8-K
Adient plc (ADNT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): September 30, 2021
ADIENT PLC
(Exact name of registrant as specified in its charter)
| Ireland | 001-37757 | 98-1328821 |
|---|---|---|
| (State or Other Jurisdiction<br> <br>of Incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification Number) |
| 25-28 North Wall Quay, IFSC<br> <br>Dublin 1, Ireland D01 H104 | ||
| --- | ||
| (Address of principal executive offices) |
Registrant’s telephone number, including area code: 734-254-5000
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of class | Trading<br> <br>symbol(s) | Name of exchange<br> <br>on which registered |
|---|---|---|
| Ordinary Shares, par value $0.001 | ADNT | New York Stock Exchange |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
|---|
On September 30, 2021, Adient plc (“Adient”) completed the transactions contemplated by the previously disclosed Master Agreement, dated as of March 12, 2021, by and among Adient Asia Holdings Co., Ltd. (“Adient Asia”), Qiyue (Shanghai) Trading Co., Ltd. (“Qiyue”), a direct, wholly-owned subsidiary of Adient Asia, Yanfeng Automotive Trim Systems Company Ltd. (“Yanfeng”), Yanfeng Adient Seating Co., Ltd., a joint venture owned, directly or indirectly, by Yanfeng (50.01%) and Adient Asia (49.99%) (“YFAS”) and KEIPER Seating Mechanisms Co., Ltd. (f/k/a Adient Yanfeng Seating Mechanisms Co., Ltd.), a joint venture owned, directly or indirectly, by Yanfeng (50%) and Adient Asia (50%) (“KEIPER”), filed as Exhibit 10.1 to the Current Report on Form 8-K dated March 12, 2021 and filed with the Securities and Exchange Commission (“SEC”) on March 12, 2021. Except for amounts described under “Dispositions” below, Chinese Renminbi (“RMB”) amounts and corresponding U.S. Dollars (“USD” or “US$”) amounts in this Current Report on Form 8-K are based on a USD to RMB exchange rate as of September 28, 2021 of 6.46 RMB to each USD. RMB amounts and corresponding USD amounts described below under “Dispositions” are based on a USD to RMB exchange rate of 6.66 RMB to each USD, which rate reflects the derivative contract rate used to hedge the net proceeds received by Adient from such transactions.
The following series of related dispositions, acquisitions and other transactions that were contemplated by the Master Agreement have been completed:
Dispositions
| • | Adient Asia transferred all of the issued and outstanding equity interest in YFAS held by Adient Asia, which represents 49.99% of YFAS’s total issued and outstanding equity interest, to Yanfeng for RMB 8,064 million (US$1,210 million) (the “YFAS Sale”), of which RMB 3,446 million (US$519 million) was paid at the closing of the YFAS Sale, and the remaining RMB 4,618 million (US$691 million) will be paid on or before December 21, 2021. |
|---|---|
| • | Adient Asia transferred, simultaneous with the closing of the YFAS Sale: (i) all of the issued and outstanding equity interest in Nantong Yanfeng Adient Seating Trim Co., Ltd. (“YFAT”) held, directly or indirectly, by Adient Asia, which represents 25% of YFAT’s total issued and outstanding equity interest, to KEIPER for RMB 38 million (US$6 million) (the “Adient YFAT Sale”); (ii) all of the issued and outstanding equity interest in Guangzhou Dongfeng Adient Seating Co., Ltd. (“GZDFAS”) held by Adient Asia, which represents 25% of GZDFAS’s total issued and outstanding equity interest, to YFAS for RMB 371 million (US$56 million) (the “GZDFAS Sale”); and (iii) all of the issued and outstanding equity interest in Hefei Adient Yunhe Automotive Seating Co., Ltd. (“YHAS”) held by Adient Asia, which represents 10% of YHAS’s total issued and outstanding equity interest, to YFAS for RMB 13 million (US$2 million) (together with the Adient YFAT Sale and GZDFAS Sale, collectively, the “Additional Equity Sales”). |
| --- | --- |
Acquisitions
| • | Qiyue, being the successful bidder in the public bidding process (which was required to be conducted under People’s Republic of China law with respect to the sale of state-owned assets), acquired from YFAS the 50% equity interest in Chongqing Yanfeng Adient Automotive Components Co., Ltd. (“CQYFAS”) and 100% equity interest in Yanfeng Adient (Langfang) Seating Co., Ltd. owned by YFAS, simultaneous with the closing of the YFAS Sale, for RMB 1,754 million (US$271 million) (the “YFAS JVs Acquisition”). |
|---|
Other Transactions
| • | YFAS transferred all of the issued and outstanding equity interest in (i) Yanfeng Adient Founder Motor Co., Ltd. (“YFM”) held, directly or indirectly, by YFAS, which represents 70% of YFM’s total issued and outstanding equity interest; and (ii) YFAT held, directly or indirectly, by YFAS, which represents 75% of YFAT’s total issued and outstanding equity interest, to KEIPER for RMB 71 million (US$11 million) and RMB 113 million (US$17 million), respectively. |
|---|
In conjunction with the Master Agreement, Adient Asia also entered into an agreement (the “Boxun Agreement”) with Chongqing Boxun Industrial Co., Ltd. (“Boxun”). Pursuant to the Boxun Agreement, upon consummation of the YFAS JVs Acquisition, Adient Asia provided Boxun with the right to sell and, if exercised, Adient Asia agreed to purchase, all of the issued and outstanding equity interest in CQYFAS held by Boxun, which represents 25% of CQYFAS’s total issued and outstanding equity interest (the “Boxun Equity Purchase”) for approximately RMB 825 million (US$128 million). Pursuant to the Boxun Agreement, Boxun may exercise its right to sell such interest anytime on or prior to October 31, 2021. If Adient Asia buys Boxun’s 25% interest in CQYFAS, then, upon the closing of the Boxun Equity Purchase, Adient Asia will own 100% of CQYFAS.
1
The foregoing description of the Master Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Master Agreement filed as Exhibit 10.1 to Adient’s Current Report on Form 8-K dated March 12, 2021 and filed with the SEC on March 12, 2021 and incorporated herein by reference.
| Item 7.01. | Regulation FD Disclosure |
|---|
On September 30, 2021, Adient issued a press release announcing the completion of the transactions contemplated by the Master Agreement and completion of the other transactions described in the Current Report on Form 8-K dated March 12, 2021 and filed with the SEC on March 12, 2021. A copy of the press release is attached hereto as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.
