt and Credit Agreements of Notes to Consolidated and Combined Financial Statements.

Non-operating (income) expense ~~for~~in 2020 increased to income of $38 million from an expense of $8 million in 2019, primarily due to a significant unhedged exposure driven by the termination of all derivatives and closing of the credit lines, as a consequence of Chapter 11 filing.

Non-operating expense (income) in 2019 decreased to an expense of $8 million from an income of ($8) million ~~from income of ($18) million~~ in ~~2017. This decrease was~~the prior year period, primarily driven by $6 million of marked to market pension costs and other non-service components of pension costs, $7 million of foreign exchange costs, net of hedging and a $4 million decrease in interest income from bank accounts and marketable ~~securities~~securities.

Reorganization items, net for 2020 were $73 million, representing professional service fees related to Chapter 11 of $7$55 million, DIP Credit Agreement financing fees of $13 million and ~~an increase in non-service~~the write-off of the unamortized deferred high yield debt issuance cost of $6 million. There were no Reorganization items, net for the years ended December 31, 2019, and December 31, 2018, since these are new items related ~~pension ongoing (income) expense of $3 million.~~

~~Non-operating (income) expense for 2017 increased~~ to ~~income of ($18) million from income of ($5) million in 2016 primarily driven by lower foreign exchange losses of $9 million.~~the Chapter 11 Cases.

The effective tax rate ~~decreased~~increased by ~~566.6~~23.3 percentage points in ~~2018~~2020 compared to ~~2017.~~2019. The ~~decrease~~increase was primarily attributable to the ~~non-recurring~~absence of tax benefits related to the remeasurement of deferred tax assets and liabilities for tax law changes enacted during 2019, higher tax expense because of nondeductible costs incurred in connection with the Chapter 11 Cases, the resolution of tax audits and an increase in losses for jurisdictions where we don’t expect to generate future tax benefits from such losses. The increase in the effective tax rate was also impacted by overall lower earnings compared to 2019 because of the adverse impacts of ~~U.S. tax reform from 2017 (see "The Tax Act" further below) and due to~~COVID-19, partially offset by tax benefits from lower withholding taxes on non-US earnings.

The effective tax rate increased by 214.0 percentage points in 2019 compared to 2018. The increase was primarily attributable to the absence of approximately $910 million of non-recurring tax benefits in 2018 because of a reduction in withholding taxes incurred as part of an internal restructuring of Garrett’s business in advance of ~~its Spin-Off which resulted in a decrease to~~ the withholding tax deferred tax liability. The Company's non-U.S. effective tax rate was (197.6)% a decrease of approximately 417 percentage points compared to 2017. The year-over-year decrease in the non-U.S. effective tax rate was primarily driven by the Company's change in assertion regarding foreign unremitted earnings in connection with the Tax Act, decreased expense for tax reserves in various jurisdictions, and higher earnings taxed at lower rates.

~~The effective tax rate increased by 348.2 percentage points in 2017 compared to 2016.~~Spin-Off. The increase was primarily attributable to the provisional impact of U.S. tax reform. On December 22, 2017, the U.S. enacted H.R.1, commonly known as the Tax Cuts and Jobs Act (“Tax Act”) that instituted fundamental changes to the U.S. tax system. The Tax Act included changes to the taxation of foreign earnings by implementing a dividend exemption system, expansion of the current anti-deferral rules, a minimum tax on low-taxed foreign earnings and new measures to deter base erosion. The Tax Act also permanently reduced the corporate tax rate from 35% to 21%, imposed a one-time mandatory transition tax on the historical earnings of foreign affiliates and implemented a territorial-style tax system. The impacts of these changes are reflected in the 2017 tax expense, which resulted in provisional charges of approximately $980 million due to the Company’s change in assertion regarding foreign unremitted earnings and $354 million due to the mandatory transition tax. These charges were subject to adjustment given the provisional nature of the charges. The Tax Act provisional charges were the primary driver of the increase in the effective tax rate in 2017, partially offset by ~~increased~~approximately $60 million of tax benefits ~~from~~related to the ~~resolution~~remeasurement of ~~tax audits.~~

The majority of the $980 million provisional charge described above relates to non-U.S. withholding taxes that would have been payable at the time of the actual cash transfer and is based on the legal entity structure that existed at December 31, 2017. However, as discussed above, this deferred tax ~~liability was significantly reduced~~assets and liabilities for tax law changes enacted during 2019, primarily in ~~2018 as a result of~~ ~~internal restructuring in advance of the Spin-Off.~~Switzerland.

As a result of the factors described above, net income was ~~$1,180~~$80 million in ~~2018~~2020 as compared to net ~~loss~~income of ~~$983~~$313 million in ~~2017.~~2019.

As a result of the factors described above, net ~~loss~~income was ~~$983~~$313 million in ~~2017~~2019 as compared to net income of ~~$199~~$1,206 million in ~~2016.~~2018. Net income for 2018 includes an $879 million tax benefit from reduced withholding taxes on undistributed earnings and no interest expense related to our long-term debt raised at the time of the Spin-Off.

~~Prior~~As described above, the commencement of the Chapter 11 Cases constituted an event of default that accelerated the Company’s obligations, as applicable, under the Prepetition Credit Agreement (as defined below) and the Company’s 5.125% senior notes due 2026 (the “Senior Notes”). The Prepetition Credit Agreement and Senior Notes provide that as a result of the commencement of the Chapter 11 Cases, the principal, interest and all other amounts due thereunder shall be immediately due and payable. Any efforts to enforce the payment obligations under the Prepetition Credit Agreement and Senior Notes are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Prepetition Credit Agreement and Senior Notes are subject to the ~~Spin-Off, we generated positive~~applicable provisions of the Bankruptcy Code.

We expect that our cash requirements in 2021 will primarily be to fund operating activities, working capital, Chapter 11 case related costs and capital expenditures. We have historically funded our cash requirements, which included requirements to meet our obligations under our debt instruments and the Honeywell Indemnity Agreement described below, as well as the tax matters agreement with Honeywell (the “Tax Matters Agreement”), through the combination of cash flows from ~~operations.~~operating activities, available cash balances and available borrowings through our debt agreements. During the Chapter 11 Cases, our principal sources of liquidity are expected to be limited to cash flow from operations, cash on hand and borrowings under the DIP Credit Agreement (as defined below). Based on our current expectations, we believe these principal sources of liquidity during the Chapter 11 Cases will be sufficient to fund our operations during the pendency of the Chapter 11 Cases. Under the terms of the Transaction contemplated by the PSA and the Plan, the CO Group obtained a commitment from certain financial institutions to provide us with new credit facilities upon Emergence, and, if the Transaction, PSA and Plan are approved by the Bankruptcy Court, we expect to enter into definitive documentation for such credit facilities in connection with Emergence.

Our ability to continue as a going concern is contingent upon the Company’s ability to successfully implement a plan of reorganization in the Chapter 11 Cases, among other factors. As a result of the Chapter 11 Cases, the realization of assets and the satisfaction of liabilities are subject to uncertainty. While operating as debtors-in-possession under the Bankruptcy Code, we may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the ~~Spin-Off~~

~~As part~~approval of the ~~Former Parent~~Bankruptcy Court or as otherwise permitted in the ordinary course of business, for ~~the periods prior to the Spin-Off, we were dependent upon Honeywell for all of~~amounts other than those reflected in our working capital and financing requirements. Honeywell uses a centralized approach to cash management and financing of its operations. The majority of the Business’s cash was transferred to Honeywell daily and Honeywell funded its operating and investing activities as needed. This arrangement is not reflective of the manner in which the Business would have been able to finance its operations had it been a stand-alone business separate from Honeywell during the entirety of the periods presented. Cash transfers to and from Honeywell’s cash management accounts are reflected within Invested deficit.

For the periods prior to the Spin-Off, we operated a centralized non-interest-bearing cash pool in U.S. and regional interest-bearing cash pools outside of the U.S. As of December 31, 2017, we had non-interest-bearing cash pooling balances of $51 million, which are presented in Invested deficit within the Consolidated and Combined ~~Balance Sheets. As part~~Financial Statements. Further, any plan of reorganization in the ~~preparation for~~Chapter 11 Cases could materially change the ~~Spin-Off, we delinked from U.S.~~amounts and ~~regional cash pools operated by Honeywell.~~

~~All intracompany transactions have been eliminated. As described in Note 3 Related Party Transactions with Honeywell, all significant transactions between the Business~~classifications of assets and ~~Honeywell prior to the Spin-Off have been included~~liabilities reported in the Consolidated and Combined Financial ~~Statements and settled for cash prior~~Statements. As a result of our financial condition, uncertainty related to the ~~Spin-Off with the exception~~impacts of certain related party notes which were forgiven. These transactions are reflected in the Consolidated and Combined Balance Sheets as Due from related parties or Due to related parties for the periods prior to the Spin-Off. In the Consolidated and Combined Statements of Cash Flows, the cash flows related to related party notes receivables presented in the Consolidated and Combined Balance Sheets in Due from related parties are reflected as investing activities since these balances represent amounts loaned to Former Parent. The cash flows related to related party notes payables presented in the Consolidated and Combined Balance Sheets in Due to related parties are reflected as financing activities since these balances represent amounts financed by Former Parent. Following the Spin-Off, Honeywell is no longer considered a related party.

For the periods prior to the Spin-Off, the cash and cash equivalents held by Honeywell at the corporate level were not specifically identifiable to the Business and therefore were not allocated for such periods. Honeywell third-party debtCOVID-19, and the ~~related interest expense have not been allocated for such periods,~~risks and uncertainties surrounding the Chapter 11 Cases, substantial doubt exists that we will be able to continue as ~~Honeywell’s borrowings were not directly attributable to the Business.~~

For the periods prior to the Spin-Off, we received interest income for related party notes receivables of $1 million, $1 million and $ 4 million, for the years ended December 31, 2018, 2017 and 2016, respectively. Additionally, we incurred interest expense for related party notes payable of $1 million, $6 million and $6 million, for the years ended December 31, 2018, 2017 and 2016, respectively.a going concern.

On September 27, 2018, we entered into a Credit Agreement by and among us, Garrett LX I S.à r.l., Garrett LX II S.à r.l. (“Lux Guarantor”), Garrett LX III S.à r.l. (“Lux Borrower”), Garrett Borrowing LLC (in such capacity, the “US Co-Borrower”), and Honeywell Technologies Sàrl (“Swiss Borrower” and, together with Lux Borrower and US Co-Borrower, the “Borrowers”),certain of our subsidiaries, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the ~~“Credit~~“Prepetition Credit Agreement”).

The Prepetition Credit Agreement was amended on June 12, 2020 (the “2020 Amendment”). The Prepetition Credit Agreement provides for senior secured financing of approximately the Euro equivalent of $1,254 million, consisting of (i) a seven-year senior secured first-lien term B loan facility, which consists of a tranche denominated in Euro of €375 million and a tranche denominated in U.S. Dollars of $425 million (the “Term B Facility”), (ii) a five-year senior secured first-lien term A loan facility in an aggregate principal amount of €330 million (the “Term A Facility” and, together with the Term B Facility, the “Term Loan Facilities”) and (iii) a five-year senior secured first-lien revolving credit facility in an aggregate principal amount of €430 million with revolving loans to the Swiss Borrower (as defined in the Prepetition Credit Agreement), to be made available in a number of currencies including Australian Dollars, Euros, Pounds Sterling, Swiss Francs, U.S. Dollars and Yen (the “Revolving Facility” and, together with the Term Loan Facilities, the “Senior Secured Credit Facilities”). ~~Each~~

Following the commencement of the ~~Revolving Facility and~~Chapter 11 Cases, the ~~Term A Facility matures five years after~~contractual non-default rate of interest applicable under the ~~effective date of the~~Senior Secured Credit ~~Agreement, in each case with certain extension rights~~Facilities is either (a) in the ~~discretion~~case of ~~each lender. The Term B Facility matures seven years after the effective date of the Credit Agreement, with certain extension rights in the discretion of each lender.~~

~~The Senior Credit Facilities are subject to an interest rate, at our option, of either (a)~~dollar denominated loans, base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the United States, (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the one month adjusted LIBOR rate, plus 1% per annum (“ABR”), (b) in the case of loans denominated in certain permitted foreign currencies other than dollars or euros, an adjusted LIBOR rate (“LIBOR”) (which shall not be less than zero), or (c) in the case of loans denominated in euros, an adjusted EURIBOR rate (“EURIBOR”) (which shall not be less than zero), in each case, plus an applicable margin. Pursuant to the 2020 Amendment, (i) the margin applicable to loans under the Term B Facility increased by 75 basis points through the maturity date and (ii) the margin applicable to loans under the Revolving Facility and Term A Facility increased by 25 basis points until the Company delivers consolidated financial statements as of and for its first fiscal quarter ending on or after the last day of the Relief Period (as defined in the 2020 Amendment). Pursuant to the 2020 Amendment, the margin applicable to Revolving Credit Facility and Term Loan A Facility increased by a further 25 basis points on September 4, 2020 following a downgrade in our corporate credit rating by S&P Global ratings.

The applicable margin for the U.S. Dollar tranche of the Term B Facility is currently 2.50% per annum (for ~~LIBOR loans) and 1.50% per annum (for~~ ABR loans) while that for the euro tranche of the Term B Facility is currently ~~2.75%~~3.75% per annum (for EURIBOR loans). The applicable margin for each of the Term A Facility and the Revolving ~~Credit~~ Facility varies based on our leverage ~~ratio.~~ratio which is increased by 50 basis points (including above mentioned Ratings event step up) until the Company delivers consolidated financial statements as of and for its first fiscal quarter ending on or after the last day of the Relief Period. Accordingly, the interest rates for the Senior Secured Credit Facilities will fluctuate during the term of the Prepetition Credit Agreement based on changes in the ABR, LIBOR, EURIBOR or future changes in our corporate rating or leverage ratio. ~~Interest payments with respect to the Term Loan Facilities~~The applicable margins for credit arrangements are ~~required either on a quarterly basis (for ABR loans) or at the end of each interest period (for LIBOR and EURIBOR loans) or, if the duration~~summarized as follows:

The commencement of the Chapter 11 Cases described above constituted an event of default that accelerated the Company’s obligations and terminated undrawn commitments, as applicable, ~~interest period exceeds three months, then every three months.~~

~~We are obligated to make quarterly principal payments throughout~~under the ~~term~~Prepetition Credit Agreement. The Prepetition Credit Agreement provides that as a result of the ~~Term Loan Facilities according~~commencement of the Chapter 11 Cases, the principal, interest and all other amounts due thereunder shall be immediately due and payable. Any efforts to enforce the ~~amortization provisions in the Credit Agreement. Borrowings~~payment obligations under the Prepetition Credit Agreement are ~~prepayable at our option without premium or penalty, subject to~~automatically stayed as a ~~1.00% prepayment premium in connection with any repricing transaction with respect to the Term B Facility in the first six months after the effective date~~result of the ~~Credit Agreement. We may request to extend~~Chapter 11 Cases, and the ~~maturity date~~creditors’ rights of all or a portion of the Senior Credit Facilities subject to certain conditions customary for financings of this type. The Credit Agreement also contains certain mandatory prepayment provisions in the event that we incur certain types of indebtedness or receive net cash proceeds from certain non-ordinary course asset sales or other dispositions of property, in each case subject to terms and conditions customary for financings of this type.

The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit our and our subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends, to make other distributions or redemptions/ repurchases,enforcement in respect of the our and our subsidiaries’ equity interests, to engage in transactions with affiliates, amend certain material documents or to permit the International Financial Reporting Standards equity amount of Lux Borrower to decrease below a certain amount. ThePrepetition Credit Agreement ~~also contains financial covenants requiring~~are subject to the ~~maintenance~~applicable provisions of ~~a consolidated total leverage ratio~~the Bankruptcy Code.

During the Chapter 11 Cases and pursuant to an order of ~~not greater than 4.25 to 1.00 (with step-downs to (i) 4.00 to 1.00 in approximately 2019, (ii) 3.75 to 1.00 in approximately 2020~~the Bankruptcy Court, we make monthly payments of adequate protection at the contractual non-default rate of interest on loans and ~~(iii) 3.50 to 1.00 in approximately 2021), and a consolidated interest coverage ratio of not less than 2.75 to 1.00. We were in compliance with~~certain other obligations under our ~~financial covenants as of December 31, 2018.~~Senior Secured Credit Facilities.

On September 27, 2018, we completed the offering of €350 million (approximately ~~$400 million)~~$410 million based on exchange rates as of September 27, 2018) in aggregate principal amount of ~~5.125% senior notes due 2026 (the “Senior Notes”).~~Senior Notes. The Senior Notes bear interest at a fixed annual interest rate of 5.125% and mature on October 15, 2026.

The Senior Notes were issued pursuant to an Indenture, dated September 27, 2018, ~~(the “Indenture”),~~ which, among other things and subject to certain limitations and exceptions, limits our ability and the ability of our restricted subsidiaries to: (i) incur, assume or guarantee additional indebtedness or issue certain disqualified equity interests and preferred shares, (ii) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments, (iii) make investments, (iv) consummate certain asset sales or transfers, (v) engage in certain transactions with affiliates, (vi) grant or assume certain liens on assets to secure debt unless the notes are secured equally and ratably (vii) restrict dividends and other payments by certain of their subsidiaries and (vii) consolidate, merge, sell or otherwise dispose of all or substantially all of our or our restricted subsidiaries’ assets.

~~In connection with the consummation~~The commencement of the ~~Spin-Off, Lux Borrower used all~~Chapter 11 Cases described above constituted an event of default that accelerated the Company’s obligations, as applicable, under the Senior Notes. The Senior Notes provide that as a result of the ~~net proceeds~~commencement of the ~~Term B Facility~~Chapter 11 Cases, the principal, interest and all other amounts due thereunder shall be immediately due and payable. Any efforts to ~~make three unsecured intercompany loans to Swiss Borrower. In addition,~~enforce the ~~subsidiary that issued~~payment obligations under the Senior Notes ~~used all~~are automatically stayed as a result of the ~~net proceeds~~Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Senior Notes are subject to ~~make~~the applicable provisions of the Bankruptcy Code. For additional information regarding our Prepetition Credit Agreement, see Note 16, Long-term Debt and Credit Agreements of the notes to the Consolidated and Combined Financial Statements.

On October 6, 2020, the Bankruptcy Court entered an order granting interim approval of the Debtors’ entry into a Senior Secured Super-Priority Debtor-in-Possession Credit Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “DIP Credit Agreement”), with the lenders party thereto (the “DIP Lenders”) and Citibank N.A. as administrative agent (the “DIP Agent”). On October 9, 2020 (the “Closing Date”), the Company, the DIP Agent and the DIP Lenders entered into the DIP Credit Agreement. The DIP Credit Agreement provides for a senior secured, ~~intercompany~~super-priority term loan ~~to Swiss Borrower. Swiss Borrower used~~(the “DIP Term Loan Facility”) with a maximum principal amount of $200 million, $100 million of which was funded on the Closing Date and $100 million of which was subsequently funded on October 26, 2020, following entry of the Bankruptcy Court’s final order approving the DIP Term Loan Facility on October 23, 2020. The proceeds of the ~~intercompany loans, as well as~~DIP Term Loan Facility are to be used by the ~~net proceeds~~Debtors to (a) pay certain costs, premiums, fees and expenses related to the Chapter 11 Cases, (b) make payments pursuant to any interim or final order entered by the Bankruptcy Court pursuant to any “first day” motions permitting the payment by the Debtors of any prepetition amounts then due and owing; (c) make certain adequate protection payments in accordance with the DIP Credit Agreement and (d) fund working capital needs of the ~~Term A Facility, which equal, in~~Debtors and their subsidiaries to the ~~aggregate,~~extent permitted by the ~~Euro-equivalent of approximately $1.621 billion, to repay certain Euro-denominated intercompany notes to Honeywell or a subsidiary of Honeywell. We used a portion of~~DIP Credit Agreement. On October 12, 2020, the ~~gross proceeds from~~Company, the ~~Term Loan Facilities~~DIP Agent and the ~~Senior Notes offering~~DIP Lenders entered into the First Amendment to the DIP Credit Agreement (the “First Amendment”). The First Amendment eliminates the obligation for the Company to pay certain fees ~~costs and expenses~~to the DIP Lenders in connection with certain prepayment events under the ~~entry into~~DIP Credit Agreement. For additional information regarding the ~~Senior Credit Facilities and the consummation~~terms of the ~~Senior~~DIP Credit Agreement, see Note 2, Reorganization and Chapter 11 Proceedings of the Notes ~~offering.~~

~~Liquidity following~~to the ~~Spin-Off~~Consolidated and Combined Financial Statements and Note 16, Long-term Debt and Credit Agreements of the notes to the Consolidated and Combined Financial Statements.

On September 20, 2020, we were notified by the ~~Spin-Off,~~New York Stock Exchange (the “NYSE”) that, as a ~~treasury team was appointed~~result of the Chapter 11 Cases, and ~~cash management structures were implemented,~~ in ~~order~~accordance with Section 802.01D of the NYSE Listed Company Manual, that NYSE had commenced proceedings to ~~manage~~delist our common stock from the ~~Company’s liquidity centrally and concentrate excess cash.~~

Our capital structure and sources of liquidity have changed from our historical capital structure because we no longer participate in our Former Parent’s centralized cash management program. We expect that our primary cash requirements in 2019 will primarily be to fund operating activities, working capital, and capital expenditures, and to meet our obligations under the debt instruments and the Indemnification and Reimbursement Agreement described below, as well as the Tax Matters Agreement. In addition, we engage in repurchasesNYSE. The NYSE indefinitely suspended trading of our ~~debt~~common stock on September 21, 2020. We determined not to appeal the NYSE’s determination. On October 8, 2020, the NYSE filed a Form 25-NSE with the Securities and ~~equity securities~~Exchange Commission, which removed our common stock from ~~time~~listing and registration on the NYSE effective as of the opening of business on October 19, 2020. The delisting of our common stock from NYSE has and could continue to ~~time. We believe we will meet~~limit the liquidity of our ~~known or reasonably likely future cash requirements through~~common stock, increase the combination of cash flows from operating activities, available cash balances and available borrowings through our debt agreements. If these sources of liquidity need to be augmented, additional cash requirements would likely be financed through the issuance of debt or equity securities; however, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable termsvolatility in the ~~future. Based upon~~price of our ~~history of generating strong cash flows, we believe we will be able~~common stock, and hinder our ability to ~~meet our short-term liquidity needs for at least the next twelve months.~~raise capital.

On September 12, 2018, weGarrett ASASCO entered into the ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement, under which ~~we are~~Garrett ASASCO is required to make certain payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of the ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement, ~~we are~~Garrett ASASCO is responsible for paying to Honeywell such amounts, up to a cap ~~of an amount~~ equal to the Distribution Date Currency Exchange Rate (1.16977 USD = 1 EUR) equivalent of $175 million (exclusive of any late payment fees) in respect of such liabilities arising in any given calendar year. This Indemnification and Reimbursement Agreement may have material adverse effects on our liquidity and cash flows and on our results of operations, regardless of whether we experience a decline in net sales. See “We are subject to risks associated withIn addition, the Indemnification and Reimbursement Agreement, pursuant to which we are required to make substantial cash payments to Honeywell, measured in substantial part by reference to estimates by Honeywell of certain of its liabilities.” The payments that ~~we are~~Garrett ASASCO is required to make to Honeywell pursuant to the terms of the ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement will not be deductible for U.S. federal income tax purposes. The ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement.

During the ~~fourth~~first quarter of ~~2018, we~~2020, Garrett ASASCO paid Honeywell the Euro-equivalent of ~~$41~~$35 million in connection with the ~~Indemnification~~Honeywell Indemnity Agreement. In January 2020 we received from Honeywell the 2019 Prior Year Aggregate Loss Statement (as defined in the Honeywell Indemnity Agreement) which confirmed that the payments made to Honeywell as required by the Honeywell Indemnity Agreement in 2019 included an overpayment of $33 million. This payment would have been deducted from the second quarter 2020 payment and ~~Reimbursement Agreement.~~would have reduced the cash payments payable to Honeywell in 2020. Honeywell and Garrett agreed to defer the second quarter 2020 payment due May 1, 2020 to December 31, 2020 but the second quarter 2020 payment was not paid on this date as a result of the automatic stay applicable to the Debtors under the Bankruptcy Code as a result of the Chapter 11 Cases. We do not expect Garrett ASASCO to make payments to Honeywell under the Honeywell Indemnity Agreement during the pendency of the Chapter 11 Cases.

Under the terms of the PSA and the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Indemnity Agreements and the Tax Matters Agreement, and (b) the dismissal with prejudice of the Honeywell Litigation in exchange for (x) a $375 million cash payment at Emergence and (y) the new Series B Preferred Stock issued by the Company payable in installments of $35 million in 2022, and $100 million annually 2023-2030 (the “Series B Preferred Stock”). The Company will have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to $584 million as of Emergence (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make a partial payment of the Series B Preferred Stock, reducing the present value to $400 million, at any time within 18 months of Emergence. In every case, the duration of future liabilities to Honeywell will be reduced from 30 years prior to the Chapter 11 filing to a maximum of nine years.

The terms of the PSA, the Transaction and the Plan remain subject to approval by the Bankruptcy Court. There can be no assurances that we will obtain the approval of the Bankruptcy Court and complete the Transaction.

On September 12, 2018, we entered into a Tax Matters Agreement ~~with Honeywell. The Tax Matters Agreement~~which governs the respective rights, responsibilities and obligations of Honeywell and us after the Spin-Off with respect to all tax matters (including tax liabilities, tax attributes, tax returns and tax contests).

The Tax Matters Agreement generally provides that we are responsible and will indemnify Honeywell for all taxes, including income taxes, sales taxes, VAT and payroll taxes, relating to Garrett for all periods, including periods prior to the completion date of the Spin-Off. Among other items, as a result of the mandatory transition tax imposed by the Tax Cuts and Jobs Act, ~~one of our subsidiaries~~Garrett ASASCO is required to make payments to a subsidiary of Honeywell in the amount representing the net tax liability of Honeywell under the mandatory transition tax attributable to us, as determined by Honeywell. ~~We currently estimate~~Additionally, the Tax Matters Agreement provides that ~~our aggregate~~Garrett ASASCO is to make payments to a subsidiary of Honeywell for a portion of Honeywell’s net tax liability under Section 965(h)(6)(A) of the Internal Revenue Code for mandatory transition taxes that Honeywell determined is attributable to us (the “MTT Claim”). Following the Spin-Off, Honeywell asserted that Garrett ASASCO was obligated to pay $240 million to Honeywell for the MTT Claim under the Tax Matters Agreement. Accordingly, and in connection with the Tax Matters Agreement, we made payments to Honeywell, ~~with respect to~~under protest, for the ~~mandatory transition tax will be $240~~Euro-equivalent of $18 million and $19 million during 2019 and the fourth quarter of 2018, respectively, for the MTT Claim. On October 30, 2020, however, Honeywell filed an SEC Form 10-Q for the quarterly period ended September 30, 2020, reporting that its claim against us under the Tax Matters Agreement, including the MTT Claim, is now $273 million. Under the terms of the Tax Matters Agreement, ~~we are~~Garrett ASASCO is required to pay this amount in Euros, without interest, in five annual installments, each equal to 8% of the aggregate amount, followed by three additional annual installments equal to 15%, 20% and 25% of the aggregate amount, respectively. ~~In connection~~Garrett ASASCO paid the first annual installment in October 2018 and subsequent annual installments are due in April of each year. The annual installment due on April 1, 2020 was deferred to December 31, 2020 in agreement with Honeywell but was not paid on this ~~agreement, we paid~~dateas a result of the automatic stay applicable to the Debtors under the Bankruptcy Code as a result of the Chapter 11 Cases. We do not expect Garrett ASASCO to make payments to Honeywell under the ~~Euro-equivalent of $19 million~~Tax Matters Agreement during the ~~fourth quarter~~pendency of ~~2018.~~the Chapter 11 Cases.

~~The~~Further, the Tax Matters Agreement also imposes certain restrictions on us and our subsidiaries (including restrictions on share issuances, redemptions or repurchases, business combinations, sales of assets and similar transactions) that are designed to address compliance with Section 355 of the Internal Revenue Code of 1986, as amended, and are intended to preserve the tax-free nature of the Spin-Off.

As described above, under the terms of the PSA and the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Tax Matters Agreement. In every case the duration of future liabilities to Honeywell will be reduced from 30 years prior to the Chapter 11 filing to a maximum of nine years. Our entry into and performance under the PSA and the terms of the PSA, the Transaction and the Plan remain subject to

approval by the Bankruptcy Court. There can be no assurances that we will obtain the approval of the Bankruptcy Court and complete the Transaction.

CashFlowSummary for the Years EndedDecember31, 2020, 2019 and2018 ~~2017 and 2016~~

Our cash flows fromoperating,investingand financingactivitiesfor the yearsended December31, ~~2018, 2017~~2020, 2019 and ~~2016,~~2018, as reflectedin the audited Consolidated and Combined FinancialStatementsincludedelsewherein this Annual Report on Form 10-K,are summarizedas follows:

Cash provided by operating activities increased by $302 million for 2018 in comparison to 2017, primarily due to a decrease in cash taxes paid of $354 million and favorable impacts from working capital of $35 million partially offset by an unfavorable impact from changes in Payables to related parties of $82 million.

Cash provided by investing activities increased by $162 million for 2018 in comparison to 2017, primarily due to favorable net cash impacts from marketable securities investment activities year over year of $230 million, partially offset by a decrease in proceeds from related party notes receivables of $66 million.

Cash used for financing activities increased by $718 million for 2018 in comparison to 2017 primarily due to a decrease in proceeds from related party notes payable year over year of $671 million. Additionally, there was $1,631 million in proceeds from issuance of long-term debt in 2018 partially offset by unfavorable impacts from changes in Invested deficit period over period of $1,474 million.

Cash provided by operating activities decreased by ~~$234~~$217 million for 2020 in comparison to 2019, primarily due to ~~higher~~a decrease in net income, ~~taxes settled with our Former Parent~~net of ~~$357 million, mainly due to the provisional mandatory transition tax impact of the Tax Act. This was partially offset by higher Income before~~deferred taxes of ~~$116~~$226 million, ~~favorable impacts~~unfavorable impact from working capital of ~~approximately~~$194 million, partially offset by a decrease in Obligations to Honeywell of $149 million and an increase of $54 million in other items (mainly accrued liabilities).

Cash used for investing activities decreased by $6 million in 2020 compared to 2019, primarily due to a favorable impact from Expenditures for property, plant and ~~payables~~equipment of $22 million, due to ~~related parties~~higher customer contribution and lower spend, partially offset by an unfavorable impact from a prior year settlement received on the re-couponing of ~~$37~~our cross currency swap contract of $19 million.

Cash provided by financing activities increased by $693 million in 2020, as compared to 2019. The change was driven by a draw down, net of payments, on our Revolving Facility of $349 million, payments of long-term debt during 2020 totaling $2 million, as compared to $163 million of such payments during 2019 and proceeds from debtor-in-possession credit agreement, net of financing fees of $187 million.

Cash provided by operating activities decreased by $131 million for 2019 in comparison to 2018, primarily due to a decrease in Obligations to Honeywell of $67 million, higher cash interest payments of $46 million, a decrease in net income, net of deferred taxes of $3 million and a decrease of $39 million in other items (accrued liabilities and other assets), partially offset by a favorable impact from working capital of $24 million.

Cash provided by investing activities ~~increased~~decreased by ~~$212~~$278 million in 2019 compared to 2018, primarily due to ~~lower issuances of related party notes receivables to the Former Parent of $63 million and favorable~~unfavorable net cash impacts from marketable securities ~~investment~~investments activities year over year of ~~$145~~$291 million and unfavorable impact from Expenditures for property, plant and equipment of $7 million, partially offset by a favorable impact from the cash settlement received on the re-couponing of our cross currency swap contract of $19 million.

Cash ~~provided~~ byused for financing activities ~~increased~~ decreased by ~~$209 million.~~ $495 million in 2019, as compared to 2018. The change was ~~primarily~~ ~~due~~to ~~a $133~~ driven by payments for related party notes payable of $493 million, ~~increase~~ innet changes to cash ~~received~~pooling and short-term notes of $300 million and the net decrease in invested deficit of $1,493 million during 2018 that did not recur during 2019. This was partially offset by the $1,631 million of proceeds from ~~the Former~~ ~~Parent’s cash pools~~ issuance of long-term debt during 2018 that did not recur during 2019 and ~~lower increase~~ in ~~Invested deficit~~ payments of~~$76~~ ~~million.~~ long-term debt during 2019 of $163 million, as compared to $6 million during 2018.

The ~~following is a~~ summary of our significant contractual obligations and probable liability payments at December 31, ~~2018:~~2020 were as set forth in the table below. The table does not reflect any potential changes to our contractual obligations and other commitments that may result from the Chapter 11 cases and activities contemplated by the Transaction and the Plan.

We believeour capitalspending in recentyearshas been sufficientto maintainefficientproductioncapacity, to implementimportantproductand processredesignsand to expand capacityto meetincreaseddemand.

Productivityprojectshave freedup capacityin our manufacturingfacilitiesand are expectedto continueto do so. We expectto continueinvestingto expand and modernizeour existingfacilitiesand investin our facilitiesto createcapacityfor newproductdevelopment.

In light of the near-term impact of the COVID-19 pandemic, we have reviewed current capital expenditure programs and re-phased some programs related to future capacity ~~for~~expansion and long-term development programs. This has materially reduced new ~~product development.~~capital expenditures in 2020 without having an adverse effect on our ability to deliver long-term projects on time. In 2021, we expect capital expenditures to materially increase as a result of the re-phasing noted aboveand the Company’s expected Emergence.

We do not engage in any off-balancesheetfinancialarrangementsthathave or are reasonablylikelyto have a materialcurrentor futureeffecton our financialcondition,changes in financialcondition,revenuesor expenses,resultsof operations,liquidity,capitalexpendituresor capitalresources.

The preparationof our Consolidated and CombinedFinancialStatementsin accordancewith generallyacceptedaccounting principlesis based on the selectionand applicationof accountingpoliciesthatrequireus to make significant estimatesand assumptionsabout the effectsof mattersthatare inherentlyuncertain.We considerthe accounting policiesdiscussedbelow to be criticalto the understandingof our financialstatements.Actual resultscould differ fromour estimatesand assumptions,and any such differencescould be materialto our Consolidated and CombinedFinancial Statements. In connection with the filing of the Chapter 11 Cases on the Petition Date, the Consolidated and Combined Financial Statements included herein have been prepared in accordance with ~~generally accepted accounting principles is based on~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 852, Reorganizations. See Note 2, Reorganization and Chapter 11 Proceedings, of the selection and application of accounting policies that require us to make significant estimates and assumptions about the effects of matters that are inherently uncertain. We consider the accounting policies discussed below to be critical to the understanding of our financial statements. Actual results could differ from our estimates and assumptions, and any such differences could be material to our Consolidated and Combined Financial ~~Statements.~~Statements for further details.

Contingent Liabilities—We are subjectto lawsuits,investigationsand claimsthatariseout of the conductof our globalbusinessoperationsor those of previouslyownedentities,includingmattersrelatingto commercial transactions,governmentcontracts,productliability(includingasbestos),prioracquisitionsand divestitures, employeebenefitplans, intellectualproperty,legaland environmental,healthand safetymatters.We continually assessthe likelihoodof any adversejudgmentsor outcomesto our contingencies,as well as potentialamountsor rangesof probablelosses,and recognizea liability,if any, for thesecontingenciesbased on a carefulanalysisof each matterwith the assistanceof outsidelegalcounseland, if applicable,otherexperts.Such analysisincludes makingjudgmentsconcerningmatterssuch as the costsassociatedwith environmentalmatters,the outcomeof negotiations,the numberand cost of pending and futureasbestosclaims,and the impactof evidentiary requirements.Because mostcontingenciesare resolvedover long periodsof time,liabilitiesmay change in the futuredue to newdevelopments(includingnewdiscoveryof facts,changes in legislationand outcomesof similarcasesthrough the judicialsystem),changes in assumptionsor changes in our settlementstrategy.See Note ~~21,~~23, Commitmentsand Contingenciesof Notes to Consolidated and Combined FinancialStatementsfor a discussionof management’sjudgmentappliedin the recognitionand measurementof our environmentaland asbestos liabilitieswhich representour mostsignificantcontingencies.

Asbestos-RelatedContingenciesandInsurance Recoveries—Honeywell is subject to certain asbestos-related and environmental-related liabilities, primarily related to its legacy Bendix business. In conjunction with the Spin-Off, certain operations that were part of the Bendix business, along with the ownership of the Bendix trademark, as well as certain operations that were part of other legacy elements of the Business, were transferred to us. For periods prior to the Spin-Off, we reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities primarily related to the Bendix legacy Honeywell business, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. We recognized a liability for any asbestos-related contingency that was probable of occurrence and reasonably estimable. In connection with the recognition of liabilities for asbestos-related matters, we recorded asbestos-related insurance recoveries that are deemed probable. Asbestos-related expenses, net of probable insurance recoveries, are presented within Other expense, net in the Consolidated and Combined Statement of Operations.

~~In periods subsequent to the Spin-Off, the~~The accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of the ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement with Honeywell entered into on September 12, 2018, under which ~~we are~~Garrett ASASCO is required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities.The ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement.

~~Warranties~~Under the terms of the PSA and the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Indemnity Agreements and the Tax Matters Agreement and (b) the dismissal with prejudice of the Honeywell Litigation in exchange for (x) a $375 million cash payment at Emergence and (y) the “Series B Preferred Stock. The Company will have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to $584 million as of Emergence (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make a partial payment of the Series B Preferred Stock, reducing the present value to $400 million, at any time within 18 months of Emergence. In every case the duration of future liabilities to Honeywell will be reduced from 30 years prior to the Chapter 11 filing to a maximum of nine years.

WarrantiesandGuarantees—Expected warrantycostsfor productssold are recognizedbased on an estimateof the amountthateventuallywill be requiredto settlesuch obligations.These accrualsare based on factorssuch as past experience,lengthof the warrantyand variousotherconsiderations.Costs of productrecalls, which may includethe cost of the productbeing replacedas well as the customer’scost of the recall,including laborto removeand replacethe recalledpart,are accruedas partof our warrantyaccrualat the timean obligation becomesprobableand can be reasonablyestimated.These estimatesare adjustedfromtimeto timebased on factsand circumstancesthatimpactthe statusof existingclaims.See Note ~~21,~~23, Commitmentsand Contingencies of Notes to Consolidated and Combined FinancialStatementsincludedhereinfor additionalinformation.

Pension Benefits—We sponsor defined benefit pension plans covering certain employees, primarily in Switzerland, the USU.S. and Ireland. For such plans, we are required to disaggregate the service cost component of net benefit costs and report those costs in the same line item or items in the Consolidated and Combined Statements of Operations as other compensation costs arising from services rendered by the pertinent employees during the period. The other nonservice components of net benefit costs are required to be presented separately from the service cost component. We record the service cost component of Pension ongoing (income) expense in Cost of goods sold or Selling, general and administrative expenses. The remaining components of net benefit costs within Pension ongoing (income) expense, primarily interest costs and assumed return on plan assets, are recorded in Non-operating expense (income). We recognize net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plans’ projected benefit obligation (the corridor) annually in the fourth quarter each year (“MTM Adjustment”), and, if applicable, in any quarter in which an interim remeasurement is triggered. The remaining components of pension expense, primarily service and interest costs and assumed return on plan assets, are recognized on a quarterly basis.

On January 1, 2018, we retrospectively adopted the new accounting guidance on presentation of net periodic pension costs. That guidance requires that we disaggregate the service cost component of net benefit costs and report those costs in the same line item or items in the Consolidated Statement of Operations as other compensation costs arising from services rendered by the pertinent employees during the period. The other nonservice components of net benefit costs are required to be presented separately from the service cost component.

Following the adoption of this guidance, we continue to record the service cost component of Pension ongoing (income) expense in Costs of goods sold. The remaining components of net benefit costs within Pension ongoing (income) expense, primarily interest costs and assumed return on plan assets, are now recorded in Non-operating (income) expense. We will continue to recognize net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plans’ projected benefit obligation (the corridor) annually in the fourth quarter of each year (MTM Adjustment). The MTM Adjustment ~~will also be reported~~is recorded in Non-operating expense (income) ~~expense.~~.

The key assumptions used in developing our ~~2018~~2020 net periodic pension (income) expense included the following:

The MTM Adjustment represents the recognition of net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plans’ projected benefit obligation (the corridor). Net actuarial gains and losses occur when the actual experience differs from any of the various assumptions used to value our pension plans or when assumptions change. The primary factors contributing to actuarial gains and losses are changes in the discount rate used to value pension obligations as of the measurement date each year and the difference between expected and actual returns on plan assets. The mark-to-market accounting method results in the potential for volatile and difficult to forecast MTM Adjustments. MTM charges were $0 for our U.S. Plans and $3$13 million for our non-U.S. Plans for the year ended December 31, ~~2018.~~2020.

