UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



			FORM			10-Q

x ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, ~~2017~~2022

¨ ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-37757

Adient plc

(exact name of Registrant as specified in its charter)

Ireland

98-1328821

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer

Identification No.)

~~25-28~~ 3 Dublin Landings, North Wall Quay, ~~IFSC,~~ Dublin 1, Ireland D01 H104

(Address of principal executive offices)

734-254-5000

(Registrant's telephone number, including area ~~code:~~ ~~414-220-8900~~code)

Securities registered pursuant to Section 12(b) of the Act:

(

Title of ~~class)~~each class

Trading symbol

(Name of exchange on which ~~registered)~~

registered

Ordinary Shares, par value $0.001

ADNT

New York Stock Exchange

~~Securities registered pursuant to Section 12(g) of the Act:~~ ~~None~~

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

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

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



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.Large accelerated filer	~~Yes~~ x ☑	No ¨ Accelerated filer	☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).Non-accelerated filer	~~Yes~~ x ☐	No ¨ Smaller reporting company	☐
~~Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting~~		Emerging growth 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 is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

At December 31, 2022, 95,385,075 ordinary shares were outstanding.

Adient plc

Form 10-Q

For the Three Months Ended December 31, 2022

TABLE OF CONTENTS

~~Large accelerated filer~~ x

~~Accelerated filer~~ ¨

~~Non-accelerated filer~~ ¨PART I - FINANCIAL INFORMATION

~~Smaller reporting company~~ ¨

~~Emerging growth company~~ ¨



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



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

~~At December 31, 2017, 93,334,571 ordinary shares were outstanding.~~

~~Adient plc~~

~~Form 10-Q~~

~~For the Three Months Ended December 31, 2017~~

~~TABLE OF CONTENTS~~

Adient plc | Form 10-Q | 2



PART I - FINANCIAL INFORMATION

Item 1.

Unaudited Financial Statements

Adient plc

Consolidated Statements of Income (Loss)

(unaudited)


	Three Months Ended December 31,
(in millions, except per share data)	2022		2021
Net sales	$	3,699	$	3,480
Cost of sales	3,468		3,307
Gross profit	231		173
Selling, general and administrative expenses	138		162

Restructuring and impairment costs	7		4
Equity income (loss)	28		33
Earnings (loss) before interest and income taxes	114		40
Net financing charges	41		50
Other pension expense (income)	9		(1)
Income (loss) before income taxes	64		(9)
Income tax provision (benefit)	31		21
Net income (loss)	33		(30)
Income (loss) attributable to noncontrolling interests	21		24
Net income (loss) attributable to Adient	$	12	$	(54)

Earnings (loss) per share:
Basic	$	0.13	$	(0.57)
Diluted	$	0.13	$	(0.57)

Shares used in computing earnings per share:
Basic	95.1		94.6
Diluted	95.9		94.6

Three Months Ended
December 31,
(in millions, except per share data) 2017 2016
Net sales $ 4,204
$ 4,026
Cost of sales 4,002
3,676
Gross profit 202
350
Selling, general and administrative expenses 196
217
Equity income 96
94
Earnings before interest and income taxes 102
227
Net financing charges 33
35
Income before income taxes 69
192
Income tax provision 265
28
Net income (loss) (196 ) 164
Income attributable to noncontrolling interests 20
22
Net income (loss) attributable to Adient $ (216 ) $ 142

Earnings per share:
Basic $ (2.32 ) $ 1.52
Diluted $ (2.32 ) $ 1.51

Cash dividends declared per share $ 0.275
$ —

Shares used in computing earnings per share:
Basic 93.2
93.7
Diluted 93.2
93.9

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

Adient plc | Form 10-Q | 3

Adient plc

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)


	Three Months Ended December 31,
(in millions)	2022		2021
Net income (loss)	$	33	$	(30)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	106		24
Realized and unrealized gains (losses) on derivatives	25		(2)

Other comprehensive income (loss)	131		22
Total comprehensive income (loss)	164		(8)
Comprehensive income (loss) attributable to noncontrolling interests	37		31
Comprehensive income (loss) attributable to Adient	$	127	$	(39)

Three Months Ended
December 31,
(in millions) 2017 2016
Net income (loss) $ (196 ) $ 164
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 76
(449 )
Realized and unrealized gains (losses) on derivatives (10 ) (2 )
Other comprehensive income (loss) 66
(451 )
Total comprehensive income (loss) (130 ) (287 )
Comprehensive income (loss) attributable to noncontrolling interests 25
20
Comprehensive income (loss) attributable to Adient $ (155 ) $ (307 )

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

Adient plc | Form 10-Q | 4

Adient plc

Consolidated Statements of Financial Position

(unaudited)


(in millions, except share and per share data)	December 31, 2022		September 30, 2022
Assets
Cash and cash equivalents	$	901	$	947
Accounts receivable - net	1,755		1,852
Inventories	972		953

Other current assets	459		411
Current assets	4,087		4,163
Property, plant and equipment - net	1,419		1,377
Goodwill	2,128		2,057
Other intangible assets - net	463		467
Investments in partially-owned affiliates	306		286
Assets held for sale	5		11
Other noncurrent assets	865		797
Total assets	$	9,273	$	9,158
Liabilities and Shareholders' Equity
Short-term debt	$	2	$	3
Current portion of long-term debt	11		11
Accounts payable	2,422		2,478
Accrued compensation and benefits	314		340

Restructuring reserve	45		60
Other current liabilities	624		609
Current liabilities	3,418		3,501
Long-term debt	2,627		2,564

Pension and postretirement benefits	90		88
Other noncurrent liabilities	584		585
Long-term liabilities	3,301		3,237
Commitments and Contingencies (Note 17)
Redeemable noncontrolling interests	45		45
Preferred shares issued, par value $0.001; 100,000,000 shares authorized, Zero shares issued and outstanding at December 31, 2022	—		—
Ordinary shares issued, par value $0.001; 500,000,000 shares authorized, 95,385,075 shares issued and outstanding at December 31, 2022	—		—
Additional paid-in capital	4,018		4,026
Accumulated deficit	(1,096)		(1,108)
Accumulated other comprehensive income (loss)	(730)		(845)
Shareholders' equity attributable to Adient	2,192		2,073
Noncontrolling interests	317		302
Total shareholders' equity	2,509		2,375
Total liabilities and shareholders' equity	$	9,273	$	9,158

(in millions, except share and per share data) December 31, 2017 September 30, 2017
Assets
Cash and cash equivalents $ 390
$ 709
Accounts receivable - net 2,074
2,224
Inventories 762
735
Other current assets 851
831
Current assets 4,077
4,499
Property, plant and equipment - net 2,546
2,502
Goodwill 2,545
2,515
Other intangible assets - net 533
543
Investments in partially-owned affiliates 1,924
1,793
Other noncurrent assets 1,018
1,318
Total assets $ 12,643
$ 13,170
Liabilities and Shareholders' Equity
Short-term debt $ 38
$ 36
Current portion of long-term debt 2
2
Accounts payable 2,768
2,958
Accrued compensation and benefits 328
444
Restructuring reserve 205
236
Other current liabilities 652
652
Current liabilities 3,993
4,328
Long-term debt 3,461
3,440
Pension and postretirement benefits 138
129
Other noncurrent liabilities 593
653
Long-term liabilities 4,192
4,222
Commitments and Contingencies (Note 14)
Redeemable noncontrolling interests 29
28
Preferred shares issued, par value $0.001; 100,000,000 shares authorized
Zero shares issued and outstanding at December 31, 2017 —
—
Ordinary shares issued, par value $0.001; 500,000,000 shares authorized
93,334,571 shares issued and outstanding at December 31, 2017 —
—
Additional paid-in capital 3,952
3,942
Retained earnings 492
734
Accumulated other comprehensive income (loss) (336 ) (397 )
Shareholders' equity attributable to Adient 4,108
4,279
Noncontrolling interests 321
313
Total shareholders' equity 4,429
4,592
Total liabilities and shareholders' equity $ 12,643
$ 13,170

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

Adient plc | Form 10-Q | 5

Adient plc

Consolidated Statements of Cash Flows

(unaudited)


	Three Months Ended December 31,
(in millions)	2022		2021
Operating Activities
Net income (loss) attributable to Adient	$	12	$	(54)
Income attributable to noncontrolling interests	21		24
Net income (loss)	33		(30)
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:
Depreciation	69		75
Amortization of intangibles	12		13
Pension and postretirement expense (benefit)	9		1
Pension and postretirement contributions, net	(3)		(5)
Equity in earnings of partially-owned affiliates, net of dividends received (includes purchase accounting amortization of $– and $1, respectively)	(16)		(32)



Derivative loss on the 2021 Yanfeng Transaction	—		3
Deferred income taxes	(1)		(3)
Non-cash impairment charges	—		7

Equity-based compensation	8		10
Other	(3)		2
Changes in assets and liabilities:
Receivables	167		(175)
Inventories	22		26
Other assets	(47)		—
Restructuring reserves	(27)		(24)
Accounts payable and accrued liabilities	(191)		104
Accrued income taxes	12		14
Cash provided (used) by operating activities	44		(14)
Investing Activities
Capital expenditures	(61)		(60)
Sale of property, plant and equipment	15		11
Settlement of derivatives	—		(30)
Advance payment for business acquisitions	(6)		—
Proceeds from business divestitures	3		731


Other	(1)		—
Cash provided (used) by investing activities	(50)		652
Financing Activities
Increase (decrease) in short-term debt	—		(6)
Increase (decrease) in long-term debt	2		—
Repayment of long-term debt	(2)		(2)
Debt financing costs	(7)		—



Dividends paid to noncontrolling interests	(50)		(59)

Share based compensation and other	(12)		(12)
Cash provided (used) by financing activities	(69)		(79)
Effect of exchange rate changes on cash and cash equivalents	29		—


Increase (decrease) in cash and cash equivalents	(46)		559
Cash and cash equivalents at beginning of period	947		1,521
Cash and cash equivalents at end of period	$	901	$	2,080

Three Months Ended
December 31,
(in millions) 2017 2016
Operating Activities
Net income (loss) attributable to Adient $ (216 ) $ 142
Income attributable to noncontrolling interests 20
22
Net income (loss) (196 ) 164
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:
Depreciation 96
83
Amortization of intangibles 12
5
Pension and postretirement benefit expense 1
1
Pension and postretirement contributions 13
(9 )
Equity in earnings of partially-owned affiliates, net of dividends received (includes purchase accounting amortization of $5 and $5, respectively) (90 ) (72 )
Deferred income taxes 260
9
Equity-based compensation 16
6
Other 2
—
Changes in assets and liabilities:
Receivables 170
181
Inventories (22 ) 1
Other assets (23 ) (17 )
Restructuring reserves (32 ) (42 )
Accounts payable and accrued liabilities (296 ) (323 )
Accrued income taxes (38 ) —
Cash provided (used) by operating activities (127 ) (13 )
Investing Activities
Capital expenditures (143 ) (207 )
Sale of property, plant and equipment 2
13
Changes in long-term investments (5 ) (6 )
Other —
(3 )
Cash provided (used) by investing activities (146 ) (203 )
Financing Activities
Net transfers from (to) Parent prior to separation —
606
Cash transferred from former Parent post separation —
228
Increase (decrease) in short-term debt 1
9
Cash dividends (26 ) —
Dividends paid to noncontrolling interests (20 ) (12 )
Other (4 )
2
Cash provided (used) by financing activities (49 ) 833
Effect of exchange rate changes on cash and cash equivalents 3
(13 )
Increase (decrease) in cash and cash equivalents (319 ) 604
Cash and cash equivalents at beginning of period 709
105
Cash and cash equivalents at end of period $ 390
$ 709

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

Adient plc | Form 10-Q | 6

Adient plc

Notes to Consolidated Financial Statements

(unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies

~~On October 31, 2016,~~

Adient ~~plc ("Adient") became an independent company as~~is a ~~result of the separation of~~global leader in the automotive seating and interiors business (the "separation") from Johnson Controls International plc ("the former Parent"). Adient was incorporated under the laws of Ireland in fiscal 2016 for the purpose of holding these businesses. Adient's ordinary shares began trading "regular-way" under the ticker symbol "ADNT" on the New York Stock Exchange on October 31, 2016. Upon becoming an independent company, the capital structure of Adient consisted of 500 million authorized ordinary shares and 100 million authorized preferred shares (par value of $0.001 per ordinary and preferred share). The number of Adient ordinary shares issued on October 31, 2016 was 93,671,810.

~~Adient is the world's largest automotive seating supplier.~~supplier industry. Adient has a leading market position in the Americas, Europe and China, and has longstanding relationships with the largest global original equipment manufacturers, or OEMs, in the automotive space. Adient's proprietary technologies extend into virtually every area of automotive seating solutions, including complete seating systems, frames, mechanisms, foam, head restraints, armrests and trim ~~covers and fabrics.~~covers. Adient is an independent seat supplier with global scale and the capability to design, develop, engineer, manufacture, and deliver complete seat systems and components in every major automotive producing region in the world. ~~Adient also participates in the automotive interiors market primarily through its global automotive interiors joint venture in China, Yanfeng Global Automotive Interior Systems Co., Ltd., or YFAI.~~

Basis of Presentation

The ~~accompanying~~unaudited consolidated financial statements ~~are presented on a consolidated basis~~of Adient have been prepared in accordance with the rules and ~~include all~~regulations of the ~~accounts~~US Securities and ~~operations of Adient~~Exchange Commission and ~~its consolidated subsidiaries. Intercompany accounts and transactions have been eliminated. The consolidated financial statements reflect all adjustments, which are normal and recurring~~ in ~~nature, necessary for fair financial statement presentation. The preparation of these consolidated financial statements in conformity~~accordance with ~~U.S.~~accounting principles generally accepted ~~accounting principles~~in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. The. These interim consolidated financial statements include all adjustments (consisting of normal recurring adjustments) that management believes are necessary for a fair statement of the results of operations, financial position and ~~accompanying notes are unaudited and should be read in conjunction with Adient’s annual consolidated financial statements and the notes thereto included in its Annual Report on Form 10-K~~cash flows of Adient for the ~~fiscal year ended September 30, 2017.~~interim periods presented. Interim results are not necessarily indicative of full-year results particularly as Adient, along with the automotive industry, continues to recover from supply chain disruptions, reacts to inflationary pressures on input costs (particularly labor, freight and utility costs), manages changing COVID-19 regulations in China, and as it addresses the impacts of higher interest rates and softening consumer demand.

Principles of Consolidation

Adient consolidates its wholly-owned subsidiaries and those entities in which it has a controlling interest. Investments in partially-owned affiliates are accounted for by the equity method when Adient's interest exceeds 20% and does not have a controlling interest.

Consolidated VIEs

Based upon the criteria set forth in the Financial Accounting Standards Board (the FASB) Accounting Standards Codification (ASC) 810, "Consolidation," Adient has determined that it was the primary beneficiary in two variable interest entities (VIEs) for the reporting periods ended December 31, ~~2017~~2022, and ~~2016,~~September 30, 2022, respectively, as Adient absorbs significant economics of the entities and has the power to direct the activities that are considered most significant to the entities.

The two VIEs manufacture seating products in North America for the automotive industry. Adient funds the entities' short-term liquidity needs through revolving credit facilities and has the power to direct the activities that are considered most significant to the entities through its key customer supply relationships.

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


(in millions)	December 31, 2017		September 30, 2017		(in millions)	December 31, 2022		September 30, 2022
Current assets	$	210	$	232	Current assets	$	205	$	262
Noncurrent assets	63		56		Noncurrent assets	157		113
Total assets	$	273	$	288	Total assets	$	362	$	375

Current liabilities	$	159	$	169	Current liabilities	$	193	$	233
Noncurrent liabilities					Noncurrent liabilities	14		14
Total liabilities	$	159	$	169	Total liabilities	$	207	$	247

~~Revisions~~

As disclosed in the fiscal 2017 Form 10-K, Adient revised previously reported results to correctly report equity income from a non-consolidated affiliate in the Seating segment related to engineering costs that were inappropriately capitalized. Adient also revised previously reported net sales and cost of sales to correctly report certain sales on a net versus gross basis in the Seating segment. The following tables disclose the quarterly impact for the three months ended December 31, 2016 of such previously disclosed revisions. Adient assessed the materiality of these misstatements on prior periods’ financial statements in accordance with SEC Staff Accounting Bulletin ("SAB") No. 99, Materiality, codified in ASC 250, Presentation of Financial Statements, and concluded that these misstatements were not material, individually or in the aggregate, to any previously issued financial statements. In accordance with ASC 250 (SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), the consolidated financial statements and notes to consolidated financial statements as of December 31, 2016 have been revised. Adient will revise remaining fiscal 2017 interim periods in future quarterly filings. The following tables show the impact of these revisions on impacted line items from Adient's consolidated financial statements.

