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 North Wall Quay, IFSC, Dublin 1, Ireland D01 H104

(Address of principal executive offices)

734-254-5000

(Registrant's telephone number, including area ~~code: 734-254-5000~~code)



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~~ x	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~~ x	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.



~~Large accelerated filer~~ x	~~Accelerated filer~~ ¨	~~Non-accelerated filer~~ ¨
~~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



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

Title of each class		Trading ~~Symbol~~symbol		Name of exchange on which registered
		Ordinary Shares, par value $0.001	ADNT		New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically 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). Yes ☑ No ☐

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


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	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 ☑

At March 31, ~~2019, 93,610,056~~2020, 93,878,959 ordinary shares were outstanding.

Adient plc

Form 10-Q

For the Three ~~and Six~~ Months Ended March 31, ~~2019~~2020

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 March 31,						Six Months Ended March 31,
(in millions, except per share data)	2020		2019		2020		2019
Net sales	$	3,511	$	4,228	$	7,447	$	8,386
Cost of sales	3,274		4,031		6,947		8,009
Gross profit	237		197		500		377
Selling, general and administrative expenses	127		168		292		346
Loss on business divestitures - net	—		—		25		—
Restructuring and impairment costs	52		113		54		144
Equity income (loss)	8		62		(105)		145
Earnings (loss) before interest and income taxes	66		(22)		24		32
Net financing charges	50		40		98		75
Other pension expense (income)	(2)		—		(4)		(2)
Income (loss) before income taxes	18		(62)		(70)		(41)
Income tax provision (benefit)	16		64		70		74
Net income (loss)	2		(126)		(140)		(115)
Income (loss) attributable to noncontrolling interests	21		23		46		51
Net income (loss) attributable to Adient	$	(19)	$	(149)	$	(186)	$	(166)

Earnings per share:
Basic	$	(0.20)	$	(1.59)	$	(1.98)	$	(1.78)
Diluted	$	(0.20)	$	(1.59)	$	(1.98)	$	(1.78)

Shares used in computing earnings per share:
Basic	93.8		93.5		93.8		93.5
Diluted	93.8		93.5		93.8		93.5

Three Months Ended
March 31,

Six Months Ended
March 31,
(in millions, except per share data) 2019 2018 2019 2018
Net sales $ 4,228
$ 4,596
$ 8,386
$ 8,800
Cost of sales 4,031
4,314
8,009
8,317
Gross profit 197
282
377
483
Selling, general and administrative expenses 168
193
346
389
Restructuring and impairment costs 113
315
144
315
Equity income (loss) 62
85
145
181
Earnings (loss) before interest and income taxes (22 ) (141 ) 32
(40 )
Net financing charges 40
37
75
70
Other pension expense (income) —
(7 ) (2 ) (8 )
Income (loss) before income taxes (62 ) (171 ) (41 ) (102 )
Income tax provision (benefit) 64
(28 ) 74
237
Net income (loss) (126 ) (143 ) (115 ) (339 )
Income (loss) attributable to noncontrolling interests 23
25
51
45
Net income (loss) attributable to Adient $ (149 ) $ (168 ) $ (166 ) $ (384 )

Earnings per share:
Basic $ (1.59 ) $ (1.80 ) $ (1.78 ) $ (4.12 )
Diluted $ (1.59 ) $ (1.80 ) $ (1.78 ) $ (4.12 )

Shares used in computing earnings per share:
Basic 93.5
93.4
93.5
93.3
Diluted 93.5
93.4
93.5
93.3

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 March 31,						Six Months Ended March 31,
(in millions)	2020		2019		2020		2019
Net income (loss)	$	2	$	(126)	$	(140)	$	(115)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(141)		40		(82)		56
Realized and unrealized gains (losses) on derivatives	(62)		4		(47)		1

Other comprehensive income (loss)	(203)		44		(129)		57
Total comprehensive income (loss)	(201)		(82)		(269)		(58)
Comprehensive income (loss) attributable to noncontrolling interests	4		28		38		56
Comprehensive income (loss) attributable to Adient	$	(205)	$	(110)	$	(307)	$	(114)

Three Months Ended
March 31, Six Months Ended
March 31,
(in millions) 2019 2018 2019 2018
Net income (loss) $ (126 ) $ (143 ) $ (115 ) $ (339 )
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 40
142
56
218
Realized and unrealized gains (losses) on derivatives 4
10
1
—
Other comprehensive income (loss) 44
152
57
218
Total comprehensive income (loss) (82 ) 9
(58 ) (121 )
Comprehensive income (loss) attributable to noncontrolling interests 28
35
56
60
Comprehensive income (loss) attributable to Adient $ (110 ) $ (26 ) $ (114 ) $ (181 )

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)	March 31, 2020		September 30, 2019
Assets
Cash and cash equivalents	$	1,640	$	924
Accounts receivable - net	1,344		1,905
Inventories	775		793
Assets held for sale	40		—
Other current assets	477		494
Current assets	4,276		4,116
Property, plant and equipment - net	1,591		1,671
Goodwill	2,018		2,150
Other intangible assets - net	381		405
Investments in partially-owned affiliates	1,279		1,399
Assets held for sale	157		—
Other noncurrent assets	944		601
Total assets	$	10,646	$	10,342
Liabilities and Shareholders' Equity
Short-term debt	$	838	$	22
Current portion of long-term debt	8		8
Accounts payable	2,203		2,709
Accrued compensation and benefits	287		364
Liabilities held for sale	36		—
Restructuring reserve	146		123
Other current liabilities	705		609
Current liabilities	4,223		3,835
Long-term debt	3,717		3,708
Liabilities held for sale	10		—
Pension and postretirement benefits	130		151
Other noncurrent liabilities	648		408
Long-term liabilities	4,505		4,267
Commitments and Contingencies (Note 17)
Redeemable noncontrolling interests	35		51
Preferred shares issued, par value $0.001; 100,000,000 shares authorized, NaN shares issued and outstanding at March 31, 2020	—		—
Ordinary shares issued, par value $0.001; 500,000,000 shares authorized, 93,878,959 shares issued and outstanding at March 31, 2020	—		—
Additional paid-in capital	3,966		3,962
Accumulated deficit	(1,735)		(1,545)
Accumulated other comprehensive income (loss)	(690)		(569)
Shareholders' equity attributable to Adient	1,541		1,848
Noncontrolling interests	342		341
Total shareholders' equity	1,883		2,189
Total liabilities and shareholders' equity	$	10,646	$	10,342

(in millions, except share and per share data)
March 31,
2019
September 30, 2018
Assets
Cash and cash equivalents $ 491
$ 687
Accounts receivable - net 1,976
2,091
Inventories 828
824
Other current assets 631
707
Current assets 3,926
4,309
Property, plant and equipment - net 1,641
1,683
Goodwill 2,165
2,182
Other intangible assets - net 441
460
Investments in partially-owned affiliates 1,544
1,407
Assets held for sale —
37
Other noncurrent assets 857
864
Total assets $ 10,574
$ 10,942
Liabilities and Shareholders' Equity
Short-term debt $ 9
$ 6
Current portion of long-term debt 1
2
Accounts payable 2,880
3,101
Accrued compensation and benefits 387
331
Restructuring reserve 140
141
Other current liabilities 587
611
Current liabilities 4,004
4,192
Long-term debt 3,373
3,422
Pension and postretirement benefits 114
124
Other noncurrent liabilities 416
440
Long-term liabilities 3,903
3,986
Commitments and Contingencies (Note 16)

Redeemable noncontrolling interests 37
47
Preferred shares issued, par value $0.001; 100,000,000 shares authorized
Zero shares issued and outstanding at March 31, 2019 —
—
Ordinary shares issued, par value $0.001; 500,000,000 shares authorized
93,610,056 shares issued and outstanding at March 31, 2019 —
—
Additional paid-in capital 3,956
3,951
Retained earnings (accumulated deficit) (1,220 ) (1,028 )
Accumulated other comprehensive income (loss) (479 ) (531 )
Shareholders' equity attributable to Adient 2,257
2,392
Noncontrolling interests 373
325
Total shareholders' equity 2,630
2,717
Total liabilities and shareholders' equity $ 10,574
$ 10,942

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)


	Six Months Ended March 31,
(in millions)	2020		2019
Operating Activities
Net income (loss) attributable to Adient	$	(186)	$	(166)
Income attributable to noncontrolling interests	46		51
Net income (loss)	(140)		(115)
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:
Depreciation	147		137
Amortization of intangibles	19		20
Pension and postretirement benefit expense (benefit)	—		2
Pension and postretirement contributions, net	(18)		(13)
Equity in earnings of partially-owned affiliates, net of dividends received (includes purchase accounting amortization of $1 and $0, respectively)	(103)		(117)
Impairment of nonconsolidated partially-owned affiliate	216		—

Deferred income taxes	5		40
Non-cash impairment charges	—		66

Loss (gain) on divestitures - net	25		—
Equity-based compensation	1		8
Other	5		7
Changes in assets and liabilities:
Receivables	508		90
Inventories	(30)		(12)
Other assets	38		62
Restructuring reserves	(33)		(70)
Accounts payable and accrued liabilities	(466)		(51)
Accrued income taxes	9		(14)
Cash provided (used) by operating activities	183		40
Investing Activities
Capital expenditures	(185)		(252)
Sale of property, plant and equipment	4		58
Settlement of cross-currency interest rate swap	10		—

Changes in long-term investments	(37)		—

Other	—		4
Cash provided (used) by investing activities	(208)		(190)
Financing Activities



Increase (decrease) in short-term debt	818		3
Repayment of long-term debt	(4)		(1)
Debt financing costs	(1)		(8)




Cash dividends	—		(26)
Dividends paid to noncontrolling interests	(59)		(43)
Formation of consolidated joint venture	—		28
Other	(2)		(2)
Cash provided (used) by financing activities	752		(49)
Effect of exchange rate changes on cash and cash equivalents	(11)		3
Increase (decrease) in cash and cash equivalents	716		(196)
Cash and cash equivalents at beginning of period	924		687
Cash and cash equivalents at end of period	$	1,640	$	491

Six Months Ended
March 31,
(in millions) 2019 2018
Operating Activities
Net income (loss) attributable to Adient $ (166 ) $ (384 )
Income attributable to noncontrolling interests 51
45
Net income (loss) (115 ) (339 )
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:
Depreciation 137
197
Amortization of intangibles 20
24
Pension and postretirement benefit expense (benefit) 2
(5 )
Pension and postretirement contributions, net (13 ) 11
Equity in earnings of partially-owned affiliates, net of dividends received (includes purchase accounting amortization of $0, and $11, respectively) (117 ) (103 )
Deferred income taxes 40
232
Non-cash impairment charges 66
299
Equity-based compensation 8
30
Other 7
6
Changes in assets and liabilities:
Receivables 90
(303 )
Inventories (12 ) (26 )
Other assets 62
(21 )
Restructuring reserves (70 ) (82 )
Accounts payable and accrued liabilities (51 ) 13
Accrued income taxes (14 ) (83 )
Cash provided (used) by operating activities 40
(150 )
Investing Activities
Capital expenditures (252 ) (266 )
Sale of property, plant and equipment 58
2
Changes in long-term investments —
(5 )
Other 4
—
Cash provided (used) by investing activities (190 ) (269 )
Financing Activities
Increase (decrease) in short-term debt 3

135
Repayment of long-term debt (1 ) —
Debt financing costs (8 )
(1 )
Cash dividends (26 )
(51 )
Dividends paid to noncontrolling interests (43 )
(34 )
Formation of consolidated joint venture 28
—
Other (2 )
(4 )
Cash provided (used) by financing activities (49 ) 45
Effect of exchange rate changes on cash and cash equivalents 3
18
Increase (decrease) in cash and cash equivalents (196 ) (356 )
Cash and cash equivalents at beginning of period 687
709
Cash and cash equivalents at end of period $ 491
$ 353

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

Adient is a global leader in the automotive seating supplier industry. Adient has a leading market position in the Americas, Europe and China, and has longstanding relationships with the largest global 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, trim covers and fabrics. 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.

