0001670541-21-000007.txt : 20210205 0001670541-21-000007.hdr.sgml : 20210205 20210205163033 ACCESSION NUMBER: 0001670541-21-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 94 CONFORMED PERIOD OF REPORT: 20201231 FILED AS OF DATE: 20210205 DATE AS OF CHANGE: 20210205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Adient plc CENTRAL INDEX KEY: 0001670541 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 000000000 STATE OF INCORPORATION: L2 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37757 FILM NUMBER: 21596010 BUSINESS ADDRESS: STREET 1: 25-28 NORTH WALL QUAY CITY: DUBLIN STATE: L2 ZIP: D01 H104 BUSINESS PHONE: 1-734-254-5000 MAIL ADDRESS: STREET 1: 25-28 NORTH WALL QUAY CITY: DUBLIN STATE: L2 ZIP: D01 H104 FORMER COMPANY: FORMER CONFORMED NAME: Adient Ltd DATE OF NAME CHANGE: 20160328 10-Q 1 adnt-20201231.htm 10-Q adnt-20201231
00016705412021Q1FALSE--09-30us-gaap:OtherAssetsus-gaap:OtherLiabilitiesCurrentus-gaap:OtherLiabilitiesNoncurrent00016705412020-10-012020-12-31xbrli:shares00016705412020-12-31iso4217:USD00016705412019-10-012019-12-31iso4217:USDxbrli:shares00016705412020-09-3000016705412019-09-3000016705412019-12-31xbrli:pure0001670541adnt:OtherAsiaExcludingChinaMember2020-04-30adnt:variableInterestEntity0001670541us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-12-310001670541us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-09-300001670541adnt:AdientAerospaceMember2018-10-1100016705412018-10-012018-12-310001670541adnt:AdientAerospaceMember2019-10-250001670541adnt:AdientAerospaceMember2019-10-252019-10-250001670541adnt:AdientAerospaceMemberadnt:AmericasSegmentMember2019-10-252019-10-250001670541adnt:RECAROMember2019-10-012019-12-310001670541adnt:RECAROMember2018-10-012019-09-300001670541adnt:YanfengMemberadnt:AYMMember2020-01-310001670541adnt:AdientMemberadnt:AYMMember2020-01-310001670541adnt:YFASMemberadnt:YanfengMember2020-01-310001670541adnt:YFASMemberadnt:AdientMember2020-01-310001670541adnt:YanfengMemberadnt:YFAIMember2020-01-310001670541adnt:AdientMemberadnt:YFAIMember2020-01-310001670541adnt:YFAIMember2020-01-310001670541adnt:YFAIMember2020-01-312020-01-310001670541adnt:AYMMember2020-01-312020-01-3100016705412020-04-012020-06-300001670541adnt:YFAIMember2020-06-242020-06-240001670541us-gaap:IncomeApproachValuationTechniqueMemberadnt:YFAIMemberus-gaap:MeasurementInputCapRateMemberus-gaap:FairValueInputsLevel3Member2020-10-012020-12-310001670541adnt:YFASMemberus-gaap:IncomeApproachValuationTechniqueMemberus-gaap:MeasurementInputCapRateMemberus-gaap:FairValueInputsLevel3Member2020-10-012020-12-310001670541adnt:YFAIMember2018-10-012019-09-300001670541adnt:YFASMember2020-09-300001670541adnt:YFASMember2020-10-012020-12-310001670541adnt:AutomotiveFabricsManufacturingMember2020-09-302020-09-300001670541adnt:AutomotiveFabricsManufacturingMember2020-12-31adnt:facilityadnt:employee0001670541adnt:AutomotiveFabricsManufacturingMember2019-10-012020-09-300001670541adnt:AutomotiveFabricsManufacturingMember2018-10-012019-09-300001670541us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2020-10-012020-12-310001670541adnt:EntitiesInChinaAndPropertiesInUSMemberus-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2019-10-012020-09-300001670541us-gaap:OperatingSegmentsMemberadnt:EntitiesInChinaAndPropertiesInUSMemberus-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMembersrt:AmericasMember2019-10-012020-09-300001670541us-gaap:OperatingSegmentsMemberadnt:EntitiesInChinaAndPropertiesInUSMembercountry:CNus-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2019-10-012020-09-300001670541adnt:AmericasSegmentMember2020-09-300001670541adnt:EMEASegmentMember2020-09-300001670541adnt:AsiaSegmentMember2020-09-300001670541adnt:AmericasSegmentMember2020-10-012020-12-310001670541adnt:EMEASegmentMember2020-10-012020-12-310001670541adnt:AsiaSegmentMember2020-10-012020-12-310001670541adnt:AmericasSegmentMember2020-12-310001670541adnt:EMEASegmentMember2020-12-310001670541adnt:AsiaSegmentMember2020-12-310001670541us-gaap:PatentsMember2020-12-310001670541us-gaap:PatentsMember2020-09-300001670541us-gaap:CustomerRelationshipsMember2020-12-310001670541us-gaap:CustomerRelationshipsMember2020-09-300001670541us-gaap:TrademarksMember2020-12-310001670541us-gaap:TrademarksMember2020-09-300001670541us-gaap:OtherIntangibleAssetsMember2020-12-310001670541us-gaap:OtherIntangibleAssetsMember2020-09-300001670541adnt:TermLoanBLIBORPlus400DueIn2024Memberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:RevolvingCreditFacilityMember2020-12-310001670541adnt:TermLoanBLIBORPlus400DueIn2024Memberus-gaap:RevolvingCreditFacilityMember2020-12-310001670541adnt:TermLoanBLIBORPlus400DueIn2024Memberus-gaap:RevolvingCreditFacilityMember2020-09-300001670541adnt:NotesDue2026Memberus-gaap:UnsecuredDebtMember2020-12-310001670541adnt:NotesDue2026Memberus-gaap:UnsecuredDebtMember2020-09-300001670541adnt:NotesDue2024Memberus-gaap:UnsecuredDebtMember2020-12-310001670541adnt:NotesDue2024Memberus-gaap:UnsecuredDebtMember2020-09-300001670541us-gaap:UnsecuredDebtMemberadnt:NotesDueIn2026Member2020-12-310001670541us-gaap:UnsecuredDebtMemberadnt:NotesDueIn2026Member2020-09-300001670541adnt:SeniorNotesDue2025900Memberus-gaap:UnsecuredDebtMember2020-12-310001670541adnt:SeniorNotesDue2025900Memberus-gaap:UnsecuredDebtMember2020-09-300001670541us-gaap:EurodollarMemberus-gaap:UnsecuredDebtMemberadnt:EuropeanInvestmentBankLoanduein2022Member2020-10-012020-12-310001670541us-gaap:UnsecuredDebtMemberadnt:EuropeanInvestmentBankLoanduein2022Member2020-12-310001670541us-gaap:UnsecuredDebtMemberadnt:EuropeanInvestmentBankLoanduein2022Member2020-09-300001670541us-gaap:RevolvingCreditFacilityMember2020-12-310001670541us-gaap:RevolvingCreditFacilityMemberadnt:NorthAmericanSubfacilityMember2020-12-310001670541adnt:EuropeanSubfacilityMemberus-gaap:RevolvingCreditFacilityMember2020-12-310001670541us-gaap:RevolvingCreditFacilityMembersrt:MinimumMemberus-gaap:EurodollarMember2020-10-012020-12-310001670541us-gaap:RevolvingCreditFacilityMembersrt:MaximumMemberus-gaap:EurodollarMember2020-10-012020-12-310001670541us-gaap:RevolvingCreditFacilityMembersrt:MinimumMember2020-10-012020-12-310001670541us-gaap:RevolvingCreditFacilityMembersrt:MaximumMember2020-10-012020-12-310001670541us-gaap:LineOfCreditMember2020-12-310001670541us-gaap:RevolvingCreditFacilityMember2020-10-012020-12-310001670541adnt:TermLoanBLIBORPlus400DueIn2024Memberus-gaap:SecuredDebtMember2019-05-062019-05-060001670541adnt:TermLoanBLIBORPlus400DueIn2024Memberus-gaap:SecuredDebtMember2019-05-060001670541us-gaap:SecuredDebtMemberadnt:IncrementalTermLoanMember2019-05-060001670541adnt:TermLoanBLIBORPlus400DueIn2024Membersrt:MaximumMember2019-05-062019-05-060001670541adnt:NotesDueIn2026Memberus-gaap:SeniorNotesMember2019-05-060001670541adnt:NotesDue2026Memberus-gaap:UnsecuredDebtMember2020-07-012020-09-30iso4217:EUR0001670541us-gaap:EurodollarMember2020-10-012020-12-310001670541us-gaap:UnsecuredDebtMember2020-12-312020-12-310001670541us-gaap:UnsecuredDebtMemberadnt:EuropeanInvestmentBankLoanduein2022Member2020-10-012020-12-310001670541adnt:SeniorNotesDue2025900Memberus-gaap:SeniorNotesMember2020-04-200001670541adnt:SeniorNotesDue2025900Memberus-gaap:SeniorNotesMember2020-04-202020-04-200001670541adnt:NotesDue2024Memberus-gaap:SeniorNotesMember2020-04-200001670541us-gaap:LongTermDebtMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-31adnt:instrument0001670541us-gaap:CrossCurrencyInterestRateContractMembercountry:JPus-gaap:NetInvestmentHedgingMember2020-12-31iso4217:JPY0001670541us-gaap:InterestRateCapMember2020-12-310001670541us-gaap:ForeignExchangeContractMember2019-12-310001670541us-gaap:OtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-310001670541us-gaap:OtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-09-300001670541us-gaap:OtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2020-12-310001670541us-gaap:OtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2020-09-300001670541us-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentAssetsMember2020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentAssetsMember2020-09-300001670541us-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:NondesignatedMember2020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:NondesignatedMember2020-09-300001670541us-gaap:InterestRateCapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentAssetsMember2020-12-310001670541us-gaap:InterestRateCapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentAssetsMember2020-09-300001670541us-gaap:InterestRateCapMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:NondesignatedMember2020-12-310001670541us-gaap:InterestRateCapMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:NondesignatedMember2020-09-300001670541us-gaap:DesignatedAsHedgingInstrumentMember2020-12-310001670541us-gaap:DesignatedAsHedgingInstrumentMember2020-09-300001670541us-gaap:NondesignatedMember2020-12-310001670541us-gaap:NondesignatedMember2020-09-300001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-310001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-09-300001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2020-12-310001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2020-09-300001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2020-12-310001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2020-09-300001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2020-12-310001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2020-09-300001670541us-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentLiabilitiesMember2020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentLiabilitiesMember2020-09-300001670541us-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:NondesignatedMember2020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:NondesignatedMember2020-09-300001670541us-gaap:LongTermDebtMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-09-300001670541us-gaap:LongTermDebtMemberus-gaap:NondesignatedMember2020-12-310001670541us-gaap:LongTermDebtMemberus-gaap:NondesignatedMember2020-09-300001670541us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMember2020-10-012020-12-310001670541us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMember2019-10-012019-12-310001670541us-gaap:CashFlowHedgingMemberus-gaap:CostOfSalesMemberus-gaap:ForeignExchangeContractMember2020-10-012020-12-310001670541us-gaap:CashFlowHedgingMemberus-gaap:CostOfSalesMemberus-gaap:ForeignExchangeContractMember2019-10-012019-12-310001670541us-gaap:CostOfSalesMemberus-gaap:ForeignExchangeContractMember2020-10-012020-12-310001670541us-gaap:CostOfSalesMemberus-gaap:ForeignExchangeContractMember2019-10-012019-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:InterestExpenseMember2020-10-012020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:InterestExpenseMember2019-10-012019-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:NetInvestmentHedgingMember2020-10-012020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:NetInvestmentHedgingMember2019-10-012019-12-310001670541us-gaap:OtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMember2020-12-310001670541us-gaap:OtherCurrentAssetsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:ForeignExchangeContractMember2020-12-310001670541us-gaap:OtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Member2020-12-310001670541us-gaap:OtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel3Member2020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentAssetsMember2020-12-310001670541us-gaap:FairValueInputsLevel1Memberus-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentAssetsMember2020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueInputsLevel2Member2020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueInputsLevel3Member2020-12-310001670541us-gaap:InterestRateCapMemberus-gaap:OtherNoncurrentAssetsMember2020-12-310001670541us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateCapMemberus-gaap:OtherNoncurrentAssetsMember2020-12-310001670541us-gaap:InterestRateCapMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueInputsLevel2Member2020-12-310001670541us-gaap:InterestRateCapMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueInputsLevel3Member2020-12-310001670541us-gaap:FairValueInputsLevel1Member2020-12-310001670541us-gaap:FairValueInputsLevel2Member2020-12-310001670541us-gaap:FairValueInputsLevel3Member2020-12-310001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMember2020-12-310001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:ForeignExchangeContractMember2020-12-310001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Member2020-12-310001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel3Member2020-12-310001670541us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:OtherCurrentLiabilitiesMember2020-12-310001670541us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:OtherCurrentLiabilitiesMemberus-gaap:FairValueInputsLevel1Member2020-12-310001670541us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:OtherCurrentLiabilitiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310001670541us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:OtherCurrentLiabilitiesMemberus-gaap:FairValueInputsLevel3Member2020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentLiabilitiesMember2020-12-310001670541us-gaap:FairValueInputsLevel1Memberus-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentLiabilitiesMember2020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Memberus-gaap:OtherNoncurrentLiabilitiesMember2020-12-310001670541us-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:FairValueInputsLevel3Member2020-12-310001670541us-gaap:OtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMember2020-09-300001670541us-gaap:OtherCurrentAssetsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:ForeignExchangeContractMember2020-09-300001670541us-gaap:OtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Member2020-09-300001670541us-gaap:OtherCurrentAssetsMemberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel3Member2020-09-300001670541us-gaap:InterestRateCapMemberus-gaap:OtherNoncurrentAssetsMember2020-09-300001670541us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateCapMemberus-gaap:OtherNoncurrentAssetsMember2020-09-300001670541us-gaap:InterestRateCapMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueInputsLevel2Member2020-09-300001670541us-gaap:InterestRateCapMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueInputsLevel3Member2020-09-300001670541us-gaap:FairValueInputsLevel1Member2020-09-300001670541us-gaap:FairValueInputsLevel2Member2020-09-300001670541us-gaap:FairValueInputsLevel3Member2020-09-300001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMember2020-09-300001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:ForeignExchangeContractMember2020-09-300001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Member2020-09-300001670541us-gaap:OtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel3Member2020-09-300001670541us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:OtherCurrentLiabilitiesMember2020-09-300001670541us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:OtherCurrentLiabilitiesMemberus-gaap:FairValueInputsLevel1Member2020-09-300001670541us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:OtherCurrentLiabilitiesMemberus-gaap:FairValueInputsLevel2Member2020-09-300001670541us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:OtherCurrentLiabilitiesMemberus-gaap:FairValueInputsLevel3Member2020-09-300001670541us-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentLiabilitiesMember2020-09-300001670541us-gaap:FairValueInputsLevel1Memberus-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentLiabilitiesMember2020-09-300001670541us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Memberus-gaap:OtherNoncurrentLiabilitiesMember2020-09-300001670541us-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:FairValueInputsLevel3Member2020-09-300001670541us-gaap:CommonStockMember2020-09-300001670541us-gaap:AdditionalPaidInCapitalMember2020-09-300001670541us-gaap:RetainedEarningsMember2020-09-300001670541us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001670541us-gaap:ParentMember2020-09-300001670541us-gaap:NoncontrollingInterestMember2020-09-300001670541us-gaap:RetainedEarningsMember2020-10-012020-12-310001670541us-gaap:ParentMember2020-10-012020-12-310001670541us-gaap:NoncontrollingInterestMember2020-10-012020-12-310001670541us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-10-012020-12-310001670541us-gaap:AdditionalPaidInCapitalMember2020-10-012020-12-310001670541us-gaap:CommonStockMember2020-12-310001670541us-gaap:AdditionalPaidInCapitalMember2020-12-310001670541us-gaap:RetainedEarningsMember2020-12-310001670541us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001670541us-gaap:ParentMember2020-12-310001670541us-gaap:NoncontrollingInterestMember2020-12-310001670541us-gaap:CommonStockMember2019-09-300001670541us-gaap:AdditionalPaidInCapitalMember2019-09-300001670541us-gaap:RetainedEarningsMember2019-09-300001670541us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001670541us-gaap:ParentMember2019-09-300001670541us-gaap:NoncontrollingInterestMember2019-09-300001670541us-gaap:RetainedEarningsMember2019-10-012019-12-310001670541us-gaap:ParentMember2019-10-012019-12-310001670541us-gaap:NoncontrollingInterestMember2019-10-012019-12-310001670541us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-10-012019-12-310001670541us-gaap:AdditionalPaidInCapitalMember2019-10-012019-12-310001670541srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2019-09-300001670541srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:ParentMember2019-09-300001670541srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-09-300001670541us-gaap:CommonStockMember2019-12-310001670541us-gaap:AdditionalPaidInCapitalMember2019-12-310001670541us-gaap:RetainedEarningsMember2019-12-310001670541us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001670541us-gaap:ParentMember2019-12-310001670541us-gaap:NoncontrollingInterestMember2019-12-310001670541us-gaap:AccumulatedTranslationAdjustmentMember2020-09-300001670541us-gaap:AccumulatedTranslationAdjustmentMember2019-09-300001670541us-gaap:AccumulatedTranslationAdjustmentMember2020-10-012020-12-310001670541us-gaap:AccumulatedTranslationAdjustmentMember2019-10-012019-12-310001670541us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310001670541us-gaap:AccumulatedTranslationAdjustmentMember2019-12-310001670541us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-09-300001670541us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-09-300001670541us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-10-012020-12-310001670541us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-10-012019-12-310001670541us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-12-310001670541us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-12-310001670541us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-09-300001670541us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-09-300001670541us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-12-310001670541us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-12-310001670541adnt:RedeemableNoncontrollingInterestMember2020-09-300001670541adnt:RedeemableNoncontrollingInterestMember2019-09-300001670541adnt:RedeemableNoncontrollingInterestMember2020-10-012020-12-310001670541adnt:RedeemableNoncontrollingInterestMember2019-10-012019-12-310001670541adnt:RedeemableNoncontrollingInterestMember2020-12-310001670541adnt:RedeemableNoncontrollingInterestMember2019-12-310001670541adnt:A2021RestructuringPlanMember2020-12-310001670541adnt:A2021RestructuringPlanMember2020-10-012020-12-310001670541adnt:A2020RestructuringPlanMember2019-10-012020-09-300001670541adnt:AmericasSegmentMemberadnt:A2020RestructuringPlanMember2019-10-012020-09-300001670541adnt:EMEASegmentMemberadnt:A2020RestructuringPlanMember2019-10-012020-09-300001670541adnt:A2020RestructuringPlanMemberadnt:AsiaSegmentMember2019-10-012020-09-300001670541us-gaap:EmployeeSeveranceMemberadnt:A2020RestructuringPlanMember2020-09-300001670541us-gaap:OtherRestructuringMemberadnt:A2020RestructuringPlanMember2020-09-300001670541us-gaap:ForeignCurrencyGainLossMemberadnt:A2020RestructuringPlanMember2020-09-300001670541adnt:A2020RestructuringPlanMember2020-09-300001670541us-gaap:EmployeeSeveranceMemberadnt:A2020RestructuringPlanMember2020-10-012020-12-310001670541us-gaap:OtherRestructuringMemberadnt:A2020RestructuringPlanMember2020-10-012020-12-310001670541us-gaap:ForeignCurrencyGainLossMemberadnt:A2020RestructuringPlanMember2020-10-012020-12-310001670541adnt:A2020RestructuringPlanMember2020-10-012020-12-310001670541us-gaap:EmployeeSeveranceMemberadnt:A2020RestructuringPlanMember2020-12-310001670541us-gaap:OtherRestructuringMemberadnt:A2020RestructuringPlanMember2020-12-310001670541us-gaap:ForeignCurrencyGainLossMemberadnt:A2020RestructuringPlanMember2020-12-310001670541adnt:A2020RestructuringPlanMember2020-12-310001670541adnt:RestructuringPlan2019Memberus-gaap:EmployeeSeveranceMember2020-09-300001670541adnt:RestructuringPlan2019Memberus-gaap:OtherRestructuringMember2020-09-300001670541adnt:RestructuringPlan2019Memberus-gaap:ForeignCurrencyGainLossMember2020-09-300001670541adnt:RestructuringPlan2019Member2020-09-300001670541adnt:RestructuringPlan2019Memberus-gaap:EmployeeSeveranceMember2020-10-012020-12-310001670541adnt:RestructuringPlan2019Memberus-gaap:OtherRestructuringMember2020-10-012020-12-310001670541adnt:RestructuringPlan2019Memberus-gaap:ForeignCurrencyGainLossMember2020-10-012020-12-310001670541adnt:RestructuringPlan2019Member2020-10-012020-12-310001670541adnt:RestructuringPlan2019Memberus-gaap:EmployeeSeveranceMember2020-12-310001670541adnt:RestructuringPlan2019Memberus-gaap:OtherRestructuringMember2020-12-310001670541adnt:RestructuringPlan2019Memberus-gaap:ForeignCurrencyGainLossMember2020-12-310001670541adnt:RestructuringPlan2019Member2020-12-310001670541adnt:RestructuringPlan2018Member2020-12-310001670541adnt:RestructuringPlan2017Member2020-12-310001670541adnt:RestructuringPlan2016Member2020-12-31adnt:plant0001670541us-gaap:ForeignCountryMemberus-gaap:RevenueCommissionersIrelandMember2020-10-012020-12-310001670541us-gaap:ForeignCountryMemberus-gaap:SecretariatOfTheFederalRevenueBureauOfBrazilMember2020-10-012020-12-310001670541adnt:YFAIMember2019-10-012019-12-31adnt:segment0001670541us-gaap:OperatingSegmentsMemberadnt:AmericasSegmentMember2020-10-012020-12-310001670541us-gaap:OperatingSegmentsMemberadnt:AmericasSegmentMember2019-10-012019-12-310001670541us-gaap:OperatingSegmentsMemberadnt:EMEASegmentMember2020-10-012020-12-310001670541us-gaap:OperatingSegmentsMemberadnt:EMEASegmentMember2019-10-012019-12-310001670541us-gaap:OperatingSegmentsMemberadnt:AsiaSegmentMember2020-10-012020-12-310001670541us-gaap:OperatingSegmentsMemberadnt:AsiaSegmentMember2019-10-012019-12-310001670541us-gaap:IntersegmentEliminationMember2020-10-012020-12-310001670541us-gaap:IntersegmentEliminationMember2019-10-012019-12-310001670541us-gaap:CorporateNonSegmentMember2020-10-012020-12-310001670541us-gaap:CorporateNonSegmentMember2019-10-012019-12-310001670541adnt:AdientAerospaceMember2019-10-012019-12-310001670541adnt:AmericasSegmentMemberadnt:RECAROMember2019-10-012019-12-310001670541country:BR2020-10-012020-12-310001670541us-gaap:OperatingSegmentsMembercountry:US2020-10-012020-12-310001670541country:US2019-10-012019-12-310001670541us-gaap:OperatingSegmentsMembercountry:MX2020-10-012020-12-310001670541country:MX2019-10-012019-12-310001670541us-gaap:OperatingSegmentsMemberadnt:OtherNonUSMember2020-10-012020-12-310001670541adnt:OtherNonUSMember2019-10-012019-12-310001670541us-gaap:IntersegmentEliminationMembersrt:AmericasMember2020-10-012020-12-310001670541us-gaap:IntersegmentEliminationMembersrt:AmericasMember2019-10-012019-12-310001670541srt:AmericasMember2020-10-012020-12-310001670541srt:AmericasMember2019-10-012019-12-310001670541us-gaap:OperatingSegmentsMembercountry:DE2020-10-012020-12-310001670541country:DE2019-10-012019-12-310001670541country:CZus-gaap:OperatingSegmentsMember2020-10-012020-12-310001670541country:CZ2019-10-012019-12-310001670541us-gaap:OperatingSegmentsMemberadnt:OtherEMEAExcludingGermanyMember2020-10-012020-12-310001670541adnt:OtherEMEAExcludingGermanyMember2019-10-012019-12-310001670541us-gaap:EMEAMemberus-gaap:IntersegmentEliminationMember2020-10-012020-12-310001670541us-gaap:EMEAMemberus-gaap:IntersegmentEliminationMember2019-10-012019-12-310001670541us-gaap:EMEAMember2020-10-012020-12-310001670541us-gaap:EMEAMember2019-10-012019-12-310001670541us-gaap:OperatingSegmentsMembercountry:TH2020-10-012020-12-310001670541country:TH2019-10-012019-12-310001670541us-gaap:OperatingSegmentsMembercountry:CN2020-10-012020-12-310001670541country:CN2019-10-012019-12-310001670541us-gaap:OperatingSegmentsMembercountry:JP2020-10-012020-12-310001670541country:JP2019-10-012019-12-310001670541us-gaap:OperatingSegmentsMemberadnt:OtherAsiaExcludingChinaMember2020-10-012020-12-310001670541adnt:OtherAsiaExcludingChinaMember2019-10-012019-12-310001670541srt:AsiaMemberus-gaap:IntersegmentEliminationMember2020-10-012020-12-310001670541srt:AsiaMemberus-gaap:IntersegmentEliminationMember2019-10-012019-12-310001670541srt:AsiaMember2020-10-012020-12-310001670541srt:AsiaMember2019-10-012019-12-310001670541us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2020-10-012020-12-310001670541us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2019-10-012019-12-31