We determine the expected long-term rate of return on plan assets utilizing historical plan asset returns over varying long-term periods combined with our expectations of future market conditions and asset mix considerations (see Note 2224, Defined Benefit Pension ~~Plan~~Plans of Notes to Consolidated and Combined Financial Statements for details on the actual various asset classes and targeted asset allocation percentages for our pension plans). We plan to ~~continue to~~ use an expected rate of return on plan assets of ~~5.8%~~4.88% for our U.S. Plans and ~~3.34%~~3.60% for our non-U.S. Plans for ~~2019~~2020 as this is a long-term rate based on historical plan asset returns over varying long-term periods combined with our expectations of future market conditions and the asset mix of the plan’s investments.

The discount rate reflects the market rate on December 31 (measurement date) for high-quality fixed-income investments with maturities corresponding to our benefit obligations and is subject to change each year. The discount rate can be volatile from year to year as it is determined based upon prevailing interest rates as of the measurement date. We used a ~~4.33%~~2.65% discount rate to determine benefit obligations for our U.S. Plans and ~~1.50%~~0.46% for our non-U.S. Plans as of December 31, ~~2018.~~2020.

Pension ongoing expense (income) for all of our pension plans is expected to be ~~approximately~~pension income of $2 million in ~~2019~~2021 compared with pension ongoing expense of $2$1 million in ~~2018.~~2020. Also, if required, an MTM Adjustment will be recorded in the fourth quarter of ~~2019~~2021 in accordance with our pension accounting method as previously described. It is difficult to reliably forecast or predict whether there will be an MTM Adjustment in ~~2019,~~2021, and if one is required, what the magnitude of such adjustment will be. MTM Adjustments are primarily driven by events and circumstances beyond the control of the Company such as changes in interest rates and the performance of the financial markets.

For periods prior to the Spin-off, certain Garrett employees participated in defined benefit pension plans (the “Shared Plans”) sponsored by Honeywell which includes participants of other Honeywell subsidiaries and operations. We account for our participation in the Shared Plans as a multiemployer benefit plan. Accordingly, we do not record an asset or liability to recognize the funded status of the Shared Plans. The related pension expense is based on annual service cost of active Garrett participants and reported within Cost of goods sold in the Consolidated and Combined Statements of Operations. The pension expense specifically identified for the active Garrett participants in the Shared Plans for the years ended December 31, 2018, 2017 and 2016 was $5 million, $7 million and $6 million, respectively.

~~Inventories—Inventoriesare statedat the lower of cost, determinedon a first-in,first-outbasis,includingdirectmaterialcostsand directand indirectmanufacturingcosts,or net realizablevalue. Obsoleteinventoryis identifiedbased on analysisof inventoryfor knownobsolescenceissues.The originalequipmentinventoryon hand in excessof one year’sforecastedusage is fullyreserved.~~

~~Goodwill~~—Goodwill is subject to impairment testing annually as of March 31, and whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. This testing compares carrying value to fair value of our single reporting unit. The Company recognizes an impairment charge for the amount by which the carrying value of the reporting unit exceeds the reporting unit´s fair value. However, any impairment should not exceed the amount of goodwill allocated to the reporting unit. We completed our annual goodwill impairment test as of March 31, 2018, as well as an interim impairment test immediately following the Spin-Off and determined that there was no impairment as of these dates.

Income Taxes—We account for income taxes pursuant to the asset and liability method which requires us to recognize current tax liabilities or receivables for the amount of taxes we estimate are payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts and their respective tax bases of assets and liabilities and the expected benefits of net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible.

Our pre-Spin-Off activity in the U.S. will be reported in Honeywell’s U.S. consolidated income tax return and certain foreign activity will be reported in Honeywell tax paying entities in those jurisdictions. For periods prior to the Spin-Off, the income tax provision included in the Consolidated and Combined Financial Statements related to domestic and certain foreign operations was calculated on a separate return basis, as if Garrett was a separate taxpayer and the resulting current tax receivable or liability, including any liabilities related to uncertain tax positions, was settled with Honeywell through equity at the time of the Spin-Off. In other foreign taxing jurisdictions, the operations of Garrett were always conducted through discrete legal entities, each of which filed separate tax returns, and all resulting income tax assets and liabilities, including liabilities related to uncertain tax positions, are reflected in the Consolidated ~~and Combined~~ Balance Sheets of Garrett.

See Note ~~21,~~23, Commitmentsand Contingenciesof Notes to Consolidated and Combined FinancialStatementsfor a discussion of environmental,asbestosand otherlitigationmatters.

See Note 23, Summaryof SignificantAccounting Policiesof Notes to the Consolidated and Combined FinancialStatementsfor a discussionof recentaccountingpronouncements.

Item 7A. Quantitative and ~~Qualitative~~Qualitative Disclosures about Market Risks

We are exposed to market risks from changes in currency exchange rates. These exposures may impact future earnings and/or operating cash flows. Our exposure to market risk for changes in foreign currency exchange rates arises from international financing activities between subsidiaries, foreign currency denominated monetary assets and liabilities and transactions arising from international trade.

For the periods prior to the Spin-Off, as part of Honeywell´s centralized treasury function, the primary objective was to preserve the U.S. Dollar value of foreign currency denominated cash flows and earnings. The historical treasury strategies implemented by Honeywell’s centralized treasury function may differ from our future treasury strategies as a standalone company.

We ~~hedge~~historically have hedged currency exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through foreign currency exchange forward contracts (Foreign Currency Exchange Contracts). We ~~hedge~~hedged monetary assets and liabilities denominated in non-functional currencies. Prior to conversion into U.S. dollars, these assets and liabilities are remeasured at spot exchange rates in effect on the balance sheet date. The effects of changes in spot rates are recognized in earnings and included in Non-operating expense (income) ~~expense. Open Foreign Currency Exchange Contracts (excluding~~.

As a result of the ~~cross-currency swap described below) mature~~Chapter 11 Cases, the Company has been limited in its ability to enter into hedging transactions. The Company has obtained Bankruptcy Court authorization for continuing hedging activities in the ~~next four months.~~

~~We will~~ordinary course of business, however, counterparties have either been unwilling to enter into hedging transactions with the Company during the Chapter 11 Cases or have required the Company to fully cash collateralize its obligations under the relevant hedging instrument, which has effectively reduced the Company’s ability to hedge ~~major exposures to~~ foreign currency ~~denominated cash flows over the next 12~~exposures beyond those relating to ~~18 months, on a rolling~~trade payables and layered basis, to smooth the effects of fluctuations in foreign currency exchange rates on earnings. Garrett designates the related hedging instruments as cash flow hedges, except in cases where the hedged item is recognized on our balance sheet. The gain or loss from a derivative financial instrument designated as a cash flow hedge is classified in the same line of the Consolidated and Combined Statements of Operations as the offsetting loss or gain on the hedged item.

On September 27, 2018, the Company entered into a floating-floating cross-currency swap contract to hedge the foreign currency exposure from foreign currency-denominated debt which will mature on September 27, 2025. The gain or loss on this derivative instrument is recognized in earnings and included in Non-operating (income) expense. For the year ended December 31, 2018, gains recorded in Non-operating (income) expense, under the cross-currency swap contract were $16 million.

At December 31, 2018 and 2017, we had contracts with notional amounts of $838 million and $928 million, respectively, to exchange foreign currencies, principally the U.S. Dollar, Euro, Chinese Yuan, Japanese Yen, Mexican Peso, New Romanian Leu, Australian Dollar and Korean Won.

receivables. As of December 31, ~~2018 and 2017,~~2020, the net fair value of all financial instruments with exposure to currency risk was ~~approximately~~ a ~~$19~~$0 million ~~asset and a $37 million liability, respectively.~~asset. The potential loss or gain in fair value for such financial instruments from a hypothetical 10% adverse or favorable change in quoted currency exchange rates would be ~~approximately $(38)~~$(2) million and ~~$74~~$2 million, respectively, at December 31, ~~2018 and $(121) million and $65 million at December 31, 2017.~~2020 exchange rates. The model assumes a parallel shift in currency exchange rates; however, currency exchange rates rarely move in the same direction. The assumption that currency exchange rates change in a parallel fashion may overstate the impact of changing currency exchange rates on assets and liabilities denominated in currencies other than the U.S. dollar.

Our exposure to risk based on changes in interest rates relates primarily to our Prepetition Credit Agreement and DIP Credit Agreement. ~~We have not used derivative financial instruments in our investment portfolio.~~ The Prepetition Credit Agreement ~~bears~~and DIP Credit Agreement bear interest at floating rates. For variable rate debt, interest rate changes generally do not affect the fair market value of such debt assuming all other factors remain constant but do impact future earnings and cash flows. Accordingly, we may be exposed to interest rate risk on borrowings under the Credit Agreement and DIP Credit Agreement. ~~Had~~For our outstanding borrowings under the Prepetition Credit Agreement and DIP Credit Agreement as of December 31, ~~2018 been outstanding for the full year ended December 31, 2018,~~2020, a 2550 basis point increase (decrease) in interest rates would have increased (decreased) our interest expense by $3 million and $1$3 million, respectively, compared to the amount of interest that would have been incurred in such period based on the rates of interest in effect at December 31, ~~2018.~~2020. For additional information regarding our Prepetition Credit Agreement and DIP Credit Agreement, see Note 1416, Long-term Debt and Credit Agreements of the notes to the Consolidated and Combined Financial Statements.

While we are exposed to commodity price risk, we pass through abnormal changes in component and raw material costs to our customers based on the contractual terms of our arrangements. In limited situations, we may not be fully compensated for such changes in costs.

We have audited the ~~accompanying consolidated balance sheet~~internal control over financial of Garrett Motion Inc. and subsidiaries in reorganization under Chapter 11 of the Federal Bankruptcy Code since September 20, 2020 — see Note 2 (the "Company") as of December 31, ~~2018,~~2020, based on criteria established in Internal Control—Integrated Framework (2013) issued by the ~~related~~Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated and combined ~~statement~~financial statements as of ~~operations, comprehensive income, equity (deficit),~~ and ~~cash flows,~~ for the year ended December 31, ~~2018, and the related notes (collectively referred to as the "financial statements").In our opinion, the financial statements present fairly, in all material respects, the financial position~~2020, of the Company and our report dated February 16, 2021, expressed an unqualified opinion on those consolidated and combined financial statements and included explanatory paragraphs regarding changes in accounting principle and certain conditions that give rise to substantial doubt about the Company’s ability to continue as a going concern; and emphasis of ~~December 31, 2018,~~matter paragraphs concerning the bankruptcy proceedings and ~~the results of its operations and its cash flows for the year ended December 31, 2018, in conformity with the accounting principles generally accepted in the United States of America.~~expense allocations.

The Company’s management is responsible for maintaining effective internal control over financial ~~statements are the responsibility~~reporting and for its assessment of the ~~Company's management.~~effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the ~~Company's~~Company’s internal control over financial ~~statements~~reporting based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether ~~the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its~~effective internal control over financial ~~reporting. As part of our audits, we are required to obtain~~reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, ~~but not for~~assessing the ~~purpose~~risk that a material weakness exists, testing and evaluating the design and operating effectiveness of ~~expressing an opinion~~internal control based on the ~~effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.~~

~~Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,~~assessed risk, and performing such other procedures ~~that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures~~as we considered necessary in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls

may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We have audited the accompanying consolidated balance sheet of Garrett Motion Inc. and subsidiaries in reorganization under chapter 11 of the Federal Bankruptcy Code since September 20, 2020 — see Note 1 (the "Company") as of December 31, 2020 and 2019, the related consolidated and combined statement of operations, comprehensive income, equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with the accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2021 expressed an unqualified opinion on the Company's internal control over financial reporting.

As discussed in Note 3 to the financial statements, effective January 1, 2019, the Company adopted FASB ASC Topic 842, Leases, using the modified retrospective approach.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, as a result of the Company’s financial condition, uncertainty related to the impacts of COVID-19, and the risks and uncertainties surrounding the Chapter 11 Cases filed by the Company, there is substantial doubt about its ability to continue as a going concern. Management’s evaluation of the events and conditions and their plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 1 to the financial statements, on September 20, 2020, the Company has voluntarily filed for reorganization under chapter 11 of the U.S. Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The accompanying financial statements do not purport to reflect or provide for the consequences of the bankruptcy proceedings. In particular, such financial statements do not purport to show (1) as to assets, their realizable value on a liquidation basis or their availability to satisfy liabilities; (2) as to pre-petition liabilities, the settlement amounts for allowed claims, or the status and priority thereof; (3) as to stockholder accounts, the effect of any changes that may be made in the capitalization of the Company; or (4) as to operations, the effect of any changes that may be made in its business.

As discussed in Note 1 to the financial statements, on October 1, 2018, the Company became an independent publicly-traded company through a pro rata distribution by Honeywell International Inc. (“Honeywell”) of 100% of the ~~then-outstanding~~then outstanding shares of the Company to Honeywell’s stockholders. For the period from January 1, 2018 to October 1, 2018, the financial statements include expense allocations for certain corporate functions historically provided by ~~Honeywell International Inc.~~Honeywell. These allocations may not be reflective of the actual expense that would have been incurred had the Company operated as a separate entity apart from ~~Honeywell International Inc.~~Honeywell. A summary of transactions with related parties is included in Note 327 to the financial statements.

We have audited the accompanying combined balance sheet of Garrett Motion Inc. (formerly the Transportation Systems Business of Honeywell International, Inc.) and subsidiaries (the “Company”) as of December 31, 2017, and the related combined statements of operations, comprehensive income, equity (deficit), and cash flows for each of the two years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of the ~~Company’s~~Company's management. Our responsibility is to express an opinion on the ~~Company’s~~Company's financial statements based on our audits. We are a public accounting firm registered with the ~~Public Company Accounting Oversight Board (United States) (PCAOB)~~PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures ~~that~~to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

The critical audit matter communicated below is a matter arising from the current-period audit of ~~a Matter~~

~~As discussed in Note 1~~the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the ~~accompanying~~ financial statements, have been derived from the separate records maintained by Honeywell International Inc. The financial statements also include expense allocations for certain corporate functions historically provided by Honeywell International Inc. These allocations may not be reflective of the actual expense that would have been incurred had the Company operatedtaken as a whole, and we are not, by communicating the critical audit matter below, providing a separate ~~entity apart from Honeywell International Inc. A summary of transactions with related parties is included in~~opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Obligations Payable to Honeywell– Refer to Note 323 to the financial statements

As more fully described in Note 23 of the financial statements, the Company recorded a liability for obligations payable to Honeywell as of December 31, 2020, as a result of certain agreements entered into in connection with the spin-off from Honeywell on October 1, 2018. These agreements prescribe payments due to Honeywell for the indemnification of certain asbestos claims and pre-spin-off tax matters. Subsequent to separation from Honeywell, the Company has challenged the enforceability of such agreements and filed a motion with the Bankruptcy Court to hear arguments related to these obligations. The Bankruptcy Court was scheduled to hold an estimation proceeding to evaluate all of Honeywell’s claims against the Company. This proceeding has been stayed pending the Bankruptcy Court’s consideration of the plan of reorganization. While under chapter 11 protection, the Company is required to record obligations payable to Honeywell at the Company’s expected amount of the allowed claim as determined by the Bankruptcy Court. The carrying value of the obligations payable to Honeywell as of December 31, 2020 is $1,482 million. The actual amount to be paid is subject to the Bankruptcy Court’s approval.

We have identified the Company’s measurement of the obligations payable to Honeywell as a critical audit matter. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s judgments around the expected amount of the allowed claim due to Honeywell.

The primary procedures we performed to address this critical audit matter included the following:

May 1, 2018 (June 8, 2018 as to the effect of adoption of ASU 2017-07; August 7, 2018 as to the effects of the restatement to the 2017 financial statements; March 1, 2019 as to the effects of the change in sales concentration presentation in Note 24)February 16, 2021

We ~~began serving~~have served as the Company’s auditor insince 2018. ~~In 2018 we became the predecessor auditor.~~

	Years Ended December 31,									Years Ended December 31,
	2018			2017			2016			2020			2019		2018
	(Dollars in millions except per share amounts)									(Dollars in millions except per share amounts)
Net sales (Note 4)	$	3,375		$	3,096		$	2,997		$	3,034		$	3,248	$	3,375
Cost of goods sold		2,599			2,361			2,365			2,478			2,537		2,599
Gross profit		776			735			632			556			711		776
Selling, general and administrative expenses		249			249			197			277			249		249
Other expense, net (Note 5)		120			130			183			46			40		120
Interest expense		19			8			7
Interest expense (excludes contractual interest for the twelve months ended December 31, 2020 of $14 million) (Note 2)											79			68		19
Non-operating (income) expense (Note 6)		(8	)		(18	)		(5	)		(38	)		8		(8	)
Reorganization items, net											73			—		—
Income before taxes		396			366			250			119			346		396
Tax (benefit) expense (Note 7)		(784	)		1,349			51
Net income (loss)	$	1,180		$	(983	)	$	199
Tax expense (benefit) (Note 7)											39			33		(810	)
Net income										$	80		$	313	$	1,206

Earnings (losses) per common share
Basic	$	15.93		$	(13.27	)	$	2.69		$	1.06		$	4.20	$	16.28
Diluted	$	15.86		$	(13.27	)	$	2.69		$	1.05		$	4.12	$	16.21

Weighted average common shares outstanding
Basic		74,059,240			74,070,852			74,070,852			75,543,461			74,602,868		74,059,240
Diluted		74,402,148			74,070,852			74,070,852			76,100,509			75,934,373		74,402,148

The Notes to Consolidated and Combined FinancialStatementsare an integral partof thisstatement.

The Notes to Consolidated and Combined FinancialStatementsare an integralpartof thisstatement.

December 31,

2018

2017

(Dollars in millions)

ASSETS

Current assets:

Cash and cash equivalents

$
196

$
300

Accounts, notes and other receivables—net (Note 8)

750

745

Inventories—net (Note 9)

172

188

Due from related parties, current (Note 3)

—

530

Other current assets (Note 10)

71

321

Total current assets

1,189

2,084

Due from related parties, non-current (Note 3)

—

23

Investments and long-term receivables

39

38

Property, plant and equipment—net (Note 11)

438

442

Goodwill (Note 12)

193

193

Insurance recoveries for asbestos-related liabilities (Note 21)

—

174

Deferred income taxes (Note 7)

165

41

Other assets

80

2

Total assets

$
2,104

$
2,997

LIABILITIES

Current liabilities:

Accounts payable

$
916

$
860

Due to related parties, current (Note 3)

—

1,117

Current maturities of long-term debt (Note 14)

23

—

Obligations payable to Honeywell, current (Note 21)

127

—

Accrued liabilities (Note 13)

426

571

Total current liabilities

1,492

2,548

Long-term debt (Note 14)

1,569

—

Deferred income taxes (Note 7)

27

956

Obligations payable to Honeywell (Note 21)

1,399

—

Asbestos-related liabilities (Note 21)

1

1,527

Other liabilities (Note 17)

209

161

Total liabilities

$
4,697

$
5,192

COMMITMENTS AND CONTINGENCIES (Note 21)

EQUITY (DEFICIT)

Common stock, par value $0.001; 400,000,000 shares authorized, 74,070,852
issued and 74,019,825 outstanding

—

—

Additional paid-in capital

5

—

Retained earnings

(2,671
)

—

Invested equity (deficit)

—

(2,433
)
Accumulated other comprehensive income (Note 18)

73

238

Total stockholders' deficit

(2,593
)

(2,195
)
Total liabilities and stockholders' deficit

$
2,104

$
2,997

	December 31,
	2020			2019
	(Dollars in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	592		$	187
Restricted cash (Note 3)		101			—
Accounts, notes and other receivables, net (Note 8)		841			707
Inventories, net (Note 10)		235			220
Other current assets (Note 11)		110			85
Total current assets		1,879			1,199
Investments and long-term receivables		30			36
Property, plant and equipment, net (Note 13)		505			471
Goodwill (Note 14)		193			193
Deferred income taxes (Note 7)		275			268
Other assets (Note 12)		135			108
Total assets	$	3,017		$	2,275
LIABILITIES
Current liabilities:
Accounts payable	$	1,019		$	1,009
Borrowings under revolving credit facility (Note 16)		370			—
Current maturities of long-term debt (Note 16)		—			4
Debtor-in-possession Term Loan (Note 16)		200			—
Obligations payable to Honeywell, current (Note 23)		—			69
Accrued liabilities (Note 15)		248			310
Total current liabilities		1,837			1,392
Long-term debt (Note 16)		1,082			1,409
Deferred income taxes (Note 7)		2			51
Obligations payable to Honeywell (Note 23)		—			1,282
Other liabilities (Note 19)		114			274
Total liabilities not subject to compromise		3,035			4,408
Liabilities subject to compromise (Note 2)		2,290			—
Total liabilities	$	5,325		$	4,408
COMMITMENTS AND CONTINGENCIES (Note 23)
EQUITY (DEFICIT)
Common stock, par value $0.001; 400,000,000 shares authorized, 76,229,578 and 74,911,139 issued and 75,813,634 and 74,826,329 outstanding as of December 31, 2020 and December 31, 2019 respectively		—			—
Additional paid-in capital		28			19
Retained earnings		(2,207	)		(2,282	)
Accumulated other comprehensive loss (income) (Note 20)		(129	)		130
Total equity (deficit)		(2,308	)		(2,133	)
Total liabilities and equity (deficit)	$	3,017		$	2,275

The Notes to Consolidated and Combined FinancialStatementsare an integralpartof thisstatement.

Years Ended December 31,

2018

2017

2016

(Dollars in millions)

Cash flows from operating activities:

Net (loss) income

1,180

(983
)

199

Adjustments to reconcile net (loss) income to net cash provided by
operating activities:

Deferred income taxes

(905
)

973

(39
)
Depreciation and amortization

72

64

59

Foreign exchange (gain) loss

15

(24
)

(15
)
Stock compensation expense

21

15

12

Pension expense

10

9

13

Other

39

(2
)

(24
)
Changes in assets and liabilities:

Accounts, notes and other receivables

(30
)

(42
)

(90
)
Receivables from related parties

57

—

3

Inventories

2

(46
)

2

Other assets

(46
)

1

6

Accounts payable

63

88

82

Payables to related parties

(50
)

32

(5
)
Accrued liabilities

49

41

43

Obligations payable to Honeywell

(76
)

—

—

Asbestos-related liabilities

(1
)

(69
)

16

Other liabilities

(27
)

14

43

Net cash provided by operating activities

373

71

305

Cash flows from investing activities:

Expenditures for property, plant and equipment

(95
)

(103
)

(84
)
Issuance of related party notes receivables

—

—

(63
)
Proceeds from related party notes receivables

—

66

72

Increase in marketable securities

(21
)

(651
)

(659
)
Decrease in marketable securities

312

712

575

Other

(4
)

6

(23
)
Net cash provided by (used for) investing activities

192

30

(182
)
Cash flows from financing activities:

Net increase in Invested deficit

(1,493
)

(19
)

(95
)
Proceeds from revolving credit facility

331

—

—

Payments of revolving credit facility

(331
)

—

—

Proceeds from issuance of long-term debt

1,631

—

—

Payments of long-term debt

(6
)

—

—

Proceeds for related party notes payable

—

671

656

Payments related to related party notes payable

(493
)

(670
)

(655
)
Net change to cash pooling and short-term notes

(300
)

78

(55
)
Other

3

—

—

Net cash provided by (used for) financing activities

(658
)

60

(149
)
Effect of foreign exchange rate changes on cash and cash equivalents

(11
)

20

(1
)
Net increase (decrease) in cash and cash equivalents

(104
)

181

(27
)
Cash and cash equivalents at beginning of period

300

119

146

Cash and cash equivalents at end of period

$
196

$
300

$
119

Supplemental cash flow disclosures:

Income taxes paid (net of refunds)

$
76

$
430

$
73

Interest expense paid

$
12

$
5

$
5

Supplemental schedule of non-cash investing and financing activities:

Expenditures for property, plant and equipment in accounts payable

$
43

$
42

$
35

~~The Notes to Consolidated and Combined Financial Statements are an integral part of this statement.~~

Accumulated

Additional

Other

Common Stock

Paid-in

Retained

Invested

Comprehensive

Total

Shares

Amount

Capital

Earnings

Deficit

Income/(Loss)

Deficit

(in millions)

Balance at December 31, 2015

—

$
—

$
—

$
—

$
(1,552
)

$
193

$
(1,359
)
Net (loss) income

—

—

—

—

199

—

199

Other comprehensive income, net of tax

—

—

—

—

—

50

50

Change in Invested deficit

—

—

—

—

(111
)

—

(111
)
Balance at December 31, 2016

—

—

—

—

(1,464
)

243

(1,221
)
Net (loss) income

—

—

—

—

(983
)

—

(983
)
Other comprehensive income, net of tax

—

—

—

—

—

(5
)

(5
)
Change in Invested deficit

—

—

—

—

14

—

14

Balance at December 31, 2017

—

—

—

—

(2,433
)

238

(2,195
)
Net (loss) income through September 30,
2018

—

—

—

—

1,137

—

1,137

Net (loss) income from October 1, 2018

—

—

—

43

—

—

43

Other comprehensive income, net of tax

—

—

—

—

—

(165
)

(165
)
Change in Invested deficit

—

—

—

—

(1,168
)

—

(1,168
)
Spin-Off related adjustments

—

—

—

—

(250
)

—

(250
)
Issuance of common stock and
reclassification of invested deficit

74

—

—

(2,714
)

2,714

—

—

Stock-based compensation

—

—

5

—

—

—

5

Balance at December 31, 2018

74

$
—

$
5

$
(2,671
)

$
—

$
73

$
(2,593
)

	Years Ended December 31,
	2020			2019			2018
	(Dollars in millions)
Cash flows from operating activities:
Net income		80			313			1,206
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes		(34	)		(41	)		(931	)
Reorganization items, net		60			—			—
Depreciation		86			73			72
Amortization of deferred issuance costs		7			9			2
Foreign exchange (gain) loss		(58	)		19			15
Stock compensation expense		10			18			21
Pension expense		15			18			10
Other		44			19			37
Changes in assets and liabilities:
Accounts, notes and other receivables		(162	)		32			(30	)
Receivables from related parties		—			—			57
Inventories		(14	)		(60	)		2
Other assets		(45	)		(22	)		(46	)
Accounts payable		41			87			63
Payables to related parties		—			—			(50	)
Accrued liabilities		(13	)		(60	)		49
Obligations payable to Honeywell		6			(143	)		(76	)
Asbestos-related liabilities		—			—			(1	)
Other liabilities		2			(20	)		(27	)
Net cash provided by operating activities		25			242			373
Cash flows from investing activities:
Expenditures for property, plant and equipment		(80	)		(102	)		(95	)
Increase in marketable securities		—			—			(21	)
Decrease in marketable securities		—			—			312
Other		—			16			(4	)
Net cash (used for) provided by investing activities		(80	)		(86	)		192
Cash flows from financing activities:
Net increase in Invested deficit		—			—			(1,493	)
Proceeds from debtor-in-possession financing		200			—			—
Proceeds from revolving credit facilities		1,449			745			331
Payments of revolving credit facilities		(1,100	)		(745	)		(331	)
Proceeds from issuance of long-term debt		—			—			1,631
Payments of long-term debt		(2	)		(163	)		(6	)
Debtor-in-possession financing fees		(13	)		—			—
Payments related to related party notes payable		—			—			(493	)
Net change to cash pooling and short-term notes		—			—			(300	)
Other		(4	)		—			3
Net cash provided by (used for) financing activities		530			(163	)		(658	)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		31			(2	)		(11	)
Net increase/ (decrease) in cash, cash equivalents and restricted cash		506			(9	)		(104	)
Cash and cash equivalents at beginning of period		187			196			300
Cash, cash equivalents and restricted cash at end of period	$	693		$	187		$	196
Supplemental cash flow disclosures:
Income taxes paid (net of refunds)	$	44		$	93		$	76
Interest expense paid	$	63		$	54		$	12
Reorganization items paid	$	14			—			—
Supplemental schedule of non-cash investing and financing activities:
Expenditures for property, plant and equipment in accounts payable	$	47		$	51		$	43

The Notes to Consolidated and Combined FinancialStatementsare an integralpartof thisstatement.

					Additional									Other
	Common Stock				Paid-in			Retained			Invested			Comprehensive			Total
	Shares		Amount		Capital			Earnings			Deficit			Income/(Loss)			Deficit
	(in millions)
Balance at December 31, 2017		—		—		—			—			(2,433	)		238			(2,195	)
Net income through September 30, 2018		—		—		—			—			1,137			—			1,137
Net income from October 1, 2018		—		—		—			69			—			—			69
Other comprehensive income, net of tax		—		—		—			—			—			(165	)		(165	)
Change in Invested deficit		—		—		—			—			(1,168	)		—			(1,168	)
Spin-Off related adjustments		—		—		—			—			(200	)		—			(200	)
Issuance of common stock and reclassification of invested deficit		74		—		—			(2,664	)		2,664			—			—
Stock-based compensation		—		—		5			—			—			—			5
Balance at December 31, 2018		74		—		5			(2,595	)		—			73			(2,517	)
Net income		—		—		—			313			—			—			313
Other comprehensive income, net of tax		—		—		—			—			—			57			57
Stock-based compensation		1		—		18			—			—			—			18
Tax withholding related to vesting of restricted stock units and other		—		—		(4	)		—			—			—			(4	)
Balance at December 31, 2019		75		—		19			(2,282	)		—			130			(2,133	)
Net income		—		—		—			80			—			—			80
Other comprehensive income, net of tax		—		—		—			—			—			(259	)		(259	)
Stock-based compensation		1		—		10			—			—			—			10
Tax withholding related to vesting of restricted stock units and other		—		—		(1	)		—			—			—			(1	)
Adoption impact of ASU 2016-13, Financial Instruments - Credit Losses		—		—		—			(5	)		—			—			(5	)
Balance at December 31, 2020		76		—		28			(2,207	)		—			(129	)		(2,308	)

The Notes to Consolidated and Combined FinancialStatementsare an integralpartof thisstatement.

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 ~~aftermarket.~~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 gasand ~~diesel propulsion systems and hybrid~~electric (hybrid and fuel ~~cell~~cell) powertrains. These products are key enablers for fuel economy and emission standards compliance.

On October 1, 2018, the Company became an independent publicly-traded company through a pro rata distribution by Honeywell International Inc. (“Former Parent” or “Honeywell”) of 100% of the then-outstanding shares of Garrett to Honeywell’s stockholders (the “Spin-Off”). Each Honeywell stockholder of record received one share of Garrett common stock for every 10 shares of Honeywell common stock held on the record date. Approximately 74 million shares of Garrett common stock were distributed on October 1, 2018 to Honeywell stockholders. In connection with the Spin-Off, Garrett´s common stock began trading “regular-way” under the ticker symbol “GTX” on the New York Stock Exchange on October 1, 2018.

In 2020, the COVID-19 virus was declared a pandemic and spread across the world, including throughout Asia, the United States and Europe. Our business operations have been materially disrupted and our revenues have decreased significantly as a result of the COVID-19 pandemic and related response measures, and we expect our financial performance in future fiscal quarters, to be materially negatively affected by the pandemic and its impact on the global automotive industry.

On June 12, 2020, the Company entered into an amendment (the “2020 Amendment”) to its Credit Agreement, dated as of September 27, 2018 (as amended, the “Prepetition Credit Agreement”) by and among the Company, Garrett LX I S.à r.l., Garrett LX II S.à r.l., Garrett LX III S.à r.l., Garrett Borrowing LLC, and Garrett Motion Sàrl (f/k/a Honeywell Technologies Sàrl), the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent, consisting of:

The ~~Spin-Off~~primary purpose for entering into the 2020 Amendment was ~~completed pursuant~~ to obtain covenant relief with respect to the total leverage ratio and interest coverage ratios under the Prepetition Credit Agreement as a ~~Separation~~result of the impact of the COVID-19 pandemic and ~~Distribution~~the Company’s leveraged capital structure.

The 2020 Amendment qualified as a debt modification that did not result in an extinguishment or have a material impact on our Consolidated Financial Statements.

The commencement of the Chapter 11 Cases (as defined below) constituted an event of default that accelerated the Company’s obligations, as applicable, under the Prepetition Credit Agreement. The Prepetition Credit Agreement provides that as a result of the commencement of the Chapter 11 Cases, the principal, interest and all other ~~agreements~~amounts due thereunder shall be immediately due and payable. Any efforts to enforce the payment obligations under the Prepetition Credit Agreement are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Prepetition Credit Agreement are subject to the applicable provisions of the Bankruptcy Code.

On September 20, 2020 (the “Petition Date”), the Company and certain of its subsidiaries (collectively, the “Debtors”) each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Debtors’ chapter 11 cases (the “Chapter 11 Cases”) are being jointly administered under the caption “In re: Garrett Motion Inc., 20-12212.” On September 22 and 24, 2020, the Bankruptcy Court entered orders granting interim approval of certain forms of relief requested by the Debtors, enabling the Debtors to conduct their business activities in the ordinary course, subject to the terms and conditions of such orders, including authorizing the Debtors to pay employee wages and benefits, to pay certain taxes and certain governmental fees and charges, to continue to operate the Debtors’ cash management system in the ordinary course, to maintain certain customer programs, and to pay the prepetition claims of certain of the Debtors’ vendors. On October 20 and 21, 2020, the Bankruptcy Court entered orders granting such relief on a final basis. For goods and services provided following the Petition Date, the Debtors continue to pay vendors under normal terms.

The Consolidated Financial Statements included herein have been prepared in accordance with ~~Honeywell~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 852, Reorganizations. See Note 2, Reorganization and Chapter 11 Proceedings, for further details.

On September 20, 2020, the Company was notified by the New York Stock Exchange (the “NYSE”) that, as a result of the Chapter 11 Cases, and in accordance with Section 802.01D of the NYSE Listed Company Manual, that the NYSE had commenced proceedings to delist the Company’s common stock from the NYSE. The NYSE indefinitely suspended trading of the Company’s common stock on September 21, 2020. The Company determined not to appeal the NYSE’s determination. On October 8, 2020, the NYSE filed a Form 25-NSE with the Securities and Exchange Commission, which removed the Company’s common stock from listing and registration on the NYSE effective as of the opening of business on October 19, 2020. Trading of the Company’s common stock now occurs on the OTC Pink Market under the symbol “GTXMQ.” Any over-the-counter market quotations of the Company’s common stock reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

The accompanying Consolidated and Combined Financial Statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. Liabilities subject to compromise will be resolved in connection with the Chapter 11 Cases. The Company’s ability to continue as a going concern is contingent upon the Company’s ability to successfully implement a plan of reorganization in the Chapter 11 Cases, among other factors. As a result of the Chapter 11 Cases, the realization of assets and the satisfaction of liabilities are subject to uncertainty. While operating as debtors-in-possession under the Bankruptcy Code, the Company may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business, for amounts other than those reflected in the accompanying Consolidated and Combined Financial Statements. Further, any plan of reorganization in the Chapter 11 Cases could materially change the amounts and classifications of assets and liabilities reported in the Consolidated and Combined Financial Statements. The accompanying Consolidated and Combined Financial Statements do not include any adjustments related to the ~~Spin-Off, including but not limited~~recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to ~~an indemnification and reimbursement agreement (the “Indemnification and Reimbursement Agreement”) and~~continue as a ~~tax matters agreement (the “Tax Matters Agreement”). Refer to Note 21 Commitments and Contingencies for additional details~~going concern or as a consequence of the Chapter 11 Cases. As a result of our financial condition, uncertainty related to the ~~Indemnification~~impacts of COVID-19, and ~~Reimbursement Agreement~~the risks and ~~Tax Matters Agreement.~~uncertainties surrounding the Chapter 11 Cases, substantial doubt exists that we will be able to continue as a going concern.

Unless the context otherwise requires, references to “Garrett,” “we,” “us,” “our,” and “the Company” refer to (i) Honeywell’s Transportation Systems Business (the “Transportation Systems Business” or the “Business”) prior to the Spin-Off and (ii) Garrett Motion Inc. and its subsidiaries following the Spin-Off, as applicable.

Prior to the Spin-Off on October 1, 2018, our historical financial statements were prepared on a stand-alone combined basis and were derived from the consolidated financial statements and accounting records of Honeywell. Accordingly, for periods prior to October 1, 2018, our financial statements are presented on a combined basis and for the periods subsequent to October 1, 2018 are presented on a consolidated basis (collectively, the historical financial statements for all periods presented are referred to as “Consolidated and Combined Financial Statements”). The Consolidated and Combined Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All amounts presented are in millions, except per share amounts.

Asbestos-related expenses, net of probable insurance recoveries, are presented within Other expense, net in the Consolidated and Combined Statement of Operations. Honeywell is subject to certain asbestos-related and environmental-related liabilities, primarily related to its legacy Bendix business. In conjunction with the Spin-Off, certain operations that were part of the Bendix business, along with the ownership of the Bendix trademark, as well as certain operations that were part of other legacy elements of the Business, were transferred to us. For the periods prior to the Spin-Off, these Consolidated and Combined Financial Statements reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities primarily related to the Bendix legacy Honeywell business, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. However, this recognition model differs from the recognition model applied subsequent to the Spin-Off, with the difference recognized through equity as of the Spin-Off date. In periods subsequent to the Spin-Off, theThe accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of the ~~Indemnification~~indemnification and ~~Reimbursement Agreement~~reimbursement agreement with Honeywell entered into on September 12, 2018 (the “Honeywell Indemnity Agreement”), under which ~~we are~~Garrett ASASCO is required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such

liabilities. The ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. We have accounted for the Honeywell liability consistent with the agreement up to the Petition Date and classified it as part of Liabilities Subject to Compromise.

~~We evaluated segment reporting in accordance with Accounting Standards Codification~~ ~~(“ASC”)~~ ~~280–Segment Reporting. We concluded that Garrett operates in a single operating segment~~Under the terms of the PSA and ~~a single reportable segment based on~~ the ~~operating results available and evaluated regularly~~Transaction, the Plan, if confirmed by the ~~chief operating decision maker~~ Bankruptcy Court, will include a global settlement with Honeywell providing for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Honeywell Indemnity Agreement, that certain Indemnification Guarantee Agreement, dated as of September 27, 2018 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time), by and among Honeywell ASASCO 2 Inc. as payee, Garrett ASASCO as payor, and certain subsidiary guarantors as defined therein (the “Guarantee Agreement,” and together with the Honeywell Indemnity Agreement, the “Indemnity Agreements”) and the Tax Matters Agreement and (b) the dismissal with prejudice of the Honeywell Litigation in exchange for (x) a $375 million cash payment at emergence from the Chapter 11 Cases (“~~CODM”~~Emergence”) and (y) the new Series B Preferred Stock issued by the Company payable in installments of $35 million in 2022, and $100 million annually 2023-2030 (the “Series B Preferred Stock”). The Company will have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to $584 million as of Emergence (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make ~~decisions about resource allocation and performance assessment. The CODM makes operational performance assessments and resource allocation decisions on~~ a ~~consolidated basis, inclusive of all~~partial payment of the ~~Business’s products.~~

~~All intracompany transactions have been eliminated. As described in Note 3 Related Party Transactions with~~Series B Preferred Stock, reducing the present value to $400 million, at any time within 18 months of Emergence. In every case the duration of future liabilities to Honeywell ~~all significant transactions between the Business and Honeywell~~will be reduced from 30 years prior to the ~~Spin-Off have been included in~~Chapter 11 filing to a maximum of nine years.

The Debtors’ entry into and performance under the PSA and the terms of the PSA, the Transaction and the Plan remain subject to approval by the Bankruptcy Court. There can be no assurances that the Debtors will obtain the approval of the Bankruptcy Court and complete the Transaction.

For additional information, see Note 23, Commitments and Contingencies, of the Notes to the Consolidated and Combined Financial ~~Statements~~ Statements.

We evaluatedsegmentreportingin accordancewith Accounting StandardsCodification(“ASC”)280, SegmentReporting.We concludedthatGarrettoperatesin a singleoperatingsegmentand ~~settled~~a singlereportable segmentbased on the operatingresultsavailableand evaluatedregularlyby the chiefoperatingdecisionmaker (“CODM”) to make decisionsabout resourceallocationand performanceassessment.The CODMmakesoperationalperformanceassessmentsand resourceallocationdecisionson a consolidatedbasis,inclusiveof allof the Business’sproducts.