The information contained in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K and Exhibit 99.2 hereto contain forward-looking statements and, therefore, are subject to risks and uncertainties. All statements in this document other than statements of historical fact are statements that are, or could be, deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In this document, statements regarding Adient’s expectations for the YFAS Sale, Additional Equity Sales, YFAS JVs Acquisition, Boxun Equity Purchase and other transactions (collectively, the “Transactions”) benefits and outcome of the Transactions, use of proceeds from the Transactions, as well as its future financial position, sales, costs, earnings, cash flows, other measures of results of operations, capital expenditures or debt levels and plans, objectives, market position, outlook, targets, guidance or goals are forward-looking statements. Words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “forecast,” “project” or “plan” or terms of similar meaning are also generally intended to identify forward-looking statements. Adient cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Adient’s control, that could cause Adient’s actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: Adient’s ability to derive additional value from the Transactions for shareholders, the benefits and outcome of the Transactions, the effect of the announcement of the Transactions on Adient’s business relationships, operating results and business generally, risks that the Transactions disrupt current plans and operations, including potential disruptions with respect to our employees, vendors, clients and customers as well as management diversion or potential litigation, the effects of local and national economic, credit and capital market conditions on the economy in general, and other risks and uncertainties, the continued financial and operational impacts of and uncertainties relating to the COVID-19 pandemic on Adient and its customers, suppliers, joint venture partners and other parties, the ability of Adient to execute its turnaround plan, the ability of Adient to effectively launch new business at forecast and profitable levels, the ability of Adient to meet debt service requirements, the terms of financing, the impact of tax reform legislation through the Tax Cuts and Jobs Act and/or under a new U.S. presidential administration, uncertainties in U.S. administrative policy regarding trade agreements, tariffs and other international trade relations including as may be impacted by the change in U.S. presidential administration, general economic and business conditions, the strength of the U.S. or other economies, automotive vehicle production levels, mix and schedules, changes in consumer demand, work stoppages and similar events, global climate change and related emphasis on ESG matters by various stakeholders, energy and commodity prices, the availability of raw materials and component products, currency exchange rates and cancellation of or changes to commercial arrangements, and the ability of Adient to identify, recruit and retain key leadership. A detailed discussion of risks related to Adient’s business is included in the section entitled “Risk Factors” in Adient’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020 filed with the SEC on November 30, 2020, Quarterly Report on Form 10-Q for the Quarterly Period ended December 31, 2020 filed with the SEC on February 5, 2021, Quarterly Report on Form 10-Q for the Quarterly Period ended March 31, 2021 filed with the SEC on May 6, 2021, Quarterly Report on Form 10-Q for the Quarterly Period ended June 30, 2021 filed with the SEC on August 5, 2021 and in subsequent reports filed with or furnished to the SEC, available at www.sec.gov/. Potential investors and others should consider these factors in evaluating the forward-looking statements and should not place undue reliance on such statements. The forward-looking statements included in this document are made only as of the date of this document, unless otherwise specified, and, except as required by law, Adient assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this document.
2
Adient does not undertake any obligation to update the projections to reflect events or circumstances or changes in expectations after the date of this document or to reflect the occurrence of subsequent events. No representations or warranties are made as to the accuracy or reasonableness of such assumptions or the projections based thereon.
| Item 9.01. | Financial Statements and Exhibits. |
|---|---|
| (a) | The Adient plc unaudited pro forma condensed financial statements giving effect to the YFAS Sale, the Additional Equity Sales, the YFAS JVs Acquisition and certain other transactions as set forth therein are attached hereto as Exhibit 99.1 and are incorporated herein by reference. |
| --- | --- |
| (d) | Exhibits. |
| --- | --- |
EXHIBIT INDEX
| Exhibit<br>No. | Exhibit Description |
|---|---|
| 99.1 | Unaudited Pro Forma Consolidated Financial Information of Adient plc. |
| 99.2 | Press Release, dated September 30, 2021. |
| 104 | Cover Page Interactive Data File (the Cover Page Interactive Data File is embedded within the Inline XBRL document). |
| * | Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however, that Adient plc may request confidential treatment of omitted items. |
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3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ADIENT PLC | ||
|---|---|---|
| Date: September 30, 2021 | By: | /s/ Jeffrey M. Stafeil |
| Name: | Jeffrey M. Stafeil | |
| Title: | Executive Vice President and Chief Financial Officer |
EX-99.1
Exhibit 99.1
Adient plc
UnauditedPro Forma Consolidated Financial Information
The following unaudited pro forma consolidated financial information is based upon the historical financial statements of Adient plc (“Adient” or the “Company”) and reflects adjustments to the Company’s historical financial results as reported under generally accepted accounting principles in the United States (GAAP) in connection with the completion of the “2021 Yanfeng Transaction” as described below. The unaudited pro forma consolidated financial information also includes the impact of “Other Transactions” and “Debt Transactions”, each, as described below, in order to reflect the impact of these previously completed transactions on Adient’s historical financial statements.
2021 Yanfeng Transaction
The 2021 Yanfeng Transaction pursuant to a Master Agreement, dated March 12, 2021 (the “2021 Agreement”) closed on September 30, 2021 (“Closing Date”) and includes the components listed below. The impact of the 2021 Yanfeng Transaction assumes that the transaction occurred on October 1, 2019 for the purposes of the unaudited pro forma consolidated statements of income and assumes the transaction occurred on June 30, 2021 for the purposes of the unaudited pro forma consolidated statement of financial position.
| a. | Adient transferred all of the issued and outstanding equity interest in YFAS held by Adient, which represents<br>49.99% of YFAS’s total issued and outstanding equity interest, to Yanfeng pursuant to the Equity Transfer Agreement, dated as of March 12, 2021, by and between Yanfeng and Adient, for RMB 8,064 million ($1,210 million), of which RMB<br>3,446 million ($519 million) was paid by Yanfeng to Adient on the Closing Date and RMB 4,618 million ($691 million) is payable by Yanfeng to Adient on or before December 21, 2021 ( the “YFAS Sale”); |
|---|---|
| b. | YFAS transferred all of the issued and outstanding equity interests in Chongqing Yanfeng Adient Automotive<br>Components Co., Ltd. (“CQYFAS”) and Yanfeng Adient (Langfang) Seating Co., Ltd. (“YFASLF”) held directly or indirectly by YFAS to Adient for a price of RMB 1,754 million ($271 million) (the “YFAS JVs<br>Acquisition”). The YFAS JVs Acquisition was funded, in part, by annual cash dividends from YFAS and KEIPER (50% owned by Adient), paid to shareholders of YFAS and KEIPER; |
| --- | --- |
| c. | YFAS transferred all of the issued and outstanding equity interest in Yanfeng Adient Founder Motor Co., Ltd.<br>(“YFM”) held, directly or indirectly, by YFAS, which represented 70% of YFM’s total issued and outstanding equity interest, to KEIPER for RMB 71 million ($11 million) (the “YFM Sale”);<br> |
| --- | --- |
| d. | YFAS transferred all of the issued and outstanding equity interest in Nantong Yanfeng Adient Seating Trim Co.,<br>Ltd. (“YFAT”) held, directly or indirectly, by YFAS, which represented 75% of YFAT’s total issued and outstanding equity interest, to KEIPER for RMB 113 million ($17 million) (the “YFAT Sale”);<br> |
| --- | --- |
| e. | Adient granted to Yanfeng a license of certain Adient seating intellectual property (excluding mechanisms) for<br>use on a non-exclusive and perpetual basis for a payment of RMB 385 million ($59 million), and Yanfeng/YFAS granted to Adient a royalty-free, non-exclusive and<br>perpetual intellectual property license of certain Yanfeng/YFAS seating intellectual property (excluding mechanisms); and |
| --- | --- |
| f. | YFAS declared and distributed dividends in the amounts and at the times as set forth in the 2021 Agreement to<br>its shareholders (proportionately to their ownership interest, namely 50.01% to Yanfeng and 49.99% to Adient) of approximately RMB 4,168 million ($640 million) in the aggregate. YFAS paid a dividend of RMB 2,809 million ($436 million) in<br>the aggregate during the third quarter of fiscal 2021, and RMB 1,359 million ($204 million) was distributed shortly prior to the Closing Date. |
| --- | --- |
In conjunction with the 2021 Yanfeng Transaction, Adient has entered into an agreement with Chongqing Boxun Industrial Co., Ltd. (“Boxun”). Pursuant to such agreement, upon consummation of the YFAS JVs Acquisition, Adient has provided Boxun with the right to sell and, if exercised, Adient has agreed to purchase, all of the issued and outstanding equity interest in CQYFAS held by Boxun, which represents 25% of CQYFAS’s total issued and outstanding equity interest (the “Boxun Equity Purchase”) for RMB 825 million ($128 million). If Adient buys Boxun’s 25% interest of CQYFAS, then, Adient will own 100% of CQYFAS. For purposes of the unaudited pro forma consolidated financial information it is assumed that Boxun has not exercised its right to sell its interest to Adient, and Boxun’s 25% interest in CQYFAS has been reflected as redeemable noncontrolling interest on the pro forma consolidated statement of financial position as of June 30, 2021. Accordingly income attributable to noncontrolling interests has been reflected in the pro forma consolidated statements of income (loss) for the fiscal year ended September 30, 2020 and the nine months ended June 30, 2021.