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2020
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-37757
adnt-20201231_g1.jpg
Adient plc
(exact name of Registrant as specified in its charter)

Ireland98-1328821
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
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)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of exchange on which registered
Ordinary Shares, par value $0.001ADNTNew York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically 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 December 31, 2020, 94,041,202 ordinary shares were outstanding.


Adient plc
Form 10-Q
For the Three Months Ended December 31, 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
December 31,
(in millions, except per share data)20202019
Net sales$3,848 $3,936 
Cost of sales3,507 3,673 
Gross profit341 263 
Selling, general and administrative expenses149 165 
Loss on business divestitures - net— 25 
Restructuring and impairment costs7 2 
Equity income (loss)97 (113)
Earnings (loss) before interest and income taxes282 (42)
Net financing charges59 48 
Other pension expense (income)(2)(2)
Income (loss) before income taxes225 (88)
Income tax provision (benefit)52 54 
Net income (loss)173 (142)
Income (loss) attributable to noncontrolling interests23 25 
Net income (loss) attributable to Adient$150 $(167)
Earnings (loss) per share:
Basic$1.60 $(1.78)
Diluted$1.58 $(1.78)
Shares used in computing earnings per share:
Basic94.0 93.7 
Diluted94.8 93.7 

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

Adient plc | Form 10-Q | 3

Adient plc
Consolidated Statements of Comprehensive Income (Loss)
(unaudited)




Three Months Ended
December 31,
(in millions)20202019
Net income (loss)$173 $(142)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments72 59 
Realized and unrealized gains (losses) on derivatives28 15 
Other comprehensive income (loss)100 74 
Total comprehensive income (loss)273 (68)
Comprehensive income (loss) attributable to noncontrolling interests40 34 
Comprehensive income (loss) attributable to Adient $233 $(102)

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

Adient plc | Form 10-Q | 4

Adient plc
Consolidated Statements of Financial Position
(unaudited)




(in millions, except share and per share data)December 31, 2020September 30, 2020
Assets
Cash and cash equivalents$1,820 $1,692 
Accounts receivable - net
1,432 1,641 
Inventories711 685 
Assets held for sale57 43 
Other current assets476 421 
Current assets4,496 4,482 
Property, plant and equipment - net1,606 1,581 
Goodwill2,109 2,057 
Other intangible assets - net445 443 
Investments in partially-owned affiliates838 707 
Assets held for sale27 27 
Other noncurrent assets1,023 964 
Total assets$10,544 $10,261 
Liabilities and Shareholders' Equity
Short-term debt$11 $202 
Current portion of long-term debt8 8 
Accounts payable2,228 2,179 
Accrued compensation and benefits352 374 
Liabilities held for sale59 46 
Restructuring reserve194 237 
Other current liabilities732 773 
Current liabilities3,584 3,819 
Long-term debt4,342 4,097 
Pension and postretirement benefits143 145 
Other noncurrent liabilities636 622 
Long-term liabilities5,121 4,864 
Commitments and Contingencies (Note 17)
Redeemable noncontrolling interests42 43 
Preferred shares issued, par value $0.001; 100,000,000 shares authorized,
Zero shares issued and outstanding at December 31, 2020
— — 
Ordinary shares issued, par value $0.001; 500,000,000 shares authorized,
94,041,202 shares issued and outstanding at December 31, 2020
— — 
Additional paid-in capital3,980 3,974 
Accumulated deficit(1,946)(2,096)
Accumulated other comprehensive income (loss)(582)(665)
Shareholders' equity attributable to Adient1,452 1,213 
Noncontrolling interests345 322 
Total shareholders' equity1,797 1,535 
Total liabilities and shareholders' equity$10,544 $10,261 

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

Adient plc | Form 10-Q | 5
Adient plc
Consolidated Statements of Cash Flows
(unaudited)

Three Months Ended
December 31,
(in millions)20202019
Operating Activities
Net income (loss) attributable to Adient$150 $(167)
Income attributable to noncontrolling interests23 25 
Net income (loss)173 (142)
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:
Depreciation70 75 
Amortization of intangibles10 9 
Pension and postretirement contributions, net(9)(4)
Equity in earnings of partially-owned affiliates, net of dividends received (includes purchase accounting amortization of $1 and $1, respectively)
(96)(102)
Impairment of nonconsolidated partially-owned affiliate— 216 
Deferred income taxes(2)(5)
Non-cash impairment charges6 — 
Loss on divestitures - net— 25 
Equity-based compensation13 4 
Other(3)3 
Changes in assets and liabilities:
Receivables246 395 
Inventories(6)23 
Other assets(78)(2)
Restructuring reserves(53)(18)
Accounts payable and accrued liabilities(84)(267)
Accrued income taxes44 29 
Cash provided (used) by operating activities231 239 
Investing Activities
Capital expenditures(71)(91)
Sale of property, plant and equipment10 — 
Changes in long-term investments— (37)
Cash provided (used) by investing activities(61)(128)
Financing Activities
Increase (decrease) in short-term debt3 (17)
Repayment of long-term debt(18)(2)
Dividends paid to noncontrolling interests(52)(54)
Other(1)(1)
Cash provided (used) by financing activities(68)(74)
Effect of exchange rate changes on cash and cash equivalents25 4 
Increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale127 41 
Change in cash classified within current assets held for sale1 — 
Increase (decrease) in cash and cash equivalents128 41 
Cash and cash equivalents at beginning of period1,692 924 
Cash and cash equivalents at end of period$1,820 $965 

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 and trim covers. Adient is an independent seat supplier with global scale and the capability to design, develop, engineer, manufacture, and deliver complete seat systems and components in every major automotive producing region in the world.