The preparation of the financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these estimates on assumptions that it believes to be reasonable under the circumstances, including considerations for ~~cash prior~~the impact from the outbreak of the COVID-19 pandemic on the Company's business due to various global macroeconomic, operational and supply chain risks as a result of COVID-19. Actual results could differ from the original estimates, requiring adjustments to these balances in future periods. Furthermore, while operating as “debtors-in-possession” under Chapter 11, the Debtors may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the ~~Spin-Off with~~approval of the ~~exception~~Bankruptcy Court or as otherwise permitted in the ordinary course of ~~certain related party notes which were forgiven. These transactions which were settled~~business and subject to restrictions of the debtor in possession (“DIP”) financing, for ~~cash prior to the Spin-Off are~~amounts other than those reflected in the Consolidated and Combined Balance Sheets as Due from related parties or Due to related parties for the periods prior to the Spin-Off. In the Consolidated and Combined Statements of Cash Flows, the cash flows related to related party notes receivables presented in the Consolidated and Combined Balance Sheets in Due from related parties are reflected as investing activities since these balances represent amounts loaned to Former Parent. The cash flows related to related party notes payables presented in the Consolidated and Combined Balance Sheets in Due to related parties are reflected as financing activities since these balances represent amounts financed by Former Parent. Following the Spin-Off, Honeywell is no longer considered a related party.

Honeywell used a centralized approach to cash management and financing of its operations. For the periods prior to the Spin-Off, the majority of the Business’s cash was transferred to Honeywell daily and Honeywell funded its operating and investing activities as needed. This arrangement is not reflective of the manner in which the Business would have been able to finance its operations had it been a stand-alone business separate from Honeywell during the periods presented prior to the Spin-Off. Cash transfers to and from Honeywell’s cash management accounts are reflected in the Consolidated and Combined Balance Sheet as Due to and Due from related parties, current and in the Consolidated and Combined Statements of Cash Flows as net financing activities.

~~For the periods prior to the Spin-Off, the~~accompanying unaudited Consolidated and Combined Financial ~~Statements include certain~~Statements. Any such actions occurring during the Chapter 11 Cases,

including through a plan of reorganization confirmed by the Bankruptcy Court could materially impact the amounts and classifications of assets and liabilities ~~that have historically been held at~~reported in the Honeywell corporate level but are specifically identifiable or otherwise attributable to Garrett. The cash and cash equivalents held by Honeywell at the corporate level are not specifically identifiable to Garrett and therefore were not attributed for any of the periods presented. Honeywell third-party debt and the related interest expense have not been allocated for any of the periods presented as Honeywell’s borrowings were not directly attributable to Garrett.

For the periods prior to the Spin-Off, Honeywell provided certain services, such as legal, accounting, information technology, human resources and other infrastructure support, on behalf of the Business. The cost of these services has been allocated to the Business on the basis of the proportion of revenues. We consider these allocations to be a reasonable reflection of the benefits received by the Business. However, the financial information presented in theunaudited Consolidated and Combined Financial ~~Statements may not reflect~~Statements.

Due to the ~~consolidated~~Company´s highly leveraged capital structure resulting from the Spin-Off, the Company began a strategic review process assisted by external financial advisers before the COVID-19 pandemic. The pandemic accelerated the review process to include the careful monitoring of liquidity and ~~combined financial position, operating results~~the consideration of potential court-supervised restructuring processes.

The strategic review process lasted months and ~~cash flows~~considered a wide variety of options, including strategic mergers and stand-alone recapitalizations, both out-of-court and with the assistance of Chapter 11. The result of the ~~Business had~~Company’s strategic review process was the ~~Business~~decision to commence a pre-filing marketing process for a cash sale of the business in chapter 11, with the proceeds of the sale and any litigation recoveries related to the spin-off to be distributed to stakeholders. After the bidding process, the Company selected a winning bid of $2.1 billion from AMP Intermediate B.V. (the “Stalking Horse Bidder”) and AMP U.S. Holdings, LLC, each affiliate of KPS Capital Partners, LP, (“KPS”).

As described in greater detail below, the Stalking Horse Bidder and certain of the Debtors entered into a share and asset purchase agreement (the “Stalking Horse Purchase Agreement”) on the Petition Date. The Stalking Horse Purchase Agreement constituted a “stalking horse” bid that was subject to higher and better offers by third parties in accordance with the bidding procedures approved by the Bankruptcy Court in an order entered by the Bankruptcy Court after hearings on October 21, 2020 and October 23, 2020 (the “Bidding Procedures Order”). The Bidding Procedures Order permitted third parties to submit competing proposals for the purchase and/or reorganization of the Debtors and approved stalking horse protections for the Stalking Horse Bidder.

Following entry into the Stalking Horse Purchase Agreement, the Chapter 11 Cases were commenced on the Petition Date. The Debtors filed certain motions and applications intended to limit the disruption of the Chapter 11 Cases on their operations. Since the commencement of the Chapter 11 Cases, the Debtors have continued to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

The Bankruptcy Court granted the first day relief the Debtors requested that was designed primarily to mitigate the impact of Chapter 11 Cases on our operations, customers and employees. As a result, we are able to conduct normal business activities and pay all associated obligations for the period following the Petition Date and we are also authorized to pay prepetition employee wages and benefits and certain vendors and suppliers in the ordinary course for goods and services provided prior to the Petition Date. During the pendency of the Chapter 11 Cases, all transactions outside of the ordinary course of business require the prior approval of Bankruptcy Court.

In accordance with the Bidding Procedures Order, the Debtors held an auction (the “Auction”) at which they solicited and received higher and better offers from KPS and from a consortium made up of Owl Creek Asset Management, L.P., Warlander Asset Management, L.P., Jefferies LLC, Bardin Hill Opportunistic Credit Master Fund LP, Marathon Asset Management L.P., and Cetus Capital VI, L.P., or affiliates thereof (collectively, the “OWJ Group”). In addition to the bids received at the Auction from KPS and the OWJ Group, the Debtors also received a transaction proposal in parallel to the Auction from Centerbridge Partners, L.P.(“Centerbridge”), Oaktree Capital Management, L.P.(“Oaktree”), Honeywell International Inc. and certain other investors and parties (collectively, the “CO Group”). The Auction was completed on January 8, 2021, at which point the Debtors filed with the Bankruptcy Court (i) an auction notice noting that a bid received from KPS was the successful bid at the Auction but that the Debtors were still considering the proposal from the CO Group, (ii) a Plan to implement the successful bid of KPS at the Auction and (iii) a related disclosure statement.

On January 11, 2021, the Debtors, having determined that the proposal from the CO Group was a higher and better proposal than the successful bid of KPS at the Auction, entered into a Plan Support Agreement with the CO Group (as amended, restated, supplemented or otherwise modified from time to time, the “PSA”) and announced their intention to pursue a restructuring transaction with the CO Group (the “Transaction”). As a result of the entry into the PSA, (i) the Debtors filed a supplemental auction notice with the Bankruptcy Court on January 11, 2021 describing the Debtors’ determination to proceed with the Transaction, (ii) the Debtors filed a revised Plan and related revised disclosure statement with the Bankruptcy Court on January 22, 2021 to implement the Transaction and (iii) the Stalking Horse Purchase Agreement became terminable, following which, on January 15, 2021, the Stalking Horse Bidder terminated the Stalking Horse Purchase Agreement and the Debtors subsequently paid a termination payment of $63 million and an expense reimbursement payment of $15.7 million to the Stalking Horse Bidder pursuant to the terms of the Stalking Horse Purchase Agreement and the Bidding Procedures Order.

In accordance with the terms of the PSA, on January 22, 2021, the Debtors’ entered into an Equity Backstop Commitment Agreement (the “EBCA”) with certain members of the CO Group (the “Equity Backstop Parties”), pursuant to which, among other things, the Company will conduct the rights offering contemplated by the PSA (the “Rights Offering”) and each Equity Backstop Party committed to (i) exercise its rights, as a stockholder of the Company, to purchase in the Rights Offering shares of the convertible Series A preferred stock of the Company to be offered in the Rights Offering (the “Series A Preferred Stock”) and (ii) purchase, on a pro rata basis (in accordance with percentages set forth in the EBCA), shares of Series A Preferred Stock which were offered but not subscribed for in the Rights Offering.

On February 15, 2021, the Debtors and the CO Group agreed with certain of the Consenting Lenders (as defined below) to amend and restate the PSA, among other things, so as to add certain of the Consenting Lenders as parties thereto supporting the Plan.

On January 24, 2021, representatives of the Equity Committee submitted a restructuring term sheet for a proposed plan of reorganization sponsored by Atlantic Park. The Equity Committee subsequently filed with the Bankruptcy Court on February 5, 2021, a proposed plan of reorganization and related disclosure statement with respect to such transaction (as reflected in the proposed plan of reorganization filed with the Bankruptcy Court, the “Atlantic Park Proposal”). The transactions contemplated under the Atlantic Park Proposal have been proposed as an alternative to the transactions contemplated under the Plan. In connection with the Atlantic Park Proposal, the Equity Committee filed a ~~separate stand-alone entity during~~motion with the Bankruptcy Court seeking to modify the Debtors’ exclusive periods ~~presented. Actual costs~~to file and solicit votes on a Chapter 11 plan. The Equity Committee’s motion is scheduled to be heard by the Bankruptcy Court on February 16, 2021. The Company has significant concerns with the feasibility of the Atlantic Park Proposal and has concluded that at this time the transactions contemplated under the Atlantic Park Proposal are not reasonably likely to lead to a higher and better alternative plan of reorganization as compared to the Plan.

On the Petition Date, certain of the Debtors also entered into the Stalking Horse Purchase Agreement with the Stalking Horse Bidder, pursuant to which the Stalking Horse Bidder agreed to purchase, subject to the terms and conditions contained therein, substantially all of the assets of the Debtors. The Stalking Horse Purchase Agreement constituted a “stalking horse” bid that was subject to higher and better offers by third parties in accordance with the bidding procedures approved by the Bidding Procedures Order. The Bidding Procedures Order permitted third parties to submit competing proposals for the purchase and/or reorganization of the Debtors and approved stalking horse protections for the Stalking Horse Bidder.In accordance with the Bidding Procedures Order, the Debtors held an auction (the “Auction”) at which they solicited and received higher and better offers from KPS and from a consortium made up of Owl Creek Asset Management, L.P., Warlander Asset Management, L.P., Jefferies LLC, Bardin Hill Opportunistic Credit Master Fund LP, Marathon Asset Management L.P., and Cetus Capital VI, L.P., or affiliates thereof (collectively, the “OWJ Group”). In addition to the bids received at the Auction from KPS and the OWJ Group, the Debtors also received a transaction proposal in parallel from Centerbridge Partners, L.P., Oaktree Capital Management, L.P., Honeywell International Inc. and certain other investors and parties (collectively, the “CO Group”). The Auction was completed on January 8, 2021, at which point the Debtors filed with the Bankruptcy Court (i) an auction notice noting that a bid received from KPS was the successful bid at the Auction but that the Debtors were still considering the proposal from the CO Group, (ii) a plan of reorganization (as may be amended, restated, supplemented or otherwise modified from time to time, the “Plan”) and (iii) a related disclosure statement (as may be amended, restated, supplemented or otherwise modified from time to time, the “Disclosure Statement”).

On January 11, 2021, the Debtors, having determined that the proposal from the CO Group was a higher and better proposal than the successful bid of KPS at the Auction, entered into the PSA and announced their intention to pursue the Transaction. As a result of the entry into the PSA, (i) the Debtors filed a supplemental auction notice with the Bankruptcy Court on January 11, 2021 describing the Debtors’ determination to proceed with the Transaction, (ii) the Debtors filed a revised Plan and a related revised Disclosure Statement with the Bankruptcy Court on January 22, 2021 to implement the Transaction and (iii) the Stalking Horse Purchase Agreement became terminable, following which, on January 15, 2021, the Stalking Horse Bidder terminated the Stalking Horse Purchase Agreement and the Debtors subsequently paid a termination payment of $63 million and an expense reimbursement payment of $15.7 million to the Stalking Horse Bidder pursuant to the terms of the Stalking Horse Purchase Agreement and the Bidding Procedures Order.The subsequent payment was recorded in Reorganization items, net in the first quarter of 2021, due to the termination notice by KPS.

The PSA contains customary representations, warranties and covenants. The PSA is subject to certain termination events, subject to certain exceptions, including (a) the breach by any party of any of the representations, warranties, covenants, obligations or commitments set forth therein, where such breach would materially and adversely interfere with the Transaction and remains uncured; (b) the issuance by any governmental authority of an order that would have ~~been incurred~~an adverse effect on a material provision of the PSA or a material portion of the Transaction or the Plan or a material adverse effect on the Debtors’ business; (c) an examiner, trustee or receiver is appointed in the Chapter 11 Cases; (d) conversion of one or more of the Chapter 11 Cases to cases under Chapter 7 of the Bankruptcy Code or dismissal of any of the Chapter 11 Cases; (e) if any of the restructuring documents after completion (i) contain terms, conditions, representations, warranties or covenants that are materially inconsistent with the terms of the PSA, (ii) are materially and adversely amended or modified with respect to the terminating party or (iii) are withdrawn without the consent of the applicable party; (f) if any party proposes, supports, assists, solicits or files a pleading seeking approval of any alternative transaction without the prior written consent of certain parties; (g) if, on or after April 19, 2021, the Plan is not filed with the Bankruptcy Court, subject to certain extensions; (h) if the effective date of the Plan has not occurred by June 30, 2021, subject to certain extensions; (i) if the Bankruptcy Court grants relief that is inconsistent with the PSA in any material respect or that would materially frustrate the purposes of the PSA; or (j) by the Debtors, if their boards of directors reasonably determine in good faith after receiving the advice of outside counsel that the Debtors’ continued performance under the PSAs would be inconsistent with the exercise of such boards’ fiduciary duties under applicable law.

In accordance with the terms of the PSA, on January 22, 2021, the Debtors’ entered into the EBCA with the Equity Backstop Parties, pursuant to which, among other things, the Company will conduct the Rights Offering and each Equity Backstop Party committed to (i) exercise its rights, as a stockholder of the Company, to purchase in the Rights Offering shares of the Series A Preferred Stock and (ii) purchase, on a pro rata basis (in accordance with percentages set forth in the EBCA), shares of Series A Preferred Stock which were offered but not subscribed for in the Rights Offering. The EBCA provides for the reimbursement by the Debtors of professional fees and expenses and filing fees incurred by the Equity Backstop Parties in connection with the Chapter 11 Cases in an aggregate amount that, together with and inclusive of amounts to be reimbursed pursuant to the PSA, do not exceed $25 million prior to Emergence. The EBCA further provides for indemnification by the Debtors of losses, claims, damages, liabilities, costs and expenses incurred by the Equity Backstop Parties in connection with the Transaction.

The EBCA contains customary representations, warranties and covenants. The EBCA is subject to certain termination events, including, without limitation, (a) by mutual agreement of the parties, (b) by the Company following an uncured breach of a representation, warranty or covenant in the EBCA by an Equity Backstop Party, or (c) by the Equity Backstop Parties constituting each of Centerbridge, Oaktree and a number of the other Equity Backstop Parties holding at least a majority of the rights to purchase Series A Preferred Stock pursuant to the PSA (excluding any such rights held by Centerbridge and Oaktree) following an uncured breach by the Debtors of a representation, warranty or covenant in the EBCA. The EBCA will automatically terminate if the Plan Support Agreement terminates with respect to the rights and obligations of the Debtors prior to the occurrence of the effective date of the Plan in accordance with its terms.

Plan. The PSA provides for the reimbursement by the Debtors of professional fees and expenses of the CO Group and certain of the Consenting Lenders, subject to an interim cap on certain expenses of $25 million prior to Emergence and with the balance to be paid at Emergence. As of February 15, 2021, the CO Group estimated that the aggregate amount of professional fees and expenses expected to be payable by the Debtors under the PSA (inclusive of any amounts payable prior to Emergence) was approximately $82 million.

The Debtors’ entry into and performance and obligations under the PSA and the ECBA are subject to approval by the Bankruptcy Court and other customary closing conditions. On February 9, 2021, the Equity Committee filed an objection to the Debtors’ motion seeking authority to enter into and perform under the PSA and the ECBA. A hearing on the matter is scheduled to take place in the Bankruptcy Court on February 16, 2021. There can be no assurances that the Debtors will obtain the approval of the Bankruptcy Court and complete the Transaction.

On the Petition Date, the Debtors entered into a Restructuring Support Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “RSA”) with consenting lenders (the “Consenting Lenders”) holding, in the aggregate, approximately 61% of the aggregate outstanding principal amount of loans under the Prepetition Credit Agreement. Pursuant to the RSA, the Consenting Lenders and the Debtors agreed to the principal terms of a financial restructuring, which will be implemented through a plan of reorganization under the Bankruptcy Code and which could include the sale of all or substantially all of the assets of certain Debtors and of the stock of certain Debtors and other subsidiaries, as further described below. On January 6, 2021, the Debtors and Consenting Lenders holding no less than a majority of the aggregate outstanding principal amount of loans under the Prepetition Credit Agreement then held by all Consenting Lenders entered into Amendment No. 1 to the Restructuring Support Agreement (the “Amendment”), which, among other things, extended certain milestones contained in the RSA.

The RSA provides that the Consenting Lenders will support the Debtors’ restructuring efforts, including the approval of the Plan, as set forth in, and subject to the terms and conditions of, the RSA. In addition, the Consenting Lenders agreed to the Debtors’ entry into the DIP Term Loan Facility (as defined below) discussed below.

The RSA provides certain milestones for the Chapter 11 Cases. Failure of the Debtors to satisfy these milestones without a waiver or consensual amendment would provide the Requisite Consenting Lenders a termination right under the RSA. These milestones, as modified from time to time, include (a) no later than February 22, 2021, (i) the hearing to approve the Disclosure Statement shall have occurred and (ii) the Bankruptcy Court shall have entered an order approving the Disclosure Statement on a final basis, which shall be in form and substance reasonably acceptable to the Requisite Consenting Lenders; (b) no later than April 7, 2021, a hearing shall have occurred for approval of the Plan, and within 2 Business Days thereafter, the Bankruptcy Court shall have entered the Confirmation Order on a final basis, which shall be in form and substance reasonably acceptable to the Requisite Consenting Lenders; and (c) no later than April 30, 2021, (i) the Transaction shall have closed and (ii) the Plan Effective Date shall have occurred.

Under the Bankruptcy Code, the Debtors had the exclusive right to file a plan of reorganization under Chapter 11 through and including 120 days after the Petition Date, and the Debtors currently have the exclusive right to solicit acceptances of such plan through and including 180 days after the Petition Date. This deadline may be extended with the approval of the Bankruptcy Court.

As described above, in connection with the Atlantic Park Proposal, the Equity Committee filed a motion with the Bankruptcy Court seeking to modify the Debtors’ exclusive periods to file and solicit votes on a Chapter 11 plan. The Equity Committee’s motion is scheduled to be heard by the Bankruptcy Court on February 16, 2021.

Under the absolute priority scheme established by the Bankruptcy Code, unless our creditors agree otherwise, all of our pre-petition liabilities and post-petition liabilities must be satisfied in full before the holders of our existing common stock can receive any distribution or retain any property under a plan of reorganization. The ultimate recovery to creditors and/or shareholders, if any, will not be determined until confirmation and implementation of a plan or plans of reorganization. We can give no assurance that any recovery or distribution of any amount will be made to any of our creditors or shareholders. A confirmed plan of reorganization could result in any of the holders of our liabilities and/or securities, including our common stock, receiving no distribution on account of their interests and cancellation of their holdings. Moreover, a plan of reorganization can be confirmed, under the Bankruptcy Code, even if the holders of our common stock vote against the plan of reorganization and even if the plan of reorganization provides that the holders of our common stock receive no distribution on account of their equity interests.

As described above, the Debtors filed the Plan and Disclosure Statement on January 8, 2021, and filed a revised Plan and revised Disclosure Statement on January 22, 2021 to implement the Transaction. The Plan has not been confirmed by the Bankruptcy Court and may be supplemented or revised by the Debtors prior to the confirmation hearing to be held by the Bankruptcy Court. A hearing before the Bankruptcy Court to consider approval of the Disclosure Statement filed by the Debtors is scheduled for February 16, 2021. On February 9, 2021, the Equity Committee filed an objection to the approval of the Disclosure Statement, which will be considered at the February 16, 2021 hearing.

The Company has applied ASC 852 in preparing our Consolidated and Combined Financial Statements. ASC 852 requires the financial statements for periods subsequent to the Petition Date to distinguish transactions and events that are directly associated with the Company's reorganization from the ongoing operations of the business. Accordingly, revenues, expenses, realized gains and losses, and provisions for losses directly resulting from the reorganization and restructuring shall be reported separately as Reorganization items, net in the Consolidated Statements of Operations. In addition, the balance sheet distinguishes pre-petition liabilities subject to compromise from those pre-petition liabilities that are not subject to compromise and post-petition liabilities. Pre-petition liabilities that are not fully secured or those that have at least a ~~stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. We consider~~possibility of not being repaid at the ~~basis on which the expenses~~allowed claim amount have been ~~allocated~~classified as liabilities subject to compromise on the Consolidated Balance Sheet at December 31, 2020.

Under the Bankruptcy Code, the Debtors may assume and assign or reject executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a prepetition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach subject, in the case of the rejection of unexpired leases of real property, to certain caps on damages. Counterparties to such rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against the applicable Debtor’s estate for such damages. Generally, the assumption or assumption and assignment of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance thereunder. Accordingly, any description of an executory contract or unexpired lease with a Debtor in this annual report, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease with a Debtor is qualified by any overriding rejection rights the Company has under the Bankruptcy Code.

The Debtors have incurred and will continue to incur significant costs associated with the reorganization, including the write-off of original issue discount and deferred long-term debt fees on debt, a component of liabilities subject to compromise, costs of debtor-in-possession financing and legal and professional fees. The amount of these charges, which since the Petition Date are being expensed as incurred, are expected to significantly affect the Company’s results of operations. In accordance with applicable guidance, costs associated with the bankruptcy proceedings have been recorded as Reorganization items, net within the Company's Consolidated Statements of Operations for the twelve months ended December 31, 2020.

Reorganization items, net are comprised of the following for the twelve months ended December 31, 2020:

See note 16, Long-term Debt and Credit Agreements for further discussion of the DIP facilities and the pre-petition long term debt.

As a result of the Chapter 11 Cases, the payment of pre-petition liabilities is generally subject to compromise pursuant to a plan of reorganization. Generally, actions to enforce or otherwise effect payment of pre-bankruptcy filing liabilities are stayed. Although payment of pre-petition claims generally is not permitted, the Bankruptcy Court granted the Debtors authority to pay certain pre-petition claims in designated categories and subject to certain terms and conditions. This relief generally was designed to preserve the value of the Debtors’ business and assets. Among other things, the Bankruptcy Court authorized, but did not require, the Debtors to pay certain pre-petition claims relating to employee wages and benefits, taxes, critical vendors and foreign vendors. Pre-petition liabilities that are subject to compromise are required to be ~~a reasonable reflection~~reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for different amounts. The amounts classified as liabilities subject to compromise may be subject to future adjustments depending on Bankruptcy Court actions, further developments with respect to disputed claims, determination of secured status of certain claims, the determination as to the value of any collateral securing claims, proof of claims or other events.

The following table presents liabilities subject to compromise as reported in the Consolidated Balance Sheet at December 31, 2020:

Determination of the ~~utilization~~value at which liabilities will ultimately be settled cannot be made until the Bankruptcy Court approves the plan of ~~services provided~~reorganization. We will continue to evaluate the amount and classification of our pre-petition liabilities. Any additional liabilities that are subject to compromise will be recognized accordingly, and the aggregate amount of liabilities subject to compromise may change.

On November 3, 2020, the Debtors filed with the Bankruptcy Court schedules and statements for Garrett Motion Holdings Inc., Garrett ASASCO Inc. and Garrett Motion Holdings II Inc. (collectively, the “Initial Reporting Debtors”), setting forth, among other things, the assets and liabilities of each of the Initial Reporting Debtors, subject to the assumptions filed in connection therewith. On December 18, 2020, the Debtors filed with the Bankruptcy Court schedules and statements for each of the remaining Debtors, setting forth, among other things, the assets and liabilities of each of the remaining Debtors, subject to the assumptions filed in connection therewith. These schedules and statements are subject to further amendment or modification. As part of the ~~benefits received~~Chapter 11 Cases, parties believing that they have claims or causes of action against the Debtors may file proofs of claim evidencing such claims. On November 4, 2020, the Bankruptcy Court entered an order requiring that certain holders of pre-petition claims that are not governmental units file proofs of claim with respect to claims against the Initial Reporting Debtors by the ~~Business during~~deadline for general claims against the ~~periods presented.~~Sellers, which was December 18, 2020 at 4:00pm Eastern Time. On December 15, 2020, the Bankruptcy Court entered an order requiring that certain holders of pre-petition claims that are not governmental units file proofs of claim with respect to claims against the remaining Debtors by the deadline for general claims against the remaining Debtors, which is March 1, 2021 at 4:00pm Eastern Time. On December 17, 2020, the Bankruptcy Court entered an order requiring that holders of pre-petition claims arising from the purchase or sale of our common stock file proofs of claim with respect to such claims by March 1, 2021 at 4:00pm Eastern Time.

The Debtors' have received 1,326 proofs of claim as of February 8, 2021, for an amount of approximately $146 billion.Such amount includes duplicate claims across multiple debtor legal entities. As claims are filed against the Debtors, the claims will be reconciled to amounts recorded in the Company's accounting records. Differences in amounts recorded and claims filed by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court, where appropriate. In addition, the Company may ask the Bankruptcy Court to disallow claims that the Company believes are duplicative, have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons. In light of the substantial number of claims already filed, and expected to be filed, the claims resolution process may take considerable time to complete and may continue after the Debtors emerge from bankruptcy. As of February 10, 2021 the Company’s assessment of the validity of claims received has not been completed.

Subject to certain specific exceptions under the Bankruptcy Code, the commencement of the Chapter 11 Cases automatically stayed most judicial or administrative actions against the Debtors and efforts by creditors to collect on or otherwise exercise rights or remedies with respect to pre-petition claims. Absent an order from the Bankruptcy Court, substantially all of the Debtors’ pre-petition liabilities are subject to settlement in accordance with the Bankruptcy Code.

The financial statements below represent the condensed combined financial statements of the Debtors as of and for the twelve months ended December 31, 2020. Any entities which are non-debtor entities, are not included in these condensed combined financial statements. Intercompany transactions among the Debtors have been eliminated in the financial statements contained herein. Intercompany transactions among the Debtors and the non-debtor entities have not been eliminated in the Debtors’ financial statements.

Principlesof Consolidation and Combination— For the periods subsequent to the Spin-Off, the Consolidated and Combined Financial Statements include the accounts of Garrett Motion Inc. and all of its subsidiaries in which a controlling financial interest is maintained. We consolidate entities that we control due to ownership of a majority voting interest, and we consolidate variable interest entities (“VIEs”) when we have variable interests and are the

primary beneficiary. Our consolidation policy requires equity investments that we exercise significant influence over but in which we do not ~~control the investee and are not the primary beneficiary of the investee’s activities~~have a controlling financial interest to be accounted for using the equity method. Investments through which we are not able to exercise significant influence over the investee and which we do not have readily determinable fair values are accounted for under the cost method. All intercompany transactions and balances are eliminated in consolidation.

For the periods prior to the Spin-Off, the Consolidated and Combined Financial Statements were prepared on a stand-alone basis and include our business units and wholly owned direct and indirect subsidiaries and entities in which we had a controlling financial interest.

CashandCashEquivalents—Cash and cash equivalentsincludecash on hand and highly liquidinvestmentshaving an originalmaturityof threemonthsor less.

Restricted Cash—Restricted cash primarily consists of bank deposits used to pledge as collateral in order to be able to issue bank notes as payment to certain suppliers in the Asia Pacific region (refer to Note 9. Factoring and Notes Receivable) as well as provide access to a traditional supplier payable program involving certain of our suppliers and a third-party financial institution.

Trade ReceivablesandAllowance for Doubtful Accounts—Trade accountsreceivableare recordedat the invoicedamountas a resultof transactionswith customers.Garrett maintainsallowancesfor doubtful accountsfor estimatedlossesas a resultof a customer’sinabilityto make requiredpayments. As of January 1, 2020, Garrett adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new guidance requires an entity to recognize as an allowance its estimate of lifetime expected credit losses rather than incurred losses. The guidance is also applicable to contract assets such as unbilled receivables. Consistent with the new guidance, Garrett estimates~~anticipated~~lossesfromdoubtfulaccounts expected over the contractual life of the receivablesbased on days past due as measuredfromthe contractualdue date and ~~historical~~collectionhistory.Garrett also takesinto considerationchanges in economicconditions thatmay not be reflectedin historicaltrends(forexample,customersin bankruptcy,liquidationor reorganization).Receivablesare written-offagainstthe allowancefor doubtfulaccountswhenthey are determineduncollectible.Such determinationincludesanalysisand considerationof the particularconditionsof the account,includingtimeintervalssincelastcollection,customerperformanceagainstagreedupon payment plans, solvencyof customerand any bankruptcyproceedings.

Transfer of Financial Instruments—Sales and transfers of financial instruments are accounted for under ASC 860, Transfers and Servicing (“ASC 860”). The Company may discount and sell accounts receivables during the normal course of business. These receivables which are transferred to a third party without recourse to the Company and that meet the criteria of sales accounting as per ASC 860, are excluded from the amounts reported in the Consolidated Balance Sheets. The cash proceeds received from such sales are included in operating cash flows. The expenses associated with the factoring of receivables are recorded within Other expense, net in the Consolidated and Combined Statements of Operations.

The Company may also receive bank notes in settlement of accounts receivables, primarily in the Asia Pacific region. Such bank notes are classified as notes receivables under Accounts, notes and other receivables – net in the Consolidated Balance Sheets. The collections of such bank notes are included in operating cash flows and any expenses related to discounting these are included within Other expense, net in the Consolidated and Combined Statements of Operations. The Company can hold the bank notes until maturity, exchange them with suppliers to settle liabilities, or sell them to third party financial institutions in exchange for cash.

Inventories—Inventoriesare statedat the lower of cost, determinedon a first-in,first-outbasis,includingdirectmaterialcostsand directand indirectmanufacturingcosts,or net realizablevalue. Obsoleteinventoryis identifiedbased on analysisof inventoryfor knownobsolescenceissues.The originalequipmentinventoryon hand in excessof ~~one year’s~~forecastedusage and lack of consumption in the previous 12 months is fully~~reserved.~~ reserved, unless the value of such material is recoverable from either the vendor or the customer.

Property,Plant andEquipment—Property,plantand equipmentare recordedat cost lessaccumulated depreciation and amortization.For financialreporting,the straight-linemethodof depreciationis used over the estimateduseful livesof 10 to 50 yearsfor buildingsand improvements,2 to 16 yearsfor machineryand equipment,3 to 10 yearsfor toolingequipmentand 5to 7 yearsfor software.

Leases—For the periods beginning January 1, 2019, right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of a lease (the “commencement date”) based on the present value of lease payments over the lease term. We determine if an arrangement is a lease at inception. Operating leases are included in Other assets, Accrued liabilities, and Other liabilities in our Consolidated Balance Sheets. No finance leases have been recognized. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease where it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are expensed in the period in which they occur. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For machinery and equipment, we account for the lease and non-lease components as a single lease component. We account for short-term leases by recognizing lease payments in net income on a straight-line basis over the lease term and will not recognize any ROU assets and lease liabilities on the Consolidated Balance Sheet. For the periods prior to January 1, 2019, we accounted for leases in accordance with ASC 840, Leases (“ASC 840”). Upon commencement of the Chapter 11 Cases, certain pre-petition leases have been reclassified into liabilities subject to compromise.

Goodwill—Goodwill is subject to impairment testing annually, ~~as of March 31,~~ and whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. This testing compares carrying value to fair value of our single reporting unit. The Company recognizes an impairment charge for the amount by which the carrying value of the reporting unit exceeds the reporting unit´s fair value. However, any impairment should not exceed the amount of goodwill allocated to the reporting unit. ~~We completed our annual goodwill~~Because we have a single reporting unit with a negative carrying value, 0 impairment ~~test as of March 31, 2018, as well as an interim impairment test immediately following the Spin-Off and determined that there~~ was ~~no impairment as of these dates.~~recognized.

WarrantiesandGuarantees—Expected warrantycostsfor productssold are recognizedbased on an estimateof the amountthateventuallywill be requiredto settlesuch obligations.These accrualsare based on factorssuch as past experience,lengthof the warrantyand variousotherconsiderations.Costs of productrecalls, which may includethe cost of the productbeing replacedas well as the customer’scost of the recall,including laborto removeand replacethe recalledpart,are accruedas partof our warrantyaccrualat the timean obligation becomesprobableand can be reasonablyestimated.These estimatesare adjustedfromtimeto timebased on factsand circumstancesthatimpactthe statusof existingclaims.For additionalinformation,see Note ~~21,~~23, Commitmentsand ~~Contingencies.~~Contingencies of Notes to Consolidated and Combined FinancialStatements.

Sales Recognition—On January 1, 2018, we adopted the FASB´s updated guidance on revenue from contracts with customers, ASC 606 Revenue from Contracts ~~With~~with Customers (“ASC 606”), using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting.

Product sales are recognized when we transfer control of the promised goods to our customer, which is based on shipping terms. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the promised goods.

In the sale of products in the OEM channel, the transaction price for these goods is equal to the agreed price of each unit and represents the standalone selling price for the unit.

In the sale of products in the aftermarket channel, the terms of a contract or the historical business practice can give rise to variable consideration due to, but not limited to, discounts and bonuses. We estimate variable consideration at the most likely amount we will receive from customers and reduce revenues recognized accordingly. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us.

Prior to January 1, 2018, sales were recognized when there was evidence of a sales agreement, the delivery of goods had occurred, the sales price was fixed or determinable and the collectability of revenue was reasonably assured. Sales were generally recorded upon shipment of product to customers and transfer of title under standard commercial terms. Sales incentives and allowances were recognized as a reduction to revenue at the time of the related sale. In addition, payments made to customers were generally recognized as a reduction to revenue at the time these payments are made or committed to the customers.

Research andDevelopment—Garrett conductsresearchand development(“R&D”) activities,whichconsistprimarilyof the developmentof newproductsand productapplications.R&Dcostsare chargedto expense as incurred.Such costsare includedin Cost of goods sold of ~~$128~~$111 million, $129 million and$~~119~~128 million,~~and $112 million~~for the yearsended December31, ~~2018, 2017,~~2020, 2019 and ~~2016,~~2018 respectively. Additionally, the Company incurs engineering-related expenses which are also included in Cost of goods sold of ~~$10~~$13 million, ~~$19~~$5 million and ~~$21~~$10 million for the years ended December 31, ~~2018, 2017,~~2020, 2019 and ~~2016. The prior year amounts have been reclassified to conform to the current year presentation.~~2018.

Asbestos-RelatedContingenciesandInsurance Recoveries—Honeywell is subject to certain asbestos-related and environmental-related liabilities, primarily related to its legacy Bendix business. In conjunction with the Spin-Off, certain operations that were part of the Bendix business, along with the ownership of the Bendix trademark, as well as certain operations that were part of other legacy elements of the Business, were transferred to us. ~~For periods prior~~The accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of the indemnification and reimbursement agreement with Honeywell entered into on September 12, 2018 (the “Honeywell Indemnity Agreement”), under which Garrett ASASCO is required to ~~the Spin-Off, we reflect an estimated~~make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability ~~for resolution of pending~~payments and ~~future asbestos-related and environmental liabilities~~accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States

asbestos-related liability payments and accounts payable, in each case related to legacy ~~Honeywell business, calculated as if we were responsible for 100%~~elements of the ~~Bendix asbestos-liability payments. We recognized a liability for any asbestos-related contingency that was probable~~Business, including the legal costs of ~~occurrence~~defending and ~~reasonably estimable. In connection~~resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with the recognition of liabilities for asbestos-related matters, we recorded asbestos-related insurance recoveries that are deemed probable. Asbestos-related expenses, net of probable insurance recoveries, are presented within Other expense, net in the Consolidated and Combined Statement of Operations.such liabilities. The ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement.

~~In periods subsequent to the Spin-Off, the accounting for the majority of our asbestos-related liability payments and accounts payable reflect~~Under the terms of the ~~Indemnification~~PSA and ~~Reimbursement Agreement~~the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell ~~entered into on September 12, 2018,~~providing for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under ~~which we are required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily~~or related to the ~~Bendix business~~Indemnity Agreements and the Tax Matters Agreement and (b) the dismissal with prejudice of the Honeywell Litigation in exchange for (x) a $375 million cash payment at Emergence and (y) the Series B Preferred Stock. The Company will have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to $584 million as of Emergence (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make a partial payment of the Series B Preferred Stock, reducing the present value to $400 million, at any time within 18 months of Emergence. In every case the duration of future liabilities to Honeywell will be reduced from 30 years prior to the Chapter 11 filing to a maximum of nine years.

The Debtors’ entry into and performance under the PSA and the terms of the PSA, the Transaction and the Plan remain subject to approval by the Bankruptcy Court. On February 9, 2021, the Equity Committee filed an objection to the Debtors’ motion seeking authority to enter into and perform under the PSA and the ECBA. A hearing on the matter is scheduled to take place in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elementsBankruptcy Court on February 16, 2021. There can be no assurances that the Debtors will obtain the approval of the ~~Business, including~~Bankruptcy Court and complete the ~~legal costs~~ Transaction.

For additional information, see Note 23, Commitments and Contingencies of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Net charges for asbestos-related and environmental-related matters in connection with the Indemnification and Reimbursement Agreement are presented within Other expense, net in theNotes to Consolidated and Combined ~~Statement of Operations.~~FinancialStatements.

Stock-Based Compensation Plans—The principal awards issued under our stock-based compensation plans, which are described in Note 1921, Stock-Based Compensation, ~~Plans,~~ are restricted stock units. The cost for such awards is measured at the grant date based on the fair value of the award. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods (generally the vesting period of the equity award) and is included in Selling, general and administrative expenses in the Consolidated and Combined Statements of Operations. Forfeitures are estimated at the time of grant to recognize expense for those awards that are expected to vest and are based on our historical forfeiture rates under our Former Parent´s plans.

For periods prior to the Spin-Off, certain employees within the Business participated in stock-based compensation plans sponsored by the Former Parent. The Former Parent’s stock-based compensation plans primarily include incentive compensation plans. Awards granted under the plans consist of stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) and are based on the Former Parent’s common shares and, as such, are reflected in Invested deficit within the Consolidated and Combined Statements of Equity (Deficit).

Pension Benefits—Following the Spin-Off, we sponsor defined benefit pension plans covering certain employees, primarily in Switzerland, the USU.S. and Ireland. For such plans, we are required to disaggregate the service cost component of net benefit costs and report those costs in the same line item or items in the Consolidated and Combined Statements of Operations as other compensation costs arising from services rendered by the pertinent employees during the period. The other nonservice components of net benefit costs are required to be presented separately from the service cost component. We record the service cost component of Pension ongoing (income) expense in Cost of goods sold or Selling, general and administrative expenses. The remaining components of net benefit costs within Pension ongoing (income) expense, primarily interest costs and assumed return on plan assets, are recorded in Non-operating expense (income). We recognize net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plans’ projected benefit obligation (the corridor) annually in the fourth quarter each year (MTM Adjustment), and, if applicable, in any quarter in which an interim remeasurement is triggered. The remaining components of pension expense, primarily service and interest costs and assumed return on plan assets, are recognized on a quarterly basis.

Following the adoption of this guidance, we continue to record the service cost component of Pension ongoing (income) expense in Costs of goods sold or Selling, general and administrative expenses. The remaining components of net benefit costs within Pension ongoing (income) expense, primarily interest costs and assumed return on plan assets, are now recorded in Non-operating (income) expense. We will continue to recognize net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plans’ projected benefit obligation (the corridor) annually in the fourth quarter each year (MTM Adjustment)(“MTM Adjustment”). The MTM Adjustment ~~will also be reported~~is recorded in Non-operating expense (income) ~~expense.~~.

For periods prior to the Spin-Off, we sponsored a defined benefit pension plan covering certain employees in Ireland. Additionally, certain Garrett employees participated in defined benefit pension plans (the “Shared Plans”) sponsored by Honeywell which includes participants of other Honeywell subsidiaries and operations. We accounted for our participation in the Shared Plans as a multiemployer benefit plan. Accordingly, we did not record an asset or liability to recognize the funded status of the Shared Plans. The related pension expense was based on annual service cost of active Garrett participants and reported within Cost of goods sold in the Consolidated and Combined Statements

of Operations. The pension expense specifically identified for the active Garrett participants in the Shared Plans for the ~~years~~year ended December 31, 2018 ~~2017 and 2016~~ was $5 ~~million, $7 million and $6 million, respectively.~~million.