1
In addition, in conjunction with the 2021 Yanfeng Transaction, Adient has entered into agreements, whereby, Adient would: (i) transfer all of the issued and outstanding equity interest in YFAT held, directly or indirectly, by Adient, which represents 25% of YFAT’s total issued and outstanding equity interest, to KEIPER for RMB 38 million ($6 million) (the “Adient YFAT Sale” and together with the YFAT Sale, the “YFAT Sales”); (ii) transfer all of the issued and outstanding equity interest in Guangzhou Dongfeng Adient Seating Co., Ltd. (“GZDFAS”) held by Adient, which represents 25% of GZDFAS’s total issued and outstanding equity interest, to YFAS for RMB 371 million ($56 million) (the “GZDFAS Sale”); and (iii) transfer all of the issued and outstanding equity interest in Hefei Adient Yunhe Automotive Seating Co., Ltd. (“YHAS”) held by Adient, which represents 10% of YHAS’s total issued and outstanding equity interest, to YFAS for RMB 13 million ($2 million) (the “YHAS Sale,” together with the Adient YFAT Sale and GZDFAS Sale, each an “Additional Equity Sale” and collectively, the “Additional Equity Sales”).
Other Transactions
The unaudited pro forma consolidated financial information reflects the impact of previously completed transactions prior to June 30, 2021 related to Adient’s divestitures of the RECARO and fabrics businesses, deconsolidation of Adient Aerospace, sale of Adient’s 30% YFAI equity method investment, and sale of Adient’s 50% SJA equity method investment (collectively, the “Other Transactions”). Adjustments for these transactions have been included in the unaudited pro forma consolidated financial information in order to remove the recurring impact of the transactions and results of operations of the businesses from Adient’s historical financial information. It is assumed that the remaining balance of the proceeds of approximately $40 million related to the sale of Adient’s interest in YFAI has been collected at June 30, 2021 for the purposes of the unaudited pro forma consolidated statement of financial position. As part of the 2021 Yanfeng Transaction, it was agreed that this payment would be accelerated compared to the original sale of YFAI terms. The impact of the Other Transactions assumes that the Other Transactions occurred on October 1, 2019 for the purposes of the unaudited pro forma consolidated statements of income. All non-recurring gains/losses/impairments associated with the above transactions have not been adjusted in these unaudited pro forma consolidated statements of income (loss). For more information for these Other Transactions, refer to Note 3, “Acquisitions and Divestitures,” of the notes to the consolidated financial statements as included in Adient’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed with the SEC on August 5, 2021.
Debt Transactions
The unaudited pro forma consolidated financial information reflects the impact of reduced levels of Adient’s net financing charges resulting from previously completed debt transactions, as part of Adient’s deleveraging strategy. In particular, adjustments related to the repayment of the $800 million 7.00% Note during the second and third quarters of fiscal 2021, and a repayment of $103 million of the 4.875% Notes during the fourth quarter of fiscal 2020, offset by $214 million incremental increase in LIBOR + 3.50% Term Loan B balance during the third quarter of fiscal 2021, have been included in the unaudited pro forma consolidated financial information. The impact of the repayment of the 7.00% and 4.875% Notes, and the incremental increase of the Term Loan B assumes that such transactions occurred on October 1, 2019 for the purposes of the unaudited pro forma consolidated statements of income.
The unaudited pro forma consolidated statement of financial position as of June 30, 2021 gives effect to the transactions contemplated by the 2021 Yanfeng Transaction, the Other Transactions, and the Debt Transactions as if these transactions were completed on June 30, 2021. The unaudited pro forma consolidated statements of income (loss) for the nine months ended June 30, 2021 and the fiscal year ended September 30, 2020 give effect to the 2021 Yanfeng Transaction, the Other Transactions, and the Debt Transactions as if these transactions were completed on October 1, 2019. The unaudited pro forma consolidated financial information and the accompanying notes should be read in conjunction with the historical consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020, filed with the Securities and Exchange Commission (the “SEC”) on November 30, 2020, and in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed with the SEC on August 5, 2021.
The USD figures related to the cash receipts from the YFAS Sale and the Additional Equity Sales are converted from RMB to USD at a rate of 6.66 RMB to each USD, reflecting the derivative contract rate used to hedge the net proceeds from such disposition transactions. The USD figure related to the Boxun Equity Purchase is converted from RMB to USD at a current exchange rate, as of September 28, 2021, of 6.46 RMB to each USD. The USD figures related to the other components of the 2021 Yanfeng Transaction are converted from RMB to USD at a rate, as of June 30, 2021, of 6.46 RMB to each USD.
The unaudited pro forma consolidated financial information included herein is being provided for informational purposes only and is not necessarily indicative of the results of operations or financial position that would have resulted if the 2021 Yanfeng Transaction, the Other Transactions and the Debt Transactions had actually been effective on the date indicated and is not intended to project the Company’s results of operations or financial position for any future period. The pro forma adjustments are based on currently available information and certain estimates and assumptions reflecting events directly attributable to the 2021 Yanfeng Transaction, the Other Transactions and the Debt Transactions. Therefore, actual adjustments may differ from the pro forma adjustments. However, management believes the pro forma assumptions provide a reasonable basis for presenting significant effects of the transactions as contemplated and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma consolidated financial information. The pro forma adjustments are described in the notes and the unaudited pro forma consolidated financial information should be read in conjunction with their related notes.