Basis of Presentation
The consolidated financial statements of Adient have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). During fiscal 2020, Adient faced an unprecedented situation with the coronavirus pandemic identified in late 2019 ("COVID-19") and the related significant interruption it had on Adient's 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 2020) and did not return to operations until the end of March 2020. 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 also experienced the shutdown of approximately 50% of its plants in Asia (outside China) during late March and early April. During May and June 2020, production started to resume in the Americas, European and Asia (outside China) regions concurrent with Adient's customers resuming operations and production continued to ramp up throughout Adient’s fiscal fourth quarter of fiscal 2020 in all regions in line with customer production. Virtually all of Adient's plants have resumed production by December 31, 2020.

Principles of Consolidation
Adient consolidates its wholly-owned subsidiaries and those entities in which it has a controlling interest. Investments in partially-owned affiliates are accounted for by the equity method when Adient's interest exceeds 20% and does not have a controlling interest.
Consolidated VIEs
Based upon the criteria set forth in the Financial Accounting Standards Board (the FASB) Accounting Standards Codification (ASC) 810, "Consolidation," Adient has determined that it was the primary beneficiary in two variable interest entities (VIEs) for the reporting periods ended December 31, 2020, and September 30, 2020, respectively, as Adient absorbs significant economics of the entities and has the power to direct the activities that are considered most significant to the entities.
The two VIEs manufacture seating products in North America for the automotive industry. Adient funds the entities' short-term liquidity needs through revolving credit facilities and has the power to direct the activities that are considered most significant to the entities through its key customer supply relationships.
The carrying amounts and classification of assets (none of which are restricted) and liabilities included in Adient's consolidated statements of financial position for the consolidated VIEs are as follows:

(in millions)December 31, 2020September 30, 2020
Current assets$211 $217 
Noncurrent assets78 74 
Total assets$289 $291 
Current liabilities$176 $204 
Noncurrent liabilities10 10 
Total liabilities$186 $214 

Adient plc | Form 10-Q | 7

Earnings Per Share
The following table shows the computation of basic and diluted earnings (loss) per share:
Three Months Ended
December 31,
(in millions, except per share data)20202019
Numerator:
Net income (loss) attributable to Adient$150 $(167)
Denominator:
Shares outstanding94.0 93.7 
Effect of dilutive securities0.8 — 
Diluted shares94.8 93.7 
Earnings (loss) per share:
Basic$1.60 $(1.78)
Diluted$1.58 $(1.78)

Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings
per share for the three months ended December 31, 2019, which is a result of all periods presented being in a loss position.

New Accounting Pronouncements

Standards Adopted During Fiscal 2021

On October 1, 2020, Adient adopted Accounting Standards Codification 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. ASU 2016-13 changes the impairment model for financial assets measured at amortized cost, requiring presentation at the net amount expected to be collected. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts. Available-for-sale debt securities with unrealized losses will now be recorded through an allowance for credit losses. The adoption of this guidance on October 1, 2020 did not significantly impact Adient's consolidated financial statements for the three months ended December 31, 2020.

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, eliminates, adds, and modifies certain disclosure requirements for fair value measurements. The amendments with respect to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are to be applied prospectively. All other amendments are to be applied retrospectively to all periods presented. The adoption of this guidance on October 1, 2020 did not significantly impact Adient's consolidated financial statements for the three months ended December 31, 2020.

ASU 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities, affects reporting entities that are required to determine whether they should consolidate a legal entity under the guidance within the Variable Interest Entities Subsections of Subtopic 810-10, Consolidation - Overall. The adoption of this guidance on October 1, 2020 did not significantly impact Adient's consolidated financial statements for the three months ended December 31, 2020.

Adient plc | Form 10-Q | 8

Standards Effective After Fiscal 2021

Adient has considered the ASUs summarized below, effective after fiscal 2020, none of which is expected to significantly impact the consolidated financial statements:
Standard AdoptedDescriptionDate Effective
ASU 2018-14 Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)
ASU 20218-14 eliminates, adds, and modifies certain disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The guidance is to be applied on a retrospective basis.
October 1, 2021
ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income TaxesASU 2019-12 modifies ASC 740, Income Taxes, by simplifying accounting for income taxes. As part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements, the FASB’s amendments may impact both interim and annual reporting periods.October 1, 2021
ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity by reducing the number of accounting models for convertible debt and convertible preferred stock.October 1, 2022


2. Revenue Recognition

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

In a typical arrangement with the customer, purchase orders are issued for pre-production activities which consist of engineering, design and development, tooling and prototypes for the manufacture and delivery of component parts. Adient has concluded that these activities are not in the scope of ASC 606 and for that reason, there have been no changes to how Adient accounts for reimbursable pre-production costs.

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

Contract assets primarily relate to the right to consideration for work completed, but not billed at the reporting date on contracts with customers. The contracts assets are transferred to receivables when the rights become unconditional. Contract liabilities primarily relate to contracts where advance payments or deposits have been received, but performance obligations have not yet been satisfied and revenue has not been recognized. No significant contract assets or liabilities were identified at September 30, 2020 or at December 31, 2020. As described above, the issuance of a purchase order and/or a materials release by the customer represents the point at which an enforceable contract with the customer exists. Therefore, Adient has elected to apply the practical expedient in ASC 606, paragraph 606-10-50-14 and does not disclose information about the remaining performance obligations that have an original expected duration of one year or less. Refer to Note 15, "Segment Information," of the notes to
Adient plc | Form 10-Q | 9

consolidated financial statements for disaggregated revenue by geographical market.

3. Acquisitions and Divestitures

Divestitures

Adient Aerospace, LLC ("Adient Aerospace") became operational on October 11, 2018 with Adient’s initial ownership position in Adient Aerospace being 50.01%. Initial contributions of $28 million were made during the first quarter of fiscal 2019 by each partner. On October 25, 2019, Adient reached an agreement with Boeing in which Adient's ownership position was reduced to 19.99%, resulting in the deconsolidation of Adient Aerospace on that date, including $37 million of cash. Adient recorded a $4 million loss as a result of the transaction in the Americas segment, including $21 million of allocated goodwill. Adient Aerospace develops, manufactures, and sells a portfolio of seating products to airlines and aircraft leasing companies for installation on Boeing and other OEM commercial airplanes, for both production line-fit and retrofit configurations.

On December 31, 2019, Adient sold the RECARO automotive high performance seating systems business to a group of investors for de minimis proceeds. As a result of the sale, Adient recorded a loss of $21 million during the quarter ending December 31, 2019. For fiscal 2019, the RECARO business recorded $148 million of net sales and insignificant pre-tax income.

