Goodwill and Other Intangible Assets

12 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

6. Goodwill and Other Intangible Assets

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


(in millions)	Americas		EMEA		Asia		Total









Balance at September 30, 2019	$	638	$	429	$	1,083	$	2,150
Business divestitures	(21)		(80)		—		(101)
Currency translation and other	(11)		19		—		8
Balance at September 30, 2020	$	606	$	368	$	1,083	$	2,057
Business acquisitions	—		—		188		188

Business divestitures	—		(11)		—		(11)
Currency translation and other	1		(3)		(20)		(22)
Balance at September 30, 2021	$	607	$	354	$	1,251	$	2,212

Refer to Note 3, "Acquisitions and Divestitures," of the notes to consolidated financial statements for additional information.

Adient evaluates its goodwill for impairment on an annual basis, or as facts and circumstances warrant. Adient performed its annual goodwill impairment test during the fourth quarter of fiscal 2021 using a fair value method based on management's

judgments and assumptions regarding future cash flows. The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. Adient estimated the fair value of each of its reporting units using an income approach, which utilized Level 3 unobservable inputs. These calculations contain uncertainties as they require management to make assumptions about market comparables, future cash flows, and the appropriate discount rates (based on weighted average cost of capital ranging from 15.0% to 17.5%) to reflect the risk inherent in the future cash flows and to derive a reasonable enterprise value and related premium. The estimated future cash flows reflect management's latest assumptions of the financial projections based on current and anticipated competitive landscape, including estimates of revenue based on production volumes over the foreseeable future and long-term growth rates, and operating margins based on historical trends and future cost containment activities. The financial projections also considered the impact that the COVID-19 pandemic as well as the semiconductor shortages and higher commodity pricing and shipping costs are having on Adient’s current and future operations as well as the impact to new vehicle sales in future years. As a result of the test, there was no goodwill impairment recorded for the fiscal year ended September 30, 2021. A change in any of these estimates and assumptions, especially as it relates to the extent of the COVID-19 pandemic’s, the semiconductor shortages’ impacts on vehicle production volumes within the automotive industry, the impact of commodity pricing and shipping costs as well as the demand for new vehicle sales once the current operational disruptions are over, could produce significantly lower fair values of Adient's reporting units, which could have a material impact on its results of operations.

Due to the COVID-19 pandemic and the significant interruption it has caused to Adient’s operations in fiscal 2020, Adient tested goodwill for impairment for each of its reporting units for the quarter ended March 31, 2020 and also performed its annual goodwill test during the fourth quarter of fiscal 2020 (based on weighted average cost of capital ranging from 15.0% to 17.5% as of March 31, 2020 and 16.0% to 18.5% as of September 30, 2020). As a result of the tests, there was no goodwill impairment recorded during the quarter ended March 31, 2020 or during the fourth quarter of fiscal 2020.

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


	September 30, 2021						September 30, 2020
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Intangible assets
Patented technology	$	86	$	(19)	$	67	$	27	$	(19)	$	8
Customer relationships	649		(178)		471		424		(103)		321
Trademarks	26		(21)		5		41		(27)		14
Miscellaneous	24		(12)		12		110		(10)		100
Total intangible assets	$	785	$	(230)	$	555	$	602	$	(159)	$	443

On September 30, 2021, Adient acquired CQADNT and LFADNT as part of the 2021 Yanfeng Transaction and recorded $176 million of customer relationships and $60 million of patented technology intangibles. The values of the intangible assets were determined based on independent appraisals. Adient evaluates its other intangible assets for impairment as facts and circumstances warrant. As part of the 2020 Yanfeng Transaction, Adient recorded an intangible asset of $92 million associated with the YFAS joint venture extension to 2038 (reflected in the Miscellaneous line in the table above), to be amortized over the 18-year term of the extension. During the fourth quarter of fiscal 2021, Adient wrote off the remaining balance of the intangible asset ($86 million) as a result of the 2021 Yanfeng Transaction. Refer to Note 3, "Acquisitions and Divestitures," of the notes to the consolidated financial statements for additional information.

During the third quarter of fiscal 2020, a pre-tax non-cash impairment of $27 million was recorded in the Asia segment related to customer relationship intangible assets of $24 million and other long-lived assets of $3 million within the Futuris China business due to an overall decline in forecasted operations within that business. During the second quarter of fiscal 2019, of the $66 million long-lived asset impairment charge recognized, $4 million was attributable to a customer relationship intangible asset. The impairments were calculated based on a fair value method using discounted cash flows that involves the use of management judgements and estimates related to forecasted revenue, operating costs and discount rates. Refer to Note 18, “Segment Information,” and Note 16, "Impairment of Long-Lived Assets," of the notes to the consolidated financial statements for additional information.

Amortization of other intangible assets for the fiscal years ended September 30, 2021, 2020 and 2019 was $45 million, $37 million and $40 million, respectively. Adient anticipates amortization for fiscal 2022, 2023, 2024, 2025 and 2026 will be approximately $54 million, $53 million, $51 million, $49 million and $48 million, respectively.