2
Adient plc
Pro Forma Consolidated Statement of Income (Loss)
(Unaudited)
| For the Year Ended<br>September 30, 2020 | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Footnote<br> <br>reference | 2021 Yanfeng Transaction<br>Pro Forma Adjustments | Pro Forma Adjustments | ||||||||||||||||||||||
| A | B | C | D | E | ||||||||||||||||||||
| (in millions, except per share<br>data) | Historical<br>Adient | YFAS<br>Sale | Acquisitions | OtherDispositions/<br>Transactions | Pro Forma<br>Subtotal | Other<br>Transactions | Debt<br>Transactions | Pro Forma<br>Adient | ||||||||||||||||
| 1 | Net sales | $ | 12,670 | $ | — | $ | 580 | $ | — | $ | 13,250 | $ | (133 | ) | $ | — | $ | 13,117 | ||||||
| 2 | Cost of sales | 12,078 | — | 488 | — | 12,566 | (106 | ) | — | 12,460 | ||||||||||||||
| Gross profit | 592 | — | 92 | — | 684 | (27 | ) | — | 657 | |||||||||||||||
| 3 | Selling, general and administrative expenses | 558 | — | 35 | (1 | ) | 592 | (26 | ) | — | 566 | |||||||||||||
| 4 | Loss on business divestitures — net | 13 | — | — | — | 13 | — | — | 13 | |||||||||||||||
| 5 | Restructuring and impairment costs | 238 | — | — | — | 238 | (7 | ) | — | 231 | ||||||||||||||
| 6 | Equity income (loss) | 22 | (128 | ) | — | (14 | ) | (120 | ) | (27 | ) | — | (147 | ) | ||||||||||
| Earnings (loss) before interest and income taxes | (195 | ) | (128 | ) | 57 | (13 | ) | (279 | ) | (21 | ) | — | (300 | ) | ||||||||||
| 7 | Net financing charges | 220 | — | 3 | — | 223 | 1 | (54 | ) | 170 | ||||||||||||||
| Other pension expense (income) | 14 | — | — | — | 14 | — | — | 14 | ||||||||||||||||
| Income (loss) before income taxes | (429 | ) | (128 | ) | 54 | (13 | ) | (516 | ) | (22 | ) | 54 | (484 | ) | ||||||||||
| 8 | Income tax provision (benefit) | 57 | (6 | ) | 14 | (1 | ) | 64 | 14 | — | 78 | |||||||||||||
| Net income (loss) | (486 | ) | (122 | ) | 40 | (12 | ) | (580 | ) | (36 | ) | 54 | (562 | ) | ||||||||||
| 9 | Income attributable to noncontrolling interests | 61 | — | 11 | — | 72 | — | — | 72 | |||||||||||||||
| Net income (loss) attributable to Adient | $ | (547 | ) | $ | (122 | ) | $ | 29 | $ | (12 | ) | $ | (652 | ) | $ | (36 | ) | $ | 54 | $ | (634 | ) | ||
| Basic earnings (loss) per share | $ | (5.83 | ) | $ | (6.95 | ) | $ | (6.76 | ) | |||||||||||||||
| Diluted earnings (loss) per share | $ | (5.83 | ) | $ | (6.95 | ) | $ | (6.76 | ) | |||||||||||||||
| Basic weighted average shares | 93.8 | 93.8 | 93.8 | |||||||||||||||||||||
| Diluted weighted average shares | 93.8 | 93.8 | 93.8 |
See accompanying notes to the pro forma consolidated financial information
3
Adient plc
Pro Forma Consolidated Statement of Income (Loss)
(Unaudited)
| For the Nine Months Ended<br>June 30, 2021 | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Footnote<br>reference | 2021 Yanfeng Transaction<br>Pro Forma Adjustments | Pro Forma Adjustments | ||||||||||||||||||||||
| A | B | C | D | E | ||||||||||||||||||||
| (in millions, except per share data) | HistoricalAdient | YFASSale | Acquisitions | OtherDispositions/<br>Transactions | Pro FormaSubtotal | Other<br>Transactions | DebtTransactions | Pro FormaAdient | ||||||||||||||||
| 10 | Net sales | $ | 10,909 | $ | — | $ | 656 | $ | — | $ | 11,565 | $ | — | $ | — | $ | 11,565 | |||||||
| 11 | Cost of sales | 10,120 | — | 554 | — | 10,674 | — | — | 10,674 | |||||||||||||||
| Gross profit | 789 | — | 102 | — | 891 | — | — | 891 | ||||||||||||||||
| 12 | Selling, general and administrative expenses | 433 | (4 | ) | 45 | (1 | ) | 473 | — | — | 473 | |||||||||||||
| Loss on business divestitures - net | — | — | — | — | — | — | — | — | ||||||||||||||||
| Restructuring and impairment costs | 20 | — | — | — | 20 | — | — | 20 | ||||||||||||||||
| 13 | Equity income (loss) | 220 | (82 | ) | — | (16 | ) | 122 | (8 | ) | — | 114 | ||||||||||||
| Earnings (loss) before interest and income taxes | 556 | (78 | ) | 57 | (15 | ) | 520 | (8 | ) | — | 512 | |||||||||||||
| 14 | Net financing charges | 256 | — | 1 | — | 257 | (18 | ) | (83 | ) | 156 | |||||||||||||
| Other pension expense (income) | (8 | ) | — | — | — | (8 | ) | — | — | (8 | ) | |||||||||||||
| Income (loss) before income taxes | 308 | (78 | ) | 56 | (15 | ) | 271 | 10 | 83 | 364 | ||||||||||||||
| 15 | Income tax provision (benefit) | 90 | 7 | 17 | (1 | ) | 113 | (5 | ) | — | 108 | |||||||||||||
| Net income (loss) | 218 | (85 | ) | 39 | (14 | ) | 158 | 15 | 83 | 256 | ||||||||||||||
| 16 | Income attributable to noncontrolling interests | 70 | — | 13 | — | 83 | — | — | 83 | |||||||||||||||
| Net income (loss) attributable to Adient | $ | 148 | $ | (85 | ) | $ | 26 | $ | (14 | ) | $ | 75 | $ | 15 | $ | 83 | $ | 173 | ||||||
| Basic earnings (loss) per share | $ | 1.57 | $ | 0.80 | $ | 1.84 | ||||||||||||||||||
| Diluted earnings (loss) per share | $ | 1.55 | $ | 0.78 | $ | 1.81 | ||||||||||||||||||
| Basic weighted average shares | 94.1 | 94.1 | 94.1 | |||||||||||||||||||||
| Diluted weighted average shares | 95.6 | 95.6 | 95.6 |
See accompanying notes to the pro forma consolidated financial information
4
Adient plc
Pro Forma Consolidated Statement of Financial Position
(Unaudited)
| As of June 30, 2021 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Footnote<br> <br>reference | 2021 Yanfeng Transaction<br>Pro Forma Adjustments | Pro Forma Adjustments | |||||||||||||||||||
| A | B | C | D | E | |||||||||||||||||
| (in millions) | Historical<br>Adient | YFAS<br>Sale | Acquisitions | Other<br>Dispositions/Transactions | Pro FormaSubtotal | OtherTransactions | DebtTransactions | Pro FormaAdient | |||||||||||||