Foreign Currency Translation—Assets and liabilitiesof subsidiariesoperatingoutsidethe United States with a functionalcurrencyotherthan U.S.Dollarsare translatedinto U.S.Dollarsusing year-endexchange rates. Sales, costsand expensesare translatedat the averageexchange ratesin effectduring the year. Foreign currency translationgains and lossesare includedas a componentof Accumulatedothercomprehensiveincome(loss).

DerivativeFinancial Instruments—We minimize our risks from foreign currency exchange rate fluctuations through our normal operating and financing activities and, when deemed appropriate through the use of derivative financial instruments. Derivative financial instruments are used to manage risk and are not used for trading or other speculative purposes. Derivative financial instruments that qualify for hedge accounting must be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accordingly, changes in fair value of the derivative contract must be highly correlated with changes in fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract.

All derivatives are recorded on the balance sheet as assets or liabilities and measured at fair value. For derivatives designated as cash flow hedges, the effective portion of the changes in fair value of the derivatives are recorded in Accumulated other comprehensive income (loss) and subsequently recognized in earnings when the hedged items impact earnings. Cash flows of such derivative financial instruments are classified consistent with the underlying hedged item.

On September 27, 2018, we early adopted the new accounting guidance contained in ASU 2017-12 on a modified retrospective approach. The new standard is intended to improve and simplify rules relating to hedge accounting, including the elimination of periodic hedge ineffectiveness, recognition of components excluded from hedge effectiveness assessment, the ability to elect to perform subsequent effectiveness assessments qualitatively, and other provisions designed to provide more transparency around the economics of a company’s hedging strategy.

Prior to the Spin-Off, the tax provision was presented on a separate company basis as if we were a separate filer. The effects of tax adjustments and settlements from taxing authorities are presented in our Consolidated and Combined Financial Statements in the period to which they relate as if we were a separate filer. Our current obligations for taxes ~~are~~were settled with our Former Parent on an estimated basis and adjusted in later periods as appropriate. All income taxes due to or due from our Former Parent that have not been settled or recovered by the end of the period are reflected in Invested deficit within the Consolidated and Combined Financial Statements. We are subject to income tax in the United States (federal, state and local) as well as other jurisdictions in which we operate. The tax provision ~~has been~~was calculated as if the ~~carve-out entity~~Business was operating on a stand-alone basis and filed separate tax returns in the jurisdiction in which it operates. Therefore, cash tax payments and items of current and deferred taxes may not be reflective of the actual tax balances prior to or subsequent to the ~~carve-out.~~Spin-Off.

Earnings per share—Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. On October 1, 2018, the date of consummation of the Spin-Off, 74,070,852 shares of the Company’s Common Stock were distributed to Honeywell stockholders of record as of September 18, 2018 who held their shares through the Distribution Date. Basic and diluted EPS for all periods prior to the Spin-Off reflect the number of distributed shares, or 74,070,852 shares. For 2018, the distributed shares were treated as issued and outstanding from January 1, 2018 for purposes of calculating historical basic earnings per share. Basic and

diluted weighted average of common shares outstanding for the years ended December 31, 2020, 2019 and 2018 were 75,543,461, 74,602,868 and 74,059,240 and 76,100,509, 75,934,373 and 74,402,148, respectively.

Use of Estimates—The preparationof the Consolidated and Combined FinancialStatementsin conformitywith U.S. GAAPrequiresmanagementto make estimatesand assumptionsthataffectthe reportedamountsin the Consolidated and Combined FinancialStatementsand relateddisclosuresin the accompanyingnotes. Actual resultscould differ fromthose estimates.Estimatesand assumptionsare periodicallyreviewedand the effectsof changes are reflectedin the Consolidated and Combined FinancialStatementsin the periodthey are determinedto be necessary.

In connection with the filing of the Chapter 11 Cases on the Petition Date, the Consolidated and Combined Financial Statements included herein have been prepared in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 852, Reorganizations. See Note 2, Reorganization and Chapter 11 Proceedings, of the Consolidated and Combined Financial Statements for further details.

Liabilities Subject to Compromise—Liabilities subject to compromise include pre-petition liabilities that are unsecured, under-secured or where it cannot be determined that the liabilities are fully secured. Liabilities that may be affected by a plan of reorganization must be reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts as a result of the plan of reorganization or negotiations with creditors. If there is uncertainty about whether a secured claim is undersecured, or will be impaired under the plan of reorganization, the entire amount of the claim is included with prepetition claims in liabilities subject to compromise.

Reorganization Items, Net— Effective on September 20,2020, we began to apply the provisions of accounting Standards Codification (“ASC”) 852, Reorganizations, which is applicable to companies under bankruptcy protection, and requires amendments to the presentation of key financial statement line items. ASC 852 requires that the financial statements for periods subsequent to the filing of the Chapter 11 Cases distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Revenues, expenses, realized gains and losses, and provisions for losses that can be directly associated with the reorganization and restructuring of the business must be reported separately as reorganization items, net in the consolidated statements of operations beginning September 20, 2020.

In ~~October 2016,~~August 2018, the FASB issued ASU ~~2016-16, Intra-Entity Transfers of Assets Other Than Inventory. The ASU requires an entity~~2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to ~~recognize~~ the ~~income tax consequences of an intra-entity transfer of an asset, other than inventory, at the time the entity transfer occurs rather than when the asset is ultimately transferred~~Disclosure Requirements for Fair Value Measurement, which amends certain disclosure requirements related to ~~a third party, as required under current U.S. GAAP.~~fair value measures. The guidance is ~~intended to reduce diversity in practice, particularly~~effective for ~~transfers involving intellectual property. Subsequent to 2017~~ fiscal ~~year, we~~years beginning after December 15, 2019, including interim periods within that fiscal year. Effective January 1, 2020, the Company adopted the accounting standard update as of January 1, 2018. The guidance requires application on a modified retrospective basis. The adoption of this guidance increased our deferred tax assets by $191 million with a cumulative-effect adjustment to retained earnings of the same amount.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350). The ASU eliminates Step 2 of the goodwill impairment test, which requires determining the fair value of assets acquired or liabilities assumed in a business combination. Under the amendments in this update, a goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We have early adopted this guidance during the fourth quarter of 2018.new guidance. The adoption did not have an impact on our Consolidated Balance Sheets, Consolidated and Combined ~~Balance Sheets,~~ Statements of Operations and related Notes to the Consolidated and Combined Financial Statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. These amendments are intended to better align a company’s risk management strategies and financial reporting for hedging relationships. As further noted in our Derivative financial instruments accounting policy above, we early adopted during the third quarter of 2018 the new accounting guidance contained in ASU 2017-12 on a modified retrospective approach. In relation to the Company’s foreign currency exchange forward and option contracts (foreign currency exchange contracts), the adoption did not have an impact on our Consolidated and Combined Balance Sheets and Statements of Operations.

In February 2016, the FASB issued guidance on accounting for leases which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from leases that will be effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. We expect to adopt the requirements of the new standard effective January 1, 2019, and we will elect to not recast comparative periods in the transition. We estimate the adoption will result in the addition of $33 million to $43 million of right-of-use assets and liabilities to our consolidated balance sheet, with no significant change to our consolidated statements of operations or cash flows. In adopting the new leases standard as per January 1, 2019, the Company has applied the practical expedients as per ASC 842-10-65-1(f) and (g).

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, ~~(ASU 2016-13),~~ which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for us in our first quarter of fiscal 2020, and earlier adoption is permitted beginning in the first quarter of fiscal 2019. We are currently evaluating the impact of the guidance on our Consolidated and Combined Balance Sheets, Statements of Operations and related Notes to Consolidated and Combined Financial Statements.

In February 2018, the FASB issued guidance that allows for an entity to elect to reclassify the income tax effects on items within Accumulated other comprehensive income resulting from U.S. tax reform to retained earnings. The guidance is effective for fiscal years beginning after December 15, ~~2018 with early adoption permitted,~~2019, including interim periods within ~~those years.~~that fiscal year. Early adoption is permitted. Adoption of the new standard resulted in an increase in the allowance for doubtful accounts of $5 million which was recognized as a cumulative-effect adjustment to opening retained earnings as of January 1, 2020.

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits Defined Benefit Plans – General (Subtopic 715-20), which amends certain disclosure requirements related to the defined benefit pension and other postretirement plans. The guidance ~~allows~~is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. Early adoption ~~(i) at the beginning~~is permitted. Adoption of the ~~period~~new guidance did not have a material impact on the Company’s disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of ~~adoption~~Effects of Reference Rate Reform on Financial Reporting, provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or ~~(ii) retrospective~~another reference rate expected to ~~each period in which~~be discontinued because of reference rate reform. The expedients and exceptions provided by the ~~income tax effects~~amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the ~~U.S. tax reform related to items recognized in Accumulated other comprehensive income are recognized.~~hedging relationship. We are currently evaluating the impact of ~~this standard~~the guidance related to certain existing debt agreements on our Consolidated and Combined Financial Statements.

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 and Combined Financial Statements and ~~whether we will elect to reclassify the income tax effects on items within Accumulated other comprehensive income resulting from U.S. tax reform to retained earnings.~~related disclosures.

~~We have Obligations payable to Honeywell related to the Indemnification and Reimbursement Agreement and Tax Matters Agreement. See Note 21 Commitments and Contingencies for further details.~~

~~The Consolidated and Combined Financial Statements have been prepared on a stand-alone basis and are derived from the consolidated financial statements and accounting records of Honeywell.~~

Prior to the Spin-Off, Honeywell provided certain services, such as legal, accounting, information technology, human resources and other infrastructure support, on behalf of the Business. The cost of these services has been allocated to the Business on the basis of the proportion of revenues. We consider the allocations to be a reasonable reflection of the benefits received by the Business. During the years ended December 31, 2018, 2017 and 2016, Garrett was allocated $87 million, $127 million and $75 million, respectively, of general corporate expenses incurred by Honeywell, and such amounts are included within Selling, general and administrative expenses in the Consolidated and Combined Statements of Operations. As certain expenses reflected in the Consolidated and Combined Financial Statements include allocations of corporate expenses from Honeywell, these statements could differ from those that would have been prepared had Garrett operated on a stand-alone basis.

Honeywell used a centralized approach for the purpose of cash management and financing of its operations. Prior to the Spin-Off, the Business’ cash was historically transferred to Honeywell daily, and Honeywell funded its operating and investing activities as needed. Honeywell had operated a centralized non-interest-bearing cash pool in U.S. and regional interest-bearing cash pools outside of U.S. As of December 31, 2017, the Company had non-interest-bearing cash pooling balances of $51 million which are presented in Invested deficit within the Consolidated and Combined Balance Sheets.

The Company received interest income for related party notes receivables of $1 million, $1 million and $4 million for the years ended December 31, 2018, 2017 and 2016, respectively. Additionally, the Company incurred interest expense for related party notes payable of $1 million, $6 million and $6 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Honeywell centrally hedged its exposure to changes in foreign exchange rates principally with forward contracts. Certain contracts were specifically designated to and entered on behalf of the Business with the Former Parent as a counterparty and were used to hedge known or probable anticipated foreign currency sales and purchases. The Business designated these hedges as cash flow hedges. These hedges were marked-to-market with the effective portion of the changes in fair value of the derivatives recorded in Accumulated other comprehensive income (loss) and subsequently recognized in earnings when the hedged items impact earnings. See Note 6 Non-Operating (Income) Expense, and Note 18 Accumulated Other Comprehensive Income (Loss), for the net impact of these economic foreign currency hedges in Non-Operating (Income) Expense and Accumulated Other Comprehensive Income, respectively, and Note 16 Financial Instruments and Fair Value Measures, for further details of these financial instruments.

Net transfers to and from Honeywell are included within Invested deficit on the Consolidated and Combined Balance Sheet. The components of the net transfers to and from Honeywell for the years ended December 31, 2018, 2017 and 2016 are as follows:

The Company generates revenue through the sale of products to customers in the OEM and aftermarket channels. OEM and aftermarket contracts generally include scheduling agreements that stipulate the pricing and delivery terms that identify the quantity and timing of the product to be transferred.

Revenue recognition ~~will be~~under ASC 606 is generally consistent with the previous standard, with the exception of how we account for payments made to customers in conjunction with future business. Historically these payments were recognized as a reduction of revenue at the time the payments were made. Under ASC 606, these payments result in deferred reductions to revenue that are subsequently recognized when the products are delivered to the customer. The Company evaluates the amounts capitalized each period end for recoverability and expenses any amounts that are no longer expected to be recovered over the term of the business arrangement. These payments are recorded in Other current assets and Other assets in our Consolidated ~~and Combined~~ Balance ~~Sheet. Upon adoption the cumulative impact of this change is as follows:~~

Under the modified retrospective method of adoption, we are required to disclose the impact to revenues had we continued to follow our accounting policies under the previous revenue recognition guidance. We estimate the impact to revenues for the year ended December 31, 2018 would have been a decrease of $6 million. As of December 31, 2018, deferred payments to customers recorded in Other current assets and Other assets in our Consolidated and Combined Balance Sheet were $9 million and $56 million. Refer to Note 2, Summary of Significant Accounting Policies for a summary of our significant policies for revenue recognition.Sheets.

For Net sales by region (determined based on country of shipment) and channel, refer to Note ~~24,~~26, Concentrations.

We recognize virtually all of our revenues arising from performance obligations at a point in time. Less than 1% of our revenue is satisfied over time.

The timing of revenue recognition, billings and cash collections results in unbilled receivables (contract assets) and billed accounts receivable, reported in Accounts, notes and other receivables – net, and customer advances and deposits (contract liabilities), reported in Accrued Liabilities, on the Consolidated ~~and Combined~~ Balance ~~Sheet.~~Sheets. Contract assets arise when the timing of cash collected from customers differs from the timing of revenue recognition. Contract assets are recognized when the revenue associated with the contract is recognized prior to billing and derecognized once invoiced in accordance with the terms of the contract. Contract liabilities are recorded in scenarios where we enter into arrangements where customers are contractually obligated to remit cash payments in advance of us satisfying performance obligations and recognizing revenue. Contract liabilities are generally derecognized when revenue is recognized.

These assets and liabilities are reported on the Consolidated ~~and Combined~~ Balance ~~Sheet~~Sheets on a contract-by-contract basis at the end of each reporting period.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For product sales, typically each product sold to a customer represents a distinct performance obligation.

Virtually all of our performance obligations are satisfied as of a point in time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. All performance obligations are expected to be satisfied within one year, with substantially all performance obligations being satisfied within a month.

The timing of satisfaction of our performance obligations does not significantly vary from the typical timing of payment, with cash advances (contract liabilities) and unbilled receivables (contract assets) being settled within 3 months. For some contracts, we may be entitled to receive an advance payment.

We have applied the practical expedient to not disclose the value of remaining performance obligations for contracts with an original expected term of one year or less.

The sources of income (loss) from continuing operations, before income taxes, classified between domestic entities and those entities domiciled outside of the U.S., are as follows:

The U.S.federalstatutoryincometax rateis reconciledto our effectiveincometax rateas follows:

The effective tax rate ~~decreased~~increased by ~~566.6~~23.3 percentage points in ~~2018~~2020 compared to ~~2017.~~2019. The ~~decrease~~increase was primarily attributable to the ~~impacts~~absence of ~~U.S.~~ tax ~~reform from 2017 (see "The Tax Act" further below)~~benefits related to the remeasurement of deferred tax assets and ~~due~~liabilities for tax law changes enacted during 2019, higher tax expense because of nondeductible costs incurred in connection with the Chapter 11 Cases, the resolution of tax audits and an increase in losses for jurisdictions where we do not expect to generate future tax benefits from such losses. The increase in the ~~mitigation~~effective tax rate was also impacted by overall lower earnings compared to 2019 because of ~~certain potential~~the adverse impacts of COVID-19, partially offset by tax ~~liabilities~~benefits from lower withholding taxes on non-US earnings.

The effective tax rate increased by 214.0 percentage points in 2019 compared to 2018. The increase was primarily attributable to the absence of approximately $910 million of non-recurring tax benefits in 2018 because of a reduction in withholding taxes incurred as part of ~~the~~an internal restructuring of Garrett’s business in advance of the Spin-Off. The Company's non-U.S. effective tax rate was (197.6)%, a decrease of approximately 417 percentage points compared to 2017. The year-over-year decrease in the non-U.S. effective tax rate was primarily driven by the Company's change in assertion regarding foreign unremitted earnings in connection with the Tax Act, decreased expense for tax reserves in various jurisdictions, and higher earnings taxed at lower rates.

~~The effective tax rate increased by 348.2 percentage points in 2017 compared to 2016. The~~ increase was ~~primarily attributable to the provisional impact of U.S. tax reform (see "The Tax Act" further below),~~ partially offset by ~~increased~~approximately $60 million of tax benefits ~~from~~related to the ~~resolution~~remeasurement of deferred tax ~~audits. The Company's non-U.S. effective tax rate was 218.9%, an increase of approximately 210.5 percentage points compared to 2016. The year-over-year increase in the non-U.S. effective tax rate~~

~~was primarily driven by the Company's change in assertion regarding foreign unremitted earnings in connection with the Tax Act, partially offset by decreased expense~~assets and liabilities for tax ~~reserves~~law changes enacted during the year, primarily in ~~various jurisdictions and higher earnings taxed at lower rates.~~Switzerland.

The tax effectsof temporarydifferencesand tax carryforwardswhich give riseto futureincometax benefits and payablesare as follows:

As ~~discussed further below, under “The Tax Act”, the Company no longer intends to reinvest the historical earnings of its foreign subsidiaries as~~ of December 31, ~~2018 and has recorded a deferred tax liability, mainly comprised of non-US withholding taxes of approximately $56 million.~~

~~Our deferred tax assets of $209 million relate primarily to non-U.S. operations comprised principally of deductible temporary differences and~~2020, the Company had gross net operating loss carryforwards ~~(mainly~~of approximately $132 million with the majority in ~~Brazil, France, Germany and Portugal).~~ the below jurisdictions.

We maintain a valuation allowance of ~~$24~~$34 million against a portion of the non-U.S. ~~gross~~total deferred tax assets. In the event we determine that we will not be able to realize our net deferred tax assets in the future, we will reduce such amounts through an increase to ~~Tax~~tax expense in the period such determination is made. Conversely, if we determine that we will be able to realize net deferred tax assets in excess of the carrying amounts, we will decrease the recorded valuation allowance through a reduction to ~~Tax~~tax expense in the period that such determination is made. Our balance sheets present a deferred tax asset of ~~$165~~$275 million and a deferred tax liability of $27 million after taking into account jurisdictional netting.

As of December 31, ~~2018, our net operating loss carryforwards were as follows:~~

~~Many jurisdictions impose limitations on the timing and utilization~~2020, $25 million of ~~net operating loss carryforwards. In those instances whereby there is an expected permanent limitation on the utilization of the net operating loss or tax credit carryforward,~~ the deferred tax ~~asset~~liability balance were reclassified to Liabilities subject to compromise. For moreinformation, refer to Note 2, Reorganization and ~~amount~~Chapter 11 Proceedings.

The Company does not intend to permanently reinvest the undistributed earnings of ~~the carryforward have been reduced.~~its foreign subsidiaries and has recorded a deferred tax liability mainly consisting of withholding taxes of approximately $13 million as of December 31, 2020.

The following table summarizes the activity related to the Company’s uncertain tax positions (excluding interest and penalties and related tax attributes):

As of December 31, ~~2018, 2017,~~2020, 2019, and ~~2016~~2018 there were ~~$32~~$60 million, ~~$100~~$54 million, and ~~$152~~$48 million, respectively, of unrecognized tax benefits that, if recognized, would be recorded as a component of Tax expense.

Estimated interest and penalties related to uncertain tax benefits are classified as a component of tax expense in the Consolidated and Combined Statements of Operations and totaled $5 million of expense, $3 million of expense and $2 million of income for the years ~~that remain subject to examination by major tax jurisdictions~~ended December 31, 2020, 2019, and 2018, respectively. Accrued interest and penalties were $29 million, $26 million, and $23 million, as of December 31, ~~2018:~~2020, 2019, and 2018, respectively.

* Includes provincial or similar localWe are currently under audit in a few jurisdictions ~~as applicable~~

for tax years ranging from 2006 through 2017. Based on the outcome of these examinations, or as a result of the expiration of statutes of limitations for specific jurisdictions, it is reasonably possible that certain unrecognized tax benefits for tax positions taken on previously filed tax returns will materially change from those recorded as liabilities in our financial statements. ~~In addition, the outcome of these examinations may impact the valuation of certain deferred tax assets (such as net operating losses) in future periods.~~

Estimated interest and penalties related to the underpayment of income taxes are classified as a component of Tax expense in the Consolidated and Combined Statement of Operations and totaled $2 million of income attributed to recognition of previously unrecognized tax benefits, $6 million of income, and $5 million of expense for the years ended December 31, 2018, 2017, and 2016, respectively. Accrued interest and penalties were $29 million, $35 million, and $43 million, as of December 31, 2018, 2017, and 2016, respectively.

On December 22, 2017, the U.S. enacted H.R. 1, commonly known as the Tax Cuts and Jobs Act (“Tax Act”) that instituted fundamental changes to the taxation of multinational corporations. The Tax Act changed the taxation of foreign earnings by implementing a dividend exemption system, expansion of the current anti-deferral rules, a minimum tax on low-taxed foreign earnings and new measures to deter base erosion. The Tax Act also included a permanent reduction in the corporate tax rate to 21%, repeal of the corporate alternative minimum tax, expensing of capital investment and limitation of the deduction for interest expense.

Furthermore, as part of the transition to the new tax system, a one-time transition tax was imposed on a U.S. shareholder’s historical undistributed earnings of foreign affiliates. Although the Tax Act was generally effective January 1, 2018, GAAP required recognition of the tax effects of new legislation during the reporting period that includes the enactment date, which was December 22, 2017.

As a result of the impacts of the Tax Act, the SEC provided guidance that allowed the Company to record provisional amounts for those impacts, with the requirement that the accounting be completed in a period not to exceed one year from the date of enactment. As of December 31, 2018, the Company has completed the accounting for the tax effects of the Tax Act. The primary impacts of the Tax Act relate to the re-measurement of deferred tax assets and liabilities resulting from the change in the corporate tax rate (“Corporate Tax Rate Change”); the one-time mandatory transition tax on undistributed earnings of foreign affiliates (“MTT”); and deferred taxes in connection with a change in the Company’s intent to permanently reinvest the historical undistributed earnings of its foreign affiliates (“Undistributed Foreign Earnings”).

~~Corporate Tax Rate~~ ~~Change—For~~ ~~the year ended December31, 2017 when the Business was still part of Honeywell and its consolidated tax return filings, werecordeda tax expense of lessthan $1 milliondue to the decreasein the corporatetax ratefrom35% to 21% with respect to the remeasurement of the deferred tax assets and liabilities.~~

At the date of enactment, the Company had a deferred tax asset for the excess of its tax basis over net book value of its U.S. assets and liabilities that will generate future tax deductions in excess of book value. Due to the Tax Act, these additional tax deductions will be subject to tax at a lower corporate tax rate, consequently reducing the Company’s deferred tax asset as of the date of enactment.

~~Mandatory Transition Tax—~~For the year ended December 31, 2017, we recorded a provisional tax charge of approximately $354 million determined as if the Company was a stand-alone business due to the imposition of the MTT on the deemed repatriation of undistributed foreign earnings.

The Tax Act imposes a one-time tax on undistributed and previously untaxed post-1986 foreign earnings and profits (“E&P”) as determined in accordance with U.S. tax principles of certain foreign corporations owned by U.S. shareholders. In general, we estimated $1.7 billion of E&P related to our foreign affiliates that is subject to the MTT. The MTT is imposed at a rate of 15.5% to the extent of the cash and cash equivalents that are held by the foreign affiliates at certain testing dates; the remaining E&P is taxed at a rate of 8.0%. As a result of Honeywell finalizing its computation of the MTT, Garrett was allocated an indemnity obligation of $240 million. The Company has completed its analysis of the impact of the Tax Act and fully recorded this impact.

In addition, pursuant to the Tax Matters Agreement, we will be required to make payments to a subsidiary of Honeywell in an amount payable in Euros (calculated by reference to the Distribution Date Currency Exchange Rate) representing the net tax liability of Honeywell under the mandatory transition tax attributable to the Business, as determined by Honeywell. Following the Spin-Off which occurred in October 2018, Honeywell has determined the portion of its net tax liability attributable to the Business is $240 million. The amount will be payable in installments over 8 years and may be adjusted at Honeywell’s discretion in the event of an audit adjustment or otherwise. Furthermore, Honeywell will control any subsequent tax audits or legal proceedings with respect to the mandatory transition tax, and accordingly we do not expect to be able to make definitive decisions regarding settlements or other outcomes that could influence our potential related exposure.

~~Undistributed Foreign~~ ~~Earnings~~—For the year ended December 31, 2017, we recorded a tax charge of $980 million due to the Company’s intent to not permanently reinvest the historical undistributed earnings of its foreign affiliates. The amount was calculated as if the Company was operating on a stand-alone basis for the full year and filed separate tax returns in the jurisdictions in which it operates. ~~The Company has completed its analysis of the impact of the Tax Act and fully recorded this impact.~~

We previously considered substantially all of the earnings in our non-U.S. subsidiaries to be permanently reinvested and, accordingly, recorded no deferred income taxes on such earnings. As a result of the fundamental changes to the taxation of multinational corporations created by the Tax Act, the Company no longer intends to permanently reinvest the historical undistributed earnings of its foreign affiliates which amount to approximately $1.7 billion as of December 31, 2018 (including current year earnings). GAAP requires recognition of a deferred tax liability in the reporting period in which its intent to no longer permanently reinvest its historical undistributed foreign earnings is made. Although no U.S. federal taxes will be imposed on such future distributions of foreign earnings, in many cases the cash transfer will be subject to foreign withholding and other local taxes. Accordingly, at December 31, 2018, the Company has included a deferred tax liability of $56 million, mostly related to non-U.S. withholding taxes. Further, the Company previously recorded its provisional estimate based on E&P as distributable reserves was not available at that time. We have finalized our analysis using distributable reserves to compute the deferred tax liability.

~~Global Intangible Low-Taxed Income~~—In addition to the changes described above, the Tax Act imposes a U.S. tax on global intangible low-taxed income (“GILTI”) that is earned by certain foreign affiliates owned by a U.S. shareholder. The computation of GILTI is still subject to interpretation and additional clarifying guidance is expected, but is generally intended to impose tax on earnings of a foreign corporation that are deemed to exceed a certain threshold return relative to the underlying business investment. For purposes of the Consolidated and Combined Financial Statements, future taxes related to GILTI have not been included as they are being recorded as a current period expense in the reporting period in which the tax is incurred.

~~Supplemental Cash Flow Information~~—Included in Income taxes paid, net of refunds for 2017 on the Consolidated and Combined Statements of Cash Flows is the provisional tax charge settled with the Former Parent of $354 million due to the imposition of the mandatory transition tax on the deemed repatriation of certain undistributed foreign earnings. As noted above within the Mandatory Transition Tax section, this liability was ultimately reduced to $240 million in 2018 as an adjustment to equity in connection with the opening balance sheet (and will be paid to Honeywell over an 8 year period). Additionally, included within the change in 2017 deferred income taxes is the provisional tax charge of $980 million related to a reduction of estimated foreign and state taxes on undistributed earnings of its foreign affiliates. As noted above under “Tax expense (benefit)”, the Company recorded a tax benefit due to the mitigation of certain potential tax liabilities as part of the internal restructuring of Garrett’s business in advance of the Spin-Off. The balance as of December 31, 2018 is $56 million.

Trade ~~Receivables~~receivables include $5$61 million and $6$4 million of unbilled balances as of December 31, ~~2018~~2020 and ~~2017,~~2019, respectively. ~~These~~

The Company entered into arrangements with financial institutions to sell eligible trade receivables. For the years ended December 31, 2020 and December 31, 2019, the Company sold $473 million and $27 million of eligible receivables, respectively, without recourse, and accounted for these arrangements as a true sale.

The Company also received guaranteed bank notes without recourse, in settlement of accounts receivables, primarily in the Asia Pacific region. The Company can hold the bank notes until maturity, exchange them with suppliers to settle liabilities, or sell them to third party financial institutions in exchange for cash. For the years ended December 31, 2020 and December 31, 2019, the Company sold $160 million and $105 million of bank notes, respectively, without recourse, and accounted for these as true sales. As of December 31, 2020, the Company has pledged as collateral $18 million of guaranteed bank notes which have not been sold in order to be able to issue bank notes as payment to certain suppliers. Such pledged amounts are ~~billed~~included as Notes receivables in ~~accordance with the terms of customer contracts to which they relate. See~~ Accounts, notes and other receivables – Net (Note 8).

Depreciation and amortizationexpense was ~~$72~~$86 million, ~~$64~~$73 million and ~~$59~~$72 millionin ~~2018, 2017~~2020, 2019 and ~~2016,~~2018, respectively.

The change in the carryingamountof goodwill for the yearsended December31, ~~2018~~2020 and ~~2017~~2019 is as follows:

Due to the Chapter 11 filing, Accrued Liabilities that existed as of December 31, 2020 and were deemed pre-petition, unsecured were reclassified as Liabilities subject to compromise, refer to Note 2, Reorganization and Chapter 11 Proceedings.

The Company accrued repositioning costs related to projects to optimize our product costs and to right-size our organizational structure. Expenses related to the repositioning accruals are included in Cost of goods sold in our Consolidated and Combined Statement of Operations.

On October 6, 2020, the Bankruptcy Court entered an order granting interim approval of the Debtors’ entry into a Senior Secured Super-Priority Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”), with the lenders party thereto (as amended, restated, supplemented or otherwise modified from time to time, the “DIP Lenders”) and Citibank N.A. as administrative agent (the “DIP Agent”). On October 9, 2020 (the “Closing Date”), the Company, the DIP Agent and the DIP Lenders entered into the DIP Credit Agreement. The DIP Credit Agreement provides for a senior secured, super-priority term loan (the “DIP Term Loan Facility”) with a maximum principal amount of $200 million, $100 million of which was funded on the Closing Date and $100 million of which was subsequently funded on October 22, 2020 (the “Delayed Draw Borrowing Date”), following entry of the Bankruptcy Court’s final order approving the DIP Term Loan Facility on October 21, 2020. The proceeds of the DIP Term Loan Facility are to be used by the Debtors to (a) pay certain costs, premiums, fees and expenses related to the Chapter 11 Cases, (b) make payments pursuant to any interim or final order entered by the Bankruptcy Court pursuant to any “first day” motions permitting the payment by the Debtors of any prepetition amounts then due and owing; (c) make certain adequate protection payments in accordance with the DIP Credit Agreement and (d) fund working capital needs of the Debtors and their subsidiaries to the extent permitted by the DIP Credit Agreement.

The maturity date of the DIP Term Loan Facility is the earlier to occur of (a) March 31, 2021 (the “Scheduled Maturity Date”); provided, however, that upon the Company’s written request such Scheduled Maturity Date can be extended by three separate one-month extensions subject to (i) the payment of an extension fee to the Lenders equal to 0.50% of the principal amount of the Loans outstanding at the time of such extension, (ii) no default or Event of Default (as defined in the DIP Credit Agreement) existing at the time of such extension and (iii) accuracy of the representations and warranties in all material respects at the time of such extension and after giving effect thereto; and (b) the effective date of a plan of reorganization; and certain other events under the DIP Credit Agreement.

The outstanding principal amount under the DIP Term Loan Facility will bear interest at a rate equal to (x) prior to March 31, 2021, LIBOR (subject to a 1.00% LIBOR floor) plus 4.50% per annum and (y) following March 31, 2021, if the Scheduled Maturity Date has been extended at such time, LIBOR (subject to a 1.00% LIBOR floor) plus 5.50% per annum, in each case, payable every 30 days in arrears. On the Closing Date, the Company paid 1.00% in commitment fees on the total commitment plus 2.00% in fees in the form of original issue discount on the initial $100 million borrowing. On the Delayed Draw Borrowing Date, date the Company paid 2.00% in fees in the form of original issue discount on the $100 million delayed draw loan. Upon an event of default, all outstanding amounts under the DIP Credit Agreement will bear interest at a rate equal to the applicable interest rate plus an additional 2.00% per annum and be payable on demand.

Pursuant to the terms of the DIP Credit Agreement, certain subsidiaries of the Company that guarantee the obligations arising under the prepetition Credit Agreement and that are Debtors in the Chapter 11 Case have guaranteed the Company’s obligations under the DIP Credit Agreement. Subject to certain exceptions, the DIP Term Loan Facility is secured by a security interest in substantially all of the assets of the Company and the guarantors. The DIP Financing is subject to certain covenants, including, without limitation, related to the incurrence of additional debt, liens, the making of restricted payments, and the Company’s failure to comply with certain bankruptcy-related covenants, in each case as set forth in the DIP Credit Agreement. The DIP Credit Agreement contains representations, warranties and events of default that are customary for debtor-in-possession facilities of this type. The DIP Financing is subject to certain prepayment events, including, without limitation, upon the sale of certain assets, in each case as set forth in the DIP Credit Agreement.

On October 12, 2020, the Company, the DIP Agent and the DIP Lenders entered into the First Amendment to the DIP Credit Agreement (the “First Amendment”). The First Amendment eliminates the obligation for the Company to pay certain fees to the DIP Lenders in connection with certain prepayment events under the DIP Credit Agreement.

The principal amounts outstanding on ~~long-term debt and the revolving credit facility~~Debtor-in-possession financing are as follows:

~~On September 27, 2018, we entered into a~~Pre-petition Long-Term Debt during the Chapter 11 Cases

We are party to the Prepetition Credit Agreement, by and among us, Garrett LX I S.à r.l., Garrett LX II S.à r.l. (“Lux Guarantor”), Garrett LX III S.à r.l. (“Lux Borrower”), Garrett Borrowing LLC (in such capacity, the “US Co-Borrower”), and Honeywell Technologies Sàrl (“Swiss Borrower” and, together with Lux Borrower and US Co-Borrower, the “Borrowers”), the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”).

~~The Credit Agreement provides for senior secured financing of approximately the Euro equivalent of $1,254 million,~~ consisting ~~of (i)~~of: a seven-year ~~senior secured first-lien~~ term B loan facility, ~~which consists~~consisting of a tranche denominated in Euro of €375 million and a tranche denominated in U.S. Dollars of $425 million (the “Term B Facility”)~~, (ii)~~ ; a five-year ~~senior secured first-lien~~ term A loan facility in an aggregate principal amount of €330 million (the “Term A Facility” and, together with the Term B Facility, the “Term Loan Facilities”); and ~~(iii)~~ a five-year ~~senior secured first-lien~~ revolving credit facility in an aggregate principal amount of €430 million ~~with revolving loans to Swiss Borrower, to be made available in a number of currencies including Australian Dollars, Euros, Pounds Sterling, Swiss Francs, U.S. Dollars and Yen~~ (the “Revolving Facility” and, together with the Term Loan Facilities, the “Senior Secured Credit Facilities”). ~~Each of the Revolving Facility and the Term A Facility matures five years after the effective date of the~~The Prepetition Credit Agreement in each case with certain extension rights in the discretion of each lender. The Term B Facility matures seven years after the effective date of the Credit Agreement, with certain extension rights in the discretion of each lender.

The Senior Credit Facilities are subject to an interest rate, at our option, of either (a) base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the United States, (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the one month adjusted LIBOR rate, plus 1% per annum (“ABR”), (b) an adjusted LIBOR rate (“LIBOR”) (which shall not be less than zero), or (c) an adjusted EURIBOR rate (“EURIBOR”) (which shall not be less than zero), in each case, plus an applicable margin. The applicable margin for the U.S. Dollar tranche of the Term B Facility is currently 2.50% per annum (for LIBOR loans) and 1.50% per annum (for ABR loans) while that for the Euro tranche of the Term B Facility is currently 2.75% per annum (for EURIBOR loans). The applicable margin for each of the Term A Facility and the Revolving Credit Facility varies basedwas amended on our leverage ratio. Accordingly, the interest rates for the Senior Credit Facilities will fluctuate during the term of the Credit Agreement based on changes in the ABR, LIBOR, EURIBOR or future changes in our leverage ratio. Interest payments with respect to the Term Loan Facilities are required either on a quarterly basis (for ABR loans) or at the end of each interest period (for LIBOR and EURIBOR loans) or, if the duration of the applicable interest period exceeds three months, then every three months.

We are obligated to make quarterly principal payments throughout the term of the Term Loan Facilities according to the amortization provisions in the Credit Agreement. Borrowings under the Credit Agreement are prepayable at our option without premium or penalty, subject to a 1.00% prepayment premium in connection with any repricing transaction with respect to the Term B Facility in the first six months after the effective date of the Credit Agreement. We may request to extend the maturity date of all or a portion of the Senior Credit Facilities subject to certain conditions customary for financings of this type. The Credit Agreement also contains certain mandatory prepayment provisions in the event that we incur certain types of indebtedness or receive net cash proceeds from certain non-ordinary course asset sales or other dispositions of property, in each case subject to terms and conditions customary for financings of this type.

~~The schedule of principal payments on long-term debt and the revolving credit facility is as follows:~~

The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit our and our subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends, to make other distributions or redemptions/ repurchases, in respect of the our and our subsidiaries’ equity interests, to engage in transactions with affiliates, amend certain material documents or to permit the International Financial Reporting Standards equity amount of Lux Borrower to decrease below a certain amount. The Credit Agreement also contains financial covenants requiring the maintenance of a consolidated total leverage ratio of not greater than 4.25 to 1.00 (with step-downs to (i) 4.00 to 1.00 in approximately 2019, (ii) 3.75 to 1.00 in approximatelyJune 12, 2020 ~~and (iii) 3.50 to 1.00 in approximately 2021), and a consolidated interest coverage ratio of not less than 2.75 to 1.00. We are in compliance with our financial covenants as of December 31, 2018.~~(the “2020 Amendment”).

On September 27, 2018, we completed the offering of €350 million (approximately ~~$400 million)~~$410 million based on exchange rates as of September 27, 2018) in aggregate principal amount of 5.125% senior notes due 2026 (the “Senior Notes”). The Senior Notes bear interest at a fixed annual interest rate of 5.125% and mature on October 15, 2026.

The Senior Notes were issued pursuant to an Indenture, dated September 27, 2018 (the “Indenture”), which, among other things and subject to certain limitations and exceptions, limits our ability and the ability of our restricted subsidiaries to: (i) incur, assume or guarantee additional indebtedness or issue certain disqualified equity interests and preferred shares, (ii) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments, (iii) make investments, (iv) consummate certain asset sales or transfers, (v) engage in certain transactions with affiliates, (vi) grant or assume certain liens on assets to secure debt unless the Senior Notes are secured equally and ratably (vii) restrict dividends and other payments by certain of their subsidiaries and (vii) consolidate, merge, sell or otherwise dispose of all or substantially all of our or our restricted subsidiaries’ assets.

All debt issuance costs, except for those associated to the Revolving Credit Facility, are deferred and recognized as a direct deduction to the related debt liability and are amortized to interest expense over the debt term. The company paid approximately $37 million of debt issuance costs in connection with the Term A Facility,, Term B Facility, and Senior Notes.

~~The unutilized portion~~As a result of the ~~Revolving Credit Facility is subject~~Chapter 11 Cases, and in order to ~~an annual commitment fee~~adjust the carrying amount of ~~0.40%~~the debt to ~~0.50% depending on~~ the ~~Company’s consolidated leverage ratio.~~ expected allowed claim amount in accordance with ASC 852, the Company expensed $6 million of deferred issuance costs related to the pre-petition Senior Notes which are not fully secured. These costs were recorded to Reorganization items, net, in the Consolidated and Combined Statement of Operations for the year ended December 31, 2020. Refer to Note 2, Reorganization and Chapter 11 Proceedings for further discussion.

Debt issuance costs associated with the Revolving Credit Facility were capitalized in Other assets and are amortized to interest expense over the debt term. Approximately, $6 million of debt issuance costs were paid in connection with the Revolving Credit Facility.

~~Future minimum lease payments under operating leases having initial non-cancellable lease terms in excess~~The principal amounts outstanding on our Senior Secured Credit Facilities and the Senior Notes as of ~~one year~~December 31, 2020 and December 31, 2019 are as follows:

The commencement of the Chapter 11 Cases constituted an event of default that accelerated the Company’s obligations and terminated undrawn commitments, as applicable, under the Prepetition Credit Agreement. The Prepetition Credit Agreement provides that as a result of the commencement of the Chapter 11 Cases, the principal, interest and all other amounts due thereunder shall be immediately due and payable. Any efforts to enforce the payment obligations under the Prepetition Credit Agreement are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Prepetition Credit Agreement are subject to the applicable provisions of the Bankruptcy Code.

