Improving the experience of a world in motion

Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA FY16 Actual FY17 Actual FY18 Actual (in $ millions) Net income attributable to Adient Income attributable to noncontrolling interests Income Tax Provision (1) Financing Charges Pension mark-to-market (7) Full FY16 Full FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Full FY18 $ (1,546) $ 877 (216) $ (168) $ 54 $ (1,355) $ (1,685) 84 85 20 25 19 20 84 1,839 99 265 (28) (13) 256 480 22 132 33 37 39 35 144 110 (45) (24) (24) Other pension expense (income) Earnings before interest and income taxes Separation costs (1) (12) (6) (4) (1) (7) (10) (1) (19) $ 503 $ 1,144 $ 101 $ (141) $ 89 $ (1,069) $ (1,020) 369 Becoming Adient (2) (3) Purchase accounting amortization (4) Restructuring related charges 37 14 (5) Other items (79) Restructuring and impariment costs Gain on previously held interest (11) Impairment on YFAI investment (8) Adjusted EBIT (6) 332 253344 10 95 19 19 12 17 18 17 37 11 12 20 28 12 62 17 69 18 61 16 14 28 10 3 55 46 315 57 809 1,181 (151) 358 358 $ 1,176 $ 1,240 $ 162 $ 251 $ 205 148 $ 766 (9) 28 29 10 12 12 3 37 327 332 94 99 101 99 393 $ 1,531 $ 1,601 $ 266 $ 362 $ 318 $ 250 $ 1,196 1. 2345 6. 7. 8. 9. 10. 11. 12. 112 30 50 (10) Stock based compensation Depreciation Adjusted EBITDA The income tax provision for the three and twelve months ended September 30, 2018 includes a non-cash tax charge of $439 million to establish valuation allowances against net deferred tax assets in certain jurisdictions because of the on-going performance issues and the associated decline in profits in those jurisdictions. Also included in the income tax provision for the three months ended September 30, 2018 is a non-cash tax benefit of $48 million related to the impact of US tax reform. The impact of US tax reform on the income tax provision for the twelve months ended September 30, 2018 is a non-cash tax charge of $210 million Reflects incremental expenses associated with becoming an independent company and expenses associated with the separation from JCI. Reflects amortization of intangible assets including those related to partially owned affiliates recorded within equity income. Reflects non-qualified restructuring charges for costs that are directly attributable to restructuring activities, but do not meet the definition of restructuring under ASC 420 along with restructuring costs at partially owned affiliates recorded within equity income. Fourth quarter of 2018 reflects $3 million of integration costs associated with the acquisition of Futuris, Third quarter of 2018 reflects $6 million of integration costs associated with the acquisition of Futuris, $9 million of OPEB income related to the termination of a retiree medical plan, and $4 million of non-recurring consulting fees related to SS&M. Second quarter of 2018 primarily reflects $7 million of integration costs associated with the acquisition of Futuris, $8 million of prior period adjustments, and $7 million of non-recurring consulting fees related to SS&M. First quarter of 2018 reflects $6 million of integration costs associated with the acquisition of Futuris and $8 million related to the impact of the U.S. tax reform legislation at YFAI. Reflects qualified restructuring charges for costs that are directly attributable to restructuring activities and meet the definition of restructuring under ASC 420. Also incudes a non-cash pre-tax impairment charge of $787 million (post-tax charge of $718 million) during the three months ended September 30, 2018 related to SS&M long-lived assets that were in use as of September 30, 2018 in support of current programs. On-going performance issues on the current programs within the North American and European regions led to an impairment assessment of each region and resulted in the recognition of such impairment charge. The twelve months ended September 30, 2018 also includes a non-cash goodwill impairment charge of $299 million associated with SS&M and a $49 million non-cash impairment charge related to assets held for sale Reflects net mark-to-market adjustments on pension and postretirement plans During the three months ended September 30, 2018, the Company recorded a non-cash pre-tax impairment charge related to its YFAI investment balance of $358 million (post-tax charge of $322 million). On-going performance issues within the YFAI business led Adient to perform an impairment analysis of its YFAI investment and resulted in the recognition of such impairment charge, which has been recorded within equity income Stock based compensation excludes $6 million, $2 million, $1 million and $1 million of expense in the first, second, third and fourth quarters of 2018, respectively, and $2 million, $5 million, $3 million and $6 million of expense in the first, second, third and fourth quarters of 2017, respectively. These costs are included in Becoming Adient costs discussed above. Depreciation excludes $2 million, $2 million, $2 million and $1 million of expense in the first, second, third and fourth quarters of 2018, respectively, which is included in restructuring related charges discussed above. Depreciation excludes $3 million, $1 million and $1 million of expense in the second, third and fourth quarters of 2017, respectively. These costs are included in Becoming Adient costs discussed above. Adient amended the agreement with a seating joint venture in China, giving Adient control of the previously non-consolidated JV. Adient began consolidating this JV in July 2017 and was required to apply purchase accounting, including recognizing a gain on our previously held interest, which has been recorded in equity income. On October 1, 2018, Adient adopted ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 requires the service cost component of the net periodic costs for pension and postretirement plans to be presented in the same line item in the statement of income as other employee-related compensation costs. The non-service related costs are now required to be presented separately from the service cost component and outside of operating income/EBIT. This presentation change to the income statement has been reflected on a retrospective basis and had no effect on income (loss) before income taxes. For the three months ended, December 31, 2017, this change resulted in a $1 million increase to cost of sales, a $1 million decrease to gross profit, a $1 million decrease to earnings (loss) before interest and income taxes and a $1 million increase to other pension expense (income) line items in the condensed consolidated statements of income. As a result of presenting certain pension costs as non-operating items, consolidated adjusted EBITDA decreased by $1 million and $4 million in the Seating segment for the three months ended December 31, 2017 and twelve months ended September 30, 2018, respectively.