| Assets | |||||||||||||||||||||
| 17 | Cash and cash equivalents | $ | 1,000 | $ | 1,196 | $ | 31 | $ | 124 | $ | 2,351 | $ | 40 | $ | — | $ | 2,391 | ||||
| 18 | Accounts receivable — net | 1,451 | — | 216 | — | 1,667 | — | — | 1,667 | ||||||||||||
| 19 | Inventories | 850 | — | 39 | — | 889 | — | — | 889 | ||||||||||||
| Assets held for sale | 55 | — | — | — | 55 | — | — | 55 | |||||||||||||
| 20 | Other current assets | 758 | — | (149 | ) | — | 609 | (40 | ) | — | 569 | ||||||||||
| Current assets | 4,114 | 1,196 | 137 | 124 | 5,571 | — | — | 5,571 | |||||||||||||
| — | |||||||||||||||||||||
| 21 | Property, plant and equipment — net | 1,549 | — | 93 | — | 1,642 | — | — | 1,642 | ||||||||||||
| 22 | Goodwill | 2,069 | — | 208 | — | 2,277 | — | — | 2,277 | ||||||||||||
| 23 | Other intangible assets — net | 428 | (88 | ) | 143 | (10 | ) | 473 | — | — | 473 | ||||||||||
| 24 | Investments in partially-owned affiliates | 616 | (231 | ) | — | (47 | ) | 338 | — | — | 338 | ||||||||||
| Assets held for sale | 24 | — | — | — | 24 | — | — | 24 | |||||||||||||
| 25 | Other noncurrent assets | 1,004 | — | 17 | — | 1,021 | — | — | 1,021 | ||||||||||||
| Total assets | $ | 9,804 | $ | 877 | $ | 598 | $ | 67 | $ | 11,346 | $ | — | $ | — | $ | 11,346 | |||||
| Liabilities and Shareholders’ Equity | |||||||||||||||||||||
| 26 | Short-term debt | $ | 215 | $ | — | $ | 16 | $ | — | $ | 231 | $ | — | $ | — | $ | 231 | ||||
| 27 | Accounts payable and accrued expenses | 2,494 | — | 286 | — | 2,780 | — | — | 2,780 | ||||||||||||
| Liabilities held for sale | 60 | — | — | — | 60 | — | — | 60 | |||||||||||||
| 28 | Other current liabilities | 862 | (4 | ) | 15 | — | 873 | — | — | 873 | |||||||||||
| Current liabilities | 3,631 | (4 | ) | 317 | — | 3,944 | — | — | 3,944 | ||||||||||||
| — | |||||||||||||||||||||
| 29 | Long-term debt | 3,542 | — | 1 | — | 3,543 | — | — | 3,543 | ||||||||||||
| 30 | Other noncurrent liabilities | 776 | (5 | ) | 59 | (2 | ) | 828 | (2 | ) | — | 826 | |||||||||
| 31 | Redeemable noncontrolling interests | 48 | — | 153 | — | 201 | — | — | 201 | ||||||||||||
| Shareholders’ equity attributable to Adient | 1,467 | 886 | 68 | 69 | 2,490 | 2 | — | 2,492 | |||||||||||||
| Noncontrolling interests | 340 | — | — | — | 340 | — | — | 340 | |||||||||||||
| Total liabilities and shareholders’ equity | $ | 9,804 | $ | 877 | $ | 598 | $ | 67 | $ | 11,346 | $ | — | $ | — | $ | 11,346 |
See accompanying notes to the pro forma consolidated financial information
5
Adient plc
Notes to Pro Forma Consolidated Financial Information
| 1. | Pro Forma Adjustments |
|---|
The unaudited pro forma financial information, which was prepared in accordance with Article 11, as amended, of Regulation S-X, should be read in conjunction with Adient’s historical consolidated financial statements and related notes included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2020 as well as Adient’s Form 10-Q for the quarter ended June 30, 2021. The historical Adient financial information is directly derived from these Form 10-K and Form 10-Q filings.
The unaudited pro forma consolidated statements of income (loss) for the fiscal year ended September 30, 2020 and for the nine months ended June 30, 2021 and the unaudited pro forma consolidated statement of financial position as of June 30, 2021, include the following adjustments giving effect to the 2021 Yanfeng Transaction that closed on September 30, 2021 along with Other Transactions and Debt Transactions, as previously defined. The unaudited pro forma consolidated statement of financial position as of June 30, 2021 gives effect to the transactions contemplated by the 2021 Yanfeng Transaction, the Other Transactions, and the Debt Transactions as if these transactions were completed on June 30, 2021. The unaudited pro forma consolidated statements of income (loss) for the nine months ended June 30, 2021 and the fiscal year ended September 30, 2020 give effect to the 2021 Yanfeng Transaction, the Other Transactions, and the Debt Transactions as if these transactions were completed on October 1, 2019.
The adjustments related to the 2021 Yanfeng Transaction involving cash receipts related to the YFAS Sale and the disposition transactions described in item 2) in Other Dispositions/Transactions, as more fully described below, are converted from RMB to USD at a rate of 6.66 RMB to each USD, reflecting the derivative contract rate used to hedge the net proceeds from such disposition transactions. Adjustments to the pro forma consolidated statements of income (loss) for the twelve months ended September 30, 2020 and nine months ended June 30, 2021 are converted from RMB to USD at the historical average rates of 7.01 RMB to each USD and 6.52 RMB to each USD, for the respective time periods, as applicable. Adjustments to the pro forma consolidated statement of financial position as of June 30, 2021 are converted from RMB to USD at the June 30, 2021 rate of 6.46 RMB to each USD, as applicable. The redeemable noncontrolling interest has been reflected using a current exchange rate, as of September 28, 2021, of 6.46 RMB to each USD.
The unaudited pro forma financial information has been prepared for illustrative purposes only and is not necessarily indicative of the consolidated statement of financial position or results of operations in future periods or the results that actually would have been achieved.