For recent developments regarding the planned divestitures of Adient's YFAI investment and the fabrics business, refer to Note 3, "Acquisitions and Divestitures," of the notes to consolidated financial statements.

Basis of Presentation

The unaudited consolidated financial statements of Adient have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet data as of September 30, 2019 was derived from audited financial statements, but does not include all disclosures required by GAAP. These interim consolidated financial statements include all adjustments (consisting of normal recurring adjustments, except as otherwise disclosed) that management believes are necessary for a fair statement of the results of operations, financial position and cash flows of Adient for the interim periods presented. Interim results are not necessarily indicative of full-year ~~results.~~results, particularly in fiscal 2020 given the unprecedented situation Adient is currently facing with the COVID-19 pandemic and the related significant interruption it is having on its operations. Adient's China facilities (including both consolidated and non-consolidated joint ventures) were effectively shut down during the lunar New Year festival (at the end of January) and did not return to operations until the end of March 2020. Currently, all 79 of Adient's plants in China are operating and all of its customer plants in China have re-opened. Beginning in late March 2020, Adient experienced the shutdown of effectively all of its facilities in the Americas and European regions coinciding with the shutdown of its customer facilities in those regions. Adient has also experienced the shutdown of approximately 50% of its plants in Asia (outside China) during late March and early April. The resumption of production in all of these regions is dependent on Adient's customers resuming operations, and the level of production will depend on consumer demand for new vehicles.

Principles of Consolidations

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~~2 variable interest entities (VIEs) for the reporting periods ended March 31, ~~2019~~2020, and September 30, ~~2018,~~2019, 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~~2 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.

Adient plc | Form 10-Q | 7

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


	March 31,		September 30,
(in millions)	2019		2018		(in millions)	March 31, 2020		September 30, 2019
Current assets	$	266	$	270	Current assets	$	239	$	236
Noncurrent assets	42		43		Noncurrent assets	82		40
Total assets	$	308	$	313	Total assets	$	321	$	276

Current liabilities	$	257	$	252	Current liabilities	$	217	$	235
Noncurrent liabilities					Noncurrent liabilities	17		—
Total liabilities	$	257	$	252	Total liabilities	$	234	$	235

Earnings Per Share

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


	Three Months Ended March 31,						Six Months Ended March 31,							Three Months Ended March 31,						Six Months Ended March 31,
(in millions, except per share data)	2019			2018			2019			2018			(in millions, except per share data)	2020		2019		2020		2019
Numerator:													Numerator:
Net income (loss) attributable to Adient	$	(149	)	$	(168	)	$	(166	)	$	(384	)	Net income (loss) attributable to Adient	$	(19)	$	(149)	$	(186)	$	(166)

Denominator:													Denominator:
Weighted average shares outstanding	93.5			93.4			93.5			93.3
Shares outstanding													Shares outstanding	93.8		93.5		93.8		93.5
Effect of dilutive securities	—			—			—			—			Effect of dilutive securities	—		—		—		—
Diluted shares	93.5			93.4			93.5			93.3			Diluted shares	93.8		93.5		93.8		93.5

Earnings per share:													Earnings per share:
Basic	$	(1.59	)	$	(1.80	)	$	(1.78	)	$	(4.12	)	Basic	$	(0.20)	$	(1.59)	$	(1.98)	$	(1.78)
Diluted	$	(1.59	)	$	(1.80	)	$	(1.78	)	$	(4.12	)	Diluted	$	(0.20)	$	(1.59)	$	(1.98)	$	(1.78)

Adient plc | Form 10-Q | 24

(in millions) Employee Severance and Termination Benefits
Balance at September 30, 2018 $ 12
Utilized—cash (2 )
Utilized—noncash (1 )
Noncash adjustment—underspend (6 )
Balance at March 31, 2019 $ 3

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, $298 million relates to the EMEA segment, $32 million relates to the Americas segment and $2 million relates to the Asia segment. The asset impairment charge recorded during fiscal 2016 related primarily to information technology assets within the EMEA segment that will not be used going forward by Adient. The restructuring actions are expected to be substantially complete in fiscal 2021.

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 $20 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 the changes in Adient's 2016 Plan reserve:~~

(in millions) Employee Severance and Termination Benefits Currency
Translation Total
Balance at September 30, 2018 $ 71
$ 4
$ 75
Utilized—cash (37 ) —
(37 )
Utilized—noncash —
(2 ) (2 )
Balance at March 31, 2109 $ 34
$ 2
$ 36

Adient's fiscal 2020, 2019, 2018, 2017 and 2016 restructuring plans included workforce reductions of approximately ~~7,300.~~10,000 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 March 31, ~~2019,~~2020, approximately ~~5,000~~6,700 of the employees have been separated from Adient pursuant to the restructuring plans. In addition, the restructuring plans included ~~fifteen~~18 plant closures. As of March 31, ~~2019, eleven~~2020, 16 of the ~~fifteen~~18 plants have been closed.

Adient's management closely monitors its overall cost structure and continually analyzes each of its businesses for opportunities to consolidate current operations, improve operating efficiencies and locate facilities in low cost countries in close proximity to customers. This ongoing analysis includes a review of its manufacturing, engineering, purchasing and administrative functions, as well as the overall global footprint for all its businesses. Because of the importance of new vehicle sales by major automotive manufacturers to operations, Adient is affected by the general business conditions in the automotive industry. Future adverse developments in the automotive industry, particularly related to the COVID-19 pandemic, could impact Adient's liquidity position, lead to impairment charges and/or require additional restructuring of its operations.

~~Impairment~~

In the second quarter of fiscal 2019, Adient concluded it had a triggering event requiring assessment of impairment for certain of its former SS&M segment long-lived assets within the EMEA ($55 million) and Americas ($11 million) segments due to declines in actual and forecasted performance that worsened during the second quarter of fiscal 2019 as compared to originally forecasted results. As a result, Adient reviewed the long-lived assets for impairment and recorded a $66 million non-cash pre-tax impairment charge within restructuring and impairment costs on the consolidated statements of income (loss). The impairment charge related to long-lived assets in North America and Europe asset groups in support of current programs. Of the $66 million impairment charge, $62 million relates to fixed assets, and $4 million relates to customer relationships. The impairment was measured under a market approach utilizing appraisal techniques to determine fair values of the impaired assets. This method is consistent with methods Adient employed in prior periods to value other long-lived assets. The inputs utilized in the analysis are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair value measurement" and primarily consist of estimated salable values and third party appraisal techniques such as market comparables. To the extent that the profitability on current or future programs decline as compared to forecasted profitability or if adverse changes occur to key assumptions or other fair value measurement inputs, further impairment of long-lived assets could occur in the future. During the first quarter of fiscal 2019, impairments of $6 million were recorded related to assets held for sale.

~~During the second quarter of fiscal 2018, in conjunction with a change in segment reporting at that time, a $299 million goodwill impairment charge was recorded related to the former SS&M segment.~~

~~13.~~14. Income Taxes

~~In calculating~~

Adient has historically calculated the provision for income taxes ~~Adient uses~~during interim reporting periods by applying an estimate of the annual effective tax rate ~~based upon~~for the ~~facts and circumstances known~~full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.Due to the uncertainty related to the impact of the COVID-19 pandemic on the Company’s operations at ~~each interim period. On~~ a ~~quarterly basis, the actual~~jurisdictional level that is required to estimate an annual effective tax rate ~~is adjusted, as appropriate, based on changes in facts and circumstances, if any, as compared to those forecasted at~~for the ~~beginning of the~~full fiscal year, Adient used a discrete effective tax rate method to calculate an income tax provision for the six-month period ended March 31, 2020.For the three and ~~each interim period thereafter.~~six months ended March 31, 2020, Adient’s income tax expense was $16 million equating to an effective tax rate of 89% and $70 million equating to an effective tax rate of (100)%, respectively. The three and six month income tax expense in fiscal 2020 was higher than the statutory rate impact of 12.5% primarily due to the impact of recognizing no tax benefit for losses in jurisdictions with valuation allowances and foreign currency remeasurement of Mexican peso denominated deferred tax assets. The six month income tax expense in fiscal 2020 was partially offset by a tax benefit related to the impairment of Adient’s YFAI investment. For the three and six months ended March 31, 2019, Adient’s income tax expense ~~(benefit)~~ was $64 million equating to an effective tax rate of ~~(103%)~~(103)% and $74 million equating to an effective ~~tax~~ rate of ~~(180%)~~(180)%, respectively. The three and six month income tax expense in fiscal 2019 was higher than the statutory rate impact of 12.5% primarily due to the recognition of a valuation allowance in Poland and the impact of recognizing no tax benefit for losses in jurisdictions with valuation allowances. The six month income tax expense in fiscal 2019 was partially offset by a tax rate change benefit in China. For the three and six months ended March 31, 2018, Adient’s income tax expense (benefit) was $(28) million equating to an effective tax rate of 16% and $237 million equating to an effective tax rate of (232%), respectively. The three month income tax benefit was higher than the statutory rate impact of 12.5% primarily due to the goodwill impairment charge and foreign exchange. The six month income tax expense was higher than the statutory rate impact primarily due to the charge to recognize the impact of the U.S. tax reform legislation.

Valuation Allowances

As a result of ~~Adient's~~the Company's second quarter fiscal ~~2019~~2020 analysis of the realizability of its worldwide deferred tax assets, and after considering tax planning initiatives and other positive and negative evidence, ~~(including the long-lived asset impairment recorded in the second quarter of fiscal 2019),~~ Adient determined that ~~it was more likely than not that deferred tax assets within certain Poland entities would not be realized and recorded a net income tax expense of $43 million in the second quarter of fiscal 2019~~no changes to ~~establish a~~ valuation ~~allowance.~~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 previous estimates, periodic adjustments to Adient's valuation allowances may be necessary. As a result of the external refinancing that occurred in the third quarter of fiscal 2019, Adient will reevaluate its internal financing structure. Adient may conclude that it is more likely than not that a material portion of our deferred tax assets will not be realized as a result of this evaluation. As such, it is possible that a change to valuation allowances in certain jurisdictions may result in a material increase to income tax expense during the next twelve months. In addition, the effective tax rate in subsequent periods would also increase.