During the Chapter 11 Cases and pursuant to an order of the Bankruptcy Court, we make monthly payments of adequate protection at the contractual non-default rate of interest on loans and certain other obligations under our Senior Secured Credit Facilities.

Following commencement of the Chapter 11 Cases, the contractual non-default rate of interest that is applicable under Senior Secured Credit Facilities is either (a) in the case of dollar denominated borrowings, base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the United States, (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the one month adjusted LIBOR rate, plus 1% per annum (“ABR”), (b) in the case of borrowings denominated in certain permitted foreign currencies other than dollars or euros, an adjusted LIBOR rate (“LIBOR”) (which shall not be less than zero), or (c) in the case of borrowings denominated in euros, an adjusted EURIBOR rate (“EURIBOR”) (which shall not be less than zero), in each case, plus an applicable margin. Pursuant to the 2020 Amendment, (i) the margin applicable to loans under the Term B Facility increased by 75 basis points through the maturity date and (ii) the margin applicable to loans under the Revolving Facility and Term A Facility increased by 25 basis points until the Company delivers consolidated financial statements as of and for its first fiscal quarter ending on or after the last day of the Relief Period (as defined in the 2020 Amendment). Pursuant to the 2020 Amendment, the margin applicable to loans under our Senior Secured Credit Facilities increased by 25 basis points on September 4, 2020 following a downgrade in our corporate credit rating by S&P Global ratings.

The applicable margin for the U.S. Dollar tranche of the Term B Facility is currently 2.50% per annum (for ABR loans) while that for the euro tranche of the Term B Facility is currently 3.75% per annum (for EURIBOR loans). The applicable margin for each of the Term A Facility and the Revolving Facility varies based on our leverage ratio which is increased by 25 basis points until the Company delivers consolidated financial statements as of and for its first fiscal quarter ending on or after the last day of the Relief Period. Accordingly, the interest rates for the Senior Secured Credit Facilities will fluctuate during the term of the Credit Agreement based on changes in the ABR, LIBOR, EURIBOR or future changes in our corporate rating or leverage ratio.

In connection with our Chapter 11 cases, all pre-petition debt amounts have been stayed and separately stated as part of Liabilities subject to compromise. Their resolution will be based upon the requirements in the Plan of Reorganization. Given the uncertainties related to the resolution of the Chapter 11 cases, all pre-petition debt has been included at their contractual maturities.

We have operating leases that primarily consist of real estate, machinery and equipment. Our leases have remaining lease terms of up to 10 years, some of which include options to extend the leases for up to two years, and some of which include options to terminate the leases within the year.

Rent expense under ASC 840 was $14 million ~~$10 million and $11 million~~ in ~~2018, 2017 and 2016, respectively.~~2018.

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

Credit and Market Risk—We continually monitor the creditworthiness of our customers to which we grant credit terms in the normal course of business. The terms and conditions of our credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer.

Foreign Currency Risk Management—We are exposed to market risks from changes in currency exchange rates. These exposures may impact future earnings and/or operating cash flows. Our exposure to market risk for changes in foreign currency exchange rates arises from international financing activities between subsidiaries, foreign currency denominated monetary assets and liabilities and transactions arising from international trade.

For the periods prior to the Spin-Off, as part of Honeywell´s centralized treasury function, the primary objective was to preserve the U.S. Dollar value of foreign currency denominated cash flows and earnings. We hedged major exposures to foreign currency denominated cash flows to smoothen the effects of fluctuations in foreign currency exchange rates on earnings. We designated the related hedging instruments as cash flow hedges, except in cases where the hedged item was recognized on balance sheet. The gain or loss from a derivative financial instrument designated as a cash flow hedge was classified in the same line of the Consolidated and Combined Statements of Operations as the offsetting loss or gain on the hedged item.

~~The historical treasury strategies implemented by Honeywell’s centralized treasury function differ from our treasury strategy as a standalone company, which is described below.~~

We hedge currency exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through foreign currency exchange forward contracts (foreign currency exchange contracts). We hedge monetary assets and liabilities denominated in non-functional currencies. Prior to conversion into U.S. dollars, these assets and liabilities are remeasured at spot exchange rates in effect on the balance sheet date. The effects of changes in spot rates are recognized in earnings and included in Non-operating (income) expense. ~~Open foreign currency exchange contracts (excluding the below cross-currency swap) mature in the next four months.~~

At December 31, ~~2018~~2020 and December 31, ~~2017,~~2019, we had contracts with aggregate gross notional amounts of ~~$838~~$19 million and ~~$928~~$1,820 million, respectively, to limit interest rate risk and to exchange 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.

As a result of the Chapter 11 Cases, the Company has been limited in its ability to enter into hedging transactions. The Company has obtained Bankruptcy Court authorization for continuing hedging activities in the ordinary course of business, however, counterparties have either been unwilling to enter into hedging transactions with the Company during the Chapter 11 Cases or have required the Company to fully cash collateralize its obligations under the relevant hedging instrument, which has effectively reduced the Company’s ability to hedge foreign currency exposures beyond those relating to trade payables and receivables.

Fair Value of Financial Instruments—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~~.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 December 31, ~~2018~~2020 and December 31, ~~2017:~~2019:

					Fair Value															Fair Value
	Notional Amounts				Assets					Liabilities						Notional Amounts				Assets					Liabilities
	December 31, 2018		December 31, 2017		December 31, 2018			December 31, 2017		December 31, 2018			December 31, 2017			December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019			December 31, 2020		December 31, 2019
Designated forward currency exchange contracts	$	—	$	556	$	—		$	—	$	—		$	35	^(d)		—	$	392		—	$	5	^(a)		—	$	1	^(b)
Undesignated instruments:
Undesignated cross-currency swap		425		—		16	^(a)		—		—			—			—		420		—		—	^(c)		—		1
Undesignated interest rate swap																	—		561		—		—			—		1	^(d)
Undesignated forward currency exchange contracts		413		372		4	^(b)		—		1	^(c)		2	^(d)		19		447		—		2	^(a)		—		3	^(b)
		838		372		20			—		1			2
	$	838	$	928	$	20		$	—	$	1		$	37
Total undesignated instruments																	19		1,428		—		2			—		5
Total designated and undesignated instruments																$	19	$	1,820	$	—	$	7		$	—	$	6

On June 7, 2019, the Company entered into interest rate swap contracts to limit its exposure to interest rate risk by converting the interest payments on variable rate debt to fixed rate payments. These interest rate swaps have not been designated as hedging instruments for accounting purposes.

The Company initiated a cash flow hedging program in the first quarter of 2019 and has since then entered into forward currency exchange contracts to mitigate exposure to foreign currency exchange rate volatility and the associated impact on earnings related to forecasted foreign currency commitments. These forward currency exchange contracts 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 (loss) until the underlying transactions are recognized in earnings.

On September 27, 2018, the Company entered into a floating-floating cross-currency swap contract to hedge the foreign currency exposure from foreign currency-denominated debt which will mature on September 27, 2025. The gain or loss on this derivative instrument is recognized in earnings and included in Non-operating (income) ~~expense.~~. For the year ended December 31, ~~2018, gains~~2020, losses recorded in Non-operating expense (income) ~~expense,~~, under the cross-currency swap contract were ~~$16~~$20 million. For the year ended December 31, 2019, gains recorded in Non-operating expense (income), under the cross-currency swap contract were $1 million.

The foreign currency exchange, interest rate swap and cross-currency swap contracts are valued using market observable inputs. As such, these derivative instruments are classified within Level 2. The assumptions used in measuring fair value of the cross-currency swap are considered ~~level~~Level 2 inputs, which are based upon market observable interest rate curves, cross currency basis curves, credit default swap curves, and foreign exchange rates.

Following our voluntary filing for Chapter 11 protection, and as noted in the table above, the majority of our foreign exchange, interest rate swap, and cross-currency swap contracts were terminated at or prior to September 30, 2020. All outstanding amounts as of December 31, 2020 are classified as Other Liabilities and are fully secured and payable upon Emergence. Any valuation difference from our Petition Date to the termination date will be reflected in Reorganization items, net. See Note 2, Reorganization and Chapter 11 Proceedings, for additional information.

A number of our forward currency exchange contracts are also designated as accounting hedges. Upon termination, these amounts have been dedesignated. As the Company still anticipates the forecasted transaction to commence, the amounts in accumulated comprehensive incomes will be released based on our original forecast.

The carrying value of Cash, ~~and~~ cash equivalents ~~Marketable securities (Level 2),~~and restricted cash, Account receivables ~~notes~~ and ~~other~~Notes and Other receivables ~~Due from related parties, Account payables, and Due to related parties~~ contained in the Consolidated ~~and Combined~~ Balance Sheets approximates fair value.

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

The Company determined the fair value of certain of its long-term debt and related current maturities utilizing transactions in the listed markets for similar liabilities. As such, the fair value of the long-term debt and related current maturities is considered ~~level~~Level 2.

Due to the Chapter 11 filing, Other Liabilities that existed as of December 31, 2020 and were deemed pre-petition, unsecured were reclassified as Liabilities subject to compromise, refer to Note 2, Reorganization and Chapter 11 Proceedings.

The changes in accumulatedothercomprehensiveincome(loss)are providedin the tablesbelow:

	Pre-Tax			Tax			After-Tax
Year Ended December 31, 2016
Foreign exchange translation adjustment	$	29		$	—		$	29
Pension adjustments		(12	)		—			(12	)
Changes in fair value of effective cash flow hedges		38			(5	)		33
	$	55		$	(5	)	$	50
Year Ended December 31, 2017
Foreign exchange translation adjustment	$	72		$	—		$	72
Pension adjustments		—			—			—
Changes in fair value of effective cash flow hedges		(84	)		7			(77	)
	$	(12	)	$	7		$	(5	)	Pre-Tax			Tax			After-Tax
Year Ended December 31, 2018
Foreign exchange translation adjustment	$	(198	)	$	—		$	(198	)	$	(198	)	$	—		$	(198	)
Pension adjustments		(2	)		—			(2	)		(2	)		—			(2	)
Changes in fair value of effective cash flow hedges		37			(2	)		35			37			(2	)		35
	$	(163	)	$	(2	)	$	(165	)	$	(163	)	$	(2	)	$	(165	)
Year Ended December 31, 2019
Foreign exchange translation adjustment										$	59		$	8		$	67
Pension adjustments											(18	)		4			(14	)
Changes in fair value of effective cash flow hedges											2			2			4
										$	43		$	14		$	57
Year Ended December 31, 2020
Foreign exchange translation adjustment										$	(212	)	$	(22	)	$	(234	)
Pension adjustments											(17	)		(1	)		(18	)
Changes in fair value of effective cash flow hedges											(8	)		1			(7	)
										$	(237	)	$	(22	)	$	(259	)

Total

Foreign

Changes in Fair

Accumulated

Exchange

Value of

Other

Translation

Effective Cash

Pension

Comprehensive

Adjustment

Flow Hedges

Adjustments

Income (Loss)

Balance at December 31, 2016

$
212

$
42

$
(11
)

$
243

Other comprehensive income (loss) before
   reclassifications

72

(66
)

—

6

Amounts reclassified from accumulated other
   comprehensive income (loss)

—

(11
)

—

(11
)
Net current period other comprehensive income
   (loss)

72

(77
)

—

(5
)
Balance at December 31, 2017

$
284

$
(35
)

$
(11
)

$
238

Other comprehensive income (loss) before
   reclassifications

(198
)

12

(5
)

(191
)
Amounts reclassified from accumulated other
   comprehensive income

—

23

3

26

Net current period other comprehensive income
   (loss)

(198
)

35

(2
)

(165
)
Balance at December 31, 2018

$
86

$
—

$
(13
)

$
73

										Total
	Foreign			Changes in Fair						Accumulated
	Exchange			Value of						Other
	Translation			Effective Cash			Pension			Comprehensive
	Adjustment			Flow Hedges			Adjustments			Income (Loss)
Balance at December 31, 2018	$	86		$	0		$	(13	)	$	73
Other comprehensive income (loss) before reclassifications		67			27			(27	)		67
Amounts reclassified from accumulated other comprehensive income		—			(23	)		13			(10	)
Net current period other comprehensive income (loss)		67			4			(14	)		57
Balance at December 31, 2019	$	153		$	4		$	(27	)	$	130
Other comprehensive income (loss) before reclassifications		(234	)		(3	)		(29	)		(266	)
Amounts reclassified from accumulated other comprehensive income		—			(4	)		11			7
Net current period other comprehensive income (loss)		(234	)		(7	)		(18	)		(259	)
Balance at December 31, 2020	$	(81	)	$	(3	)	$	(45	)	$	(129	)

Year ended December 31, 2018
Year ended December 31, 2020
Affected Line in the Consolidated and Combined Statement of Operations
						Selling,												Selling,
				Cost of		General and									Cost of			General and
	Net			Goods		Administrative		Non-Operating (Income)					Net		Goods			Administrative		Non-Operating (Income)
	Sales			Sold		Expenses		Expense		Total			Sales		Sold			Expenses		Expense		Total
Amortization of Pension and Other Postretirement Items:
Actuarial losses recognized	$	—		$	—	$	—	$	3	$	3		$	—	$	—		$	—	$	13	$	13
Losses (gains) on cash flow hedges		(1	)		26		—		—		25			—		(4	)		—		—		(4	)
Tax expense (benefit)											(2	)		—		—			—		—		(2	)
Total reclassifications for the period, net of tax										$	26											$	7

Year ended December 31, 2017
Year ended December 31, 2019
Affected Line in the Consolidated and Combined Statement of Operations
						Selling,												Selling,
			Cost of			General and									Cost of			General and
	Net		Goods			Administrative		Non-Operating (Income)					Net		Goods			Administrative		Non-Operating (Income)
	Sales		Sold			Expenses		Expense		Total			Sales		Sold			Expenses		Expense		Total
Amortization of Pension and Other Postretirement Items:
Actuarial losses recognized	$	—	$	—		$	—	$	—	$	—		$	—	$	—		$	—	$	13	$	13
Losses (gains) on cash flow hedges		—		(14	)		—		—		(14	)		—		(25	)		—		—		(25	)
Tax expense (benefit)											3												2
Total reclassifications for the period, net of tax										$	(11	)										$	(10	)

On September 14, 2018, our Board adopted, and Honeywell, as our sole stockholder, approved, the 2018 Stock Incentive Plan of Garrett Motion Inc. and its Affiliates (the “Stock Incentive Plan”) and the 2018 Stock Plan for Non-Employee Directors (the “Director Equity Plan”). The Stock Incentive Plan provides for the grant of stock options, stock appreciation rights, performance awards, restricted stock units, restricted stock, other stock-based awards, and cash-based awards to employees of Garrett or its affiliates, and independent contractors or consultants of Garrett. The maximum aggregate number of shares of our common stock that may be issued under the Stock Incentive Plan is 10,000,000 shares and, for the Director Equity Plan, 400,000 shares. Up to 5,000,000 shares may be granted as incentive stock options under the Stock Incentive Plan.

As of December 31, ~~2018, 6,620,619~~2020, there were 5,641,452 and 344,860 shares of our common stock ~~were~~ available for future issuance under the Stock Incentive ~~Plan.~~

~~As of December 31, 2018, no awards have been granted to members of our Board under the~~Plan and Director Equity Plan, ~~and 400,000 shares of our common stock remain available for future issuance under such plan.~~respectively.

Restricted Stock Units —Restricted stock unit (“RSU”) awards are issued to certain key employees and directors at fair market value at the date of grant. RSUs typically vest over a period of three or four years, and when vested, each unit entitles the holder to one share of our common stock.

The following table summarizes information about RSU activity related to our Stock Incentive Plan and Director Equity Plan for each of the ~~year ended December 31, 2018:~~periods presented:

As of December 31, ~~2018,~~2020, there was approximately ~~$25~~$9 million of total unrecognized compensation cost related to unvested RSUs granted under our Stock Incentive Plan, which is expected to be recognized over a weighted-average period of ~~2.8~~1.5 years.

The following table summarizes the impact to the Consolidated and Combined Statement of Operations from RSUs:

Stock Options — The exercise price, term and other conditions applicable to each option granted under our stock incentive plans are generally determined by the Compensation Committee of the Board. The exercise price of stock options is set on the grant date and may not be less than the fair market value per share of our stock on that date. The fair value is recognized as an expense over the employee’s requisite service period (generally the vesting period of the award). Options generally vest over a period four years and expire after ten years.

The following table summarizes the impact to the Consolidated and Combined Statement of Operations from stock options. There were 0 stock options granted prior to 2019.

The fair value related to stock options granted was determined using Black-Scholes option pricing model and the weighted average assumptions are shown in the table below:

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. Volatility is determined based on the historical volatility of peer companies over a period corresponding to the expected term. Expected term is determined using a simplified approach, calculated as the midpoint between the vesting period and the contractual term of the award. The risk-free interest rate is determined based upon the yield of an outstanding U.S. Treasury note with a term equal to the expected term of the option granted.

The following table summarizes information about stock option activity related to the ~~income statement~~Stock Incentive Plan for each of the periods presented:

There were 0 stock options granted in 2020. NaN options were exercised during the year ended December 31, 2020. As of December 31, 2020, there was 0 intrinsic value for the outstanding and exercisable shares under options.

As of December 31, 2020, there was $2 million of unrecognized stock-based compensation expense related to stock options that is expected to be recognized over a weighted average period of approximately 2.2 years.

Performance Stock Units — The Company has issued PSUs under its 2019 and 2020 long term incentive plans which, upon vesting, entitles the holder to shares of our common stock. The actual number of shares an employee receives for each PSU depends on the Company’s performance against various measures. For the 2019 plan, the performance measures are related to organic revenue growth, adjusted EBITDA and leveraged cash flows, weighted 20%, 40%, and 40%, respectively, over a three-year performance period from January 1, 2019 through December 31, 2021. For the 2020 plan, the performance measures are related to relative organic revenue growth, adjusted free cash flow conversion, and relative total shareholder return (“TSR”), weighted 30%, 30%, and 40%, respectively, over a three-year performance period from January 1, 2020 through December 31, 2022. In addition, for certain key employees, the PSUs granted under the 2020 plan were subject to an absolute TSR modifier. Each grantee is granted a target level of PSUs and may earn between 0% and 200% (250% for employees whose PSUs were subject to an absolute TSR modifier) of the target level depending on the Company’s performance against the financial goals. The PSUs granted under the 2020 plan were forfeited as a condition to the receipt of the continuity awards, as explained below.

The following table summarizes information about PSU activity related to the Stock Incentive Plan for each of the periods presented:

The fair value of the PSUs is based on the fair market value of the Company’s stock at the grant date. The number of underlying shares to be issued will be based on actual performance achievement over the performance period. The per unit weighted average fair value at the date of grant for PSUs granted during the year ended December 31, 2020 was $8.36. The fair value of each PSU grant is amortized monthly into compensation expense on a graded vesting (accelerated) basis over a vesting period of 36 months. The accrual of compensation costs is based on our estimate of the final expected value of the award and is adjusted as required for the performance-based condition. The Company estimates forfeitures at time of issuance, which results in a reduction in compensation expense. As the payout of PSUs includes dividend equivalents, no separate dividend yield assumption is required in calculating the fair value of the PSUs. The Company currently does not pay dividends.

As of December 31, 2020, there was approximately $1 million of total unrecognized compensation cost related to non-vested PSUs granted under the Stock Incentive Plan which is expected to be recognized over a weighted-average period of 1 year.

The following table summarizes the impact to the Consolidated and Combined Statement of Operations from PSUs. There were 0 PSUs granted prior to 2019.

Continuity Awards— In June 2020, in response to the unprecedented and ongoing market uncertainty resulting from the COVID-19 pandemic and in connection with the Board’s evaluation of strategic alternatives for the Company, the Compensation Committee approved one-time cash continuity awards (“Continuity Awards”) to ensure retention of key individuals in exchange for the forfeiture of RSUs and PSUs granted in February 2020. The Continuity Awards total $11 million, with $9 million paid in June 2020 and $2 million expected to be paid in 2021. The Continuity Awards are subject to repayment if prior to June 2021, the recipient has a qualifying termination of employment. Given the Continuity Awards have a 1-year service requirement, the combined transaction is accounted for as a modification to liability-classified awards. The total incremental compensation cost resulting from the modification is $5 million. As of December 31, 2020, there was $5 million of unrecognized compensation cost related to the Continuity Awards that is expected to be recognized over a weighted-average period of approximately 0.5 years.

The following table summarizes information about Continuity Award activity for the year ended December 31, ~~2018:~~2020:

The following table summarizes the impact to the Consolidated and Combined Statement of Operations from Continuity Awards for the year ended December 31, 2020.

Stock Based Awards Granted by Honeywell—For periods prior to the Spin-Off, Honeywell maintained stock-based compensation plans for the benefit of its officers, directors and employees. Under the Former Parent´s stock-based compensation plans, Honeywell awarded RSUs, stock options and PSUs to certain employees. Stock-based compensation expense related to awards granted by Honeywell recognized in the Consolidated and Combined Statements of Operations amounted to $16 million ~~$15 million and $12 million~~ for the ~~years~~year ended December 31, 2018 ~~2017 and 2016, respectively,~~ of which approximately $10 ~~million, $8 million and $5~~ million are specifically identified for employees within the Business ~~respectively~~ and $6 ~~million, $7 million and $7~~ million is related to shared employees not specifically identifiable to the ~~Business, respectively.~~Business. These amounts represent stock-based compensation expenses attributable to the Business based on the awards and terms previously granted under the incentive compensation plans to employees within the Business and an allocation of Former Parent’s corporate and shared functional employee stock based compensation expenses. Accordingly, the amounts presented are not necessarily indicative of current and future awards and do not necessarily reflect the results that the Business would have experienced as an independent company for the periods presented.

~~The activity related to stock based awards granted by Honeywell to employees of the Business for the year ended December 31, 2017 consisted of the following:~~

On October 1, 2018, the date of consummation of the Spin-Off, 74,070,852 shares of the Company’s common stock were distributed to Honeywell stockholders of record as of September 18, 2018 who held their shares through the Distribution Date. Basic and Diluted EPS for all historical periods prior to the Spin-Off reflect the number of distributed shares, or 74,070,852 shares. For 2018, these shares are treated as issued and outstanding from January 1, 2018 to the Spin-Off for purposes of calculating basic earnings per share.

The details of the earnings per share calculations for the years ended December 31, ~~2018, 2017~~2020, 2019 and ~~2016~~2018 are as follows:

Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. ~~There were no anti-dilutive~~

The diluted earnings per share calculations exclude the effect of stock options when the options’ assumed proceeds exceed the average market price of the common shares during the period. For the years ended December 31, 2020 and December 31, 2019, the weighted number of stock options excluded from the ~~computation of Diluted EPS~~computations was 428,690 and 483,408, respectively. These stock options were outstanding for ~~any~~the years ended December 31, 2020 and December 31, 2019, respectively.

Commencement of the ~~periods presented.~~Chapter 11 Cases automatically stayed the proceedings and actions against us that are described below, in addition to actions seeking to collect pre-petition indebtedness or to exercise control over the property of the Company’s bankruptcy estates. The Plan filed by the Debtors, if confirmed by the Bankruptcy Court, will provide for the treatment of claims against the Company’s bankruptcy estates, including pre-petition liabilities that have not been satisfied or addressed during the Chapter 11 Cases.

See Note ~~21. Commitments~~1, Background and ~~Contingencies~~Basis of Presentation and Note 2, Reorganization and Chapter 11 Proceedings for additional information on the Chapter 11 Cases, the RSA, the Stalking Horse Purchase Agreement, the PSA, the ECBA, the Transaction and the DIP Credit Agreement.

Honeywell is a defendant in asbestos-related personal injury actions mainly related to its legacy Bendix friction materials (“Bendix”) business. The Bendix business manufactured automotive brake linings that contained chrysotile asbestos in an encapsulated form. Claimants consist largely of individuals who allege exposure to asbestos from brakes from either performing or being in the vicinity of individuals who performed brake replacements. Certain operations that were part of the Bendix business were transferred to Garrett.

In connection with the Spin-Off, weGarrett ASASCO, a wholly owned indirect subsidiary of the Company, entered into ~~an Indemnification and Reimbursement~~the Honeywell Indemnity Agreement with Honeywell on September 12, 2018. As of the Spin-Off date of October 1, 2018, ~~we are~~Garrett ASASCO is obligated to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of this ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement, ~~we are~~Garrett ASASCO is responsible for paying to Honeywell such amounts, up to a cap of an amount equal to the Euro-to-U.S. dollar exchange rate determined by Honeywell as of a date within two business days prior to the date of the Distribution (1.16977 USD = 1 EUR)

equivalent of $175 million in respect of such liabilities arising in any given calendar year. The payments that ~~we are~~Garrett ASASCO is required to make to Honeywell pursuant to the terms of ~~this agreement~~the Honeywell Indemnity Agreement will not be deductible for U.S. federal income tax purposes. The ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year

were less than $25 million as converted into Euros in accordance with the terms of the agreement. During the ~~fourth~~first quarter of ~~2018, we~~2020, Garrett ASASCO paid Honeywell the Euro-equivalent of ~~$41~~$35 million in connection with the ~~Indemnification~~Honeywell Indemnity Agreement. Honeywell and ~~Reimbursement~~Garrett agreed to defer the payment under the Honeywell Indemnity Agreement due May 1, 2020 to December 31, 2020 (the “Q2 Payment”), however we do not expect Garrett ASASCO to make payments to Honeywell under the Honeywell Indemnity Agreement during the pendency of the Chapter 11 Cases. The Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for, among other things, the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Indemnity Agreements.

On December 2, 2019, the Company and its subsidiary, Garrett ASASCO, filed a Summons with Notice in the Commercial Division of the Supreme Court of the State of New York, County of New York (the “NY Supreme Court”) commencing an action (the “Action”) against Honeywell, certain of Honeywell’s subsidiaries and certain of Honeywell’s employees for declaratory judgment, breach of contract, breach of fiduciary duties, aiding and abetting breach of fiduciary duties, corporate waste, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. On January 15, 2020, the Company and Garrett ASASCO, filed a Complaint in the NY Supreme Court in connection with the Action. The lawsuit arises from the Honeywell Indemnity Agreement. The Company is seeking declaratory relief; compensatory damages in an amount to be determined at trial; rescission of the Honeywell Indemnity Agreement; attorneys’ fees and costs and such other and further relief as the Court may deem just and proper. There can be no assurance as to the time and resources that will be required to pursue these claims or the ultimate outcome of the lawsuit. Among other claims, Garrett asserts that Honeywell is not entitled to indemnification because it improperly seeks indemnification for amounts attributable to punitive damages and intentional misconduct, and because it has failed to establish other prerequisites for indemnification under New York law. Specifically, the claim asserts that Honeywell has failed to establish its right to indemnity for each and every asbestos settlement of the thousands for which it seeks indemnification. The Action seeks to establish that the Honeywell Indemnity Agreement is not enforceable, in whole or in part.On March 5, 2020, Honeywell filed a “Notice of Motion to Dismiss Garrett’s Complaint.”. On September 20, 2020, Garrett and certain of its subsidiaries each filed the Chapter 11 Cases. On September 23, 2020, Garrett removed the case to the United States District Court for the Southern District of New York, and on September 24, 2020, the case was referred to the Bankruptcy Court, where the case is currently pending. On October 13, 2020, Honeywell filed a motion to dismiss in the Bankruptcy Court. Garrett does not believe Honeywell’s motion has merit. A pre-trial conference took place on October 22, 2020.The Court heard argument on Honeywell’s pending motion to dismiss on November 18, 2020; the Court has not yet issued a decision. On November 2, 2020, the Garrett entities that are Debtors and Debtors in Possession filed a Motion Pursuant to Sections 105(a) and 502(c) To Establish Procedures For Estimating The Maximum Amount Of Honeywell’s Claims And Related Relief (“Motion”). The Court heard argument on the Motion on November 18. The Court ordered an estimation proceeding to take place to estimate all of Honeywell’s claims against the Garrett entities that are Debtors and Debtors in Possession.

On December 18, 2020, Honeywell filed proofs of claim in the Chapter 11 Cases, asserting that the Company owes at least $1.9 billion in respect of such claims. The Bankruptcy Court was scheduled to estimate the amount of Honeywell’s claims in an estimation proceeding that was scheduled to commence on February 1, 2021. As noted below, the estimation proceeding has been stayed by order of the Bankruptcy Court.

On January 11, 2021, the Company announced that it had agreed to settle Honeywell’s claims as part of a revised Plan. The Plan is subject to various conditions, including approval by the Bankruptcy Court.

Under the Plan, Honeywell would receive a $375 million payment and Series B Preferred Stock payable in installments of $35 million in 2022, and $100 million annually 2023-2030. The Company would have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to $584 million as of the Emergence date (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make a partial payment of the Series B Preferred Stock, reducing the present value to $400 million, at any time within 18 months of Emergence.

On January 15, 2021, the Bankruptcy Court ordered that the Action and the estimation proceeding both be stayed pending the Bankruptcy Court’s consideration of the Plan. The confirmation hearing for the Plan is currentlyscheduled to take place in April 2021, however the hearing may be rescheduled for a later date.

On September 12, 2018, we also entered into a ~~Tax Matters Agreement~~tax matters agreement with Honeywell (the “Tax Matters Agreement”), which governs the respective rights, responsibilities and obligations of Honeywell and us after the Spin-Off with respect to all tax matters (including tax liabilities, tax attributes, tax returns and tax contests). The Tax Matters Agreement generally provides that, following the Spin-Off date of October 1, 2018, we are responsible and will indemnify Honeywell for all taxes, including income taxes, sales taxes, ~~VAT~~value-added and payroll taxes, relating to Garrett for all periods, including periods prior to the completion date of the Spin-Off. Among other items, as a result of the mandatory transition tax imposed by the Tax Cuts and Jobs Act, ~~one of our subsidiaries~~Garrett ASASCO is required to make payments to a subsidiary of Honeywell in the amount representing the net tax liability of Honeywell under the mandatory transition tax attributable to us, as determined by Honeywell. ~~We currently estimate~~Additionally, the Tax Matters Agreement provides that ~~our aggregate~~Garrett ASASCO is to make payments to a subsidiary of Honeywell for a portion of Honeywell’s net tax liability under Section 965(h)(6)(A) of the Internal Revenue Code for mandatory transition taxes that Honeywell determined is attributable to us (the “MTT Claim”). Following the Spin-Off, Honeywell asserted that Garrett ASASCO was obligated to pay $240 million to Honeywell for the MTT Claim under the Tax Matters Agreement. Accordingly, and in connection with the Tax Matters Agreement, we made payments to Honeywell, ~~with respect to~~under protest, for the ~~mandatory transition tax will be $240~~Euro-equivalent of $18 million and $19 million during 2019 and the fourth quarter of 2018, respectively, for the MTT Claim. On October 30, 2020, however, Honeywell filed an SEC Form 10-Q for the quarterly period ended September 30, 2020, reporting that its claim against us under the Tax Matters Agreement, including the MTT Claim, is now $273 million. Under the terms of the Tax Matters Agreement, ~~we are~~Garrett ASASCO is required to pay this amount in Euros, without interest, in ~~five~~5 annual installments, each equal to 8% of the aggregate amount, followed by three additional annual installments equal to 15%, 20% and 25% of the aggregate amount, respectively. ~~In connection~~Following the Spin-Off in October 2018, Garrett ASASCO paid the first annual installment in October 2018, with ~~this~~subsequent annual installments to be paid in April of each year. The annual installment due on April 1, 2020 was initially deferred to December 31, 2020 in agreement wewith Honeywell, and subsequently not paid as a result of the automatic stay applicable to the Debtors under the Bankruptcy Code as a result of the Chapter 11 Cases. We do not expect Garrett ASASCO to make payments to Honeywell under the ~~Euro-equivalent of $19 million~~Tax Matters Agreement during the ~~fourth quarter~~pendency of ~~2018.~~the Chapter 11 Cases. On July 17, 2020, we provided notice to Honeywell asserting that Honeywell has caused material breaches of the Tax Matters Agreement and that the Tax Matters Agreement is unenforceable. The value and validity of Honeywell’s claims under the Tax Matters Agreement, including the MTT Claim, are currently being litigated in the Chapter 11 Cases. As described above, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for, among other things, the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Tax Matters Agreement.

In addition, the Tax Matters Agreement addresses the allocation of liability for taxes incurred as a result of restructuring activities undertaken to effectuate the Spin-Off. The Tax Matters Agreement also provides that we are required to indemnify Honeywell for certain taxes (and reasonable expenses) resulting from the failure of the Spin-Off and related internal transactions to qualify for their intended tax treatment under U.S. federal, state and local income tax law, as well as foreign tax law. Further, the Tax Matters Agreement also imposes certain restrictions on us and our subsidiaries (including restrictions on share issuances, redemptions or repurchases, business combinations, sales of assets and similar transactions) that are designed to address compliance with Section 355 of the Internal Revenue Code of 1986, as amended, and are intended to preserve the tax-free nature of the Spin-Off.

The Obligation payable to Honeywell related to these agreements was deemed a pre-petition, unsecured liability subject to compromise. On the Petition Date, the Obligation was stayed from further payment and, in accordance with ASC 852-10, measured at the expected allowed claim amount. The Company measured the expected allowed claim as of December 31, 2020 utilizing a combination of data points including: (1) the historical actuarial claims data provided by Honeywell up to December 31, 2019 (2) the aforementioned Honeywell claims estimation trial proceedings, (3) Honeywell’s bankruptcy claim filed with the Bankruptcy Court, and (4) the expected settlement of the Honeywell liabilities as per the Plan of Reorganization. The following table summarizes our Obligation payable to Honeywell related to these ~~agreements following~~agreements. As of December 31, 2020, all amounts have been reclassified to Liabilities subject to compromise on the ~~Spin-Off:~~Consolidated Balance Sheets:

For the periods prior to the Spin-Off, these Consolidated and Combined Financial Statements reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities primarily related to the Bendix legacy Honeywell business, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. However, this recognition model differs from the recognition model applied subsequent to the Spin-Off as outlined above. In periods subsequent to the Spin-Off, theThe accounting for the majority of our asbestos-related liability

payments and accounts payable reflect the terms of the ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement with Honeywell entered into by Garrett ASASCO on September 12, 2018, under which ~~we are~~Garrett ASASCO is required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. The ~~Indemnification and Reimbursement~~Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. As stated above, on January 11, 2021, the Company announced that it had agreed to settle Honeywell’s claims as part of a revised Plan. This settlement would extinguish our obligations to Honeywell under the Honeywell Indemnity Agreement. The Plan is subject to various conditions, including approval by the Bankruptcy Court.

The followingtablesummarizesinformationconcerningboth Bendix and otherasbestos-relatedbalances. Other representsasbestosliabilitiesrelatedto claimantsoutsidethe United States.

	Year ended December 31, 2018									Year ended December 31, 2017									Year ended December 31, 2016								Year ended December 31, 2020						Year ended December 31, 2019								Year ended December 31, 2018
	Bendix			Other			Total			Bendix			Other			Total			Bendix			Other		Total			Bendix		Other		Total		Bendix		Other			Total			Bendix			Other			Total
Beginning of year	$	1,703		$	9		$	1,712		$	1,789		$	6		$	1,795		$	1,793		$	6	$	1,799		$	—	$	—	$	-	$	—	$	1		$	1		$	1,703		$	9		$	1,712
Accrual for update to estimated liabilities		141			—			141			199			4			203			203			—		203			—		—		—		—		—			—			141			—			141
Change in estimated cost of future claims		—			—			—			(65	)		—			(65	)		(10	)		—		(10	)		—		—		—		—		—			—			—			—			—
Update of expected resolution values for pending claims		—			—			—			3			—			3			4			—		4			—		—		—		—		—			—			—			—			—
Asbestos-related liability payments		(151	)		(4	)		(155	)		(223	)		(1	)		(224	)		(201	)		—		(201	)		—		—		—		—		—			—			(151	)		(4	)		(155	)
Spin-Off related adjustments		(1,693	)		(4	)		(1,697	)		—			—			—			—			—		—			—		—		—		—		—			—			(1,693	)		(4	)		(1,697	)
Balance Sheet Reclassification																												—		—		—		—		(1	)		(1	)		—			—			—
End of year	$	—		$	1		$	1		$	1,703		$	9		$	1,712		$	1,789		$	6	$	1,795		$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	1		$	1

There are 0 asbestos related liabilities recorded as of December 31, 2020 and 2019.

~~Asbestos balancesare included~~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 asserts 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 ~~followingbalancesheetaccounts:~~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 asserts claims under Sections 10(b) and 20(a) of the Exchange Act.

~~The following tables present information regarding Bendix-related asbestos claims activity:~~All three actions are currently assigned to Judge John P. Cronan. Su Ping Lu filed a waiver of service in the Gabelli Action on November 10, 2020. 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.

~~Honeywell~~The Company’s insurer, AIG has ~~experienced average resolutions per Bendix-related asbestos claim, excluding legal costs, as follows:~~accepted the defense, subject the customary reservation of rights.

The Bankruptcy Court has set a bar date of March 1, 2021for, among others, current and former shareholders to file securities-related claims against the Company. We are not yet able to assess the likelihood that any such claims will be allowed. To the extent allowed, each holder of such claims shall be entitled to receive, (x) its pro rata share of the aggregate cash payments received or recoverable from any insurance policies of the Company on account of any such allowed claims and (y) solely to the extent that such payments are less than the amount of its allowed claim, such treatment that is consistent with section 1129 of the Bankruptcy Code and otherwise acceptable to the Debtors and the parties to the PSA in accordance with the PSA.

~~It is not possible to predict whether resolution values for Bendix-related asbestos claims will increase, decrease or stabilize~~Make-Whole Litigation

On November 13, 2020, certain of the Debtors (the “Plaintiffs”) filed a complaint in the ~~future.~~Bankruptcy Court against the indenture trustee (the “Indenture Trustee”) of the 5.125% senior notes due 2026 (the “Senior Notes”) seeking declaratory judgment on two claims for relief that the Debtors do not owe, and the holders of the Senior Notes (the “Noteholders”) are not entitled to, any make-whole premium under the Indenture (the “Make-Whole” and such litigation, the “Make-Whole Litigation”). Certain Noteholders have contended in these Chapter 11 Cases that the Noteholders are entitled to payment of the Make-Whole under the terms of the Indenture, which provide for the payment of the Make-Whole if the Debtors exercise their right to redeem the Senior Notes prior to maturity, as a result of the Debtors’ commencement of their Chapter 11 Cases. The Plaintiffs believe that the Noteholders are not entitled to any Make-Whole because the Debtors have not exercised their right of redemption as contemplated by the Indenture and, in the alternative, the Make-Whole should be disallowed as unmatured interest pursuant to Section 502(b)(2) of the Bankruptcy Code. On January 8, 2021, the Indenture Trustee filed an answer to the Debtors’ complaint. Pursuant to the Plan, the Make Whole is an allowed claim in the amount of $15 million. As the Plan has not been approved by the Bankruptcy Court, the Make Whole was 0t recorded as of December 31, 2020. Pursuant to the PSA, the Debtors have agreed to suspend all litigation activities related to and to stay the Make-Whole Litigation through Emergence and to dismiss with prejudice such proceedings upon Emergence.

We are subjectto otherlawsuits,investigationsand disputesarisingout of the conduct of our business, includingmattersrelatingto commercialtransactions,governmentcontracts,productliability,prioracquisitions and divestitures,employeebenefitplans, intellectualpropertyand environmental,healthand safetymatters.We recognizea liabilityfor

any contingencythatis probableof occurrenceand reasonablyestimable.We continually assessthe likelihoodof adversejudgmentsof outcomesin thesematters,as well as potentialrangesof possible losses ~~(taking~~ (takinginto considerationany insurancerecoveries),based on a carefulanalysisof each matterwith the assistanceof outsidelegalcounseland, if applicable,otherexperts.

In September 2020, the Brazilian tax authorities issued an infraction notice against Garrett Motion Industria Automotiva Brasil Ltda, challenging the use of certain tax credits between January 2017 and February 2020. The infraction notice results in a loss contingency that may or may not ultimately be incurred by the Company. The estimated total amount of the contingency as of December 31, 2020 was $29 million including penalties and interest. The Company appealed the infraction notice on October 23, 2020. 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 ~~if applicable, other experts. To date,~~any liability for the infraction notice is currently not probable. Accordingly, no ~~such matters are material to the Consolidated~~ accrual is required at this time.