Adient plc | Form 10-Q | 7

Consolidated Statements of Income (Loss)
Three Months Ended December 31, 2016
(in millions, except per share data) As Reported Adjustment As Revised
Net sales $ 4,038
$ (12 ) $ 4,026
Cost of sales 3,688
(12 ) 3,676
Gross profit 350
—
350
Equity income 101
(7 ) 94
Earnings before interest and income taxes 234
(7 ) 227
Income before income taxes 199
(7 ) 192
Net income (loss) 171
(7 ) 164
Net income (loss) attributable to Adient 149
(7 ) 142

Earnings per share:
Basic $ 1.59
$ (0.07 ) $ 1.52
Diluted $ 1.59
$ (0.08 ) $ 1.51

Consolidated Statements of Comprehensive Income (Loss)
Three Months Ended December 31, 2016
(in millions) As Reported Adjustment As Revised
Total comprehensive income (loss) $ (280 ) $ (7 ) $ (287 )
Comprehensive income (loss) attributable to Adient (300 ) (7 ) (307 )

Consolidated Statements of Cash Flows
Three Months Ended December 31, 2016
(in millions) As Reported Adjustment As Revised
Operating Activities
Net income (loss) $ 171
$ (7 ) $ 164
Equity in earnings of partially-owned affiliates, net of dividends received (79 ) 7
(72 )
Cash provided (used) by operating activities (13 ) —
(13 )

Earnings Per Share

The following table shows the computation of basic and diluted earnings (loss) per share:


	Three Months Ended December 31,
(in millions, except per share data)	2022		2021
Numerator:
Net income (loss) attributable to Adient	$	12	$	(54)

Denominator:
Shares outstanding	95.1		94.6
Effect of dilutive securities	0.8		—
Diluted shares	95.9		94.6

Earnings (loss) per share:
Basic	$	0.13	$	(0.57)
Diluted	$	0.13	$	(0.57)

Three Months Ended
December 31,
(in millions, except per share data) 2017 2016
Numerator:
Net income (loss) attributable to Adient $ (216 ) $ 142

Denominator:
Shares outstanding 93.2
93.7
Effect of dilutive securities —
0.2
Diluted shares 93.2
93.9

Earnings per share:
Basic $ (2.32 ) $ 1.52
Diluted $ (2.32 ) $ 1.51

The effect of common stock equivalents that would have been anti-dilutive was excluded from the calculation of diluted earnings per share for the three months ended December 31, 2022 and was immaterial. Potentially dilutive securities whose effect would have been ~~antidilutive~~anti-dilutive are excluded from the computation of diluted earnings per ~~share.~~share for the three months ended December 31, 2021 as a result of being in a loss position.

New Accounting Pronouncements

~~In July 2015,~~

Standards Adopted During Fiscal 2023

On October 1, 2022, Adient adopted Accounting Standards Codification (ASU) 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). ASU 2020-06 simplifies the ~~FASB issued ASU No. 2015-11, "Simplifying~~accounting for certain financial instruments with characteristics of liabilities and equity by reducing the ~~Measurement~~number of Inventory." ASU No. 2015-11 requires inventory that is recorded using the first-in, first-out method to be measured at the lower of cost or net realizable value. ASU No. 2015-11 was effective retrospectivelyaccounting models for ~~Adient for the quarter ending December 31, 2017.~~convertible debt and convertible preferred stock. The adoption of this guidance on October 1, 2022 did not ~~have an impact on Adient's consolidated financial statements.~~

In March 2016, the FASB issued ASU No. 2016-07, "Investments-Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting." ASU No. 2016-07 eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retrospectively. ASU No. 2016-07 was effective prospectively for Adient for increases in the level of ownership interest or degree of influence that result in the adoption of the equity method that occur during or after the quarter ending December 31, 2017. The adoption of this guidance did notsignificantly impact Adient's consolidated financial statements for the ~~quarter ending December 31, 2017.~~

In October 2016, the FASB issued ASU No. 2016-17, "Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control." ASU No. 2016-17 changes the evaluation of whether a reporting entity is the primary beneficiary of a Variable Interest Entity (VIE) by changing how a reporting entity that is a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. ASU No. 2016-17 was effective for Adient for the quarterthree months ended December 31, ~~2017.~~2022.

On October 1, 2022, Adient adopted ASU 2021-10, Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance. The ASU requires annual disclosures of: (i) information about the nature of government assistance transactions and the related accounting policy used to account for the transactions; (ii) the balance sheet and income statement line items affected by the transactions, and the amounts for each financial statement line item; and (iii) significant transaction terms and conditions. The adoption of this guidance on October 1, 2022 did not ~~have an~~significantly impact on Adient's consolidated financial ~~statements.~~

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." ASU No. 2014-09 clarifies the principles for recognizing revenue when an entity either enters into a contract with customers to transfer goods or services or enters into a contractstatements for the ~~transfer of non-financial assets. In March 2016~~three months ended December 31, 2022.

Standards Effective After Fiscal 2023

Adient has considered the ~~FASB issued~~ ASU ~~No. 2016-08, "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)," in April 2016~~summarized below, effective after fiscal 2023, which is not expected to significantly impact the FASB issued ASU No. 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing," and in May 2016 the FASB issued ASU No. 2016-12, ‘‘Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,’’which provide additional clarification on certain topics addressed in ASU No. 2014-09. ASU No. 2016-08, ASU No. 2016-10 and ASU No. 2016-12 follow the same implementation guidelines as ASU No. 2014-09 and ASU No. 2015-14. This guidance will be effective October 1, 2018 for Adient. The accounting changes under the new standard will require new processes and procedures to collect the data required for proper reporting and disclosure. Adient is undergoing its review of the impact of adopting this standard and is developing and executing an implementation plan which will include changes to internal processes and controls. Under current guidance Adient generally recognizes revenue when products are shipped and risk of loss has transferred to the customer. Under the new standard, the customized nature of some of Adient's products combined with contractual provisions that provide an enforceable right to payment, will likely require Adient to recognize revenue prior to the product being shipped to the customer. Adient is also assessing pricing provisions contained in certain customer contracts. It is possible that pricing provisions contained in some of Adient's customer contracts may provide the customer with a material right, potentially resulting in a different allocation of the transaction price than under current guidance. Adient expects to expand disclosures in line with the requirements of the new standard. Adient anticipates applying the modified retrospective method which would require Adient to recognize the cumulative effect of initially applying the standard as an adjustment to opening retained earnings at the date of initial application.

consolidated financial statements:

Standard Adopted

Description

Date Effective

ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations

The ASU requires buyers of goods and services to disclose information about supplier finance programs if such arrangements are used to manage their payables. The disclosures should include both qualitative and quantitative information including key terms and the amount of outstanding obligations.

October 1, 2023

~~2. Acquisitions and Divestitures~~

On January 16, 2018, Adient announced it will form a joint venture with The Boeing Company ("Boeing") called Adient Aerospace, LLC ("Adient Aerospace"). Adient's ownership position in Adient Aerospace will be 50.01%. Adient Aerospace will develop, manufacture, and sell a portfolio of seating products to airlines and aircraft leasing companies for installations on Boeing and other OEM commercial airplanes, for both production line-fit and retrofit configurations. Adient Aerospace's results will be included within the Seating segment.

On September 22, 2017, Adient completed the acquisition of Futuris Global Holdings LLC ("Futuris"), a manufacturer of full seating systems, seat frames, seat trim, headrests, armrests and seat bolsters. The acquisition is expected to provide substantial synergies through vertical integration, purchasing and logistics improvements. The acquisition also provided for an immediate manufacturing presence on the west coast of the U.S. to service customers such as Tesla as well as strategic locations in China and Southeast Asia.

During the three months ended December 31, 2017, Adient updated the Futuris purchase price allocation to adjust inventory, property, plant and equipment, goodwill, intangible assets and other liabilities as of the acquisition date for revised estimates based on an updated valuation. This measurement period adjustment was an increase to goodwill of $4 million, with corresponding adjustments to inventory, property, plant and equipment, intangible assets and other liabilities. This measurement period adjustment is also reflected in the goodwill table in Note 4 , "Goodwill and Other Intangible Assets".

As a result of the Futuris acquisition, consolidated Adient results include $120 million of net sales and an immaterial impact on net income in the three months ended December 31, 2017. The purchase price allocation is based on preliminary valuations to determine the fair value of the net assets as of the acquisition date and is subject to final adjustments. Pro forma historical results of operations related to the acquisition of Futuris have not been presented as they are not material to Adient’s consolidated statements of operations.

As a result of the Guangzhou Adient Automotive Seating Co., Ltd. ("GAAS") consolidation in July 2017, consolidated Adient results include $89 million of net sales and an immaterial impact on net income in the three months ended December 31, 2017. The purchase price allocation is based on preliminary valuations to determine the fair value of the net assets as of the acquisition date and is subject to final adjustments. Pro forma historical results of operations related to the consolidation of GAAS have not been presented as they are not material to Adient’s consolidated statements of operations.

Adient plc | Form 10-Q | 8

~~3. Inventories~~2. Revenue Recognition

Adient generates revenue through the sale of automotive seating solutions, including complete seating systems and the components of complete seating systems. Adient provides production and service parts to its customers under awarded multi-year programs. The duration of a program is generally consistent with the life cycle of a vehicle, however, the program can be canceled at any time without cause by the customer. Programs awarded to Adient to supply parts to its customers do not contain a firm commitment by the customer for volume or price and do not reach the level of a performance obligation until Adient receives either a purchase order and/or a materials release from the customer for a specific number of parts at a specified price, at which point an enforceable contract exists. Sales revenue is generally recognized at the point in time when parts are shipped and control has transferred to the customer, at which point an enforceable right to payment exists. Contracts may provide for annual price reductions over the production life of the awarded program, and prices are adjusted on an ongoing basis to reflect changes in product content/cost and other commercial factors. The amount of revenue recognized reflects the consideration that Adient expects to be entitled to in exchange for such products based on purchase orders, annual price reductions and ongoing price adjustments (some of which are accounted for as variable consideration and subject to being constrained), net of the impact, if any, of consideration paid to the customer.

In a typical arrangement with the customer, purchase orders are issued for pre-production activities which consist of engineering, design and development, tooling and prototypes for the manufacture and delivery of component parts. Adient has concluded that these activities are not in the scope of ASC 606.

Adient includes shipping and handling fees billed to customers in revenue, while including costs of shipping and handling in cost of sales. Taxes collected from customers are excluded from revenue and credited directly to obligations to the appropriate government agencies. Payment terms with customers are established based on customary industry and regional practices. Adient has evaluated the terms of its arrangements and determined that they do not contain significant financing components.

Contract assets primarily relate to the right to consideration for work completed, but not billed at the reporting date on contracts with customers. The contracts assets are transferred to receivables when the rights become unconditional. Contract liabilities primarily relate to contracts where advance payments or deposits have been received, but performance obligations have not yet been satisfied and revenue has not been recognized. No significant contract assets or liabilities exist at September 30, 2022 or at December 31, 2022. As described above, the issuance of a purchase order and/or a materials release by the customer represents the point at which an enforceable contract with the customer exists. Therefore, Adient has elected to apply the practical expedient in ASC 606, paragraph 606-10-50-14 and does not disclose information about the remaining performance obligations that have an original expected duration of one year or less. Refer to Note 15, "Segment Information," of the notes to consolidated financial statements for disaggregated revenue by geographical market.

3. Acquisitions and Divestitures

In fiscal 2022, Adient entered into an agreement whereby Adient would purchase all of the issued and outstanding equity interest in Nantong Yanfeng Adient Seating Trim Co., Ltd. ("YFAT") held by KEIPER Seating Mechanisms Co., Ltd. ("KEIPER") for ¥150 million ($24 million). Adient made an initial deposit of ¥75 million ($12 million) in fiscal 2022, which represents 50% of the estimated purchase price (reflected within other current assets as of September 30, 2022). During the first quarter of fiscal 2023, Adient made an additional deposit of ¥38 million ($6 million) in conjunction with the public bidding process. The transaction is subject to customary regulatory approvals in China, and is expected to be completed during the first half of fiscal 2023. The remaining balance of the estimated purchase price will be paid at the time of completion of the transaction.

Also in fiscal 2022, Adient entered into agreements whereby Adient would transfer all of the issued and outstanding equity interests in two joint ventures in China held directly by Adient, each of which represents 25% of their total issued and outstanding equity interests, to Yanfeng for $3 million. As a result, Adient concluded that indicators of other-than-temporary impairment were present related to the investments in these joint ventures, and recorded a non-cash impairment charge of $3 million during the second quarter of fiscal 2022. The sale of one of the joint ventures was completed during the first quarter of fiscal 2023, wherein Adient received $3 million of sale proceeds. The sale of the other joint venture closed in January 2023 for minimal proceeds.

During the first quarter of fiscal 2022, Adient received final cash proceeds of $652 million for the sale of its 49.99% interest in Yanfeng Adient Seating Co., Ltd.("YFAS"), a joint venture previously owned by Yanfeng Automotive Trim Systems Company

Adient plc | Form 10-Q | 9

Ltd. ("Yanfeng") (50.01%) and Adient (49.99%), which closed in fiscal 2021, and $41 million representing the remaining balance of proceeds from the sale of its interest in Yanfeng Global Automotive Interior Systems Co. ("YFAI"), a joint venture previously owned by Yanfeng (70%) and Adient (30%) which closed in fiscal 2020. Also during the first quarter of fiscal 2022, Adient collected cash proceeds of $36 million for sale of certain assets in Turkey.

During the first quarter of fiscal 2022, Chongqing Boxun Industrial Co., Ltd. (“Boxun”) exercised its right to sell its 25% equity interest in Chongqing Adient Automotive Components Co., Ltd. (“CQADNT”) to Adient. As a result, Adient reclassified the redeemable noncontrolling interests balance of $186 million to other current liabilities on December 31, 2021 as the obligation was determined to be unconditional. The acquisition of Boxun's 25% interest closed in January 2022 which resulted in Adient owning 100% of CQADNT.

4. Inventories

Inventories consisted of the following:


(in millions)	December 31, 2017		September 30, 2017		(in millions)	December 31, 2022		September 30, 2022
Raw materials and supplies	$	559	$	552	Raw materials and supplies	$	756	$	755
Work-in-process	41		37		Work-in-process	31		26
Finished goods	162		146		Finished goods	185		172
Inventories	$	762	$	735	Inventories	$	972	$	953

4.5. Goodwill and Other Intangible Assets

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

(in millions) September 30,
2017
Business
Acquisitions

Business
Divestitures

Currency Translation
and Other
December 31,
2017
Goodwill
Seating $ 2,515
$ 4
$ —
$ 26
$ 2,545


(in millions)	Americas		EMEA		Asia		Total
Balance at September 30, 2022	$	607	$	295	$	1,155	$	2,057


Currency translation and other	1		26		44		71
Balance at December 31, 2022	$	608	$	321	$	1,199	$	2,128

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

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


	December 31, 2017							September 30, 2017								December 31, 2022						September 30, 2022
(in millions)	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net		(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Intangible assets															Intangible assets
Patented technology	$	30	$	(16	)	$	14	$	30	$	(15	)	$	15	Patented technology	$	82	$	(28)	$	54	$	80	$	(25)	$	55
Customer relationships	546		(74		)	472		545		(64		)	481		Customer relationships	570		(176)		394		560		(163)		397
Trademarks	60		(27		)	33		59		(26		)	33		Trademarks	20		(19)		1		19		(17)		2
Miscellaneous	22		(8		)	14		22		(8		)	14		Miscellaneous	26		(12)		14		25		(12)		13
Total intangible assets	$	658	$	(125	)	$	533	$	656	$	(113	)	$	543	Total intangible assets	$	698	$	(235)	$	463	$	684	$	(217)	$	467

Amortization of ~~other~~ intangible assets for the three months ended December 31, ~~2017~~2022 and ~~2016~~2021 was $12 million and $5$13 million, respectively.