On January 31, 2020 (as amended on June 24, 2020), Adient, Yanfeng Automotive Trim Systems Company Ltd. (“Yanfeng”), Adient Yanfeng Seating Mechanisms Co., Ltd. (“AYM”), a joint venture owned, directly or indirectly, by Yanfeng (50%) and Adient (50%), Yanfeng Adient Seating Co., Ltd. (“YFAS”), a joint venture owned, directly or indirectly, by Yanfeng (50.01%) and Adient (49.99%) and Yanfeng Global Automotive Interior Systems Co. ("YFAI"), a joint venture owned, directly or indirectly, by Yanfeng (70%) and Adient (30%), entered into a Master Agreement (the “Agreement”, collectively referred to as “Yanfeng transaction”), pursuant to which the parties have agreed, among other things, that:

•Adient would transfer all of the issued and outstanding equity interest in YFAI held, directly or indirectly, by Adient, which represents 30% of YFAI’s total issued and outstanding equity interest, to Yanfeng for $369 million, of which $309 million was paid at the closing of the agreed transactions and the remaining $60 million will be paid on a deferred basis post-closing. With respect to each YFAI fiscal year ending after the closing, starting with the year ending December 31, 2020, Adient will be paid an earnout in an amount equal to 30% percent of YFAI’s distributable earnings for such year until such time as the $60 million deferred purchase price is fully paid;

•Adient and Yanfeng would amend the YFAS Joint Venture Contract, dated as of October 22, 1997, as amended, and the Articles of Association of YFAS, dated as of October 22, 1997, as amended, in each case in order to extend the term of the YFAS joint venture until December 31, 2038;

•Adient would transfer all patents, trademarks and copyrights, know-how, trade secrets and other intellectual property rights owned by Adient (or certain of its subsidiaries) and used exclusively in the conduct of Adient’s mechanism business as of the date of such transfer (the “Transferred IP”) to AYM for $20 million, and in connection with such transfer, (i) AYM will grant back to Adient a sole license with respect to the Transferred IP on a worldwide and royalty-free basis, (ii) Adient will grant AYM a worldwide and royalty-free license with respect to certain intellectual property rights owned by Adient (or certain of its subsidiaries) and used on a non-exclusive basis in the conduct of Adient’s mechanism business, and (iii) Adient and AYM will license to each other certain improvements to the Transferred IP, as well as certain other intellectual property rights developed or acquired by Adient, AYM or certain of their respective subsidiaries and relating to the mechanism business; and

•Adient and Yanfeng would amend the AYM Equity Joint Venture Contract, dated as of September 9, 2013, as amended, and the Articles of Association of AYM, dated as of September 9, 2013, as amended to, among other things, (i) make certain governance changes such that Yanfeng will control and consolidate the results of AYM for financial reporting and accounting purposes, and (ii) expand AYM’s business and customer scope such that it may carry out its seating mechanism business anywhere in and outside of the People’s Republic of China, in each case, on the terms and subject to the conditions set forth in the Agreement and the relevant definitive agreements to be entered into in connection therewith.

The transactions agreed on January 31, 2020, as amended on June 24, 2020, were cross-conditioned on each other and closed in accordance with the terms above on August 21, 2020. Proceeds from the transactions of $329 million were received at closing and will be used by Adient for general corporate purposes or to potentially pay down a portion of Adient’s debt subject to the
Adient plc | Form 10-Q | 10

ongoing impacts of the COVID-19 pandemic. The terms of the Master Agreement as described above are consistent with non-binding terms reached in December 2019.

As a result of the January 31, 2020 agreement, as amended on June 24, 2020, described above, Adient concluded that indicators of other-than-temporary impairment were present related to the investment in YFAI as of December 31, 2019, June 30, 2020 and upon closing. Upon entering into a formal agreement to sell the YFAI investment, Adient determined that other-than-temporary impairment did exist and recorded a $216 million non-cash impairment of Adient's YFAI investment during the quarter ended December 31, 2019. As a result of the June 24, 2020 modifications to the agreement described above, Adient recorded $6 million of additional non-cash impairment of Adient's YFAI investment during the quarter ended June 30, 2020. Upon closing of the transaction, an additional $9 million of impairment was recorded due to receipt of proceeds in U.S. dollars. The impairments were determined based on combining the fair value of consideration received for all transactions contemplated within the Master Agreement, including an estimated fair value of the YFAS joint venture extension, and allocating the total consideration received to the individual transactions based on relative fair values. Adient estimated the fair value of the individual transactions using both an income approach and market approach. The inputs utilized in the fair value analyses of the transactions are classified as level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement" and primarily consisted of expected future operating margins and cash flows of YFAI, estimated production volumes, estimated dividend payments from YFAS over the extension period, estimated terminal values of YFAS, market comparables, weighted-average costs of capital (YFAI - 15.0%, YFAS - 10.5%), and noncontrolling interest discounts. As a result of the pending divestiture of the YFAI investment and the corresponding impairment, Adient ceased recognizing equity income from YFAI subsequent to December 31, 2019 (YFAI equity income was $40 million in fiscal year 2019). In addition, upon the closing of the transaction, an intangible asset of $92 million was recorded associated with the YFAS joint venture extension to be amortized over the 18-year term of the extension.

On September 30, 2020, Adient closed on the sale of its automotive fabrics manufacturing business including the lamination business to Sage Automotive Interiors for net proceeds of approximately $170 million, net of $4 million of cash divested within the business. Proceeds from the transaction are expected to be used by Adient for general corporate purposes or to potentially pay down a portion of Adient's debt subject to the ongoing impact of the COVID-19 pandemic. A minimal gain was recorded as a result of the transaction after allocating $80 million of goodwill to the disposed business. The sale transaction included 11 facilities globally with the majority located in EMEA and approximately 1,300 employees. For fiscal years 2020 and 2019, the fabrics manufacturing business recorded $99 million and $130 million of third party sales and a nominal amount and $8 million of pre-tax income, respectively.

All of the divestiture transactions described above align with Adient's strategy of focusing on its core, high-volume seating business.

Assets held for sale

During the first quarter of fiscal 2021, Adient committed to a plan to sell certain assets in France. As a result, these assets were classified as assets held for sale and were required to be adjusted to the lower of fair value less cost to sell or carrying value. Adient recorded an impairment charge of $6 million within restructuring and impairment costs on the consolidated statement of income (loss) during the current quarter. The impairment was measured using third party sales pricing to determine fair values of the assets. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement."

During fiscal 2020, Adient committed to a plan to sell certain entities in China and certain properties in the U.S. As a result, these assets were classified as assets held for sale and were required to be adjusted to the lower of fair value less cost to sell or carrying value. This resulted in an impairment charge of $21 million which was recorded within restructuring and impairment costs on the consolidated statement of income (loss) during fiscal 2020, of which $12 million related to America’s assets and $9 million related to China’s assets. The impairment was measured using third party sales pricing to determine fair values of the assets. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement."

Adient plc | Form 10-Q | 11


4. Inventories

Inventories consisted of the following:
(in millions)December 31, 2020September 30, 2020
Raw materials and supplies$539 $530 
Work-in-process26 22 
Finished goods146 133 
Inventories$711 $685 


5. Goodwill and Other Intangible Assets

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

(in millions)AmericasEMEAAsiaTotal
Balance at September 30, 2020$606 $368 $1,083 $2,057 
Currency translation and other2 20 30 52 
Balance at December 31, 2020$608 $388 $1,113 $2,109 

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

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

 December 31, 2020September 30, 2020
(in millions)Gross
Carrying
Amount		Accumulated
Amortization		NetGross
Carrying
Amount		Accumulated
Amortization		Net
Intangible assets
Patented technology$28 $(19)$9 $27 $(19)$8 
Customer relationships439 (115)324 424 (103)321 
Trademarks43 (29)14 41 (27)14 
Miscellaneous110 (12)98 110 (10)100 
Total intangible assets$620 $(175)$445 $602 $(159)$443 

Amortization of other intangible assets for the three months ended December 31, 2020 and 2019 was $10 million and $9 million, respectively.