In the normalcourseof business,weissueproductwarrantiesand productperformanceguarantees.We accruefor the estimatedcost of productwarrantiesand performanceguaranteesbased on contracttermsand historicalexperienceat the timeof saleto the customer.Adjustmentsto initialobligationsfor warrantiesand guaranteesare made as changes to the obligationsbecomereasonablyestimable.Product warrantiesand product performanceguaranteesare includedin Accrued liabilities.As noted in Note 2, Reorganization, the Debtors have been granted certain First Day Orders that allow the Company to continue to operate as a debtor-in-possession and continue to perform on these warranty and guarantee obligations in the ordinary course of business. The followingtablesummarizesinformation concerningour recordedobligationsfor productwarrantiesand productperformanceguarantees.

We sponsor several funded U.S. and non-U.S. defined benefit pension plans. Pension benefits for many of our U.S. employees are provided through a non-contributory, qualified defined benefit plan. All non-union hourly and salaried employees ~~joining~~that joined the Business or Garrett for the first time after December 31, 2012, are not eligible to participate in our U.S. defined benefit pension plans. We also sponsor defined benefit pension plans which cover non-U.S. employees who are not U.S. citizens, in Switzerland and Ireland. Other pension plans outside of the U.S. are not material to the Company either individually or in the aggregate.

For periods prior to the Spin-Off, we only accounted for our pension plan in Ireland as a defined benefit pension plan. Our other pension plans were accounted for as multiemployer plans.

On October 1, 2018, in connection with the Spin-Off, we performed an interim remeasurement of our defined benefit pension plan in Ireland to update the discount rate as of the date immediately prior to the ~~Spin-Off as mandated by the Employee Matters Agreement.~~Spin-Off.

The following tables summarize the balance sheet impact, including the benefit obligations, assets and funded status associated with our significant pension plans.

	Pension Benefits									Pension Benefits
	U.S. Plans			Non-U.S. Plans			Non-U.S. Plans			U.S. Plans			U.S. Plans			Non-U.S. Plans			Non-U.S. Plans
	2018			2018⁽¹⁾			2017⁽¹⁾			2020			2019			2020			2019
Change in benefit obligation:
Benefit obligation at beginning of the year	$	—		$	107		$	89		$	206		$	178		$	226		$	172
Transfer of plan obligations from Former Parent		181			65			—
Spin-Off remeasurement adjustment		—			2			—
Service cost		—			4			2			1			1			9			6
Interest cost		2			2			2			6			7			2			2
Plan amendments		—			1			—			—			—			(10	)		1
Actuarial (gains) losses		(3	)		(5	)		3
Actuarial (gains) losses⁽¹⁾											17			29			18			37
Benefits paid		(2	)		(3	)		(1	)		(10	)		(9	)		(3	)		(6	)
Settlements and curtailments⁽²⁾											—			—			(10	)		—
Foreign currency translation		—			(5	)		12			—			—			22			—
Transfers											—			—			2			10
Other		—			4			—			—			—			3			4
Benefit obligation at end of the year		178			172			107			220			206			259			226
Change in plan assets:
Fair value of plan assets at beginning of the year		—			64			50			204			177			150			123
Transfer of plan assets from Former Parent		181			54			—
Spin-Off remeasurement adjustment		—			(10	)		—
Actual return on plan assets		(2	)		2			4			25			36			8			14
Employer contributions		—			16			3			—			—			7			6
Benefits paid		(2	)		(3	)		—			(10	)		(9	)		(3	)		(6	)
Settlements and curtailments⁽²⁾											—			—			(10	)		—
Foreign currency translation		—			(4	)		7			—			—			15			—
Transfers											—			—			2			10
Other		—			4			—			—			—			3			3
Fair value of plan assets at end of year		177			123			64			219			204			172			150
Funded status of plans	$	(1	)	$	(49	)	$	(43	)	$	(1	)	$	(2	)	$	(87	)	$	(76	)
Amounts recognized in Consolidated Balance Sheet consist of:
Accrued pension liabilities - current		—			—			(3	)
Accrued pension liabilities - noncurrent⁽²⁾		(1	)		(49	)		(40	)
Accrued pension liabilities - noncurrent⁽³⁾											—			(2	)		—			(76	)
Liabilities subject to compromise⁽⁴⁾											(1	)		—			(87	)		—
Net amount recognized	$	(1	)	$	(49	)	$	(43	)	$	(1	)	$	(2	)	$	(87	)	$	(76	)

Amounts recognized in Accumulated other comprehensive (income) loss associated with our significant pension and other postretirement benefit plans at December 31, 2020 and December 31, 2019 are as follows:

The components of net periodic benefit (income) cost and other amounts recognized in Other comprehensive (income) loss for our significant pension and other postretirement benefit plans include the following components:

~~Amounts recognized in Accumulated other comprehensive (income) loss associated with our significant pension and other postretirement benefit plans at December 31, 2018 are as follows:~~

~~The components of~~Major actuarial assumptions used in determining the benefit obligations and net periodic benefit (income) cost ~~and other amounts recognized in Other comprehensive (income) loss~~ for our significant ~~pension and other postretirement~~ benefit plans ~~include~~are presented in the following ~~components:~~table as weighted averages.

Pension Benefits

U.S. Plans

Non-U.S. Plans

Net Periodic Benefit Cost

2018

2018⁽¹⁾

2017⁽¹⁾

Service cost

$
—

$
4

$
2

Interest cost

2

2

2

Expected return on plan assets

(3
)

(3
)

(2
)
Recognition of actuarial losses

—

3

—

Net periodic benefit (income) cost

$
(1
)

$
6

$
2

	Pension Benefits
	U.S. Plans						Non-U.S. Plans
	2020			2019			2020			2019			2018⁽¹⁾
Actuarial assumptions used to determine benefit obligations as of December 31:
Discount rate		2.65	%		3.30	%		0.46	%		0.79	%		1.50	%
Expected annual rate of compensation increase		3.57	%		3.74	%		1.82	%		1.77	%		1.77	%
Interest credited to accounts ⁽²⁾		—			—			1.50	%		1.50	%		1.50	%
Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31:
Discount rate—benefit obligation		3.30	%		4.44	%		0.79	%		1.65	%		1.50	%
Discount rate—service cost		4.47	%		4.47	%		1.20	%		1.20	%		1.50	%
Discount rate—interest cost		4.06	%		4.06	%		1.74	%		1.74	%		1.50	%
Expected rate of return on plan assets		5.49	%		5.80	%		3.79	%		3.34	%		3.77	%
Expected annual rate of compensation increase		3.74	%		3.74	%		1.77	%		1.77	%		1.77	%

The estimated prior service (credit) for pension benefits that will be amortized from Accumulated other comprehensive (income) loss into net periodic benefit (income) cost in 2019 are expected to be less than $1 million for both the U.S. and non-U.S. pension plans.

Major actuarial assumptions used in determining the benefit obligations and net periodic benefit (income) cost for our significant benefit plans are presented in the following table as weighted averages.

The discount rate for our significant pension plans reflects the current rate at which the associated liabilities could be settled at the measurement date of December ~~31, 2018 and 2017, respectively.~~31. To determine the discount rates, we use a modeling process that involves matching the expected cash outflows of our benefit plans to a yield curve constructed from a portfolio of high quality, fixed-income debt instruments. We use the single weighted-average yield of this hypothetical portfolio as a discount rate benchmark.

For both our U.S. and non-U.S. defined benefit pension ~~plan,~~plans, we estimate the service and interest cost components of net period benefit (income) cost by utilizing a full yield curve approach in the estimation of these cost components by applying the specific spot rates along the yield curve used in the determination of the pension benefit obligation to their underlying projected cash flows. 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. For our Switzerland and Ireland defined benefit pension plans, we estimated such cost components utilizing a single weighted-average discount rate derived from the yield curve used to measure the pension benefit obligation. In 2019, we expect to update the approach for estimating the service and interest cost components of net period benefit (income) cost for the Switzerland and Ireland plans to the full yield curve approach.

For non-U.S. benefit plans, actuarial assumptions reflect economic and market factors relevant to each country.

The following amounts relate to our significant pension plans with accumulated benefit obligations exceeding the fair value of plan assets.

Our asset investment strategy for our U.S. pension plan focuses on maintaining a diversified portfolio using various asset classes in order to achieve market exposure and diversification on an interim basis as we ~~complete an asset liability study and~~ develop our long-term investment objectives on a risk adjusted basis. Once finalized, we will implement our long-term strategy. Our interim target allocations are as follows: 35% equity securities, 50% fixed income securities and cash, 10% real estate investments, and 5% high yield bonds. Equity securities include mutual funds that invest in companies located both

inside and outside the United States. Fixed income securities include exposure to medium and high quality investment grade corporate bonds, pooled consumer loans and U.S. government bonds with an average maturity of 5 –- 25 years. The real estate fund invests in real estate investment trusts – companies that purchase office buildings, hotels and other real estate property. The high yield bond fund invests in a diversified portfolio of intermediate term below investment-grade debt securities. Our assets are reviewed on a daily basis to ensure that we are within the targeted asset allocation ranges and, if necessary, asset balances are adjusted back within target allocations.

Our non-U.S. pension assets are typically managed by decentralized fiduciary committees. Our non-U.S. investment policies are different for each country as local regulations, funding requirements, and financial and tax considerations are part of the funding and investment allocation process in each country.

The fair values of both our U.S. and non-U.S. pension plans assets by asset category are as follows:

Equity funds, corporate bond funds, government bond funds, real estate funds and short-term investments are valued either by bids provided by brokers or dealers or quoted prices of securities with similar characteristics. Other

includes diversified mutual funds. These investments are valued at estimated fair value based on quarterly financial information received from the investment advisor and/or general partner.

Our general funding policy for qualified defined benefit pension plans is to contribute amounts at least sufficient to satisfy regulatory funding standards. We are not required to make any contributions to our U.S. pension plan in ~~2019.~~2020. In ~~2018,~~2020, contributions of ~~$16~~$7 million were made to our non-U.S. pension plans to satisfy regulatory funding requirements. In ~~2019,~~2021, we expect to make contributions of cash and/or marketable securities of approximately $6$7 million to our non-U.S. pension plans to satisfy regulatory funding standards. Contributions for both our U.S. and non-U.S. pension plans do not reflect benefits paid directly from Company assets.

Benefit payments, including amounts to be paid from Company assets, and reflecting expected future service, as appropriate, are expected to be paid as follows:

On September 20, 2018 in preparation of the Spin-Off, wethe Company entered into an agreement by and between Honeywell ~~International Inc.~~ and Garrett ~~Motion Inc.~~ (the “China Purchase Agreement”) in which Honeywell agreed to sell to Garrett 100% of the equity interests of Honeywell Transportation Investment (China) Co., Ltd. (“Garrett China”) consisting of our primary operations in China, in exchange for upfront consideration of 8,444,077 shares of our common stock. No further consideration from Garrett iswas due. The China Purchase Agreement was amended to extend the date of the transfer of the equity interests in Garrett China from ~~Honeywell~~September 20, 2019 to ~~Garrett will occur following~~June 30, 2020.

Prior to the ~~current share lock-up period, one year from the date~~transfer of the ~~agreement.~~

equity interests, Garrett China iswas considered a variable interest entity for which Garrett is the primary beneficiary because the China Purchase Agreement ~~provides~~provided Garrett ~~prior to the transfer of the equity interests,~~ control to direct the management and operation of Garrett China as well as all economic benefits and losses. The intent of the agreement iswas to place Garrett in the same position as if it already owned 100% of the equity interests of Garrett China. As the agreement was effective prior to the Spin-Off date while the Company and Garrett China were under common control of Honeywell, the assets and liabilities of Garrett China ~~are~~were recognized at their carrying amounts. ~~Additionally,~~

On June 3, 2020 Honeywell transferred 100% of the ~~assets and liabilities and related operations~~equity interests of Garrett China ~~were included~~ in ~~our Consolidated and Combined Balance Sheets and Consolidated and Consolidated and Combined Statements~~accordance with the China Purchase Agreement. Following the transfer, Garrett continues to consolidate Garrett China. However, Garrett China is no longer considered to be a variable interest entity as Garrett now owns 100% of ~~Operations as~~the equity interests. There was no change in the basis of ~~and for~~ the ~~years ended December 31, 2017 and 2016 which were prepared on a carve-out basis.~~

~~The following table summarizes the consolidated~~net assets ~~and liabilities~~ of Garrett ~~China:~~China as the transaction did not result in a change of control under U.S. GAAP.

~~Net sales from Garrett China were $470 million, $393~~ ~~million, and $279~~ ~~million~~ ~~for the years ended December 31, 2018, 2017, and 2016, respectively. Related expenses primarily consisted of Costs of Goods Sold of $340 million, $310~~ ~~million, and $199~~ ~~million, Selling, general and administrative expenses of $19 million, $20~~ ~~million, and $17~~ ~~million~~ ~~and Tax expense of $24 million, $28 million and $14 million for the years ended December 31, 2018, 2017, and 2016, respectively.~~

Sales concentration—Net sales by region (determined based on country of ~~shipment~~⁽¹⁾)shipment) and channel are as follows:

Customer concentration—Net salesto Garrett’s largestcustomerand the correspondingpercentageof total net salesare as follows:

~~Customer concentration—Net salesto Garrett’s largestcustomersand the correspondingpercentageof total net salesare as follows:~~

Supplier concentration—The Company’s largestsupplieraccountedfor ~~14%~~8%, ~~16%~~12% and ~~17%~~14% of directmaterialspurchasesfor the yearsended December31, 2020, 2019 and 2018 ~~2017 and 2016,~~ respectively.

Note ~~25. Unaudited Quarterly Financial Information~~27. Related Party Transactions with Honeywell

We have Obligations payable to Honeywell related to the Indemnification and Reimbursement Agreement and Tax Matters Agreement. See Note 23 Commitments and Contingencies for further details.

The ~~following tables show selected unaudited quarterly results of operations~~Consolidated and Combined Financial Statements for ~~2018 and 2017. The quarterly data~~periods prior to the Spin-Off have been prepared on a stand-alone basis and are derived from the ~~same basis as the audited annual~~consolidated financial statements and accounting records of Honeywell.

Prior to the Spin-Off, Honeywell provided certain services, such as legal, accounting, information technology, human resources and other infrastructure support, on behalf of the Business. The cost of these services has been allocated to the Business on the basis of the proportion of revenues. We consider the allocations to be a reasonable reflection of the benefits received by the Business. During the year ended December 31, 2018, Garrett was allocated $87 million of general corporate expenses incurred by Honeywell, and such amounts are included within Selling, general and administrative expenses in the Consolidated and Combined Statements of Operations. As certain expenses reflected in the Consolidated and Combined Financial Statements include ~~all adjustments, which include only normal recurring adjustments, necessary~~allocations of corporate expenses from Honeywell, these statements could differ from those that would have been prepared had Garrett operated on a stand-alone basis.

The Company received interest income for related party notes receivables of $1 million for the ~~fair statement~~year ended December 31, 2018. Additionally, the Company incurred interest expense for related party notes payable of ~~our results of operations~~$1 million for ~~these periods.~~

~~Item~~ ~~9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~

~~The information required by this Item 9 was previously reported in~~ the ~~Company’s Current Report on Form 8-K that was filed with the Securities and Exchange Commission on November 6,~~year ended December 31, 2018.

The following tables show selected unaudited quarterly results of operations for 2020 and ~~Procedures~~

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving2019. The quarterly data have been prepared on the ~~desired control objectives. In addition,~~same basis as the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Our Chief Executive Officer and Chief Financial Officer previously concluded that the Company’s disclosure controls and procedures were not effective as of the quarter ended September 30, 2018 as a result of the material weakness in internal control over financial reporting that ~~was identified by Honeywell in August 2018 prior to the Spin-Off~~ ~~related to the estimation in the liability for unasserted Bendix-related asbestos claims. Our financial statements in periods prior to the Spin-Off were derived from the consolidated~~audited annual financial statements and ~~accounting records of Honeywell and reflected~~ ~~an estimated liability for resolution of pending and future asbestos-related and environmental liabilities. Following the Spin-Off, our financial statements~~ are no longer derived from the consolidated financial statements and accounting records of Honeywell and no longer reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities. Because the material weakness disclosed in our Form 10 and our Form 10-Qinclude all adjustments, which include only normal recurring adjustments, necessary for the ~~quarter ended September 30, 2018 was solely related to Honeywell’s reassessment~~fair statement of ~~its accounting~~our results of operations for these ~~liabilities, and because these liabilities are no longer reflected on our balance sheet, management has concluded that the material weakness identified as of September 30, 2018 no longer exists.~~periods.

Our Consolidated and Combined Financial Statements for periods beginning on and after October 1, 2018 reflect the impact of the Indemnification and Reimbursement Agreement with Honeywell, under which we are required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be appl~~icable, certain other recoveries associated with such liabilities. See Note 21 Commitments and Contingencies.~~

In accordance with the terms of the Indemnification and Reimbursement Agreement, our Consolidated and Combined Balance Sheets reflect a liability of $1,244 million in Obligations payable to Honeywell as of December 31, 2018 (the “Indemnification Liability”). The amount of the Indemnification Liability is based on information provided to us by Honeywell with respect to Honeywell’s assessment of its own asbestos-related liability payments and accounts payable as of such date and is calculated in accordance with the terms of the Indemnification and Reimbursement Agreement as described above. Honeywell is responsible for litigating the underlying proceedings, and estimates its future liability for asbestos-related claims based on a number of factors.

In the course of preparing this Annual Report on Form 10-K and our Consolidated and Combined Financial Statements for the year ended December 31, 2018, our management determined that there is a material weakness in our internal control over financial reporting relating to the supporting evidence for our liability to Honeywell under the Indemnification and Reimbursement Agreement. Specifically, we were unable to independently verify the accuracy of certain information Honeywell provided to us that we used to calculate the amount of our Indemnification Liability, including information provided in Honeywell's actuary report and the amounts of settlement values and insurance receivables. For example, Honeywell did not provide us with sufficient information to make an independent assessment of the probable outcome of the underlying asbestos proceedings and whether certain insurance receivables are recoverable.

~~Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this~~ ~~Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)~~. Our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2018, our disclosure controls and procedures were not effective at the reasonable assurance level as a result of the material weakness in our internal control over financial reporting relating to the supporting evidence for our liability under the Indemnification and Reimbursement Agreement described above.

~~Our management is committed to maintaining a strong internal control environment. In response to the identified material weakness, our management,~~Item 9. Changes in and Disagreements with the oversight of the Audit Committee of the Board of Directors, has taken steps to remediate the material weakness by working to obtain additional information about the Indemnification Liability through a dialogueAccountants on Accounting and ~~iterative process with Honeywell.~~Financial Disclosure

This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by the SEC for newly public companies.None.

In periods prior to the Spin-Off, we relied on financial information and resources provided by Honeywell to manage certain aspects of our business. Following the Spin-Off, several areas of our internal control over financial reporting have changed. New corporate and oversight functions have been implemented in the areas of investor relations, communications, payroll and benefits, stock administration, financial reporting, tax, legal, human resources, and treasury, including insurance and risk management, to address corporate-level activities previously performed by Honeywell and to meet all regulatory requirements for a stand-alone company. Apart from the foregoing changes and the material weakness relating to the supporting evidence for our liability to Honeywell under the Indemnification and Reimbursement Agreement described above, there were no changes in our internal control over fi~~nancial reporting that occurred during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.~~

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Based on management's evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2020.

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.

Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of December 31, 2020, our internal control over financial reporting was effective.

Deloitte SA, our independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting, which is included in Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The followingtablepresents informationconcerningour ~~executive officers and directors.~~board of directors (the “Board”).

The followingare briefbiographiesdescribingthe backgroundsof our ~~executive officers and~~ directors.

Mr. Rabiller has served as ~~our~~ President & Chief Executive Officer (“CEO”) as well as a member of ~~our~~the Board ~~of Directors~~ since the ~~Company was spun off from Honeywell International, Inc. (“Honeywell”) on October 1, 2018 (the “Spin Off”).~~Spin-Off. Prior to the ~~Spin Off,~~Spin-Off, Mr. Rabiller served as President and ~~Chief Executive Officer~~CEO of the Transportation Systems division at Honeywell ~~since~~ ~~July 2016. From July 2014 to July~~from 2016 until the Spin-Off. Mr. Rabiller’s global career spanned approximately 16 years at Honeywell where he also served as Vice President and General Manager of Transportation Systems for High Growth Regions, Business Development, and ~~Aftermarket. From January 2012~~Aftermarket (from July 2014 to July ~~2014, he served~~2016) as well as Vice President, ~~and~~ General Manager of Transportation Systems ~~Aftermarket.~~Aftermarket (from January 2012 to July 2014). Earlier positions within Honeywell included ~~roles as the~~ Vice President ~~Chief Procurement Officer~~ of Sourcing for Transportation ~~Systems for three years, and prior to that Mr. Rabiller served in various roles at Honeywell Turbo Technology, including~~Systems; Vice President of Customer Management for Passenger ~~Vehicles;~~ Vehicles at Honeywell Turbo Technologies; Vice President, of European ~~and Indian~~ Sales ~~Marketing~~ and Customer ~~Management;~~Management; and Director of Marketing and Business Development for the European region. He joined Honeywell in 2002 as Senior Program Manager and Business Development Manager for Turbo Technologies EMEA. Mr. Rabiller is a director of the Swiss-American Chamber of Commerce, a non-profit organization ~~which~~that facilitates business relations between Switzerland and the United States. From ~~2016 to 2018, Mr. Rabiller was a director at Honeywell and from~~ 2012 to 2016, heMr. Rabiller was a director of Friction Material Pacifica, Australia. He holds a ~~Master’s~~Master's degree in ~~engineering~~Engineering from ~~École~~Ecole Centrale Nantes and an MBA from INSEAD. We believe Mr. Rabilleris qualified to serve as a member of our Board of Directorsbecauseof his extensiveexperienceat the Transportation Systemsdivisionat Honeywell, his background within the automotiveindustryand his strongleadershipabilities.

Mr. Cardoso has served as a member of our Board ~~of Directors~~ since ~~the Spin Off.~~September 2018. Mr. Cardoso has served as the Principal of CMPC Advisors LLC, an investment advisory firm, since January 2015. ~~Mr. Cardoso previously~~Previously, he served as a Senior Advisor of Irving Place Capital ~~focusing~~where he focused on investments in industrial manufacturing and distribution companiesfrom July 2015 to August 2018. From 2007 to 2015, Mr. Cardoso was ~~President~~also Chairman and ~~Chief Executive Officer~~CEO of Kennametal, a global leader in ~~metalworking~~metal-working solutions and engineered components serving a diverse set of industrial and infrastructure markets, where he also served as Chairman from 2006 to 2014. Before serving as CEO, Mr. Cardoso served as Kennametal’s Vice President and Chief Operating ~~Officer.~~Officer (“COO”). Prior to Kennametal, he held executive roles at Flowserve and Honeywell ~~(Allied Signal)~~(AlliedSignal). Mr. Cardoso currently serves on the boards of ~~public companies~~directors of Stanley

Black & Decker, Inc. and Hubbell ~~Incorporated~~.Incorporated. He previously served on the board of the Ohio TransmissionCorporation.Hehas been named one of America’s “Best ChiefExecutiveOfficers” by InstitutionalInvestorMagazine.Mr. Cardoso earneda Bachelorof Sciencedegreein~~businessadministration~~ Business Administration fromFairfieldUniversityand a Master’s degreein ~~management~~Management from~~the~~ Rensselaer PolytechnicInstitute. He received an honorary degree of Doctor of Humane Letters from Saint Vincent College in Latrobe, Pennsylvania. We believe Mr. Cardoso is qualified to serve as a member and Chairmanof our Board of Directorsbecauseof his background as a directorfor publiccompaniesand his expertisein companieswith extensivemanufacturing and distributionoperations.

Ms. Clark has served as a member of our Board ~~of Directors~~ since the ~~Spin Off.~~Spin-Off. From 2005 to 2014, Ms. Clark served as President of Direct Energy Business, LLC, ~~where she was responsible for all aspects of the~~a leading North American retail energy business serving commercial and industrial ~~energy business,~~companies, and Senior Vice President North American Strategy and Mergers and Acquisitions of Direct Energy. Her prior experience includes serving as a Managing Director of Investment Banking Services at Goldman Sachs & Co. and as Executive Vice President of Corporate Development and Chief Financial Officer (“CFO”) of Clark USA, an independent oil refining and marketing company. ~~She also served as Vice President of Finance of North American Life Assurance Company, a financial services company.~~ Ms. Clark is a member of the ~~boards of directors~~Boards of Nutrien Ltd, ~~(formerly Potash Corp. of Saskatchewan and Agrium~~Fortis Inc., ~~which merged to form Nutrien Ltd), Fortis Inc.~~Newmont Corporation and Sanctuary for Families, a New York-based not-for-profit organization. She previously served on the ~~boards~~Boards of Elizabeth Arden, Inc. and Primary Care Development Corp. She graduated from Queens University with a Bachelor of Arts in Economics. She is also qualified as a Charted Professional Accountant. We believe Ms. Clark is qualified to serve as a member of our Board due to her ~~extensive~~financial management expertise and experience managing the operations of an international commercial and industrial energy business as well as her significant experience serving on other public company boards. In addition, Ms. Clark contributes to the gender diversity of our Board.

Ms. Enghauser has served as a member of ~~the~~our Board ~~of Directors~~ since the ~~Spin Off.~~Spin-Off and has served as the CFO of Heartland Home Services, a residential HVAC, plumbing, electrical and air quality services business, since January 2021. Ms. Enghauser ~~currently advises~~previously served as CFO of Agility Global Holdings, a private equity owned platform acquiring and operating businesses in the automotive plastics sector, from November 2019 to 2020. Prior to her current role, she advised private equity firms on acquisitions and transactions in a variety of ~~industries. Ms. Enghauser was previously the Chief Financial Officer of Sensus, now a part of Xylem, a leading global water technology company from~~ industries. From April 2013 to June ~~2017.~~2017, she was the CFO of Sensus, a leading provider of smart meters, network technologies, and advanced data analytics services that was acquired by Xylem Inc. in 2016. Prior to ~~that,~~her time at Sensus, Ms. Enghauser was the ~~Chief Financial Officer~~CFO of Kinetek, Inc., where she was responsible for the financial management, treasury, and reporting of a global portfolio company consisting of eleven operating subsidiaries and sixteen holding companies in the electric motors and controls industries located throughout the world. Ms. Enghauser also served as CFO of other businesses and held a variety of other financial positions including Director of Finance, Mergers and Acquisitions, ~~of Kinetek, Inc.~~ and ~~Chief Financial Officer of Finishing Services & Technologies, Inc. after starting~~Corporate Controller. She started her career as an ~~auditor~~Auditor at PricewaterhouseCoopers. Ms. Enghauser graduated with a Bachelor of Science in Accounting from Indiana University and is a Certified Public Accountant. We believe Ms. Enghauser is qualified to serve on our Board due to her significant experience in the technology sector and her expertise in global financial strategy. In addition, Ms. Enghauser contributes to the gender diversity of our Board.

Ms. Main has served as a member of our Board ~~of Directors~~ since the ~~Spin Off. Ms. Main~~Spin-Off and has served as the Senior Vice President and ~~Chief Financial Officer~~CFO of Teledyne Technologies Incorporated, a leading provider of sophisticated instrumentation, digital imaging products and software, aerospace and defense electronics, and engineered systems, since November 2012. Prior to her current role, Ms. Main was ~~the~~Teledyne’s Vice President and Controller ~~since March 2004.~~for approximately nine years. From 1999 to 2004, Ms. Main served as Vice President and Controller for Water Pik Technologies, Inc. Ms. Main also held numerous financial roles at the former Allegheny Teledyne ~~Incorporated in~~Inc. within its government, industrial and commercial segments. Earlier in her career, Ms. Main held financial and auditing roles at the former Hughes Aircraft Company. Ms. Main is a member of the ~~board of directors~~Board of Ashland Global Holdings, Inc., where she serves as the Chairperson of the Audit Committee and as a member of the Governance and Nominating Committee. Ms. Main is a member of the National Association of Corporate Directors and Women Corporate Directors. Ms. Main graduated from California State University, Fullerton with a Bachelor of Arts in ~~business administration.~~ Business Administration.We believeMs. Main is qualified to serve on our Board based on her extensive leadership experiencein financial ~~management.~~management, including in a leading global technology company. In addition, Ms. Main contributes to the gender diversity of our Board.

Mr. Reinhardt has served as a member of our Board ~~of Directors~~ since the ~~Spin Off.~~Spin-Off. Mr. Reinhardt has served as an independent ~~senior advisor~~Senior Advisor since October 2016. From October 2016 to February 2019, Mr. Reinhardt served as Senior Advisor for RLE International, a development and service provider to the ~~international engineering industries.~~automotive industry. From July 2012 to October 2016, Mr. Reinhardt was President and CEO of Voith Turbo GmbH & Co. KG, a supplier of advanced powertrain technologies to the rail, commercial vehicle, marine, power generation, oil & gas and mining industries. Prior to that, Mr. Reinhardt served as COO of Meritor Inc., a manufacturer of automobile components, from 2008 ~~through~~to 2011 and as President of Meritor’s Commercial Vehicle Division from 2006 ~~until~~to 2008. Before joining Meritor, Mr. Reinhardt served as President and CEO of Detroit Diesel ~~Corporation,~~Corp., a diesel engine manufacturer, from 2003 ~~through~~to 2006, following 10 years in a variety of management positions at Daimler Trucks North America, a manufacturer of commercial vehicles. Mr. Reinhardt started his career as ~~Management Trainee~~management trainee at Daimler AG ~~a multinational automotive corporation,~~ in Stuttgart, Germany. Mr. Reinhardt currently sits on the Board of SAF-Holland S.A., where he serves as a member of the ~~Audit Committee.~~audit committee. He also sits on the Boards of several private companies, including GRUNDFOS Holding A/S, ~~Rosti Group AB, Rosti Automotive AB, Tegimus~~Tmax Holding GmbH and Beinbauer Automotive GmbH. Mr. Reinhardt holds a Bachelor’s degree in Mechanical Engineering from Esslingen Technical University in Germany and a Master of Science degree in ~~automobile engineering~~Automobile Engineering from the University of Hertfordshire, UK. We believe Mr. Reinhardt is qualified to serve on our Board due to his extensive experience and operational expertise in the automotive industry across global markets.

Mr. Stoll has served as a member of our Board since March 2020. Mr. Stoll served in numerous senior executive roles at Groupe Renault from 1980 to 2020, including as President of Renault Sport Racing from 2013 to 2020; Chief Performance Officer from 2013 to 2016; Executive Vice President, Sales and Marketing from 2009 to 2016; Chief Executive Officer of Renault DO Brazil from 2006 to 2009; and Chief Executive Officer of Renault Samsung Motors, South Korea from 2000 to 2006. Mr. Stoll also serves on various Strategic Committees in the automotive sector and is the Vice President of CEDEP, a training organization for high potential executives. Mr. Stoll received an MBA from Ecole Superieure de Commerce de Paris and an Executive MBA from HEC-CPA. We believe Mr. Stoll is qualified to serve on our Board due to his extensive management experience in the automotive industry, his global business experience and his strong leadership skills.

Mr. Tozier has served as a member of our Board ~~of Directors~~ since the ~~Spin Off. Mr. Tozier~~Spin-Off and has been the ~~Chief Financial Officer~~CFO and Executive Vice President of Albemarle Corporation, a specialty chemicals company, since January 2011. Prior to joining Albemarle, he served as Vice President of Finance, Transformation and Operations of Honeywell, where he was responsible for ~~Honeywell’s~~Honeywell's global financial shared services and best practices management. His 16-year career with Honeywell spanned senior financial positions in the United States, Asia Pacific and Europe. Mr. Tozier currently serves as a ~~director on~~member of the ~~boards of directors~~Boards for ~~FCCSA~~MARBL and Volta Energy Technologies. He is also a trustee for Blumenthal Performing Arts, and on the Board of Advisors for Junior Achievement of the Carolinas. He holds a Bachelor of Business Administration in Accounting from the University of ~~Wisconsin-Madison and~~Wisconsin-Madison. Mr. Tozier holds an MBA from the University of Michigan, where he graduated with honors. He is a Certified Public Accountant.We believe Mr. Tozier is qualified to serve on our Board due to his experience asa formerexecutivewithin Honeywell, a global public company,as well as his financialmanagement skills given his background as a CFOand a CertifiedPublic Accountant.

The following are brief biographies describing the backgrounds of our executive officers. The Company and certain of its affiliates filed a petition under the federal bankruptcy laws on September 20, 2020, at which time all of the below individuals were serving as executive officers of the Company.

Mr. Deason has served as our Senior Vice President and Chief Financial Officer since June 2020. Mr. Deason previously served as Chief Financial Officer and Controller of WABCO Holdings Inc. (“WABCO”), a manufacturer of technology systems for commercial vehicles, from April 2019 to June 2020. Prior to that, Mr. Deason was WABCO’s Vice President Controller and Investor Relations from June 2015 to April 2019. Prior to joining WABCO, Mr. Deason spent four years with Evraz N.A., a steel products manufacturer, where he served as Vice President, Financial Planning & Analysis. Prior to Evraz, Mr. Deason spent twelve years with Lear Corporation, a global automotive technology manufacturer, where he served as Director, Finance, Corporate Business Planning & Analysis, Director, Finance, Asia Pacific Operations, and Assistant Treasurer, and held various other positions of increasing responsibility since August 1999. Mr. Deason holds a Masters of International Management from Thunderbird School of Global Management and is a Certified Management Accountant.

Mr. Balis has served as our Senior Vice President and Chief Technology Officer since the ~~Spin Off.~~Spin-Off. From June 2014 until ~~the Spin-Off,~~such appointment, Mr. Balis was the Vice President and Chief Technology Officer of Honeywell Transportation Systems. From ~~December~~ 2008 to ~~June~~ 2014, Mr. Balis was the Vice President of Engineering of Honeywell Transportation Systems. Mr. Balis has a Bachelor of Science and Master’s ~~Degree~~degree in ~~engineering~~Engineering from the University of Illinois.

Mr. Bracke has served as Vice President and Chief Transformation Officer since June 2020. From September 2019 to June 2020, Mr. Bracke served as our Vice President and Interim Chief Financial Officer. Previously, Mr. Bracke was Vice President, FP&A and Business Finance for Garrett where he was responsible for the financial planning and control of operational and commercial activities from the Spin-Off to September 2019. Prior to this, Mr. Bracke held various senior-level roles within multiple divisions at Honeywell. During his more than 20-year tenure at Honeywell, Mr. Bracke was CFO for Honeywell Homes & Buildings Technologies and CFO for Honeywell Transportation Systems, which was renamed Garrett following the Spin Off. Prior to joining Honeywell, Mr. Bracke was an auditor at KPMG. He received his undergraduate degree in Business Administration and his Master's degree in Accountancy from the University of Ghent in Belgium.

Mr. Deiro has served as our Senior Vice President, Global Customer Management, and General Manager Japan/Korea since the ~~Spin Off.~~Spin-Off. From August 2014 until ~~the Spin-Off,~~such appointment, Mr. Deiro was the Vice President of Customer Management and General Manager for Honeywell Transportation Systems for Japan and Korea. From ~~April~~ 2012 until ~~August~~ 2014, Mr. Deiro was a Senior Customer Management Director at Honeywell Transportation Systems. Mr. Deiro has a degree in Automotive Engineering from Haute école spécialisée bernoise, Technique et ~~Informatique~~lnformatique (BFH-TI), Biel, Switzerland.

Mr. Gili has served as our Senior Vice President and Chief Financial Officer since the Spin Off. From June 2018 until the Spin-Off, Mr. Gili was the Chief Financial Officer of Honeywell Transportation Systems. From February 2015 until May 2018, Mr. Gili was the Chief Financial Officer of Ferrari N.V. In April 2015 he was also appointed as President of Ferrari Financial Services S.p.A. From June 2013 to February 2015, he was a Vice President and Chief

~~Accounting Officerof Fiat Chrysler AutomobilesN.V.From June 2011 to June 2013, Mr. Gili was Vice President,~~ ~~CorporateControllerand Chief Accounting Officerof Chrysler GroupLLC.Priorto joiningthe Fiat Group, Mr. Gili was a projectmanagerfor InnovativeRedesign Managements Consultants.Mr. Gili spent the firstyearsof his careerin Audit at Coopers & Lybrand. Mr. Gili holds a Bachelor’sdegreein financefromTurin Universityand is a CertifiedPublic Accountantand CertifiedPublic Auditor in Italy.~~

Mr. Mabru has served as our Senior Vice President, Integrated Supply Chain since the ~~Spin Off.~~Spin-Off. From March 2013 until ~~the Spin-Off,~~such appointment, Mr. Mabru was the Vice President of Global Integrated Supply Chain for Honeywell Transportation Systems. From ~~April~~ 2011 until ~~February~~ 2013, Mr. Mabru was Senior Director of Global Advanced Manufacturing Engineering for Honeywell Transportation Systems. From ~~September~~ 2006 to ~~February~~ 2011, Mr. Mabru was Director of the Program Management Office of Honeywell Aerospace EMEAI. Mr. Mabru currently serves as ~~director~~a member of ~~both~~ the Board of Friction Material Pacific (FMP) Group Australia PTY Limited and the Board of Friction Material Pacific (FMP) Group PTY Limited. Mr. Mabru holds a Master of Science degree from the ~~École~~Ecole Nationale de Me´~~canique~~Mecanique et ~~d’A~~e´~~rotechniques~~d'Aerotechniques (ISAE/ENSMA), Poitier, France.

Mr. Maironi has served as our Senior Vice President, General Counsel and Corporate Secretary since the ~~Spin Off. For the five years prior~~Spin-Off. Prior to the Spin-Off, Mr. Maironi ~~was~~served as the Vice President of Global Legal Affairs for Honeywell Performance Materials and ~~Technologies. Mr. Maironi graduated with an Executive MBA from INSEAD, Fontainebleau, France.~~Technologies for approximately five years. Mr. Maironi received a post-graduate degree in Law & Practice of International Trade and a Master of Law from the University Rene Descartes, Paris, France. Mr. Maironi is a member of the Association Francaise des Juristes ~~d’Entreprise~~d'Entreprise and has also passed the French Bar Exam. Mr. Maironi graduated with an Executive MBA from INSEAD, Fontainebleau, France.

Mr. Spenninck has served as our Senior Vice President and Chief Human Resources Officer since the ~~Spin Off~~.Spin-Off. From August 2015 until ~~the Spin-Off,~~such appointment, Mr. Spenninck was Vice President of Human Resources of Honeywell Transportation Systems. From 2013 to 2015, Mr. Spenninck was Vice President of Labor and Employee Relations and, from 2011 to 2013, he was Senior Director of Human Resources (One Country Leader) in France and North Africa at Honeywell. Mr. Spenninck holds a Master’s degree in Human Resources and Labor Relations from the University of Montpellier, France.

There are no family relationships among any of our executive officers or directors.

The Board has adopted a writtencode of businessconduct (the “Code of Conduct”), which applies to all of our directors, officers and employees, including our principal executive officer, ~~and our~~ principal financial officer and principal accounting officer. Our Code of Conduct is available on our website www.garrettmotion.com in the “Investors” section under ~~“Governance.~~“Leadership & Governance.” In addition, we intend to post on our website all disclosures that are required by law or ~~New York Stock Exchange~~applicable listing rules concerning any amendments to, or waivers from, any provision of our Code of Conduct.

We believe that good corporate governance is important to ensure that Garrett is managed for the long-term benefit of our stockholders. Our Nominating and Governance Committee will periodically review and reassess our Governance Guidelines, other governance documents and overall governance structure. Complete copies of our Governance Guidelines and committee charters are available on the “Investors—Leadership & Governance” section of our website at www.garrettmotion.com. Alternatively, you may request a copy of any of these documents by writing to Garrett Motion Inc., Attention: Jérôme Maironi, Secretary, La Pièce 16, Rolle, Switzerland 1180.

Section 16(a) of the Exchange Act requires our executive officers and directors, our principal accounting officer and persons who beneficially own more than 10% of our common stock to file with the SEC reports of their ownership and changes in their ownership of our common stock. To our knowledge, based solely on review of the copies of such reports and amendments to such reports with respect to the year ended December 31, 2020 filed with the SEC and on written representations by our directors and executive officers, all required ~~to be disclosed by this item will be included~~Section 16 reports under the ~~headings “Election of Directors,” “Corporate Governance,” and “Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive proxy statement~~Exchange Act for our ~~2019 Annual Meeting~~directors, executive officers, principal accounting officer and beneficial owners of ~~Stockholders,~~greater than 10% of our common stock were filed on a timely basis during the year ended December 31, 2020 except that the following forms were filed late: one Form 4 for Peter Bracke reporting one transaction; one Form 4 for Cyrus Capital Partners reporting one transaction; and ~~such information is incorporated herein~~one Form 4 for Attestor Value Master Fund reporting one transaction.