Adient plc | Form 10-Q | 10

5.6. Product Warranties

Adient offers warranties to its customers depending upon the specific product and terms of the customer purchase agreement. A typical warranty program requires that Adient replace defective products within a specified time period from the date of sale. Adient records an estimate for future warranty-related costs based on actual historical return rates and other known factors. Based on analysis of return rates and other factors, Adient's warranty provisions are adjusted as necessary. Adient monitors its warranty activity and adjusts its reserve estimates when it is probable that future warranty costs will be different than those estimates. Adient's product warranty liability is recorded in the consolidated statements of financial position in other current liabilities.

The changes in Adient's total product warranty liability are as follows:


	Three Months Ended December 31,							Three Months Ended December 31,
(in millions)	2017			2016			(in millions)	2022		2021
Balance at beginning of period	$	19		$	13		Balance at beginning of period	$	21	$	23
Accruals for warranties issued during the period	2			1			Accruals for warranties issued during the period	2		2
Changes in accruals related to pre-existing warranties (including changes in estimates)	(2		)	4			Changes in accruals related to pre-existing warranties (including changes in estimates)	—		1

Settlements made (in cash or in kind) during the period	(2		)	(3		)	Settlements made (in cash or in kind) during the period	(4)		(3)
Currency translation							Currency translation	1		—
Balance at end of period	$	17		$	15		Balance at end of period	$	20	$	23

6.7. Leases

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

The components of lease costs included in the consolidated statement of income (loss) for the three months ended December 31, 2022 and 2021 were as follows:


	Three Months Ended December 31,
(in millions)	2022		2021




Operating lease cost	$	26	$	30
Short-term lease cost	8		5

Total lease cost	$	34	$	35

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

Adient plc | Form 10-Q | 11


(in millions)		December 31, 2022			September 30, 2022
Operating leases:
Operating lease right-of-use assets	Other noncurrent assets	$	268		$	266

Operating lease liabilities - current	Other current liabilities	$	83		$	81
Operating lease liabilities - noncurrent	Other noncurrent liabilities	186			186
		$	269		$	267





Weighted average remaining lease term:
Operating leases		6 years			6 years


Weighted average discount rate:
Operating leases		5.5		%	5.6		%

Maturities of operating lease liabilities and minimum payments for operating leases having initial or remaining non-cancelable terms in excess of one year as of December 31, 2022 are as follows:


	Operating leases
Fiscal years (in millions)	December 31, 2022
2023 (excluding the three months ended December 31, 2022)	$	70
2024	73
2025	51
2026	33
2027	25
Thereafter	58
Total lease payments	310
Less: imputed interest	(41)
Present value of lease liabilities	$	269

Supplemental cash flow information related to leases is as follows:


	Three Months Ended December 31,
(in millions)	2022		2021
Right-of-use assets obtained in exchange for lease obligations:
Operating leases (non-cash activity)	$	8	$	10


Operating cash flows:
Cash paid for amounts included in the measurement of lease liabilities	$	26	$	29

Adient plc | Form 10-Q | 12

8. Debt and Financing Arrangements

~~Long-term debt~~

Debt consisted of the following:


(in millions)	December 31, 2022		September 30, 2022
Long-term debt:
Term Loan B - LIBOR plus 3.25% due in 2028	$	985	$	988
4.875% Notes due in 2026	795		795
3.50% Notes due in 2024	878		809

Other bank borrowings and finance lease obligations	3		1

Less: debt issuance costs	(23)		(18)
Gross long-term debt	2,638		2,575
Less: current portion	11		11
Net long-term debt	$	2,627	$	2,564

Short-term debt:


Other bank borrowings	$	2	$	3
Total short-term debt	$	2	$	3

Adient US LLC ("Adient US"), a wholly owned subsidiary of Adient, together with certain of Adient's other subsidiaries, maintains an asset-based revolving credit facility (the “ABL Credit Facility”), which provides for a revolving line of credit up to $1,250 million, including a North American subfacility of up to $950 million and a European subfacility of up to $300 million, subject to borrowing base capacity and certain other restrictions, including a minimum fixed charge coverage ratio. The ABL Credit Facility, as amended in November 2022, is set to mature on November 2, 2027, subject to certain springing maturity provisions. Adient will pay a commitment fee of 0.25% to 0.375% on the unused portion of the commitments under the asset-based revolving credit facility based on average global availability. Letters of credit are limited to the lesser of (x) $150 million and (y) the aggregate unused amount of commitments under the ABL Credit Facility then in effect. Subject to certain conditions, the ABL Credit Facility may be expanded by up to $250 million in additional commitments. Loans under the ABL Credit Facility may be denominated, at the option of Adient, in U.S. dollars, Euros, Pounds Sterling or Swedish Kroner. It also provides flexibility for future amendments to the ABL Facility to incorporate certain sustainability-based pricing provisions. The ABL Credit Agreement is secured on a first-priority lien on all accounts receivable, inventory and bank accounts (and funds on deposit therein) and a second-priority lien on all of the tangible and intangible assets of certain Adient subsidiaries. Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to SOFR, in the case of amounts outstanding in dollars, EURIBOR, in the case of amounts outstanding in euros, STIBOR, in the case of amounts outstanding in Swedish krona and SONIA, in the case of amounts outstanding in pounds sterling, in each case, plus an applicable margin of 1.50% to 2.00%. As of December 31, 2022, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of $971 million (net of $13 million of letters of credit).

In addition, Adient US and Adient Global Holdings S.à r.l., a wholly-owned subsidiary of Adient, maintain a term loan credit agreement, as amended in fiscal 2021, (the “Term Loan B Agreement”) that provides for a $985 million senior secured term loan facility. The Term Loan B Agreement amortizes in equal quarterly installments at a rate of 1.00% per annum of the original principal amount thereof, with the remaining balance due at final maturity on April 8, 2028. Interest on the Term Loan B Agreement accrues at the Eurodollar rate plus an applicable margin equal to 3.25%. The Term Loan B Agreement also permits Adient to incur incremental term loans in an aggregate amount not to exceed the greater of $750 million and an unlimited amount subject to a pro forma first lien secured net leverage ratio of not greater than 1.75 to 1.00 and certain other conditions.

Adient plc | Form 10-Q | 13

(in millions) December 31, 2017 September 30, 2017
Term Loan A - LIBOR plus 1.75% due in 2021 $ 1,200
$ 1,200
4.875% Notes due in 2026 900
900
3.50% Notes due in 2024 1,197
1,180
European Investment Bank Loan - EURIBOR plus 0.90% due in 2022 197
195
Capital lease obligations 4
4
Other 2
1
Less: debt issuance costs (37 ) (38 )
Gross long-term debt 3,463
3,442
Less: current portion 2
2
Net long-term debt $ 3,461
$ 3,440
forth in the agreements. The agreements also provide for customary events of default, including, but not limited to, cross-default clauses with other debt arrangements, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving Adient and its significant subsidiaries.

Adient Global Holdings Ltd. ("AGH"), a wholly-owned subsidiary of Adient, previously maintained $900 million aggregate principal amount of 4.875% USD-denominated unsecured notes due 2026. Adient redeemed $103 million and $2 million during fiscal 2020 and 2021, respectively, resulting in a remaining balance of $795 million as of December 31, 2022 and September 30, 2022. AGH also previously maintained €1.0 billion aggregate principal amount of 3.50% unsecured notes due 2024. During fiscal 2022, Adient repurchased €177 million ($198 million) of the 3.50% unsecured notes due 2024 at a premium of €3 million ($4 million) plus €3 million ($3 million) of accrued and unpaid interest, and expensed €1 million ($1 million) of previously deferred financing costs to net financing charges. As of December 31, 2022, the remaining balance of this debt was €823 million ($878 million).

Net Financing Charges

Adient's net financing charges ~~line item~~ in the consolidated statements of income (loss) contained the following components:

Three Months Ended
December 31,
(in millions) 2017 2016
Interest expense, net of capitalized interest costs $ 34
$ 33
Banking fees and debt issuance cost amortization 2
2
Interest income (1 ) (1 )
Net foreign exchange (2 ) 1
Net financing charges $ 33
$ 35


	Three Months Ended December 31,
(in millions)	2022		2021
Interest expense, net of capitalized interest costs	$	41	$	46
Banking fees and debt issuance cost amortization	4		3
Interest income	(4)		(2)

Derivative loss on Yanfeng transaction	—		3

Net financing charges	$	41	$	50

Total interest paid on both short and long-term debt for the three months ended December 31, 2022 and 2021 was $20 million and $41 million, respectively.

Adient enters into supply chain financing programs in certain domestic and foreign jurisdictions to either sell or discount accounts receivable without recourse to third-party institutions. Sales or discounts of accounts receivable are reflected as a reduction of accounts receivable on the consolidated statements of financial position and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows. As of December 31, 2022, $181 million was funded under these programs compared to $269 million as of September 30, 2022.

7.9. Derivative Instruments and Hedging Activities

Adient selectively uses derivative instruments to reduce Adient's market risk associated with changes in foreign currency. Under Adient's policy, the use of derivatives is restricted to those intended for hedging purposes; the use of any derivative instrument for speculative purposes is strictly prohibited. A description of each type of derivative utilized to manage Adient's risk is included in the following paragraphs. In addition, refer to Note 8,10, "Fair Value Measurements," of the notes to consolidated financial statements for information related to the fair value measurements and valuation methods utilized by Adient for each derivative type.

Adient has global operations and participates in the foreign exchange markets to minimize its risk of loss from fluctuations in foreign currency exchange rates. Adient primarily uses foreign currency exchange contracts to hedge certain foreign exchange rate exposures. Adient hedges 70% to 90% of the nominal amount of each of its known foreign exchange transactional exposures. Gains and losses on derivative contracts offset gains and losses on underlying foreign currency exposures. These contracts have been designated as cash flow hedges under ASC 815, "Derivatives and Hedging," and the ~~effective portion of the~~ hedge gains or losses due to changes in fair value are initially recorded as a component of accumulated other comprehensive income (AOCI) and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings. ~~Any ineffective portion of the hedge is reflected in the consolidated statements of income. These~~All contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates at December 31, ~~2017~~2022 and September 30, ~~2017.~~2022, respectively.

Adient ~~selectively uses equity swaps to reduce market risk associated with certain~~plc | Form 10-Q | 14

As of its stock-based compensation plans, such as its deferred compensation plans. The equity swaps are recorded at fair value. Changes in fair value of the equity swaps are reflected in the consolidated statements of income within selling, general and administrative expenses.

At December 31, ~~2017,~~2022, the ~~€1.0 billion~~€823 million ($878 million) aggregate principal amount of 3.50% euro-denominated unsecured notes due 2024 was designated as a net investment hedge to selectively hedge portions of Adient's net investment in Europe. The currency effects of Adient's euro-denominated bonds are reflected in the AOCI account within shareholders' equity attributable to Adient where they offset gains and losses recorded on Adient's net investment in Europe.

Adient entered into a ¥150 million ($23 million) foreign exchange forward contract during fiscal 2022 to selectively hedge portions of its net investment in China. The currency effects of the forward contract were reflected in the AOCI account within shareholder’s equity attributable to Adient, where they offset gains and losses recorded on Adient’s net investment in China. The forward contract matured during the first quarter of fiscal 2023.

The following table presents the location and fair values of derivative instruments and other amounts used in hedging activities included in Adient's consolidated statements of financial position:

Derivatives and Hedging
Activities Designated as
Hedging Instruments
under ASC 815

Derivatives and Hedging
Activities Not Designated as
Hedging Instruments
under ASC 815
(in millions) December 31,
2017 September 30,
2017 December 31,
2017 September 30,
2017
Other current assets
Foreign currency exchange derivatives $ 7
$ 4
$ —
$ —
Other noncurrent assets
Foreign currency exchange derivatives —
1
—
—
Equity swaps —
—
—
3
Total assets $ 7
$ 5
$ —
$ 3

Other current liabilities
Foreign currency exchange derivatives $ 15
$ 6
$ 5
$ 2
Other noncurrent liabilities
Foreign currency exchange derivatives 2
3
—
—
Long-term debt
Foreign currency denominated debt 1,197
1,180
—
—
Total liabilities $ 1,214
$ 1,189
$ 5
$ 2


	Derivatives and Hedging Activities Designated as Hedging Instruments under ASC 815				Derivatives and Hedging Activities Not Designated as Hedging Instruments under ASC 815
(in millions)	December 31, 2022		September 30, 2022		December 31, 2022		September 30, 2022
Other current assets
Foreign currency exchange derivatives	$	26	$	17	$	3	$	3

Other noncurrent assets
Foreign currency exchange derivatives	2		—		—		—


Total assets	$	28	$	17	$	3	$	3

Other current liabilities
Foreign currency exchange derivatives	$	8	$	20	$	—	$	—

Other noncurrent liabilities
Foreign currency exchange derivatives	—		2		—		1

Long-term debt
Foreign currency denominated debt	878		809		—		—
Total liabilities	$	886	$	831	$	—	$	1

Adient enters into International Swaps and Derivatives Associations (ISDA) master netting agreements with counterparties that permit the net settlement of amounts owed under the derivative contracts. The master netting agreements generally provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event. Adient has not elected to offset the fair value positions of the derivative contracts recorded in the consolidated statements of financial position. Collateral is generally not required of Adient or the counterparties under the master netting agreements. As of ~~both~~ December 31, ~~2017~~2022 and September 30, ~~2017,~~2022, no cash collateral was received or pledged under the master netting agreements.

The gross and net amounts of derivative instruments and other amounts used in hedging activities are as follows:

Assets Liabilities
(in millions) December 31,
2017 September 30,
2017 December 31,
2017 September 30,
2017
Gross amount recognized $ 7
$ 8
$ 1,219
$ 1,191
Gross amount eligible for offsetting (2 ) (2 ) (2 ) (2 )
Net amount $ 5
$ 6
$ 1,217
$ 1,189


	Assets				Liabilities
(in millions)	December 31, 2022		September 30, 2022		December 31, 2022		September 30, 2022
Gross amount recognized	$	31	$	20	$	886	$	832
Gross amount eligible for offsetting	(5)		(19)		(5)		(19)
Net amount	$	26	$	1	$	881	$	813

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

Adient plc | Form 10-Q | 15


								Three Months Ended December 31,
(in millions)	Three Months Ended December 31,						(in millions)	2022		2021
	2017			2016
Foreign currency exchange derivatives	$	(7	)	$	(7	)	Foreign currency exchange derivatives	$	32	$	(2)

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


(in millions)		Three Months Ended December 31,					(in millions)		Three Months Ended December 31,
		2017		2016				2022		2021
Foreign currency exchange derivatives	Cost of sales	$	1	$	(3	)	Foreign currency exchange derivatives	Cost of sales		$	7	$	1

The following table presents the location and amount of pretax gains (losses) on derivatives not designated as hedging instruments recognized in Adient's consolidated statements of ~~income:~~income (loss):


(in millions)		Three Months Ended December 31,						(in millions)			Three Months Ended December 31,
		2017			2016					2022			2021
Foreign currency exchange derivatives	Cost of sales	$	(2	)	$	(14	)	Foreign currency exchange derivatives		Cost of sales			$	3			$	1
Foreign currency exchange derivatives	Net financing charges	(1		)	31			Foreign currency exchange derivatives	Net financing charges		9				(15)
Equity swap	Selling, general and administrative	(3		)	(1		)

Total		$	(6	)	$	16		Total			$	12			$	(14)

The effective portion of pretax gains (losses) recorded in currency translation adjustment (CTA) within other comprehensive income (loss) related to net investment hedges was ~~$(17)~~$(69) million and ~~$67~~$29 million for the three months ended December 31, ~~2017~~2022 and ~~2016,~~2021, respectively. For the three months ended December 31, ~~2017~~2022 and ~~2016,~~2021, no gains or losses were reclassified from CTA into income for Adient's outstanding net investment ~~hedges,~~hedges. For the three months ended December 31, 2022 and 2021, no ~~gains or losses were~~ineffectiveness was recognized in the consolidated statements of income ~~for the ineffective portion of~~(loss) resulting from cash flow hedges.