The pro forma adjustments are categorized as follows:
| A. YFAS Sale | Adjustments reflect the sale of Adient’s interest (49.99%) in YFAS, which includes the receipt of net of withholding tax cash proceeds and the removal of equity income and the equity method investment as part of the 2021<br>Yanfeng Transaction. |
|---|---|
| B. Acquisitions | Adjustments primarily reflect Adient’s acquisitions of CQYFAS (50%) and YFASLF (100%), which are accounted for as business combinations under ASC 805, and which were part of the 2021 Yanfeng Transaction. This includes a cash<br>payment to Yanfeng and the consolidation of CQYFAS and YFASLF. The financial information of CQYFAS and YFASLF is unaudited, and was obtained from Yanfeng. The YFM and YFAT acquisitions by KEIPER are immaterial to Adient for purposes of the unaudited<br>pro forma consolidated financial information. |
| C. Other Dispositions/ Transactions | Adjustments primarily reflect: 1) the removal of Adient’s equity income and equity method investment in CQYFAS (25%) as a result of the acquisition of a controlling interest in CQYFAS, and 2) the sale of Adient’s interest<br>in GZDFAS (25%), YFAT (25%) and YHAS (10%), including the receipt of net of withholding tax cash proceeds and the removal of equity income and equity method investments as part of the 2021 Yanfeng Transaction. |
6
Adient plc
Notes to Pro Forma Consolidated Financial Information
| D. Other Transactions | Adjustments primarily reflect Adient’s divestitures of the RECARO and fabrics businesses, deconsolidation of Adient Aerospace, sale of Adient’s 30% YFAI equity method investment, the payment of the remaining balance of<br>proceeds (approximately $40 million) from the sale of Adient’s interest in YFAI, and sale of Adient’s 50% SJA equity method investment as if all such transactions were completed on October 1, 2019 for purposes of the unaudited pro<br>forma consolidated statements of income. It is assumed that the remaining balance of proceeds (approximately $40 million) from the sale of Adient’s interest in YFAI was collected on June 30, 2021 for the purposes of the unaudited pro forma<br>consolidated statement of financial position. All non-recurring gains/losses/impairments associated with the above transactions have not been adjusted in these unaudited pro forma consolidated statements of<br>income (loss). |
|---|---|
| E. Debt Transactions | Adjustments reflect the impact to Adient’s net financing charges as a result of the repayment of the $800 million 7.00% Note during the second and third quarters of fiscal 2021, and a repayment of $103 million of the<br>4.875% Notes during the fourth quarter of fiscal 2020, offset by the impact of the $214 million incremental increase in the LIBOR + 3.50% Term Loan B balance during the third quarter of fiscal 2021. The impact of the repayment of the 7.00% and<br>4.875% Notes, and the incremental increase of the Term Loan B assumes that such transactions occurred on October 1, 2019 for the purposes of the unaudited pro forma consolidated statements of income. |
Pro forma consolidated statement of income (loss) for the year ended September 30, 2020
| A6 | Reflects the removal of equity income of YFAS for the twelve months ended September 30, 2020. |
|---|---|
| A8 | Reflects the removal of discrete income tax expense of Adient related to deferred tax liabilities on unremitted earnings of YFAS. |
| B1 | Reflects consolidations of CQYFAS and YFASLF’s net sales for the twelve months ended September 30, 2020. |
| B2 | Reflects consolidations of CQYFAS and YFASLF’s cost of sales for the twelve months ended September 30, 2020. |
| B3 | Reflects consolidations of CQYFAS and YFASLF’s selling, general and administrative expense for the twelve months ended September 30, 2020. |
| B7 | Reflects consolidations of CQYFAS and YFASLF’s net financing charges for the twelve months ended September 30, 2020. |
| B8 | Reflects consolidations of CQYFAS and YFASLF’s income tax provision for the twelve months ended September 30, 2020. |
| B9 | Reflects income attributable to noncontrolling interest associated with Boxun’s 25% interest in CQYFAS for the twelve months ended September 30, 2020. |
| C3 | Reflects a reversal of amortization expense related to Adient’s net customer relationship intangible asset attributed to YFAS’s operations. Refer to the pro forma adjustment C23 for more information. |
| C6 | Reflects the removal of equity income of CQYFAS, GZDFAS, YFAT and YHAS for the twelve months ended September 30, 2020. |
| C8 | Reflects the addition of income tax expense/benefit related to Other Dispositions/Transactions. |
| D1 | Reflects reductions in net sales resulting from the divestitures of the RECARO business in December 2019 and the fabrics business in September 2020. |
| D2 | Reflects reductions in cost of sales resulting from the divestitures of the RECARO business in December 2019 and the fabrics business in September 2020. |
| D3 | Reflects reductions in selling, general and administrative expense resulting from the deconsolidation of Adient Aerospace in October 2019, the divestitures of the RECARO business in December 2019 and the fabrics business in<br>September 2020. |
7
Adient plc
Notes to Pro Forma Consolidated Financial Information
| D4 | Adient recorded a loss of $21 million on sale of RECARO and a loss of $4 million on deconsolidation of Aerospace, partially offset by a $12 million gain on completion of the 2020 Yanfeng Transaction, all of which has<br>not been adjusted for purposes of these unaudited pro forma consolidated financial information. |
|---|---|
| D5 | Reflects the removal of restructuring costs resulting from the divestitures of the RECARO business in December 2019 and the fabrics business in September 2020. |
| D6 | Reflects the removal of YFAI’s equity income for the three months ended December 31, 2019 ($13 million), as well as the removal of equity income from SJA ($11 million) and JVs belonging to the fabrics business ($3 million)<br>for the twelve months ended September 30, 2020. An impairment loss of $231 million was recorded on Adient’s 30% interest in YFAI during fiscal 2020, which has not been adjusted for purposes of these unaudited pro forma consolidated<br>financial information. |
| D7 | Reflects the reversal of interest accretion recognized on the $60 million deferred YFAI sale proceeds. |
| D8 | Reflects primarily the removal of income tax benefits related to the write-off of deferred tax liabilities associated with the sale of Adient’s interest in YFAI. |
| E7 | Reflects reductions in interest expense based on the pay-downs in long-term debt. |
| Pro forma consolidated statement of income (loss) for the nine months ended June 30, 2021 | |
| A12 | Reflects a reversal of amortization expense recorded for the $92 million intangible asset which was established upon the extension of the YFAS JV contract in August 2020. |
| A13 | Reflects the removal of equity income of YFAS for the nine months ended June 30, 2021. |
| A15 | Reflects the removal of income tax expense and benefit related to deferred tax liabilities on unremitted earnings of YFAS. |
| B10 | Reflects consolidations of CQYFAS and YFASLF’s net sales for the nine months ended June 30, 2021. |
| B11 | Reflects consolidations of CQYFAS and YFASLF’s cost of sales for the nine months ended June 30, 2021. |
| B12 | Reflects consolidations of CQYFAS and YFASLF’s selling, general and administrative expense for the nine months ended June 30, 2021. |
| B14 | Reflects consolidations of CQYFAS and YFASLF’s net financing charges for the nine months ended June 30, 2021. |
| B15 | Reflects consolidations of CQYFAS and YFASLF’s income tax provision for the nine months ended June 30, 2021. |
| B16 | Reflects income attributable to noncontrolling interest associated with Boxun’s 25% interest in CQYFAS for the nine months ended June 30, 2021. |
| C12 | Reflects a reversal of amortization expense related to Adient’s net customer relationship intangible asset attributed to YFAS’s operations. Refer to the pro forma adjustment C23 for more information. |