We have a separately-designated standing audit committee (“Audit Committee”). Scott A. Tozier, Carlos M. Cardoso, Courtney M. Enghauser and Susan L. Main are the members of the Audit Committee. Mr. Tozier serves as the Chair of the Audit Committee. Although we are no longer listed on the New York Stock Exchange (“NYSE”), our Board continues to apply the NYSE independence criteria in assessing director independence. All members of the Audit Committee meet the independence standards of the NYSE and the SEC, as well as the financial literacy requirements of the NYSE. The Board has determined that each of Mr. Tozier, Mr. Cardoso, Ms. Enghauser and Ms. Main qualifies as an “audit committee financial expert” as defined by ~~reference.~~SEC rules. No Audit Committee member currently serves on the audit committees of more than three public companies.

Our Compensation Discussion and Analysis describes the principles underlying the material components of the executive compensation programs for our Named Executive Officers who are named in the “Summary Compensation Table” below and the factors relevant to an analysis of the compensatory policies and decisions. In 2020, our Named Executive Officers were:

In June 2020, the Company appointed Sean Deason as Senior Vice President and Chief Financial Officer of the Company. In connection with Mr. Deason’s appointment, Mr. Bracke stepped down as our Vice President and Interim Chief Financial Officer and was appointed as our Chief Transformation Officer, effective as of the date of Mr. Deason’s appointment.

In considering the design of our 2020 executive compensation program, the Compensation Committee undertook a thorough evaluation of the metrics that align with the Company’s long-term strategy for inclusion in our short-term incentive plan (“ICP”) and Long-Term Incentive Plan. The evaluation included analysis of different performance metrics and their alignment with our value proposition to shareholders, a review of the performance metrics used by our peer group, and an assessment of independent performance metrics versus modifier structures as well as absolute goals versus relative goals. The work also considered the input received during a series of shareholder outreach meetings held in 2019. Effective for fiscal year 2020, we modified our 2020 executive compensation program to include a higher percentage of Performance Stock Units (“PSUs”) granted under our 2020-2022 Long-Term Incentive Plan (“LTI Plan”), as well as included performance goals linked to relative and absolute Total Shareholder Return in our PSU awards granted to our Named Executive Officers pursuant to the LTI Plan, as described further under “Equity Awards – 2020-2022 Long Term Incentive Plan” below, both of which were modifications from our 2019 executive compensation program. However, as discussed further below, the Compensation Committee subsequently determined to modify the fiscal year 2020 compensation program such that our executive officers, including our Named Executive Officers, waived their participation in the 2020 ICP and forfeited their 2020 awards granted under our LTI Plan.

In light of the unprecedented and ongoing market uncertainties related to the global COVID-19 pandemic, in April 2020, the Compensation Committee approved temporary reductions in the annual base salaries of all executive officers, including certain of our Named Executive Officers. Effective April 1, 2020, the annual base salaries for Messrs. Rabiller, Bracke, Balis, Maironi and Mabru were reduced by 20%, which reduction remained in effect through the second quarter of 2020. Although annual base salaries were restored after the second quarter reduction, for September 2020, the Compensation Committee approved a 10% reduction (of the original 2020 annual base salaries) for all of our Named Executive Officers.

Additionally, for these same reasons, and in connection with the Board’s evaluation of strategic alternatives for the Company, in June 2020, the Compensation Committee determined to conduct a review of the 2020 compensation program to ensure that the program appropriately aligns with the Company’s current goals and supports the stability and motivation of the Company’s workforce in light of the anticipated Restructuring (as defined below). Based on this review, the Compensation Committee decided it was in the Company’s best interests to redesign the Company’s 2020 compensation program to more effectively retain and motivate key employees to successfully navigate through the challenging business environment. Under the redesigned program, the Compensation Committee approved one-time cash continuity awards to the Named Executive Officers (other than Mr. Deason) and other key individuals who participated in the 2020 ICP and LTI Plan. As a condition to the receipt of these awards, the recipients waived their participation in the 2020 ICP and forfeited the equity awards granted in February 2020 under the LTI Plan, effective July 1, 2020 and as further described under “Elements of Executive Compensation”. As described further below, Mr. Deason joined our Company in June 2020 during the Company’s Restructuring and therefore was not eligible to participate in the 2020 ICP. Additionally, Mr. Deason did not receive any grants under the LTI Plan in 2020. Since Mr. Deason was not a participant under our 2020 ICP nor the LTI Plan, he did not receive a continuity award.

Our overall compensation program is structured to attract, motivate and retain highly qualified executive officers by paying them competitively, consistent with our success and their contribution to that success. Our ability to excel depends on the skill, creativity, integrity and teamwork of our employees. We believe compensation should be structured to reward short-term and long-term business results and exceptional performance, and most importantly, maximize stockholder value.

The following table highlights key features of our executive compensation program. We believe these practices promote good governance and serve the interests of our stockholders.

At our 2020 annual meeting, approximately 97% of the votes cast by our shareholders approved, on an advisory basis, the compensation of our Named Executive Officers, which we believe affirms our shareholders’ support of our executive compensation program.

Our Compensation Committee oversees and administers our executive compensation program, with input from our management team and an independent compensation consultant.

The Compensation Committee is responsible for establishing and administering programs and procedures for annual and long-term executive compensation and assessing organizational structure and the development of our executives. The Compensation Committee follows a robust process to review and approve all compensation decisions regarding the Named Executive Officers. These decisions are informed by peer group and market data and supported by the review and advice of an independent compensation consultant.

To aid the Compensation Committee in making its determination, our Chief Executive Officer provides recommendations annually to the Compensation Committee regarding the compensation of all other executive officers (i.e., other than himself) based on the overall corporate achievements during the period being assessed and his knowledge of the individual contributions to our success by each of the other Named Executive Officers. Our Named Executive Officers do not play a role in their own compensation determinations other than discussing their performance with our Chief Executive Officer, or in the case of the Chief Executive Officer, with the Compensation Committee and Chairperson of the Board.

Our senior management also supports the Compensation Committee by developing recommendations for specific award designs, including metric assessment, performance goal-setting, and program administration. While members of our senior management may attend the meetings of the Compensation Committee, they do not attend executive sessions and do not attend the portions of meetings during which their own compensation is discussed.

Our Compensation Committee has retained Semler Brossy as its independent compensation consultant. Semler Brossy assists the Compensation Committee in its evaluation of the compensation provided to our Chief Executive Officer and other executive officers and the design of the compensation programs for Named Executive Officers. Semler Brossy generally attends Compensation Committee meetings and provides information, research and analysis pertaining to executive compensation and governance as requested by the Compensation Committee. Other than advising the Compensation Committee and senior management, as described above, Semler Brossy did not provide any services to the Company in 2020.

Additionally, in June 2020, the Compensation Committee retained Willis Towers Watson (WTW), an independent compensation consultant, to advise on common market practices regarding compensation programs during the Company’s financial restructuring to be implemented pursuant to a plan of reorganization under the Bankruptcy Code (the “Restructuring”). In 2020, WTW assisted the Compensation Committee by making recommendations with respect to the continuity awards for key employees, including our Named Executive Officers. Other than advising the Compensation Committee, WTW did not provide any services to the Company in 2020. For additional information on the Restructuring, see Note 2, Restructuring and Chapter 11 Proceedings of the Notes to the Consolidated Interim Financial Statements in our Annual Report.

The Compensation Committee has considered the independence of Semler Brossy and WTW, consistent with the requirements of the NYSE, and has determined that both Semler Brossy and WTW are independent. Further, pursuant to SEC rules, the Compensation Committee conducted a conflicts of interest assessment and determined that there is no conflict of interest resulting from retaining Semler Brossy or WTW. The Compensation Committee intends to reassess the independence of its advisors at least annually.

Since 2019, Semler Brossy has worked with the Compensation Committee and management to develop a peer group of companies to be used for market comparison purposes in terms of executive pay levels and practices. For 2020, Semler Brossy assessed our peer group against the following characteristics, which are consistent with criteria historically reviewed:

The Compensation Committee was careful to construct a group based on the considerations above that, on the whole, captures Garrett’s global presence and talent market as well as its unique business dynamics. As a U.S.-listed but European-headquartered company that attracts talent globally, we decided to include both U.S. and European companies. For 2020, our peer group consisted of the following companies:

Company	Exchange	Country of HQ	Primary Industry Classification	Revenue ($Mil)		EBITDA Margin	Enterprise Value ($Mil)		Market Cap ($Mil)		Employee Count
US-Listed
Allison Transmission Holdings, Inc.	NYSE	US	Construction Machinery & Heavy Trucks	$	2,163	35%	$	7,209	$	4,859		3,700
American Axle & Manufacturing Holdings, Inc.	NYSE	US	Auto Parts & Equip.	$	4,703	13%	$	4,042	$	945		20,000
Autoliv	NYSE	Sweden	Auto Parts & Equip.	$	7,122	14%	$	9,751	$	8,044		59,423
BorgWarner Inc.	NYSE	US	Auto Parts & Equip.	$	8,798	15%	$	10,324	$	9,448		29,000
Cooper-Standard Holdings Inc.	NYSE	US	Auto Parts & Equip.	$	2,405	0%	$	1,290	$	586		28,000
Dana Incorporated	NYSE	US	Auto Parts & Equip.	$	6,985	8%	$	5,225	$	2,820		36,300
Delphi Technologies PLC	NYSE	UK	Auto Parts & Equip.	$	3,662	8%	$	3,140	$	1,470		19,000
Gentex	NasdaqGS	US	Auto Parts & Equip.	$	1,602	29%	$	7,890	$	8,315		5,874
Meritor, Inc.	NYSE	US	Construction Machinery & Heavy Trucks	$	3,044	7%	$	3,037	$	2,018		8,600
Modine Manufacturing Company	NYSE	US	Auto Parts & Equip.	$	1,756	8%	$	1,055	$	642		11,300
Sensata Technologies	NYSE	US	Electrical Components & Equip.	$	2,986	21%	$	10,685	$	8,297		21,050
The Timken Company	NYSE	US	Industrial Machinery	$	3,518	19%	$	7,289	$	5,830		17,000
Veoneer, Inc.	NYSE	Sweden	Auto Parts & Equip.	$	1,374	(21)%	$	1,934	$	2,377		6,175
Visteon Corporation	NasdaqGS	US	Auto Parts & Equip.	$	2,505	7%	$	3,704	$	3,494		11,000
Non-US-Listed
Autoneum Holding AG	SWX	Switzerland	Auto Parts & Equip.	$	1,977	3%	$	1,726	$	849		12,479
ElringKlinger AG	DB	Germany	Auto Parts & Equip.	$	1,981	8%	$	1,897	$	1,228		9,770
LEONI AG	DB	Germany	Auto Parts & Equip.	$	4,752	(6)%	$	2,042	$	266		95,222
Martinrea International Inc.	TSX	Canada	Auto Parts & Equip.	$	2,418	8%	$	1,642	$	936		15,000
TI Fluid Systems plc	LSE	UK	Auto Parts & Equip.	$	3,248	7%	$	2,860	$	1,742		27,300

In addition to the 19 companies above, the Compensation Committee identified three additional European-headquartered companies – Aptiv, TE Connectivity and Valeo – to monitor outside of the peer group. Based on Semler Brossy’s assessment, we revised our 2020 peer group to remove three companies (i.e., Tenneco Inc., Tower International, Inc. and WABCO Holdings Inc.) since each was acquired in separate transactions during 2019 and no longer fits the selection criteria.

The Compensation Committee intends to continually evaluate the peer group to ensure that it remains an appropriate market reference going forward and continues to suit our business needs.

In addition to reviewing information regarding the peer group, our Compensation Committee also leverages broader market survey and data sources to guide the establishment of our executive compensation programs.

The following is a discussion of the primary elements of 2020 compensation for each of our Named Executive Officers as determined by our Compensation Committee. All amounts are shown in USD. Certain amounts payable to one or more of our Named Executive Officers represent compensation paid in Swiss Francs (including salary and bonuses) and were converted to USD using the average exchange rate for the year-ended December 31, 2020 under GAAP of 1 USD to 0.94023 CHF, unless otherwise noted.

Base salaries are intended to attract and compensate high-performing and experienced leaders and are determined based on performance, scope of responsibility, and years of experience with reference made to relevant competitive market data (but not targeted to a specific competitive position).

In light of the uncertainties related to the global COVID-19 pandemic, in April 2020, the Compensation Committee approved temporary reductions in the annual base salaries of all executive officers, including certain of our Named Executive Officers. Effective April 1, 2020, the annual base salaries for Messrs. Rabiller, Bracke, Balis, Maironi and Mabru were reduced by 20%, which remained in effect through the second quarter of 2020. Effective for the month of September 2020, the Compensation Committee approved another 10% annual base salary reduction for all of our Named Executive Officers.

In addition, in June 2020, the Company appointed Mr. Deason as Senior Vice President and Chief Financial Officer of the Company. Pursuant to Mr. Deason’s employment agreement, Mr. Deason’s annual base salary is $606,235. In connection with Mr. Deason’s appointment, Mr. Bracke stepped down as our Vice President and Interim Chief Financial Officer and was appointed as our Chief Transformation Officer, effective as of the date of Mr. Deason’s appointment. In connection with these changes, Mr. Bracke and Garrett Motion Sàrl, one of our subsidiaries, entered into an amendment to Mr. Bracke’s employment agreement, pursuant to which his annual base salary was decreased from $473,919 to $425,428, effective July 1, 2020.

The following table sets forth the base salaries for each of our Named Executive Officers for 2020. The amounts in the table show the salaries on a non-reduced basis. As described above, the base salaries were reduced by 20% for the second quarter of 2020 and reduced by 10% for the month of September 2020. The actual base salaries paid to each of our Named Executive Officers for 2020, taking into account reductions, are disclosed in the Summary Compensation Table below.

As discussed above in the “Executive Summary—2020 Program Changes,” in June 2020, in response to the unprecedented and ongoing market uncertainty resulting from the COVID-19 pandemic and in connection with the Board’s evaluation of strategic alternatives for the Company, the Compensation Committee determined to redesign the Company’s 2020 compensation program to ensure effective retention and motivation of the Company’s key employees. Under the revised program, the Compensation Committee approved one-time cash continuity awards in the following amounts to ensure the retention of the key individuals who participated in the 2020 ICP and LTI Plan, including the Named Executive Officers (other than Mr. Deason):

As a condition to the receipt of the continuity awards, the key individuals who participated in the 2020 ICP and LTI Plan, including certain of our Named Executive Officers, waived their participation in the 2020 ICP and forfeited the equity awards granted in February 2020 under the LTI Plan, each effective July 1, 2020 and as further described below. The continuity awards are subject to repayment if prior to June 25, 2021, the executive resigns without “good reason”, or the Company terminates the executive’s employment for “cause” (each, as defined in the continuity award agreement).

As described further below, Mr. Deason joined our Company in June 2020 during the Company’s Restructuring and therefore was not eligible to participate in the 2020 ICP. Additionally, Mr. Deason did not receive any grants under the LTI Plan. Since Mr. Deason was not a participant under our 2020 ICP or LTI Plan, he did not receive a continuity award.

ICP awards are intended to motivate and reward executives to achieve annual corporate, strategic business group and functional goals in key areas of financial and operational performance. Each Named Executive Officer’s target ICP opportunity is based upon a percentage of base salary.

In February 2020, the Compensation Committee, after taking into consideration industry and market data, mix of target compensation for the Named Executive Officers, and other elements of their compensation, determined to increase the 2020 ICP target annual incentive percentages for Mr. Balis to 60% from 55%, Mr. Maironi to 65% from 60% and Mr. Mabru to 60% from 55%. The ICP target annual incentive percentage for Mr. Rabiller remained unchanged for 2020.

Additionally, effective July 1, 2020, Mr. Bracke’s ICP target annual incentive percentage was decreased from 60% to 50% in connection with stepping down as Interim Chief Financial Officer and his appointment as our Chief Transformation Officer.

The 2020 target ICP opportunity for each Named Executive Officer, as a percentage of base salary, are set forth below:

For 2020, the ICP was designed so that payout was based in part on the achievement of objective Company performance criteria (the “Company Performance Portion”), which represented 75% of the award opportunity, and in part on the achievement of individual performance objectives (the “Individual Performance Portion”), which represented the remaining 25% of the award opportunity. In addition, the 2020 ICP was designed so that Award opportunities under the Company Performance Portion were based on the achievement of two financial performance criteria: Adjusted EBITDA Margin and Adjusted Free Cash Flow Conversion (each, as defined below), weighted 40% and 60%, respectively. In 2019, we utilized a third performance metric, Organic Revenue Growth, which we removed from our 2020 ICP because our Compensation Committee wanted to incentivize focusing in the near-term on generating higher margins than competitors and maximizing cash flow to deleverage and reinvest back into the Company.

Performance goals for each metric were established at threshold, target and maximum levels with intermediate inflections between threshold and target as well as between target and maximum. Payout for achievement at or above maximum for each metric was capped at 200% of target, and achievement below threshold would have resulted in no payout. Straight-line interpolation would have been used to calculate the 2020 ICP payout associated with actual results falling between goals. The goals were set at levels that were expected to be challenging but achievable at the outset of the year. The following table sets forth the applicable goals for each measure:

For 2020, the ICP was designed so that payouts under the Individual Performance Portion were based on the Compensation Committee’s assessment of each executive’s individual performance against their objectives established at the beginning of the fiscal year specifically related to the categories of differentiated technology, global presence and capabilities (operational excellence), customer experience with each such goal comprising 15% of the Individual Performance Portion, as well as pre-established strategic goals which comprised 10% of the Individual Performance Portion. Individual objectives for the Named Executive Officers are typically developed during the Company’s annual strategic planning to ensure rigor and business alignment, and the year-end performance assessment is performed using a formal process that matches actual performance and behaviors against established expectations.

Each of the Named Executive Officers, other than Mr. Deason, had individualized performance goals for 2020 as follows:

As described above, as a condition to receipt of the continuity awards, effective July 1, 2020, the Named Executive Officers (other than Mr. Deason who was not a participant in the 2020 ICP) waived their participation in the 2020 ICP, and subsequently our Named Executive Officers did not receive a payout under the Company Performance Portion or the Individual Performance Portion of the 2020 ICP.

In May 2020, in connection with Mr. Bracke stepping down as Interim Chief Financial Officer, the Compensation Committee approved the payment of a one-time retention bonus in the amount of $473,919 to Mr. Bracke. The retention bonus is subject to repayment in the event that Mr. Bracke resigns without “good reason”, or the Company terminates his employment for “cause” (each, as defined in the 2018 Stock Incentive Plan, or the “2018 Plan”), prior to March 31, 2021.

In addition, in June 2020, in conjunction with the commencement of his employment, Mr. Deason received a one-time sign-on bonus of $1,063,570 as part of his employment agreement. The sign-on bonus will be repaid by Mr. Deason if prior to the one-year anniversary of his start date, Mr. Deason’s employment is terminated for any reason. Mr. Deason also received a one-time relocation bonus equal to $159,535, which is subject to repayment if Mr. Deason terminates employment for any reason or if Garrett Motion Sàrl terminates Mr. Deason’s employment (other than for reason of redundancy) prior to the second anniversary of his start date.

The goal of our long-term, equity-based incentive awards is to align the interests of our Named Executive Officers with the interests of our stockholders. Because vesting is based on continued service, our equity-based incentives also encourage the retention of our Named Executive Officers during the award vesting period.

Pursuant to the executives’ offer letters or employment agreements, each of Messrs. Rabiller, Deason, Bracke, Balis, Maironi and Mabru is eligible for an annual grant of equity awards with an initial target opportunity of 350%, 170%, 100%, 200%, 189% and 160%, respectively, of the executive’s annual base salary. Under our LTI Plan, the Compensation Committee granted awards, 60% in the form of PSUs and 40% in the form of Restricted Stock Units (“RSUs”) to our Named Executive Officers (other than Mr. Deason). For the LTI Plan, we increased the weighting of PSUs to 60% (previously 50% under the 2019-2021 Long-Term Incentive Plan (the “2019-2021 LTI Plan”)) and incorporated two relative metrics (Relative Organic Revenue Growth and relative TSR), as well as incorporated an Absolute TSR modifier for our PSU awards, in each case, in order to further align our Named Executive Officers’ compensation with shareholder outcomes. As a result of this update, we also eliminated the usage of stock options and increased the weighting of RSUs to 40% (previously 25% under the 2019-2021 LTI Plan).

The PSUs were eligible to vest based on the achievement of Relative Organic Revenue Growth, Adjusted Free Cash Flow Conversion, and relative TSR, weighted 30%, 30%, and 40%, respectively, over a three-year performance period from January 1, 2020 through December 31, 2022. Achievement at or above maximum for each metric was capped at 200% of target. Additionally, the PSUs were subject to an Absolute TSR modifier.

In establishing the goals for the PSUs under the LTI Plan, Management and the Compensation Committee determined to include two relative measures – Relative Organic Revenue Growth, and relative TSR – to emphasize peer outperformance in a competitive landscape. In addition, the introduction of TSR as 40% of the PSUs signifies our commitment to provide superior returns to our shareholders. Adjusted Free Cash Flow Conversion remains an important part of the PSUs to further emphasize deleveraging the Company over the long term. At the time the program was approved, the Compensation Committee believed these metrics were aligned with feedback received from stockholder outreach discussions and were critical for executing the Company’s near- and long-term strategy.

Further, for the PSUs under the LTI Plan, we added an Absolute TSR component that would deliver up to an incremental 50% of the target PSUs depending on the stock price at the end of the performance period such that the maximum number of PSUs that may be earned under the LTI Plan was capped at 250% of target. The Company determined that including an Absolute TSR component will serve as a powerful means to incentivize share price appreciation back to and above the Company’s opening price per share of common stock on the date of the Spin-Off, October 1, 2018 (the “Spin-Off Price”). To that end, threshold performance to start earning a portion of the component was set at a 20% premium over the 30-day stock price average ($8.38) preceding the grant date, and the price to earn maximum for this component was established at $20, approximately 14% higher than the Spin-Off Price and 139% higher than the 30-day average price on the date of grant. Payouts would have been linear between the threshold and maximum depending on the resulting stock price.

The RSUs were eligible to vest in full on the third anniversary of the grant date, subject to continued employment.

We made the following grants of PSUs and RSUs under the LTI Plan to our Named Executive Officers in 2020, prior to the forfeiture of such awards effective July 1, 2020 in connection with the grant of the continuity awards, as described above:

As described above, as a condition to the approval of the continuity awards, effective July 1, 2020, the Named Executive Officers (other than Mr. Deason, who had not yet commenced employment and, accordingly, was not granted LTI Plan awards in February 2020) forfeited the PSUs and RSUs granted in February 2020 pursuant to the LTI Plan and such awards were cancelled.

Under our 2019-2020 Performance Plan (the “Replacement Plan”), we issued PSUs and performance cash units (“PCUs”) to certain of our Named Executive Officers that will vest in full on March 4, 2021, subject to company performance and continued employment through each vesting date, consistent with the vesting schedule that applied to corresponding Honeywell Performance Plan awards previously granted for the 2018-2020 performance period. PCUs are dollar denominated and pay out in cash rather than equity. The PSUs and PCUs awarded under the Replacement Plan were scheduled to vest based on the achievement of Organic Revenue Growth, Adjusted EBITDA and Adjusted Free Cash Flow Conversion goals, weighted 20%, 40% and 40%, respectively, over a two-year performance period from January 1, 2019 through December 31, 2020. Based on the Company’s actual performance with respect to Organic Revenue Growth, Adjusted EBITDA and Adjusted Free Cash Flow Conversion for the period from January 1, 2019 through December 31, 2020, the threshold targets were not met and PSUs and PCUs granted under the Replacement Plan were not earned.

In addition to the annual and long-term compensation programs described above, we provided the Named Executive Officers with benefits and limited perquisites consistent with those provided to other Company executives, as described below.

Certain of our Named Executive Officers’ employment agreements and offer letters provide that the executive is eligible to receive severance payments upon a qualifying involuntary termination of employment, including in connection with a change in control of our Company (as opposed to solely upon a “single-trigger” change in control). Additionally, we maintain a severance policy under which our Named Executive Officers are eligible to receive severance payments and benefits upon a qualifying termination, including in connection with a change in control. We believe that these protections serve to encourage continued attention and dedication to duties without distraction arising from the possibility of a change in control and provide the business with a smooth transition in the event of such a termination of employment in connection with a transaction. These severance and change in control arrangements are designed to retain certain of our executives in these key positions as we compete for talented executives in the marketplace where such protections are commonly offered. For a detailed description of the severance provisions contained in our Named Executive Officers’ employment agreements and offer letters and our severance policy, see “Summary of Potential Payments and Benefits—Termination Events” below.

We maintain the Garrett Supplemental Savings Plan for our executives in the United States. This plan provides our executives with the opportunity to defer pre-tax compensation and incentive compensation that cannot be contributed to our 401(k) savings plan due to IRS limitations. These amounts may be matched by Garrett, and the amount of such matching contributions are at our discretion. Matching contributions, if any, are immediately vested. Deferred compensation balances earn interest through the Fidelity U.S. Bond Index Fund, which is subject to change on a daily basis. This plan is explained in detail in the section entitled “Nonqualified Deferred Compensation—Fiscal Year 2020.” Mr. Balis does not actively contribute to the plan (and we are not actively making any matching contributions to his account); however, his account continues to earn interest under the plan. Mr. Balis elected to receive benefits under this plan in a lump sum, which amount will be paid on the later of six months or in January of the year following his separation from service.

Our Named Executive Officers are eligible to participate in Garrett’s pension plan sponsored in Switzerland and named “Columna Sammelstiftung Client Invest Winterthur”. For a detailed description of Garrett’s Swiss pension plan, see “Pension-Benefits-Fiscal Year 2020” below.

We provide a competitive benefits package to all full-time employees, including the Named Executive Officers, which includes life insurance benefits.

In 2020, the Named Executive Officers were eligible for benefits under the Company’s car policy (in the form of a company car or cash allowance) as it generally applies to executives in Switzerland, as well as reimbursements associated with legal representation, family, tax, legal and financial planning expenses. In 2020, we also provided Mr. Deason with relocation assistance in connection with his relocation to Switzerland.

In the future, we may provide different and/or additional compensation components, benefits and/or perquisites to our Named Executive Officers to ensure that we provide a balanced and comprehensive compensation structure. We believe that it is important to maintain flexibility to adapt our compensation structure to properly attract, motivate and retain the top executive talent for which we compete. All future practices regarding compensation components, benefits and/or perquisites will be subject to periodic review by the Compensation Committee.

Section 409A of the Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities, penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and benefits plans and arrangements for all of our employees and other service providers, including our Named Executive Officers, so that they are either exempt from, or satisfy the requirements of, Section 409A of the Code.

Section 280G of the Code disallows a tax deduction with respect to excess parachute payments to certain executives of companies that undergo a change in control. In addition, Section 4999 of the Code imposes a 20% penalty on the individual receiving the excess payment.

Parachute payments are compensation that is linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans including stock options and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G of the Code based on the executive’s prior compensation. In approving the compensation arrangements for our Named Executive Officers in the future, the Compensation Committee will consider all elements of the cost to the Company of providing such compensation, including the potential impact of Section 280G of the Code. However, the Compensation Committee may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility under Section 280G of the Code and the imposition of excise taxes under Section 4999 of the Code when it believes that such arrangements are appropriate to attract and retain executive talent.

ASC Topic 718 requires us to calculate the grant date “fair value” of our stock-based awards using a variety of assumptions. ASC Topic 718 also requires us to recognize an expense for the fair value of equity-based compensation awards. Grants of restricted stock, RSUs and performance units under our equity incentive award plans will be accounted for under ASC Topic 718. We have adopted ASU 2016-09, Improvements to Employee Share-Based

Payment Accounting, and elected to account for forfeitures of awards at the time of grant. The Compensation Committee will regularly consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align the accounting expense of our equity awards with our overall executive compensation philosophy and objectives.

Our equity grant practices ensure all grants are made on fixed grant dates and at exercise prices or grant prices equal to the fair market value of our Common Stock on such dates. Equity grants are awarded under our stockholder-approved plans and we do not backdate, reprice or grant equity awards retroactively. Our stockholder-approved equity plans prohibit repricing of awards or exchanges of underwater options for cash or other securities without stockholder approval.

Our policy on securities trading prohibits our directors, officers and employees from trading in our securities during certain designated blackout periods and otherwise while they are aware of material non-public information.

Our securities trading policy prohibits directors and executive officers, and their Related Parties (as defined in such policy), from purchasing any financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) or otherwise engaging in transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of the Company’s equity securities whether they are (1) granted by the Company as part of the person’s compensation; or (2) otherwise held, directly or indirectly. See “Additional Prohibited Transactions” above for more information about the securities trading policy.

We maintain a Clawback Policy which requires certain cash and equity incentive compensation to be repaid to the Company by its executive officers in the event of the Company being required to prepare an accounting restatement as a result of intentional or grossly negligent misconduct by such executive officer. The Clawback Policy also authorizes the Board, or a designated committee, to recoup bonus or incentive compensation (whether cash-based or equity-based) such executive officer received during the three fiscal years preceding the year the restatement is determined to be required, to the extent such bonus or incentive compensation exceeds what the executive officer would have received based on an applicable restated performance measure or target.

In addition to the elements of executive officer compensation described above, we have adopted stock ownership guidelines pursuant to which our Named Executive Officers are required to hold a number of shares of our common stock having a market value equal to or greater than a multiple of each executive’s base salary. Until the applicable ownership guideline is achieved, each Named Executive Officer is required to retain at least 50% of the shares acquired from Company equity awards after payment (or withholding) of the exercise price, if applicable, and taxes. Once the applicable ownership guideline is achieved, the aforementioned retention ratio will no longer apply. If a Named Executive Officer’s share ownership subsequently falls back below the applicable ownership guideline and remains below the ownership guideline on a continuous basis for a period of more than 24 months, the Named Executive Officer will be required to comply again with the retention ratio until such time as the Named Executive Officer again achieves the ownership guidelines.

Our ownership guidelines are shown below. We believe the use of a retention ratio appropriately balances the need to work toward achieving these requirements with standard liquidity needs our Named Executive Officers may face. As of December 31, 2020, our Named Executive Officers (other than Mr. Deason), each of whom had previously met their share ownership requirements, each fell below their applicable ownership guidelines due to the cancellation of the LTI Plan. Mr. Deason joined the Company in June 2020 and is continuing to grow his equity position in the Company.

The information contained in this Report of the Compensation Committee shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing (except to the extent that we specifically incorporate this information by reference) and shall not otherwise be deemed “soliciting material” or “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act (except to the extent that we specifically incorporate this information by reference).

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis and, based on such review and discussions, recommended to the Board that the Compensation Discussion and Analysis be included in this Annual Reporton Form 10-K.

The following table sets forth information concerning the compensation of our Named Executive Officers for the years ended December 31, 2020, 2019 and 2018.

Name and Principal Position	Year	Salary ($) ⁽¹⁾		Bonus ($) ⁽²⁾		Stock Awards ($) ⁽³⁾		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) ⁽⁴⁾		All Other Compensation ($) ⁽⁵⁾		Total ($)
Olivier Rabiller	2020		905,670		—		3,582,093		—		—		114,388		22,016		4,624,167
President and Chief Executive Officer	2019		897,923		276,011		2,830,817		790,273		452,735		92,521		29,221		5,369,501
	2018		639,476		597,178		5,251,916		373,670		418,942		127,988		25,053		7,434,223
Sean Deason Senior Vice President and Chief Financial Officer	2020		314,773		1,223,105		—		—		—		28,916		302,340		1,869,134
Peter Bracke	2020		424,528		473,919		406,755		—		—		76,704		22,016		1,403,922
Chief Transformation Officer and Former Vice President and Interim Chief Financial Officer	2019		392,552		110,668		472,177		91,313		80,177		65,444		21,505		1,233,836
Craig Balis	2020		402,520		—		914,285		—		—		92,872		27,284		1,436,961
Senior Vice President and Chief Technology Officer	2019		402,431		158,707		852,143		200,710		76,793		78,306		139,763		1,908,853
	2018		390,764		272,095		1,030,513		279,070		153,340		187,932		106,704		2,420,418
Jérôme Maironi	2020		452,835		—		989,904		—		—		70,823		42,856		1,556,418
Senior Vice President, General Counsel and Corporate Secretary	2019		452,735		—		875,153		213,377		122,312		65,732		210,923		1,940,232
	2018		429,418		77,094		1,208,459		264,880		187,644		17,944		231,738		2,417,177
Thierry Mabru	2020		407,552		—		838,186		—		—		79,660		22,016		1,347,414
Senior Vice President, Integrated Supply Chain	2019		407,461		119,604		672,721		162,570		77,971		65,674		20,826		1,526,827
	2018		379,693		222,685		962,142		205,755		148,990		65,034		21,775		2,006,074

The following table shows all plan-based awards which the Company granted to the Named Executive Officers during 2020.

						Estimated Possible Payouts Under Non-Equity Incentive Plan Awards ($)						Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Shares of Stock or Units (#)		All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)⁽¹⁾
Name	Award Type	Performance Plan		Grant Date		Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)						Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)⁽¹⁾
Olivier Rabiller	ICP ⁽²⁾		—		—		299,129		1,196,516		2,393,031		—		—		—		—		—		—		—
	PSU	LTI Plan		02/28/2020⁽³⁾			��		—		—		64,137		256,549		641,373		—		—		—		2,294,093
	RSU	LTI Plan		02/28/2020⁽⁴⁾			—		—		—		—		—		—		185,324		—		—		1,288,000
Peter Bracke	ICP ⁽²⁾		—		—		53,178		212,714		425,428		—		—		—		—		—		—		—
	PSU	LTI Plan		02/28/2020⁽³⁾			—		—		—		7,258		29,033		72,583		—		—		—		260,996
	RSU	LTI Plan		02/28/2020⁽⁴⁾			—		—		—		—		—		—		20,973		—		—		145,758
Craig Balis	ICP ⁽²⁾		—		—		63,814		255,257		510,513		—		—		—		—		—		—		—
	PSU	LTI Plan		02/28/2020⁽³⁾			—		—		—		16,289		65,156		162,890		—		—		—		587,174
	RSU	LTI Plan		02/28/2020⁽⁴⁾			—		—		—		—		—		—		47,067		—		—		327,111
Jérôme Maironi	ICP ⁽²⁾		—		—		77,774		311,094		622,188		—		—		—		—		—		—		—
	PSU	LTI Plan		02/28/2020⁽³⁾			—		—		—		17,317		69,269		173,173		—		—		—		642,144
	RSU	LTI Plan		02/28/2020⁽⁴⁾			—		—		—		—		—		—		50,038		—		—		347,760
Thierry Mabru	ICP ⁽²⁾		—		—		64,612		258,447		516,895		—		—		—		—		—		—		—
	PSU	LTI Plan		02/28/2020⁽³⁾			—		—		—		13,194		52,776		131,940		—		—		—		573,226
	RSU	LTI Plan		02/28/2020⁽⁴⁾			—		—		—		—		—		—		38,124		—		—		264,960

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

The material terms of the employment agreements and/or offer letters with each of our Named Executive Officers, as in effect in 2020, are described below.

On May 2, 2018, Honeywell entered into an offer letter with Mr. Rabiller appointing him as President and Chief Executive Officer of the Company, which became effective upon the completion of the Spin-Off. The letter provides Mr. Rabiller with an annual base salary of $889,786 (which was $957,213 in 2020) and an annual cash incentive target opportunity under the ICP equal to 100% of his annual base salary (which was 125% in 2020), and other elements of his compensation.

Additionally, under the offer letter, Mr. Rabiller is eligible for an annual grant of equity awards with an initial target opportunity of 325% of annual base salary (which was 350% in 2020). Mr. Rabiller’s annual equity award will be determined by the Board and will be based on his individual performance. Further, in connection with the successful completion of the Spin-Off and pursuant to his offer letter, Mr. Rabiller received a grant of Company RSUs valued at $4,300,000, which vests in two equal installments on each of the third and fourth anniversaries of the Spin-Off, subject to continued employment through each vesting date.

In addition, Mr. Rabiller is eligible to receive vacation benefits in accordance with Company policy.

In the event of Mr. Rabiller’s involuntary termination of employment without cause, he will be entitled to certain payments, as described under “Summary of Potential Payments and Benefits—Termination Events” below. Mr. Rabiller’s offer of employment is also contingent upon his execution of the Company’s intellectual property and non-competition agreements, which include two-year post-termination non-competition and non-solicitation restrictions and customary confidentiality provisions.

On May 29, 2020, the Company and Garrett Motion Sàrl entered into an employment agreement with Mr. Deason appointing him as Senior Vice President and Chief Financial Officer of the Company effective June 15, 2020. The agreement provides Mr. Deason with an annual base salary of $606,235 and an annual cash incentive target opportunity under the ICP equal to 80% of his annual base salary.

In addition, pursuant to his employment agreement, Mr. Deason received a one-time sign-on bonus of $1,063,570. The sign-on bonus will be repaid by Mr. Deason if prior to the one-year anniversary of his start date, Mr. Deason’s employment is terminated for any reason. Mr. Deason also received a one-time relocation bonus equal to $159,535, which is subject to repayment if Mr. Deason terminates employment for any reason or if Garrett Motion Sàrl terminates Mr. Deason’s employment (other than for reason of redundancy) prior to the second anniversary of his start date. Additionally, under the employment agreement, Mr. Deason is eligible for an annual grant of equity awards with an initial target opportunity of 170% of annual base salary. Mr. Deason’s annual equity award will be determined by the Board and will be based on his individual performance.

Mr. Deason is also eligible to receive vacation benefits in accordance with Company policy, a cash car allowance in the amount of $1,835 per month and tuition reimbursement. Mr. Deason’s employment agreement also includes two-year post-termination non-competition restrictions and one-year post-termination non-solicitation restrictions.

In the event of Mr. Deason’s involuntary termination of employment without cause, he will be entitled to certain payments, as described under “Summary of Potential Payments and Benefits—Termination Events” below. Mr. Deason’s offer of employment is also contingent upon his execution of the Company’s intellectual property and non-competition agreements, which include customary confidentiality provisions.

Chief Transformation Officer and Former Interim Chief Financial Officer—Peter Bracke.

On September 15, 2015, Honeywell Technologies Sàrl, a subsidiary of Honeywell, entered into an employment agreement with Mr. Bracke appointing him as ECC Vice President and CFO. The agreement was amended in September 2019 when Mr. Bracke was appointed as our Interim Chief Financial Officer, and further amended on June 8, 2020 when Mr. Bracke stepped down as our Interim Chief Financial Officer and was appointed as our Chief Transformation Officer.

Prior to the amendment in June 2020, Mr. Bracke’s agreement provided Mr. Bracke with an annual base salary of $473,919 and an annual cash incentive target opportunity under the ICP equal to 60% of his annual base salary. Pursuant to the June 2020 amendment, the agreement provides Mr. Bracke’s with an annual base salary of $425,428, effective July 1, 2020, and an annual cash incentive target opportunity under the ICP equal to 50% of his annual base salary.

Mr. Bracke is eligible for an annual grant of equity awards with an initial target opportunity of 100% of annual base salary, Mr. Bracke’s annual equity award will be determined by the Board. Additionally, under the amended employment agreement, Mr. Bracke received a restricted stock unit award in September 2019 valued at $200,000. The award will vest in full on the second anniversary of the grant date, subject to Mr. Bracke’s continued employment through such date.

In addition, Mr. Bracke is eligible to receive vacation benefits in accordance with Company policy.

In the event of Mr. Bracke’s involuntary termination of employment without cause, he will be entitled to certain payments, as described under “Summary of Potential Payments and Benefits—Termination Events” below.

Other Named Executive Officers—Craig Balis, Thierry Mabru, and Jérôme Maironi.

Honeywell entered into offer letters with each of Messrs. Balis, Mabru, and Maironi.

The offer letters for Messrs. Balis, Mabru, and Maironi each provide for an annual base salary of $409,097, $414,211, and $460,234, respectively, and an annual cash incentive target opportunity under the ICP equal to 55%, 55% and 60% of the executive’s annual base salary, respectively, which were increased to 60%, 60% and 65%, respectively, in February 2020 after taking into consideration industry and market data, mix of target compensation for each executive.

Additionally, under the offer letters, each of Messrs. Balis, Mabru, and Maironi is eligible for an annual grant of equity awards with an initial target opportunity of 200%, 160% and 189%, respectively, of the executive’s annual base salary. Annual equity awards will be determined by the Board and are based on the executive’s individual performance.

Under the offer letters and in connection with the successful completion of the Spin-Off, each of Messrs. Balis, Mabru, and Maironi also received grants of Company RSUs valued at $800,000 for Messrs. Balis and Mabru and $1,000,000 for Mr. Maironi. The awards vest in two equal installments on each of the third and fourth anniversaries of the Spin-Off, subject to continued employment through each vesting date.