8.10. Fair Value Measurements

ASC 820, "Fair Value Measurement," defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Adient plc | Form 10-Q | 16

Recurring Fair Value Measurements

The following tables present Adient's fair value hierarchy for those assets and liabilities measured at fair value:


	Fair Value Measurements Using:
(in millions)	Total as of December 31, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other current assets
Foreign currency exchange derivatives	$	29	$	—	$	29	$	—

Other noncurrent assets
Foreign currency exchange derivatives	2		—		2		—


Total assets	$	31	$	—	$	31	$	—
Other current liabilities
Foreign currency exchange derivatives	8		—		8		—






Total liabilities	$	8	$	—	$	8	$	—

Fair Value Measurements Using:
(in millions)
Total as of
December 31,
2017

Quoted Prices
in Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Other current assets
Foreign currency exchange derivatives $ 7
$ —
$ 7
$ —
Total assets $ 7
$ —
$ 7
$ —
Other current liabilities
Foreign currency exchange derivatives $ 20
$ —
$ 20
$ —
Other noncurrent liabilities
Foreign currency exchange derivatives 2
—
2
—
Total liabilities $ 22
$ —
$ 22
$ —


	Fair Value Measurements Using:
(in millions)	Total as of September 30, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other current assets
Foreign currency exchange derivatives	$	20	$	—	$	20	$	—

Other noncurrent assets


Interest rate cap	—		—		—		—
Total assets	$	20	$	—	$	20	$	—
Other current liabilities
Foreign currency exchange derivatives	$	20	$	—	$	20	$	—

Other noncurrent liabilities
Foreign currency exchange derivatives	3		—		3		—
Total liabilities	$	23	$	—	$	23	$	—

Fair Value Measurements Using:
(in millions)
Total as of
September 30,
2017

Quoted Prices
in Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Other current assets
Foreign currency exchange derivatives $ 4
$ —
$ 4
$ —
Other noncurrent assets
Foreign currency exchange derivatives 1
—
1
—
Equity swaps 3
—
3
—
Total assets $ 8
$ —
$ 8
$ —
Other current liabilities
Foreign currency exchange derivatives $ 8
$ —
$ 8
$ —
Other noncurrent liabilities
Foreign currency exchange derivatives 3
—
3
—
Total liabilities $ 11
$ —
$ 11
$ —

Valuation Methods

Foreign currency exchange derivatives Adient selectively hedges anticipated transactions and net investments that are subject to foreign exchange rate risk primarily using foreign currency exchange hedge contracts. The foreign currency exchange derivatives are valued under a market approach using publicized spot and forward prices. Changes in fair value on foreign exchange derivatives accounted for as hedging instruments under ASC 815 are initially recorded as a component of AOCI and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings. These contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates at December 31, ~~2017~~2022 and September 30, ~~2017.~~2022, respectively. The changes

in fair value of foreign currency exchange derivatives not designated as hedging instruments under ASC 815 are recorded in the consolidated statements of income.

~~Equity~~

Cross-currency interest rate swaps Adient determines the fair value of a cross-currency interest rate swap contract using a market approach which is based on quoted market price for similar instruments in markets. All significant inputs are corroborated by observable market data for the term of such a contract. Adient selectively uses ~~equity~~cross-currency interest rate swaps to ~~reduce market risk associated with certain~~hedge portions of its ~~stock-based compensation plans, such as its deferred compensation plans. The equity swaps are recorded at fair value. Changes in~~net investments.

Adient plc | Form 10-Q | 17

Interest rate caps Adient determines the fair value of an interest rate cap contract using a market approach which is based on quoted market price for identical or similar instruments in markets. All significant inputs are corroborated by observable market data for the ~~equity swaps are reflected in~~term of such a contract. As of December 31, 2022, Adient had no interest rate caps outstanding.

The fair value of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values. The fair value of long-term debt, which was $2.5 billion and $2.4 billion at December 31, 2022 and September 30, 2022, respectively, was determined primarily using market quotes classified as Level 1 inputs within the ~~consolidated statements of income within selling, general and administrative expenses.~~ASC 820 fair value hierarchy.

9.11. Equity and Noncontrolling Interests

(in millions) Ordinary Shares Additional Paid-in Capital Retained Earnings Parent's Net Investment Accumulated Other Comprehensive Income (Loss)
Shareholders' Equity Attributable
to Adient
Shareholders' Equity Attributable to Noncontrolling Interests Total Equity
Balance at September 30, 2016 $ —
$ —
$ —
$ 4,452
$ (276 ) $ 4,176
$ 131
$ 4,307
Net income —
—
77
65
—
142
17
159
Change in Parent's net investment —
—
—
(880 ) —
(880 ) —
(880 )
Transfers from former Parent —
228
—
—
—
228
—
228
Reclassification of Parent's net investment and issuance of ordinary shares in connection with separation —
3,637
—
(3,637 ) —
—
—
—
Foreign currency translation adjustments —
—
—
—
(447 ) (447 ) (1 ) (448 )
Realized and unrealized gains (losses) on derivatives —
—
—
—
(2 ) (2 ) —
(2 )
Dividends attributable to noncontrolling interests —
—
—
—
—
—
(16 ) (16 )
Change in noncontrolling interest share —
—
—
—
—
—
2
2
Balance at December 31, 2016 $ —
$ 3,865
$ 77
$ —
$ (725 ) $ 3,217
$ 133
$ 3,350

Balance at September 30, 2017 $ —
$ 3,942
$ 734
$ —
$ (397 ) $ 4,279
$ 313
$ 4,592
Net income —
—
(216 ) —
—
(216 ) 13
(203 )
Foreign currency translation adjustments —
—
—
—
71
71
4
75
Realized and unrealized gains (losses) on derivatives —
—
—
—
(10 ) (10 ) —
(10 )
Dividends declared ($0.275 per share) —
—
(26 ) —
—
(26 ) —
(26 )
Dividends attributable to noncontrolling interests —
—
—
—
—
—
(9 ) (9 )
Share based compensation —
6
—
—
—
6
—
6
Other —
4
—
—
—
4
—
4
Balance at December 31, 2017 $ —
$ 3,952
$ 492
$ —
$ (336 ) $ 4,108
$ 321
$ 4,429

~~The change in Parent's net investment during~~For the ~~fiscal quarter~~three months ended December 31, ~~2016 includes all intercompany activity with~~2022:


(in millions)	Ordinary Shares		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Shareholders' Equity Attributable to Adient		Shareholders' Equity Attributable to Noncontrolling Interests		Total Equity
Balance at September 30, 2022	$	—	$	4,026	$	(1,108)	$	(845)	$	2,073	$	302	$	2,375
Net income (loss)	—		—		12		—		12		14		26
Foreign currency translation adjustments	—		—		—		90		90		5		95
Realized and unrealized gains (losses) on derivatives	—		—		—		25		25		—		25

Dividends attributable to noncontrolling interests	—		—		—		—		—		(4)		(4)

Share based compensation and other	—		(8)		—		—		(8)		—		(8)

Balance at December 31, 2022	$	—	$	4,018	$	(1,096)	$	(730)	$	2,192	$	317	$	2,509

For the ~~former Parent prior to separation, including a $1.5 billion non-cash settlement.~~three months ended December 31, 2021:

~~In September 2017,~~


(in millions)	Ordinary Shares		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Shareholders' Equity Attributable to Adient		Shareholders' Equity Attributable to Noncontrolling Interests		Total Equity
Balance at September 30, 2021	$	—	$	3,991	$	(988)	$	(627)	$	2,376	$	342	$	2,718
Net income (loss)	—		—		(54)		—		(54)		11		(43)
Foreign currency translation adjustments	—		—		—		17		17		2		19
Realized and unrealized gains (losses) on derivatives	—		—		—		(2)		(2)		—		(2)

Dividends attributable to noncontrolling interests	—		—		—		—		—		(8)		(8)
Purchase of subsidiary shares from noncontrolling interest	—		12		—		—		12		(12)		—
Share based compensation and other	—		(5)		—		—		(5)		—		(5)


Balance at December 31, 2021	$	—	$	3,998	$	(1,042)	$	(612)	$	2,344	$	335	$	2,679

Adient ~~declared a dividend of $0.275 per ordinary share, which was paid in November 2017. In November 2017, Adient declared a dividend of $0.275 per ordinary share, which is payable in February 2018.~~plc | Form 10-Q | 18

The following table presents changes in AOCI attributable to Adient:


	Three Months Ended December 31,							Three Months Ended December 31,
(in millions)	2017			2016			(in millions)	2022		2021
Foreign currency translation adjustments							Foreign currency translation adjustments
Balance at beginning of period	$	(398	)	$	(260	)	Balance at beginning of period	$	(836)	$	(617)
Aggregate adjustment for the period (net of tax effect of $0 and $0)	71			(447		)
Aggregate adjustment for the period, net of tax							Aggregate adjustment for the period, net of tax	90		17
Balance at end of period	(327		)	(707		)	Balance at end of period	$	(746)	$	(600)
Realized and unrealized gains (losses) on derivatives							Realized and unrealized gains (losses) on derivatives
Balance at beginning of period	3			(14		)	Balance at beginning of period	$	(8)	$	(8)
Current period changes in fair value (net of tax effect of $(2) and $(2))	(9		)	(4		)
Reclassification to income (net of tax effect of $0 and $1)*	(1		)	2
Current period changes in fair value, net of tax							Current period changes in fair value, net of tax	31		(1)
Reclassification to income, net of tax							Reclassification to income, net of tax	(6)		(1)
Balance at end of period	(7		)	(16		)	Balance at end of period	$	17	$	(10)
Pension and postretirement plans							Pension and postretirement plans
Balance at beginning of period	(2		)	(2		)	Balance at beginning of period	$	(1)	$	(2)

Balance at end of period	(2		)	(2		)	Balance at end of period	$	(1)	$	(2)
Accumulated other comprehensive income (loss), end of period	$	(336	)	$	(725	)	Accumulated other comprehensive income (loss), end of period	$	(730)	$	(612)

* Refer

Adient consolidates certain subsidiaries in which the noncontrolling interest party has within their control the right to ~~Note 7, "Derivative Instruments and Hedging Activities~~,"require Adient to redeem all or a portion of its interest in the ~~notes~~subsidiary. These redeemable noncontrolling interests are reported at their estimated redemption value. Any adjustment to ~~consolidated financial statements for disclosure~~the redemption value impacts retained earnings but does not impact net income. Redeemable noncontrolling interests which are redeemable only upon future events, the occurrence of ~~the line items on the consolidated statements of income affected by reclassifications from AOCI into income related to derivatives.~~

which is not currently probable, are recorded at carrying value. The following table presents changes in the redeemable noncontrolling interests:


	Three Months Ended December 31,							Three Months Ended December 31,
(in millions)	2017			2016			(in millions)	2022		2021
Beginning balance	$	28		$	34		Beginning balance	$	45	$	240
Net income	7			5			Net income	7		13
Dividends							Dividends	(18)		(31)
Change in redeemable noncontrolling interest							Change in redeemable noncontrolling interest	—		(186)
Foreign currency translation adjustments	1			(1		)	Foreign currency translation adjustments	11		5
Dividends	(8		)	—
Change in noncontrolling interest share	1			—
Ending balance	$	29		$	38		Ending balance	$	45	$	41

Refer to Note 3, "Acquisitions and Divestitures," of the notes to the consolidated financial statements for additional information on the change in redeemable noncontrolling interests during fiscal 2022.

Repurchases of Equity Securities

In November 2022, Adient’s board of directors authorized the repurchase of the Company’s ordinary shares up to an aggregate purchase price of $600 million with no expiration date. Under the share repurchase authorization, Adient’s ordinary shares may be purchased either through discretionary purchases on the open market, by block trades or privately negotiated transactions. The number of ordinary shares repurchased, if any, and the timing of repurchases will depend on a number of factors, including share price, trading volume and general market conditions, as well as on working capital requirements, general business conditions and other factors. No shares were repurchased under the program during the three months ended December 31, 2022.

~~10.~~12. Retirement Plans

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

Adient plc | Form 10-Q | 19



	Three Months Ended December 31,
(in millions)	2022		2021
Service cost	$	1	$	2
Interest cost	4		3
Expected return on plan assets	(3)		(4)
Net actuarial and settlement/curtailment (gain) loss	8		—
Net periodic benefit cost	$	10	$	1

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

13. Restructuring and Impairment Costs

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

InDuring fiscal ~~2018,~~2023, Adient committed to a restructuring plan ("~~2018~~2023 Plan") ~~within the Seating segment for $13 million that was offset by underspend in the fiscal 2016 Plan. The restructuring actions relate to cost reduction initiatives and consist primarily~~ of ~~workforce reductions. The restructuring actions are expected to be substantially completed by fiscal 2019.~~

~~The following table summarizes the changes in Adient's 2018 Plan reserve:~~

(in millions) Employee Severance and Termination Benefits Long-Lived Asset Impairments Other Currency
Translation Total
Original Reserve $ 13
$ —
$ —
$ —
$ 13
Balance at December 31, 2017 $ 13
$ —
$ —
$ —
$ 13

In fiscal 2017, Adient committed to a restructuring plan ("2017 Plan") within the Seating segment and recorded $46 million of restructuring and impairment costs in the consolidated statements of income. This is the total amount expected to be incurred for this restructuring plan.$7 million. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions ~~and plant closures.~~in EMEA. The restructuring actions are expected to be substantially ~~complete~~completed by fiscal 2026. Restructuring costs are included in ~~fiscal 2018.~~

~~Adient maintained $11 million of Futuris restructuring reserves as of September 30, 2017 all of which was paid during the three months ended December 31, 2017.~~

~~The following table summarizes the changes in Adient's 2017 Plan reserve:~~

(in millions) Employee Severance and Termination Benefits Long-Lived Asset Impairments Other Currency
Translation Total
Original Reserve $ 42
$ —
$ 4
$ —
$ 46
Utilized—cash (4 ) —
(4 ) —
(8 )
Balance at September 30, 2017 38
—
—
—
38
Utilized—cash (4 ) —
—
—
(4 )
Balance at December 31, 2017 $ 34
$ —
$ —
$ —
$ 34

~~In fiscal 2016, Adient committed to a restructuring plan ("2016 Plan") and recorded $332 million of~~ restructuring and impairment costs in the consolidated statements of income. This is the total amount expected to be incurred for this restructuring plan. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions, plant closures and asset impairments. Of the restructuring and impairment costs recorded, $315 million relates to the Seating segment and $17 million relates to the Interiors segment. The asset impairment charge recorded during fiscal 2016 related primarily to information technology assets within the Seating segment that will not be used going forward by Adient. The other charges recorded in fiscal 2016 of $22 million relate primarily to restructuring costs at one of Adient's joint ventures which Adient had indemnified. The restructuring actions are expected to be substantially complete in fiscal 2018.income (loss).

Since the announcement of the 2016 Plan in fiscal 2016, Adient has experienced lower employee severance and termination benefit cash payouts than previously calculated of approximately $13 million, due to changes in cost reduction actions. The planned workforce reductions disclosed for the 2016 Plan have been updated for Adient's revised actions.

The following ~~table summarizes~~tables summarize the changes in Adient's ~~2016 Plan reserve:~~restructuring reserve during the first quarters of fiscal 2023 and 2022:

(in millions) Employee Severance and Termination Benefits Long-Lived Asset Impairments Other Currency
Translation Total
Original Reserve $ 223
$ 87
$ 22
$ —
$ 332
Utilized—cash (29 ) —
(1 ) —
(30 )
Utilized—noncash —
(87 ) —
(2 ) (89 )
Balance at September 30, 2016 194
—
21
(2 ) 213
Utilized—cash (48 ) —
(12 ) —
(60 )
Utilized—noncash —
—
—
7
7
Balance at September 30, 2017 146
—
9
5
160
Noncash adjustment—underspend (13 ) —
—
—
(13 )
Utilized—cash (12 ) —
—
—
(12 )
Balance at December 31, 2017 $ 121
$ —
$ 9
$ 5
$ 135


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


(in millions)	Employee Severance and Termination Benefits		Currency Translation		Total
Balance at September 30, 2021	$	111	$	4	$	115
2022 Plan charges	3		—		3
Utilized - cash	(24)		—		(24)
Noncash and other adjustments	(7)		(1)		(8)
Balance at December 31, 2021	$	83	$	3	$	86

Adient's ~~fiscal 2018, 2017 and 2016~~ restructuring plans ~~included~~include workforce reductions of approximately ~~4,000.~~14,000 employees. Restructuring charges associated with employee severance and termination benefits are paid over the severance period granted to each employee or on a lump sum basis in accordance with individual severance agreements. As of December 31, ~~2017,~~2022, approximately ~~2,000~~12,000 of the employees have been separated from Adient pursuant to the restructuring plans. In addition, the restructuring plans included ~~eighteen~~twenty-seven plant closures. As of December 31, ~~2017, ten~~2022, twenty-one of the ~~eighteen~~twenty-seven plants have been closed.