Uncertain Tax Positions

At March 31, ~~2019,~~2020, Adient had gross tax effected unrecognized tax benefits of ~~$280~~$413 million. If recognized, ~~$131~~$114 million of Adient's unrecognized tax benefits would impact the effective tax rate. Total net accrued interest at March 31, ~~2019~~2020 was approximately $8$12 million (net of tax benefit). The interest and penalties accrued ~~during~~for the three and six months ended March 31, ~~2019~~2020 was ~~not material.~~$2 million and $3 million, respectively. 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

~~During~~

Adient plc | Form 10-Q | 25

On March 27, 2020, the ~~first quarter~~House passed the Coronavirus Aid, Relief, and Economic Security Act (The CARES Act), also known as the Third COVID-19 Supplemental Relief bill, and the president signed the legislation into law. Adient does not expect the provisions of ~~fiscal 2019, Adient completed its accounting for~~ the ~~Tax Cuts and Jobs Act Base Erosion and Anti-avoidance Tax valuation allowance resulting in no change~~legislation to have a significant impact on the ~~$100 million~~effective tax rate or the income tax ~~impact estimated in fiscal 2018.~~payable and deferred income tax positions of the Company.

During the first quarter of fiscal 2019, Guangzhou Adient Automotive Seating Co., Ltd. ~~("GAAS”)~~ was approved for High and New Tech Enterprise status for the three-year period of 2018 to 2020, thereby reducing their tax rate from 25% to 15%. As a result, a $7 million income tax benefit was recorded on the reduction of deferred tax liabilities and a reduction of 2018 calendar year income taxes.

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

Other Tax Matters

During fiscal 2020, Adient recognized net restructuring expenses of $54 million. Refer to Note 13, “Restructuring and Impairment Costs,” of the notes to the consolidated financial statements for additional information. The tax benefit associated with the restructuring charge was $1 million.

During the first quarter of fiscal 2020, Adient recognized a pre-tax non-cash impairment of $216 million in equity income related to Adient's YFAI investment. Refer to Note 3, “Acquisitions and Divestitures,” of the notes to the consolidated financial statements for additional information. The tax benefit associated with the impairment charge was $4 million.

During the second quarter of fiscal 2019, Adient recognized a pre-tax impairment charge on long-lived assets of $66 million. Refer to Note 1213 "Restructuring and Impairment Costs," of the notes to the consolidated financial statements for additional information. The tax benefit associated with the impairment charge was $2 million, which was negatively impacted by geographic mix and Adient’s current tax position in these jurisdictions.

During the second quarter of fiscal 2018, Adient recognized a pre-tax goodwill impairment charge of $299 million related to the former SS&M segment. Refer to Note 12, "Restructuring and Impairment Costs," of the notes to the consolidated financial statements for additional information. The tax benefit associated with the goodwill impairment charge was $20 million.

~~14.~~15. Segment Information

~~During the second quarter of fiscal 2019,~~ Adient ~~realigned certain of its organizational structure to manage~~manages its business ~~primarily~~ on a geographic basis ~~resulting in a change to reportable segments. Prior period segment information has been recast to align with this change in organizational structure~~ and ~~the updated definition of corporate-related costs. Pursuant to this change, Adient now~~ operates in the following ~~three~~3 reportable segments for financial reporting purposes: 1) Americas, which is inclusive of North America and South America; 2) Europe, Middle East, and Africa ("EMEA") and 3) Asia Pacific/China ("Asia").

Adient evaluates the performance of its reportable segments using an adjusted EBITDA metric defined as income before income taxes and noncontrolling interests, excluding net financing charges, ~~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 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 three reportable segments for financial reporting purposes:~~

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


	Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2020		2019		2020		2019
Net Sales
Americas	$	1,641	$	1,915	$	3,500	$	3,850
EMEA	1,488		1,778		3,052		3,418
Asia	444		599		1,016		1,249
Eliminations	(62)		(64)		(121)		(131)
Total net sales	$	3,511	$	4,228	$	7,447	$	8,386

Adient plc | Form 10-Q | 26


	Three Months Ended March 31,						Six Months Ended March 31,							Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2019			2018 ⁽¹⁾			2019			2018 ⁽¹⁾			(in millions)	2020		2019		2020		2019
Net Sales
Adjusted EBITDA													Adjusted EBITDA
Americas	$	1,915		$	1,941		$	3,850		$	3,727		Americas	$	106	$	34	$	200	$	77
EMEA	1,778			2,056			3,418			3,909			EMEA	62		59		111		61
Asia	599			690			1,249			1,338			Asia	63		123		240		277
Eliminations	(64		)	(91		)	(131		)	(174		)
Total net sales	$	4,228		$	4,596		$	8,386		$	8,800
Corporate-related costs ⁽¹⁾													Corporate-related costs ⁽¹⁾	(20)		(25)		(43)		(48)
Restructuring and impairment costs ⁽²⁾													Restructuring and impairment costs ⁽²⁾	(52)		(113)		(54)		(144)
Purchase accounting amortization ⁽³⁾													Purchase accounting amortization ⁽³⁾	(11)		(10)		(21)		(20)
Restructuring related charges⁽⁴⁾													Restructuring related charges⁽⁴⁾	(7)		(14)		(12)		(23)
Loss on business divestitures - net ⁽⁵⁾													Loss on business divestitures - net ⁽⁵⁾	—		—		(25)		—
Impairment of nonconsolidated partially-owned affiliate ⁽⁶⁾													Impairment of nonconsolidated partially-owned affiliate ⁽⁶⁾	—		—		(216)		—
Depreciation													Depreciation	(72)		(72)		(147)		(137)
Stock based compensation													Stock based compensation	3		(2)		(1)		(8)
Other items ⁽⁷⁾													Other items ⁽⁷⁾	(6)		(2)		(8)		(3)
Earnings (loss) before interest and income taxes													Earnings (loss) before interest and income taxes	66		(22)		24		32
Net financing charges													Net financing charges	(50)		(40)		(98)		(75)
Other pension income (expense)													Other pension income (expense)	2		—		4		2
Income (loss) before income taxes													Income (loss) before income taxes	$	18	$	(62)	$	(70)	$	(41)

Three Months Ended
March 31, Six Months Ended
March 31,
(in millions) 2019 Change 2018 2019 Change 2018
Comprehensive income (loss) attributable to Adient $ (110 ) * $ (26 ) $ (114 ) -37% $ (181 )


	Three Months Ended March 31,								Six Months Ended March 31,
(in millions)	2020		Change	2019		2020		Change	2019
Comprehensive income (loss) attributable to Adient	$	(205)	-86%	$	(110)	$	(307)	>-100%	$	(114)

* Measure not meaningful

Comprehensive loss attributable to Adient was ~~$110~~$205 million for the second quarter of fiscal ~~2019~~2020 compared to $110 million of comprehensive loss ~~attributable to Adient~~ for the second quarter of fiscal ~~2018~~2019. The increased level of ~~$26 million. The increase in~~ comprehensive loss attributable to Adient ~~for~~in the second quarter of fiscal ~~2019 was~~2020 is primarily due to ~~reduced comprehensive income resulting from~~the unfavorable change in foreign currency translation adjustments ($~~103~~181 million) ~~which was~~and unfavorable change in realized and unrealized losses on derivatives ($66 million), partially offset by the favorable change in net income ($128 million) and the decrease in comprehensive income attributable to noncontrolling interests ($24 million). The year-over-year unfavorable change in foreign currency and unrealized losses on derivatives is primarily driven by ~~weaker Chinese yuan against~~ the ~~U.S. dollar. This was partially offset by reduced net loss attributable to Adient ($19 million).~~weakening of the Mexican Peso during the period.

Comprehensive loss attributable to Adient was $307 million for the first six months of fiscal 2020 compared to a comprehensive loss attributable to Adient of $114 million for the first six months of fiscal ~~2019 compared to~~2019. The increased level of comprehensive loss attributable to Adient ~~for~~in the first six months of fiscal ~~2018 of $181 million. The~~2020 is primarily due to the unfavorable change in foreign currency translation adjustments ($138 million) and unfavorable change in realized and unrealized losses on derivatives ($48 million), and the unfavorable change in net loss ($25 million), partially offset by the decrease in comprehensive ~~loss~~income attributable to ~~Adient for the first six months of fiscal 2019 was primarily due to reduced net losses attributable to Adient of $218 million offset by unfavorable year-over-year impact of foreign currency~~noncontrolling interests ($~~162~~18 million). The year-over-year unfavorable ~~foreign currency impact was~~change in unrealized losses on derivatives is primarily driven by the weakening of the ~~Chinese yuan against~~Mexican Peso during the ~~U.S. dollar.~~period.

Segment Analysis

~~During the second quarter of fiscal 2019,~~

Adient ~~realigned certain of its organizational structure to manage~~manages its business ~~primarily~~ on a geographic basis ~~resulting in a change to reportable segments. Prior period segment information has been recast to align with this change in organizational structure~~ and ~~the updated definition of corporate-related costs. Pursuant to this change, Adient now~~ operates in the following three reportable segments for financial reporting purposes: 1) Americas, which is inclusive of North America and South America; 2) Europe, Middle East, and Africa ("EMEA") and 3) Asia Pacific/China ("Asia").

Adient evaluates the performance of its reportable segments using an adjusted EBITDA metric defined as income before income taxes and noncontrolling interests, excluding net financing charges, 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 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 for the three months and six months ended March 31, 2020 presented below are not necessarily indicative of full-year results, particularly for fiscal 2020 given the unprecedented situation Adient ~~has three reportable segments~~is currently facing with the COVID-19 pandemic and the related significant interruption the impacts of the pandemic is having on Adient's operations. Refer to the Recent Developments Regarding COVID-19 section earlier in Item 2. and to Part II, Item 1.A. Risk Factors, for ~~financial reporting purposes:~~ additional information related to the COVID-19 impacts on Adient.

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


	Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2020		2019		2020		2019
Net Sales
Americas	$	1,641	$	1,915	$	3,500	$	3,850
EMEA	1,488		1,778		3,052		3,418
Asia	444		599		1,016		1,249
Eliminations	(62)		(64)		(121)		(131)
Total net sales	$	3,511	$	4,228	$	7,447	$	8,386

Adient plc | Form 10-Q | 39

Three Months Ended
March 31, Six Months Ended
March 31,
(in millions) 2019 2018 2019 2018
Net Sales
Americas $ 1,915
$ 1,941
$ 3,850
$ 3,727
EMEA 1,778
2,056
3,418
3,909
Asia 599
690
1,249
1,338
Eliminations (64 ) (91 ) (131 ) (174 )
Total net sales $ 4,228
$ 4,596
$ 8,386
$ 8,800


	Three Months Ended March 31,						Six Months Ended March 31,
(in millions)	2020		2019		2020		2019
Adjusted EBITDA
Americas	$	106	$	34	$	200	$	77
EMEA	62		59		111		61
Asia	63		123		240		277
Corporate-related costs ⁽¹⁾	(20)		(25)		(43)		(48)
Restructuring and impairment costs ⁽²⁾	(52)		(113)		(54)		(144)
Purchase accounting amortization ⁽³⁾	(11)		(10)		(21)		(20)
Restructuring related charges ⁽⁴⁾	(7)		(14)		(12)		(23)
Loss on business divestitures - net ⁽⁵⁾	—		—		(25)		—
Impairment of nonconsolidated partially-owned affiliate ⁽⁶⁾	—		—		(216)		—
Depreciation	(72)		(72)		(147)		(137)
Stock based compensation	3		(2)		(1)		(8)
Other items ⁽⁷⁾	(6)		(2)		(8)		(3)
Earnings (loss) before interest and income taxes	66		(22)		24		32
Net financing charges	(50)		(40)		(98)		(75)
Other pension income (expense)	2		—		4		2
Income (loss) before income taxes	$	18	$	(62)	$	(70)	$	(41)

Three Months Ended
March 31, Six Months Ended
March 31,
(in millions) 2019
2018 ⁽¹⁾
2019
2018 ⁽¹⁾
Adjusted EBITDA
Americas $ 34
$ 98
$ 77
$ 133
EMEA 59
130
61
212
Asia 123
157
277
333
Corporate-related costs ⁽²⁾
(25 ) (23 ) (48 ) (50 )
Becoming Adient costs ⁽³⁾
—
(19 ) —
(38 )
Restructuring and impairment costs ⁽⁴⁾
(113 ) (315 ) (144 ) (315 )
Purchase accounting amortization ⁽⁵⁾
(10 ) (18 ) (20 ) (35 )
Restructuring related charges⁽⁶⁾
(14 ) (12 ) (23 ) (23 )
Stock based compensation ⁽⁷⁾
(2 ) (12 ) (8 ) (22 )
Depreciation ⁽⁸⁾
(72 ) (99 ) (137 ) (193 )
Other items ⁽⁹⁾
(2 ) (28 ) (3 ) (42 )
Earnings (loss) before interest and income taxes (22 ) (141 ) 32
(40 )
Net financing charges (40 ) (37 ) (75 ) (70 )
Other pension income —
7
2
8
Income (loss) before income taxes $ (62 ) $ (171 ) $ (41 ) $ (102 )

Notes:

~~Notes~~

(1) The presentation of certain amounts has been revised from what was previously reported to retrospectively adopt Accounting Standard Update ("ASU") 2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Cost" as of October 1, 2018. See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies," for more information.