| C13 | Reflects the removal of equity income of CQYFAS, GZDFAS, YFAT and YHAS for the nine months ended June 30, 2021. |
| C15 | Reflects the removal of income tax provisions/benefits related to the Other Dispositions/Transactions. |
| D13 | Reflects the removal of equity income of SJA for the six months ended March 31, 2021. Adient recorded a gain of $33 million upon sale of its 50% interest in SJA in March 2021, which has not been adjusted for purposes of<br>these unaudited pro forma consolidated financial information. |
| D14 | Reflects the reversal of $6 million interest accretion recognized on the $60 million deferred YFAI sale proceeds, offset by $24 million of loss recognized on the derivative contracts entered to hedge the proceeds from<br>the transaction. |
| D15 | Reflects the reversal of withholding tax expense recorded upon sale of Adient’s equity interest in SJA. |
8
Adient plc
Notes to Pro Forma Consolidated Financial Information
| E14 | Reflects reductions in interest expense based on the pay downs in long-term debt. |
|---|---|
| Pro forma consolidated statement of financial position as of June 30, 2021 | |
| A17 | Reflects net of withholding tax proceeds received by Adient on the Closing Date as a result of the dispositions of Adient’s 49.99% interest in YFAS. Also reflects $97 million of dividends, net of withholding tax,<br>distributed shortly prior to the closing by YFAS to Adient. |
| A23 | Reflects the reversal of the net $88 million intangible asset related to the extension of the YFAS JV contract. The $92 million balance was initially established in August 2020, and Adient has recorded $4 million of<br>amortization expense for the nine months ended June 30, 2021. See the pro forma adjustment A12 for more information. |
| A24 | Reflects the removal of Adient’s equity method investments in YFAS (49.99%). |
| A28 & A30 | Reflects the removal of deferred income tax accounts related to YFAS. |
| B17 | Reflects consolidations of CQYFAS and YFASLF’s cash balances. |
| B18 | Reflects consolidations of CQYFAS and YFASLF’s accounts receivable balances. |
| B19 | Reflects consolidations of CQYFAS and YFASLF’s inventories balances. |
| B20 | Reflects consolidations of CQYFAS and YFASLF’s other current assets balances. Also reflects the removal of a $271 million deposit with an escrow agent resulting from the bidding process during the third quarter of fiscal<br>2021 to acquire the 50% interest in CQYFAS ($258 million) and 100% interest in YFASLF ($13 million). |
| B21 | Reflects consolidations of CQYFAS and YFASLF’s properties, plant and equipment (net) balances. |
| B22 | Reflects the net residual purchase price adjustments as a result of acquisitions and consolidations of CQYFAS and YFASLF. The actual residual purchase price adjustments may be different than the amount presented herein. |
| B23 | Reflects the recognition of preliminary identifiable intangible assets as a result of the acquisitions of CQYFAS and YFASLF. |
| B25 | Reflects consolidations of CQYFAS and YFASLF’s other noncurrent assets balances. |
| B26 | Reflects consolidations of CQYFAS and YFASLF’s short-term debt balances. |
| B27 | Reflects consolidations of CQYFAS and YFASLF’s accounts payable and accrued expenses balances. |
| B28 | Reflects consolidations of CQYFAS and YFASLF’s other current liabilities balances. |
| B29 & B30 | Reflects consolidations of CQYFAS and YFASLF’s debt and other noncurrent liabilities balances. |
| B31 | Reflects the value of Boxun’s right to sell to Adient all of the issued and outstanding equity interest in CQYFAS held by Boxun, which represents 25% of CQYFAS’s total issued and outstanding equity interest for<br>approximately RMB 825 million ($128 million), along with other related payments for future services. |
| C17 | Reflects net of withholding tax proceeds received by Adient on the Closing Date as a result of the dispositions of Adient’s 25% interest in GZDFAS ($50 million), 25% interest in YFAT ($5 million), and 10% interest in YHAS ($2<br>million). Also reflects $52 million of net of withholding tax proceeds related to licensing of intellectual property to Yanfeng, and $15 million of other proceeds. |
| C23 | Reflects the removal of $10 million of Adient’s net customer relationship intangible asset attributed to YFAS’s operations. |
| C24 | Reflects the removal of Adient’s equity method investments in CQYFAS, GZDFAS, YFAT and YHAS. |
| C30 | Reflects the removal of deferred income tax accounts related to Other Dispositions/Transactions. |
| D17 & D20 | Reflects the collection of deferred proceeds from the sale of Adient’s 30% interest in YFAI. |
9
Adient plc
Notes to Pro Forma Consolidated Financial Information
| D30 | Reflects the removal of deferred income tax accounts related to Other Transactions. |
|---|
10
EX-99.2
Exhibit 99.2
| For Immediate Release | |
|---|---|
| CONTACTS<br> <br><br><br><br>MEDIA:<br> <br>Mary Kay Dodero<br><br><br>T +1 734.386.6253<br> <br>Mary.Kay.Dodero@adient.com<br><br><br><br> <br>Investors:<br><br><br>Mark Oswald<br> <br>T +1 734.254.3372<br><br><br>Mark.A.Oswald@adient.com | Adient closes previously announced transactions, strategically transforming its business in China |
| • Company ends Yanfeng Adient Seating Co., Ltd. (YFAS) joint venture with<br>partner Yanfeng Automotive Trim Systems Ltd. (YF) | |
| • Adient acquires YFAS’s 50% equity interest in Chongqing Yanfeng Adient<br>Automotive Components Co., Ltd. (CQYFAS) and 100% equity interest in Yanfeng Adient (Langfang) Seating Co., Ltd. (YFASLF) from YFAS | |
| • Transactions will enable Adient to independently drive its strategy in<br>China | |
| • Net proceeds at closing totaled $695M; final proceeds expected before 2021<br>calendar year-end | |
| PLYMOUTH, Mich., Sept. 30, 2021 — Adient (NYSE: ADNT), a global leader in automotive seating, today announced that it has closed the transactions contemplated by its previously announced definitive agreements with joint<br>venture partner Yanfeng Automotive Trim Systems Ltd. (YF) to, among other items, end its YFAS joint venture in China. | |
| The completed transactions will enable Adient to drive its strategy in China independently, which is expected to result in a variety of benefits, including capturing growth in profitable and expanding segments; improving the<br>integration of the company’s China operations; and allowing for more certain value realization relative to status quo, where cash and value are generated from dividends at entities not in Adient’s control. | |
| “We are pleased to have successfully closed these transactions, which offer Adient the opportunity to drive our China strategy independently and position the company for future growth in the world’s largest automotive<br>market,” said Doug Del Grosso, president and CEO of Adient. | |
| Details of the transactions | |
| Under the agreements, Adient sold its 49.99% interest in YFAS to YF and its minority interest in certain other joint ventures and acquired YFAS’s 50% equity interest in CQYFAS, bringing Adient’s ownership stake in CQYFAS<br>to 75%, and YFAS’s 100% equity interest in YFASLF. | |
| Following the acquisition of YFAS’s interests in CQYFAS and YFASLF, Adient will consolidate those businesses. YF will operate the remainder of YFAS as a wholly owned enterprise. | |
| Total net proceeds (including dividends) related to the transactions are expected to total approximately $1.4B. Including the impact of currency hedges executed post-announcement and other provisions contained in the agreement<br>(i.e., ability to consolidate the cash balance at CQYFAS), net proceeds collected at closing totaled $695M, and final proceeds of about $625M are expected to be received prior to calendar<br>year-end. | |
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| As previously noted, in conjunction with these transactions, Adient signed an agreement with Chongqing Boxun Industrial Co., Ltd. (Boxun), its joint venture partner in CQYFAS. The agreement provides Boxun with a put right to sell<br>and, if exercised, requires Adient to buy Boxun’s 25% interest in CQYFAS. The put right price is ~ $125M. If Adient buys Boxun’s 25% interest, Adient would own 100% of CQYFAS. | |