Adient plc | Form 10-Q | 20

Adient's management closely monitors its overall cost structure and continually analyzes each of its businesses for opportunities to consolidate current operations, improve operating efficiencies and locate facilities in low cost countries in close proximity to customers. This ongoing analysis includes a review of its manufacturing, engineering, purchasing and administrative functions, as well as the overall global footprint for all its businesses. Because of the importance of new vehicle sales by major automotive manufacturers to operations, Adient is affected by the general business conditions in the automotive industry. Future adverse developments in the automotive industry could impact Adient's liquidity position, lead to impairment charges and/or require additional restructuring of its operations.

~~11.~~14. Income Taxes

In calculating the provision for income taxes, Adient uses an estimate of the annual effective tax rate based upon the facts and circumstances known at each interim period. On a quarterly basis, the actual effective tax rate is adjusted, as appropriate, based on changes in facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter. For the three months ended December 31, ~~2017,~~2022, Adient’s income tax expense was $31 million equating to an effective tax rate ~~was 384%~~of 48%. The ~~effective rate~~three month income tax expense was higher than the Irish statutory rate of 12.5% primarily due to the ~~charge~~inability to ~~recognize the impact of the U.S.~~record a tax ~~reform legislation~~benefit for losses in jurisdictions with valuation allowances and ~~unfavorable~~ foreign ~~exchange.~~tax rate differentials. For the three months ended December 31, ~~2016,~~2021, Adient’s income tax expense was $21 million equating to an effective tax rate ~~was 14%~~of (233)%. The ~~effective rate~~three month income tax expense was higher than the statutory rate impact of 12.5% primarily due to the inability to record a tax ~~law change~~benefit for losses in ~~Hungary, partially offset by benefits~~jurisdictions with valuation allowances and foreign tax rate differentials.

Valuation Allowances

As a result of the Company's first quarter fiscal 2023 analysis of the realizability of its worldwide deferred tax assets, and after considering tax planning initiatives and other positive and negative evidence, Adient determined that no changes to valuation allowances were required.

Adient reviews the realizability of its deferred tax assets on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or combined group recording the net deferred tax asset are considered, along with any other positive or negative evidence. All of the factors that Adient considers in evaluating whether and when to establish or release all or a portion of the deferred tax asset valuation allowance involve significant judgment. Since future financial results may differ from ~~global tax planning.~~previous estimates, periodic adjustments to Adient's valuation allowances may be necessary.

Uncertain Tax Positions

At December 31, ~~2017,~~2022, Adient had gross tax effected unrecognized tax benefits of ~~$191~~$522 million. If recognized, $122 million ~~essentially all~~ of ~~which, if recognized,~~Adient's unrecognized tax benefits would impact the effective tax rate. Total net accrued interest at December 31, ~~2017~~2022 was approximately $3$25 million (net of tax benefit). The interest and penalties accrued ~~during~~for the three months ended December 31, ~~2017~~2022 was ~~not material.~~$2 million. Adient recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

~~Impacts of Tax Legislation and Change in Statutory Tax Rates~~

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed and enacted into law, and is effective for tax years beginning on or after January 1, 2018, with the exception of certain provisions. As a fiscal year taxpayer, Adient will not be subject to the majority of the provisions until fiscal year 2019, however the statutory tax rate reduction is effective January 1, 2018.

The Act reduces the U.S. corporate tax rate from 35% to 21%. Adient’s fiscal 2018 estimated annual effective tax rate reflects the benefit from the reduced rate of 24.5% resulting from the application of Internal Revenue Code, Section 15 which provides for a proration of the newly enacted rate during this fiscal year. This benefit is offset by a non-cash estimated tax expense of $150 million related to the remeasurement of Adient’s net deferred tax assets at the lower statutory rate, a non-cash estimated tax expense of $100 million related to recording a valuation allowance to reflect the reduced benefit Adient expects to realize as a result of being subject to the Base Erosion and Anti-avoidance Tax ("BEAT"), and an estimated cash tax expense of $8 million related to the transition tax imposed on previously untaxed earnings and profits. Adient is projecting that it will be subject to BEAT, a parallel tax system, for the foreseeable future.

In accordance with Staff Accounting Bulletin No. 118, Adient is disclosing the estimated income tax impact. Although the $258 million tax expense represents what Adient believes is a reasonable estimate of the impact of the income tax effects of the Act on its consolidated financial statements as of December 31, 2017, it is a provisional amount and will be impacted by Adient’s on-going analysis of the legislation and the full year fiscal 2018 financial results.

The Act makes broad and complex changes to the U.S. tax code, and in certain instances, lacks clarity and is subject to interpretation until additional Internal Revenue Service guidance is issued. The ultimate impact of the Act may differ from Adient's estimates due to changes in the interpretations and assumptions made as well as any forthcoming regulatory guidance. Adient will continue to assess the provisions of the Act and the anticipated impact to income tax expense and will disclose the anticipated impact on its consolidated financial statements in future financial filings. Any adjustments to these provisional amounts will be reported as a component of income tax expense (benefit) in the reporting period in which any such adjustments are determined, which will be no later than the first quarter of fiscal 2019.

~~Other tax legislation was adopted during the quarter in various jurisdictions, which did not have a material impact on Adient’s consolidated financial statements.~~

In the first quarter of fiscal 2017, Hungary passed the 2017 tax bill which reduced the corporate income tax rate to a flat 9% rate. As a result of the law change, Adient recorded income tax expense of $5 million related to the write down of deferred tax assets.

~~12.~~15. Segment Information

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

Adient evaluates the performance of its reportable segments using an adjusted ~~EBIT~~EBITDA metric defined as income before income taxes and noncontrolling interests, excluding net financing charges, ~~qualified~~ restructuring and impairment costs, restructuring related-costs, ~~incremental "Becoming Adient" costs, separation costs,~~ net mark-to-market adjustments on pension and postretirement plans, transaction gains/losses, purchase accounting amortization, depreciation, stock-based compensation and other non-recurring items ("Adjusted ~~EBIT"~~EBITDA"). Also, certain corporate-related costs are not allocated to the segments. The reportable segments are consistent with how management views the markets served by Adient and reflect the financial information that is reviewed by its chief operating decision maker.

~~Adient has two reportable segments for financial reporting purposes: Seating and Interiors.~~

Adient plc | Form 10-Q | 21



•	~~The Seating segment produces seat metal structures and mechanisms, foam, trim, fabric and complete seat systems for automotive and other mobility applications.~~

•	The Interiors segment, derived from its global automotive interiors joint ventures, produces instrument panels, floor consoles, door panels, overhead consoles, cockpit systems, decorative trim and other products.


	Three Months Ended December 31,
(in millions)	2022		2021
Net Sales
Americas	$	1,724	$	1,498
EMEA	1,182		1,230
Asia	821		784
Eliminations	(28)		(32)
Total net sales	$	3,699	$	3,480

~~Financial information relating~~


	Three Months Ended December 31,
(in millions)	2022		2021
Adjusted EBITDA
Americas	$	69	$	9
EMEA	28		43
Asia	138		114
Corporate-related costs (1)	(23)		(20)
Restructuring and impairment costs (2)	(7)		(4)
Purchase accounting amortization (3)	(12)		(14)
Restructuring related charges (4)	(3)		(1)

Adjustment to nonconsolidated partially-owned affiliates (5)	1		—
Depreciation	(69)		(75)
Stock based compensation	(8)		(10)
Other items (6)	—		(2)
Earnings (loss) before interest and income taxes	114		40
Net financing charges	(41)		(50)
Other pension income (expense) (7)	(9)		1
Income (loss) before income taxes	$	64	$	(9)

Notes:

(1) Corporate-related costs not allocated to the segments include executive office, communications, corporate development, legal and corporate finance.

(2) Reflects qualified restructuring charges for costs that are directly attributable to restructuring activities and meet the definition of restructuring under ASC 420 and non-recurring impairment charges. During the three months ended December 31, 2021, a held-for-sale impairment charge of $7 million was recorded in EMEA.

(3) Reflects amortization of intangible assets including those related to partially owned affiliates recorded within equity income.

(4) Reflects restructuring related charges for costs that are directly attributable to restructuring activities, but do not meet the definition of restructuring under ASC 420.

(5) The three months ended December 31, 2022 reflects a non-recurring adjustment to certain of Adient's ~~reportable segments~~investments in nonconsolidated partially-owned affiliates in Asia.

(6) The three months ended December 31, 2022 includes $1 million of transaction costs, offset by $1 million of indirect tax recoveries in Brazil. The three months ended December 31, 2021 primarily reflects $2 million of transaction costs.

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

Adient plc | Form 10-Q | 22

Geographic Information

Revenue by geographic area is as follows:


Net Sales
	Three Months Ended December 31,
(in millions)	2022		2021
Americas
United States	$	1,553	$	1,331
Mexico	607		541
Other Americas	95		91
Regional elimination	(531)		(465)
	1,724		1,498
EMEA
Germany	248		233
Czech Republic	228		267
Other EMEA	1,030		1,039
Regional elimination	(324)		(309)
	1,182		1,230
Asia
Thailand	141		135
China	398		414
Japan	87		35
Other Asia	203		206
Regional elimination	(8)		(6)
	821		784

Inter-segment elimination	(28)		(32)

Total	$	3,699	$	3,480

Three Months Ended
December 31,
(in millions) 2017 2016
Net Sales
Seating $ 4,204
$ 4,026
Total net sales $ 4,204
$ 4,026

Three Months Ended
December 31,
(in millions) 2017
2016 ⁽¹⁾
Adjusted EBIT
Seating $ 138
$ 253
Interiors 25
30
Becoming Adient costs ⁽²⁾
(19 ) (15 )
Separation costs ⁽³⁾
—
(10 )
Purchase accounting amortization ⁽⁴⁾
(17 ) (10 )
Restructuring related charges⁽⁵⁾
(11 ) (8 )
Other items ⁽⁶⁾
(14 ) (13 )
Earnings before interest and income taxes 102
227
Net financing charges (33 ) (35 )
Income before income taxes $ 69
$ 192



~~(1)~~		Amounts presented have been revised from what was previously reported to correctly report net sales, equity income and total assets as discussed in Note 1, "Basis of Presentation and Summary of Significant Accounting Policies".
~~(2)~~		Reflects incremental expenses associated with becoming an independent company, including non-cash costs of $6 million and $13 million for the three months ended December 31, 2017 and 2016, respectively.
~~(3)~~		~~Reflects expenses associated with and incurred prior to the separation from the former Parent.~~
~~(4)~~		~~Reflects amortization of intangible assets including those related to the YFAI joint venture recorded within equity income.~~
~~(5)~~		~~Reflects restructuring related charges for costs that are directly attributable to restructuring activities, but do not meet the definition of restructuring under ASC 420.~~
~~(6)~~		Reflects $8 million for the U.S. tax reform impact at YFAI and $6 million of integration-related costs associated with Futuris for the three months ended December 31, 2017. Reflects primarily $12 million of initial funding of the Adient foundation for the three months ended December 31, 2016.

~~13.~~16. Nonconsolidated Partially-Owned Affiliates

Investments in the net assets of nonconsolidated partially-owned affiliates are ~~stated~~reported in the "Investments in partially-owned affiliates" line in the consolidated statements of financial position as of December 31, ~~2017~~2022 and September 30, ~~2017.~~2022. Equity in the net income of nonconsolidated partially-owned affiliates ~~is stated~~are reported in the "Equity ~~income"~~income (loss)" line in the consolidated statements of income (loss) for the three months ended December 31, ~~2017~~2022 and ~~2016.~~2021, respectively.

Adient plc | Form 10-Q | 23

Adient maintains total investments in partially-owned affiliates of ~~$1.9 billion~~$306 million and ~~$1.8 billion~~$286 million at December 31, ~~2017~~2022 and September 30, ~~2017,~~2022, respectively. Operating information for nonconsolidated partially-owned affiliates is as follows:


	Three Months Ended December 31,
(in millions)	2022		2021
Income statement data:
Net sales	$	976	$	1,208
Gross profit	$	101	$	127
Net income	$	60	$	67
Net income attributable to the entity	$	59	$	67

Three Months Ended
December 31,
(in millions) 2017
2016 ⁽¹⁾
Net sales $ 4,663
$ 4,324
Gross profit $ 566
$ 539
Operating income $ 279
$ 295
Net income $ 221
$ 280
Net income attributable to the entity $ 216
$ 259

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



~~(1)~~		Amounts presented have been revised from what was previously reported, as discussed in Note 1, "Basis of Presentation and Summary of Significant Accounting Policies". The engineering recovery revisions decreased operating income, net income and net income attributable to the entity by $14 million for the three months ended December 31, 2016.

~~14.~~17. Commitments and Contingencies

Adient is involved in various lawsuits, claims and proceedings incident to the operation of its businesses, including those pertaining to product liability, casualty environmental, safety and health, intellectual property, employment, commercial and contractual matters, and various other matters. Although the outcome of any such lawsuit, claim or proceeding cannot be predicted with certainty and some may be disposed of unfavorably to Adient, it is management's opinion that none of these will have a material adverse effect on Adient's financial position, results of operations or cash flows. Costs related to such matters were not material to the periods presented.

Adient accrues for potential environmental liabilities when it is probable a liability has been incurred and the amount of the liability is reasonably estimable. Reserves for environmental liabilities totaled $9$5 million and $6 million at ~~both~~ December 31, ~~2017~~2022 and September 30, ~~2017.~~2022, respectively. Adient reviews the status of its environmental sites on a quarterly basis and adjusts its reserves accordingly. Such potential liabilities accrued by Adient do not take into consideration possible recoveries of future insurance proceeds. They do, however, take into account the likely share other parties will bear at remediation sites. It is difficult to estimate Adient's ultimate level of liability at many remediation sites due to the large number of other parties that may be involved, the complexity of determining the relative liability among those parties, the uncertainty as to the nature and scope of the investigations and remediation to be conducted, the uncertainty in the application of law and risk assessment, the various choices and costs associated with diverse technologies that may be used in corrective actions at the sites, ~~and~~ the often quite lengthy periods over which eventual remediation may ~~occur.~~occur, and changing environmental laws. Nevertheless, Adient does not currently believe that any claims, penalties or costs in connection with known environmental matters will have a material adverse effect on Adient's financial position, results of operations or cash flows.

~~15.~~18. Related Party Transactions

In the ordinary course of business, Adient enters into transactions with related parties, such as equity affiliates. Such transactions consist of ~~facility management services,~~ the sale or purchase of goods and other arrangements. ~~Subsequent to the separation, transactions with the former Parent and its businesses represent third-party transactions.~~

The following table sets forth the net sales to and purchases from related parties included in the consolidated statements of income:

Three Months Ended
December 31,
(in millions) 2017 2016
Net sales $ 99
$ 98
Cost of sales 137
100


		Three Months Ended December 31,
(in millions)		2022		2021
Net sales to related parties	Net sales	$	58	$	56
Purchases from related parties	Cost of sales	114		96

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

(in millions) December 31, 2017 September 30, 2017
Accounts receivable $ 158
$ 129
Accounts payable 122
104


(in millions)		December 31, 2022		September 30, 2022
Accounts receivable due from related parties	Accounts receivable	$	25	$	34
Accounts payable due to related parties	Accounts payable	58		95

Average receivable and payable balances with related parties remained consistent with the period end balances shown above.

~~Allocations from Former Parent~~

During fiscal 2017, allocations from the former Parent were insignificant. During fiscal 2017, Adient and the former Parent finalized the reconciliation of working capital and other accounts and the net amount due from the former Parent of $87 million was settled during the quarter ended March 31, 2017 in accordance with the separation agreement. The impact of the settlement is reflected within additional paid-in capital.

Adient plc | Form 10-Q | 25

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

~~Presentation of Information~~

Unless the context requires otherwise, references to "Adient plc" or"Adient" refer to Adient plc and its consolidated subsidiaries for periods subsequent to its separation from Johnson Controls International plc ("the former Parent") on October 31, 2016. References in this Quarterly Report on Form 10-Q to the "separation" refer to the legal separation and transfer of the former Parent's automotive seating and interiors business to Adient on October 31, 2016.