~~(2)~~ Corporate-related costs not allocated to the segments include executive office, communications, corporate development, legal, finance and ~~finance.~~marketing.

~~(3) Reflects incremental expenses associated with becoming an independent company. Includes non-cash costs of $5 million and $11 million in the three and six months ended March 31, 2018, respectively.~~

~~(4)~~(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. Restructuring charges during the three months and six months ended March 31, 2020 primarily consist of workforce reductions. Restructuring charges during the three months and six months ended March 31, 2019 primarily consist of workforce reductions and a $66 million non-cash impairment charge related to long-lived assets in the seat structure and mechanism operations during the three months ended March 31, 2019.

~~(5)~~(3) Reflects amortization of intangible assets including those related to partially owned affiliates recorded within equity income. ~~As a result of the fiscal year 2018 YFAI impairment, the intangible assets related to YFAI were deemed to be fully impaired and thus no longer amortized.~~

~~(6)~~(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.~~420 along with restructuring costs at partially owned affiliates recorded within equity income.

(5) Reflects losses on business divestitures, of which $4 million is related to the deconsolidation of Adient Aerospace, and $21 million is the result of the sale of the RECARO automotive high performance seating systems.

(6) Reflects the $216 million pre-tax non-cash impairment of Adient's YFAI investment as described in Note 3, "Acquisitions and Divestitures," of the notes to consolidated financial statements.

(7) ~~For~~The three months ended March 31, 2020 reflects $6 million of transaction costs and the six months ended March 31, ~~2018, stock based compensation excludes $8~~2020 reflects $7 million ~~which is included in Becoming Adient~~transaction costs ~~discussed above.~~

~~(8) For the six months ended March 31, 2018, depreciation excludes $4~~and $1 million ~~which is included in restructuring related charges discussed above.~~

~~(9)~~of tax adjustments at YFAI. The three and six months ended March 31, 2019 reflects $2 million and $3 million of Futuris integration costs, respectively. The three months ended March 31, 2018 includes $7 million of Futuris integration costs, $8 million of prior period adjustments, $7 million of non-recurring consulting fees related to the former SS&M segment. The six months ended March 31, 2018 also includes $8 million for the U.S tax reform impact at YFAI and $6 million of integration-related costs associated with Futuris. In addition, for both the three and six months ended March 31, 2018, $6 million of other non-recurring income that was reclassified to other pension income upon adoption of ASU 2017-07.

Adient plc | Form 10-Q | 40

~~Americas~~

Three Months Ended
March 31, Six Months Ended
March 31,
(in millions) 2019 Change 2018 2019 Change 2018
Net sales $ 1,915
-1% $ 1,941
$ 3,850
3% $ 3,727
Adjusted EBITDA $ 34
-65% $ 98
$ 77
-42% $ 133
Americas


	Three Months Ended March 31,								Six Months Ended March 31,
(in millions)	2020		Change	2019		2020		Change	2019
Net sales	$	1,641	-14%	$	1,915	$	3,500	-9%	$	3,850
Adjusted EBITDA	$	106	> 100%	$	34	$	200	> 100%	$	77

Net sales decreased during the second quarter of fiscal ~~2019~~2020 by ~~$26~~$274 million due to lower production volumes ($257 million), resulting primarily from the operational shutdowns in March 2020 in response to the COVID-19 pandemic, the impact of the RECARO divestiture ($14 million), and the unfavorable impact of foreign currency ($1712 million) ~~and lower volumes ($14 million) in North America,~~, partially offset by favorable commercial settlements and net pricing ~~including material economics recoveries ($5 million)~~adjustments ($9 million). ~~The volume decrease related to lower sales in all jurisdictions in the Americas.~~

Adjusted EBITDA ~~decreased~~increased during the second quarter of fiscal ~~2019~~2020 by ~~$64~~$72 million due to business performance improvements ($32 million), the impact of lower administrative and engineering expense ($31 million) including lower levels of incentive compensation which are not expected to recur as part of the annual SG&A run rate, favorable commercial settlements and net pricing adjustments ($21 million), favorable material economics, net of recoveries ($7 million), the favorable impact of the Adient Aerospace deconsolidation ($7 million), and the favorable impact of foreign currency ($1 million), partially offset by lower volumes and unfavorable product mix ($27 million).

Net sales decreased during the first six months of fiscal 2020 by $350 million due to lower production volumes ~~and product mix~~ ($24337 million), ~~increased freight and~~resulting primarily from the operational ~~performance issues~~shutdowns in March 2020 in response to the COVID-19 pandemic along with other market driven declines (including $55 million attributable to the GM labor strike during the first quarter of fiscal 2020), the impact of the RECARO divestiture ($2514 million), ~~higher administrative~~ and ~~engineering expenses ($12 million), material economics, net of recoveries ($4 million),~~ the unfavorable impact of foreign currency ($~~4 million) and lower equity income ($1~~19 million), partially offset by ~~the~~net favorable ~~impact of net~~pricing, including material ~~and pricing adjustments~~economic recoveries ($620 million).

~~Net sales~~

Adjusted EBITDA increased during the first six months of fiscal 2019 by $123 million due to ~~higher volumes~~business performance improvements ($~~145~~63 million), lower administrative and engineering expenses ($41 million), a favorable impact of net material and pricing adjustments ($41 million), the favorable ~~pricing, including material economic recoveries~~impact of the Adient Aerospace deconsolidation ($1413 million), and favorable impact of foreign currency ($2 million), partially offset by lower volumes and unfavorable sales mix ($36 million), and lower equity income ($1 million).

EMEA


	Three Months Ended March 31,								Six Months Ended March 31,
(in millions)	2020		Change	2019		2020		Change	2019
Net sales	$	1,488	-16%	$	1,778	$	3,052	-11%	$	3,418
Adjusted EBITDA	$	62	5%	$	59	$	111	82%	$	61

Net sales decreased during the second quarter of fiscal 2020 by $290 million due to lower production volumes ($218 million) resulting primarily from the operational shutdowns in March 2020 in response to the COVID-19 pandemic, the unfavorable impact of foreign currency ($3665 million), and the impact of the RECARO divestiture ($13 million), partially offset by favorable commercial settlements and net pricing adjustments ($6 million).

Adjusted EBITDA increased during the second quarter of fiscal 2020 by $3 million due to business performance improvements ($12 million), lower administrative and engineering expenses ($8 million) including lower levels of incentive compensation which are not expected to recur as part of the annual SG&A run rate and the favorable impact of commercial settlements and net pricing adjustments ($30 million), partially offset by the impact of lower volumes and product mix ($38 million), unfavorable material economics, net of recoveries ($5 million) and the unfavorable impact of foreign currency ($4 million).

Net sales decreased during the first six months of fiscal 2020 by $366 million due to lower production volumes ($262 million) resulting primarily from the operational shutdowns in March 2020 in response to the COVID-19 pandemic along with other market driven declines, the unfavorable impact of foreign currency ($113 million), and the impact of the RECARO divestiture ($13 million), partially offset by the favorable impact of commercial settlements and net pricing adjustments ($22 million).

Adient plc | Form 10-Q | 41

Adjusted EBITDA increased during the first six months of fiscal 2020 by $50 million due to business performance improvements ($35 million), the favorable impact of commercial settlements and net pricing adjustments ($51 million), lower administrative and engineering expense ($20 million), and higher equity income ($1 million), offset by the impact of lower volumes ($44 million), the unfavorable impact of foreign currency ($6 million), and unfavorable material economics, net of recoveries ($7 million).

Asia


	Three Months Ended March 31,								Six Months Ended March 31,
(in millions)	2020		Change	2019		2020		Change	2019
Net sales	$	444	-26%	$	599	$	1,016	-19%	$	1,249
Adjusted EBITDA	$	63	-49%	$	123	$	240	-13%	$	277

Net sales decreased during the second quarter of fiscal 2020 by $155 million due to lower production volumes ($149 million) primarily resulting from the operational shutdowns in China in February and March 2020 and in other Asia countries in March 2020 in response to the COVID-19 pandemic, the impact of the RECARO divestiture ($11 million), and the unfavorable impact of foreign currency ($9 million), partially offset by favorable commercial settlements and net pricing adjustments ($14 million).

Adjusted EBITDA decreased during the second quarter of fiscal 2020 by $60 million due to lower equity income in China ($51 million) as a result of the operational shutdowns of Adient's affiliates in February and March 2020 in response to the COVID-19 pandemic, the impact of lower production volumes and product mix ($29 million), the unfavorable impact of foreign currency ($5 million), and unfavorable material economics, net of recoveries ($1 million), partially offset by lower administration and engineering costs ($6 million) including lower levels of incentive compensation which are not expected to recur as part of the annual SG&A run rate, the favorable impact of commercial settlements and net pricing adjustments ($16 million), and operational performance improvements ($4 million). ~~The volume increase~~In addition, as a result of the planned divestiture of the YFAI investment, no further equity income will be recorded related to ~~higher~~YFAI subsequent to December 31, 2019. Refer to "Note 3, "Acquisitions and Divestitures," of the notes to consolidated financial statements for more information on the planned divestiture of YFAI.

Net sales decreased during the first six months of fiscal 2020 by $233 million due to lower production volumes ($239 million) primarily resulting from the operational shutdowns in ~~both North~~China in February and ~~South Americas.~~March 2020 and in other Asia countries in March 2020 in response to the COVID-19 pandemic along with other market driven declines, unfavorable material economics, net of recoveries ($3 million), and the impact of the RECARO divestiture ($11 million), partially offset by the favorable impact of foreign currency ($2 million) and favorable net pricing adjustments ($18 million).