In addition, Messrs. Balis, Mabru, and Maironi are eligible to receive vacation benefits in accordance with Company policy. Further, Mr. Maironi is also entitled to relocation assistance in connection with his relocation to Switzerland in accordance with Company policy.

In the event of Messrs. Balis, Mabru, or Maironi’s involuntary termination of employment without cause, they will be entitled to certain payments, as described under “Summary of Potential Payments and Benefits—Termination Events” below. The offer letters for Messrs. Balis, Mabru and Maironi are also contingent upon the execution of the Company’s intellectual property and non-competition agreements, which include two-year post-termination non-competition and non-solicitation provisions and customary confidentiality provisions.

As described above, in June 2020, in response to the unprecedented and ongoing market uncertainty resulting from the COVID-19 pandemic and in connection with the Board’s evaluation of strategic alternatives for the Company, the Compensation Committee determined to revise the Company’s 2020 compensation program and issued one-time cash continuity awards to ensure effective retention and motivation of key individuals, including the Named Executive Officers (other than Mr. Deason). As a condition to the approval of the continuity awards, such Named Executive Officers forfeited the RSUs and PSUs granted in February 2020 under the LTI Plan, effective July 1, 2020 and subsequently, those awards were cancelled. The grant date fair value of such awards, including the incremental fair value of the awards upon modification in connection with the cancellation and subsequent issuance of the continuity awards, is reported in the Summary Compensation Table and Grants of Plan-Based Awards Table above.

The following table shows all outstanding Company equity awards held by the named executive officers as of December 31, 2020:

		Option Awards								Stock Awards
Name	Grant Date	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)⁽¹⁾		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)⁽¹⁾
Olivier Rabiller	7/29/2016		—		—		—		—	57,083⁽²⁾			252,878		—		—
	2/28/2017		—		—		—		—	12,312⁽³⁾			54,542		—		—
	2/27/2018		—		—		—		—	14,601⁽⁴⁾			64,682		—		—
	2/27/2018		—		—		—		—	10,100⁽¹²⁾			44,743		—		—
	10/1/2018		—		—		—		—	232,440⁽⁵⁾			1,029,709		—		—
	3/4/2019		—		—		—		—	48,873⁽⁶⁾			216,507		—		—
	3/4/2019		—		—		—		—		—		—	97,745⁽⁷⁾			433,010
	3/4/2019		27,138	81,416⁽⁸⁾			16.17	3/4/2029			—		—		—			—
Craig Balis	2/27/2014		—		—		—		—	16,864⁽⁹⁾			74,708		—		—
	2/28/2017		—		—		—		—	6,995⁽³⁾			30,988		—		—
	7/27/2017		—		—		—		—	18,519⁽¹⁰⁾			82,039		—		—
	2/27/2018		—		—		—		—	15,346⁽¹¹⁾			67,983		—		—
	2/27/2018		—		—		—		—	7,543⁽¹²⁾			33,415		—		—
	10/1/2018		—		—		—		—	43,250⁽⁵⁾			191,598		—		—
	3/4/2019		—		—		—		—	12,413⁽⁶⁾			54,990		—		—
	3/4/2019		—		—		—		—		—		—	24,825⁽⁷⁾			109,975
	3/4/2019		6,892	20,678⁽⁸⁾			16.17	3/4/2029			—		—		—			—
Jérôme Maironi	7/25/2014		—		—		—		—	11,753⁽¹³⁾			52,066		—		—
	2/28/2017		—		—		—		—	7,835⁽³⁾			34,709		—		—
	2/27/2018		—		—		—		—	14,528⁽¹¹⁾			64,359		—		—
	2/27/2018		—		—		—		—	7,159⁽¹²⁾			31,714		—		—
	10/1/2018		—		—		—		—	54,060⁽⁵⁾			239,486		—		—
	3/4/2019		—		—		—		—	13,196⁽⁶⁾			58,458		—		—
	3/4/2019		—		—		—		—		—		—	26,392⁽⁷⁾			116,917
	3/4/2019		7,327	21,983⁽⁸⁾			16.17	3/4/2029			—		—		—			—
Thierry Mabru	7/31/2015		—		—		—		—	9,875⁽¹⁴⁾			43,746		—		—
	2/28/2017		—		—		—		—	5,429⁽³⁾			24,050		—		—
	7/27/2017		—		—		—		—	15,432⁽¹⁰⁾			68,364		—		—
	2/27/2018		—		—		—		—	11,350⁽¹¹⁾			50,281		—		—
	2/27/2018		—		—		—		—	5,561⁽¹²⁾			24,635		—		—
	10/1/2018		—		—		—		—	43,250⁽⁵⁾			191,598		—		—
	3/4/2019		—		—		—		—	10,054⁽⁶⁾			44,539		—		—
	3/4/2019		—		—		—		—		—		—	20,108 ⁽⁷⁾			89,078
	3/4/2019		5,582	16,749⁽⁸⁾			16.17	3/4/2029			—		—		—			—
Peter Bracke	9/24/2015		—		—		—		—	9,824⁽¹⁵⁾			43,520		—		—
	2/28/2017		—		—		—		—	8,394⁽³⁾			37,185		—		—
	2/27/2018		—		—		—		—	6,538⁽¹¹⁾			28,963		—		—
	2/27/2018		—		—		—		—	3,196⁽¹²⁾			14,158		—		—
	3/4/2019		3,135	9,408⁽⁸⁾			16.17	3/4/2029			—		—		—			—
	3/4/2019		—		—		—		—	11,185⁽¹⁶⁾			49,550		—		—
	3/4/2019		—		—		—		—	5,647⁽⁶⁾			25,016		—		—
	9/6/2019		—		—		—		—	20,111⁽¹⁷⁾			89,092		—		—

The following table shows the number of shares acquired upon the vesting of Company stock awards for 2020 and the value realized upon such vesting.

The following table provides summary information about the pension benefits that have been earned by our Named Executive Officers in 2020. For 2020, the Named Executive Officers all participated in a pension plan sponsored in Switzerland and named “Columna Sammelstiftung Client Invest Winterthur” (the “Garrett Swiss Plan”). Garrett Swiss Plan benefits depend on each Named Executive Officer’s annual contribution election and age. The column in the table below entitled “Present Value of Accumulated Benefits” represents the value of the employer contributions in the Garrett Swiss Plan with related interest, converted to U.S. dollars.

The Garrett Swiss Plan is a broad-based pension plan in which all of Garrett’s Swiss-based employees participate, as well as our Named Executive Officers. The Garrett Swiss Plan complies with Swiss tax requirements applicable to broad-based pension plans. Normal retirement age under the Garrett Swiss Plan is 65, for men, and 64, for women. All benefits are immediately vested.

The Named Executive Officers can contribute to the Garrett Swiss Plan based on their age at rates that range from 5%-11% of pensionable salary with additional contributions for death and disability benefits. Employer contributions are also based on the Named Executive Officer’s age at rates that range from 5.5%-11.5% of pensionable salary with additional contributions for death and disability benefits. For 2020, participants received an interest rate of return of 4.5%.

The Garrett Swiss Plan defines pensionable salary as the sum of annual base salary, sales incentives/commissions, bonuses, gratuities and gifts for service years, in each case, while taking into account any changes to compensation have been agreed to for the applicable year, minus the annual coordination amount and limited to the Garrett Swiss Plan’s annual pay limit. For 2020, the annual coordination amount was $26,467 and the Garrett Swiss Plan’s annual pay limit was $848,047.

Annual benefits under the Garrett Swiss Plan are calculated at a Named Executive Officer’s retirement date and are equal to a percentage of the Named Executive Officer’s account balance specified in the Garrett Swiss Plan based on his age and retirement year. The normal payment form is a joint and 60% survivor annuity with the member’s surviving spouse, with a lump sum option. Swiss pension law requires participants who were covered by the pension plan of another employer to transfer the termination benefit of that pension plan into the Garrett Swiss Plan. Participants are permitted to withdraw part of the termination benefit, or pledge the termination benefit, for home ownership.

The following table provides information on the defined contribution or other plans that during 2020 provided for deferrals of compensation to our Named Executive Officer’s on a basis that is not tax-qualified.

The SSP is a U.S. nonqualified deferred compensation plan that permits executives to defer the portion of their pre-tax compensation and incentive compensation that could not be contributed to Garrett’s tax-qualified 401(k) plan due to the annual deferral and compensation limits imposed by the Internal Revenue Code and/or up to an additional 25% of base annual salary for the plan year. Employer matching contributions are discretionary and immediately vested.

Participant deferrals are credited with a rate of interest, compounded daily, based on the Fidelity U.S. Bond Index Fund. The rate is subject to change daily, and for 2020, the average rate was 7.8%.

Mr. Balis elected to receive his SSP benefits in a lump sum, which amount will be paid on the later of six months or in January of the year following his separation from service. Amounts deferred cannot be withdrawn before the distribution date for any reason.

This section describes the benefits payable to our Named Executive Officers in two circumstances:

Olivier Rabiller. Under Mr. Rabiller’s offer letter, upon an involuntary termination of employment, other than for cause, Mr. Rabiller will be entitled to 24 months of base salary continuation and target incentive compensation, which will be extended to 36 months in the case of such termination within two years after a change in control of the Company.

Our Named Executive Officers are eligible for severance payments and benefits upon a qualifying termination of employment under our Company severance plan. Upon an involuntary termination of employment by the Company, the Named Executive Officers are entitled to 18 months of base salary continuation, target incentive compensation prorated for the severance period and continued health and welfare benefits for the duration of the severance period, in each case, which will be extended to 24 months in the case of such termination following a change in control. We do not provide our Named Executive Officers, all of whom reside in Switzerland, with continued health and welfare benefits upon a qualifying termination of employment as these benefits typically are provided by the government.

Under the terms of the 2018 Plan and applicable award agreements, in the event of a change in control, if (i) the successor corporation does not assume or substitute outstanding equity awards or (ii) if outstanding equity awards are assumed or substituted and the executive is terminated without “cause” or for “good reason” (each as defined in the 2018 Plan) within 24 months of the change in control, such equity awards will immediately vest (with PSU awards vesting at target or other substantially achieved performance as determined by the Compensation Committee and PCU awards vesting based on actual performance on a pro-rated basis) and, if applicable, become exercisable immediately prior to the change in control transaction. Upon death or disability, any outstanding equity awards held by the executive will immediately vest and, if applicable, become exercisable (with PSU and PCU awards vesting based on actual performance and on a prorated basis).

The following table summarizes the payments that would be made to our Named Executive Officers upon the occurrence of certain qualifying terminations of employment or a change in control, in any case, occurring on December 31, 2020. Amounts shown do not include (i) accrued but unpaid base salary through the date of termination, or (ii) other benefits earned or accrued by the Named Executive Officer during his employment that are available to all salaried employees, such as accrued vacation, and assume that any successor company in a change in control assumed or substituted awards for any outstanding awards under the 2018 Plan. Pension and nonqualified deferred compensation benefits, which are described elsewhere in this filing, are not included in the table below in accordance with the applicable disclosure requirements, even though they may become payable at the times specified in the table.

Name	Benefit	Death ($)		Disability ($)		Termination Without Cause (no Change in Control) ($)		Termination Without Cause in Connection with a Change in Control ($)
Olivier Rabiller	Cash		—		—		4,307,457		6,461,186
	Equity Acceleration ⁽¹⁾		2,096,072		2,096,072		—		2,469,864
	All Other Payments or Benefits		—		—		—		—
	Total		2,096,072		2,096,072		4,307,457		8,931,050
Sean Deason	Cash		—		—		1,636,834		3,273,668
	Equity Acceleration ⁽¹⁾		—		—		—		—
	All Other Payments or Benefits		—		—		—		—
	Total		—		—		1,636,834		3,273,668
Peter Bracke	Cash		—		—		957,213		1,276,284
	Equity Acceleration ⁽¹⁾		287,485		287,485		—		338,752
	All Other Payments or Benefits		—		—		—		—
	Total		287,485		287,485		957,213		1,615,036
Craig Balis	Cash		—		—		1,021,028		1,361,370
	Equity Acceleration ⁽¹⁾		645,695		645,695		—		760,841
	All Other Payments or Benefits		—		—		—		—
	Total		645,695		645,695		1,021,028		2,122,211
Jérôme Maironi	Cash		—		—		1,184,550		1,579,401
	Equity Acceleration ⁽¹⁾		597,709		597,709		—		704,298
	All Other Payments or Benefits		—		—		—		—
	Total		597,709		597,709		1,184,550		2,283,699
Thierry Mabru	Cash		—		—		1,033,790		1,378,385
	Equity Acceleration ⁽¹⁾		536,291		536,291		—		631,928
	All Other Payments or Benefits		—		—		—		—
	Total		536,291		536,291		1,033,790		2,010,313

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information regarding the relationship of the annual total compensation of our median employee to the annual total compensation of Olivier Rabiller, our CEO. We consider the pay ratio specified below to be a reasonable estimate, calculated in a manner that is intended to be consistent with the requirements of Item 402(u) of Regulation S-K.

Based on this information, for 2020, our CEO’s annual total compensation was 169 times that of the median of the annual total compensation of all of our employees (other than the CEO).

We used our employee population data as of October 1, 2019 as the determination date for identifying our median employee. As of such date, our employee population consisted of approximately 6,100 individuals.

To identify the median employee from our employee population, we selected base salary and target bonus as the most appropriate measure of compensation, which was consistently applied to all of our employees included in the calculation. In identifying the median employee, we annualized the compensation of all permanent employees who were new-hires in 2019 and we converted international currencies to US dollars using the exchange rates on the determination date.

This employee is the same employee identified for purposes of our 2020 disclosure. We believe that there have been no changes in our employee population or employee compensation arrangements since that median employee was identified in 2019 that would significantly impact our pay ratio disclosure.

With respect to the annual total compensation of the employee who represents our median compensated employee, we calculated the elements of such employee’s compensation for 2020 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $27,146.

With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2020 Summary Compensation Table, included in this Annual Report.

We have entered into letter agreements with each of our non-employee directors that generally provide a total compensation package that includes annual cash fees and annual restricted stock unit grants to compensate our non-employee directors for the time and effort necessary to serve on the Board.

Our non-employee directors receive a cash retainer for service on the Board and for service on each committee of which the non-employee director is a member. The Independent Chairperson of the Board and the Chairperson of each committee may receive a higher retainer for such service. Cash retainers are paid quarterly on the first business day of the applicable quarter. The fees paid to our non-employee directors for service on the Board are set forth in the table below.

In addition, each of our non-employee directors is eligible to receive an annual restricted stock unit grant with a total target value of $120,000 (the actual number of restricted stock units to be determined by dividing the target value by the fair market value of Company common stock on the date of the annual meeting of stockholders). The restricted stock units will vest on the earlier of the one-year anniversary of the grant date, death, disability or the non-employee director’s removal from the Board in connection with a change in control.

In light of the uncertainties related to the global COVID-19 pandemic, in April 2020 our directors have agreed to reduce their annual cash retainers by 20% for the remainder of 2020. Additionally, in June 2020, our Nominating and Governance Committee approved an amendment to our non-employee director compensation program. Under the amended program, all non-employee director compensation will be paid in cash on a quarterly basis (with the annual equity grant for 2020 paid in equal portions cash in each of the third and fourth quarters).

We also reimburse our non-employee directors for expenses incurred in connection with attending Board and committee meetings and provide our non-employee directors with business travel accident insurance.

In accordance with our 2018 Stock Plan for Non-Employee Directors, the maximum number of shares with respect to which awards may be granted to any non-employee director during any calendar year is 20,000.

Under our non-employee director stock ownership guidelines, each non-employee director is required to hold a number of shares of Company common stock having a market value equal to or greater than five times the annual base cash retainer payable to the non-employee director. Until the applicable ownership guideline is achieved, each non-employee director is required to retain at least 50% of the shares acquired from Company restricted stock unit grants, other than any shares required to be ~~disclosed by this item~~sold to pay applicable taxes. Once the applicable ownership guideline is achieved, the aforementioned retention ratio will no longer apply. If a non-employee director’s share ownership subsequently falls back below the applicable ownership guideline and remains below the ownership guideline on a continuous basis for a period of more than 24 months, the non-employee director will be required to comply again with the retention ratio until such time as the non-employee director again achieves the ownership guideline.

The following table sets forth information regarding the compensation earned by our non-employee directors for the year ended December 31, 2020. Mr. Rabiller, who served as our President and Chief Executive Officer during the year ended December 31, 2020, and continues to serve in that capacity, does not receive additional compensation for his service as a director, and therefore is not included in the Director Compensation table below. All compensation paid to Mr. Rabiller is reported in the Summary Compensation Table included under ~~the headings~~ “Executive Compensation” and “Compensation Committee Interlocks and Insider Participation” in our definitive proxy statement for our 2019 Annual Meeting of Stockholders, and such information is incorporated herein by reference.Compensation.”

Item 12. Security Ownership of Certain Beneficial Ow~~ners~~Owners and Management and Related Stockholder Matters

The following table sets forth information regarding beneficial ownership of our common stock as of February 4, 2021, by:

The number of shares of common stock beneficially owned by each person or entity is determined in accordance with the applicable rules of the SEC and includes voting or investment power with respect to shares of our common stock. The information is not necessarily indicative of beneficial ownership for any other purpose. Shares of our common stock issuable under restricted stock units that will vest, and stock options that will be exercisable, on or before April 5, 2021, are deemed beneficially owned for computing the percentage ownership of the person holding the options but are not deemed outstanding for computing the percentage ownership of any other person. Unless otherwise indicated, to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under community property laws. Unless otherwise indicated, the address of all directors and executive officers is La Pièce 16, Rolle, Switzerland 1180. The inclusion of any shares deemed beneficially owned in this table does not constitute an admission of beneficial ownership of those shares.

Applicable percentage of ownership for each holder is based on 75,813,634 shares of common stock outstanding on February 4, 2021.

² Oaktree Capital Management, L.P., Centerbride Partners, L.P., Honeywell International Inc., Attestor Value Master Fund LP; The Baupost Group, L.L.C., acting on behalf of certain managed funds; Cyrus Capital Partners, L.P., solely in its capacity as investment manager to and on behalf of certain managed funds and accounts; FIN Capital Partners LP acting to behalf of certain managed funds; Hawk Ridge Capital Management LP acting to behalf of certain managed funds; IngleSea Capital acting on behalf of certain managed funds or accounts; Keyframe Capital Partners, L.P., solely in its capacity as investment manager to and on behalf of certain managed funds; Newtyn Management, LLC on behalf of its advisee funds; Sessa Capital (Master), L.P.; Whitebox Multi- Strategy Partners, L.P.; and Benefit Street Partners, L.L.C. (collectively, the “Oaktree and Centerbridge Group”) entered into a Coordination Agreement, as amended and restated, in connection with submitting a proposal for a plan of reorganization to the Company that was ultimately selected by the Company. Accordingly, the Oaktree and Centerbridge Group constitutes a “group” as such term is used in Section 13(d)(3) of the Exchange Act. The following is the beneficial ownership of each of the members of the Oaktree and Centerbridge group:

³ Information is based on a Schedule 13G/A filed by Deccan Value Investors L.P. (the “Deccan Investment Manager”) and Vinit Bodas on February 14, 2020. According to the Schedule 13G/A, each of the Deccan Investment Manager and Mr. Bodas has shared voting power and shared dispositive power over all 7,200,605 shares. The Deccan Investment Manager serves as an investment manager with respect to the shares held by certain funds and managed accounts. Mr. Bodas is the managing member of Deccan Value LLC, the general partner of the Deccan Investment Manager. The address for these beneficial owners is Vinit Bodas, One Fawcett Place, Greenwich, CT 06830.

⁴ Includes options to purchase 54,276 shares and 17,362 restricted stock units that will vest on or before April 5, 2021.

⁵ Includes options to purchase 13,784 shares and 42,976 restricted stock units that will vest on or before April 5, 2021.

⁶ Includes options to purchase 6,270 shares and 27,715 restricted stock units that will vest on or before April 5, 2021.

⁷ Includes options to purchase 11,164 shares and 19,599 restricted stock units that will vest on or before April 5, 2021.

⁸ Includes options to purchase 14,654 shares and 25,942 restricted stock units that will vest on or before April 5, 2021.

⁹ Includes options to purchase 116,782 shares and 159,721 restricted stock units that will vest on or before April 5, 2021.

Securities Authorized For Issuance under Equity Compensation Plans (As of December 31, ~~2018)~~2020)

The remaining information required to be disclosed by this item will be included under the heading “Security Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement for our 2019 Annual Meeting of Stockholders, and such information is incorporated herein by reference.

Item 13. Certain ~~Relationship~~sRelationships and Related Transactions, and Director Independence

Our Board has adopted written policies and procedures (the “Policy”) for the review, approval and ratification of any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) (“Related Person Transactions”) in which the Company (including any of its subsidiaries) was, is or will be a participant and the amount involved exceeds $120,000, and in which any “Related Person” had, has or will have a direct or indirect material interest. Under the Policy, a “Related Person” includes (i) any person who is, or at any time since the beginning of the Company’s last fiscal year was, a director, executive officer or a nominee to become a director of the Company; (ii) any person (or group) who is the beneficial owner of more than 5% of any class of the Company’s voting securities; (iii) any immediate family member of any of the foregoing persons; and (iv) any firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.

Prior to entering into any Related Person Transaction, the Related Person must provide notice to our General Counsel of the facts and circumstances of the proposed Related Person Transaction. The Policy calls for the proposed transaction to be assessed by the General Counsel and, if determined to be a Related Person Transaction, submitted to the Nominating and Governance Committee for its consideration at the next Nominating and Governance Committee meeting or, if the General Counsel, in consultation with the Chief Executive Officer or Chief Financial Officer, determines that it is not practicable or desirable to wait until the next Nominating and Governance Committee meeting, to the Chair of the Nominating and Governance Committee.

The ~~information required~~Nominating and Governance Committee or Chair of the Nominating and Governance Committee, as applicable, will review and consider all the relevant facts and circumstances available, including but not limited to:

•the benefits to ~~be disclosed by this item will be included under~~ the ~~headings “Certain Relationships~~Company of the proposed transaction;

•the impact on a director’s independence in the event the Related Person is a director, an immediately family member of a director or an entity in which a director is a partner, stockholder or executive officer;

•the terms of the transaction and the terms available to unrelated third parties or to employees generally.

The Nominating and Governance Committee (or the Chair of the Nominating and Governance Committee) shall approve only those Related Person Transactions~~” “Corporate Governance”~~ that are in, or are not inconsistent with, the best interests of the Company, as the Nominating and ~~“Director Independence”~~Governance Committee (or its Chair) determines in good faith. From time to time, the Nominating and Governance Committee shall review certain previously approved or ratified Related Person Transactions that remain ongoing in nature.

Relationships and Transactions with Directors, Executive Officers and Significant Stockholders

We have not been a party to any Related Person Transactions since January 1, 2020.

Although we are no longer listed on the NYSE, our ~~definitive proxy statement~~Board continues to apply the NYSE independence criteria in assessing director independence. Our Board has determined that all of our non-employee directors, who are listed below, meet the applicable criteria for independence established by the NYSE. Olivier Rabiller is not an independent director under the NYSE rules due to his employment as our ~~2019 Annual Meeting~~Chief Executive Officer and President.

In addition, each member of ~~Stockholders,~~the Audit Committee (Mr. Tozier, Mr. Cardoso, Ms. Enghauser and ~~such~~Ms. Main) meets the heightened independence standards required for audit committee members under NYSE rules and SEC standards and each member of the Compensation Committee (Mr. Reinhardt, Mr. Cardoso, Ms. Clark and Mr. Tozier) meets the heightened independence standards required for compensation committee members under the NYSE rules and SEC standards.

In arriving at the foregoing independence determinations, the Board reviewed and discussed information provided by the directors with regard to each director’s business and personal activities and any relationships they have with us and our management. The Board considered that Carsten J. Reinhardt is ~~incorporated herein by reference.~~a director and minority shareholder of TMax Holding GmbH (“TMax”), a supplier to Garrett. In 2020, the Company’s payments to TMax did not exceed 2% of TMax’ gross revenues. The Board determined that this relationship does not impair Mr. Reinhardt’s independence. The Board also considered that Jérôme Stoll was an employee of Renault during 2020, a customer of Garrett. In 2020, the Company’s payments from Renault did not exceed 2% of Renault’s revenues. The Board determined that this relationship does not impair Mr. Stoll’s independence.

The ~~information required~~following table summarizes the fees of Deloitte SA, our independent registered public accounting firm, billed to us for each of the last two fiscal years.

(1) Audit fees consist of fees for the audit of our financial statements, the review of the interim financial statements included in our quarterly reports on Form 10-Q, and other professional services provided in connection with statutory and regulatory filings or engagements.

(2) Audit-related fees consist of fees that are reasonably related to the performance of the audit and the review of our financial statements and which are not reported under “Audit Fees.”

(3) Tax fees consist of fees for tax-related services, including tax compliance and tax advice.

The Audit Committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be ~~disclosed~~performed by ~~this item~~the Company’s independent registered public accounting firm. This policy provides that the Company will not engage its independent registered public accounting firm to render audit or non-audit services unless the Audit Committee specifically approves the service in advance. Between regularly scheduled meetings of the Audit Committee, the chairperson of the Audit Committee may pre-approve the terms and fees of non-audit engagements with the independent auditor. Any such pre-approvals by the chairperson of the Audit Committee will be ~~included under~~presented to the ~~heading “Principal Accountant Fees and Services” in our definitive proxy statement for our 2019 Annual Meeting of Stockholders, and such information is incorporated herein by reference.~~full Audit Committee at its next regularly scheduled meeting.

1. The following financial statements are included in Item 8 “Financial Statements and Supplementary Data” herein.

2. All schedules are omitted because they are not applicable, not required or the required information is shown in the consolidated financial statements or notes thereto.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Delaware		82-4873189
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
La Pièce 16, Rolle, Switzerland		1180
(Address of Principal Executive Offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐☒
Non-accelerated filer	☒☐	Smaller reporting company	☐
Emerging growth company	☐

		Page
PART I
Item 1.	Business	69
Item 1A.	Risk Factors	1625
Item 1B.	Unresolved Staff Comments	3544
Item 2.	Properties	3544
Item 3.	Legal Proceedings	3544
Item 4.	Mine Safety Disclosures	3646
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3747
Item 6.	Selected Financial Data	3949
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4353
Item 7A.	Quantitative and Qualitative Disclosures About Market Risks	5869
Item 8.	Financial Statements and Supplementary Data	6070
	Consolidated and CombinedStatementsof Operations	6275
	Consolidated and CombinedStatementsof ComprehensiveIncome	6376
	Consolidated ~~and Combined~~BalanceSheets	6477
	Consolidated and CombinedStatementsof CashFlows	6578
	Consolidated and CombinedStatementsof Equity(Deficit)	6679
	Notesto Consolidated and CombinedFinancialStatements	6780
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~105~~131
Item 9A.	Controls and Procedures	~~105~~131
Item 9B.	Other Information	~~106~~131
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	~~107~~132
Item 11.	Executive Compensation	~~110~~137
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~111~~168
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~112~~173
Item 14.	Principal Accountant Fees and Services	~~112~~174
PART IV
Item 15.	Exhibits and Financial Statement Schedules	~~113~~175
Item 16.	Form 10- K Summary	~~115~~178
Signatures		~~116~~179

	Applicable margin per annum
	Until end of Relief period			Thereafter
Credit Arrangements:
Revolving Credit Facility LIBOR / EURIBOR		3.00	%		2.75	%
Revolving Credit Facility ABR		2.00	%		1.75	%
Term Loan A		3.00	%		2.75	%
Term Loan B EUR EURIBOR		3.75	%		3.75	%
Term Loan B USD LIBOR		3.50	%		3.50	%
Term Loan B USD ABR		2.50	%		2.50	%


~~By Geography~~
	•	We are a globalbusinessthatgeneratedrevenuesof approximately$3 billionin 2020.

						Ownership				Regional distribution
		Europe,									Europe,
		Middle East &	South Asia &								Middle East &	South Asia &
	North America	Africa	Asia Pacific	South America	Total		Owned		Leased	North America	Africa	Asia Pacific	South America		Total
Manufacturing Sites	2	5	5	1	13		9		4	2	5	5	1		13
R&D Centers	1	2	2	0	5		1		4	1	2	2		—	5
Close-to-Customer Engineering Sites	3	6	3	1	13			—	11	2	5	3	1		11

		As of December 31,																As of December 31,
		2018			2017			2016			2015			2014				2020			2019			2018			2017			2016
	(Dollars in millions)																(Dollars in millions)
Selected Balance Sheet Information:
Total assets		$	2,104		$	2,997		$	2,661		$	2,444		$	3,428			$	3,017		$	2,275		$	2,124		$	2,997		$	2,661
Long-term debt		$	1,569		$	—		$	—		$	116		$	129			$	1,082		$	1,409		$	1,569		$	—		$	—
Total liabilities		$	4,697		$	5,192		$	3,882		$	3,803		$	4,432			$	5,325		$	4,408		$	4,641		$	5,192		$	3,882
Total deficit		$	(2,593	)	$	(2,195	)	$	(1,221	)	$	(1,359	)	$	(1,004	)		$	(2,308	)	$	(2,133	)	$	(2,517	)	$	(2,195	)	$	(1,221	)

			Payments by Period										Payments by Period
	Total⁽⁵⁾		2019		2020-2021		2022-2023		Thereafter		Total⁽⁵⁾		2021		2022-2023		2024-2025		Thereafter
	(Dollars in millions)										(Dollars in millions)
Obligations to Honeywell – Asbestos and environmental⁽¹⁾		1,244		108		207		192		737		1,196		—		281		268		647
Obligations to Honeywell – Mandatory Transition Tax⁽²⁾		217		19		38		54		106		211		40		58		113		—
Long-term debt⁽³⁾		1,628		23		74		297		1,234		1,533		4		317		781		431
Interest payments on long-term debt⁽⁴⁾		337		51		100		93		93		337		70		134		111		22
Minimum operating lease payments		48		12		13		8		15
Minimum lease payments												46		12		17		9		8
Purchase obligations⁽⁵⁾		91		91		—		—		—		95		91		4		—		—
	$	3,565	$	304	$	432	$	644	$	2,185	$	3,418	$	217	$	811	$	1,282	$	1,108

	Twelve Months Ended December 31,
	2020
Advisor fees	$	55
DIP Financing fees		13
Write-off of pre-petition unamortized debt issuance costs		6
Other		(1	)
Total reorganization items, net	$	73

	For the Twelve Months Ended December 31,
	2020
Net sales		2,273
Cost of goods sold		1,863
Gross profit	$	410
Selling, general and administrative expenses		252
Other expense, net		45
Interest expense		80
Non-operating (income) expense		(152	)
Reorganization items, net		73
Income before taxes	$	112
Tax expense		3
Net income	$	109

	December 31, 2020
	(Dollars in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	516
Restricted cash		30
Accounts, notes and other receivables – net		430
Accounts and other receivables from non-debtor affiliates		240
Inventories – net		166
Other current assets		91
Total current assets		1,473
Investments and long-term receivables		6
Investment in subsidiaries		883
Property, plant and equipment – net		319
Goodwill		193
Deferred income taxes		236
Other assets		93
Total assets	$	3,203
LIABILITIES
Current liabilities:
Accounts payable	$	497
Borrowings under revolving credit facility		370
Current maturities of long-term debt		—
Debtor-in-possession Term Loan		200
Obligations payable to Honeywell, current		—
Accrued liabilities		106
Total current liabilities		1,173
Long-term debt		1,082
Deferred income taxes		—
Obligations payable to Honeywell		—
Other liabilities		22
Total liabilities not subject to compromise	$	2,277
Liabilities subject to compromise		—
External		2,290
With non-debtor affiliates		528
Total liabilities subject to compromise	$	2,818
Total liabilities	$	5,095
COMMITMENTS AND CONTINGENCIES (Note 23)
EQUITY (DEFICIT)
Total deficit attributable to the Debtors		(1,892	)
Total liabilities and deficit	$	3,203

	For the Twelve Months Ended December 31,
	2020
	(Dollars in millions)
Cash Flows from operating activities:
Net cash used for operating activities	$	15
Cash Flows from investing activities:
Expenditures for property, plant and equipment		(39	)
Other		5
Net cash used for investing activities	$	(34	)
Cash Flows from financing activities:
Proceeds from debtor-in-possession financing		200
Proceeds from revolving credit facility		1,437
Payments of revolving credit facility		(1,088	)
Payments of long-term debt		(2	)
Debtor-in-possession financing fees		(13	)
Other		—
Net cash provided by financing activities		534
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		30
Net increase in cash, cash equivalents and restricted cash		545
Cash and cash equivalents at beginning of period		1
Cash, cash equivalents and restricted cash at end of period	$	546

	December 31, 2018		December 31, 2017
Cash pooling and short-term notes receivables	$	—	$	495
Other tax receivables from Former Parent		—		26
Receivables from related parties		—		8
Related party notes receivables, current		—		1
Foreign currency exchange contracts		—		—
	$	—	$	530

	December 31, 2018		December 31, 2017
Cash pooling and short-term notes payables	$	—	$	545
Related party notes payables, current		—		484
Payables to related parties		—		51
Foreign currency exchange contracts		—		37
	$	—	$	1,117

	December 31, 2017
	As reported			Adjustments		As adjusted
Consolidated and Combined Balance Sheet
Assets
Current assets:
Other current assets	$	321		$	7	$	328
Other assets		2			53		55

Liabilities
Non-current liabilities:
Deferred income taxes		956			6		962

Equity (Deficit)
Invested deficit		(2,433	)		54		(2,379	)

	2018			2020
Contract assets—January 1	$	5		$	6
Contract assets—December 31		5			61
Change in contract assets—Increase/(Decrease)		—			55
Contract liabilities—January 1	$	(7	)	$	(3	)
Contract liabilities—December 31		(2	)		(2	)
Change in contract liabilities—(Increase)/Decrease	$	5		$	1

	Expiration	Net Operating
	Period	Loss
	Jurisdiction	Carryforwards
Brazil	Indefinite	$	53
Luxembourg	2037		36
Switzerland	2027		30
		$	119

	~~Open Tax Years Based on Originally~~ ~~Filed Returns~~
	~~Examination~~	~~Examination~~
	~~in Progress~~	~~Not Yet~~
	~~Jurisdiction~~	~~Initiated~~
~~U.S. Federal~~	~~2015-2016~~	~~2017-2018~~
~~U.S. State~~	~~2015-2017~~	~~2018~~
~~Germany~~	~~2008-2015~~	~~2016-2018~~
~~India~~	~~1999-2016~~	~~2017-2018~~
~~United Kingdom~~	~~2013-2015~~	~~2016-2018~~

	Severance Costs			Exit Costs			Total			Severance Costs			Exit Costs			Total
Balance at December 31, 2016	$	35		$	8		$	43
Balance at December 31, 2018											13			2			15
Charges		20			—			20			2			—			2
Usage—cash		(6	)		(2	)		(8	)		(8	)		(2	)		(10	)
Adjustments											(3	)		1			(2	)
Foreign currency translation		4			1			5			(1	)		—			(1	)
Balance at December 31, 2017		53			7			60
Balance at December 31, 2019										$	3		$	1		$	4
Charges		2			—			2			10			—			10
Usage—cash		(42	)		(5	)		(47	)		(7	)		0			(7	)
Adjustments											1			(1	)		—
Foreign currency translation		—			—			—			—			—			—
Balance at December 31, 2018	$	13		$	2		$	15
Balance at December 31, 2020										$	7		$	—		$	7

	December 31, 2018
Term Loan A	$	374
Term Loan B		853
Senior Notes		401
		1,628
Less: current portion		(23	)
	$	1,605

	December 31, 2020
2021	$	4
2022		70
2023		247
2024		4
2025		777
Thereafter		431
	$	1,533
Less: current portion		—
	$	1,533

	December 31, 2018
	Carrying Value		Fair Value
Long-term debt and related current maturities	$	1,592	$	1,548

	December 31, 2020
	Carrying Value		Fair Value
Liabilities not subject to compromise:
Terms Loans A and B	$	1,082	$	1,083
DIP Financing	$	200	$	200
Liabilities subject to compromise:
Senior Notes	$	429	$	429

	Number of Restricted Stock Units			Weighted Average Grant Date Fair Value Per Share		Number of Restricted Stock Units			Weighted Average Grant Date Fair Value Per Share
Non-vested at October 1, 2018		2,848,541		$	8.70
Non-vested at December 31, 2018							3,369,622		$	10.12
Granted		530,840			17.76		629,037			15.36
Vested		(4,452	)		6.67		(967,518	)		5.26
Forfeited		(5,307	)		14.16		(236,501	)		14.47
Non-vested at December 31, 2018		3,369,622		$	10.12
Non-vested at December 31, 2019							2,794,640		$	12.62
Granted							878,904			6.70
Vested							(1,185,121	)		7.83
Forfeited							(949,454	)		8.11
Non-vested at December 31, 2020							1,538,969			13.11

Key Black-Scholes Assumptions	Year Ended December 31, 2020
Risk-free interest rate	2.6%
Expected term (years)		6.25
Volatility	42.08%
Dividend yield	0.0%
Fair value per stock option		7.28

	Number of Stock Options			Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2018		—		$	—		—		—
Granted		483,408			16.17
Exercised		—			—
Forfeited		(34,375	)		16.17
Expired		—			—
Outstanding as of December 31, 2019		449,033			16.17		9.26		—
Granted		—			—
Exercised		—			—
Forfeited		(37,482	)		16.17
Expired		(8,034	)		16.17
Outstanding as of December 31, 2020		403,517			16.17		8.26		—
Exercisable as of December 31, 2020		102,420			—		—		—

	Number of Performance Stock Units			Weighted Average Grant Date Fair Value Per Share
Non-vested at December 31, 2018		—		$	—
Granted		379,090			16.17
Vested		—			—
Forfeited		(47,769	)		16.17
Non-vested at December 31, 2019		331,321		$	16.17
Granted		1,021,069			8.36
Vested		—			—
Forfeited		(1,038,279	)		8.48
Non-vested at December 31, 2020		314,111			16.17

	Number of Awards		Weighted Average Grant Date Fair Value Per Award
Non-vested at December 31, 2019		—	$	—
Granted		43		257,536
Vested		—		—
Forfeited		—		—
Non-vested at December 31, 2020		43	$	257,536

	Year Ended December 31, 2020
Compensation expense	$	7
Future income tax benefit recognized		1

	RSUs						Options
					Wtd Avg
	Number of				Grant Date		Number of				Wtd Avg
	RSUs				Fair Value		Options				Exercise Price
Outstanding as of December 31, 2016		163,110			$	96		475,476			$	87
Granted^(a)		45,503				131		162,600				125
Vested/exercised		(41,137	)			83		(121,231	)			79
Outstanding as of December 31, 2017		167,476		^(b)(c)	$	108		516,845		^(d)	$	101

	2018									2020
	Asbestos and environmental			Tax Matters			Total			Asbestos and environmental			Tax Matters		Total
Beginning of year	$	—		$	—		$	—		$	1,090		$	261	$	1,351
Spin-Off related adjustments		1,328			308			1,636
Accrual for update to estimated liability		(30	)		—			(30	)		—			—		—
Legal fees expensed		14			—			14			41			—		41
Payments to Honeywell		(41	)		(19	)		(60	)		(35	)		—		(35	)
Currency translation adjustment		(27	)		(7	)		(34	)		100			25		125
End of year	$	1,244		$	282		$	1,526		$	1,196		$	286	$	1,482

Current		108			19			127			2			40		42
Non-current		1,136			263			1,399			1,194			246		1,440
Total	$	1,244		$	282		$	1,526		$	1,196		$	286	$	1,482

	Years Ended December 31,
Claims Activity	2018			2017
Claims Unresolved at the beginning of year		6,280			7,724
Claims Filed		2,430			2,645
Claims Resolved		(2,501	)		(4,089	)
Claims Unresolved at the end of the year		6,209			6,280

	December 31,
Disease Distribution of Unresolved Claims	2018		2017
Mesothelioma and Other Cancer Claims		2,949		3,062
Nonmalignant Claims		3,260		3,218
Total Claims		6,209		6,280

Other Changes in Plan Assets and Benefits Obligations Recognized in	U.S. Plans					Non-U.S. Plans
Other Comprehensive (Income) Loss	2020			2019		2020			2019			2018⁽¹⁾
Actuarial (gains) losses	$	3		$	2	$	15		$	27		$	(4	)
Prior service (credit)		—			—		(10	)		1			1
Actuarial losses recognized during year		—			—		(14	)		(13	)		(3	)
Foreign currency translation		—			—		2			1			—
Total recognized in other comprehensive (income) loss	$	3		$	2	$	(7	)	$	16		$	(6	)
Total recognized in net periodic benefit (income) cost and other comprehensive (income) loss	$	(1	)	$	—	$	12		$	33		$	—