Forward-Looking Statements

This section and other parts of this Quarterly Report on Form 10-Q ~~contain~~contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," or similar terms. Forward-looking statements are not guarantees of future performance and Adient's actual results may differ significantly from the results discussed in the forward-looking statements. Adient cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond ~~Adient's~~Adient’s control, that could cause Adient’s actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: the Ukraine conflict and COVID lockdowns in China and their impact on regional, global economies and additional pressure on supply chains and vehicle production, the effects of local and national economic, credit and capital market conditions on the economy in general, and other risks and uncertainties, the continued financial and operational impacts of and uncertainties relating to the COVID-19 pandemic on Adient and its customers, suppliers, joint venture partners and other parties, work stoppages, including due to supply chain disruptions and similar events, energy and commodity prices, the Company’s ability and timing of customer recoveries for increased input costs, the availability of raw materials and component products (including components required by our customers for the manufacture of vehicles (i.e., semiconductors)), whether deleveraging activities may yield additional value for shareholders at all or on the same or different terms as those described herein, the ability of Adient ~~Aerospace~~ to ~~successfully implement~~execute its ~~strategic initiatives or realize~~turnaround plan, automotive vehicle production levels, mix and schedules, as well as our concentration of exposure to certain automotive manufacturers, the ~~expected benefits~~ability of ~~the joint venture, the impact of tax reform legislation through the Tax Cuts~~Adient to effectively launch new business at forecast and ~~Jobs Act,~~profitable levels, the ability of Adient to meet debt service requirements, the ~~availability and~~ terms of future financing, the impact of tax reform legislation, uncertainties in U.S. administrative policy regarding trade agreements, tariffs and other international trade relations, general economic and business conditions, the strength of the U.S. or other economies, ~~automotive~~shifts in market shares among vehicles, vehicle ~~production levels, mix~~segments or away from vehicles on which Adient has significant content, changes in consumer demand, global climate change and ~~schedules, energy and commodity prices,~~related emphasis on ESG matters by various stakeholders, the ~~availability~~ability of ~~raw materials and component products,~~Adient to achieve its ESG-related goals, currency exchange rates and cancellation of or changes to commercial ~~arrangements.~~arrangements, and the ability of Adient to identify, recruit, and retain key leadership. Additional information regarding these and other risks related to Adient’s business that could cause actual results to differ materially from what is contained in the forward-looking statements is included in the section entitled "Risk Factors," contained in ~~Item Part I, Item 1A of the which are incorporated herein by reference. The following discussion should be read in conjunction with Adient's~~our Annual Report on Form 10-K ~~(the “Form 10-K”)~~ for the fiscal year ended September 30, ~~2017 filed with the U.S. Securities and Exchange Commission (the "SEC").~~2022. The following discussion should be read in conjunction with the ~~Form 10-K and the~~ consolidated financial statements and notes thereto included ~~elsewhere in~~within this report as well as within Part II, Item 8 of our Annual Report on Form ~~10-Q.~~10-K for the fiscal year ended September 30, 2022. All information presented herein is based on ~~the~~ Adient's fiscal calendar. Unless otherwise stated, references to particular years, quarters, months or periods refer to Adient's fiscal years ended in September and the associated quarters, months and periods of those fiscal years. Adient assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

~~Separation from the former Parent~~

~~On October 31, 2016,~~ Overview

Adient ~~became an independent company as~~is a ~~result of the separation of~~global leader in the automotive seating and interiors business from Johnson Controls. Adient was incorporated under the laws of Ireland in fiscal 2016 for the purpose of holding these businesses. Adient's ordinary shares began trading "regular-way" under the ticker symbol "ADNT" on the New York Stock Exchange on October 31, 2016. Upon becoming an independent company, the capital structure of Adient consisted of 500 million authorized ordinary shares and 100 million authorized preferred shares (par value of $0.001 per ordinary and preferred share). The number of Adient ordinary shares issued on October 31, 2016 was 93,671,810.

~~Overview~~

Adient is the world's largest automotive seating supplier*supply industry with relationships with the largest global auto manufacturers. Adient's technologies extend into virtually every area of automotive seating solutions, including complete seating systems, frames, mechanisms, foam, head restraints, armrests and trim ~~covers and fabrics.~~covers. Adient is an independent seat supplier with global scale and the capability to design, develop, engineer, manufacture and deliver complete seat systems and components in every major automotive producing region in the world. Adient also participates in the automotive interiors market primarily through its 30% equity interest in our global automotive interiors joint venture in China, Yanfeng Global Automotive Interior Systems Co., Ltd. (YFAI).



*	~~Based on production volumes. Source: IHS Automotive~~

Adient designs, manufactures and markets a full range of seating systems and components for passenger cars, commercial vehicles and light trucks, including vans, pick-up trucks and sport/crossover utility vehicles. Adient ~~also supplies high performance seating systems to the commercial trucking and international motorsports industry through its award winning RECARO brand of products. Adient~~ operates ~~approximately 238~~more than 200 wholly- and majority-owned manufacturing or assembly facilities, with operations in 3430 countries. Additionally, Adient has partially-owned affiliates in China, Asia, Europe and North America. Through its global footprint and vertical integration, Adient leverages its capabilities to drive growth in the automotive seating industry.

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

~~Seating~~

Adient plc | Form 10-Q | 26

Factors Affecting Adient’s Operating Environment

The ~~Seating~~first quarter results of fiscal 2023 are not necessarily indicative of full-year results particularly as Adient, along with the automotive industry, continues to recover from supply chain disruptions, reacts to inflationary pressures on input costs (particularly labor, freight and utility costs), manages changing COVID-19 regulations in China, and as it addresses the impacts of higher interest rates and softening consumer demand. Refer to the consolidated results of operations and segment ~~produces seat metal structures and mechanisms, foam, trim, fabric and complete seat systems~~analysis discussion below for ~~automotive and other mobility applications.~~additional information on the impacts of these items on Adient's results.

~~Interiors~~

The Interiors segment, derived from its global automotive interiors joint ventures, produces instrument panels, floor consoles, door panels, overhead consoles, cockpit systems, decorative trim and other products.

Global Automotive Industry

Adient conducts its business globally in the automotive industry, which is highly competitive and sensitive to economic, ~~conditions.~~political and social factors in the various regions. During ~~the first quarters of fiscal 2018 and 2017, the global automotive industry experienced modest global growth. In~~ the first quarter of fiscal ~~2018, South America and Europe experienced growth while~~2023, global light vehicle production increased 5.4% year over year driven by improved production volumes in North America ~~China~~ and Asia, ~~saw decreases due~~excluding China, offset by softening demand in both EMEA and China regions. The operating environment is expected to ~~varying economic, political~~continue to be challenging during the remainder of fiscal 2023 as the automotive industry recovers from supply chain disruptions, reacts to inflationary pressures on input costs, and ~~social factors.~~addresses the impacts of higher interest rates and softening consumer demand.

Light vehicle production levels by geographic region are provided below:

Light Vehicle Production

Three Months Ended
December 31,
(units in millions) 2017 Change 2016
Global 24.8 0.4% 24.7
North America 4.2 -4.5% 4.4
South America 0.8 14.3% 0.7
Europe 6.0 7.1% 5.6
China 8.3 -1.2% 8.4
Asia, excluding China, and Other 5.5 -1.8% 5.6

Source: IHS Automotive, January 2018


	Light Vehicle Production
	Three Months Ended December 31,
(units in millions)	2022	Change		2021
Global	21.6	5.4	%	20.5
North America	3.6	9.1	%	3.3
South America	0.7	—	%	0.7
EMEA	4.2	(4.5)	%	4.4
China	7.2	(2.7)	%	7.4
Asia, excluding China, and Other	5.9	25.5	%	4.7

Source: S&P, January 2023

Financial Results Summary

Significant aspects of Adient's financial results for the first quarter of fiscal ~~2018~~2023 include the following:

•Adient recorded net sales of ~~$4,204~~$3,699 million for the first quarter of fiscal ~~2018,~~2023, representing an increase of ~~$178~~$219 million or 6.3% when compared to the first quarter of fiscal ~~2017.~~2022. The increase in net sales is ~~primarily due~~attributable to ~~the impact~~higher overall production volumes in all regions (primarily Americas and Asia), favorable material economics recoveries, and higher levels of ~~the Futuris acquisition and the consolidation of a China affiliate and foreign currency,~~commercial settlements, partially offset by ~~lower volumes in North America and other Asian countries.~~the unfavorable impact of foreign currencies.

•Gross profit was ~~$202~~$231 million, or 5%6.2% of net sales, for the first quarter of fiscal ~~2018~~2023 compared to ~~$350~~$173 million, or 9%5.0% of net sales for the first quarter of fiscal ~~2017.~~2022. Profitability, ~~along with~~including gross profit as a percentage of net sales, was ~~lower primarily~~higher due to ~~significant launch inefficiencies, premium freight,~~ higher ~~commodity prices, steel supply constraints~~production volumes (primarily Americas and ~~cost~~Asia) and higher levels of ~~customer interruptions related to structures and mechanisms production within the Seating business and lower volumes,~~commercial settlements, partially offset by increased utilities, labor and freight costs, unfavorable impacts of material economics, and the unfavorable impact of ~~the Futuris acquisition and the consolidation of a China affiliate.~~foreign currencies.

•Equity income was ~~$96~~$28 million for the first quarter of fiscal ~~2018, which is $2 million higher~~2023, compared to ~~the first quarter of fiscal 2017 primarily due to higher profits at Seating affiliates, partially offset by lower results from YFAI due to the impact of U.S tax reform and lower operating margins.~~

~~Net loss attributable to Adient was $216~~$33 million for the first quarter of fiscal ~~2018, compared~~2022. The decrease is primarily attributable to ~~$142 million~~the unfavorable impact of ~~net~~foreign currencies, the impact of lower volumes at partially-owned affiliates in China, and the impact of KEIPER supply agreement modifications executed during the fourth quarter of fiscal 2022.

•Net income attributable to Adient was $12 million for the first quarter of fiscal ~~2017.~~2023, compared to net loss attributable to Adient of $54 million for the first quarter of fiscal 2022. The net ~~loss~~income in the first quarter of fiscal ~~2018~~2023 is primarily attributable to higher overall production volumes, higher commercial settlements, lower ~~levels of profitability~~selling, general and ~~to a current year tax charge related to~~administrative expenses (SG&A), favorable material economics recoveries, and lower net financing charges, partially offset by higher

Adient plc | Form 10-Q | 27

freight, utilities and labor costs, lower equity income, higher other pension expense, and the unfavorable impact of ~~U.S. tax reform legislation.~~foreign currencies.

Consolidated Results of Operations


	Three Months Ended December 31,							Three Months Ended December 31,
(in millions)	2017			Change	2016 ⁽¹⁾		(in millions)	2022		Change	2021
Net sales	$	4,204		4%	$	4,026	Net sales	$	3,699	6%	$	3,480
Cost of sales	4,002			9%	3,676		Cost of sales	3,468		5%	3,307
Gross profit	202			-42%	350		Gross profit	231		34%	173
Selling, general and administrative expenses	196			-10%	217		Selling, general and administrative expenses	138		(15)%	162
Equity income	96			2%	94
Earnings before interest and income taxes	102			-55%	227

Restructuring and impairment costs							Restructuring and impairment costs	7		75%	4
Equity income (loss)							Equity income (loss)	28		(15)%	33
Earnings (loss) before interest and income taxes							Earnings (loss) before interest and income taxes	114		>100%	40
Net financing charges	33			-6%	35		Net financing charges	41		(18)%	50
Income before income taxes	69			-64%	192
Income tax provision	265			*	28
Other pension expense (income)							Other pension expense (income)	9		>100%	(1)
Income (loss) before income taxes							Income (loss) before income taxes	64		>100%	(9)
Income tax provision (benefit)							Income tax provision (benefit)	31		48%	21
Net income (loss)	(196		)	*	164		Net income (loss)	33		>100%	(30)
Income attributable to noncontrolling interests	20			-9%	22
Income (loss) attributable to noncontrolling interests							Income (loss) attributable to noncontrolling interests	21		(13)%	24
Net income (loss) attributable to Adient	$	(216	)	*	$	142	Net income (loss) attributable to Adient	$	12	>100%	$	(54)

⁽¹⁾ As disclosed in the fiscal 2017 annual report on Form 10-K, prior year amounts have been revised to correct for misstatements as described in Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" in the accompanying notes to the consolidated financial statements.

* Measure not meaningful

Net Sales


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Net sales	$	3,699	6%	$	3,480

Three Months Ended
December 31,
(in millions) 2017 Change 2016
Net sales $ 4,204
4% $ 4,026

Net sales increased by ~~$178~~$219 million, or 4%6%, in the first quarter of fiscal ~~2018~~2023 as compared to the first quarter of fiscal ~~2017 primarily~~2022 due to ~~the impact~~higher overall production volumes primarily in Americas and Asia ($380 million), higher levels of ~~acquisitions including Futuris~~commercial settlements and ~~the consolidation of a China affiliate of $235 million, the~~net pricing adjustments ($35 million), and favorable ~~foreign currency translation impact of $127 million and higher volumes in Europe corresponding to overall economic growth,~~material economics recoveries ($15 million), partially offset by ~~lower volumes in North America and other Asian countries resulting from capital constraints prior to 2016 and~~ the ~~winddown~~unfavorable impact of ~~certain plants and related expiring programs along with overall economic factors. Refer to the segment analysis below for a discussion of segment net sales.~~foreign currencies ($211 million).

Cost of Sales / Gross Profit


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Cost of sales	$	3,468	5%	$	3,307
Gross profit	$	231	34%	$	173
% of sales	6.2%			5.0%

Three Months Ended
December 31,
(in millions) 2017 Change 2016
Cost of sales $ 4,002
9% $ 3,676
Gross profit 202
-42% 350
% of sales 4.8 % 8.7 %

Cost of sales increased by ~~$326~~$161 million, or 9%5%, and gross profit increased by $58 million in the first quarter of fiscal ~~2018~~2023 as compared to the first quarter of fiscal ~~2017 primarily as a result~~2022. The year over year increase in cost of ~~the impact of acquisitions of $206 million including Futuris~~sales was due to higher production volumes ($321 million), increased utilities, labor and ~~the consolidation of a China affiliate, the unfavorable foreign currency translation impact of $120 million~~freight costs along with operating inefficiencies associated with supply chain issues ($35 million), and ~~$100 million of incremental costs related to significant launch inefficiencies, premium freight,~~ higher commodity prices, steel supply constraints and cost of customer interruptions in structures and mechanisms production within the Seating business, partially offset by lower volumes in certain regions and the benefits from cost reduction initiatives. Gross profit decreased by $148 million, or 42% in the first quarter of fiscal 2018 as compared to the first quarter of fiscal 2017 primarily due to the previously mentioned inefficiencies and other issues experienced by our structures and mechanisms production, along with lower volumes and an increase in certain other operating costs ($33 million), partially offset by the favorable impact of ~~acquisitions including Futuris~~foreign currencies ($199 million), favorable supplier pricing ($18 million), the favorable impact of the KEIPER supply agreement modifications ($6 million), and ~~the consolidation~~lower depreciation expense ($5 million). Gross profit was impacted by higher overall production volumes, and

Adient plc | Form 10-Q | 28

higher levels of ~~a China affiliate.~~commercial settlements, partially offset by higher utilities, labor and freight costs, and unfavorable net material economics recoveries. Refer to the segment analysis below for a discussion of segment profitability.

Selling, General and Administrative Expenses


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Selling, general and administrative expenses	$	138	(15)%	$	162
% of sales	3.7%			4.7%

Three Months Ended
December 31,
(in millions) 2017 Change 2016
Selling, general and administrative expenses $ 196
-10% $ 217
% of sales 4.7 % 5.4 %

~~Selling, general and administrative~~SG&A expenses ~~(SG&A)~~ decreased by ~~$21~~$24 million, or ~~9.7%,~~15% in the first quarter of fiscal 2018 compared to the first quarter of fiscal 2017. SG&A for the first quarter of fiscal 2018 was favorably impacted by $44 million of lower overall administrative expenses, lower separation costs of $10 million and prior year initial funding of the Adient foundation of $12 million, partially offset by $28 million of growth investments related to increased engineering resources and other activities to support new business wins, the unfavorable impact of foreign currency translation of $7 million, and the impact of acquisitions including Futuris and the consolidation of a China affiliate of $13 million. Certain of the lower administrative expenses in the first quarter of fiscal 2018 related to reduced discretionary spending and lower incentive compensation levels are not anticipated to recur as part of the annual run rate of SG&A. Refer to the segment analysis below for a discussion of segment profitability.