Adjusted EBITDA decreased during the first six months of fiscal ~~2019~~2020 by ~~$56~~$37 million due to ~~increased freight and operational performance ($28 million), higher administrative and engineering expenses ($14 million), unfavorable product mix ($8 million),~~ the ~~unfavorable~~ impact of ~~foreign currency~~lower sales volumes ($535 million), lower equity income in China ($25 million) as a result of the operational shutdowns of Adient's affiliates in February and March 2020 in response to the COVID-19 pandemic, unfavorable material economics, net of recoveries ($3 million) ~~and lower equity income ($2 million)~~, ~~partially offset by the favorable impact of net material and pricing adjustments ($4 million).~~

~~EMEA~~

Three Months Ended
March 31, Six Months Ended
March 31,
(in millions) 2019 Change 2018 2019 Change 2018
Net sales $ 1,778
-14% $ 2,056
$ 3,418
-13% $ 3,909
Adjusted EBITDA $ 59
-55% $ 130
$ 61
-71% $ 212

Net sales decreased during the second quarter of fiscal 2019 by $278 million due to the unfavorable impact of foreign currency ($168 million) and lower volumes ($110 million). The volume decreases were driven by overall market declines.

Adjusted EBITDA decreased during the second quarter of fiscal 2019 by $71 million due to increased freight and operational performance issues ($40 million), the unfavorable impact of foreign currency ($17 million), lower volumes ($17 million), unfavorable material economics, net of recoveries ($2 million) and lower equity income ($1 million), partially offset by the favorable impact of net material and pricing adjustments ($6 million).

Net sales decreased during the first six months of fiscal 2019 by $491 million due to lower volumes ($242 million), the unfavorable impact of foreign currency ($233 million) and unfavorable net pricing, including material economics recoveries ($16 million). The volume decrease related to lower sales in all jurisdictions in EMEA.

Adjusted EBITDA decreased during the first six months of fiscal 2019 by $151 million due to increased freight and operational performance issues ($84 million), lower volumes ($36 million), the unfavorable impact of foreign currency ($22 million), the unfavorable impact of net material and pricing adjustments ($3 million), higher administrative and engineering expenses ($3 million), unfavorable material economics, net of recoveries ($2 million) and lower equity income ($1 million).

~~Asia~~

Three Months Ended
March 31, Six Months Ended
March 31,
(in millions) 2019 Change 2018 2019 Change 2018
Net sales $ 599
-13% $ 690
$ 1,249
-7% $ 1,338
Adjusted EBITDA $ 123
-22% $ 157
$ 277
-17% $ 333

~~Net sales decreased during the second quarter of fiscal 2019 by $91 million due to lower volumes ($63 million)~~ and the unfavorable impact of foreign currency ($~~23 million) and unfavorable net pricing adjustments, including material economic recoveries ($5 million). The volume decreases were driven by overall market declines.~~

Adjusted EBITDA decreased during the second quarter of fiscal 2019 by $34 million due to lower equity income caused primarily by the slowdown in Chinese auto production ($23 million), the unfavorable impact of foreign currency ($5 million), lower volumes ($2 million) and operational performance issues ($84 million), partially offset by ~~lower administration and engineering costs~~operational performance improvements ($24 million), ~~the favorable impact of~~ net ~~materials and~~ pricing adjustments ($~~1 million)and favorable material economics, net of recoveries ($1 million).~~

Net sales decreased during the first six months of fiscal 2019 by $89 million due to lower volumes ($46 million), the unfavorable impact of foreign currency ($37 million) and unfavorable net pricing adjustments, including material economic recoveries ($6 million). The volume decrease related to lower sales in all jurisdictions in Asia.

Adjusted EBITDA decreased during the first six months of fiscal 2019 by $56 million due to lower equity income caused primarily by the slowdown in Chinese auto production ($43 million), the unfavorable impact of foreign currency ($11 million), operational performance issues ($12 million), unfavorable material economics, net of recoveries ($2 million) and lower volumes ($1 million), partially offset by the favorable impact of materials and pricing adjustments ($1018 million) and lower administrative and engineering costs ($31 million).

Liquidity and Capital Resources

Adient's primary liquidity needs are to fund general business requirements, including working capital, capital expenditures, restructuring costs 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 somewhat volatile. Adient had cash and cash equivalents of $491 million and $687 million as of March 31, 2019 and September 30, 2018, respectively. On May 6, 2019 (the “Refinancing Date”), certain of Adient's subsidiaries entered into a new asset-based revolving credit facility (the “ABL Credit Facility”), which provides for $1.25 billion of commitments, subjectdifficult to ~~borrowing base capacity.~~manage at times. See below and refer to Note 7,8, "Debt and Financing Arrangements," of the notes to consolidated financial statements for discussion of financing arrangements. Following the first quarter of fiscal 2019 dividend payout, Adient has suspended future dividends.

~~Indebtedness~~

The Original Credit Facilities include commitments for a $1.5 billion revolving credit facility (undrawn at March 31, 2019 and September 30, 2018) and a $1.5 billion Term Loan A facility (which was fully drawn during the fourth quarter of fiscal 2016). The Original Credit Facilities mature in July 2021. Until the Term Loan A facility maturity date, amortization of the funded Term Loan A is required in an amount per quarter equal to 1.25% of the original principal amount prior to July 27, 2019 and 2.5% in each quarter thereafter prior to final maturity. The Term Loan A facility also requires mandatory prepayments in connection with certain non-ordinary course asset sales and insurance recovery and condemnation events, among other things, and subject in each case to certain significant exceptions.

~~During the first quarter of fiscal 2019, Adient entered into an amendment~~ Refer to the Original Credit Facilities (“First Amended Credit Facilities") whereby the financial maintenance covenant was amended to require Adient to maintain a total net leverage ratio equal to or less than 4.5x adjusted EBITDA, with step down provisions starting"Recent Developments Regarding COVID-19" section for additional information on short term liquidity measures implemented in the quarter ending December 31, 2020. The amendment also expanded the upper range of interest rate margins such that the drawn portion of the First Amended Credit Facilities will bear interest based on LIBOR plus a margin between 1.25% - 2.50% (previously 1.25% - 2.25%), based on Adient’s total net leverage ratio. No other terms were impacted by the amendment. During the second quarter of fiscal 2019, Adient entered into an amendmentresponse to the ~~First Amended Credit Facilities (“Second Amended Credit Facilities") whereby the financial maintenance covenant contained in the First Amended Credit Facilities was amended to require~~ COVID-19 pandemic.

Adient to maintain a first lien secured net leverage ratio equal to or less than 2.5x adjusted EBITDA as of the last day of each quarter, with step down provisions starting on September 30, 2020. The amendment also added a new tier to the pricing schedule that will be applicable when the total net leverage ratio exceeds 4.0x adjusted EBITDA and amended certain other definitions, negative covenants and other terms within the credit facility. Adient expects to be in compliance with its financial covenants for the foreseeable future.plc | Form 10-Q | 42

~~On May 6, 2019 (the “Refinancing Date”),~~ Adient US LLC ("Adient US"), a wholly owned subsidiary of Adient, together with certain of Adient's other subsidiaries, ~~entered into a new~~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. The ABL Credit Facility will mature on May 6, 2024, subject to a springing maturity date 91 days earlier if certain amounts remain outstanding at that time under the ~~New~~ Term Loan ~~Credit~~B Agreement (defined below). Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to the Eurodollar rate plus an applicable margin of 1.50% to 2.00%. 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. 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.

On March 26, 2020, Adient borrowed $825 million in principal amount under the agreement, which is recorded as short-term debt as of March 31, 2020. As of March 31, 2020, Adient's availability under this facility was $175 million (net of $109 million of letters of credit).

In addition, Adient US and Adient Global Holdings S.à r.l., a wholly-owned subsidiary of Adient, ~~entered into~~maintain a ~~new~~ term loan credit agreement (the ~~“New Term~~“Term Loan ~~Credit~~B Agreement”) ~~on the Refinancing Date~~ providing for a 5-year $800 million senior secured term loan facility that was fully drawn onat closing. The ~~New~~ Term Loan ~~Credit~~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 May 6, 2024. Interest on the ~~New~~ Term Loan ~~Credit~~B Agreement accrues at the Eurodollar rate plus an applicable margin equal to 4.25% (with one 0.25% step down based on achievement of a specific secured net leverage level starting with the fiscal quarter ending December 31, 2019). The ~~New~~ Term Loan ~~Credit~~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.

~~Finally, on the Refinancing Date,~~ Adient US ~~entered into~~also maintains an indenture relating to the issuance of $800 million aggregate principal amount of Senior First Lien ~~Notes (the “Notes”). The Notes~~Notes. These notes mature on May 15, 2026 and bear interest at a rate of 7.00% per annum. Interest on ~~the Notes~~these notes is payable semi-annually in arrears on November 15 and May 15 of each year, commencing on November 15, 2019.

The proceeds from the transactions described above were used to repay the outstanding indebtedness and terminate commitments under Adient’s existing credit agreement, which was scheduled to mature in July 2021. In addition, certain proceeds were used (i) to pay related premiums, fees and expenses in connection with the refinancing and entering into and funding of the new credit facilities and (ii) for working capital and other general corporate purposes.

The ABL Credit ~~Agreement, New~~Facility, Term Loan ~~Credit~~B Agreement and the ~~Indenture~~Senior First Lien Notes due 2026 contain covenants that are usual and customary for facilities and transactions 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, 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, maintains $0.9 billion aggregate principal amount of 4.875% USD-denominated unsecured notes due 2026 and €1.0 billion aggregate principal amount of 3.50% unsecured notes due 2024. Adient Germany Ltd. & Co. KG, a wholly owned subsidiary of Adient, maintains €165 million in an unsecured term loan from the European Investment Bank due in 2022. The loan bears interest at the 6-month EURIBOR rate plus 158 basis points and required Adient to maintain a total net leverage ratio equal to or less than 5.75x adjusted EBITDA at March 31, 2020 (with future step downs), in which the company was in compliance.

On April 20, 2020, Adient US offered $600 million (net proceeds of $591 million) aggregate principal amount of 9.00% Senior First Lien Notes due 2025. These notes will mature on April 15, 2025, provided that if AGH has not refinanced (or otherwise redeemed) in whole its outstanding 3.50% unsecured notes due 2024 or any refinancing indebtedness thereof that matures earlier than 91 days prior to the maturity date of the Senior First Lien Notes due 2025 on or prior to May 15, 2024, these notes will mature on May 15, 2024. Interest on these notes will be paid on April 15 and October 15 each year, beginning on October 15, 2020. These notes contain covenants that are usual and customary, similar to the covenants on the Senior First Lien Notes due 2026 as described above.

As discussed in the “Recent Developments Regarding COVID-19” section, the spread of COVID-19 and the measures taken to restrain the spread of the virus have had, and will continue to have, a material negative impact on Adient's financial results and liquidity, and such negative impact may continue well beyond the containment of such outbreak. Adient cannot assure that its

Adient plc | Form 10-Q | 43

assumptions used to estimate the liquidity requirements will be correct because it has never previously experienced such a widespread cessation of its operations as it is currently experiencing. In addition, the magnitude, duration and speed of the global pandemic is uncertain. Consequently, the impact on Adient's business, financial condition or longer-term financial or operational results are uncertain. Based on the actions it has taken and its assumptions regarding the impact of COVID-19, Adient believes that its current financial resources will be sufficient to fund the liquidity requirements for the next twelve months.