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

Adient plc | Form 10-Q | 12


6. Product Warranties

Adient offers warranties to its customers depending upon the specific product and terms of the customer purchase agreement. A typical warranty program requires that Adient replace defective products within a specified time period from the date of sale. Adient records an estimate for future warranty-related costs based on actual historical return rates and other known factors. Based on analysis of return rates and other factors, Adient's warranty provisions are adjusted as necessary. Adient monitors its warranty activity and adjusts its reserve estimates when it is probable that future warranty costs will be different than those estimates. Adient's product warranty liability is recorded in the consolidated statements of financial position in other current liabilities.
The changes in Adient's total product warranty liability are as follows:
Three Months Ended
December 31,
(in millions)20202019
Balance at beginning of period$24 $22 
Accruals for warranties issued during the period3 4 
Changes in accruals related to pre-existing warranties (including changes in estimates)(1)(1)
Settlements made (in cash or in kind) during the period(2)(2)
Balance at end of period$24 $23 


7. Leases

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

The components of lease costs included in the consolidated statement of income (loss) for the three months ended December 31, 2020 and 2019 were as follows:

Three Months Ended
December 31,
(in millions)20202019
Operating lease cost$30 $33 
Short-term lease cost6 5 
Total lease cost$36 $38 

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

(in millions)December 31, 2020September 30, 2020
Operating lease right-of-use assetsOther noncurrent assets$332 $334 
Operating lease liabilities - currentOther current liabilities$95 $95 
Operating lease liabilities - noncurrentOther noncurrent liabilities243 244 
$338 $339 

Maturities of operating lease liabilities and minimum payments for operating leases having initial or remaining non-cancelable terms in excess of one year as of December 31, 2020 were as follows:

Adient plc | Form 10-Q | 13

Operating leases
Fiscal years (in millions)December 31, 2020
2021 (excluding the three months ended December 31, 2020)$104 
202282 
202364 
202445 
202534 
Thereafter60 
Total lease payments389 
Less: imputed interest(51)
Present value of lease liabilities$338 

Supplemental cash flow information related to leases was as follows:

Three Months Ended
December 31,
(in millions)20202019
Right-of-use assets obtained in exchange for lease obligations:
Operating leases (non-cash activity)$24 $12 
Operating cash flows:
Cash paid for amounts included in the measurement of lease liabilities$29 $32 

The weighted average remaining lease term for Adient's operating leases as of December 31, 2020 was 5 years. The weighted average discount rate for Adient's operating leases as of December 31, 2020 was 5.9%.
Adient plc | Form 10-Q | 14


8. Debt and Financing Arrangements

Debt consisted of the following:
(in millions)December 31, 2020September 30, 2020
Long-term debt:
Term Loan B - LIBOR plus 4.25% due in 2024
$788 $790 
4.875% Notes due in 2026
797 797 
3.50% Notes due in 2024
1,230 1,173 
7.00% Notes due in 2026
800 800 
9.00% Notes due in 2025
600 600 
European Investment Bank Loan - EURIBOR plus 1.58% due in 2022
187 — 
Less: debt issuance costs(52)(55)
Gross long-term debt4,350 4,105 
Less: current portion8 8 
Net long-term debt$4,342 $4,097 
Short-term debt:
European Investment Bank Loan - EURIBOR plus 1.58% due in 2022
$— $194 
Other bank borrowings11 8 
Total short-term debt$11 $202 

Adient US LLC ("Adient US"), a wholly owned subsidiary of Adient, together with certain of Adient's other subsidiaries, maintains an asset-based revolving credit facility (the “ABL Credit Facility”), which provides for a revolving line of credit up to $1,250 million, including a North American subfacility of up to $950 million and a European subfacility of up to $300 million, subject to borrowing base capacity. 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 Term Loan 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. As of December 31, 2020, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of $930 million (net of $134 million of letters of credit).
In addition, Adient US and Adient Global Holdings S.à r.l., a wholly-owned subsidiary of Adient, maintain a term loan credit agreement (the “Term Loan B Agreement”) providing for a 5-year $800 million senior secured term loan facility that was fully drawn on closing. The Term Loan B Agreement amortizes in equal quarterly installments at a rate of 1.00% per annum of the original principal amount thereof, with the remaining balance due at final maturity on May 6, 2024. Interest on the Term Loan 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 Term Loan B Agreement also permits Adient to incur incremental term loans in an aggregate amount not to exceed the greater of $750 million and an unlimited amount subject to a pro forma first lien secured net leverage ratio of not greater than 1.75 to 1.00 and certain other conditions.

Adient plc | Form 10-Q | 15

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

The ABL Credit Facility, Term Loan B Agreement and the Senior First Lien Notes due 2026 contain covenants that are usual and customary for facilities and debt instruments of this type and that, among other things, restrict the ability of Adient and its restricted subsidiaries to: create certain liens and enter into sale and lease-back transactions; create, assume, incur or guarantee certain indebtedness; pay dividends or make other distributions on, or repurchase or redeem, Adient’s capital stock or certain other debt; make other restricted payments; and consolidate or merge with, or convey, transfer or lease all or substantially all of Adient’s and its restricted subsidiaries’ assets, to another person. These covenants are subject to a number of other limitations and exceptions set forth in the agreements. The agreements also provide for customary events of default, including, but not limited to, cross-default clauses with other debt arrangements, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving Adient and its significant subsidiaries.

Adient Global Holdings Ltd. ("AGH"), a wholly-owned subsidiary of Adient, maintains $900 million aggregate principal amount of 4.875% USD-denominated unsecured notes due 2026. During the fourth quarter of fiscal 2020, Adient redeemed $103 million of face value of these notes, resulting in a remaining balance of $797 million as of September 30, 2020. AGH also maintains €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 €152 million in an unsecured term loan from the European Investment Bank ("EIB") due in 2022. The loan bears interest at the 6-month EURIBOR rate plus 158 basis points. Adient is compliant with the net leverage ratio of 5.00x at December 31, 2020 and expects to be compliant for the foreseeable future, and has therefore classified this loan as long-term at December 31, 2020. During the first quarter of fiscal 2021, Adient repaid $16 million of the EIB loan, triggered in part by the redemption of debt in the prior year.

On April 20, 2020, Adient US issued $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 Adient Global Holdings Ltd (“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 is due 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. Adient incurred $10 million of debt issuance cost associated with this new debt in fiscal 2020.

Net Financing Charges

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

Three Months Ended
December 31,
(in millions)20202019
Interest expense, net of capitalized interest costs$59 $48 
Banking fees and debt issuance cost amortization3 4 
Interest income(2)(4)
Net foreign exchange(1)— 
Net financing charges$59 $48 

Adient plc | Form 10-Q | 16


9. Derivative Instruments and Hedging Activities

Adient selectively uses derivative instruments to reduce Adient's market risk associated with changes in foreign currency. Under Adient's policy, the use of derivatives is restricted to those intended for hedging purposes; the use of any derivative instrument for speculative purposes is strictly prohibited. A description of each type of derivative utilized to manage Adient's risk is included in the following paragraphs. In addition, refer to Note 10, "Fair Value Measurements," of the notes to consolidated financial statements for information related to the fair value measurements and valuation methods utilized by Adient for each derivative type.
Adient has global operations and participates in the foreign exchange markets to minimize its risk of loss from fluctuations in foreign currency exchange rates. Adient primarily uses foreign currency exchange contracts to hedge certain foreign exchange rate exposures. Adient hedges 70% to 90% of the nominal amount of each of its known foreign exchange transactional exposures. Gains and losses on derivative contracts offset gains and losses on underlying foreign currency exposures. These contracts have been designated as cash flow hedges under ASC 815, "Derivatives and Hedging," and the hedge gains or losses due to changes in fair value are initially recorded as a component of accumulated other comprehensive income (AOCI) and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings. All contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates at December 31, 2020 and September 30, 2020, respectively.
As of December 31, 2020, the €1.0 billion aggregate principal amount of 3.50% euro-denominated unsecured notes due 2024 was designated as a net investment hedge to selectively hedge portions of Adient's net investment in Europe. The currency effects of Adient's euro-denominated bonds are reflected in the AOCI account within shareholders' equity attributable to Adient where they offset gains and losses recorded on Adient's net investment in Europe.
Adient entered into a cross-currency interest rate swap during fiscal 2019 to selectively hedge portions of its net investment in Japan. The currency effects of the cross-currency interest rate swap is reflected in the AOCI account within shareholders' equity attributable to Adient, where they offset gains and losses recorded on Adient's net investment in Japan. As of December 31, 2020, Adient had one cross-currency interest rate swap outstanding totaling approximately ¥11 billion designated as a net investment hedge in Adient's net investment in Japan.