~~Net Financing Charges~~

Year Ended
September 30,
(in millions) 2017 Change 2016
Net financing charges $ 33
-6% $ 35

~~Net financing charges remained relatively consistent in the first quarter of fiscal 2018~~2023 as compared to the first quarter of fiscal ~~2017 due~~2022. The year over year decrease in SG&A is attributable to ~~similar levels~~the favorable impact of ~~debt maintained~~foreign currencies ($8 million), lower overall engineering and other administrative spending ($7 million), lower compensation expense including stock-based and performance-based incentive compensation costs ($7 million), and lower depreciation and amortization expense ($2 million).

Restructuring and Impairment Costs


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Restructuring and impairment costs	$	7	75%	$	4

Restructuring and impairment costs were higher by $3 million during ~~such periods.~~

~~Equity Income~~

Three Months Ended
December 31,
(in millions) 2017 Change 2016
Equity income $ 96
2% $ 94

~~Equity income increased in~~ the first quarter of fiscal ~~2018~~2023 as compared to the first quarter of fiscal 2017 primarily due to higher volumes and improved performance at certain non-consolidated Seating affiliates in China along with the favorable impact of foreign currency translation, partially offset by lower income at YFAI as a result of the impact of U.S. tax reform along with

~~unfavorable product mix, pricing pressures and certain operational issues.~~2022. Refer to Note 13, ~~"Nonconsolidated Partially-Owned Affiliates,~~"Restructuring and Impairment Costs," of the notes to the consolidated financial statements for ~~further disclosure~~information related to Adient's ~~nonconsolidated partially-owned affiliates.~~restructuring plans.

Equity Income ~~Tax Provision~~

Three Months Ended
December 31,
(in millions) 2017 Change 2016
Income tax provision $ 265
* $ 28
(Loss)


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Equity income (loss)	$	28	(15)%	$	33

* Measure not meaningful

The first quarter of fiscal 2018 had an effective tax rate of 384%, which is higher than the Irish statutory rate of 12.5%, primarily due to the impact of revaluing net deferred tax assets to recognize the U.S tax reform legislation and unfavorable foreign exchange.

~~On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”)~~Equity income was signed and enacted into law, and is effective for tax years beginning on or after January 1, 2018, with the exception of certain provisions. As a fiscal year taxpayer, Adient will not be subject to the majority of the provisions until fiscal year 2019, however the statutory tax rate reduction is effective January 1, 2018.

The Act reduces the U.S. corporate tax rate from 35% to 21%. Adient’s fiscal 2018 estimated annual effective tax rate reflects the benefit from the reduced rate of 24.5% resulting from the application of Internal Revenue Code, Section 15 which provides for a proration of the newly enacted rate during this fiscal year. This benefit is offset by a non-cash estimated tax expense of $150$28 million related to the remeasurement of Adient’s net deferred tax assets at the lower statutory rate, a non-cash estimated tax expense of $100 million related to recording a valuation allowance to reflect the reduced benefit Adient expects to realize as a result of being subject to the Base Erosion and Anti-avoidance Tax ("BEAT"), and an estimated cash tax expense of $8 million related to the transition tax imposed on previously untaxed earnings and profits. Adient is projecting that it will be subject to BEAT, a parallel tax system, for the foreseeable future.

~~Income Attributable to Noncontrolling Interests~~

Three Months Ended
December 31,
(in millions) 2017 Change 2016
Income attributable to noncontrolling interests $ 20
-9% $ 22

~~The decrease in income attributable to noncontrolling interests~~ for the first quarter of fiscal ~~2018 when~~2023, compared to $33 million in the first quarter of fiscal 2022. The decrease is primarily attributable to the unfavorable impact of foreign currencies ($3 million), and the impact of lower volumes at partially-owned affiliates in China and as a result of the KEIPER supply agreement modifications executed during the fourth quarter of fiscal 2022 ($3 million).

Net Financing Charges


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Net financing charges	$	41	(18)%	$	50

Net financing charges decreased in the first quarter of fiscal 2023 as compared to the first quarter of fiscal ~~2017~~2022 as a result of lower levels of outstanding debt, and the prior year $3 million derivative loss related to the 2021 Yanfeng Transaction. Refer to Note 8, "Debt and Financing Arrangements," of the notes to the consolidated financial statements for further information related to Adient's debt transactions during the current quarter and components of the net financing charges.

Adient plc | Form 10-Q | 29

Other Pension Expense (Income)


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Other pension expense (income)	$	9	>100%	$	(1)

Other pension expense was higher by $10 million in the first quarter of fiscal 2023 as compared to the first quarter of fiscal 2022 due primarily to an $8 million curtailment loss associated with employee termination benefit plans in the Americas segment. Refer to Note 12, "Retirement Plans," of the notes to the consolidated financial statements for information related to the non-service components of Adient's net periodic pension costs.

Income Tax Provision


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Income tax provision (benefit)	$	31	48%	$	21

The first quarter of fiscal 2023 income tax expense of $31 million was higher than the statutory rate of 12.5% primarily due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances and foreign tax rate differentials. The first quarter of fiscal 2022 income tax expense of $21 million was higher than the statutory rate of 12.5% primarily due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances and foreign tax rate differentials.

Income Attributable to Noncontrolling Interests


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Income (loss) attributable to noncontrolling interests	$	21	(13)%	$	24

The decreases in income attributable to noncontrolling interests in the first quarter of fiscal 2023 as compared to the first quarter of fiscal 2022 is primarily attributable to ~~the impact of the U.S. tax reform~~lower production volumes at ~~one of Adient's consolidated~~certain affiliates ~~partially offset by the consolidation of a Seating affiliate~~ in ~~China.~~various jurisdictions.

Net Income (Loss) Attributable to Adient

Three Months Ended
December 31,
(in millions) 2017 Change 2016
Net income (loss) attributable to Adient $ (216 ) * $ 142


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Net income (loss) attributable to Adient	$	12	>100%	$	(54)

* Measure not meaningful

Net ~~loss~~income attributable to Adient was ~~$216~~$12 million for the first quarter of fiscal ~~2018,~~2023, compared to ~~$142~~$54 million of net income attributable to Adient for the first quarter of fiscal 2017. The net loss in fiscal 2018 is primarily attributable to lower levels of profitability and a current year tax charge related to the impact of U.S. tax reform legislation.

~~Comprehensive Income Attributable to Adient~~

Three Months Ended
December 31,
(in millions) 2017 Change 2016
Comprehensive income (loss) attributable to Adient $ (155 ) * $ (307 )

* Measure not meaningful

~~The decrease in comprehensive~~ loss attributable to Adient for the first quarter of fiscal ~~2018 as compared to~~2022. The higher net income in the first quarter of fiscal ~~2017~~2023 is primarily attributable to higher overall production volumes primarily in Americas and Asia, higher commercial settlements, lower SG&A expenses, favorable material economics recoveries, and lower net financing charges, partially offset by higher freight, labor and utilities costs, lower equity income, higher other pension expense, and the unfavorable impact of foreign currencies.

Comprehensive Income (Loss) Attributable to Adient


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Comprehensive income (loss) attributable to Adient	$	127	>100%	$	(39)

Adient plc | Form 10-Q | 30

Comprehensive loss attributable to Adient was $127 million for the first quarter of fiscal 2023 compared to $39 million of comprehensive loss for the first quarter of fiscal 2022. The increase of $166 million is due primarily ~~due~~ to higher net income ($63 million), the favorable impact of foreign currency translation adjustments ($~~518~~82 million), and the impact of realized and unrealized gains on derivatives ($23 million), partially offset by ~~lower net~~higher comprehensive income attributable to ~~Adient~~noncontrolling interests ($~~358~~6 million). ~~These year-over-year favorable foreign currency translation adjustments were primarily driven by the strengthening of the Chinese yuan and Euro against the U.S. dollar.~~

Segment Analysis

Adient evaluates the performance of its reportable segments using an adjusted ~~EBIT~~EBITDA metric defined as income before income taxes and noncontrolling interests, excluding net financing charges, ~~qualified~~ restructuring and impairment costs, restructuring related-costs, ~~incremental "Becoming Adient" costs, separation costs,~~ net mark-to-market adjustments on pension ~~and postretirement~~ plans, transaction gains/losses, purchase accounting amortization, depreciation, stock-based compensation and other non-recurring items ("Adjusted ~~EBIT"~~EBITDA"). Also, certain corporate-related costs are not allocated to the segments. The reportable segments are consistent with how management views the markets served by Adient and reflect the financial information that is reviewed by its chief operating decision maker.

The results presented below are not necessarily indicative of full-year results as Adient, ~~has two reportable segments~~along with the automotive industry, continues to recover from supply chain disruptions, reacts to inflationary pressures on input costs (particularly labor, freight and utility costs), manages changing COVID-19 regulations in China, and as it addresses the impacts of higher interest rates and softening consumer demand. Refer to the Factors Affecting Adient’s Operating Environment section within our Annual Report on Form 10-K for ~~financial reporting purposes: Seating and Interiors.~~

the fiscal year ended September 30, 2022, for additional information on factors that have impacted Adient.



•	~~The Seating segment produces seat metal structures and mechanisms, foam, trim, fabric and complete seat systems for automotive and other mobility applications.~~

•	The Interiors segment, derived from its global automotive interiors joint ventures, produces instrument panels, floor consoles, door panels, overhead consoles, cockpit systems, decorative trim and other products.

Financial information relating to Adient's reportable segments is as follows:


	Three Months Ended December 31,
(in millions)	2022		2021
Net Sales
Americas	$	1,724	$	1,498
EMEA	1,182		1,230
Asia	821		784
Eliminations	(28)		(32)
Total net sales	$	3,699	$	3,480

Three Months Ended
December 31,
(in millions) 2017 Change
2016 ⁽¹⁾
Adjusted EBIT
Seating $ 138
-45% $ 253
Interiors 25
-17% 30
Becoming Adient costs ⁽²⁾
(19 ) (15 )
Separation costs ⁽³⁾
—
(10 )
Purchase accounting amortization ⁽⁴⁾
(17 ) (10 )
Restructuring related charges⁽⁵⁾
(11 ) (8 )
Other items ⁽⁶⁾
(14 ) (13 )
Earnings before interest and income taxes 102
227
Net financing charges (33 ) (35 )
Income before income taxes $ 69
$ 192

Adient plc | Form 10-Q | 31



~~(1)~~		Amounts presented have been revised from what was previously reported to correctly report net sales, equity income and total assets as discussed in Note 1, "Basis of Presentation and Summary of Significant Accounting Policies".
~~(2)~~		Reflects incremental expenses associated with becoming an independent company, including non-cash costs of $6 million and $13 million for the three months ended December 31, 2017 and 2016, respectively.
~~(3)~~		~~Reflects expenses associated with and incurred prior to the separation from the former Parent.~~
~~(4)~~		~~Reflects amortization of intangible assets including those related to the YFAI joint venture recorded within equity income.~~
~~(5)~~		~~Reflects restructuring related charges for costs that are directly attributable to restructuring activities, but do not meet the definition of restructuring under ASC 420.~~
~~(6)~~		Reflects $8 million for the U.S. tax reform impact at YFAI and $6 million of integration-related costs associated with Futuris for the three months ended December 31, 2017. Reflects primarily $12 million of initial funding of the Adient foundation for the three months ended December 31, 2016.

~~Seating~~


	Three Months Ended December 31,
(in millions)	2022		2021
Adjusted EBITDA
Americas	$	69	$	9
EMEA	28		43
Asia	138		114
Corporate-related costs (1)	(23)		(20)
Restructuring and impairment costs (2)	(7)		(4)
Purchase accounting amortization (3)	(12)		(14)
Restructuring related charges (4)	(3)		(1)

Adjustment to nonconsolidated partially-owned affiliates (5)	1		—
Depreciation	(69)		(75)
Stock based compensation	(8)		(10)
Other items (6)	—		(2)
Earnings (loss) before interest and income taxes	114		40
Net financing charges	(41)		(50)
Other pension income (expense) (7)	(9)		1
Income (loss) before income taxes	$	64	$	(9)

Notes:

(1) Corporate-related costs not allocated to the segments include executive office, communications, corporate development, legal and corporate finance.

(3) Reflects amortization of intangible assets including those related to partially owned affiliates recorded within equity income.

(4) Reflects restructuring related charges for costs that are directly attributable to restructuring activities, but do not meet the definition of restructuring under ASC 420.

(5) The three months ended December 31, 2022 reflects a non-recurring adjustment to certain of Adient's investments in nonconsolidated partially-owned affiliates in Asia.

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

Americas


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Net sales	$	1,724	15%	$	1,498
Adjusted EBITDA	$	69	>100%	$	9

Adient plc | Form 10-Q | 32

Three Months Ended
December 31,
(in millions) 2017 Change 2016
Net sales $ 4,204
4% $ 4,026
Adjusted EBIT 138
-45% 253

Net sales increased during the first quarter of fiscal ~~2018~~2023 by $226 million primarily ~~due to~~as a result of higher current quarter production volumes ($207 million), the impact of ~~acquisitions~~favorable commercial settlements and net pricing adjustments ($24 million), and favorable impact of foreign currencies ($2 million), partially offset by the unfavorable impact of material economics recoveries ($7 million).

Adjusted EBITDA increased during the first quarter of fiscal 2023 by $60 million due to higher current quarter production volumes as explained above ($34 million), higher levels of commercial settlements and net pricing adjustments including ~~Futuris~~the impact of the KEIPER supply agreement modifications ($26 million), certain business performance improvements ($6 million), lower administrative and ~~the consolidation of a China affiliate~~engineering expense ($~~235~~6 million), the favorable impact of foreign ~~currency translation~~currencies ($~~127~~3 million), and ~~certain material economic recoveries~~higher equity income ($171 million), partially offset by ~~lower volumes~~higher freight, labor and utility costs ($201 million). The decrease in volumes is primarily attributable to North America and other Asian countries resulting from capital constraints prior to 2016 and the winddown of certain plants and related expiring programs along with overall economic factors, partially offset by increased volumes in Europe corresponding to overall economic growth in that region.

Adjusted EBIT decreased for the first quarter of fiscal 2018 by $115 million due to significant launch inefficiencies, premium freight, higher commodity prices, steel supply constraints and cost of customer interruptions related to structures and mechanisms production within the Seating business ($10012 million), ~~growth investments related to increased engineering resources, program managers~~ and ~~launch activities to support new business wins~~unfavorable material economics, net of recoveries ($334 million), lower volumes in certain regions ($39 million) and an increase in other operating costs ($25 million), partially offset by lower administrative expenses ($44 million), the impact of acquisitions including Futuris and the consolidation of a China affiliate ($23 million), higher equity income ($12 million) and the favorable impact of foreign currency translation ($3 million). ~~The inefficiencies and other issues experienced within structures and mechanisms production~~

EMEA


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Net sales	$	1,182	(4)%	$	1,230
Adjusted EBITDA	$	28	(35)%	$	43

Net sales decreased during the first quarter of fiscal ~~2018 are expected to continue into~~2023 by $48 million primarily as a result of the ~~foreseeable future but at lower levels than those experienced during~~unfavorable impact of foreign currency ($134 million), partially offset by higher production volumes ($59 million), the ~~quarter just ended.~~favorable impact of material economics recoveries ($22 million) and favorable impact of commercial settlements and net pricing adjustments ($5 million).

~~Interiors~~

Three Months Ended
December 31,
(in millions) 2017 Change 2016
Adjusted EBIT $ 25
-17% $ 30

* Measure not meaningful

Adjusted ~~EBIT~~EBITDA decreased ~~for~~during the first quarter of fiscal ~~2018~~2023 by $5$15 million due primarily ~~attributable~~ to increased utilities, labor and freight costs ($30 million), unfavorable ~~product~~material economics, net of recoveries ($13 million), and the unfavorable impact of foreign currencies ($1 million), partially offset by favorable commercial settlements and net pricing adjustments ($13 million), certain business performance improvements ($6 million), lower administrative and engineering expense ($4 million), higher equity income ($4 million), and higher current quarter production volumes ($2 million). Utility costs have recently shown signs of stabilization; however, Adient expects higher overall operating costs as compared to prior year periods to persist for the remainder of fiscal 2023.

Asia


	Three Months Ended December 31,
(in millions)	2022		Change	2021
Net sales	$	821	5%	$	784
Adjusted EBITDA	$	138	21%	$	114

Net sales increased during the first quarter of fiscal 2023 by $37 million due to higher production volume and mix ($113 million), and favorable impact of commercial settlements and net pricing ~~pressures and certain operational issues within the YFAI business,~~adjustments ($6 million), partially offset by the ~~favorable~~unfavorable impact of foreign ~~currency~~currencies ($82 million).