Sources of Cash Flows


	Six Months Ended March 31,
(in millions)	2020		2019
Cash provided (used) by operating activities	$	183	$	40
Cash provided (used) by investing activities	(208)		(190)
Cash provided (used) by financing activities	752		(49)
Capital expenditures	(185)		(252)

Six Months Ended
March 31,
(in millions) 2019 2018
Cash provided (used) by operating activities $ 40
$ (150 )
Cash provided (used) by investing activities (190 ) (269 )
Cash provided (used) by financing activities (49 ) 45
Capital expenditures (252 ) (266 )

Operating Cash Flows: Cash flows from operating activities increased year over year ~~due~~primarily as a result of higher profitability and favorable overall changes to ~~the reduced net loss attributable to Adient and overall~~working capital, primarily including favorable changes to ~~working capital.~~accounts receivable partially offset by unfavorable changes to accounts payable.

Investing Cash Flows: The ~~decrease~~increase in cash used by investing activities is primarily attributable to ~~higher~~prior year proceeds of $58 million from ~~sales~~the sale of assets, including the sale of Detroit, Michigan properties and ~~remaining~~an airplane, ~~for approximately $35~~and a current year $37 million ~~and overall lower levels~~cash outflow related to the deconsolidation of Adient Aerospace, partially offset by a year over year decrease in capital ~~expenditures.~~expenditures ($67 million).

Financing Cash Flows:The increase in cash ~~used~~provided by financing activities is primarily attributable to the $825 million draw down of the ABL revolver in March 2020 and by non-recurring cash dividends paid in the prior year ~~increases in short term debt and~~($26 million), partially offset by higher levels of cash dividends paid to ~~non-controlling~~noncontrolling interest ~~in the current~~($16 million) and prior year ~~partially offset by lower amounts of~~ cash ~~dividends and the current year contribution of $28 million by Adient's JV partner as part of~~received related to the formation of athe Adient Aerospace consolidated joint ~~venture.~~venture ($28 million).

Capital expenditures: Capital expenditures decreased year over year based on timing of program spend on product ~~launches.~~launches and tightening controls around overall spending.

Working capital


(in millions)	March 31, 2020		September 30, 2019
Current assets	$	4,276	$	4,116
Current liabilities	4,223		3,835
Working capital	$	53	$	281

(in millions) March 31,
2019 September 30, 2018
Current assets $ 3,926
$ 4,309
Current liabilities 4,004
4,192
Working capital $ (78 ) $ 117

The decrease in working capital of ~~$195~~$228 million is primarily attributable to lower levels of ~~cash,~~ accounts receivable ~~and other current assets along with higher incentive compensation accruals~~ as of March 31, ~~2019~~2020 offset by lower levels of accounts payable.

Also contributing to the lower levels of working capital is the recognition of lease liabilities (current lease liability of $89 million at March 31, 2020 impacting working capital), upon adoption of the new lease accounting standard in the first quarter of fiscal 2020.

Restructuring and Impairment Costs

During the second quarter of 2020, Adient committed to a restructuring plan ~~in fiscal 2019 to drive cost efficiencies and to balance our global production against demand and recorded $80~~("2020 Plan") of $64 million ~~of restructuring costs in the consolidated statement of income,~~ that was offset by $8$10 million of ~~underspend in~~ prior ~~years.~~year underspend. Of the restructuring costs recorded, ~~$61~~$4 million relates to the Americas segment, $56 million relates to the EMEA segment ~~$13 million relates to the Americas segment~~ and $6$4 million relates to the Asia segment. The ~~costs~~restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions. Adient currently estimates that upon completion of the restructuring actions, the fiscal 2020 restructuring plan will reduce annual operating costs by approximately $42 million, which is primarily the result of lower costs of sales and selling, general and administrative expenses due to reduced employee-related costs, of which approximately 30-35% will result in net savings. The restructuring actions are expected to be substantially ~~complete in~~completed by fiscal ~~2019. The restructuring plan reserve balance of $67 million at March 31,~~2022.

Adient plc | Form 10-Q | 44

During fiscal 2019, ~~is expected to be paid in cash.~~

Adient committed to a restructuring plan ("2019 Plan") of $105 million. Of the restructuring costs recorded, $81 million relates to the EMEA segment, $16 million relates to the Americas segment and $8 million relates to the Asia segment. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions. Also recorded in fiscal 2019 was $16 million of prior year underspend, a $9 million increase to a prior year reserve and $6 million of recoveries from a customer related to previous restructuring charges. 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. Adient currently estimates that upon completion of the restructuring actions, the fiscal 2019 restructuring plan will reduce annual operating costs by approximately $109 million, which is primarily the result of lower costs of sales and selling, general and administrative expenses due to reduced employee-related costs, of which approximately 35-40% will result in net savings. The restructuring actions are expected to be substantially completed by fiscal 2021.

In fiscal 2018, Adient committed to ~~drive cost efficiencies and to balance our global production against demand and recorded~~a restructuring plan ("2018 Plan") of $71 million ~~of restructuring costs in the consolidated statement of income,~~ that was offset by ~~$20~~$25 million of ~~underspend in the 2016 Plan and $7 million of underspend related to other plan years.~~prior year underspend. Of the restructuring costs recorded, $52 million relates to the EMEA segment, $10 million relates to the Asia segment and $9 million relates to the Americas segment. In fiscal 2019 there was adjustment to this plan which resulted in additional $9 million of charges. This is the total amount expected to be incurred for this restructuring plan. The ~~costs~~restructuring actions relate to cost reduction initiatives and consist primarily of workforce ~~reductions and plant closures.~~reductions. Adient currently estimates that upon completion of the restructuring actions, the fiscal 2018 restructuring plan will reduce annual operating costs by approximately $65 million, which is primarily the result of lower costs of sales and selling, general and administrative expenses due to reduced employee-related costs, of which approximately ~~55%~~60% will result in net savings. ~~The restructuring actions are expected to be substantially complete~~Adient partially achieved these savings in fiscal year 2019. ~~The restructuring plan reserve balance of $30 million at March 31, 2019 is expected to be paid in cash.~~

In fiscal 2017, Adient committed to a restructuring plan ~~in fiscal~~ ("2017 ~~to drive cost efficiencies and to balance our global production against demand~~Plan") and recorded $46 million of restructuring and impairment costs in the consolidated ~~statement~~statements of income. Of the restructuring costs recorded, $34 million relates to the EMEA segment, $7 million relates to the Americas segment and $5 million relates to the Asia segment. 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 and plant closures. Adient currently estimates that upon completion of the restructuring actions, the fiscal 2017 restructuring plan will reduce annual operating costs by approximately $40 million, which is primarily the result of lower cost of sales and selling, general and administrative expenses due to reduced employee-related costs, of which approximately 55%-60% will result in net savings. Adient partially achieved these savings in fiscal years 2017, 2018 and ~~2018.~~2019. The restructuring actions are expected to be substantially complete in fiscal ~~2019. The restructuring plan reserve balance of $3 million at March 31, 2019 is expected to be paid in cash.~~2021.

In fiscal 2016, Adient committed to a restructuring plan ~~in fiscal~~ ("2016 ~~(the "2016~~ Plan") ~~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~~statements of income. Of the restructuring and impairment costs recorded, $298 million ~~relates~~related to the EMEA segment, $32 million ~~relates~~related to the Americas segment and $2 million ~~relates~~related to the Asia segment. This is the total amount expected to be incurred for this restructuring plan. The ~~costs~~restructuring actions relate to cost reduction initiatives and consist primarily of 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~~$145 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%~~75%-80% will result in net savings. Adient partially achieved these savings in fiscal years 2016 through ~~2018, with the full benefit expected in fiscal~~ 2019. ~~The restructuring actions are expected to be substantially complete in fiscal 2021. The restructuring plan reserve balance of $36 million at March 31, 2019 is expected to be paid in cash.~~

Off-Balance Sheet Arrangements and Contractual Obligations

There have been no material changes to the off-balance sheet arrangements and contractual obligations disclosed in Adient's Annual Report on Form 10-K for the year ended September 30, ~~2018.~~2019.

Effects of Inflation and Changing Prices

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

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 year ended September 30, ~~2018,~~2019, 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 ~~and six~~ months ended March 31, ~~2019, except as follows.~~2020.

~~Impairment of Goodwill, Other Long-lived Assets and Investments in Partially Owned Affiliates~~

As a result of the goodwill impairment assessment in the second quarter of fiscal 2019, the Americas reporting unit, which was allocated $642 million of goodwill as of March 31, 2019 maintains an excess of fair value over its carrying value of 1%. The fair value of the Americas reporting unit was derived using discounted cash flows and a discount rate of 17.5%. To the extent discount rates increase, long-term growth rates are not achieved and/or actual cash flows in the future are lower than the forecasted cash flows used in the second quarter of fiscal 2019 impairment assessment, the goodwill allocated to Americas could be determined to be impaired which could have a material impact on Adient's results of operations. See Note 5, "Goodwill and Other Intangible Assets," of the notes to the Consolidated Financial Statements for more information on the goodwill impairment assessment performed during the second quarter of fiscal 2019.

Adient plc | Form 10-Q | 45

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

~~Other Information~~

Not applicable.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

As of March 31, ~~2019,~~2020, 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 year ended September 30, ~~2018.~~

2019.



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 ~~and six~~ months ended March 31, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Adient plc | Form 10-Q | 46



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, 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 1617, "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 fiscal year ended September 30, ~~2018.~~2019.

Item 1A.

Risk Factors

~~There are no material changes from the~~

The following risk factors asare supplemental to, and should be read in combination with, those previously ~~disclosed~~reported in Adient's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2018.~~2019 as well as its Form 10-Q for the quarter ended December 31, 2019.

Adient's financial condition and results of operations have been, and are expected to continue to be, adversely affected by the recent coronavirus outbreak.

The global outbreak of COVID-19 has caused a material adverse effect on the level of economic activity around the world, including in all markets served by Adient. In response to this outbreak, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations. Adient has implemented numerous measures attempting to manage and mitigate the effects of the virus. While the Company has implemented programs to mitigate the impact of these measures on the results of operations, there can be no assurance that these programs will be successful. Adient cannot predict the degree to, or the time period over, which its sales and operations will be affected by this outbreak and preventative measures, and the effects could be material.

The COVID-19 pandemic poses the risk that Adient or its affiliates and joint ventures, employees, suppliers, customers and others may be restricted or prevented from conducting business activities for indefinite or intermittent periods of time, including as a result of employee health and safety concerns, shutdowns, shelter in place orders, travel restrictions and other actions and restrictions that may be requested or mandated by governmental authorities. For example, the Company experienced a temporary reduction of its manufacturing and operating capacity in China as a result of government-mandated actions to control the spread of COVID-19. Additionally, beginning in late March 2020, the Company experienced the shutdown of effectively all of its facilities in the Americas and European regions coinciding with the shutdown of its customer facilities in these regions. Further, certain government orders related to COVID-19 mitigation efforts may restrict Adient's ability to operate its business and may impact the financial condition and results of operations. Finally, while other of its facilities have been designated by customers as an essential business to its customers’ business in jurisdictions in which facility closures have been mandated, the Company can give no assurance that this will not change in the future or that businesses will continue to be classified as essential in each of the jurisdictions in which Adient operates.