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| Proceeds from the transactions are expected to be used by Adient to pre-pay a portion of the company’s debt; fund Boxun’s put right, if exercised; and for general corporate<br>purposes. | |
| Remaining a market leader in China | |
| Going forward, Adient’s China business is projected to have ~$4.5B in annual consolidated and unconsolidated sales, with far-reaching customer and geographic coverage through its nine<br>major entities, three state-of-the-art technical centers and more than 800 engineers. | |
| Pro forma Adient<br> <br><br><br><br>Compared to the company’s FY21 outlook and based on the execution of these transactions and other minor portfolio adjustments in China, global<br>consolidated sales and consolidated Adj.-EBITDA are expected to increase annually by between $700M-$800M and between $90M-$100M, respectively. In addition, Adient’s equity income post-closing is expected<br>to decline to between ~$90-$100M annually. Net income and EPS improvement are forecast post-closing, driven by the expected significant reduction in debt and the corresponding benefit of lower financing costs.<br>Additional information about the completed transactions, including certain pro forma effects is provided in a Current Report on Form 8-K filed by Adient today with the U.S. Securities and Exchange Commission<br>and available at www.sec.gov. | |
| About Adient: | |
| Adient (NYSE: ADNT) is a global leader in automotive seating. With approximately 77,000 employees in 32 countries, Adient operates 202 manufacturing/assembly plants worldwide. We produce and deliver automotive seating for all major<br>OEMs. From complete seating systems to individual components, our expertise spans every step of the automotive seat-making process. Our integrated, in-house skills allow us to take our products from research and design to engineering and<br>manufacturing — and into more than 19 million vehicles every year. For more information on Adient, please visit www.adient.com. | |
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| Cautionary Statement Regarding Forward-Looking Statements and Non-GAAP metrics: | |
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| Adient has made statements in this document that are forward-looking and, therefore, are subject to risks and uncertainties. All statements in this document other than statements of historical fact are statements that are, or could<br>be, deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In this document, statements regarding Adient’s expectations for the strategic transactions in China (collectively,<br>the “Transactions”) benefits and outcome of the Transactions, use of proceeds from the Transactions, as well as its future financial position, sales, costs, earnings, cash flows, other measures of results of operations, capital<br>expenditures or debt levels and plans, objectives, market position, outlook, targets, guidance or goals are forward-looking statements. Words such as “may,” “will,” “expect,” “intend,” “estimate,”<br>“anticipate,” “believe,” “should,” “forecast,” “project” or “plan” or terms of similar meaning are also generally intended to identify forward-looking statements. Adient cautions that these<br>statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Adient’s control, that could cause Adient’s actual results to differ materially from those expressed or implied by<br>such forward-looking statements, including, among others, risks related to: Adient’s ability to derive additional value from the Transactions for shareholders, the benefits and outcome of the Transactions, the effect of the announcement of the<br>Transactions on Adient’s business relationships, operating results and business generally, risks that the Transactions disrupts current plans and operations, including potential disruptions with respect to our employees, vendors, clients and<br>customers as well as management diversion or potential litigation, the effects of local and national economic, credit and capital market conditions on the economy in general, and other risks and uncertainties, the continued financial and operational<br>impacts of and uncertainties relating to the COVID-19 pandemic on Adient and its customers, suppliers, joint venture partners and other parties, the ability of Adient to execute its turnaround plan, the<br>ability of Adient to effectively launch new business at forecast and profitable levels, the ability of Adient to meet debt service requirements, the terms of financing, the impact of tax reform legislation through the Tax Cuts and Jobs Act and/ or<br>under a new U.S. presidential administration, uncertainties in U.S. administrative policy regarding trade agreements, tariffs and other international trade relations including as may be impacted by the change in U.S. presidential administration,<br>general economic and business conditions, the strength of the U.S. or other economies, automotive vehicle production levels, mix and schedules, changes in consumer demand, work stoppages and similar events, global climate change and related emphasis<br>on ESG matters by various stakeholders, energy and commodity prices, the availability of raw materials and component products, currency exchange rates and cancellation of or changes to commercial arrangements, and the ability of Adient to identify,<br>recruit and retain key leadership. A detailed discussion of risks related to Adient’s business is included in the section entitled “Risk Factors” in Adient’s Annual Report on Form 10-K for<br>the fiscal year ended September 30, 2020 filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 30, 2020, Quarterly Report on Form 10-Q for the Quarterly Period<br>ended December 31, 2020 filed with the SEC on February 5, 2021, Quarterly Report on Form 10-Q for the Quarterly Period ended March 31, 2021 filed with the SEC on May 6, 2021, Quarterly<br>Report on Form 10-Q for the Quarterly Period ended June 30, 2021 filed with the SEC on August 5, 2021 and in subsequent reports filed with or furnished to the SEC, available at www.sec.gov.<br>Potential investors and others should consider these factors in evaluating the forward-looking statements and should not place undue reliance on such statements. The forward-looking statements included in this document are made only as of the date<br>of this document, unless otherwise specified, and, except as required by law, Adient assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this<br>document. | |
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| In addition, this document includes certain projections provided by Adient with respect to the anticipated future performance of Adient’s businesses. Such projections reflect various assumptions of Adient’s management<br>concerning the future performance of Adient’s businesses, which may or may not prove to be correct. The actual results may vary from the anticipated results and such variations may be material. Adient does not undertake any obligation to update<br>the projections to reflect events or circumstances or changes in expectations after the date of this document or to reflect the occurrence of subsequent events. No representations or warranties are made as to the accuracy or reasonableness of such<br>assumptions or the projections based thereon. | |
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| This document also contains non-GAAP financial information because Adient’s management believes it may assist investors in evaluating Adient’s<br>on-going operations. Adient believes these non-GAAP disclosures provide important supplemental information to management and investors regarding financial and business<br>trends relating to Adient’s financial condition and results of operations. Investors should not consider these non-GAAP measures as alternatives to the related GAAP measures. Reconciliations of non-GAAP measures related to FY21 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations. | |
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