Adient purchased interest rate caps during fiscal 2019 to selectively limit the impact of USD LIBOR increases on its interest payments related to Adient's Term Loan B Agreement. The interest rate caps are designated as cash flow hedges under ASC 815. As of December 31, 2020, Adient had two outstanding interest rate caps with total notional amount of approximately $200 million.

Adient entered into a ¥950 million foreign exchange forward contract during the first quarter of fiscal 2020 to selectively hedge portions of its net investment in China. The currency effects of the forward contract are reflected in the AOCI account within shareholders' equity attributable to Adient, where they offset gains and losses recorded on Adient’s net investment in China. The forward contract matured in June 2020.

Adient plc | Form 10-Q | 17

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

 Derivatives and Hedging
Activities Designated as
Hedging Instruments
under ASC 815		Derivatives and Hedging
Activities Not Designated as
Hedging Instruments
under ASC 815
(in millions)December 31, 2020September 30, 2020December 31, 2020September 30, 2020
Other current assets
Foreign currency exchange derivatives$15 $5 $3 $— 
Other noncurrent assets
Foreign currency exchange derivatives2 — — — 
Interest rate cap— — — — 
Total assets$17 $5 $3 $— 
Other current liabilities
Foreign currency exchange derivatives$15 $34 $— $— 
Cross-currency interest rate swaps3 1 
Other noncurrent liabilities
Foreign currency exchange derivatives1 5 — — 
Long-term debt
Foreign currency denominated debt1,230 1,173 — — 
Total liabilities$1,249 $1,213 $— $— 

Adient enters into International Swaps and Derivatives Associations (ISDA) master netting agreements with counterparties that permit the net settlement of amounts owed under the derivative contracts. The master netting agreements generally provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event. Adient has not elected to offset the fair value positions of the derivative contracts recorded in the consolidated statements of financial position. Collateral is generally not required of Adient or the counterparties under the master netting agreements. As of December 31, 2020 and September 30, 2020, no cash collateral was received or pledged under the master netting agreements.

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

AssetsLiabilities
(in millions)December 31, 2020September 30, 2020December 31, 2020September 30, 2020
Gross amount recognized$20 $5 $1,249 $1,213 
Gross amount eligible for offsetting(11)(5)(11)(5)
Net amount$9 $— $1,238 $1,208 


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

Three Months Ended
December 31,
(in millions)20202019
Foreign currency exchange derivatives$30 $22 

Adient plc | Form 10-Q | 18

The following table presents the location and amount of the effective portion of pretax gains (losses) on cash flow hedges reclassified from AOCI into Adient's consolidated statements of income:
(in millions)Three Months Ended
December 31,
20202019
Foreign currency exchange derivativesCost of sales$(5)$2 

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

(in millions)Three Months Ended
December 31,
20202019
Foreign currency exchange derivativesCost of sales$— $(1)
Foreign currency exchange derivativesNet financing charges2 — 
Total$2 $(1)

The effective portion of pretax gains (losses) recorded in currency translation adjustment (CTA) within other comprehensive income (loss) related to net investment hedges was $(58) million and $(29) million for the three months ended December 31, 2020 and 2019, respectively. For the three months ended December 31, 2020 and 2019, respectively, no gains or losses were reclassified from CTA into income for Adient's outstanding net investment hedges. There was no ineffectiveness on cash flow hedges during the three months ended December 31, 2020 and 2019.

10. Fair Value Measurements

ASC 820, "Fair Value Measurement," defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.
ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
Adient plc | Form 10-Q | 19

Recurring Fair Value Measurements
The following tables present Adient's fair value hierarchy for those assets and liabilities measured at fair value:
 Fair Value Measurements Using:
(in millions)Total as of
December 31,
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$18 $— $18 $— 
Other noncurrent assets
Foreign currency exchange derivatives2 — 2 — 
Interest rate cap— — — — 
Total assets$20 $— $20 $— 
Other current liabilities
Foreign currency exchange derivatives$15 $— $15 $— 
Cross-currency interest rate swaps3 — 3 — 
Other noncurrent liabilities
Foreign currency exchange derivatives1 — 1 — 
Total liabilities$19 $— $19 $— 

Fair Value Measurements Using:
(in millions)Total as of
September 30,
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$5 $— $5 $— 
Other noncurrent assets
Interest rate cap— — — — 
Total assets$5 $— $5 $— 
Other current liabilities
Foreign currency exchange derivatives$34 $— $34 $— 
Cross-currency interest rate swaps1— 1— 
Other noncurrent liabilities
Foreign currency exchange derivatives5 — 5 — 
Total liabilities$40 $— $40 $— 

Valuation Methods
Foreign currency exchange derivatives Adient selectively hedges anticipated transactions and net investments that are subject to foreign exchange rate risk primarily using foreign currency exchange hedge contracts. The foreign currency exchange derivatives are valued under a market approach using publicized spot and forward prices. Changes in fair value on foreign exchange derivatives accounted for as hedging instruments under ASC 815 are initially recorded as a component of AOCI and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings. These contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates at December 31, 2020 and September 30, 2020, respectively. The changes in fair value of foreign currency exchange derivatives not designated as hedging instruments under ASC 815 are recorded in the consolidated statements of income.
Adient plc | Form 10-Q | 20


Cross-currency interest rate swaps Adient determines the fair value of a cross-currency interest rate swap contract using a market approach which is based on quoted market price for similar instruments in markets. All significant inputs are corroborated by observable market data for the term of such a contract. Adient selectively uses cross-currency interest rate swaps to hedge portions of its net investments. As of December 31, 2020, Adient had one ¥11 billion cross-currency interest rate swap outstanding.

Interest rate caps Adient determines the fair value of an interest rate cap contract using a market approach which is based on quoted market price for identical or similar instruments in markets. All significant inputs are corroborated by observable market data for the term of such a contract. Adient selectively uses interest rate caps to limit the impact of floating rate interest payment increases on its Term Loan B Agreement. The interest rate caps are designated as cash flow hedges under ASC 815. As of December 31, 2020, Adient had two interest rate caps outstanding totaling approximately $200 million.
The fair value of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values. The fair value of long-term debt, which was $4.5 billion and $4.1 billion at December 31, 2020 and September 30, 2020, respectively, was determined primarily using market quotes classified as Level 1 inputs within the ASC 820 fair value hierarchy.


11. Equity and Noncontrolling Interests

For the three months ended December 31, 2020:

(in millions)Ordinary SharesAdditional Paid-in CapitalRetained Earnings
(Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)Shareholders' Equity Attributable
to Adient		Shareholders' Equity Attributable to Noncontrolling InterestsTotal Equity
Balance at September 30, 2020$— $3,974 $(2,096)$(665)$1,213