Additionally, restrictions on the Company's access to its manufacturing facilities or on support operations or workforce, or similar limitations for its distributors and suppliers, could continue to limit customer demand and/or the Company's capacity to meet customer demand and have a material adverse effect on the business, financial condition and results of operations. In addition, Adient has modified its business practices (including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences), and it may take further actions as may be required by government

Adient plc | Form 10-Q | 47

authorities, for the continued health and safety of the employees, or that the Company otherwise determines are in the best interests of the employees, customers, partners, and suppliers. Further, the Company has experienced, and may continue to experience, disruptions or delays in its supply chain as a result of such actions, which is likely to result in higher supply chain costs to Adient in order to maintain the supply of materials and components for the products.

The Company's management of the impact of COVID-19 has and will continue to require significant investment of time from its management and employees, as well as resources across the global enterprise. The focus on managing and mitigating the impacts of COVID-19 on the business may cause the Company to divert or delay the application of its resources toward other or new initiatives or investments, which may cause a material adverse impact on the results of operations.

Adient may also experience impacts from market downturns and changes in consumer behavior related to pandemic fears and impacts on its workforce as a result of COVID-19. The Company has experienced a significant decline in demand from its customers as a result of the impact of efforts to contain the spread of COVID-19. In addition, customers may choose to delay or abandon projects on which the Company provides products and/or services in response to the adverse impact of COVID-19 and the measures to contain its spread have had on the global economy.

Further, the impacts of COVID-19 have caused significant uncertainty and volatility in the credit markets. Adient relies on the credit markets to provide it with liquidity to operate and grow its businesses beyond the liquidity that operating cash flows provide. If the Company's access to capital were to become significantly constrained, or if costs of capital increased significantly due to the impact of COVID-19 including, volatility in the capital markets, a reduction in Adient's credit ratings or other factors, then the financial condition, results of operations and cash flows could be materially adversely affected.

If the COVID-19 pandemic becomes more pronounced in the markets in which the Company or its automotive industry customers operate, or there is a resurgence in the virus in markets currently recovering from the spread of COVID-19, then the Company's operations in areas impacted by such events could experience further materially adverse financial impacts due to market changes and other resulting events and circumstances. The extent to which the COVID-19 outbreak continues to impact the Company's financial condition will depend on future developments that are highly uncertain and cannot be predicted, including new government actions or restrictions, new information that may emerge concerning the severity of COVID-19, the longevity of COVID-19 and the impact of COVID-19 on economic activity To the extent the COVID-19 pandemic materially adversely affects the Company's business and financial results, it may also have the effect of significantly heightening many of the other risks associated with the Company's business and indebtedness, including those described in the most recent Annual Report on Form 10-K for the year ended September 30, 2019.

The COVID-19 pandemic presents significant challenges to Adient's liquidity.

Adient's continued access to sources of liquidity depends on multiple factors, including global economic conditions, the COVID-19 pandemic’s effects on its customers and their production rates, the condition of global financial markets, the availability of sufficient amounts of financing, its operating performance and credit ratings. On March 26, 2020, Adient drew $825 million under the ABL Credit Facility to provide liquidity as it addresses critical issues that may arise. Adient's ability to borrow against the ABL Credit Facility is limited to its borrowing base, which consists primarily of accounts receivable, inventory and certain cash account balances. Such working capital account balances are expected to decrease over the next few months as a result of the production shutdown and thus portions of the amounts borrowed at the end of March will need to be repaid. In addition, production stoppage will result in working capital swings which are expected to result in increased outflows in May 2020.

Adient also issued $600 million of senior secured notes due 2025 on April 20, 2020 to provide additional liquidity during the current COVID-19 pandemic. These notes will bear interest at 9% and will result in higher levels of net financing charges over the term of these notes. In addition, Adient's overall indebtedness has increased as a result of the issuance of these notes.

As a result of the impacts of the COVID-19 pandemic, Adient may be required to raise additional capital and its access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, its prospects and credit ratings.

Adient may not be able to consummate the sale of YFAI and/or the sale of its fabrics business, or the time required to consummate the sale of YFAI and/or the sale of its fabrics business may be longer than anticipated.

Consummation of the sale of YFAI and the sale of its fabrics business are each subject to certain closing conditions, including expiration of waiting periods under anti-trust laws and other customary closing conditions. There can be no assurance that the closing conditions contained in the respective purchase agreements related to the sale of YFAI or the sale of the fabrics business

Adient plc | Form 10-Q | 48

will be satisfied or waived, or that the sale of YFAI and/or the sale of the fabrics business will be completed within the respective expected timeframes, on the respective proposed terms, or at all. In addition, the failure to consummate or a delay in consummating the sale of YFAI and/or the sale of its fabrics business would materially reduce Adient’s anticipated cash flow and could have a material adverse effect on the amounts available for general corporate or other purposes.

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~~has been no share repurchase activity during the three months ended March 31, ~~2019.~~2020.



~~Standard Adopted~~	~~Description~~	~~Date~~ ~~Effective and Adopted~~
~~ASU 2016-01 and ASU 2018-03, Recognition and Measurement of Financial Assets and Financial Liabilities~~	~~ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments.~~	~~October 1, 2018~~

~~ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments~~	~~ASU 2016-clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows.~~	~~October 1, 2018~~

~~ASU 2016-18, Statement of Cash Flows: Restricted Cash~~	~~ASU 2016-18 clarifies the classification and presentation of restricted cash on the statement of cash flows.~~	~~October 1, 2018~~

~~ASU 2017-01, Clarifying the Definition of a Business~~	~~ASU 2017-01 clarifies the definition of a business as it relates to the acquisition or sale of assets or businesses.~~	~~October 1, 2018~~

~~ASU 2017-05, Gains and Losses from the Derecognition of Nonfinancial Assets~~	ASU 2017-05 clarifies the scope of asset derecognition guidance and accounting for partial sales of nonfinancial assets and will follow the same implementation guidelines as ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606).	~~October 1, 2018~~

~~ASU 2017-09, Stock Compensation - Scope of Modification Accounting~~	~~ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.~~	~~October 1, 2018~~

~~ASU 2018-08, Not for Profit Entities: Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made~~	ASU 2018-08 is intended to clarify and improve the scope and the accounting guidance for contributions received and contributions made. The amendments in ASU No. 2018-08 should assist entities in (1) evaluating whether transactions should be accounted for as contributions (nonreciprocal transaction) within the scope of Topic 958, Not-for-Profit Entities, or as exchange (reciprocal) transactions subject to other guidance and (2) determining whether a contribution is conditional. This amendment applies to all entities that make or receive grants or contributions.	~~October 1, 2018~~

~~ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract~~	The amendments in ASU 2018-15 require implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customer in a software licensing arrangement under the internal-use software guidance. The amendments also require an entity to disclose the nature of its hosting arrangements and adhere to certain presentation requirements in its balance sheet, income statement and statement of cash flows.	~~ASU No. 2018-15 is effective for Adient for the quarter ending December 31, 2019, with early adoption permitted. Adient early adopted ASU No. 2018-15 effective October 1, 2018.~~

~~ASU 2018-16, Derivatives and Hedging: Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes~~	The amendments in this Update permit use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the UST, the LIBOR swap rate, the OIS rate based on the Fed Funds Effective Rate, and the SIFMA Municipal Swap Rate.	~~October 1, 2018~~


(in millions)	Six Months Ended March 31, 2020
Right-of-use assets obtained in exchange for lease obligations:
Operating leases (non-cash activity)	$	19

Operating cash flows:
Cash paid for amounts included in the measurement of lease liabilities	$	65


(in millions)							(in millions)	March 31, 2020		September 30, 2019
Long-term debt:							Long-term debt:
Term Loan B - LIBOR plus 4.00% due in 2024							Term Loan B - LIBOR plus 4.00% due in 2024	$	794	$	798
4.875% Notes due in 2026							4.875% Notes due in 2026	900		900
3.50% Notes due in 2024							3.50% Notes due in 2024	1,101		1,094
7.00% Notes due in 2026							7.00% Notes due in 2026	800		800
European Investment Bank Loan - EURIBOR plus 1.58% due in 2022							European Investment Bank Loan - EURIBOR plus 1.58% due in 2022	182		180

(in millions)	March 31, 2019			September 30, 2018
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	1,123			1,162
European Investment Bank Loan - EURIBOR plus 0.90% due in 2022	185			192
Capital lease obligations	1			2
Less: debt issuance costs	(35		)	(32		)	Less: debt issuance costs	(52)		(56)
Gross long-term debt	3,374			3,424			Gross long-term debt	3,725		3,716
Less: current portion	1			2			Less: current portion	8		8
Net long-term debt	$	3,373		$	3,422		Net long-term debt	$	3,717	$	3,708

Short-term debt:							Short-term debt:
ABL Credit Facility							ABL Credit Facility	$	825	$	—
Other bank borrowings							Other bank borrowings	13		22
Total short-term debt							Total short-term debt	$	838	$	22



(in millions)	Three Months Ended March 31						Six Months Ended March 31
	2019			2018			2019			2018
Americas
United States	$	1,630		$	1,634		$	3,245		$	3,112
Mexico	643			656			1,313			1,280
Other Americas	100			135			224			280
Regional elimination	(458		)	(484		)	(932		)	(945		)
	1,915			1,941			3,850			3,727
EMEA
Germany	390			494			731			939
Other EMEA	1,904			2,112			3,650			3,988
Regional elimination	(516		)	(550		)	(963		)	(1,018		)
	1,778			2,056			3,418			3,909
Asia
China	129			154			284			344
Other Asia	471			536			967			994
Regional elimination	(1		)	—			(2		)	—
	599			690			1,249			1,338

Inter-segment elimination	(64		)	(91		)	(131		)	(174		)

Total	$	4,228		$	4,596		$	8,386		$	8,800


	March 31, 2019							September 30, 2018								March 31, 2020										September 30, 2019
(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	$	20	$	(14	)	$	6	$	21	$	(14	)	$	7	Patented technology	$	28	$	(19)	$	9	$	27	$	(17)	$	10
Customer relationships	514		(117		)	397		509		(101		)	408		Customer relationships	487		(138)		349		494		(129)		365
Trademarks	53		(31		)	22		58		(30		)	28		Trademarks	42		(28)		14		51		(32)		19
Miscellaneous	28		(12		)	16		29		(12		)	17		Miscellaneous	18		(9)		9		21		(10)		11
Total intangible assets	$	615	$	(174	)	$	441	$	617	$	(157	)	$	460	Total intangible assets	$	575	$	(194)	$	381	$	593	$	(188)	$	405


(in millions)	Three Months Ended March 31, 2020		Six Months Ended March 31, 2020
Operating lease cost	$	31	$	64
Short-term lease cost	7		12

Total lease cost	$	38	$	76


(in millions)		March 31, 2020
Operating lease right-of-use assets	Other noncurrent assets	$	332

7.Operating lease liabilities - current	Other current liabilities	$	89
Operating lease liabilities - noncurrent	Other noncurrent liabilities	245
		$	334


Fiscal years (in millions)	March 31, 2020
2020 (excluding the six months ended March 31, 2020)	$	55
2021	94
2022	67
2023	53
2024	39
Thereafter	91
Total lease payments	399
Less: imputed interest	(65)
Present value of lease liabilities	$	334