Adjusted EBITDA increased during the first quarter of fiscal 2023 by $24 million due to favorable volume and mix ($23 million), favorable commercial settlements (certain of which in China are non-recurring) and net pricing adjustments including the impact of the KEIPER supply agreement modifications ($20 million), and lower administrative and engineering expense ($3 million), partially offset by the unfavorable impact of foreign currencies ($11 million), lower equity income due to lower volumes at partially-owned affiliates and the impact of the KEIPER supply agreement modifications ($8 million), less favorable operational performance and other labor and overhead efficiency improvements ($2 million), and unfavorable impact of material economics, net of recoveries ($1 million).

Liquidity and Capital Resources

Adient plc | Form 10-Q | 33

Adient's primary liquidity needs are to fund general business requirements, including working capital, capital expenditures, restructuring costs ~~share repurchases, dividends~~ and debt service requirements. Adient's principal sources of liquidity are cash flows from operating activities, the revolving credit facility and other debt issuances, and existing cash balances. ~~Funding also previously came from the former Parent through October 31, 2016 and as part of the separation agreement.~~ Adient actively manages its working capital and associated cash requirements and continually seeks more effective uses of cash. Working capital is highly influenced by the timing of cash flows associated with sales and purchases, and therefore can be difficult to manage at times. See below ~~and refer to Note 6, "Debt and Financing Arrangements," of the notes to consolidated financial statements~~ for discussion of Adient's financing arrangements. Adient believes that its current financial resources will be sufficient to fund its liquidity requirements for at least the next twelve months.

The ABL Credit Facility and Term Loan B Agreement contain covenants that are usual and customary for facilities and debt instruments of this type and that, among other things, restrict the ability of Adient and its restricted subsidiaries to: create certain liens and enter into sale and lease-back transactions; create, assume, incur or guarantee certain indebtedness; pay dividends or make other distributions on, or repurchase or redeem, Adient’s capital stock or certain other debt; make other restricted payments; and consolidate or merge with, or convey, transfer or lease all or substantially all of Adient’s and its restricted subsidiaries’ assets, to another person. These covenants are subject to a number of other limitations and exceptions set forth in the agreements. The agreements also provide for customary events of default, including, but not limited to, cross-default clauses with other debt arrangements, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving Adient and its significant subsidiaries.

Adient plc | Form 10-Q | 34

Sources of Cash Flows


	Three Months Ended December 31,
(in millions)	2022		2021
Cash provided (used) by operating activities	$	44	$	(14)
Cash provided (used) by investing activities	(50)		652
Cash provided (used) by financing activities	(69)		(79)
Capital expenditures	(61)		(60)

Three Months Ended
December 31,
(in millions) 2017 2016
Cash provided (used) by operating activities $ (127 ) $ (13 )
Cash provided (used) by investing activities (146 ) (203 )
Cash provided (used) by financing activities (49 ) 833
Capital expenditures (143 ) (207 )

Operating Cash ~~Flows~~

Flows: The ~~decrease~~increase in ~~operating~~ cash flows ~~is primarily attributable to overall lower levels of profitability and unfavorable changes in working capital. See working capital section below for further information on changes in working capital.~~

~~Investing Cash Flows~~

The decrease in investing cash flows is primarily attributable to lower levels of capital expenditures primarily related to prior year capital investments for higher levels of program spending on product launches and other capital costs associated with becoming an independent company.

~~Financing Cash Flows~~

~~The decrease in financing cash flows~~from operating activities is primarily due to ~~amounts funded by~~ the ~~former Parent during~~higher net income attributable to Adient for the first quarter of fiscal ~~2017~~2023, partially offset by overall unfavorable changes to ~~fund~~ working capital ~~capital~~year-over-year.

Investing Cash Flows: The decrease in cash provided by investing activities is primarily attributable to prior year cash flow activities including the $651 million of proceeds received related to the 2021 Yanfeng Transaction, $46 million in proceeds received from the sale of the assets in Turkey, and the collection of $41 million of deferred proceeds from the sale of Adient's interest in YFAI as part of the 2020 Yanfeng Transaction. Refer to Note 3, “Acquisitions and Divestitures,” of the notes to the consolidated financial statements for additional information.

Financing Cash Flows: The decrease in cash used by financing activities is attributable to lower dividend payments to noncontrolling interests, partially offset by $7 million of debt financing costs associated with the extension of the ABL Credit Facility. Refer to Note 8, “Debt and Financing Arrangements,” of the notes to the consolidated financial statements for additional information.

Capital expenditures: Capital expenditures ~~and establish opening cash balances for Adient at October 31, 2016.~~during the first three months of fiscal 2023 were fairly consistent with those during the first three months of fiscal 2022.

Working capital


(in millions)	December 31, 2022		September 30, 2022
Current assets	$	4,087	$	4,163
Current liabilities	3,418		3,501
Working capital	$	669	$	662

(in millions) December 31, 2017 September 30, 2017
Current assets $ 4,077
$ 4,499
Current liabilities 3,993
4,328
Working capital $ 84
$ 171

~~The~~Working capital was fairly consistent year over year as a decrease in ~~working capital of $87 million is primarily due to first quarter 2018 cash outlays associated with the timing of~~accounts receivable was offset by decreases in accounts payable ~~outflows,~~and accrued compensation ~~related payouts, established restructuring plan payouts~~ and ~~income tax payments.~~benefits.

Restructuring ~~and Impairment~~ Costs

During fiscal 2023, Adient committed to a restructuring plan ~~in fiscal 2018 to drive cost efficiencies and to balance our global production against demand and recorded $13 million~~("2023 Plan") of ~~restructuring costs in the consolidated statement of income that was offset by underspend in 2016.~~$7 million. The restructuring actions ~~related~~relate to cost reduction initiatives ~~in the Seating segment. The costs~~and consist primarily of workforce reductions ~~and plant closures. The restructuring actions are expected to be substantially complete~~ in ~~fiscal 2019. The restructuring plan reserve balance of $13 million at December 31, 2017 is expected to be paid in cash.~~

Adient committed to a restructuring plan in fiscal 2017 to drive cost efficiencies and to balance our global production against demand and recorded $46 million of restructuring and impairment costs in the consolidated statement of income. The restructuring actions related to cost reduction initiatives in the Seating segment. The costs consist primarily of workforce reductions and plant closures.EMEA. Adient currently estimates that upon completion of the restructuring actions, the fiscal ~~2017~~2023 restructuring plan will reduce annual operating costs by approximately ~~$20~~$4 million, which is primarily the result of lower ~~cost~~costs of sales ~~and selling, general and administrative expenses~~ due to reduced employee-related costs, of which approximately ~~60%-65%~~10% will result in net savings. ~~Adient expects that savings, net of execution costs, will partially be achieved in fiscal years 2018-2019 and the full annual benefit of these actions is expected in fiscal 2020.~~ The restructuring actions are expected to be substantially ~~complete in~~completed by fiscal ~~2020. The~~2026.

Adient's restructuring ~~plan reserve balance of $34 million at December 31, 2017 is expected to be paid in cash.~~

Adient committed to a restructuring plan in fiscal 2016 to drive cost efficiencies and to balance our global production against demand and recorded $332 million of restructuring and impairment costs in the consolidated statement of income. The restructuring actions related to cost reduction initiatives primarily in the Seating segment. The costs consist primarily ofplans include workforce reductions ~~plant closures and asset impairments. Adient currently estimates that upon completion~~ of ~~the restructuring actions, the fiscal 2016 restructuring plan will reduce annual operating costs by~~ approximately $150 million, which is primarily the result of lower cost of sales and selling, general and administrative expenses due to reduced employee-related costs and depreciation expense, of which approximately 70%-75% will result in net savings. For fiscal 2017, the savings, net of execution costs, were approximately 30% of the expected annual operating cost reduction. Adient expects that savings, net of execution costs, will partially be achieved in fiscal year 2018 and the full annual benefit of these actions is expected in fiscal 2019. The restructuring actions are expected to be substantially complete in fiscal 2018. The restructuring plan reserve balance of $135 million at December 31, 2017 is expected to be paid in cash.

~~Since the announcement of the 2016 Plan in fiscal 2016, Adient has experienced lower~~14,000 employees. Restructuring charges associated with employee severance and termination ~~benefit cash payouts than previously calculated~~benefits are paid over the severance period granted to each employee or on a lump sum basis in accordance with individual severance agreements. As of December 31, 2022, approximately ~~$13 million, due to changes in cost reduction actions. The planned workforce reductions disclosed for~~12,000 of the ~~2016 Plan~~employees have been ~~updated~~separated from Adient pursuant to the restructuring plans. In addition, the restructuring plans included twenty-seven plant closures. As of December 31, 2022, twenty-one of the twenty-seven plants have been closed.

Adient plc | Form 10-Q | 35

developments in the automotive industry could impact Adient's ~~revised actions.~~liquidity position, lead to impairment charges and/or require additional restructuring of its operations.

Repurchases of Equity Securities

Off-Balance Sheet Arrangements and Contractual Obligations

~~There have~~

Adient enters into supply chain financing programs in certain domestic and foreign jurisdictions to either sell or discount accounts receivable without recourse to third-party institutions. Sales or discounts of accounts receivable are reflected as a reduction of accounts receivable on the consolidated statements of financial position and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows. As of December 31, 2022, $181 million has been ~~no material changes~~funded under these programs compared to ~~the off-balance sheet arrangements and contractual obligations disclosed in Adient's Annual Report on Form 10-K for the year ended~~$269 million as of September 30, ~~2017.~~2022.

Effects of Inflation and Changing Prices

The effects of inflation have historically not been significant to Adient's results of ~~operations in recent years.~~operations. Generally, Adient has been able to implement operating efficiencies to sufficiently offset cost increases, which over time have been moderate.

The automotive industry has recently experienced a period of significant volatility in commodity and other input costs, including steel, petrochemical, freight energy and labor costs. This price volatility may continue into the future as demand increases and/or supply remains constrained. Price volatility has resulted in an overall increase of input costs for Adient that may not be, or may only be partially, offset through customer negotiations.

Critical Accounting Estimates and Policies

See "Critical Accounting Estimates and Policies" under the heading "Item 7" of Adient's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017,~~2022, for a discussion of critical accounting estimates and policies. There have been no material changes to Adient's critical accounting estimates and policies during the three months ended December 31, ~~2017.~~2022.

New Accounting Pronouncements

See Note 1, "~~Basis~~"Basis of Presentation and Summary of Significant Accounting Policies,," of the notes to consolidated financial statements for a discussion of new accounting pronouncements.

Other Information

Not applicable



~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~

~~None.~~



~~Other Information~~

~~Not applicable.~~

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

As of December 31, ~~2017,~~2022, Adient had not experienced any adverse changes in market risk exposures that materially affected the quantitative and qualitative disclosures presented in Adient's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2022.

Adient plc | Form 10-Q | 36



Item 4.			Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, Adient's principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act")), which are designed to provide reasonable assurance that we are able to record, process, summarize and report the information required to be disclosed in our reports under the Exchange Act within the time periods specified in SEC rules and forms. Based on their evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed in reports that we file or submit under the Exchange Act is accumulated and communicated to management, and made known to our principal executive officer and principal financial officer, on a timely basis to ensure that it is recorded, processed, summarized and reported within the time period specified in the SEC's rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial reporting during the three months ended December 31, ~~2017~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Adient plc | Form 10-Q | 37



PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

Adient is involved in various lawsuits, claims and proceedings incident to the operation of its 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 of any such lawsuit, claim or proceeding cannot be predicted with certainty and some may be disposed of unfavorably to Adient, it is management's opinion that none of these will have a material adverse effect on Adient's financial position, results of operations or cash flows. Adient accrues for potential liabilities in a manner consistent with accounting principles generally accepted in the United ~~States,~~States; that is, when it is probable a liability has been incurred and the amount of the liability is reasonably estimable.

Information with respect to this item may be found in Note 1417, "Commitments and ~~Contingencies"~~Contingencies," of the notes to ~~the~~ consolidated financial statements in this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.

Additional information on Adient's commitments and contingencies can be found in Adient's Annual Report on Form 10-K for ~~its~~the fiscal year ended September 30, ~~2017.~~2022.

Item 1A.

Risk Factors

There are no material changes from the risk factors as previously disclosed in Adient's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2022.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds


(a) Unregistered Sale of Equity Securities

None.

(b) Use of Proceeds

Not applicable.

(c) Repurchase of Equity Securities

There was no share repurchase activity during the three months ended December 31, 2022.

~~None.~~

~~(b) Use of Proceeds~~

~~Not applicable.~~

~~(c) Repurchases of Equity Securities~~

~~There has been no share repurchase activity during the three months ended December 31, 2017.~~

Item 3.

Defaults Upon Senior Securities


None.

Item 4.

Mine Safety Disclosures


Not applicable.

Item 5.

Other Information


None.

~~None.~~

Adient plc | Form 10-Q | 38

Item 6.

Exhibit Index

EXHIBIT INDEX



Exhibit No.						Exhibit Title
31.1						Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						XBRL Instance Document

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						XBRL Taxonomy Extension Label Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

Adient plc | Form 10-Q | 39

SIGNATURES

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.


		Adient plc
		By:	/s/ Douglas G. Del Grosso
			Douglas G. Del Grosso
			President and Chief Executive Officer and a Director
		Date:	February 7, 2023

		~~Adient plc~~By:	/s/ Jerome J. Dorlack
		~~By:~~	~~/s/ R. Bruce McDonald~~Jerome J. Dorlack
			~~R. Bruce McDonald~~
	~~Chairman and Chief Executive Officer~~
~~Date:~~	~~January 30, 2018~~

~~By:~~	~~/s/ Jeffrey M. Stafeil~~
	~~Jeffrey M. Stafeil~~
	Executive Vice President and Chief Financial Officer
		Date:	~~January 30, 2018~~February 7, 2023

Adient plc | Form 10-Q | 3540



~~PART I~~
Item 1.	Unaudited Financial Statements		3
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations		2326
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		3236
Item 4.		Controls and Procedures		3237

PART II - OTHER INFORMATION
Item 1.		Legal Proceedings		3238
Item 1A.		Risk Factors		3338
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		3338
Item 3.		Defaults Upon Senior Securities		3338
Item 4.		Mine Safety Disclosures		3338
Item 5.		Other Information		3338
Item 6.		Exhibits		3439
		Signatures		3540



	Consolidated Statements of Income (Loss)
	Three Months Ended December 31, 2016
(in millions, except per share data)	As Reported		Adjustment			As Revised
Net sales	$	4,038	$	(12	)	$	4,026
Cost of sales	3,688		(12		)	3,676
Gross profit	350		—			350
Equity income	101		(7		)	94
Earnings before interest and income taxes	234		(7		)	227
Income before income taxes	199		(7		)	192
Net income (loss)	171		(7		)	164
Net income (loss) attributable to Adient	149		(7		)	142

Earnings per share:
Basic	$	1.59	$	(0.07	)	$	1.52
Diluted	$	1.59	$	(0.08	)	$	1.51



(in millions)	September 30, 2017		Business Acquisitions		Business Divestitures		Currency Translation and Other		December 31, 2017
Goodwill
Seating	$	2,515	$	4	$	—	$	26	$	2,545



	Fair Value Measurements Using:
(in millions)	Total as of December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other current assets
Foreign currency exchange derivatives	$	7	$	—	$	7	$	—
Total assets	$	7	$	—	$	7	$	—
Other current liabilities
Foreign currency exchange derivatives	$	20	$	—	$	20	$	—
Other noncurrent liabilities
Foreign currency exchange derivatives	2		—		2		—
Total liabilities	$	22	$	—	$	22	$	—



	Fair Value Measurements Using:
(in millions)	Total as of September 30, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other current assets
Foreign currency exchange derivatives	$	4	$	—	$	4	$	—
Other noncurrent assets
Foreign currency exchange derivatives	1		—		1		—
Equity swaps	3		—		3		—
Total assets	$	8	$	—	$	8	$	—
Other current liabilities
Foreign currency exchange derivatives	$	8	$	—	$	8	$	—
Other noncurrent liabilities
Foreign currency exchange derivatives	3		—		3		—
Total liabilities	$	11	$	—	$	11	$	—



(in millions)	Employee Severance and Termination Benefits		Long-Lived Asset Impairments		Other		Currency Translation		Total
Original Reserve	$	13	$	—	$	—	$	—	$	13
Balance at December 31, 2017	$	13	$	—	$	—	$	—	$	13



	Year Ended September 30,
(in millions)	2017		Change	2016
Net financing charges	$	33	-6%	$	35