Fiscal years (in millions)	Operating leases
2020	$	119
2021	91
2022	64
2023	51
2024	40
After 2024	94
Total minimum lease payments	$	459


	Derivatives and Hedging Activities Designated as Hedging Instruments under ASC 815				Derivatives and Hedging Activities Not Designated as Hedging Instruments under ASC 815					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)	March 31, 2019		September 30, 2018		March 31, 2019		September 30, 2018		(in millions)	March 31, 2020		September 30, 2019		March 31, 2020		September 30, 2019
Other current assets									Other current assets
Foreign currency exchange derivatives	$	6	$	4	$	3	$	4	Foreign currency exchange derivatives	$	7	$	5	$	3	$	3
Cross-currency interest rate swaps	20		—		—		—		Cross-currency interest rate swaps	—		12		—		—
Other noncurrent assets									Other noncurrent assets
Foreign currency exchange derivatives	—		—		—		2		Foreign currency exchange derivatives	—		—		1		1
Interest rate cap									Interest rate cap	—		1		—		—
Cross-currency interest rate swaps	—		13		—		—		Cross-currency interest rate swaps	2		1		—		—
Total assets	$	26	$	17	$	3	$	6	Total assets	$	9	$	19	$	4	$	4

Other current liabilities									Other current liabilities
Foreign currency exchange derivatives	$	13	$	11	$	1	$	—	Foreign currency exchange derivatives	$	66	$	12	$	—	$	—
Other noncurrent liabilities									Other noncurrent liabilities
Foreign currency exchange derivatives	1		2		—		—		Foreign currency exchange derivatives	15		3		—		—
Equity swaps	—		—		—		2

Long-term debt									Long-term debt
Foreign currency denominated debt	1,123		1,162		—		—		Foreign currency denominated debt	1,101		1,094		—		—
Total liabilities	$	1,137	$	1,175	$	1	$	2	Total liabilities	$	1,182	$	1,109	$	—	$	—


	Assets						Liabilities
(in millions)	March 31, 2020		September 30, 2019		March 31, 2020		September 30, 2019
Gross amount recognized	$	13	$	23	$	1,182	$	1,109
Gross amount eligible for offsetting	(7)		(9)		(7)		(9)
Net amount	$	6	$	14	$	1,175	$	1,100


	Fair Value Measurements Using:
(in millions)	Total as of March 31, 2020		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	$	10	$	—	$	10	$	—

Other noncurrent assets
Foreign currency exchange derivatives	1		—		1		—
Cross-currency interest rate swaps	2		—		2		—

Total assets	$	13	$	—	$	13	$	—
Other current liabilities
Foreign currency exchange derivatives	$	66	$	—	$	66	$	—
Other non current liabilities
Foreign currency exchange derivatives	15		—		15		—



Total liabilities	$	81	$	—	$	81	$	—



	Fair Value Measurements Using:
(in millions)	Total as of March 31, 2019		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	$	9	$	—	$	9	$	—
Cross-currency interest rate swaps	20		—		20		—
Other noncurrent assets
Foreign currency exchange derivatives	—		—		—		—
Total assets	$	29	$	—	$	29	$	—
Other current liabilities
Foreign currency exchange derivatives	$	14	$	—	$	14	$	—
Other noncurrent liabilities
Foreign currency exchange derivatives	1		—		1		—
Total liabilities	$	15	$	—	$	15	$	—



			FORM			10-Q


	Fair Value Measurements Using:
(in millions)	Total as of September 30, 2019		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	$	8	$	—	$	8	$	—
Cross-currency interest rate swaps	12		—		12		—
Other noncurrent assets
Foreign currency exchange derivatives	1		—		1		—
Cross-currency interest rate swaps	1		—		1		—
Interest rate cap	1		—		1		—
Total assets	$	23	$	—	$	23	$	—
Other current liabilities
Foreign currency exchange derivatives	$	12	$	—	$	12	$	—
Other noncurrent liabilities
Foreign currency exchange derivatives	3		—		3		—
Total liabilities	$	15	$	—	$	15	$	—



	Fair Value Measurements Using:
(in millions)	Total as of September 30, 2018		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	$	8	$	—	$	8	$	—
Other noncurrent assets
Foreign currency exchange derivatives	2		—		2		—
Cross-currency interest rate swaps	13		—		13		—
Total assets	$	23	$	—	$	23	$	—
Other current liabilities
Foreign currency exchange derivatives	$	11	$	—	$	11	$	—
Other noncurrent liabilities
Foreign currency exchange derivatives	2		—		2		—
Equity swaps	2		—		2		—
Total liabilities	$	15	$	—	$	15	$	—


(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, 2019	$	—	$	3,962	$	(1,545)	$	(569)	$	1,848	$	341	$	2,189
Net income (loss)	—		—		(186)		—		(186)		32		(154)
Foreign currency translation adjustments	—		—		—		(74)		(74)		(1)		(75)
Realized and unrealized gains (losses) on derivatives	—		—		—		(47)		(47)		—		(47)

Dividends attributable to noncontrolling interests	—		—		—		—		—		(12)		(12)
Change in noncontrolling interest share	—		—		—		—		—		(18)		(18)
Share based compensation	—		5		—		—		5		—		5
Adjustments from adoption of a new standard	—		—		(4)		—		(4)		—		(4)
Other	—		(1)		—		—		(1)		—		(1)
Balance at March 31, 2020	$	—	$	3,966	$	(1,735)	$	(690)	$	1,541	$	342	$	1,883


(in millions)	Employee Severance and Termination Benefits		Other		Currency Translation		Total
Original Reserve	$	63	$	1	$	—	$	64
Utilized—cash	(5)		—		—		(5)
Noncash adjustment—other	—		—		—		—
Balance at March 31, 2020	$	58	$	1	$	—	$	59



(in millions)	Employee Severance and Termination Benefits
Balance at September 30, 2018	$	12
Utilized—cash	(2		)
Utilized—noncash	(1		)
Noncash adjustment—underspend	(6		)
Balance at March 31, 2019	$	3



	Three Months Ended March 31, 2019
	Reportable Segments						Reconciling Items⁽¹⁾		Consolidated
(in millions)	Americas		EMEA		Asia		Reconciling Items⁽¹⁾		Consolidated
Equity Income	$	—	$	3	$	59	$	—	$	62
Depreciation	27		34		11		—		72
Capital Expenditures	52		46		10		—		108
Total Assets	3,309		2,806		3,653		806		10,574



	Six Months Ended March 31, 2019
	Reportable Segments						Reconciling Items⁽¹⁾		Consolidated
(in millions)	Americas		EMEA		Asia		Reconciling Items⁽¹⁾		Consolidated
Equity Income	$	1	$	5	$	139	$	—	$	145
Depreciation	51		63		23		—		137
Capital Expenditures	100		130		22		—		252
Total Assets	3,309		2,806		3,653		806		10,574



	Three Months Ended March 31, 2018
	Reportable Segments						Reconciling Items⁽¹⁾		Consolidated
(in millions)	Americas		EMEA		Asia		Reconciling Items⁽¹⁾		Consolidated
Equity Income	$	2	$	3	$	80	$	—	$	85
Depreciation	36		51		11		3		101
Capital Expenditures	42		67		14		—		123



	Six Months Ended March 31, 2018
	Reportable Segments						Reconciling Items⁽¹⁾		Consolidated
(in millions)	Americas		EMEA		Asia		Reconciling Items⁽¹⁾		Consolidated
Equity Income	$	3	$	6	$	172	$	—	$	181
Depreciation	70		99		22		6		197
Capital Expenditures	104		147		15		—		266



	Light Vehicle Production
	Three Months Ended March 31,			Six Months Ended March 31,
(units in millions)	2019	Change	2018	2019	Change	2018
Global	22.7	-4.6%	23.8	46.2	-4.9%	48.6
North America	4.4	—%	4.4	8.5	1.2%	8.4
South America	0.8	—%	0.8	1.6	-5.9%	1.7
Europe	5.8	-4.9%	6.1	11.5	-5.0%	12.1
China	6.0	-11.8%	6.8	13.1	-13.8%	15.2
Asia, excluding China, and Other	5.7	—%	5.7	11.5	2.7%	11.2

Source: IHS Automotive, March 2019



Exhibit No.		Exhibit Title
~~4.1~~31.1		Indenture, dated as of May 6, 2019, among Adient US LLC, the guarantors party thereto from time to time and U.S. Bank National Association, as Trustee and Collateral Agent, relating to the $800.0 million aggregate principal amount of 7.00% senior first lien notes due 2026 (the “Indenture”) (incorporated by reference to Exhibit 4.1 to Adient plc’s Current Report on Form 8-K filed on May 6, 2019).

~~4.2~~	Supplemental Indenture, dated as of May 6, 2019, among Adient Fabrics Spain, S.A.U., Michel Thierry Unit Components, S.L.U., Adient Seating Holding Spain, S.L.U., Adient Seating Spain, S.L.U., Adient Automotive, S.L.U., Adient Real Estate Holding Spain, S.L.U. and U.S. Bank National Association, relating to the Indenture (incorporated by reference to Exhibit 4.2 to Adient plc’s Current Report on Form 8-K filed on May 6, 2019).

~~10.1~~	Second Amendment to the Credit Agreement, dated as of February 6, 2019, among Adient Global Holdings Ltd, Adient US LLC, the guarantors, the lenders party thereto, and JPMorgan Chase, N.A., as agent for the lenders from time to time party to the Credit Agreement (incorporated by reference to Exhibit 4.1 to Adient plc’s Current Report on Form 8-K filed on February 7, 2019).

~~10.2~~	Separation and Release of Claims Agreement by and among Adient US LLC and Byron S. Foster, dated March 5, 2019 (incorporated by reference to Exhibit 10.1 to Adient plc’s Current Report on Form 8-K filed on March 8, 2019).

~~10.3~~	Term Loan Credit Agreement, dated as of May 6, 2019, among Adient US LLC, Adient Global Holdings S.à r.l., the lenders party thereto and Bank of America, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 to Adient plc’s Current Report on Form 8-K filed on May 6, 2019).

~~10.4~~	Revolving Credit Agreement, dated as of May 6, 2019, among Adient US LLC, the other borrower subsidiaries party thereto, the lenders party thereto, the issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.2 to Adient plc’s Current Report on Form 8-K filed on May 6, 2019).

~~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



			Adient plc
			By:			/s/ Douglas G. Del Grosso
						Douglas G. Del Grosso
						President and Chief Executive Officer and a Director
			Date:			May ~~9, 2019~~5, 2020

			By:			/s/ Jeffrey M. Stafeil
						Jeffrey M. Stafeil
						Executive Vice President and Chief Financial Officer
			Date:			May ~~9, 2019~~5, 2020

~~Standard Pending Adoption~~

~~Description~~

~~Anticipated Impact~~

~~Effective Date~~

~~ASU 2016-02, 2018-01, 2018-10, 2018-11 and ASU 2019-01~~

The standard requires that a lessee recognize on its balance sheet right-of-use assets and corresponding liabilities resulting from leasing transactions, as well as additional financial statement disclosures. Currently, U.S. GAAP only requires balance sheet recognition for leases classified as capital leases. The provisions of this update apply to substantially all leased assets.

Adient is currently evaluating the impact this standard will have on its consolidated financial position, results of operations and cash flows and expects the impact to the consolidated balance sheet to be significant.

~~October 1, 2019~~